<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 30, 1997
REGISTRATION NO.
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM SB-2
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
CUIDAO HOLDING CORP.
(NAME OF SMALL BUSINESS ISSUER IN ITS CHARTER)
<TABLE>
<S> <C> <C>
FLORIDA 5182 65-0639616
(STATE OR OTHER JURISDICTION (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER IDENTIFICATION NO.)
OF INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER)
</TABLE>
3201 WEST GRIFFIN ROAD
SUITE 204
FT. LAUDERDALE, FLORIDA 33312-6900
(954) 964-1060
(ADDRESS AND TELEPHONE NUMBER OF PRINCIPAL EXECUTIVE OFFICES)
------------------------
MR. C. MICHAEL FISHER
3201 WEST GRIFFIN ROAD
SUITE 204
FT. LAUDERDALE, FLORIDA 33312-6900
(954) 964-1060
(NAME, ADDRESS AND TELEPHONE NUMBER OF AGENT FOR SERVICE)
------------------------
COPIES TO:
JOHN W. MARTIN, ESQ.
5777 WEST CENTURY BLVD., SUITE 1540
LOS ANGELES, CALIFORNIA 90045
(310) 342-6800
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable after the effective date of this Registration Statement.
------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<S> <C> <C> <C> <C>
=================================================================================================================
AMOUNT PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF TO BE OFFERING PRICE PER AGGREGATE OFFERING AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED(1) UNIT(1) PRICE(1) REGISTRATION FEE
- -----------------------------------------------------------------------------------------------------------------
Units Consisting of One share of
Common Stock and One Common
Stock Purchase Warrant................. 260,000 $5.75 $1,495,000 $516
- -----------------------------------------------------------------------------------------------------------------
Common Stock Underlying Warrants....... 260,000 $5.75 $1,495,000 $516
- -----------------------------------------------------------------------------------------------------------------
TOTALS................................................................ $2,990,000 $1,032
=================================================================================================================
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457 of Regulation C promulgated under the Securities Act of
1933.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
================================================================================
<PAGE> 2
CUIDAO HOLDING CORP.
CROSS REFERENCE SHEET
<TABLE>
<CAPTION>
ITEM NUMBER AND CAPTION PROSPECTUS HEADING
----------------------------------------- -----------------------------------------
<C> <S> <C>
1. Front of Registration Statement and
Outside Front Cover of Prospectus........ Forepart of Registration Statement and
Prospectus Cover Page
2. Inside Front and Outside Back Cover Pages
of Prospectus............................ Inside Front and Outside Back Cover Pages
of Prospectus
3. Summary Information and Risk Factors..... Prospectus Summary and Risk Factors
4. Use of Proceeds.......................... Use of Proceeds
5. Determination of Offering Price.......... Risk Factors and Plan of Distribution
6. Dilution................................. Dilution
7. Selling Security Holders................. Not Applicable
8. Plan of Distribution..................... Plan of Distribution
9. Legal Proceedings........................ Not Applicable
10. Directors, Executive Officers, Promoters
and Control Persons...................... Management and Principal Stockholders
11. Security Ownership of Certain Beneficial
Owners and Management.................... Management and Principal Stockholders
12. Description of Securities
to be Registered......................... Description of Securities
13. Interest of Named Experts and Counsel.... Legal Matters
14. Disclosure of Commission Position on
Indemnification for Securities Act
Liabilities.............................. Not Applicable
15. Organization Within Last Five Years...... Certain Relationships and Related
Transactions
16. Description of Business.................. Business
17. Management's Discussion and Analysis or
Plan of Operation........................ Plan of Operation
18. Description of Property.................. Business
19. Certain Relationships and Related
Transactions............................. Certain Relationships and Related
Transactions
20. Market for Common Equity and Related
Stockholder Matters...................... Not Applicable
21. Executive Compensation................... Management
22. Financial Statements..................... Financial Statements
23. Changes In and Disagreements With
Accountants on Accounting and Financial
Disclosure............................... Not Applicable
</TABLE>
<PAGE> 3
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR
MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS
OF ANY SUCH STATE.
SUBJECT TO COMPLETION
DATED DECEMBER 30, 1997
UP TO 260,000 UNITS CONSISTING OF 260,000
SHARES OF COMMON STOCK AND WARRANTS
TO PURCHASE 260,000 SHARES OF COMMON STOCK
CUIDAO HOLDING CORP.
------------------------
Each unit ("Unit") offered hereby consists of one share of Common Stock of
Cuidao Holding Corp. (the "Common Stock") and one Common Stock Purchase Warrant
(the "Warrant"). After completion of this offering, the shares of Common Stock
(the "Shares") and the Warrants comprising the Units shall be immediately
separately transferable. Each Warrant entitles the holder thereof to purchase
one share of Common Stock at an exercise price of $8.00, subject to adjustment,
at any time until the third anniversary of the date of this Prospectus. The
Warrants may be redeemed by the Company at $.05 per Warrant, at any time prior
to their expiration on not less than 30 days' written notice, if the closing bid
price of the Common Stock equals or exceeds $10.00 per share for 30 consecutive
trading days ending within 10 days of the notice of redemption. See "Description
of Securities."
The minimum offering by the Company will be 95,000 Units ($546,250) and the
maximum offering will be 260,000 Units ($1,495,000). The Units are offered on a
"best efforts, all or none" basis with respect to the minimum number of Units
offered hereby, and on a "best efforts" basis with respect to sales of Units
thereafter up to the maximum number of Units being offered. Pending the payment
for not less than 95,000 Units, all proceeds of this offering will be deposited
in an interest bearing escrow account at Bank, ,
California (the "Escrow Agent").
There has been no public market for any securities of the Company prior to
this offering, and there can be no assurance that a public market will develop
by reason of this offering. If such a market should develop, there is no
assurance that it will be sustained, or that it will develop into a market
greater than a limited market. See "Risk Factors."
The initial public offering price for the Units has been determined solely
by the Company, and does not necessarily bear any direct relationship to the
Company's assets, operations, book or other established criteria of value. See
"Risk Factors" and "Dilution."
THE SECURITIES OFFERED HEREBY INVOLVE A HIGH DEGREE OF RISK AND IMMEDIATE
SUBSTANTIAL DILUTION FROM THE OFFERING PRICE. SEE "RISK FACTORS" AND "DILUTION."
THE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE COMMISSION OR
ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
======================================================================================================
UNDERWRITING
PRICE TO DISCOUNTS PROCEEDS TO
PUBLIC(1) AND COMMISSIONS(2) COMPANY(3)
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Per Share........................ $5.75 $.575 $5.175
- ------------------------------------------------------------------------------------------------------
Total Minimum.................... $546,250 $54,625 $491,625
- ------------------------------------------------------------------------------------------------------
Total Maximum.................... $1,495,000 $149,500 $1,345,500
======================================================================================================
</TABLE>
Footnotes on Next Page
The offering of the Units hereunder will terminate not later than
, 1998 (the "Termination Date"), provided that, in the sole
discretion of the Company, the offering period may be extended for an additional
period not to exceed 90 days. The Company has entered into an escrow agreement
with Bank to hold any proceeds from this offering in an interest
bearing escrow account subject to certain terms and conditions. If subscriptions
for all of the Units offered hereby have not been received and accepted by the
Company by the Termination Date, no Units will be sold, and all funds held in
escrow will be returned promptly to investors along with any interest accrued
thereon. See "Plan of Distribution."
WEST AMERICA SECURITIES CORP.
THE DATE OF THIS PROSPECTUS IS , 1998
<PAGE> 4
Footnotes to Cover Page
(1) Units are being offered for sale at $5.75 per Unit. Payment in full for the
Units is due upon subscription. Unit purchase funds will initially be held
in an interest bearing escrow account at . This offering will
terminate on or before a date 90 days from the date of this Prospectus
unless the maximum amount of Units offered hereby is sold prior to such
date, or unless this offering is otherwise extended in the discretion of the
Company for a period not to exceed 90 days. When subscriptions for the
minimum amount of Units offered hereby have been received and accepted by
the Company, such funds will be released from escrow to the Company, and
investors whose subscriptions for Units have been accepted by the Company
will be issued Common Stock and Warrant certificates evidencing the number
of Units acquired, and the initial escrow will close. See "Unit Purchase
Information" and "Plan of Distribution."
(2) Does not include additional compensation to the Placement Agent in the form
of (i) a nonaccountable expense allowance of $13,656 if the minimum number
of Units offered hereby are sold, and $37,375 if the maximum number of Units
offered hereby are sold, which amounts to 2.5% of the total proceeds to be
realized from the sale of the Units and (ii) an option (the "Placement Agent
Unit Purchase Option") to purchase up to 26,000 Units (the "Option Units")
at a price of $7.00 per Option Unit. In addition, the Company has agreed to
indemnify the Placement Agent against certain liabilities under the
Securities Act of 1933, as amended (the "Securities Act"). See "Plan of
Distribution."
(3) Proceeds to the Company are calculated before the deduction of expenses in
connection with this offering and payable by the Company, which are
estimated to be $80,488 if the minimum number of Units offered hereby are
sold, and $104,207 if the maximum number of Units offered hereby are sold,
and include filing, legal, accounting, printing and other miscellaneous
fees, and the nonaccountable expenses payable to the Placement Agent
referred to in footnote 2 above.
2
<PAGE> 5
The Company is not currently a reporting company under the Securities
Exchange Act of 1934, as amended. Upon completion of the offering of the Units,
the Company intends to deliver annual reports to the holders of its securities.
The annual reports will contain financial information that has been examined and
reported upon by an independent certified public accountant.
Red Dragon is an applied for trademark of the Company. This Prospectus also
includes product names other than the names of the Company's products, and also
includes the names of companies other than the Company.
UNIT PURCHASE INFORMATION
Subscribers purchasing Units should make checks payable to " Bank as
Escrow Agent for Cuidao Holding Corp." Subscribers must complete a Subscription
Agreement in the form attached as Appendix A to this Prospectus. For
convenience, an actual Subscription Agreement has been included with this
Prospectus. Additional copies of the Subscription Agreement may be obtained by
writing or calling or faxing the Placement Agent at its executive office; 4510
E. Thousand Oaks Boulevard, Suite 100, Westlake Village, California 91362,
telephone (800) 935-9378 and facsimile (805) 777-1744. All checks and
Subscription Agreements should be forwarded to the Placement Agent at its
Westlake Village, California office.
3
<PAGE> 6
PROSPECTUS SUMMARY
This Prospectus contains forward-looking statements which involve risks and
uncertainties. The Company's actual results could differ materially from those
anticipated in these forward-looking statements as a result of certain factors
including those set forth under "Risk Factors" and elsewhere in this Prospectus.
The following information is selective and qualified in its entirety by the
detailed information (including financial information and notes thereto)
appearing elsewhere in this Prospectus. This summary of certain provisions of
the Prospectus is intended only for convenient reference and does not purport to
be complete. The entire Prospectus should be read and carefully considered by
prospective investors before making a decision to purchase Units. Except as set
forth in the Company's financial statements or as otherwise indicated herein,
all information in this Prospectus (i) reflects the 1-for-2.5 reverse stock
split of the Company's Common Stock effected on July 28, 1997, (ii) reflects the
conversion of all of the Company's outstanding shares of Preferred Stock into
shares of Common Stock which will occur automatically upon the closing of this
offering and (iii) assumes no exercise of the Warrants or the Placement Agent's
Unit Purchase Option.
THE COMPANY
Cuidao Holding Corp., a Florida corporation, was incorporated on February
12, 1996. The Company is authorized to issue two classes of capital stock, which
are Common Stock and Preferred Stock. The total authorized Common Stock of the
Company is 100,000,000 shares, $.0001 par value. The total authorized Preferred
Stock of the Company is 10,000,000 shares, $.0001 par value. The Company's
principal executive offices are located at 3201 West Griffin Road, Suite 204,
Ft. Lauderdale, Florida 33312-6900; and its telephone number is (954) 964-1060.
The Company is a development stage corporation which imports, develops,
manages and distributes a portfolio of international and regional brands of
beer, wine and spirits. The Company was formed to participate in specific niche
segments of the approximate $100 billion United States alcoholic beverage market
by acting as a supplier of a variety of beers, wines and spirits.
The Company's current portfolio of beers consist of the following line of
beers produced in the People's Republic of China by Tsingtao Brewery No. 3, a
brewery owned and operated by Tsingtao Brewery Co., Ltd. ("Tsingtao"): Red
Dragon Draft, Red Dragon Light and Red Dragon Amber. The Company's present
portfolio of wines consist of the following French originated brands: Les
Vignerons De Buzet Wines, Armadis Wines, Les Chais Du Prevot Wines, La Grappe De
Gurson Wines, and Godet Freres Champagnes. The Company's portfolio of spirits
consist of the following French originated brands: La Belle Sandrine and
Armagnac Marquis De Puysegur. See "Business of the Company."
Through its Red Dragon beer brands, the Company intends to expand the
United States market for Chinese beer imports. The Company believes that the
United States market for Chinese beer imports is approximately $125,000,000
annually, although no assurance to this effect can be given. Currently, the only
significant brand of Chinese beer being marketed and sold in the United States
is a regular beer produced by Tsingtao, and sold under the brand name of
"Tsingtao Beer". The Company's initial strategy for expanding the United States
market for Chinese beer imports will relate to diversifying Tsingtao's beer
product from a singular brand to a wider variety of beer products which will
consist of light, draft and amber beer types, and which will be sold under the
brand name of "Red Dragon".
With its wine brands, the Company intends to exploit the United States
domestic wine market. According to Beverage World Magazine, in 1995 Americans
consumed approximately 470.8 million gallons of wine. The Company believes that
wine imports consists of approximately 72.5 million gallons and account for
approximately 16% of total United States wine consumption. The Company further
believes that its portfolio of wines will provide the United States consumer
with a "French quality" wine at a retail price of between $5.00 to $8.00 per 750
ml (milliliter) bottle. At such retail prices, the Company expects that its
wines will have particular appeal to the mass merchandise market.
Through its La Belle Sandrine spirit, the Company intends to compete in the
growing market for prepared cocktail beverages. La Belle Sandrine is an all
natural, citrus based, prepared cocktail. The prepared cocktail
4
<PAGE> 7
market is a niche market which currently has approximately 30 different brand
participants (such as Jose Cuervo Margaritas and Khalua Combos). Because of the
composition of its La Belle Sandrine product, the Company believes that La Belle
Sandrine will compete primarily with a prepared cocktail which sells under the
brand name of "Alize". Statistical information available to the Company
indicates that Alize has increased its United States sales from 20,000 cases in
1991 to 430,000 cases in 1996, resulting in total 1996 sales for the product of
approximately $37,000,000.
The Company's strategy is to become a leading importer, developer and
manager of a portfolio of beer, wine and spirit brands which serve specific
niche alcoholic beverage markets. Key elements of the Company's strategy
include:
- Making selective product acquisitions in the alcoholic beverage industry
to expand its product portfolio.
- Improving market position and capitalizing on growth trends within the
industry.
- Improving operating efficiencies through reduced product and
organizational costs.
- Capitalizing and improving on strong alliance and wholesaler
relationships.
- Developing brand identification for its portfolio of products.
- Expanding distribution into new markets and increasing penetration of
existing markets primarily through product line extensions, promotional
activities and through the acquisition of producers and other importers
and distributors of alcoholic beverage products.
RISK FACTORS
An investment in the Units offered hereby involves a high degree of risk.
The Company is a development stage company which has not had substantial
business operations to date. There can be no assurance that the Company will
have substantial product sales or revenues or that it will be able to sell its
products at a profit. Other risk factors include the seasonality of the
Company's products, the Company's reliance on third-party producers and the
Company's reliance on independent distributors and wholesalers for product
sales. See "Risk Factors."
THE OFFERING
Securities Offered by the
Company.................. 260,000 Units at a public offering price of $5.75
per Unit. Each Unit consists of one share of Common
Stock and One Warrant. Each Warrant entitles the
holder thereof to purchase one additional share of
Common Stock at an exercise price of $8.00, subject
to adjustment, at any time until the third
anniversary of the date of this Prospectus.
Common Stock Outstanding
before Offering.......... 2,226,000 Shares(1).
Common Stock Outstanding
after Minimum offering..... 2,359,000 Shares(2).
Common Stock Outstanding
after Maximum Offering..... 2,524,000 Shares(2).
Use of Proceeds............ To purchase alcoholic beverage products, to
advertise and market, to provide financing for
undetermined future acquisitions and for working
capital and general corporate purposes.
- ---------------
(1) Does not include 38,000 shares of Common Stock issuable upon the automatic
conversion of 38,000 shares of the Company's Series A Preferred Stock into
shares of the Company's Common Stock.
5
<PAGE> 8
Such Series A Preferred Stock will be automatically converted into shares of
the Company's Common Stock upon the closing of the sale of the Units offered
hereby. See "Description of Securities -- Preferred Stock."
(2) All references throughout this Prospectus to the number of Shares to be
outstanding following this offering include the issuance of 38,000 Shares as
a result of the automatic conversion of 38,000 shares of Series A Preferred
Stock into 38,000 shares of the Company's Common Stock, but exclude (i) the
possible issuance of up to 260,000 additional Shares that may be purchased
upon exercise of the Warrants offered hereby, (ii) up to 26,000 additional
Shares that may be purchased upon exercise of the Placement Agent Unit
Purchase Option and (iii) 1,000,000 shares of Common Stock reserved for
issuance under the Company's Stock Option Plans. See "Capitalization,"
"Stock Option Plans" and Notes to Financial Statements.
SUMMARY FINANCIAL AND OPERATING INFORMATION
<TABLE>
<CAPTION>
FEBRUARY 12, 1996
(DATE OF TEN MONTHS DEVELOPMENT
INCEPTION) TO ENDED STAGE ENDED
DECEMBER 31, 1996 OCTOBER 31, 1997 OCTOBER 31, 1997(1)
----------------- ---------------- -------------------
<S> <C> <C> <C>
STATEMENT OF OPERATIONS DATA
Revenues.................................... $ 192 $ 149 $ 341
Net income (loss)........................... (21,523) (94,105) (115,538)
Net income (loss) loss per share............ (.012) (.046) (.060)
Shares used in calculation of net loss per
Share(2).................................. 1,833,600 2,035,960 1,929,962
</TABLE>
<TABLE>
<CAPTION>
OCTOBER 31, 1997
-------------------------------------------------
AS ADJUSTED AS ADJUSTED
ACTUAL MINIMUM MAXIMUM
(UNAUDITED) (UNAUDITED)(3) (UNAUDITED)(4)
----------- -------------- --------------
<S> <C> <C> <C>
BALANCE SHEET DATA
Working capital (deficit).......................... $59,035 $473,696 $1,307,803
Total assets....................................... 96,236 510,104 1,345,004
Total Stockholders' equity (deficit)............... 95,443 509,311 1,344,211
</TABLE>
- ---------------
(1) Cumulative totals for development stage operations of the Company from
February 12, 1996 (date of inception) to October 31, 1997.
(2) See Note 2 of Notes to Financial Statements of the Company concerning net
loss per share information, which Financial Statements are included
elsewhere in this Prospectus.
(3) As adjusted amounts give effect to the sale of 95,000 Units by the Company
in this offering, the minimum number of Units offered hereby, and the use of
the net proceeds of $413,868 therefrom as if this offering had occurred at
the balance sheet date. See "Use of Proceeds" and "Capitalization."
(4) As adjusted amounts give effect to the sale of 260,000 Units by the Company
in this offering, the maximum number of Units offered hereby, and the use of
the net proceeds of $1,248,768 therefrom as if this offering had occurred at
the balance sheet date. See "Use of Proceeds" and "Capitalization."
6
<PAGE> 9
RISK FACTORS
An investment in the Units offered hereby involves a high degree of risk
and is not an appropriate investment for persons who cannot afford the loss of
their entire investment. Prospective investors should carefully consider the
following risk factors, in addition to the other information contained in this
Prospectus, before purchasing any of the Units. Except for the historical
information contained herein, the discussion in this Prospectus contains certain
forward-looking statements that involve risks and uncertainties, such as
statements of the Company's plans, objectives, expectations and intentions. The
cautionary statements made in this Prospectus should be read as being applicable
to all related forward-looking statements wherever they appear in this
Prospectus. The Company's actual results could differ materially from those
discussed here. Factors that could cause or contribute to such differences
include those discussed below, as well as those discussed elsewhere herein.
Development Stage Company; No Revenues. The Company is a development stage
company with no product sales and no operating revenues. The Company has
incurred cumulative losses from its inception and as of December 31, 1996 and
October 31, 1997, had an accumulated deficit of $(21,523) and $(115,538)
respectively. The Company anticipates that losses will continue for the
foreseeable future as the Company continues its development and initial product
marketing activities. The likelihood of the success of the Company must be
considered in light of the expenses, complications and delays frequently
encountered in connection with the establishment and expansion of new businesses
and the competitive environment in which the Company will operate. There can be
no assurance that future revenues from sales of the Company's products will
occur or be significant, or that the Company will be able to sell its products
at a profit. Future revenues and profits, if any, will depend on various
factors, including, but not limited to, initial and continued market acceptance
of the Company's products, and the successful implementation of its planned
marketing strategies. Failure to achieve a satisfactory level of sales could
impair the Company's ability to obtain required additional funds. See
"-- Capital Requirements" and "Plan of Operation."
Uncertainty of Demand. Although the Company believes that a demand exists
for its portfolio of alcoholic beverage products, the Company has not yet
marketed its alcoholic beverage products to any significant extent. As such, the
demand for the Company's products are not yet known. Although management of the
Company has conducted what it believes is market research into the alcoholic
beverage industry, absolutely no assurance can be given that sufficient demand
for the Company's products exist such that the Company will be successful in its
business endeavor. See "Plan of Operation."
Substantial Competition; Better Financed Competitors. The Company
encounters and is likely to continue encountering substantial competition from a
number of competitors some of which posses greater resources than the Company.
The principal competitive factors affecting the market for the Company's
alcoholic beverage products include product quality and taste, packaging, brand
recognition, price and distribution capabilities. There can be no assurance that
the Company will be able to compete successfully against current and future
competitors based on these and other factors. The Company competes with a
variety of domestic and international suppliers of alcoholic beverage products,
many of whom have substantially greater financial, distribution and marketing
resources and have achieved a higher level of brand recognition than the
Company. The Company anticipates increased competition in the specific niche
areas of the alcoholic beverage industry that it intends to serve from major
importers, distributors and suppliers of alcoholic beverages such as
Brown-Forman Company, Barton Beers Ltd., Kobrand Corporation and Allied Domecq
Spirits and Wines, each of whom has introduced and is marketing alcoholic
beverages designed to serve specific niche areas of the alcoholic beverage
industry. These large importers, distributors and suppliers dominate the overall
importation and/or distribution of alcoholic beverages in the United States and
the Company expects that certain of these companies, with their superior
financial resources and established distribution networks, will seek further
participation in niche areas of the alcoholic beverage industry through the
increased acquisition of alcoholic beverage products to distribute, or the
formation of distribution alliances with the producers of alcoholic beverage
products which serve specific niche areas of the alcoholic beverage industry.
Increased competition could result in price reductions, reduced profit margins
and loss of market share, all of which would have a material adverse effect on
the Company's business, financial condition and results of operations. See
"Business -- Competition."
7
<PAGE> 10
Potential Fluctuations in Quarterly Results; Seasonality. The Company's
quarterly operating results may vary significantly depending on factors such as
the timing of new product announcements by the Company or its competitors, the
timing of significant advertising and promotion campaigns by the Company,
changes in the sales mix between the Company's beer, wine and spirits products,
the impact of an increasing average federal excise tax rate as sales volume
increases, increased competition, seasonality of sales of the Company's
products, general economic factors, trends in consumer preferences, regulatory
developments, including changes in domestic import duties and excise and other
tax rates, changes in average selling prices or market acceptance of the
Company's alcoholic beverage products and variations in shipping and
transportation costs.
The Company expects to experience higher sales in the third and fourth
quarters of a calendar year due to increased consumption of alcoholic beverages
during seasonal holidays. Fluctuations in sales due to seasonality may become
more pronounced as the growth rate of the Company's sales slow.
Based upon all of the foregoing, the Company believes that quarterly sales
and operating results are likely to vary significantly in the future and that
period-to-period comparisons of its results of operations will not be meaningful
and should not be relied upon as indications of future performance. Further, it
is possible that in some future quarter the Company's revenue or operating
results will be below the expectations of public market analysts and investors.
In such event, if a public market for the Company's securities were to develop
in the future, the price of such securities could be materially adversely
affected.
Product Concentration; Dependence on New Product Introductions. The Company
currently offers a relatively limited number of beer, wine and spirits products
and believes that the sale of such beer, wine and spirits products will account
for a significant portion of the Company's sales for the foreseeable future.
Therefore, the Company's future operating results, particularly in the near
term, are significantly dependent upon the continued market acceptance of these
beer, wine and spirits products. There can be no assurance that the Company's
beer, wine and spirits products will achieve market acceptance. Initial sales
for a new alcoholic beverage product may be caused by the interest of
distributors and retailers to have the latest product on hand for potential
future sale to consumers. As a result, initial stocking orders for, or sales of,
a newly introduced alcoholic beverage product may not be indicative of market
acceptance and long term consumer demand. A decline in the demand for any of the
Company's beers, wines and spirits as a result of competition, changes in
consumer tastes and preferences, government regulation or other factors would
have a material adverse effect on the Company's business, operating results and
financial condition. In addition, there can be no assurance that the Company
will be successful in importing, developing, managing, introducing and marketing
additional new alcoholic beverage products that will sustain sales growth in the
future. See "Business."
Reliance on Third-Party Producers. The Company does not produce any of the
alcoholic beverage products that it presently markets and distributes. The
Company's Red Dragon beer brands are produced in the People's Republic of China
by Tsiangtao Brewery No. 3, a brewery owned and operated by Tsingtao. The
Company's wine and spirits products are produced in France by SICA-Les Chais du
Prevot, Armadis, Les Vignerons De Buzet, Cave du Vignoble Gursonnais and Godet
Freres. The Company has entered into an exclusive Import and Distribution
Agreement with each of these producers which gives the Company the exclusive
right to market and distribute in the United States the alcoholic beverage
products produced by each of the foregoing referenced producers (hereinafter
collectively referred to as the "Producers"). The Company relies upon each of
the Producers at all phases of production of the alcoholic beverage products
which are imported, managed, marketed and distributed by the Company, including
scheduling production to meet delivery requirements, packaging, performing
quality control and assurance and performing regulatory compliance. The
Company's relationship with each of its Producers is therefore critical to the
Company's business, operating results and financial condition.
The Company's dependence on the Producers entails a number of significant
risks. The Company's business, results of operations and financial condition
would be materially adversely affected if any one of the Producers were unable,
for any reason, to meet the Company's delivery commitments or if a Producer were
unable to continue to produce a product being marketed and distributed by the
Company. In the event that a Producer were no longer able to supply the Company
with a particular product, the Company would be
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required to identify, qualify and obtain an appropriate substitute product from
a different producer of alcoholic beverage products. This identification,
qualification and acquisition of an alternative product could take up to one
year or longer, and no assurance can be given that alternative products would be
available to the Company or that the producers of such alternative products
would be in a position to satisfy the Company's production requirements on a
timely and cost-effective basis. Any inability by the Company to obtain a
consistent and adequate supply of the alcoholic beverages produced by the
Producers on a timely basis or any other circumstances that would require the
Company to seek alternative sources of supply would materially adversely effect
the Company's revenues and goodwill and would therefore have a material adverse
effect on the Company's business, financial condition and results of operations.
See "Business -- Products."
Foreign Production. Currently, all of the alcoholic beverage products to be
managed, marketed and distributed by the Company are produced outside of the
United States, and include production in China. The foreign production of goods
is subject to a number of risks, including transportation delays and
interruptions, political and economic disruptions, the imposition of tariffs and
import and export controls and changes in governmental policies. China currently
enjoys most favored nation trading status with the United States. While the
Company has not to date experienced any material adverse effects due to such
risks, there can be no assurance that such events will not occur in the future
with the result of possible increases in costs and delays of, or interferences
with, product deliveries resulting in losses of revenues and goodwill.
Foreign Currency and Foreign Exchange Regulation. As part of the Company's
ordinary business operations, the Company will be required to purchase alcoholic
beverage products from the Producers. The Company may be required to accomplish
such purchases through the use of foreign currencies. As a result, fluctuations
in exchange rates of the United States dollar against foreign currencies could
adversely affect the Company's results of operations. The Company may attempt to
limit its exposure to the risk of currency fluctuations by purchasing forward
exchange contracts which could expose the Company to substantial risk of loss.
In such a transaction, the Company would purchase a predetermined amount of
foreign currency to ensure that the Company in the future will own a known
amount of such currency to pay for goods at a predetermined cost. The Company
believes that the use of such transactions will successfully allow the Company
to better determine costs involved in its operations, and thus better manage
currency fluctuations. There can be no assurance that the Company will in the
future successfully manage its exposure to currency fluctuations or that such
fluctuations will not have a material adverse effect on the Company.
Dependence on Independent Distributors and Wholesalers; Customer
Concentration. The Company expects to sell most of its alcoholic beverage
products to unrelated distributors and wholesalers for resale to restaurants,
bars and retail outlets. Accordingly, the Company is dependent upon these
distributors and wholesalers to sell the Company's products and to assist the
Company in promoting market acceptance of, and creating demand for, the
Company's products. There can be no assurance that the Company's distributors
will devote the resources necessary to provide effective sales and promotion
support to the Company. The Company believes that it is likely that the vast
majority of its sales in the future will be concentrated among ten or less
distributors and wholesalers. The Company believes that its future growth and
success will depend in large part upon a few significant distributors and
wholesalers. If one or more of these significant distributors were to
discontinue selling, or decrease the level of orders for the Company's products,
the Company's business would be adversely affected in the areas serviced by such
distributors and wholesalers until the Company retained replacements. There can
be no assurance however that the Company would be able to replace a significant
distributor in a timely manner or at all in the event it were to discontinue
selling the Company's products. In addition, there is always a risk that the
Company's distributors will give higher priority to the products of other
beverage companies, including products directly competitive with the Company's
products, thus reducing their efforts to sell the Company's products. The
Company's distributors may not contractually commit to make future purchases and
therefore could discontinue carrying the Company's products in favor of a
competitor's product or other alcoholic beverages at any time or for any reason.
If any of the Company's significant distributors were to experience financial
difficulties, or otherwise become unable or unwilling to promote or sell the
Company's products, the Company's results of operations would be adversely
affected. In addition, in some states, the Company's relationship with its
distributors may be affected by laws that restrict enforceability of some
contract terms, especially those related to the
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Company's right to terminate the services of its distributors. Accordingly, the
Company's ability to change distributors in certain states may be adversely
impacted by such laws. See "Business -- Sales, Marketing and Distribution."
Development of New Products; Need to Manage Product Introductions. The
alcoholic beverage industry is highly competitive and characterized by changing
consumer preferences and continuous introduction of new products. The Company's
goal is to expand its portfolio of alcoholic beverage products through the
acquisition of new products serving niche segments of the industry, develop and
manage such new products, and introduce such new products on a timely and
regular basis to maintain distributor and retail interest and appeal to varying
consumer preferences. The Company believes that its future growth will depend,
in part, on its ability to anticipate changes in consumer preferences and
acquire, manage, develop and introduce, in a timely manner, new alcoholic
beverage products that adequately address such changes. There can be no
assurance that the Company will be successful in acquiring, developing,
introducing and marketing new products on a timely and regular basis. If the
Company is unable to acquire and introduce new products or if the Company's new
products are not successful, the Company's sales may be adversely affected as
customers seek competitive products. In addition, the introduction or
announcement of new alcoholic beverage products by the Company could result in
reduction of sales of the Company's existing products, requiring the Company to
manage carefully product introductions in order to minimize disruption in sales
of existing products. There can be no assurance that the introduction of new
product offerings by the Company will not cause distributors, retailers and
consumers to reduce purchases or consumption of existing Company products. Such
reduction of purchases or consumption could have a material adverse effect on
the Company's business, operating results and financial condition. See
"Business -- Products."
Ability to Identify and Consummate Suitable Acquisitions; Integration of
Acquisitions. The Company expects to devote a substantial amount of time and
expense in attempting to acquire other importers and distributors of alcoholic
beverage products as a means of expanding the Company's alcoholic beverage
product lines and distribution channels and to create certain operating
efficiencies. Identifying appropriate acquisitions and proposing, negotiating
and consummating acquisitions can be a lengthy and costly process. Furthermore,
the Company may compete for acquisition opportunities with companies that may
have greater resources than the Company. There can be no assurance that suitable
acquisition candidates are available or can be identified or that acquisitions
can be consummated on terms favorable to the Company. Acquisitions require the
Company to attract and retain component and experienced management personnel and
require the implementation of management information systems and other operating
systems. There can be no assurance that the Company will be able to successfully
acquire and integrate other importers and distributors of alcoholic beverage
products. Any failure or inability to efficiently acquire and integrate other
importers and distributors may have a material adverse effect on the Company's
results of operations or financial condition.
Ability to Manage Growth. The Company is a development stage company which
has not completely realized its business plan. The Company believes that as its
business plan is more fully realized, the Company may experience a period of
rapid growth that will result in new and increased responsibilities for
management personnel and will place a significant strain upon the Company's
management, operating and financial systems and resources. To accommodate any
rapid growth and to compete effectively and manage future growth, if any, the
Company will be required to implement and improve its operational, financial and
management information systems, procedures and controls on a timely basis and to
expand, train, motivate and manage its work force. There can be no assurance
that the Company's personnel, systems, procedures and controls will be adequate
to support the Company's existing and future operations. Any failure to
implement and improve the Company's operational, financial and management
systems or to expand, train, motivate or manage employees could have a material
adverse effect on the Company's business, operating results and financial
condition. See "Business -- Employees."
Dependence on Consumer Acceptance; Strength of Economy. Although the
Company believes it has the ability and experience to recognize potentially
valuable products and to gauge trends in its business, the Company's revenues,
nevertheless, will be substantially dependent on the success of its products,
which depends, among other things, on rapidly changing consumer acceptance,
which is difficult to predict and over which the Company will have little
control. The Company's profitability and sales will depend on the strength
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<PAGE> 13
of the economy, which can dictate consumers' spending habits on such items as
alcoholic beverage products. No prediction can be made about the stability of
the economy. Any prolonged downturn in the economy, whether real or perceived,
could adversely affect the Company.
Capital Requirements. The Company anticipates that, if it fails to achieve
significant revenues or profitable operations from its initial marketing
efforts, or if the initiation of sales of its alcoholic beverage products is
delayed beyond planned time periods, it will require additional funding to
develop and market its initial products, to expand its management team and for
further marketing and product development. There can be no assurance that
additional capital from any source will be available when needed by the Company,
or that such capital will be available on terms acceptable to the Company. If
adequate funds are not available, the Company may be required to curtail
significantly its business activities or cease operations entirely. See "Use of
Proceeds."
Government Regulation. Federal, state and local authorities extensively
regulate the production and distribution of beer, wine and spirits. The Federal
Bureau of Alcohol, Tobacco and Firearms (the "ATF") and various state alcohol
authorities regulate matters such as licensing, trade and pricing practices,
labelling, advertising and relations with wholesalers and distributors. In the
last several years federal and state regulators have required warning labels to
be placed on alcoholic beverages. It is uncertain what future regulations may be
promulgated by these governmental agencies and the effect these regulations will
have on the Company's business. In addition, Congress in 1991 substantially
increased the amount of excise tax assessed upon alcoholic beverages and it is
possible that additional increases in excise taxes could be promulgated in the
future. Because the Company may be required to pay excise taxes as part of its
ordinary business operations, any increase may cause a corresponding increase in
the costs to the Company, thereby requiring the Company to raise prices or
suffer reduced profit margins. It is unknown what the impact of future
regulations will be, but it is possible that current or future governmental
regulations of the type referenced above could materially adversely affect the
Company's business. See "Business -- Government Regulation."
Health Risks; Social Concerns. There has been substantial attention paid in
recent years to the adverse social and health effects of alcohol consumption.
Although some studies have indicated that moderate wine consumption may result
in health benefits, other reports have sharply disputed these findings.
Anti-alcohol groups have advocated more stringent labelling requirements and
other governmental regulations generally unfavorable to the alcoholic beverage
industry. More restrictive regulations, negative publicity regarding alcohol
consumption or publication of studies which indicate a significant health risk
from moderate consumption of alcohol could adversely affect the sale and
consumption of alcoholic beverages and could have a material adverse effect on
the Company's financial results.
Arbitrary Determination of Offering Price. The offering price of the Units
was arbitrarily determined by the Company. Among the factors considered by the
Company in establishing the offering price of the Units was the proceeds to be
raised by the Company, the percentage of ownership to be held by investors in
this offering, the experience of the Company's management and the current market
conditions in the over-the-counter securities market. Accordingly, there is no
relationship whatsoever between the offering price and the assets, earnings or
book value of the Company, or any other recognized criteria of value.
Control by Existing Management and Stockholders. Following completion of
this offering, the control of the Company will remain in the hands of its
current directors, officers and stockholders. Accordingly, these persons will be
able to elect a majority of the Board of Directors and to control the management
of the Company. See "Management," "Principal Stockholders" and "Description of
Securities."
No Dividends on Common Stock Anticipated. The Company has not paid any
dividends upon its Common Stock since its inception and, by reason of its
present financial status and its contemplated financial requirements, does not
contemplate or anticipate paying any dividends upon its Common Stock in the
foreseeable future. Therefore, any potential purchaser of the Units whose
decision to invest in the Units is based upon an expectation of dividend
payments should refrain from purchasing the Units. See "Dividend Policy."
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Dependence Upon Key Personnel. The Company's success is heavily dependent
upon the continued active participation of its current executive officers, key
employees and consultants. Loss of the services of one of these executives,
employees or consultants could have a material adverse effect upon the
development of the Company's business. The Company does not currently have
"key-man" life insurance on any of its executive personnel and does not intend
to do so in the foreseeable future. There can be no assurance that the Company
will be able to recruit or retain other qualified personnel should it be
necessary to do so. See "Management."
Dependence Upon Consultants. The Company has established a team of
consultants which include persons with expertise in business areas important to
the Company's operations. Various members of the Company's team of consultants
consult with the Company regarding sales, marketing and operations efforts at
the Company, but are employed elsewhere on a full-time basis. As a result, they
can only spend a limited amount of time on the Company's affairs. There can be
no assurance that the Company will be able to continue to retain the consulting
services of any of its consultants, the loss of which may be detrimental to the
Company. There is no assurance that the Company will be able to continue to
attract and retain qualified consultants necessary for the development of its
business. The failure to recruit additional scientific and technical consultants
in a timely manner, would be detrimental to the Company's research and
development programs and to its business. See "Business -- Consultants."
Shares Available for Resale. Sales of substantial numbers of shares of
Common Stock in the public market following this offering could adversely affect
the market price of the Common Stock prevailing from time to time. Upon
completion of this offering, and assuming that the maximum number of shares
offered hereby have been sold, the Company will have 2,524,000 shares of Common
Stock outstanding. All shares of Common Stock outstanding (including the 260,000
Shares sold in this offering) will be freely transferable without restriction of
further registration under the Securities Act, unless they are held by
"affiliates" of the Company within the meaning of Rule 144 promulgated under the
Securities Act as currently in effect. However, notwithstanding that all of the
Company's outstanding Common Stock may be sold by existing stockholders pursuant
to Rule 144, certain of the Company's stockholders have entered into an
agreement with the Company and the Placement Agent (the "Lock-Up Agreement")
pursuant to which such stockholders have agreed not to sell, pledge,
hypothecate, assign, grant any option for the sale of, or otherwise transfer or
dispose of, whether or not for consideration, directly or indirectly, 441,200
shares of Common Stock without the approval of the Placement Agent or without
the occurrence of certain events which are more particularly described in the
Lock-Up Agreement. Further, certain of the Company's stockholders have entered
into an agreement with the Company (the "Promotional Share Lock-In Agreement")
pursuant to which such stockholders have agreed not to sell, pledge,
hypothecate, assign or otherwise transfer or dispose of 1,750,000 shares of
Common Stock without the occurrence of certain events, which are more
particularly described in the Promotional Share Lock-In Agreement, and without
the approval of the administrators of certain state securities laws.
The Company is unable to estimate when or the number of foregoing shares
that may be sold by existing stockholders because such sales will depend upon
the market price for the Common Stock, the personal circumstances of the seller
and other factors. The future sales of Common Stock or the availability of such
shares of Common Stock for sale may have an adverse effect on the market price
of the Common Stock prevailing from time to time. If such future sales did
adversely affect the market price of the Common Stock, the Company's ability to
raise additional funds through an equity offering at such time could be
adversely affected. See "-- Absence of Public Market; Possible Volatility of
Stock Price," "Principal Stockholders" and "Shares Eligible for Future Sale."
Dependence on Trademarks and Proprietary Rights; No Assurance of
Enforceability. The Company's success will depend in part on its ability to
obtain and preserve its trademarks and to operate without infringing the
proprietary rights of third parties. There can be no assurance that any
applications related to the Company's trademarks will provide the Company with a
competitive advantage or will afford protection against competitors with
products similar to those offered by the Company, or that competitors of the
Company will not circumvent, or challenge the validity of, the Company's
trademarks. In addition, in the event that another party infringes the Company's
trademarks, the enforcement of such rights is at the option of
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<PAGE> 15
the Company and can be a lengthy and costly process, with no guarantee of
success. Finally, although to date no claims have been brought against the
Company alleging that its trademarks infringe intellectual property rights of
others, there can be no assurance that such claims will not be brought against
the Company in the future, or that any such claims will not be successful. If
such a claim were successful, the Company's business could be materially
adversely affected. In addition to any potential monetary liability for damages,
the Company could be required to obtain a license in order to continue to
provide products under its trademarks or could be enjoined from utilizing its
trademarks if such a license were not made available on acceptable terms. If the
Company becomes involved in such litigation, it may require significant Company
resources, which may materially adversely affect the Company. See
"Business -- Trademarks."
Dilution. Present stockholders of the Company acquired their shares of
Common Stock at an average cost of approximately $0.09 per share, an amount
substantially less than the $5.75 per Unit to be paid by public investors. The
Company's net tangible book value as of October 31, 1997, without giving effect
to any outstanding warrants or options of the Company, was $95,443 or $0.04 per
share and will increase to approximately $509,311, or $0.22 per share if the
minimum number of Units offered hereby is sold, and $1,344,211, or $0.53 per
share, if the maximum number of Units offered hereby is sold. The result will be
an immediate and substantial dilution of the net tangible book value of the
shares of Common Stock acquired by the public investor of $5.53 (96%) per share
if the minimum number of Units offered hereby is sold, and $5.22 (91%) per Unit
if the maximum number of Units offered hereby is sold. Public investors
therefore will bear most of the risk of loss, while control of the Company will
remain in the hands of the present management and stockholders. See "Dilution"
and "Certain Relationships and Related Transactions -- Prior Issuances of the
Company's Securities."
Escrow of Investors' Funds Pending Sale of Minimum Number of Shares
Offered. Under the terms of this offering, the Company is offering the Units on
a "95,000 Units or none, best efforts" basis. If the minimum number of Units is
sold, the remaining 165,000 Units will be offered on a "best efforts" basis
until all of the Units are sold or the offering period ends, whichever occurs
first, unless the offering is terminated earlier by the Company. Therefore, no
commitment exists by anyone to purchase all or any part of the Units offered
hereby. Consequently, there is no assurance that all of the Units offered hereby
will be sold, and subscribers' funds may be escrowed for so long as 90 days (or
a period of 180 days if the offering period is extended by the Company) and then
returned promptly with interest thereon, in the event all of the Units offered
hereby are not sold within the 90 day offering period. Investors, therefore will
not have the use of any funds paid for the purchase of the Units during the
offering period. In the event the Company is unable to sell all of the Units
offered hereby within the offering period, the offering will be withdrawn. See
"Plan of Distribution."
Directors' and Officers' Indemnification. The Company's Articles of
Incorporation and Bylaws require the Company to indemnify and hold harmless its
directors and officers from and against and in respect of certain losses,
damages, deficiencies, expenses or costs which may be incurred or suffered by
such directors and officers as a result of their serving in such capacities with
the Company. See "Certain Provisions of Florida Law and of the Company's
Articles of Incorporation and Bylaws."
Placement Agent Unit Purchase Option To Be Outstanding. Upon completion of
the offering, the Company expects to have outstanding a Placement Agent Unit
Purchase Option to purchase an aggregate of 26,000 Units. For the life of the
Placement Agent Unit Purchase Option, the holder thereof is given, at no cost
and without assuming the risk of ownership of the Common Stock, the opportunity
to profit from an increase in the market price of the Common Stock of the
Company. The existence of such Placement Agent Unit Purchase Option might
adversely affect the ability of the Company to raise equity capital on favorable
terms, and such Placement Agent Unit Purchase Option is likely to be exercised
at a time when the Company could obtain additional equity capital on more
favorable terms. See "Plan of Distribution."
Potential Adverse Effect of Redemption of Warrants. Commencing on the date
of this Prospectus, the Warrants may be redeemed by the Company at a redemption
price of $.05 per Warrant upon not less than 30 days' prior written notice if,
with respect to the Warrants, the closing bid price of the Common Stock shall
have averaged $10.00 per share or above for 30 consecutive trading days ending
within 10 days of the notice. Redemption of the Warrants could force the holders
(i) to exercise the Warrants and pay the exercise price
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therefor at a time when it may be disadvantageous for the holders to do so, (ii)
to sell the Warrants at the then current market price when they might otherwise
wish to hold the Warrants or (iii) to accept the nominal redemption price which,
at the time the Warrants are called for redemption, is likely to be
substantially less than the market value of the Warrants. See "Description of
Securities -- Warrants."
Current Prospectus and State Registration to Exercise Warrants. The holders
of the Warrants will be able to exercise the Warrants only if (i) a current
prospectus under the Securities Act relating to the shares of Common Stock
underlying the Warrants is then in effect and (ii) such shares of Common Stock
are qualified for sale or exempt from qualification under the applicable
securities laws of the states in which the various holders of Warrants reside.
Although the Company has undertaken and intends to use its best efforts to
maintain a current prospectus covering the securities underlying the Warrants
following completion of the offering to the extent required by federal
securities laws, there can be no assurance that the Company will be able to do
so. The value of the Warrants may be greatly reduced if a prospectus covering
the securities issuable upon the exercise of the Warrants is not kept current or
if the shares of Common Stock are not qualified, or exempt from qualification,
in the state in which the holders of Warrants reside. Persons holding Warrants
who reside in jurisdictions in which such shares of Common Stock are not
qualified and in which there is no exemption will be unable to exercise their
Warrants and would either have to sell their Warrants in the open market or
allow them to expire unexercised. If and when the Warrants become redeemable by
the terms thereof, the Company may exercise its redemption right even if it is
unable to qualify the underlying shares of Common Stock for sale under all
applicable state securities laws. See "Description of Securities -- Warrants."
Absence of Public Market; Possible Volatility of Price of Common
Stock. Prior to this offering, there has been no public market for any of the
shares of the Company's Common Stock, and there can be no assurance that a
trading market will develop, or if developed, that it will be developed into
something greater than a limited market. The trading price of the shares of
Common Stock could be subject to wide fluctuations in response to such factors
as, among others, variations in the Company's anticipated or actual results of
operations and market conditions in the industries in which the Company
operates.
Risks of Low-Priced Stocks; Possible Effect of "Penny Stock" Rules on
Liquidity of the Common Stock and Warrants. The Common Stock and Warrants may
become subject to certain rules and regulations promulgated by the Securities
and Exchange Commission ("Commission") pursuant to the Securities Enforcement
Remedies and Penny Stock Reform Act of 1990 (the "Penny Stock Rules") which
impose strict sales practice requirements on broker-dealers which sell such
securities to persons other than established customers and certain "accredited
investors." For transactions covered by the Penny Stock Rules, a broker-dealer
must make a special suitability determination for the purchaser and have
received the purchaser's written consent for the transaction prior to sale.
Consequently, such rule may affect the ability of broker-dealers to sell the
Common Stock and may affect the ability of purchasers in this offering to sell
any of the Common Stock and Warrants acquired hereby in the secondary market.
The Penny Stock Rules generally define a "penny stock" to be any security
not listed on an exchange or not authorized for quotation on the Nasdaq Stock
Market and has a market price (as therein defined) less than $5.00 per share or
an exercise price of less than $5.00 per share, subject to certain exceptions.
For any transactions by broker-dealers involving a penny stock (unless exempt),
the rules require delivery, prior to a transaction in a penny stock, of a risk
disclosure document relating to the market for the penny stocks. Disclosure is
also required to be made about compensation payable to both the broker-dealer
and the registered representative and current quotations for the securities.
Finally, monthly statements are required to be sent disclosing recent price
information for the penny stocks.
The foregoing penny stock restrictions will not apply to the Company's
securities if such securities are listed on an exchange or quoted on the Nasdaq
Stock Market and have certain price and volume information provided on a current
and continuing basis or if the Company meets certain minimum net tangible asset
or average revenue criteria. There can be no assurance that the Company's
securities will qualify for exemption from the Penny Stock Rules. In any event,
even if the Company's securities were exempt from the Penny Stock Rules, they
would remain subject to Section 15(b)(6) of the Securities Exchange Act of 1934,
as
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amended (the "Exchange Act"), which gives the Commission the authority to
prohibit any person that is engaged in unlawful conduct while participating in a
distribution of a penny stock from associating with a broker-dealer or
participating in a distribution of a penny stock, if the Commission finds that
such a restriction would be in the public interest. If the Company's securities
were subject to the rules on penny stocks, the market liquidity for the
Company's securities could be severely adversely affected.
Discretion of Management and the Board of Directors in Use of
Proceeds. Although the Company intends to apply the net proceeds of this
offering in the manner described under "Use of Proceeds," the Company's
management and the Board of Directors have broad discretion within such proposed
uses as to the precise allocation of the net proceeds, the timing of
expenditures and all other aspects of the use thereof. The Company reserves the
right to reallocate the net proceeds of this offering among the various
categories set forth under "Use of Proceeds" as it, in its sole discretion,
deems necessary or advisable based upon prevailing business conditions and
circumstances. See "Use of Proceeds."
Lack of a Majority of Independent Directors. Upon completion of the
offering of the Units, the Company's board of directors will have only one
independent director. As such, upon completion of the offering of the Units, the
majority of the Company's directors will be either officers of the Company,
persons related to the officers of the Company, or persons who provide
consulting or advisory services to the Company in exchange for remuneration. See
"Management."
Experience of Management. Potential purchasers of the Units should be aware
that management of the Company does not have any experience operating a company
which has as its primary business, the importation and distribution of alcoholic
beverage products. Accordingly, management is required to retain knowledgeable
and experienced employees and consultants in the operations of the Company's
business. There can be no assurance that the Company will be able to retain its
current employees and/or consultants, or that it will be able to recruit
knowledgeable and experienced employees and consultants in the future should it
be necessary to do so.
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THE COMPANY
The Company is a development stage corporation which was formed to
participate in specific niche segments of the approximate $100 billion United
States alcoholic beverage market by acting as an importer and wholesale supplier
of a variety of beers, wines and spirits. Through its Red Dragon beer brands,
the Company intends to expand the United States market for Chinese beer imports.
The Company believes that the United States market for Chinese beer imports is
approximately $125,000,000 annually, although absolutely no assurance to this
effect can be given. Currently, the only significant brand of Chinese beer being
marketed and sold in the United States is a regular beer produced by Tsingtao,
and sold under the brand name of "Tsingtao Beer".
The Company intends to utilize its portfolio of wines to exploit the large
United States domestic wine market. According to Beverage World Magazine, in
1995, Americans consumed approximately 470.8 million gallons of wine. The
Company believes that wine imports consists of approximately 72.5 million
gallons and account for approximately 16% of total United States wine
consumption.
With its La Belle Sandrine brand, the Company intends to compete in the
growing market for prepared cocktail beverages. La Belle Sandrine is an all
natural, citrus based, prepared cocktail containing the spirit armagnac.
Currently, this niche market has approximately 30 different brands (such as Jose
Cuervo Margaritas and Khalua Combos). Because of the composition of La Belle
Sandrine, the Company believes that La Belle Sandrine will compete primarily
with a prepared cocktail which sells under the brand name of "Alize".
Statistical information available to the Company indicates that Alize has
increased its sales from 20,000 cases in 1991 to 430,000 cases in 1996,
resulting in total 1996 sales of approximately $37,000,000.
The Company's strategy is to become a leading importer, developer, manager
and distributor of a portfolio of brands of beer, wine and spirits which serve
specific niche alcoholic beverage markets. Key elements of the Company's
strategy include:
Continuous Development of Value-Added and Branded Business. The
Company intends to develop and build its business as a value-added and
branded business through careful selection of distribution channels,
continued development of niche products with volume potential and
aggressive marketing programs. The Company expects to devote significant
financial resources to innovative selling, advertising and promotional
activities designed to build brand awareness and a high level of consumer
loyalty for its products. The Company plans to focus its selling,
advertising and promotional activities on peak selling periods for its
beer, wine and spirit products. Through participation in trade shows and
other alcoholic beverage industry events, the Company will seek to educate
distributors, retailers and consumers about the Company's products.
Development and Expansion of Distribution Network. The Company's
strategy is to expand market share in key markets of the United States by
developing initially a regional distribution network, and thereafter a
national distribution network, to increase retail account distribution. The
Company believes that as it is able to extend its product line, it will be
able to leverage its distribution network by increasing the number of
products that the Company is able to move through its distribution network,
thereby allowing the Company to realize certain operating efficiencies and
product cost reductions. The Company expects to invest significant
resources to educate distributors and retailers about promoting and selling
the Company's products. The Company further expects to choose distributors
in each market that will devote significant attention and resources to the
promotion and sale of the Company's products.
Focus on Product Development and Diversity. The Company intends to
continue to expand its product line with additional beer, wine and spirit
products designed to appeal to varying consumer preferences. The Company
has a "volume-niche" strategy where development efforts are focused on
niche products which have sufficient volume to provide distribution
efficiency. The Company intends to pursue this strategy through strategic
alliances and/or acquisitions of producers and other importers and
distributors of alcoholic beverage products.
The Company was incorporated in Florida on February 12, 1996. On June 29,
1996 the Company formed Cuidao (USA) Import Co., Inc., a Florida corporation. On
March 31, 1997, the Company acquired R&R
16
<PAGE> 19
(Bordeaux) Imports, Inc., a Florida corporation. Both Cuidao (USA) Import Co.,
Inc. and R&R (Bordeaux) Imports, Inc., are wholly-owned subsidiaries of the
Company. Unless the context requires otherwise, all references to the Company
include Cuidao (USA) Import Co., Inc. and R&R (Bordeaux) Imports, Inc.
The Company's principal executive offices are located at 3201 West Griffin
Road, Suite 204, Ft. Lauderdale, Florida 33312-6900 and its telephone number is
(954) 964-1060.
USE OF PROCEEDS
The net proceeds to the Company from the sale of Units (after deducting
Placement Agent commissions and offering expenses) are estimated to be
approximately $413,868 if the minimum number of 95,000 Units is sold and
$1,248,768 if the maximum number of 260,000 Units is sold. The following table
sets forth the estimated application by the Company of the net proceeds to be
derived from the sale of Units offered hereby.
<TABLE>
<CAPTION>
MINIMUM OFFERING MAXIMUM OFFERING
AMOUNT, 95,000 PERCENTAGE OF AMOUNT, 260,000 PERCENTAGE OF
USE OF PROCEEDS UNITS NET PROCEEDS UNITS NET PROCEEDS
- ------------------------------------ ---------------- ------------- ---------------- -------------
<S> <C> <C> <C> <C>
To purchase products(1)............. $290,000 70% $ 874,000 70%
To advertise and market(2).......... 83,000 20% 250,000 20%
To provide general working
capital(3)........................ 40,868 10% 124,768 10%
-------- --- ---------- ---
Total Net Proceeds............. $413,868 100% $1,248,768 100%
======== === ========== ===
</TABLE>
- ---------------
(1) Represents funds to be used to make payments to the producers of alcoholic
beverage products which the Company expects to import and distribute, and
includes letter of credit funding and the payment of expenses related
thereto. See "Business" and "Certain Relationships and Related
Transactions -- Certain Material Contracts."
(2) Represents funds required to implement the Company's sales and marketing
programs. This will include the retention of independent advertising and
marketing firms, attendance at trade shows, and the preparation of
promotional materials. See "Business -- Sales, Marketing and Distribution."
(3) Represents funds which will support the basic operations of the Company,
including but not limited to funds for office rent, utilities and
miscellaneous expenses.
Pending the expenditure of the proceeds of this offering, the Company may
make temporary investments in insured certificates of deposit, insured
short-term interest-bearing deposits, United States Government obligations or
insured money market certificates.
DIVIDEND POLICY
The Company has never paid or declared any cash dividends on its Common
Stock and does not intend to pay dividends on its Common Stock in the
foreseeable future. The Company presently expects to retain its earnings to
finance the development and expansion of its business. The payment by the
Company of dividends, if any, on its Common Stock in the future is subject to
the discretion of the Board of Directors and will depend on the Company's
earnings, financial condition, capital requirements and other relevant factors.
See "Description of Securities."
DILUTION
As of October 31, 1997, there were 2,226,000 shares of Common Stock
outstanding having a net tangible book value of $95,443 or approximately $0.04
per share. Net tangible book value per share is the net tangible assets of the
Company (total assets less total liabilities and intangible assets) divided by
the number of shares of Common Stock outstanding. Upon completion of this
offering, there will be 2,359,000 shares of the Company's Common Stock
outstanding having a net tangible book value of approximately $509,311 or
approximately $0.22 per share if the minimum number of Units is sold; and
2,524,000 shares of the Company's Common Stock outstanding having a net tangible
book value of approximately $1,344,211 or approximately $0.53 per share if the
maximum number of Units is sold. The net tangible book value of each
17
<PAGE> 20
share will have increased by approximately $0.18 per share to present
stockholders, and decreased by approximately $5.53 per share (a dilution of 96%)
to public investors if the minimum number of Units is sold, and the net tangible
book value of each share will have increased by approximately $0.49 per share to
the present stockholders and decreased by approximately $5.22 per share (a
dilution of 91%) to public investors if the maximum number of Units is sold.
Dilution represents the difference between the aggregate offering price of
the Units herein and the pro forma net tangible book value per share of Common
Stock of the Company immediately after the completion of the offering of the
Units. Dilution of the value of the Units purchased by investors in this
offering will also be due, in part, to the lower book value of the shares of
Common Stock presently outstanding, and in part, to expenses incurred in
connection with the offering of the Units. The following table illustrates this
dilution:
ASSUMING MINIMUM NUMBER OF UNITS SOLD
<TABLE>
<S> <C>
Public offering price per share(1)................................. $5.75
Net tangible book value per share before offering................ $0.04
Increase per share attributable to payment by investors in this
offering...................................................... $0.18
-----
Pro forma net tangible book value per share, after offering........ $0.22
-----
Dilution per share to new investors................................ $5.53
=====
</TABLE>
- ---------------
(1) Before deduction of underwriting commissions and expenses payable by the
Company. This figure does not assign any value to the Warrants included in
the Units.
ASSUMING MAXIMUM NUMBER OF UNITS SOLD
<TABLE>
<S> <C>
Public offering price per share(1)................................... $5.75
Net tangible book value per share before offering.................. $0.04
Increase per share attributable to payment by investors in this
offering........................................................ $0.49
-----
Net tangible book value per share after offering................... $0.53
-----
Dilution per share to new investors.................................. $5.22
=====
</TABLE>
- ---------------
(1) Before deduction of underwriting commissions and expenses payable by the
Company. This figure does not assign any value to the Warrants included in
the Units.
The following tables set forth the percentage of equity to be purchased by
public investors in this offering compared to the percentage of equity to be
owned by the present stockholders, and the comparative amounts paid for the
shares of Common Stock by public investors as compared to the total cash
consideration paid by the present stockholders of the Company.
ASSUMING THE MINIMUM NUMBER OF UNITS SOLD
<TABLE>
<CAPTION>
TOTAL
SHARES OF PURCHASED CONSIDERATION
-------------------- ------------------ AVERAGE PRICE
NUMBER PERCENT AMOUNT PERCENT PAID PER SHARE(1)
---------- ------- -------- ------- -----------------
<S> <C> <C> <C> <C> <C>
Existing Stockholders................ 2,264,000 96% $210,754 29% $0.09
New Investors........................ 95,000 4% $546,250 71% $5.75
--------- --- -------- ---
TOTAL...................... 2,359,000 100% $757,004 100%
========= === ======== ===
</TABLE>
- ---------------
(1) Based on the average value per share paid by existing stockholders to the
Company and a public offering price of $5.75 per share of Common Stock paid
by new investors.
18
<PAGE> 21
ASSUMING THE MAXIMUM NUMBER OF UNITS SOLD
<TABLE>
<CAPTION>
SHARES PURCHASED TOTAL CONSIDERATION
--------------------- ---------------------- AVERAGE PRICE
NUMBER PERCENT AMOUNT PERCENT PAID PER SHARE(1)
--------- ------- ---------- ------- -----------------
<S> <C> <C> <C> <C> <C>
Existing Stockholders.......... 2,264,000 90% $ 210,754 12% $0.09
New Investors.................. 260,000 10% $1,495,000 88% $5.75
--------- --- ---------- ---
TOTAL................ 2,524,000 100% $1,705,754 100%
========= === ========== ===
</TABLE>
- ---------------
(1) Based on the average value per share paid by existing stockholders to the
Company and a public offering price of $5.75 per share of Common Stock paid
by new investors.
The Company has reserved an aggregate of 1,000,000 shares of its Common
Stock for its officers, directors, employees and consultants to purchase
pursuant to its Stock Option Plans. As of the date of this Prospectus, the
Company has not issued any options pursuant to the terms of its Stock Option
Plans. The above paragraph does not give effect to the possible issuance of up
to 1,000,000 additional shares of the Company's Common Stock upon exercise of
any options which have been, or may yet be, granted under the Stock Option
Plans. The issuance of shares of the Company's Common Stock upon the exercise of
options which may be granted under the Stock Option Plans would result in
further dilution in the interests of stockholders if at the time of exercise,
the Company's net tangible book value per share is greater than the exercise
price of any such options. See "Stock Option Plans."
19
<PAGE> 22
CAPITALIZATION
The following tables set forth at October 31, 1997 (i) the actual
capitalization of the Company and (ii) the capitalization as adjusted to reflect
the sale of the minimum and the maximum number of Units offered hereby (based
upon an initial public offering price of $5.75 per Unit and the application of
the net proceeds therefrom). The table should be read in conjunction with the
Financial Statements and Notes thereto included elsewhere in this Prospectus.
ASSUMES MINIMUM NUMBER OF UNITS SOLD
<TABLE>
<CAPTION>
OCTOBER 31, 1997
------------------------------
ACTUAL (1) AS ADJUSTED (2)
---------- ---------------
(UNAUDITED)
<S> <C> <C>
Stockholders' equity (deficit):
Common Stock, $.0001 par value, 100,000,000 shares authorized;
2,226,000 shares outstanding; 2,359,000 outstanding as
adjusted pro forma (2)..................................... $ 223 $ 236
Additional paid-in-capital.................................... 58,484 624,613
Preferred Stock, $.0001 par value, 10,000,000 shares
authorized; Series A Preferred Stock outstanding........... 4 0
Additional paid-in-capital or Series A Preferred Stock........ 152,270 0
Accumulated deficit in development stage........................ (115,538) (115,538)
------- -------
Total stockholders' equity................................. 95,443 509,311
------- -------
Total capitalization.................................. $ 95,443 $ 509,311
======= =======
</TABLE>
- ---------------
(1) Derived from the Financial Statements of the Company included elsewhere in
this Prospectus.
(2) As adjusted to reflect the sale of the minimum number of Units offered
hereby and the application of the net proceeds set forth in "Use of
Proceeds."
ASSUMES MAXIMUM NUMBER OF UNITS SOLD
<TABLE>
<CAPTION>
OCTOBER 31, 1997
----------------------------
ACTUAL(1) AS ADJUSTED(2)
--------- --------------
(UNAUDITED)
<S> <C> <C>
Stockholders' equity (deficit):
Common Stock, $.0001 par value, 100,000,000 shares authorized;
2,226,000 shares outstanding; 2,524,000 outstanding as
adjusted pro forma(2)........................................ $ 223 $ 252
Additional paid-in-capital...................................... 58,484 1,459,497
Preferred Stock, $.0001 par value, 10,000,000 shares authorized;
Series A Preferred Stock outstanding......................... 4 0
Additional paid-in-capital or Series A Preferred Stock.......... 152,270 0
Accumulated deficit in development stage.......................... (115,538) (115,538)
--------- ----------
Total stockholders' equity................................... 95,443 1,344,211
--------- ----------
Total capitalization.................................... $ 95,443 $1,344,211
========= ==========
</TABLE>
- ---------------
(1) Derived from the Financial Statements of the Company included elsewhere in
this Prospectus.
(2) As adjusted to reflect the sale of the maximum number of Units offered
hereby and the application of the net proceeds set forth in "Use of
Proceeds."
20
<PAGE> 23
SELECTED FINANCIAL DATA
The statement of operations and balance sheet information set forth below
as of December 31, 1996 and for the year ended December 31, 1996, are derived
from, and are qualified by reference to, the financial statements of the Company
which have been audited by Baum & Company, P.A., independent certified public
accountants. The financial statements as of December 31, 1996, and the report
thereon, are included elsewhere in this Prospectus. The selected data for the
ten months ended October 31, 1997 are derived from the unaudited financial
statements of the Company, and in the opinion of management, all adjustments,
consisting of normal recurring adjustments, necessary for a fair presentation of
such data have been included. The information below should be read in
conjunction with the consolidated Financial Statements and Notes thereto
included in this Prospectus. The Company's historical operating results are not
necessarily indicative of the results of any future period.
<TABLE>
<CAPTION>
FEBRUARY 12, 1996
(DATE OF INCEPTION) TO TEN MONTHS ENDED
DECEMBER 31, 1996 OCTOBER 31, 1997
---------------------- ----------------
<S> <C> <C>
STATEMENTS OF OPERATIONS DATA:
Revenues................................................. $ 192 $ 149
Operating expenses....................................... (21,715) (94,164)
Operating income (loss).................................. (21,523) (94,015)
Weighted average number of shares of common stock and
common stock equivalents outstanding.................. 1,833,600 2,035,960
BALANCE SHEET DATA:
Working capital (deficit)................................ $ 10,506 $ 59,035
Total assets............................................. 38,344 96,236
Stockholders' equity (deficit)........................... 37,157 95,443
</TABLE>
21
<PAGE> 24
PLAN OF OPERATION
During the 12 month period beginning immediately after completion of the
sale of the minimum number of Units offered hereby, the Company intends to carry
out three principal objectives:
(1) aggressively manage and market its current portfolio of beer,
wines and spirits in specific niche markets of the overall alcoholic
beverage industry;
(2) expand its management and administrative personnel to support its
alcoholic beverage product lines; and
(3) expand its product line and distribution channels through
strategic alliances and/or through the acquisition of other importers and
distributors of alcoholic beverage products or through the acquisition of
producers of alcoholic beverage products.
MARKETING OF PRODUCTS
With its Red Dragon beer brands, the Company intends to expand the Chinese
beer segment of the overall Asian beer import market. Presently, the Asian beer
import market has approximately five major brands which include Tsingtao,
Sapporo and Kirin. The Company's plans are to become a leading supplier of
Chinese brand beer in the North American market by expanding the product line of
Tsingtao, which is the predominant Chinese beer product sold in North America.
The Company's marketing strategy for its line of Chinese beer will be to
first introduce its Red Dragon product line to Asian-theme restaurants
(primarily Chinese restaurants), stressing the fact that the Company's line of
Chinese beer products will provide the restauranteur with a product that he or
she currently does not have, which is a diversified (light, amber, draft)
Chinese beer line. Thereafter, the Company will seek to introduce its Red Dragon
beer products to Asian-related specialty markets. Eventually, the Company plans
to introduce its Red Dragon beer brands to retailers who specialize in marketing
and selling imported beers. These vendors will primarily consist of ale houses
and specialty liquor stores that sell a variety of imported beers.
To market its Red Dragon beer products, the Company has developed, and will
institute, a variety of advertising and marketing programs designed to create
consumer awareness for its beer products and to establish brand identification.
The Company plans to conduct on-premise promotions, which will include the use
of posters and wall and daily scheduling calendars which prominently display the
Company's Red Dragon beer products at the site of retail sale of the Company's
beer products. Where legal, the Company will conduct product tasting seminars
with restaurant staff and consumers. In addition, the Company intends to utilize
a variety of restaurant table top "tent" displays featuring its beer products
and its monthly promotions. As the Company's Red Dragon products are gradually
introduced into the mainstream retail market, the Company will integrate a
giveaway merchandise program with T-Shirts and baseball caps featuring the
Company's Red Dragon trademarked logo. The Company's merchandise program will be
specifically designed to develop brand identification.
The Company anticipates that approximately $20,000 of the net proceeds
raised from the minimum offering of Units hereunder, and $50,000 of the net
proceeds raised from the maximum offering of Units hereby will be allocated for
the initial marketing of its Red Dragon beer products.
With its wine products, the Company's objective will be to successfully
introduce a profitable line of imported wines into the $12.1 billion retail wine
market. The Company's marketing and sales strategy with respect to its wine
products will be to provide the off-premise merchandise market with quality
products at a reasonable cost to the retailer and the consumer. In the marketing
of its wine products, the Company will focus on the consumer fascination with
imported wines and their image. The Company's wine marketing approach will
combine the positive image of French wines with an appealing retail price (the
Company's wine product line is anticipated to retail in the $5.00-$10.00 range
per 750 ml bottle) so as to communicate to the consumer that the Company's wine
products have an attractive price to quality value. Management believes that
retailers and consumers of wine products make their purchasing decisions based
on an identifiable and favorable price to quality value quotient.
22
<PAGE> 25
The Company will distribute its wine products through agents that deal
directly with high volume off-premise accounts. Although the Company believes
that the high volume off-premise account market does not engage in heavy
advertising as a form of marketing (this market relies on providing distributors
and retailers value and an opportunity to realize reasonable profit margins as
its primary form of marketing strategy), it is the Company's plan to participate
in at least three major restaurant/hotel trade shows during the first 12 months
after completion of the sale of the minimum number of Units offered hereby, and
it is the Company's plan to design incentive programs for distributor personnel
which will have as its main focus the placement of products with off-premise
accounts.
Since the Company believes that its primary marketing strategy for its wine
products will be providing distributors and retailers with value and an
opportunity to realize reasonable profit margins, the Company does not expect to
use any of the net proceeds raised from the offering of the Units toward the
marketing of its wine products.
The Company's premier spirits product, La Belle Sandrine, will initially be
introduced in warm climate areas, and thereafter in seasonal climate areas as
appropriate. The Company's marketing strategy for its La Belle Sandrine product
will be to drive growth for this product using advertising that focuses on the
unique tropical related properties of the product (the combination of passion
fruit juice and armagnac).
The Company's marketing strategy for its La Belle Sandrine product will
initially concentrate on on-premise promotions, followed by a variety of
off-premise programs. The Company intends to utilize on-premise visuals which
show the various ways in which La Belle Sandrine can be mixed and used. The
Company's off-premise promotions will include the producing and packaging with
products sold, a cook book featuring a variety of seafood and poultry items
prepared with La Belle Sandrine as a sauce.
The Company anticipates that approximately $63,000 of the net proceeds
raised from the minimum offering of Units hereunder, and $200,000 of the net
proceeds raised from the maximum offering of Units hereby will be allocated for
the marketing of La Belle Sandrine.
EXPANSION OF MANAGEMENT AND ADMINISTRATIVE PERSONNEL
The Company currently has five employees and three consultants. Assuming
that product acceptance, sales and revenue growth justify such, the Company
anticipates employing an additional four persons by the end of the first quarter
of 1999. It is further anticipated that one of these persons will be an
executive officer of the Company responsible for certain aspects of sales and
marketing and three persons will be in corporate administration.
As a result of the foregoing, it is expected that annual employee
compensation will increase during the 12 month period commencing immediately
after the completion of the sale of the minimum number of Units offered hereby
from approximately $52,000 to approximately $265,000.
EXPANSION OF PRODUCT LINES AND DISTRIBUTION CHANNELS
The Company plans to expand the number of alcoholic beverage products under
its management, as well as increase the number of distribution channels for its
products. At the foundation of the Company's plans for expansion of its product
lines and distribution channels is the acquisition of other importers and/or
distributors of alcoholic beverage products.
In its acquisition planning, the Company will look to acquire other
importers and/or distributors of alcoholic beverage products who own, or have
exclusive rights to, niche alcoholic beverage products which can be sold to
volume purchasers and which have the potential to be branded. In addition to
adding entirely new product lines, acquisitions are expected to be beneficial in
adding new customers and distribution channels, and improving operating
efficiencies of the Company through shared resources and regional facilities and
the creation of critical mass in product offerings.
The Company believes that the importation and/or distribution of alcoholic
beverage products in the United States is a highly fragmented industry populated
by numerous single product, or niche product,
23
<PAGE> 26
importers and distributors. As a result, the Company believes that opportunities
exist for the Company to expand its product offerings and distribution channels,
and to increase its operating efficiencies through the acquisition of other
importers and/or distributors of alcoholic beverage products.
The Company has no present commitments or agreements and is not currently
involved in any negotiations with respect to any acquisitions. The Company has
not specifically determined the amount it will be required to expend on any
future acquisition or the timing of the expenditure. The amount actually
expended, if any, is at the discretion of the Company and may depend upon a
number of factors including future revenue growth and the amount of cash
generated by the Company's operations.
24
<PAGE> 27
BUSINESS
OVERVIEW
The Company is a development stage corporation which was formed to
participate in specific niche segments of the approximate $100 billion United
States alcoholic beverage market by acting as a supplier of a variety of beers,
wines and spirits. Through its Red Dragon beer brands, the Company intends to
expand the United States market for Chinese beer imports. The Company believes
that the United States market for Chinese beer imports is approximately
$125,000,000 annually. Currently, the only significant brand of Chinese beer
being marketed and sold in the United States is a regular beer produced by
Tsingtao, and sold under the brand name of "Tsingtao Beer".
The Company intends to utilize its portfolio of wines to exploit the large
United States domestic wine market. According to Beverage World Magazine, in
1995, Americans consumed approximately 470.8 million gallons of wine. The
Company believes that wine imports consists of approximately 72.5 million
gallons and account for approximately 16% of total United States wine
consumption.
With its La Belle Sandrine brand, the Company intends to compete in the
growing market for prepared cocktail beverages. La Belle Sandrine is an all
natural, citrus based, prepared cocktail containing the spirit armagnac.
Currently, this niche market has approximately 30 different brands (such as Jose
Cuervo Margaritas and Khalua Combos). Because of the composition of La Belle
Sandrine, the Company believes that La Belle Sandrine will compete primarily
with a prepared cocktail which sells under the brand name of "Alize".
Statistical information available to the Company indicates that Alize has
increased its sales from 20,000 cases in 1991 to 430,000 cases in 1996,
resulting in total 1996 sales of approximately $37,000,000.
The Company's strategy is to become a leading importer, developer, manager
and distributor of a portfolio of brands of beer, wines and spirits which serve
specific niche alcoholic beverage markets. Key elements of the Company's
strategy include: making selective product acquisitions in the alcoholic
beverage industry to expand its product portfolio; improving market position and
capitalizing on growth trends within the industry; improving operating
efficiencies through reduced product and organizational costs; capitalizing and
improving on strong alliance and wholesaler relationships; developing brand
identification for its portfolio of products; expanding distribution into new
markets and increasing penetration of existing markets primarily through product
line extensions, promotional activities and through the acquisition of producers
and other importers and distributors of alcoholic beverage products.
The Company was incorporated in Florida on February 12, 1996. On June 29,
1996 the Company formed Cuidao (USA) Import Co., Inc., a Florida corporation. On
March 31, 1997, the Company acquired R&R (Bordeaux) Imports, Inc., a Florida
corporation. Both Cuidao (USA) Import Co., Inc. and R&R (Bordeaux) Imports,
Inc., are wholly-owned subsidiaries of the Company. Unless the context requires
otherwise, all references to the Company include Cuidao (USA) Import Co., Inc.
and R&R (Bordeaux) Imports, Inc.
INDUSTRY BACKGROUND
Beer Industry
Beer has the largest share of the United States alcoholic beverage market
with a total of 5.8 billion gallons of beer being sold in the United States in
1995. Beer owns 87.9% of the consumed alcohol industry in the United States.
Demographic information shows that 61% of beer drinkers are men, with the 25 to
34 and 45 to 55 age brackets being the most likely to drink beer. Beer continues
to attract consumer attention through the introduction of new styles and types,
such as ice beer and specialty brew.
According to the Adams-Jacobson Handbook (1996 edition), imported beer in
1996 continued a three year growth pattern with a 7.4% increase in sales over
the previous year, and resulting in a 6% share of the United States beer market.
As Americans continue to beer surf and experiment, import sales have increased.
Importers are continuing to look for new ways to expand their core business, and
are implementing new strategies such as product line extensions.
25
<PAGE> 28
The leading import sales in cases, comparing 1995 to 1996 are as follows
(in millions):
<TABLE>
<CAPTION>
1995 1996
----- -----
<S> <C> <C>
Heineken............................................. 34 38
Corona Extra......................................... 21 28.4
Molson Ice........................................... 11 10
Total Imported Beer.................................. 155.2 172.2
</TABLE>
Asian produced beers fared relatively well in 1996 as traffic at Asian
theme restaurants (the prime sites for Asian beer sales) improved. Asahi, Kirin
and Sapporo, all Japanese brands, and Tsingtao, the predominant Chinese brand,
continue to lead in the Asian beer market.
The Company estimates that the United States market for Chinese beer is in
excess of 4,000,000 cases annually. The primary venue for Chinese beer sales in
the United States is the Chinese restaurant. According to the 1992 Census of
Retail Trade, there are over 22,000 Chinese restaurants in the United States,
with major cities having the largest share of them.
The only Chinese beer sold in all 50 states of the United States is
Tsingtao Beer. Tsingtao Beer sells in excess of 1,000,000 cases per annum.
Tsingtao Beer is almost exclusively marketed and sold in Chinese restaurants.
Unlike the Japanese brewers who have found tremendous success selling a varied
product line, Tsingtao has traditionally chosen to sell only one brand. In
response to this lack of product diversification, many of Tsingtao's Chinese
restaurant buyers have been forced to carry other brands of Asian and European
beers to satisfy their customer's demands for product diversity. The Company
believes that Tsingtao's historical decision not to extend its beer product line
has severely limited the sales potential of Tsingtao in the United States.
Wine Industry
The United States wine industry consists of the domestic and foreign (most
notably French and Italian) production of three basic wine groups. These groups
are table wines (wines consumed with a meal), dessert wines (usually sweet wines
consumed after a meal) and sparkling wines (champagnes). Table wines account for
more than 80% of the total United States wine market.
Table wines which retail for more than $3.00 per 750 ml (milliliter) bottle
are generally referred to as "premium wines". There are three segments within
the premium wine market. These segments are the "popular premium" wines which
retail between $3.00 and $7.00 per 750 ml bottle, "super premium" wines which
retail between $7.00 and $14.00 per 750 ml bottle and "ultra premium" wines
which retail over $14.00 per 750 ml bottle.
Champagnes are the most famous wines in the world. Born in the province of
Champagne, in northeastern France, it is the only one of the world's hundred of
sparkling wines that rightly bears the name Champagne.
In 1996, shipments of champagne from France set a record of 95 million
bottles. The United States alone imported over 13 million bottles of champagne
from France in 1996. The United States was the third largest importer of
champagne in the world in 1996, trailing only the United Kingdom and Germany.
Since 1993, the overall United States wine market has enjoyed four
consecutive growth years posting a 2.3% growth between 1995 and 1996. In 1995,
wine imports climbed to 72.5 million gallons and accounted for 15.7% of total
wine sales. Import wines share of the United States wine market varies widely
among different states, with shares generally higher in the East and lower in
the West. In 1996, imports accounted for 23.8% of wine sales in New York and
19.4% of wine sales in Florida, but only 9.2% of wine sales in California. The
1996 figures surged by 5.7 million cases, up 19% from 1995, mainly because of
huge gains by European wines and products from Chile, Brazil, Argentina and
Australia. European table wines sported relatively high growth in 1996 with
Italy at 15% of the import market, France at 18% of the import market and Spain
at 15% of the import market leading the way.
26
<PAGE> 29
The Company believes that Americans now consume more table wine for a
number of reasons including favorable news about the health benefits of red
wine, favorable new United States dietary guidelines, new packaging and a strong
economy.
Spirits Industry
Spirits are essentially all alcoholic beverages other than beer or wine.
Spirits are created through the process of distilling, which reduces water
content and greatly increases the alcohol strength of an alcoholic beverage.
Where beers on average have an alcohol content ranging from 2% to 8% and wines
have an alcohol content ranging from 8% to 14%, distilled spirits are usually in
the range of 35% alcohol content, although individual products may be higher or
lower.
Buoyed by a strong economy, sales of distilled spirits reversed a 15-year
record of decline, with volume rising 0.3 percent in 1996 to 135 million
nine-liter cases, according to Impact Databank.
One category of spirits is the prepared cocktail. Prepared cocktails as a
whole were up in 1996 by more than 11% as compared to 1995, and were led by
Heublein's TGI Friday's line. The TGI Friday's brand had a strong year in 1996,
with a 68% sales gain over 1995 to reach more than 1.1 million 9-liter cases
sold. The brand has had an annual compound growth rate of more than 100% since
1992. Alize, the cognac and passion fruit prepared cocktail distributed by
Kobrand Corporation, had 1996 sales of 430,000 9-liter cases, more than tripling
its sales since 1994.
PRODUCTS
Beer Products
The Company's beer products currently consist of three crafted brews from
the Tsingtao Brewery No. 3 in the People's Republic of China. These three
products are Red Dragon Draft, Red Dragon Light and Red Dragon Amber.
The Tsingtao Brewery No. 3 is located at the foot of the Tin Zhu Mountains
in Shangdong Province. In producing its beer products, the brewery utilizes a
unique patented process which is designed to eliminate all impurities from the
water used in the brewing process, thus creating a beer which tastes pure, and
is clear. The brewing process utilized by the Tsingtao Brewery No. 3 has earned
the brewery a number of national quality awards in China such as the Medal of
Most Popular with Consumers, the Medal of Beer Trusted by Consumers (issued in
the First Light Industry Fair), the title of Qingdao High Quality Product, and
the title of National Ten Best Stars. The quality awards earned by the brewery
are presented in Beijing to less than two percent of the more than 800 breweries
operating in the People's Republic of China.
Tsingtao , the owner and operator of Tsingtao Brewery No. 3 is China's most
famous beer producer. Its regular beer product, "Tsingtao Beer", is the number
one Chinese Beer imported in the United States and ranks among the top 25
imported beers (out of over 600 brands) in the United States. Tsingtao Beer is
also the number one branded consumer product exported from China. Since 1986,
Tsingtao Beer has sold approximately 1,000,000 cases annually in the United
States. Tsingtao Beer is served in more than 90% of all Chinese restaurants in
the United States. It is the only Chinese beer available in all fifty states of
the United States. Tsingtao Beer was awarded a gold medal for its superior taste
and quality by a panel of highly acclaimed chefs belonging to Chefs in America,
a prestigious culinary association.
With its newly crafted Red Dragon brands, the Company intends to further
expand the growing market for Asian beer imports, and specifically, the market
for Chinese beer imports.
Wine Products
The Company is a supplier of a diverse line of popular premium and super
premium varietal wines produced in the Bordeaux region of France. The Company's
wines are procured from five different French wine producers. These producers
are Les Vignerons De Buzet, Armadis, SICA-Les Chais Du Prevot, Cave Vignoble
Gursonnais and Godet Freres.
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<PAGE> 30
Les Vignerons De Buzet ("Buzet") is the second largest exporter of "co-op"
wines in France, shipping over 3,000,000 bottles worldwide and selling an
additional 3,500,000 bottles to restaurants within France. Buzet offers a
diverse line of premium table wines under three different labels. These labels
are Renaissance, Excellance and Instant Nature, with each label providing
premium red, white and rose flavors.
The Buzet Red Renaissance is made from Merlot, with the addition of
Cabernet Sauvignon, and has a distinctive character. The Buzet White
Renaissanceis made principally from Semillion, Sauvignon and Muscatel, and has a
floral, fruity aroma. The Buzet Rose Renaissance is made from a harmonious blend
of Merlot and Cabernet and is supple and fruity.
The Company expects that its Buzet Renaissance and Excellance lines will be
sold to consumers at prices between $5.50 and $8.00 per 750 ml bottle.
Buzet Instant Nature lines will consist of Red Instant Nature and White
Instant Nature. The Instant Nature lines are unique in that their labels have
various wildlife scenes depicting what foods these wines are best to be consumed
with.
Armadis provides the Company with a variety of labels which will be
marketed and sold to the United States consumer. The relatively low priced
popular premium labels of Bordeaux Rouge, Bordeaux Blanc Dry and Bordeaux Blanc
Sweet are expected to retail in the $6.00 per 750 ml bottle range. The super
premium premier line of Premieres Cotes de Bergerac in Blanc Molleux,
Monbazellas, Sauternes and Medoc will retail from $9.00 to $15.00 per 750 ml
bottle. Also falling into this range will be the Armadis Montagne St. Emilion
and Graves Rouge.
SICA-Les Ches Du Prevot provides the Company with the popular premium wines
of Entre Duex Mers, Bordeaux Blanc, Bordeaux Rouge and Bordeaux Superieur. Entre
Duex Mers is a dry wine containing 70% Semillion, 20% Sauvignon and 10%
Muscatel. The Sauvignon and the Muscatel bring floral aromas to the wine and the
Semillion gives it a fruity taste. The Bordeaux Blanc is 100% Sauvignon with a
prevailing floral aroma and a fruity (orange family) taste. The Bordeaux Rouge
is 50% Merlot, 40% Cabernet Franc and 10% Cabernet Sauvignon, and has a harmony
and fineness which enable it to be tasted in its youth. The Bordeaux Superieur
is 30% Merlot, 30% Sauvignon and 40% Cabernet Franc, and has a dark purple
color, intense aromas and a fruity taste. All of the SICA-Les Ches Du Prevot
wines are expected to retail to the consumer at $5.00 to $7.00 per 750 ml
bottle.
Cave du Vignoble Gursonnais provides the Company with a line of popular
premium wines under the Bergerac, Cotes de Bergerac and Moelleux labels. Some of
the wines within these lines are the Bergerac Blush, which is a wine which comes
from Cabernet grapes soaked during a short period, the Cotes de Bergerac Dry
White, which comes from a blend of Muscatel and Semillion, the Cotes de Bergerac
Mellow White, which has a very intense flavor and which is reminiscent of the
passion fruit, and Cotes de Bergerac Mellow Prestige, which is a combination of
Semillion, Sauvignon and Muscatel. The Company expects that all of the Cave de
Vignoble Gursonnais wines will retail to the consumer at a price range of
between $5.00 to $8.00 per 750 ml bottle.
Godet Freres provides the Company with an elite champagne. The Company will
offer three types of Godet Freres champagne. A Brut, which is usually the best
choice for an aperitif because it contains almost no sugar, a Rose, which is
produced in only small amounts, and a Cuvee, which is a four year old champagne.
Both the Brut and Rose are aged for two years before being made available for
commercial sale.
The Company will offer its Cuvee in both a standard 750 ml bottle and a
magnum 1.5 liter bottle. The Company expects its Godet Freres champagnes to
retail in the $20.00 to $30.00 per 750 ml bottle range. As a general rule,
champagne can never be expected to be inexpensive because by the time a bottle
of champagne leaves a wine cellar, it has been handled at least 150 times. For
example, champagne bottles are typically stored on a rack on a 45 degree angle,
and are turned daily to force any sediment into the neck of the bottle up near
the bottle's cork.
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<PAGE> 31
Spirits Products
In addition to wines, Armadis also provides the Company with a product
called La Belle Sandrine. La Belle Sandrine is a unique aperitif which is a
blend of the exotic flavor of passion fruit and armagnac. Although it is ideal
as a before dinner drink, it can also be appreciated at any time of day or
night, and can be served chilled, over ice, or added to other cocktails.
SALES, MARKETING AND DISTRIBUTION
The Company expects to sell its products to independent beverage
distributors and wholesalers for resale to retailers who sell alcoholic
beverages to the consumer. Independent wholesale distributors (all of whom may
carry other beverage products that compete with the Company's products) will be
formally appointed by the Company in a variety of ways throughout the states in
which the Company does business. The Company anticipates that in most cases,
there will be variations in appointment procedures which are directly
attributable to state alcoholic beverage laws mandating territorial appointment
(some exclusive and some non-exclusive), restricting in various ways the
Company's ability to terminate or not renew the services of wholesale
distributors and providing varying periods and methods of resolving contractual
disputes. Generally, these state laws vary from a requirement that good cause be
shown for the action taken to a requirement that compensation be paid to the
terminated distributor for the fair market value of the lost business.
The Company believes that its specific distribution and sales strategy will
necessarily vary among its beer, wine and spirits products. Preliminarily, the
diverse strategies for each such product will be as follows:
Beer Distribution. The Company's beer products are expected to be initially
distributed primarily to Asian-themed (initially Chinese) restaurants, bars and
taverns, and later to brew pubs, warehouse clubs and specialty liquor stores
that sell a variety of imported beers. The Company's beer products will be
delivered to these retail outlets through a network of approximately 20 local
and regional distributors.
The Company plans to initially introduce its Red Dragon beer products to
distributors who serve eight primary states which have the majority of Chinese
theme restaurants and retailers, and who currently sell Tsingtao Beer. The
Company expects that these markets will account for the greatest percentage of
its Red Dragon beer distribution in the near future.
Wine Distribution. The Company's wine products are expected to be
distributed in restaurants, bars and taverns, warehouse clubs, liquor stores and
supermarkets. The Company plans for its wine products to be delivered initially
to these retail outlets through a network of approximately 10 local and regional
distributors, or will be provided to retailers (such as wholesale clubs) through
direct shipment to warehouse facilities. In the event of direct shipments to
warehouse facilities, local distributors will be paid a stocking fee and be
responsible for insuring that all excise taxes are paid where required by
revenue authorities.
Initially, the Company will contract with regional distributors in the
least competitive markets on the East Coast. Distribution will begin in the
region of Delaware and gradually move south to Florida. As the Company is able
to demonstrate the viability of its wine products, it expects to be able to
expand its distribution network west into those regions of the United States
where California produced wines are also distributed.
With respect to its champagnes, the Company will focus on contracting with
wine distributors who concentrate on the restaurant trade. The Company realizes
that champagne is mostly a seasonal beverage, and will look for most of its
champagne sales to be in the third and fourth quarters of the year. The Company
expects its champagne products to perform well in specialty wine shops and large
liquor stores that offer a large variety of wines and champagnes to consumers at
prices ranging from inexpensive to higher price quality products.
Spirits. The Company's spirits products will be purchased by consumers at
restaurants, bars and taverns, as well as in bottles at liquor stores, warehouse
clubs and supermarkets (where permitted by law). The Company believes that its
spirits products will initially be delivered to these retail outlets through a
network of approximately 12 regional distributors.
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<PAGE> 32
The Company plans to initially introduce its flagship spirits product, La
Belle Sandrine, to distributors who serve states which have relatively warm
climates and which are less likely to be affected by seasonal climate changes.
Once the viability of the product is proven, the Company will seek to effectuate
an alliance with a large national distributor of spirits products in order to
secure nationwide distribution of La Belle Sandrine.
In each of its targeted markets, the Company will select its distributors
based on a number of factors including: (i) market strength measured in terms of
financial resources and number and size of accounts served, (ii) commitment to
expend resources to educate consumers and retailers about the quality and tastes
of the Company's beer, wine and spirits products, (iii) reputation for customer
service, including the ability to frequently service retail accounts and to
merchandise the Company's products aggressively and (iv) commitment to community
involvement.
The Company expects to pursue promotional strategies that are designed to
create strong brand awareness built on quality products, service to distributors
and product imaging. The Company believes that grass root promotion,
word-of-mouth reputation and an identifiable and favorable price to quality
value quotient are the principal elements influencing consumer product
selection. As a result, the Company anticipates devoting considerable effort,
through tastings and distributor visits, to educating distributors and consumers
as to the distinctive qualities of its products. The Company will participate in
localized promotions designed to enhance the reputation of the Company and its
products. The Company's sales and marketing staff will focus principally on
distributor training and assistance, local promotions, and programs for on-
premises consumer and retailer education. To build brand recognition in its
target markets, the Company anticipates sponsoring or participating in cultural
and community events, music and other entertainment performances, craft and
imported beer festivals and cuisine events, and sporting events.
The Company believes that an important function of its sales and marketing
staff will be to elevate distributor and retailer awareness of the distinctive
qualities of the Company's beer, wine and spirits products. This will be
accomplished primarily through direct contact with restaurants, pubs, taverns
and grocery chains, and by supplying distributors with distinctive point-of-sale
materials, including neon signs, posters, table tents, coasters, calendars,
glassware and promotional flyers. The Company's sales staff will meet frequently
with distributor sales representatives to jointly visit retail accounts to
educate retailers about the quality of the Company's products. This, in turn,
allows retailers to assist in educating consumers.
The Company will use distinctive graphics in its packaging and marketing
materials designed to set the Company's products apart and promote strong brand
recognition. To differentiate its beer products, the Company plans to sell and
distribute a line of T-Shirts, sweatshirts, jackets, hats and similar products
emblazoned with the Company's Red Dragon logo and graphics.
The Company will also utilize direct mail, distributing a full color
merchandise catalogue to the Company's distributors and retailers.
COMPETITION
The Company competes in niche segments of the United States alcoholic
beverage industry. The Company believes that presently its beer products compete
with imported Asian beers, its wine products compete with domestic and imported
wines that generally sell in the range of $5.00 to $8.00 per 750 ml bottle, and
its spirits products compete with other prepared cocktails. The principal
competitive factors affecting the market for the Company's products include
product quality and taste, packaging, price, brand recognition and distribution
capabilities. The Company believes that its products will compete favorably
overall with respect to these factors. There can be no assurance however that
the Company will be able to compete successfully against current and future
competitors based on these and other factors.
The Company competes with a variety of importers and suppliers of alcoholic
beverage products, many of whom have significantly greater financial,
administrative, distribution and marketing resources and a higher level of brand
recognition than the Company. With respect to its Red Dragon beer products, the
Company anticipates competition from Sapporo USA, Inc. and Kirin Brewery of
America, major importers and
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<PAGE> 33
distributors of alcoholic beverage products, and the importers and distributors
of such Asian beer brands as Sapporo Draft and Kirin Lager and Kirin Light. With
respect to its wine products, the Company expects to compete with major
importers, distributors and suppliers of domestic and foreign wines such as
Allied Domecq Spirits and Wine and Worldwide Wine and Spirits, Inc. With respect
to its primary spirits product, La Belle Sandrine, the Company anticipates
competition from Kobrand Corporation, the importer and distributor of Alize.
The Company anticipates increased competition in all of the product markets
that it serves. Increased competition could result in price reductions, reduced
margins and loss of market share, all of which could have a material adverse
effect on the Company.
EMPLOYEES
As of the date of this Prospectus, the Company employs two persons other
than its executive officers. One of these two persons is Robert K. Walker, whom
the Company considers to be a key employee.
ROBERT K. WALKER has been General Manager of the Company since its
inception and served as the Company's President from the Company's inception to
March 1997. From December 1991 to January 1996, Mr. Walker was President of
Leasing Associates, a Hollywood, Florida based company engaged in store site
development for Food Lion, Inc. Also from 1993 through 1995, Mr. Walker served
as President of Never Burn, Inc., a Hollywood, Florida based suncare products
distributor. Mr. Walker holds a BA degree from Virginia Wesleyan College.
The Company expects to hire additional employees in the first quarter of
1998. It is anticipated that additional employees will be hired in the areas of
sales and marketing and administration. See "Plan of Operation -- Expansion of
Management and Administrative Personnel."
CONSULTANTS
The Company has formed a team of consultants with which it may consult on
various matters relating to the business of the Company. Consultants may not be
officers or directors of the Company although they may be shareholders. The
establishment of a consulting team is not intended to be a delegation by the
Company's officers and directors of their power of management and control of the
Company, as management and control of the Company shall at all times be retained
by the Company's officers and directors. As of the date of this Prospectus, the
following persons have agreed to provide consulting services to the Company:
KEN CALLIHAN is a marketing consultant responsible for researching market
conditions in the alcoholic beverage industry, and designing and implementing
marketing strategies for the Company. Mr. Callihan has worked with beer
producers such as Anheuser-Busch, and has been a consultant to Sweden's Kalbach
Beer. Mr. Callihan holds a BA degree from Drew University and an MBA from
Fairleigh Dickinson University.
EMMANUEL LEBLANC is collaborating with the Company on coordinating and
facilitating container shipments of the Company's products from France to the
United States. From April 1995 to December 1996, Mr. LeBlanc was Station Manager
for Regional Airlines in Bordeaux, France. As Station Manager for Regional
Airlines, Mr. LeBlanc was responsible for overseeing and coordinating all
freight shipments on all domestic flights for the airlines. From 1990 to 1995,
Mr. LeBlanc was the Airport Agent, Ramp and Freight Coordinator for American
Airlines in Paris, France. Mr. LeBlanc received a BA degree in English at the
University of Tours (France).
JEAN FRANCOIS LOUCHET is consulting with the Company in the area of quality
assurance for the Company's wine and spirits products. Mr. Louchet is the former
owner of a restaurant in Southwest France where he was constantly involved in
the selection and procurement of wines. For a number of years, Mr. Louchet was
the Sales Manager and Managing Director for Hepworth Holding Company, a United
Kingdom corporation, where he supervised the France branch of Hepworth Holding
Company. Mr. Louchet also served in the French Army achieving the rank of
Sergeant.
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FACILITIES
The Company's corporate offices are located in a 925 square foot facility
leased by the Company in Ft. Lauderdale, Florida. The Company entered into the
lease for its corporate offices on September 30, 1996. The rental payment is
currently $740 per month. The Company's lease expires on September 30, 1998. The
Company has an option to renew the lease for its corporate offices for an
additional two year period at a rental rate of $775 per month. The Company
believes that its current corporate offices are adequate for its present needs.
GOVERNMENT REGULATION
The Company's business is highly regulated by federal, state and local laws
and regulations. Federal and state laws and regulations govern licensing
requirements, trade and pricing practices, permitted and required labeling,
advertising, promotion and marketing practices, relationships with distributors
and related matters. For example, federal and state regulators require warning
labels and signage on the Company's products. The Company believes that it has
obtained all regulatory permits and licenses necessary to operate its business
in the states where the Company's products are to be distributed. Failure on the
part of the Company to comply with federal, state or local regulations could
result in the loss or revocation or suspension of the Company's licenses,
permits or approvals and accordingly could have a material adverse effect on the
Company's business. The Company is operating within existing laws and
regulations or is taking action aimed at assuring compliance therewith. The
Company does not expect compliance with such laws and regulations to materially
affect the Company's capital expenditures, earnings or competitive position.
TRADEMARKS
The Company has applied to the United States Patent and Trademark Office
(the "PTO") to register its Red Dragon mark. As of the date of this Prospectus,
the PTO has not issued a registration mark. The Company regards its Red Dragon
trademark as having substantial value and as being an important factor in
marketing its beer products. The Company is not aware of any infringing user
that could materially effect its current business or any prior claim to the
trademark that would prevent the Company from using such trademark in its
business. The Company's policy is to pursue registration of its mark and to
oppose vigorously any infringement of its marks.
LEGAL PROCEEDINGS
The Company is not a party to any litigation.
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MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
The directors and executive officers of the Company and their ages as of
the date of this Memorandum are set forth below:
<TABLE>
<CAPTION>
NAME AGE POSITION(S) HELD
----------------------------------- ---- -----------------------------------
<S> <C> <C>
C. Michael Fisher 43 Chairman of the Board, President
and Director
Francis X. Scanlan 48 Chief Financial Officer
Edward L. Magdycz 49 Secretary and Director
Regis I. Louchet(1) 28 Subsidiary President
Francis J. Hornik, Jr. 56 Director
</TABLE>
- ---------------
(1) Mr. Louchet is not an executive officer of the Company, but is listed by
reason of his status as President of R&R (Bordeaux) Imports, Inc., a
wholly-owned subsidiary of the Company.
C. MICHAEL FISHER has been Chairman of the Board, President and a Director
of the Company since March 31, 1997. Mr. Fisher is also President of Fisher and
Associates Realty and Princessboro Development Co., Inc., which are real estate
development firms located in Virginia Beach, Virginia; positions which he has
held since 1980 and 1984 respectively. In his capacity as President of Fisher
and Associates Realty and Princessboro Development Co., Inc., Mr. Fisher has
been responsible for locating sites, obtaining anchor tenants and performing
leasing duties for approximately 15 food and drug retail shopping centers
throughout the Mid-Atlantic region of the United States. Mr. Fisher holds a BA
degree from Virginia Wesleyan College.
FRANCIS X. SCANLAN has been the Company's Chief Financial Officer since
March 4, 1997. Prior to joining the Company, Mr. Scanlan was the MIS Manager,
Operations Manager and Controller of Innovation Computers, a retailer and
telemarketer of computer related products. From September 1994 through October
1995, Mr. Scanlan was a computer consultant to Sales Control Systems, a
manufacturer of computer-related products. From March 1994 through September
1994, Mr. Scanlan was Chief Financial Officer of The Marbledge Group, Inc., an
importer, manufacturer and installer of natural stone products. From 1989
through 1994, Mr. Scanlan was Chief Financial Officer of Bernstein/Leibatone
Associates, Inc., a Nasdaq Stock Market company engaged in the business of
importing and distributing vinyl packaging textiles. Mr. Scanlan holds an MBA
degree and a BBA degree in Accounting from Florida Atlantic University.
EDWARD L. MAGDYCZ has been Secretary and a Director of the Company since
March 31, 1997. From the Company's inception until March 31, 1997, Mr. Magdycz
was Director of Sales and Marketing for the Company. From November 1993 to
December 1995, Mr. Magdycz was a District Sales Manager for Calico Industries,
Inc., an Annapolis Junction, Maryland based company engaged in the sales and
distribution of food and beverage service equipment. From December 1992 through
November 1993, Mr. Magdycz was a Vice President of Sales and Marketing for Never
Burn, Inc., a Hollywood, Florida based suncare products distributor. From 1976
to November 1992, Mr. Magdycz was a District Manager for the Vollrath Company,
Inc., a Sheboygan, Wisconsin based food service equipment manufacturer. Mr.
Magdycz holds a BS degree from the University of Delaware.
REGIS I. LOUCHET has been the President and a Director of R&R (Bordeaux)
Import Co., Inc. since April 1, 1997. Prior to becoming President of R&R
(Bordeaux) Import Co., Inc., Mr. Louchet served as the Company's Secretary. From
February 1995 to November 1996, Mr. Louchet was the President of French Cooking,
Inc., a food catering company located in Hollywood, Florida. From July 1993 to
February 1995, Mr. Louchet was the head Chef and Director of Purchasing of food
and wines at Duo Traituer and La Convention restaurants in France. From January
1992 to July 1993, Mr. Louchet was the head Chef at Le Foch and Le Pelican
restaurants in France. From December 1990 to November 1991, Mr. Louchet served
at Hotel Matignon where he directed the food and wine staff for French Prime
Ministers Michel Rocard and Edith Cresson and where he was responsible for
purchasing and quality assurance of all food and beverages.
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<PAGE> 36
FRANCIS J. HORNIK, JR. has been a Director of the Company since April 21,
1997. Since 1980, Mr. Hornik has been the sole proprietor of his own public
accounting firm located in Chesapeake, Virginia.
COMPENSATION OF DIRECTORS
The Company's directors will not receive compensation for services on the
Board of Directors or any committee thereof, but directors may be reimbursed for
certain expenses in connection with attendance at Board and committee meetings.
EXECUTIVE COMPENSATION
The following summary compensation table sets forth the aggregate cash
compensation paid or accrued by the Company to each of the Company's executive
officers and key employees for services rendered to the Company during the
Company's fiscal year ended 1996.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION -------------------------
------------------------------------ SECURITIES ALL OTHER
BONUS OTHER ANNUAL UNDERLYING COMP.
NAME AND PRINCIPAL POSITION SALARY($) ($) COMPENSATION OPTIONS(#) ($)
- -------------------------------------- --------- ----- ------------ ----------- ---------
<S> <C> <C> <C> <C> <C>
C. Michael Fisher..................... $ 0 $ 0 $0 $ 0 $ 0
Chairman of the Board
and President
Edward L. Magdycz..................... 0 0 0 0 0
Secretary
Robert K. Walker...................... 0 0 0 0 0
General Manager
</TABLE>
EMPLOYMENT AGREEMENTS
During the first quarter of 1998, the Company expects to enter into formal
employment agreements with C. Michael Fisher, the Company's Chairman of the
Board, Edward L. Magdycz, the Company's Secretary, Francis X. Scanlan, the
Company's Chief Financial Officer and Robert K. Walker, the Company's General
Manager. It is anticipated that said employment agreements will provide that
Messrs. Fisher, Magdycz, Scanlan and Walker shall be entitled to an annual base
salary of $35,000, $35,000, $40,000 and $35,000 respectively. In addition to
securing the annual cash compensation arrangement for Messrs. Fisher, Magdycz,
Scanlan and Walker, the employment agreements are also expected to address cash
and stock bonuses payable to such officers, medical, life and disability
insurance coverage, incentive compensation, automobile allowances and
reimbursement of expenses incurred on behalf of the Company.
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STOCK OPTION PLANS
1997 INCENTIVE STOCK OPTION PLAN
The Company's 1997 Incentive Stock Option Plan (the "1997 Option Plan") was
adopted by the Board of Directors and a majority of the shareholders of the
Company on October 10, 1997. A total of 750,000 shares of Common Stock are
reserved for issuance under the 1997 Option Plan. The 1997 Option Plan provides
for the granting to employees (including officers and employee directors) of
"incentive stock options" within the meaning of Section 422 of the Internal
Revenue Code of 1986 (the "Code"), and for the granting to employees and
consultants of nonstatutory stock options. The 1997 Option Plan may be
administered by the Board of Directors or a committee of the Board of Directors
(the "Administrator"), which committee shall satisfy the applicable requirements
of Section 16 of the Exchange Act and the Code. The Administrator determines the
terms of options granted under the 1997 Option Plan, including the number of
shares subject to the option, exercise price, term and the rate at which the
options become exercisable. The exercise price of all incentive stock options
granted under the 1997 Option Plan must be at least equal to the fair market
value of the Common Stock of the Company on the date of grant. The exercise
price of all nonstatutory stock options must equal at least 85% of the fair
market value of the Common Stock on the date of grant other than those granted
to certain executive officers of the Company which must have an exercise price
equal to 100% of the fair market value of the Common Stock on the date of grant.
The exercise price of any stock option granted to an optionee who owns stock
representing more than 10% of the voting power of all classes of stock of the
Company must equal at least 110% of the fair market value of the Common Stock on
the date of grant. The exercise price may be paid in such consideration as
determined by the Administrator, including cash and promissory notes. With
respect to any participant who owns stock representing more than 10% of the
voting power of all classes of stock of the Company, the term of the option is
limited to five years or less. The term of all other options may not exceed ten
years. If not terminated earlier, the 1997 Option Plan will terminate in 2007.
The Administrator has the authority to amend or terminate the 1997 Option Plan
as long as such action does not adversely affect any outstanding options. In the
event of a proposed sale of all or substantially all of the Company's assets, or
a merger of the Company with or into another corporation, each option will be
assumed or an equivalent option substituted by the successor corporation, unless
the Administrator determines, in the exercise of its sole discretion, that the
optionee will have the right to exercise the option as to some or all of the
shares of stock covered by the option, including shares as to which the option
would not otherwise be exercisable, in which case each option will be
exercisable for 30 days from the date of notice of such determination.
1997 DIRECTORS' STOCK OPTION PLAN
The 1997 Directors' Stock Option Plan (the "Directors' Plan") was adopted
by the Board of Directors and approved by a majority of the stockholders of the
Company on October 10, 1997. A total of 250,000 shares of Common Stock has been
reserved for issuance under the Directors' Plan. The Directors' Plan provides
for the grant of nonstatutory stock options to nonemployee directors of the
Company. The Directors' Plan is designed to work automatically without
administration; however, to the extent administration is necessary, it will be
performed by the Board of Directors. The Directors' Plan provides that each
person who is a nonemployee director of the Company upon joining the Board of
Directors, shall be granted a nonstatutory stock option to purchase 1,000 shares
of Common Stock (the "First Option"). Thereafter, on January 1 of each year
commencing January 1, 1998, each nonemployee director shall be automatically
granted an additional option to purchase 500 shares of Common Stock (a
"Subsequent Option") if, on such date, he or she shall have served on the
Company's Board of Directors for at least six months. The Directors' Plan
provides that the First Option shall become exercisable in installments as to
25% of the total number of shares subject to the First Option on each
anniversary of the date of grant of the First Option; each Subsequent Option
shall become exercisable in full on the first anniversary of the date of grant
of that Subsequent Option. The exercise price of all stock options granted under
the Directors' Plan shall be equal to the fair market value of a share of the
Company's Common Stock on the date of grant of the option. Options granted under
the Directors' Plan have a term of ten years. In the event of the dissolution or
liquidation of the Company, a sale of all or substantially all of the assets of
the Company, the merger of the Company with or into another
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<PAGE> 38
corporation in which the Company is not the surviving corporation or any other
capital reorganization in which more than 50% of the shares of the Company
entitled to vote are exchanged, each nonemployee director shall have either (i)
a reasonable time within which to exercise the option, including any part of the
option that would not otherwise be exercisable, prior to the effectiveness of
such dissolution, liquidation, sale, merger or reorganization, at the end of
which time the option shall terminate or (ii) the right to exercise the option,
including any part of the option that would not otherwise be exercisable, or
receive a substitute option with comparable terms, as to an equivalent number of
shares of stock of the corporation succeeding the Company or acquiring its
business by reason of such dissolution, liquidation, sale, merger or
reorganization. The Board of Directors may amend or terminate the Directors'
Plan; provided, however, that no such action may adversely affect any
outstanding option, and the provisions regarding the grant of options under the
plan may be amended only once in any six-month period, other than to comport
with changes in the Employee Retirement Income Security Act of 1974, as amended
or the Code. If not terminated earlier, the Directors' Plan will have a term of
ten years.
During the period in which the Registration Statement of which this
Prospectus is a part is effective, the total amount of shares of Common Stock
issuable pursuant to outstanding options of the Company granted under the 1997
Option Plan and the Directors' Plan shall not exceed 10% of the shares of Common
Stock to be outstanding upon completion of the offering of the Units hereby.
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<PAGE> 39
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
PRIOR ISSUANCES OF THE COMPANY'S SECURITIES
The Company was formed on February 12, 1996. From approximately March 31,
1996 to May 31, 1996, the Company issued 1,722,400 shares of its Common Stock to
six persons for an aggregate cash purchase price of $4,080.
From approximately June 14, 1996 to March 31, 1997, the Company issued
443,600 shares of its Common Stock to 47 persons for an aggregate cash purchase
price of $110,900.
On March 31, 1997, the Company acquired R&R (Bordeaux) Imports, Inc., a
Florida corporation and wholly owned subsidiary of the Company. In the
acquisition of R&R (Bordeaux) Imports, Inc., the Company issued 60,000 shares of
its Common Stock to three persons.
From July 30, 1997 to October 1997, the Company issued 38,000 shares of its
Series A Preferred Stock to five persons for an aggregate cash purchase price of
$95,000.
CERTAIN MATERIAL CONTRACTS
On December 13, 1996, the Company entered into an Import and Distribution
Agreement with Cave du Vignoble Gursonnais pursuant to which the Company was
appointed the exclusive distributor in North America and the Caribbean Islands
of all wine products produced by Cave du Vignoble Gursonnais. The term of the
agreement is for three years and is automatically renewed for additional terms
of 10 years each, unless either party gives the other sufficient written notice
of non-renewal. During the calendar year beginning January 1, 1997, the Company
is required to make a minimum annual total purchase of wine products of $100,000
U.S. Commencing with the calendar year beginning January 1, 1998, the Company is
required to make a minimum annual total purchase of wine products of $150,000
U.S. Commencing with the calendar year beginning January 1, 1999, the Company is
required to make a minimum annual total purchase of wine products of $400,000.
If, commencing with the 1999 calendar year, the Company fails to meet the
minimum annual purchase requirements set forth above, then the agreement between
the Company and Cave du Vignoble Gursonnais will become a non-exclusive
agreement.
On March 7, 1997, the Company entered into an Import and Distribution
Agreement with Armadis pursuant to which the Company was appointed the exclusive
distributor in North America and the Caribbean Islands of all wine and spirits
products produced by Armadis. The term of the agreement is for 30 years and is
automatically renewed for additional terms of 10 years each, unless either party
gives the other sufficient written notice of non-renewal. During the calendar
year beginning January 1, 1997, the Company is required to make a minimum annual
total purchase of wine products of $300,000 U.S. Commencing with the calendar
year beginning January 1, 1998, the Company is required to make a minimum annual
total purchase of wine products of $500,000. Commencing with the calendar year
beginning January 1, 1999, the Company is required to make a minimum annual
total purchase of wine products of $1,000,000. If, commencing with the 1999
calendar year, the Company fails to meet the minimum annual purchase
requirements set forth above, then the agreement between the Company and Armadis
will become a non-exclusive agreement.
On March 11, 1997, the Company entered into an Import and Distribution
Agreement with Les Chais du Prevot pursuant to which the Company was appointed
the exclusive distributor in North America and the Caribbean Islands of all wine
products produced by Les Chais du Prevot. The term of the agreement is for three
years and is automatically renewed for additional terms of three years each,
unless either party gives the other sufficient written notice of non-renewal.
During the calendar year beginning January 1, 1997, the Company is required to
make a minimum annual total purchase of wine products of $100,000 U.S.
Commencing with the calendar year beginning January 1, 1998, the Company is
required to make a minimum annual total purchase of wine products of $150,000
U.S. Commencing with the calendar year beginning January 1, 1999, the Company is
required to make a minimum annual total purchase of wine products of $400,000
U.S. If, commencing with the 1999 calendar year, the Company fails to meet the
minimum annual
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<PAGE> 40
purchase requirements set forth above, then the agreement between the Company
and Les Chais du Prevot will become a non-exclusive agreement.
On April 16, 1997, the Company entered into an Import and Distribution
Agreement with Vignerons De Buzet pursuant to which the Company was appointed
the exclusive distributor in the United States (excluding the State of New York)
and the Caribbean Islands of all wine products produced by Vignerons De Buzet.
The term of the agreement is for 10 years and is automatically renewed for
additional terms of five years each, unless either party gives the other
sufficient notice of non-renewal. During the calendar year beginning January 1,
1997, the Company is required to make a minimum annual purchase of wine products
of 275,000 French Francs (FF). Commencing with the calendar year beginning
January 1, 1998, the Company is required to make a minimum annual total purchase
of wine products of 825,000 FF. Commencing with the calendar year beginning
January 1, 1999, the Company is required to make a minimum annual total purchase
of wine products of 2,200,000 FF. If, commencing with the 2000 calendar year,
the Company fails to meet the minimum annual purchase requirements set forth in
the agreement, then the agreement between the Company and Vignerons De Buzet
shall become a non-exclusive agreement.
On September 29, 1997, the Company entered into an Import and Distribution
Agreement with Godet Freres pursuant to which the Company was appointed the
exclusive distributor in North America and the Carribean Islands of champagne
products produced by Godet Freres. The term of the agreement is for five years
and is automatically renewed for additional terms of five years each, unless
either party gives the other sufficient notice of non-renewal. During the
calendar year beginning 1997, the Company is required to make a minimum annual
total purchase of champagne products of 400 cases (each case consisting of 12
bottles). Commencing with the calendar year beginning just after the Company
receives required regulatory approval related to labeling of the champagne
products, the Company is required to make a minimum annual total purchase of 600
cases, followed by a minimum of 800 cases the next calendar year and a minimum
of 1,000 cases the calendar year thereafter. If, commencing with the 1998
calendar year, the Company fails to meet the minimum annual purchase
requirements set forth in the agreement, then the agreement between the Company
and Godet Freres shall become a non-exclusive agreement.
On November 24, 1997, the Company entered into a Distribution Agreement
with the People's Republic of China, Tsingtao Brewery No. 3 Co., Ltd. pursuant
to which the Company was appointed the exclusive distributor in North America of
all Red Dragon beer products produced by the Tsingtao Brewery No. 3. The term of
the agreement is for five years and is automatically renewed for additional
terms of 10 years each, unless either party gives the other sufficient written
notice of non-renewal. During the calendar year beginning January 1, 1998, the
Company is required to make a minimum annual total purchase of beer products of
$200,000 U.S. Commencing with the calendar year beginning January 1, 1999, the
Company is required to make a minimum annual total purchase of beer products of
$250,000 U.S. Commencing with the calendar year beginning January 1, 2000, the
Company is required to make a minimum annual total purchase of beer products of
$1,000,000 U.S. If, commencing with the 2000 calendar year, the Company fails to
meet the minimum annual purchase requirements set forth above, then the
agreement between the Company and the Tsingtao Brewery No. 3 Co., Ltd. will
become a non-exclusive agreement.
OTHER EVENTS
The Law Offices of John W. Martin is presently retained and has been
retained by the Company as its outside general counsel since its inception. On
April 29, 1996, the Company issued 400,000 shares of its Common Stock to the Law
Offices of John W. Martin in consideration for certain legal services rendered
to the Company by the Law Offices of John W. Martin. See "Legal Matters."
The Company believes that all of the transactions set forth above involving
officers, directors, employees, promoters and agents of the Company were made on
terms no less favorable to the Company than could have been obtained from
unaffiliated third parties. All future transactions, including loans between the
Company and its officers, directors and principal shareholders and their
affiliates will be approved by a majority of the Board of Directors, including a
majority of the disinterested directors of the Board of Directors, and will be
on terms no less favorable to the Company than could be obtained from
unaffiliated third parties.
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<PAGE> 41
PRINCIPAL STOCKHOLDERS
The following table sets forth certain information as of the date of this
Prospectus, regarding ownership of the Company's Common Stock (i) by each person
known by the Company to be the beneficial owner of more than 5% of the Company's
outstanding Common Stock, (ii) by each director of the Company, (iii) by certain
related stockholders, and (iv) by all executive officers and directors of the
Company as a group. All persons named have sole voting and investment power with
respect to such shares, subject to community property laws, and except as
otherwise noted.
<TABLE>
<CAPTION>
PERCENT BENEFICIALLY
OWNED
------------------------
NUMBER OF BEFORE AFTER
NAME OF SHAREHOLDER(1) SHARES OWNED OFFERING OFFERING(2)
- ---------------------------------------------------------- ------------ -------- -----------
<S> <C> <C> <C>
C. Michael Fisher(3)...................................... 394,800 18% 16%
1717 Jermyn Lane
Virginia Beach, Virginia 23454
Robert K. Walker(4)....................................... 781,200 35% 31%
3835 S.W. 56th Street
Ft. Lauderdale, Florida 33312
Edward L. Magdycz......................................... 2,000 * *
1800 Bayberry Drive
Pembroke Pines, Florida 33024
Regis Louchet(5).......................................... 67,600 3% 3%
1809 Taylor Street
Hollywood, Florida 33020
John W. Martin............................................ 400,000 18% 16%
5777 West Century Boulevard
Suite 1540
Los Angeles, California 90045
All officers and directors as a group
(4 persons)............................................. 396,800 18% 16%
</TABLE>
- ---------------
* Less than 1%.
(1) See table under "Management of the Company" for offices and directorships
held by the persons listed hereunder.
(2) Assumes all Units offered hereby are sold.
(3) Includes 148,000 shares held by Euro Imperial Group, Ltd., a corporation in
which Mr. Fisher is the beneficial owner of all of the shares of common
stock. Also includes 222,000 shares held by Paris International Holding,
Ltd., a corporation in which Mr. Fisher is the beneficial owner of one-half
( 1/2) of the shares of common stock of such corporation and 800 shares
owned by Katie Fisher and Lauren Fisher, the children of Mr. Fisher. Also
reflects the conversion into Common Stock of 8,000 shares of Series A
Preferred Stock owned by Euro Imperial Group, Ltd. and 16,000 shares of
Series A Preferred Stock owned by Mr. Fisher.
(4) Includes 222,000 shares held by Paris International Holding, Ltd., a
corporation in which Mr. Walker is the beneficial owner of one-half ( 1/2)
of the shares of common stock of such corporation. Also includes 10,800
shares held by Kristopher Walker and Kendall Walker, Mr. Walker's minor
children. Also includes 60,000 shares held by Mr. Robert H. Walker, Mr.
Walker's father. Mr. Walker disclaims any beneficial ownership of all shares
held by Mr. Robert H. Walker.
(5) Includes 40,000 shares held by Mr. Jean Francois Louchet, Mr. Louchet's
father. Mr. Louchet disclaims beneficial ownership of all shares held by Mr.
Jean Francis Louchet.
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<PAGE> 42
DESCRIPTION OF SECURITIES
The Company's authorized capital stock consist of 100,000,000 shares of
Common Stock, $.0001 par value and 10,000,000 shares of Preferred Stock, $.0001
par value. Giving effect to the sale of the maximum number of Units offered
hereby, there will be outstanding 2,524,000 shares of Common Stock.
The following description is a summary and is qualified in its entirety by
the provisions of the Company's Articles of Incorporation and Bylaws, copies of
which have been filed as exhibits to the Registration Statement of which this
Prospectus is a part.
UNITS
Each Unit offered hereby consists of one share of Common Stock and one
Warrant. The Common Stock and the Warrants are immediately detachable and
separately transferable.
COMMON STOCK
The holders of the issued and outstanding shares of Common Stock are
entitled to receive dividends when, as and if declared by the Company's board of
directors out of any funds lawfully available therefore. The Board of Directors
intends to retain future earnings to finance the development and expansion of
the Company's business and does not expect to declare any dividends in the
foreseeable future. The holders of the Common Stock have the right in the event
of liquidation to receive pro rata all assets remaining after payment of debts
and expenses. The Common Stock does not have any preemptive rights. The issued
and outstanding shares of Common Stock are fully paid and nonassessable.
Holders of shares of Common Stock are entitled to vote at all meetings of
such shareholders for the election of directors and for other purposes. Such
holders have one vote for each share of Common Stock held by them.
PREFERRED STOCK
The Company's Preferred Stock may be issued from time to time in one or
more series. The Board of Directors is authorized to determine or alter any or
all of the rights, preferences, privileges and restrictions granted to or
imposed upon any wholly unissued series of Preferred Stock, and to fix, alter or
reduce (but not below the number then outstanding) the number of shares
comprising any such series and the designation thereof, or any of them, and to
provide for the rights and terms of redemption or conversion of the shares of
any such series.
As of the date of this Prospectus, the Board of Directors has authorized
the issuance of 100,000 shares of a series of Preferred Stock designated as
"Series A Preferred Stock". Of the 100,000 shares of Series A Preferred Stock
authorized, 38,000 shares of Series A Preferred Stock are issued and
outstanding.
The Series A Preferred Stock ranks senior to the Common Stock with respect
to dividends. Holders of shares of Series A Preferred Stock are entitled to
receive dividends at the rate of $0.25 per share per annum, payable out of funds
legally available therefor. Such dividends are payable only when, as, and if
declared by the Board of Directors and are non-cumulative. Upon any liquidation,
dissolution or winding up of the Company, whether voluntary or involuntary,
before any distribution or payment is made to any person holding Common Stock or
of any shares ranking junior to the Series A Preferred Stock in respect of
distribution of assets, the persons holding Series A Preferred Stock will be
entitled to be paid an amount in cash equal to the sum of $2.50 plus any
declared but unpaid dividends on each share of Series A Preferred Stock.
Each share of Series A Preferred Stock will be automatically converted in
whole into one share of Common Stock upon the closing of the sale of the
Company's Common Stock in a firm commitment underwritten or best efforts public
offering registered under the Securities Act, at a public offering price equal
to or exceeding $3.50 per share of Common Stock. At such time, the rights of the
holders of Series A Preferred Stock, as preferred stockholders, shall cease, and
such person or persons shall thereupon and thereafter be deemed to be for all
purposes the holder of shares of Common Stock of the Company.
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<PAGE> 43
WARRANTS
General. Each Warrant entitles the registered holder to purchase one share
of Common Stock at an exercise price of $8.00 per share at any time until 5:00
p.m., New York Time, on , 2001. Commencing immediately after the
date of this Prospectus, the Warrants are redeemable by the Company on 30 days'
written notice at a redemption price of $.05 per Warrant if the closing bid
price of the Common Stock equals or exceeds $10.00 per share for any 30
consecutive trading days ending within 10 days of the notice of redemption. The
Company presently expects to call all of the Warrants for redemption as soon as
the trading price of its Common Stock meets the minimum amount of the specified
number of days. In the event the Company gives notice of its intention to
redeem, a holder would be forced either to exercise his or her Warrants within
the period set forth in the notice of redemption or accept the redemption price.
See "Risk Factors -- Current Prospectus and State Registration to Exercise
Warrants."
The Warrants will be issued pursuant to a warrant agreement (the "Warrant
Agreement") by and between the Company and Florida Atlantic Stock Transfer,
Inc., as warrant agent for the Company (the "Warrant Agent"), and will be
evidenced by warrant certificates in registered form. The Warrants provide for
adjustment of the exercise price and for a change in the number of shares
issuable upon exercise to protect holders against dilution in the event of a
stock dividend, stock split, combination or reclassification of the Common Stock
or upon issuance of shares of Common Stock at prices lower than the market price
of the Common Stock, with certain exceptions. The Company is not required to
issue fractional shares upon the exercise of a Warrant. The holder of a Warrant
will not possess any rights as a shareholder of the Company until such holder
exercises the Warrant.
The exercise price of the Warrants was determined by the Company and should
not be construed to be predictive of or to imply that any price increases in the
Shares will occur.
The Company has reserved from its authorized but unissued shares of Common
Stock a sufficient number of shares of Common Stock for issuance upon the
exercise of the Warrants. A Warrant may be exercised upon surrender of the
Warrant certificate on or prior to its expiration date (or earlier redemption
date) at the offices of the Warrant Agent, with the form of "Election to
Purchase" on the reverse side of the Warrant certificate completed and executed
as indicated, accompanied by payment of the full exercise price (by certified or
bank check payable to the order of the Company) for the number of shares with
respect to which the Warrant is being exercised. Shares of Common Stock issued
upon exercise of Warrants and payment in accordance with the terms of the
Warrants will be fully paid and nonassessable. For the life of the Warrants, the
holders thereof have the opportunity to profit from a rise in the market value
of the Common Stock, with a resulting dilution in the interest of all other
stockholders. So long as the Warrants are outstanding, the terms on which the
Company could obtain additional capital may be adversely affected. The holders
of Warrants might be expected to exercise them at a time when the Company would,
in all likelihood, be able to obtain any needed capital by a new offering of
securities on terms more favorable than those provided for by the Warrants.
Federal Income Tax Aspects of Investment in the Warrants. The following is
a description of certain of the tax effects occasioned by an investment in the
Warrants.
No gain or loss will be recognized by the holder of a Warrant upon the
exercise of a Warrant. The cost basis of the shares of Common Stock acquired
upon such exercise will be the cost basis of the Warrant plus any additional
amount paid upon the exercise of the Warrant. Gain or loss will be recognized
upon the subsequent sale or exchange of the shares of Common Stock acquired by
the exercise of the Warrant, measured by the difference between the amount
realized upon sale or exchange and the cost basis of the shares of Common Stock.
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<PAGE> 44
If a Warrant is not exercised, but is sold or exchanged (whether pursuant
to redemption or otherwise), gain or loss will be recognized upon such event,
measured by the difference between the amount realized by the holder of the
Warrant as a result of the sale, exchange or redemption and the cost basis of
the Warrant.
If a Warrant is not exercised and is allowed to expire, the Warrant will be
deemed to be sold or exchanged on the date of expiration. In such event, the
holder of the Warrant will recognize a loss to the extent of the cost basis of
the Warrant.
Generally, any gain or loss recognized as a result of the foregoing will be
a capital gain or loss and will either be long term or short term depending upon
the period of time the shares of Common Stock sold or exchanged or the Warrant
sold, exchanged, redeemed, or allowed to expire, as the case may be, was held. A
holding period of more than one year results in long term capital gain or loss
treatment. If a Warrant is exercised, the holding period of the shares of Common
Stock so acquired will not include the period during which the Warrant was held.
ALTHOUGH IN THE OPINION OF COUNSEL TO THE COMPANY THE FOREGOING IS AN ACCURATE
DESCRIPTION OF THE TAX EFFECTS DESCRIBED, EACH PURCHASER OF THE WARRANTS SHOULD
SEEK THE ADVICE OF HIS/HER OWN TAX ADVISOR REGARDING THE EFFECTS THAT AN
INVESTMENT IN THE WARRANTS WILL HAVE FOR HIS/HER INDIVIDUAL TAX SITUATION.
TRANSFER AGENT
Florida Atlantic Stock Transfer, Inc., Tamarac, Florida has been appointed
the transfer agent of the Company's Common Stock and Preferred Stock and the
warrant agent for the Company's Warrants.
CERTAIN PROVISIONS OF FLORIDA LAW AND OF THE
COMPANY'S ARTICLES OF INCORPORATION AND BYLAWS
The Company's Articles of Incorporation and Bylaws require the Company to
indemnify its directors and officers to the fullest extent permitted by Florida
law. Florida law presently provides that in the case of a nonderivative action
(that is, an action other than by or in the right of a corporation to procure a
judgment in its own favor), a corporation has the power to indemnify any person
who was or is a party or is threatened to be made a party to any proceeding by
reason of the fact that the person is or was an agent of the corporation,
against expenses, judgments, fines, settlements and other amounts actually and
reasonably incurred in connection with the proceeding if that person acted in
good faith and in a manner the person reasonably believed to be in the best
interests of the corporation and, in the case of a criminal proceeding, had no
reasonable cause to believe that the conduct of the person was unlawful. The
termination of any proceeding by judgment, order, settlement, conviction, or
upon a plea of nolo contendere or its equivalent does not, of itself, create a
presumption that the person did not act in good faith and in a manner that the
person reasonably believed to be in the best interests of the corporation or
that the person had reasonable cause to believe that the person's conduct was
unlawful.
With respect to derivative actions, Florida law provides that a corporation
has the power to indemnify any person who was or is a party or is threatened to
be made a party to any threatened, pending or completed action by or in the
right of the corporation to procure a judgment in its favor by reason of the
fact that the person is or was an agent of the corporation, against expenses
actually and reasonably incurred by that person in connection with the defense
or settlement of the action if the person acted in good faith, in a manner the
person believed to be in the best interests of the corporation and its
shareholders. Indemnification is not permitted to be made in respect of any
claim, issue, or matter as to which the person shall have been adjudged to be
liable to the corporation in the performance of that person's duty to the
corporation and its shareholders, unless and only to the extent that the court
in which the proceeding is or was pending determines that, in view of all the
circumstances of the case, the person is fairly and reasonably entitled to
indemnity for expenses, and then only to the extent that the court shall
determine.
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<PAGE> 45
SHARES ELIGIBLE FOR FUTURE SALE
Upon completion of the offer and sale of the maximum number of Units
offered hereby, the Company will have outstanding 2,524,000 shares of Common
Stock (assuming that the Warrants are not exercised). The 260,000 shares of
Common Stock sold in this offering will be freely tradeable without restrictions
under the Securities Act, except for any shares held by an "affiliate" of the
Company, which will be subject to the resale limitations of Rule 144 under the
Securities Act.
443,600 of the 2,226,000 shares of Common Stock currently issued and
outstanding are freely tradeable without restrictions under the Securities Act,
except for any shares held by an "affiliate" of the Company, which are subject
to the resale limitations of Rule 144 under the Securities Act. 1,782,400 of the
2,226,000 shares of Common Stock currently outstanding are "restricted
securities" within the meaning of Rule 144 promulgated under the Securities Act,
and may not be sold except in compliance with the registration requirements of
the Securities Act or an applicable exemption under the Securities Act,
including an exemption pursuant to Rule 144 thereunder.
In general, under Rule 144 as currently in effect, any affiliate of the
Company and any person (or persons whose sales are aggregated) who has
beneficially owned his or her restricted shares for at least one year, is
entitled to sell in the open market within any three-month period a number of
shares of Common Stock that does not exceed the greater of (i) 1% of the then
outstanding shares of the Company's common stock, or (ii) the average weekly
trading volume in the Common Stock during the four calendar weeks preceding such
sale. Sales under Rule 144 are also subject to certain limitations on manner of
sale, notice requirements, and availability of current public information about
the Company. Non-affiliates of the Company who have held their restricted shares
for two years are entitled to sell their shares under Rule 144 without regard to
any of the above limitations, provided they have not been affiliates for the
three months preceding such sale.
Further, Rule 144A as currently in effect, in general, permits unlimited
resales of certain restricted securities of any issuer provided that the
purchaser is an institution that owns and invests on a discretionary basis at
least $100 million in securities or is a registered broker-dealer that owns and
invests $10 million in securities. Rule 144A allows the existing stockholders of
the Company to sell their shares of Common Stock to such institutions and
registered broker-dealers without regard to any volume or other restrictions.
Unlike under Rule 144, restricted securities sold under Rule 144A to
nonaffiliates do not lose their status as restricted securities.
As a result of the provisions of Rule 144, all of the restricted securities
could be available for sale in the public market beginning 90 days after the
date of this Prospectus.
However, notwithstanding the foregoing, certain of the Company's officers,
directors and stockholders, who in the aggregate own 1,750,000 shares of Common
Stock (hereinafter collectively referred to as the "Promotional Shares"), have
agreed, pursuant to the terms of a Promotional Share Lock-In Agreement entered
into by and between such persons and the Company (the "Lock-In Agreement"), not
to offer, pledge, sell, contract to sell, or otherwise transfer or dispose of,
directly or indirectly, any of the Promotional Shares without the occurrence of
certain conditions. In this regard, the restrictions on transferability of the
Promotional Shares may only be terminated under the following circumstances:
(1) With respect to twenty-five percent (25%) of the Promotional
Shares on the sixth, seventh, eighth and ninth anniversary dates of this
Prospectus; or
(2) With respect to one hundred percent (100%) of the Promotional
Shares after the Company has had annual net earnings per share equal to, or
greater than, $0.29, according to generally accepted accounting principles
(GAAP), after taxes and excluding extraordinary items, for any two
consecutive fiscal years after the date of this Prospectus; or
(3) With respect to one hundred percent (100%) of the Promotional
Shares after the Company has had average annual net earnings per share
equal to, or greater than, $0.29, according to GAAP, after taxes and
excluding extraordinary items, for any five consecutive fiscal year period
after the date of this Prospectus; or
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<PAGE> 46
(4) With respect to one hundred percent (100%) of the Promotional
Shares on the date that the Common Stock becomes listed, or authorized for
listing, on the New York Stock Exchange or the American Stock Exchange, or
listed on the National Market System of the Nasdaq Stock Market (or any
successor to such entities).
In addition to the foregoing, certain other shareholders of the Company,
who in the aggregate own 441,200 shares of Common Stock (the "Lock-Up Shares"),
have agreed pursuant to the terms of a lock-up agreement entered into by and
between such stockholders, the Company and the Placement Agent (the "Lock-Up
Agreement") not to offer, pledge, sell, contract to sell, or otherwise transfer
or dispose of, directly or indirectly, any of the Lock-Up Shares without the
occurrence of certain conditions. In this regard, the restrictions on
transferability of the Lock-Up Shares may only be terminated under the following
circumstances:
(1) Upon the prior written consent of the Placement Agent; or
(2) Upon the expiration of 30 months after the date of this
Prospectus; or
(3) Upon the Company achieving annual gross revenues of $10,000,000;
or
(4) Upon the Company achieving annual net earnings per share equal to,
or greater than, $0.57 after taxes and excluding extraordinary items; or
(5) Upon the Company's shares of Common Stock trading on either the
New York Stock Exchange, American Stock Exchange or the Nasdaq Stock Market
(including the Nasdaq SmallCap Market), at a price of at least $8.62 for at
least 90 consecutive trading days after at least six months after the date
of this Prospectus. See "Plan of Distribution."
Prior to this offering, no public market for the Company's securities has
existed. Following this offering, no predictions can be made of the effect, if
any, of future public sales of restricted securities or the availability of
restricted securities for sale in the public market. Moreover, the Company
cannot predict the number of shares of Common Stock that may be sold in the
future pursuant to Rule 144 because such sales will depend on, among other
factors, the market price of the Common Stock and the individual circumstances
of the holders thereof. The availability for sale of substantial amounts of
Common Stock under Rule 144 could adversely affect prevailing market prices for
the Company's securities.
PLAN OF DISTRIBUTION
On the date of this Prospectus, the Company will have entered into a
Placement Agent Agreement with West America Securities Corp. (the "Placement
Agent"). Pursuant to the terms of the Placement Agent Agreement, the Placement
Agent has agreed to use its best efforts to sell, as exclusive agent for the
Company, up to 260,000 Units at a purchase price of $5.75 per Unit. The Units
will be sold on a "best efforts, all or none" basis with respect to the first
95,000 Units, and on a "best efforts" basis as to the remaining 165,000 Units.
The minimum number of Units offered hereby must be sold, if any are to be
sold, within a period of 90 days (or a period of 180 days if extended upon
mutual agreement between the Company and the Placement Agent) from the date of
this Prospectus (the "Offering Period"). If the Placement Agent is unable to
sell 95,000 Units within the Offering Period, the offering of the Units will be
terminated and all funds will be returned to subscribers in full with interest,
but without deduction for commissions or other expenses related to the offering.
All funds received by the Placement Agent during the offering will be
transmitted promptly, pursuant to the terms of an escrow agreement, to
Bank, California, until the minimum number of
Units offered hereby are sold. Purchasers of the Units will not receive Common
Stock or Warrant certificates unless and until subscription funds have been
released from escrow. Such subscription funds will be held in escrow for the
benefit of subscribers until the minimum number of Units offered hereby are sold
and subscription funds are released from escrow.
44
<PAGE> 47
Subject to the sale of 95,000 Units, the Company has agreed to pay the
Placement Agent a sales commission equal to ten percent (10%) of the gross
offering price of the Units. In addition, the Placement Agent Agreement provides
for the payment to the Placement Agent of a nonaccountable expense allowance
equal to two and one-half percent (2.5%) of the gross proceeds from the public
offering of the Units, or $13,656 if the minimum number of Units offered hereby
are sold, and $37,375 if the maximum number of Units offered hereby are sold.
The amount will be used to reimburse the Placement Agent for its expenses,
including fees and disbursements of counsel and such other due diligence and
customary expenses as are normally incurred by a placement agent. At this time,
$3,500 of such expense allowance has been paid on an accountable basis, to be
applied toward the nonaccountable expense allowance at the closing of the
offering.
Subject to the sale of 95,000 Units, the Company has agreed to sell to the
Placement Agent a Placement Agent Unit Purchase Option to purchase not more than
10% of the Units sold by the Company for a price of $260.00. The Placement Agent
Unit Purchase Option will be exercisable 12 months after the date of issuance at
an exercise price of $7.00 per Unit and will be subject to certain antidilution
rights. The Placement Agent Unit Purchase Option is not transferable for 12
months except to partners and officers of the Placement Agent.
During the period that the Placement Agent Unit Purchase Option is
exercisable, the Placement Agent and any transferee will have the opportunity to
profit from a rise in the market price of the Common Stock with a resulting
dilution in the interest of other stockholders. In addition, the terms on which
the Company will be able to obtain additional capital during the exercise period
of the Placement Agent Unit Purchase Option may be adversely affected because
the Placement Agent is likely to exercise the Placement Agent Unit Purchase
Option at a time when the Company would, in all likelihood, be able to obtain
capital by a new offering of securities on terms more favorable than those
provided by the terms of the Placement Agent Unit Purchase Option.
The Company has agreed to indemnify the Placement Agent against certain
liabilities, including liabilities under the Securities Act.
The Company and the Placement Agent have required that certain stockholders
of the Company, who in the aggregate own 441,200 shares of the Company's Common
Stock (the Lock-Up Shares), agree not to sell any of the Company's Common Stock
owned by them for a period of 30 months from the date of this Prospectus unless
the Placement Agent consents to a sale of such shares or unless certain other
conditions occur. See "Shares Eligible For Future Sale."
It is anticipated that after this offering, the Common Stock will be traded
in the over-the-counter market, and the Company has been advised that the
Placement Agent intends to make a market in the Common Stock following this
offering.
The foregoing is a brief summary of the provisions of the Placement Agent
Agreement and does not purport to be a complete statement of its terms and
conditions. A copy of the Placement Agent Agreement has been filed as an exhibit
to the Registration Statement of which this Prospectus is a part.
LEGAL MATTERS
The validity of the securities being offered hereby will be passed upon for
the Company by the Law Offices of John W. Martin, Los Angeles, California.
Certain legal matters will be passed upon for the Placement Agent by David L.
Kagel, Esq. John W. Martin, Esq., the sole proprietor of the Law Offices of John
W. Martin is the beneficial owner of 400,000 shares of Common Stock. See
"Principal Stockholders."
EXPERTS
The Financial Statements of the Company for the period February 12, 1996
(date of inception) to December 31, 1996 and for the period ended therein, have
been included in this Prospectus in reliance upon the report appearing elsewhere
herein, of Baum & Company, P.A., independent certified public accountants, and
upon the authority of said independent certified public accountants as experts
in accounting and auditing.
45
<PAGE> 48
AVAILABLE INFORMATION
Cuidao Holding Corp., a Florida corporation (the "Company") has filed with
the Commission a Registration Statement on Form SB-2 (Registration No.
) under the Securities Act for the registration of the Units offered
hereby. This Prospectus omits certain of the information contained in the
Registration Statement, and reference is hereby made to the Registration
Statement and exhibits and schedules thereto for further information with
respect to the Company and the securities to which this Prospectus relates.
Statements made herein concerning the provisions of any document are not
necessarily complete and, in each instance, reference is made to the copy of
such document filed as an exhibit to the Registration Statement. Each such
statement is qualified in its entirety by such reference. Items of information
omitted from this Prospectus but contained in the Registration Statement may be
inspected without charge at the Public Reference Room of the Commission, 450
Fifth Street, N.W., Judiciary Plaza, Washington, D.C. 20549, at prescribed
rates.
Upon consummation of the offering of the Units, the Company will become
subject to the informational requirements of the Securities Exchange Act of
1934, as amended, and in accordance therewith will file reports and other
information with the Commission. Such reports and other information can be
inspected at the public reference facilities maintained by the Commission at 450
Fifth Street, N.W., Room 1024, Washington, D.C. 20549, and at the Commission's
New York Regional Office, 26 Federal Plaza, New York, New York 10007, and its
Chicago Regional Office, Everett McKinley Dirksen Building, 219 South Dearborn
Street, Room 1204, Chicago, Illinois 60604. Copies of such material can be
obtained from the Public Reference Section of the Commission, Washington, D.C.
20549, at prescribed rates. The Commission also makes electronic filings
publicly available on the Internet within 24 hours of acceptance. The
Commission's Internet address is http://www.sec.gov. The Commission web site
also contains reports, proxy and information statements, and other information
regarding registrants that file electronically with the Commission.
The Company intends to deliver annual reports to the holders of its
securities, which will contain, among other information, audited financial
statements examined and reported upon by its independent certified public
accountants.
46
<PAGE> 49
CUIDAO HOLDING CORP., INC.
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
Report of Independent Accountants................................................... F-2
Consolidated Balance Sheet as of December 31, 1996.................................. F-3
Consolidated Statement of Operations for the period from February 12, 1996 (date of
inception) to December 31, 1996................................................... F-4
Consolidated Statement of Stockholders' Equity for the period from February 12, 1996
(date of inception) to December 31, 1996.......................................... F-5
Consolidated Statement of Cash Flows for the period from February 12, 1996 (date of
inception) to December 31, 1996................................................... F-6
Notes to Financial Statements....................................................... F-7
Interim Financial Statements:
Consolidated Balance Sheet as of October 31, 1997 (unaudited)....................... F-10
Interim Consolidated Statement of Operations for the ten month period ended October
31, 1997 (unaudited).............................................................. F-11
Interim Consolidated Statement of Stockholders' Equity for the ten month period
ended October 31, 1997 (unaudited)................................................ F-12
Interim Consolidated Statement of Cash Flows for the ten month period ended October
31, 1997 (unaudited).............................................................. F-13
Notes to Interim Financial Statements............................................... F-14
</TABLE>
F-1
<PAGE> 50
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors and Stockholders
of Cuidao Holding Corp.
We have audited the accompanying consolidated balance sheet of Cuidao
Holding Corp. and its subsidiaries (a development stage company) as of December
31, 1996 and the related consolidated statements of operations, stockholders'
equity and cash flows from February 12, 1996 (date of inception) through
December 31, 1996. These financial statements are the responsibility of
management. Our responsibility is to express an opinion on these financial
statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining on a test basis, evidence supporting
the accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe that
our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Cuidao Holding Corp. and
subsidiaries (a development stage company) as of December 31, 1996, and the
results of its operations and its cash flows from February 12, 1996 (date of
inception) through December 31, 1996, in conformity with generally accepted
accounting principles.
BAUM & COMPANY, P.A.
July 15, 1997
Coral Springs, Florida
F-2
<PAGE> 51
CUIDAO HOLDING CORP.
AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED BALANCE SHEET
DECEMBER 31, 1996
ASSETS
<TABLE>
<S> <C>
Current Assets
Cash and Cash Equivalents..................................................... $ 11,693
--------
Office Equipment (Net of $247 of accumulated depreciation)...................... 1,476
--------
Other Assets
Organizational Costs (Net of $296 of accumulated amortization)................ 2,367
Deferred Offering Costs....................................................... 20,500
Prepayments and Deposits...................................................... 1,808
--------
Total Other Assets......................................................... 24,675
--------
Total Assets.......................................................... $ 37,844
========
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
Accrued Expenses.............................................................. $ 1,187
--------
Stockholders' Equity
Common Stock, par value $0.0001, 100,000,000 shares authorized 1,936,800
issued and outstanding..................................................... 194
Additional Paid-In Capital...................................................... 57,986
Deficit Accumulated during Development Stage.................................... (21,523)
--------
Total Stockholders' Equity................................................. 36,657
--------
Total Liabilities and Stockholders' Equity............................ $ 37,844
========
</TABLE>
See Accompanying Auditor's Report and Notes to Financial Statements.
F-3
<PAGE> 52
CUIDAO HOLDING CORP.
AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENT OF OPERATIONS
FEBRUARY 12, 1996 (DATE OF INCEPTION) TO DECEMBER 31, 1996
<TABLE>
<S> <C>
Revenues
Interest Earned................................................................ $ 192
Operating Expenses
General and Administrative..................................................... 21,715
----------
Net Loss during Development Stage................................................ $ (21,523)
==========
Loss per Common Share............................................................ $ (.012)
==========
Weighted Average Common Shares Outstanding....................................... 1,833,600
==========
</TABLE>
See Accompanying Auditor's Report and Notes to Financial Statements.
F-4
<PAGE> 53
CUIDAO HOLDING CORP.
AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
FEBRUARY 12, 1996 (DATE OF INCEPTION) TO DECEMBER 31, 1996
<TABLE>
<CAPTION>
DEFICIT
ACCUMULATED
COMMON STOCK DURING THE
------------------- PAID-IN DEVELOPMENT
# SHARES AMOUNT CAPITAL STAGE
---------- ------ ------- -----------
<S> <C> <C> <C> <C>
Common Shares issued -- initial incorporation,
February 1996....................................... 3,940,000 $ 394 $ 3,686
Cancellation of Original Shares (March 1997).......... (2,217,600) (222) 222
Issuance of common stock in private placement
offering............................................ 214,400 22 54,078
Net Loss.............................................. $ (21,523)
========= ===== ======= ========
1,936,800 $ 194 $57,986 $ (21,523)
========= ===== ======= ========
</TABLE>
See Accompanying Auditor's Report and Notes to Financial Statements.
F-5
<PAGE> 54
CUIDAO HOLDING CORP.
AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENT OF CASH FLOW
FEBRUARY 12, 1996 (DATE OF INCEPTION) TO DECEMBER 31, 1996
<TABLE>
<S> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss........................................................................ $(21,523)
Adjustments to Reconcile Net Loss to Net Cash Used in Operating Activities:
Depreciation................................................................. 247
Amortization of Organizational Costs......................................... 296
Increase in Accrued Expenses................................................. 1,187
---------
Net Cash Used in Operating Activities........................................... (19,793)
---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of Office Equipment................................................. (1,723)
Increase in Deferred Offering Costs............................................. (20,500)
Increase in Organizational Costs................................................ (2,663)
Increase in Prepayments and Deposits............................................ (1,808)
---------
Net Cash Used in Investing Activities........................................... (26,694)
---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuing Common Stock.............................................. 58,180
---------
Net Cash Provided by Financing Activities....................................... 58,180
---------
NET INCREASE IN CASH AND CASH EQUIVALENTS......................................... 11,693
CASH AND CASH EQUIVALENTS -- BEGINNING OF PERIOD.................................. 0
---------
CASH AND CASH EQUIVALENTS -- END OF PERIOD........................................ $ 11,693
=========
</TABLE>
SUPPLEMENTAL CASH FLOW INFORMATION:
During the period ended December 31, 1996 the Company issued 400,000 shares
of its common stock to a certain individual for legal services rendered to the
Company.
See Accompanying Auditor's Report and Notes to Financial Statements.
F-6
<PAGE> 55
CUIDAO HOLDING CORP. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996
NOTE 1 -- ORGANIZATION AND OPERATIONS
Cuidao Holding Corp. (the "Company") was organized under the laws of the
State of Florida on February 12, 1996. On June 27, 1996, the Company formed
Cuidao (USA) Import Co., Inc., a wholly owned subsidiary incorporated under the
laws of the State of Florida.
On March 31, 1997, the Company acquired all of the issued and outstanding
common stock of R & R (Bordeaux) Imports, Inc., a Florida corporation, making R
& R (Bordeaux) Imports, Inc. a wholly owned subsidiary of the Company. At the
time of the acquisition, Robert K. Walker, a major beneficial owner of Cuidao
Holding Corp., was also a beneficial owner of R & R (Bordeaux) Imports, Inc.
The Company and its subsidiaries are development stage companies which
import, develop, manage and distribute a portfolio of international and regional
brands of beer, wine and spirits.
NOTE 2 -- SIGNIFICANT ACCOUNTING POLICIES
Basis of Accounting
The Company's policy is to prepare its financial statements using the
accrual basis of accounting in accordance with generally accepted accounting
principles.
Principles of Consolidation
The consolidated financial statements include the accounts of the Company
and its wholly owned subsidiaries. All material intercompany transactions have
been eliminated in consolidation.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosures of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the period.
Actual results could differ from those estimates.
Cash and Cash Equivalents
Cash and cash equivalents include cash on hand, cash in banks, and any
highly liquid investments with a maturity of three months or less at the time of
purchase.
The Company maintains cash and cash equivalent balances at a financial
institution which is insured by the Federal Deposit Insurance Corporation up to
$100,000. At December 31, 1996 there is no concentration of credit risk from
uninsured bank balances.
Office Equipment
Office Equipment is stated at cost and depreciated over its estimated
allowable useful life (7 years), using the double declining balance method.
Expenditures for major renewals and betterments that extend the useful lives of
fixed assets are capitalized. Expenditures for maintenance and repairs are
charged to expense as incurred.
F-7
<PAGE> 56
CUIDAO HOLDING CORP. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1996
NOTE 2 -- SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Organizational Costs
The Company has incurred certain federal and state filing and registration
fees, legal and promotional fees, and trademark research and registration
expenditures in its formation and capitalization, which will benefit the Company
in future periods. These costs are being amortized over a five year life using
the straight-line method.
Deferred Offering Costs
Deferred offering costs include the costs associated with the proposed
initial public offering. The costs related to the initial public offering will
be capitalized and netted against the amount received from the public offering.
All deferred offering costs will be expended in the event the offering is not
consummated.
Income Taxes
In February 1992, the Financial Accounting Standards Board issued Statement
on Financial Accounting Standards No. 109, "Accounting for Income Taxes." Under
SFAS No. 109, deferred assets and liabilities are recognized for the estimated
future tax consequences attributable to differences between the financial
statement carrying amounts of existing assets and liabilities and their
respective basis.
Deferred assets and liabilities are measured using enacted tax rates in
effect for the year in which those temporary differences are expected to be
recovered or settled. Under SFAS No. 109, the effect on deferred assets and
liabilities of a change in tax rates is recognized in income in the period that
includes the enactment date.
Net Loss per Common Share
Net loss per common share is computed by dividing net loss by the weighted
average number of common shares outstanding during the period.
NOTE 3 -- EQUIPMENT
<TABLE>
<S> <C>
Equipment................................................... $1,723
Less: Accumulated Depreciation............................ 247
------
Net Equipment............................................. $1,476
======
</TABLE>
Depreciation expense amounted to $247 for the period ended December 31,
1996.
NOTE 4 -- COMMITMENTS
Operating Lease
Effective July 1, 1996, the Company has assumed all obligation under a 14
month lease ending September, 1997. The lease calls for monthly rent payments
starting in September and October 1996 of $500 per month, increased to $740 for
the duration of the lease term. Upon its expiration, management intends to
extend the lease for a two year period.
Rent expense amounted to $3,816 for the period ended December 31, 1996.
F-8
<PAGE> 57
CUIDAO HOLDING CORP. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1996
NOTE 4 -- COMMITMENTS (CONTINUED)
Remaining future minimum lease payments under this operating lease at
December 31, 1996, net of deposit and prepayment, is $4,348.
Stock Options
At December 31, 1996 the Company has an agreement with a certain individual
to provide the Company with consulting advisory services in exchange for the
right to exercise options to acquire 45,000 shares of stock at a total cost of
$900. These options are exercisable in 1997 and 1998 (See Note 6).
NOTE 5 -- DEFERRED INCOME TAXES
As discussed in Note 2, the Company applied the provision of SFAS No. 109.
The significant components of deferred income tax benefit arising from a
net operating loss carry forward of approximately $22,400 is as follows at
December 31, 1996.
<TABLE>
<S> <C>
Deferred Tax Benefit........................................ $3,400
Valuation Allowance......................................... 3,400
------
$ 0
======
</TABLE>
The valuation allowance has been estimated at 100% due to the Company being
in the development stage.
NOTE 6 -- SUBSEQUENT EVENT
On July 28, 1997, the Company effectuated a 1 for 2.5 reverse common stock
split. In order to properly reflect this event, all financial statements are
being presented as if this had occurred at inception.
All options were terminated during 1997; there remains no outstanding
options.
F-9
<PAGE> 58
CUIDAO HOLDING CORP.
AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
INTERIM CONSOLIDATED BALANCE SHEET
OCTOBER 31, 1997
(UNAUDITED)
ASSETS
<TABLE>
<S> <C>
Current Assets
Cash and Cash Equivalents...................................................... $ 39,044
Stock Subscription Receivable.................................................. 20,000
Prepaid Rent................................................................... 784
---------
Total Current Assets........................................................ 59,828
Office Equipment
(Net of $1,842 of accumulated depreciation).................................... 10,326
---------
Other Assets
Organizational Costs
(Net of $951 of accumulated amortization)................................... 3,224
Deferred Offering Costs........................................................ 20,700
Prepayments and Deposits....................................................... 1,658
---------
Total Other Assets.......................................................... 25,582
---------
Total Assets........................................................... $ 95,736
=========
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
Accrued Expenses and Taxes..................................................... $ 793
---------
Stockholders' Equity
Common Stock, par value $0.0001, 100,000,000 shares authorized; 2,226,000
issued and outstanding...................................................... 223
Preferred Stock, par value $0.0001, 10,000,000 shares authorized; 38,000 issued
and outstanding............................................................. 4
Additional Paid-In Capital....................................................... 210,254
Deficit Accumulated during Development Stage..................................... (115,538)
---------
Total Stockholders' Equity.................................................. 94,943
---------
Total Liabilities and Stockholders' Equity............................. $ 95,736
=========
</TABLE>
See Accompanying Notes to Interim Financial Statements.
F-10
<PAGE> 59
CUIDAO HOLDING CORP.
AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
INTERIM CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE TEN MONTHS ENDED OCTOBER 31 1997 AND
CUMULATIVE TOTALS FOR DEVELOPMENT STAGE OPERATIONS
FROM FEBRUARY 12, 1996 (DATE OF INCEPTION) TO OCTOBER 31, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
DEVELOPMENT
TEN MONTHS STAGE
ENDED FEBRUARY 12, 1996
OCTOBER 31, 1997 TO OCTOBER 31, 1997
------------------ ---------------------
<S> <C> <C>
Revenues
Interest Earned.......................................... $ 149 $ 341
Operating Expenses
General and Administrative............................... 94,164 115,879
--------- ---------
Net Loss during Development Stage.......................... $ (94,015) $ (115,538)
========= =========
Loss per Common Share...................................... $ (.046) $ (.060)
========= =========
Weighted Average Common Shares Outstanding................. 2,035,960 1,929,962
========= =========
</TABLE>
See Accompanying Notes to Interim Financial Statements.
F-11
<PAGE> 60
CUIDAO HOLDING CORP. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
INTERIM CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE TEN MONTHS ENDED OCTOBER 31, 1997 AND
CUMULATIVE TOTALS FOR DEVELOPMENT STAGE OPERATIONS
FROM FEBRUARY 12, 1996 (DATE OF INCEPTION) TO OCTOBER 31, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
DEFICIT
ACCUMULATED
COMMON STOCK PREFERRED STOCK DURING THE
------------------- ----------------- PAID-IN DEVELOPMENT
# SHARES AMOUNT # SHARES AMOUNT CAPITAL STAGE
---------- ------ -------- ------ -------- -----------
<S> <C> <C> <C> <C> <C> <C>
Common Shares issued -- initial incorporation
February, 1996............................. 3,940,000 $394 $ 3,686
Cancellation of Original Shares (March,
1997)...................................... (2,217,600) (222) 222
Issuance of Common Stock in Private Placement
Offering................................... 214,400 22 54,078
Net Loss December 31, 1996................... $ (21,523)
---------- ---- ------ -- --------- ---------
Balance December 31, 1996.................... 1,936,800 194 57,986 (21,523)
Additional Shares of Common Stock Issued In
Private Placement Offering................. 229,200 23 38,000 4 152,274
Shares Issued for Acquisition of
Subsidiary................................. 60,000 6 (6)
Net Loss for the ten months ended October 31,
1997....................................... (94,015)
--
---------- ---- ------ --------- ---------
Balance October 31, 1997..................... 2,226,000 $223 38,000 $4 $210,254 $(115,538)
========== ==== ====== == ========= =========
</TABLE>
See Accompanying Notes to Interim Financial Statements.
F-12
<PAGE> 61
CUIDAO HOLDING CORP. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
INTERIM CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE TEN MONTHS ENDED OCTOBER 31, 1997 AND
CUMULATIVE TOTALS FOR DEVELOPMENT STAGE OPERATIONS FROM
FEBRUARY 12, 1996 (DATE OF INCEPTION) TO OCTOBER 31, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
DEVELOPMENT
STAGE
TEN MONTHS FEBRUARY 12, 1996
ENDED TO
OCTOBER 31, 1997 OCTOBER 31, 1997
---------------- -----------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss.............................................. $(94,015) $(115,538)
Adjustments to Reconcile Net Loss to Net Cash Used in
Operating Activities:
Depreciation....................................... 1,595 1,842
Amortization of Organizational Costs............... 655 951
Increase in Organizational Costs................... (1,512) (4,175)
Increase in Deferred Offering Costs................ (200) (20,700)
Increase in Prepayments and Deposits............... (635) (2,443)
Decrease in Accrued Expenses....................... (394) 793
-------- ---------
Net Cash Used in Operating Activities................. (94,506) (139,270)
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of Office Equipment....................... (10,444) (12,167)
-------- ---------
Net Cash Used in Investing Activities................. (10,444) (12,167)
-------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuing Common Stock.................... 37,301 95,481
Proceeds from issuing Preferred Stock................. 95,000 95,000
-------- ---------
Net Cash Provided by Financing Activities............. 132,301 190,481
-------- ---------
NET INCREASE IN CASH AND CASH EQUIVALENTS............... 27,351 39,044
CASH AND CASH EQUIVALENTS -- BEGINNING OF PERIOD........ 11,693 0
-------- ---------
CASH AND CASH EQUIVALENTS -- END OF PERIOD.............. $ 39,044 $ 39,044
======== =========
</TABLE>
SUPPLEMENTAL CASH FLOW INFORMATION:
During the period ended December 31, 1996 the Company issued 400,000 shares
of its common stock to a certain individual for legal services rendered to the
Company.
On October 31, 1997, the Company subscribed 8,000 shares of its preferred
stock which was fully paid for in the subsequent month.
See Accompanying Notes to Interim Financial Statements.
F-13
<PAGE> 62
CUIDAO HOLDING CORP. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
NOTES TO INTERIM FINANCIAL STATEMENTS
OCTOBER 31, 1997
(UNAUDITED)
NOTE 1 -- ORGANIZATION AND OPERATIONS
Cuidao Holding Corp. (the "Company") was organized under the laws of the
State of Florida on February 12, 1996. On June 27, 1996, the Company formed
Cuidao (USA) Import Co., Inc., a wholly owned subsidiary incorporated under the
laws of the State of Florida.
On March 31, 1997, the Company acquired all of the issued and outstanding
common stock of R & R (Bordeaux) Imports, Inc., a Florida corporation, making R
& R (Bordeaux) Imports, Inc. a wholly owned subsidiary of the Company. At the
time of the acquisition, Robert K. Walker, a major beneficial owner of Cuidao
Holding Corp, was also a beneficial owner of R & R (Bordeaux) Imports, Inc.
The Company and its subsidiaries are development stage companies which
import, develop, manage and distribute a portfolio of international and regional
brands of beer, wine and spirits.
NOTE 2 -- SIGNIFICANT ACCOUNTING POLICIES
Basis of Accounting
The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and in accordance with Article 10 of Regulation S-X.
Accordingly, they do not include all of the information and footnotes required
by generally accepted accounting principles for complete financial statements.
In the opinion of management, all adjustments considered necessary for a fair
presentation have been included.
Principles of Consolidation
The consolidated financial statements include the accounts of the Company
and its wholly owned subsidiaries. All material intercompany transactions have
been eliminated in consolidation.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosures of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the period.
Actual results could differ from those estimates.
Cash and Cash Equivalents
Cash and cash equivalents include cash on hand, cash in banks, and any
highly liquid investments with a maturity of three months or less at the time of
purchase.
The Company maintains cash and cash equivalent balances at a financial
institution which is insured by the Federal Deposit Insurance Corporation up to
$100,000. At October 31, 1997 there is no concentration of credit risk from
uninsured bank balances.
Office Equipment
Office Equipment is stated at cost and depreciated over its estimated
allowable useful life (7 years), using the double declining balance method.
Expenditures for major renewals and betterments that extend the useful lives of
fixed assets are capitalized. Expenditures for maintenance and repairs are
charged to expense as incurred.
F-14
<PAGE> 63
CUIDAO HOLDING CORP. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
NOTES TO INTERIM FINANCIAL STATEMENTS (CONTINUED)
OCTOBER 31, 1997
(UNAUDITED)
NOTE 2 -- SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Organizational Costs
The Company has incurred certain federal and state filing and registration
fees, legal and promotional fees, and trademark, research and registration
expenditures in its formation and capitalization, which will benefit the Company
in future periods. These costs are being amortized over a five year life using
the straight-line method.
Deferred Offering Costs
Deferred offering costs include the costs associated with the proposed
initial public offering. The costs related to the initial public offering will
be capitalized and netted against the amount received from the public offering.
All deferred offering costs will be expended in the event the offering is not
consummated.
Income Taxes
In February 1992, the Financial Accounting Standards Board issued Statement
on Financial Accounting Standards No. 109, "Accounting for Income Taxes." Under
SFAS No. 109, deferred assets and liabilities are recognized for the estimated
future tax consequences attributable to differences between the financial
statement carrying amounts of existing assets and liabilities and their
respective basis.
Deferred assets and liabilities are measured using enacted tax rates in
effect for the year in which those temporary differences are expected to be
recovered or settled. Under SFAS No. 109, the effect on deferred assets and
liabilities of a change in tax rates is recognized in income in the period that
includes the enactment date.
Net Loss per Common Share
Net loss per common share is computed by dividing net loss by the weighted
average number of common shares outstanding during the period.
NOTE 3 -- EQUIPMENT
<TABLE>
<S> <C>
Machinery and Office Equipment............................. $ 12,168
Less: Accumulated Depreciation........................... 1,842
--------
Net Equipment............................................ $ 10,326
=======
</TABLE>
Depreciation expense amounted to $1,595 for the ten months ended October
31, 1997.
NOTE 4 -- COMMITMENTS
Operating Lease
Effective July 1, 1996, the Company has assumed all obligation under a 14
month lease ending September, 1997. The lease calls for monthly rent payments
starting in September and October 1996 of $500 per month, increased to $740 for
the duration of the lease term. The lease was extended one year on September 30,
1997.
Rent expense amounted to $6,657 for the ten months ended October 31, 1997.
F-15
<PAGE> 64
CUIDAO HOLDING CORP. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
NOTES TO INTERIM FINANCIAL STATEMENTS (CONTINUED)
OCTOBER 31, 1997
(UNAUDITED)
NOTE 5 -- DEFERRED INCOME TAXES
As discussed in Note 2, the Company applied the provision of SFAS No. 109.
The significant components of deferred income tax benefit arising from a
net operating loss carry forward of approximately $74,000 is as follows at
October 31, 1997.
<TABLE>
<S> <C>
Deferred Tax Benefit....................................... $ 13,500
Valuated Allowance......................................... 13,500
--------
$ 0
=======
</TABLE>
The valuation allowance has been estimated at 100% due to the Company being
in the development stage.
NOTE 6 -- CAPITALIZATION
On July 28, 1997, the Company effectuated a 1 for 2.5 reverse common stock
split. In order to properly reflect this event, all financial statements are
being presented as if this had occurred at inception.
F-16
<PAGE> 65
APPENDIX A
CUIDAO HOLDING CORP.
3201 WEST GRIFFIN ROAD, SUITE 204
FT. LAUDERDALE, FLORIDA 33312-6900
SUBSCRIPTION AGREEMENT AND SIGNATURE PAGE
(ALL INVESTORS MUST SIGN THIS SUBSCRIPTION AGREEMENT)
- --------------------------------------------------------------------------------
================================================================================
SUBSCRIBER DATA: (Must be completed in full)
================================================================================
FULL NAME OF SUBSCRIBER: (Do not use initials)
First Full Name (Do not use initials) Middle Initial Last Name
RESIDENCE ADDRESS, INCLUDING ZIP CODE: (Do not use P.O. box)
CORRESPONDENCE ADDRESS, INCLUDING ZIP CODE:
RESIDENCE TELEPHONE NUMBER: BUSINESS TELEPHONE NUMBER:
SOCIAL SECURITY: OR TAX I.D. NUMBER:
================================================================================
SUBSCRIPTION: (Must be completed in full)
================================================================================
NUMBER OF UNITS BEING PURCHASED: _______________ X $5.75 PER UNIT = TOTAL
PURCHASE PRICE FOR UNITS: $__________________
AMOUNT OF PAYMENT RECEIVED: $__________________ _______________________
[INITIALS OF RECIPIENT]
DATE PAYMENT RECEIVED:_________________________
The undersigned subscriber hereby authorizes and directs the immediate deposit
of his/her subscription amount into the Bank, , ,
California .
================================================================================
BROKER/DEALER INFORMATION
TO BE COMPLETED BY THE REGISTERED REPRESENTATIVE
================================================================================
Registered Representative Name:_____________________ No. ______________________
Branch Office Address:__________________________________________________________
City:____________________ State:_____ Zip:______ Phone:_________________________
Broker/Dealer NASD Firm Name:___________________________________________________
Home/Main Office Address:_______________________________________________________
City:____________________ State:_____ Zip:______ Phone:_________________________
______________________________________ ______________________________________
SIGNATURE OF REGISTERED REPRESENTATIVE SIGNATURE OF REGISTERED REPRESENTATIVE
(IF MORE THAN ONE)
================================================================================
SIGNIFICANT DISCLOSURE
================================================================================
THIS SUBSCRIPTION IS MADE PURSUANT TO, AND IS SUBJECT TO, THE TERMS
AND CONDITIONS OF THE QUALIFICATION APPROVED BY THE SECURITIES COMMISSIONS
OF THE STATES IN WHICH THE UNITS ARE BEING OFFERED.
SIGNATURE MUST BE IDENTICAL TO NAME OF REGISTERED OWNER
______________________________________________________
Printed Name of Subscriber
______________________________________________________ _________________
Signature of Subscriber Date
______________________________________________________
Printed Name of Subscriber (if more than one)
______________________________________________________ _________________
Signature of Subscriber Date
================================================================================
ADDITIONAL INFORMATION
================================================================================
In order to facilitate processing of your subscription, please be sure you have
completed each of the following:
- A check made payable to "Bank as Escrow Agent for Cuidao Holding Corp."
- Enter the number of units being purchased and total cash contribution
on this Subscription Agreement.
- Enter the state in which you are a legal resident in the "Residence
Address" column above.
- Please mail check and this Subscription Agreement to:
West America Securities Corp.
4510 E. Thousand Oaks Boulevard, Ste. 100
Westlake Village, California 91362
Attn: Mr. Tracy Spencer
A-1
<PAGE> 66
======================================================
NO DEALER, SALESMAN OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS, AND IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT
BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY. THIS PROSPECTUS DOES
NOT CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO BUY, BY ANY
PERSON IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT
AUTHORIZED, OR IN WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT
QUALIFIED TO DO SO, OR TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER
OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE
HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE
INFORMATION IN THIS PROSPECTUS IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE
OF THIS PROSPECTUS.
------------------------
TABLE OF CONTENTS
<TABLE>
<S> <C>
Unit Purchase Information............. 3
Prospectus Summary.................... 4
Risk Factors.......................... 7
The Company........................... 16
Use of Proceeds....................... 17
Dividend Policy....................... 17
Dilution.............................. 17
Capitalization........................ 20
Selected Financial Data............... 21
Plan of Operation..................... 22
Business.............................. 25
Management............................ 33
Stock Option Plans.................... 35
Certain Relationships and Related
Transactions........................ 37
Principal Stockholders................ 39
Description of Securities............. 40
Certain Provisions of Florida Law and
of the Company's Articles of
Incorporation and Bylaws............ 42
Shares Eligible for Future Sale....... 43
Plan of Distribution.................. 44
Legal Matters......................... 45
Experts............................... 45
Available Information................. 46
Index to Financial Statements......... F-1
Subscription Agreement (Appendix A)... A-1
</TABLE>
------------------------
UNTIL , 1998 (90 DAYS AFTER THE DATE OF THIS PROSPECTUS), ALL
DEALERS EFFECTING TRANSACTIONS IN THE REGISTERED SECURITIES, WHETHER OR NOT
PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS.
THIS IS IN ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS WHEN
ACTING AS UNDERWRITERS.
======================================================
======================================================
[COMPANY LOGO]
------------------------
260,000 UNITS
CONSISTING OF 260,000 SHARES OF
COMMON STOCK AND WARRANTS
TO PURCHASE 260,000 SHARES
OF COMMON STOCK
------------------------
PROSPECTUS
------------------------
, 1998
======================================================
<PAGE> 67
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 24. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Articles of Incorporation and the Bylaws of the Registrant contain
provisions providing for the indemnification by the Registrant of all past and
present directors, officers, employees or agents of the Registrant. Such
indemnification applies only to the extent that any such person by reason of
acting in such capacity is, or is threatened to be made, a witness in, or party
to, any action, suit, arbitration, alternative dispute resolution mechanism,
investigation, administrative hearing or other proceeding. In that event, such
person (1) shall be indemnified, with respect to any proceeding other than a
proceeding brought by or in the right of the Registrant, against all judgments,
penalties, fines and amounts paid in settlement, and all reasonable expenses
incurred, in connection therewith, if he acted in good faith and in a manner he
reasonably believed to be in, or not opposed to, the best interests of the
Registrant, and if, with respect to criminal proceeding, he had no reasonable
cause to believe his conduct was unlawful, (2) shall be indemnified, to the
extent permitted by applicable law, with respect to any proceeding brought by or
in the right of the Registrant to procure a judgment in its favor, for his
reasonable expenses in connection therewith if he acted in good faith and in a
manner he reasonably believed to be in, or not opposed to, the best interests of
the Registrant, (3) shall be indemnified for reasonable expenses incurred in
connection with any proceeding in which he is wholly or partly successful on the
merits, and (4) shall be indemnified for reasonable expenses incurred in
connection with being, or being threatened to be made, a witness in any
proceeding.
The specific provisions of the Articles of Incorporation of the Registrant
with respect to the indemnification of directors and officers are as follows:
ARTICLE 13 -- Indemnification: The Corporation shall indemnify its
officers, directors and authorized agents for all liabilities incurred directly,
indirectly or incidentally for services performed for the Corporation, to the
fullest extent permitted under Florida law existing now or hereafter enacted.
The specific provisions of the Bylaws of Registrant with respect to the
indemnification of directors and officers are as follows:
The corporation shall indemnify any person:
(1) Who was or is a party, or is threatened to be made a party, to any
threatened, pending, or completed action, suit, or proceeding, whether
civil, criminal, administrative, or investigative (other than an action by,
or in the right of, the corporation) by reason of the fact that he is or
was a director, officer, employee, or agent of the corporation or is or was
serving at the request of the corporation as a director, officer, employee,
or agent of another corporation, partnership, joint venture, trust, or
other enterprise against such costs and expenses, and to the extent and in
the manner provided under Florida law.
(2) Who was or is a party, or is threatened to be made a party, to any
threatened, pending, or completed action or suit by or in the right of the
corporation to procure a judgment in its favor by reason of the fact that
he is or was a director, officer, employee, or agent of the corporation or
is or was serving at the request of the corporation as a director, officer,
employee, or agent of another corporation, partnership, joint venture,
trust, or other enterprise against such costs and expenses, and to the
extent and in the manner provided under Florida law.
The extent, amount, and eligibility for the indemnification provided herein
will be made by the Board of Directors. Said determinations will be made by a
majority vote to a quorum consisting of directors who were not parties to such
action, suit, or proceeding or by the shareholders by a majority vote of a
quorum consisting of shareholders who were not parties to such action suit or
proceeding.
The corporation will have the power to make further indemnification as
provided under Florida law except to indemnify any person against gross
negligence or willful misconduct.
II-1
<PAGE> 68
The corporation is further authorized to purchase and maintain insurance
for indemnification of any person as provided herein and to the extent provided
under Florida law.
ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The expenses of this offering are estimated as follows:*
<TABLE>
<S> <C>
SEC Registration Fee............................................... $ 1,032
Blue Sky fees and expenses......................................... 5,930
Transfer Agent and Registrar fees.................................. 1,000
Printing and engraving expenses.................................... 25,000
Legal fees and expenses............................................ 20,000
Accounting fees and expenses....................................... 1,500
Miscellaneous...................................................... 10,000
-------
Total.................................................... $64,462
=======
</TABLE>
- ---------------
* All amounts other than the SEC registration fee are estimated.
ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES
Within the past three years, the Registrant sold securities without
registration under the Securities Act of 1933, as amended (the "Act") as
follows:
<TABLE>
<CAPTION>
NAMES OF EXEMPTION FROM
SECURITIES SOLD INVESTORS CONSIDERATION RECEIVED REGISTRATION
- ------------------------- -------------- ----------------------- -----------------------
<S> <C> <C> <C>
1,722,400 Shares 6 Persons(1) $4,080 in cash and past Section 4(2) of the
of Common Stock services valued at Securities Act
$5,000
443,600 Shares of 47 Persons(2) $110,900 Section 3(b) of the
Common Stock Securities Act and Rule
504 of Regulation D
promulgated thereunder.
60,000 Shares of 3 Persons(3) 50,000 Shares of Common Section 4(2) of the
Common Stock Stock of R&R (Bordeaux) Securities Act
Imports,Inc.
38,000 Shares of 5 Persons(4) $95,000 Section 3(b) of the
Series A Preferred Stock Securities Act and Rule
504 of Regulation D
promulgated thereunder.
</TABLE>
- ---------------
(1) The six persons who purchased the 1,722,400 shares of Common Stock are
Robert K. Walker (488,400 shares), Euro Imperial Group, Ltd. (148,000
shares), Lucia & Tai Shing Chaw (222,000 shares), Paris International
Holding Corp. (444,000 shares), Lui Hoa Xue (20,000 shares) and John W.
Martin (400,000 shares).
(2) The 47 persons who purchased 443,600 shares of Common Stock are Barbara
Occhuzzi (12,000 shares), Filomena Gerasimchik (4,000 shares), Kristopher
Walker (800 shares), Clorinda Gerasimchik (6,000 shares), Hilda Tornatta
(4,000 shares), Nora Marin (4,000 shares), Violet Walker (800 shares),
Shirley Ferguson (400 shares), Lee and Robin Still (400 shares), Elizabeth
Schmale (800 shares), Ed and Gail Magdycz (2,000 shares), Carole Still (400
shares), Katie and Lauren Fisher (800 shares), Robert E. Friend III, Lee
Friend, Michelle F. Edwards and Owen Kelly Feild (1,600 shares), Dorthy and
Robert Friend (4,800 shares), Carolyn L. Blenne (6,000 shares), Robert H.
Callis (4,000 shares), Bertrand Ross (20,000 shares), Thomas Dobson (10,000
shares), Bretharte Jones (22,000 shares), Amy Lampert (4,000 shares), John
Fowler (20,000 shares), Gaynelle Ayers (20,000 shares), Ernest Sutton
(20,000 shares), Diane Anders (10,000 shares), Robert Kerr (4,000 shares),
Andy Powell (12,000 shares), Janet Courtney (2,000 shares), Charmeine Wiktor
(2,000 shares), Regis and Sylvia Louchet (17,600 shares),
II-2
<PAGE> 69
Luis Ramos (2,000 shares), Edward Mojena (4,000 shares), Harry Newman
(44,000 shares), Robert H. Walker (60,000 shares), Theresa Schopler (24,000
shares), Michael McDonnell (16,000 shares), Roy Bee (32,000 shares),
Jonathan Smith (800 shares), Betty Lachman (20,000 shares), Jason Mistler
(1,600 shares), Marcos Fiegler (6,400 shares), Jeannette Caissie (4,800
shares), John Gillespie (1,200 shares), James Schindel (4,000 shares), Mary
Knaak (2,000 shares), Kristene Klein (400 shares) and Mark Warren (4,000
shares).
(3) The three persons who acquired the 60,000 shares of Common Stock are Robert
K. Walker (10,000 shares), Regis Louchet (10,000 shares) and Jean Francis
Louchet (40,000 shares).
(4) The five persons who purchased 38,000 shares of Series A Preferred Stock are
Phillipe F. Drefus (4,000 shares), C. Michael Fisher (16,000 shares), P.
Tristan & Helene F. Bourgolgnie (2,000 shares), Euro Imperial Group, Ltd.
(8,000 shares)and Edward Mojena (8,000 shares).
ITEM 27. EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
----- --------------------------------------------------------------------------------
<C> <S>
1.1 Placement Agent Agreement
1.2 Escrow Agreement by and between Cuidao Holding Corp. and Bank
1.3 Warrant Agreement by and between Cuidao Holding Corp. and Florida Atlantic Stock
Transfer
3.0 Amended and Restated Articles of Incorporation of Cuidao Holding Corp.
3.1 Bylaws of Cuidao Holding Corp.
4.0 Specimen Stock Certificate
5.0 Opinion of Law Offices of John W. Martin as to legality
10.0 Cuidao Holding Corp. 1997 Incentive Stock Option Plan
10.1 Cuidao Holding Corp. 1997 Directors' Stock Option Plan
10.2 Import and Distribution Agreement by and between Cuidao Holding Corp. and the
People's Republic of China, Tsingtao Brewery No. 3 Co., Ltd.
10.3 Import and Distribution Agreement by and between Cuidao Holding Corp. and Cave
du Vignoble Gursonnais
10.4 Import and Distribution Agreement by and between Cuidao Holding Corp. and
Armadis
10.5 Import and Distribution Agreement by and between Cuidao Holding Corp. and Les
Chais du Prevot
10.6 Import and Distribution Agreement by and between Cuidao Holding Corp. and
Vignerons De Buzet
10.7 Import and Distribution Agreement by and between Cuidao Holding Corp. and Godet
Freres
10.8 Form of Lock-Up Agreement by and between the Cuidao Holding Corp., West America
Securities Corp. and certain shareholders of Cuidao Holding Corp.
10.9 Form of Promotional Share Lock-In Agreement by and between Cuidao Holding Corp.
and certain shareholders of Cuidao Holding Corp.
24.0 Consent of Baum & Company, independent certified public accountants
24.1 Consent of Law Offices of John W. Martin (included in Exhibit 5.0)
</TABLE>
II-3
<PAGE> 70
ITEM 28. UNDERTAKINGS
A. Undertaking pursuant to Rule 415.
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement to:
(i) Include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) Reflect in the prospectus any facts or events arising after
the effective date of the Registration Statement (or the most recent
post-effective amendment thereof), which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the Registration Statement; and
(iii) Include any material information with respect to the plan of
distribution not previously disclosed in the Registration Statement or
any material change to such information in the Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment will be deemed to be a
new Registration Statement relating to the securities offered therein, and
the offering of such securities at that time will be deemed to be the
initial bona fide offering thereof.
(3) To remove from registration, by means of a post-effective
amendment, any of the securities being registered that remain unsold at the
termination of the offering.
B. Undertaking in respect of indemnification.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and other agents of the Company, the
Company has been informed that in the opinion of the Securities and Exchange
Commission, such indemnification is against public policy as expressed in the
Securities Act and is therefore unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities, the Registrant will, unless in the opinion of
its counsel the matter has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question whether such indemnification by
it is against public policy as expressed in the Securities Act and will be
governed by the final adjudication of such issue.
II-4
<PAGE> 71
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements of filing on Form SB-2 and authorized this registration
statement to be signed on its behalf by the undersigned, in the City of Ft.
Lauderdale, State of Florida, on the 12th day of December, 1997.
CUIDAO HOLDING CORP.
/s/ C. MICHAEL FISHER
--------------------------------------
C. Michael Fisher
Chairman of the Board and President
/s/ FRANCIS X. SCANLAN
--------------------------------------
Francis X. Scanlan
Chief Financial Officer
(Principal Accounting Officer)
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement was signed by the following persons in the capacities and
on the dates stated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ----------------------------------------------- ------------------------ -------------------
<C> <S> <C>
/s/ C. MICHAEL FISHER Chairman of the Board, December 12, 1997
- ----------------------------------------------- President and Director
C. Michael Fisher
/s/ EDWARD L. MAGDYCZ Secretary and Director December 11, 1997
- -----------------------------------------------
Edward L. Magdycz
/s/ FRANCIS J. HORNIK Director December 12, 1997
- -----------------------------------------------
Francis J. Hornik
</TABLE>
II-5
<PAGE> 1
EXHIBIT 1.1
CUIDAO HOLDING CORP.
A Florida Corporation
260,000 Units Consisting of 260,000 Shares of Common
Stock and Warrants to Purchase 260,000
Shares of Common Stock
PLACEMENT AGENT AGREEMENT
Westlake Village,California
, 1998
West America Securities Corp.
4510 E. Thousand Oaks Boulevard
Suite 100
Westlake Village, California 91362
Gentlemen:
The undersigned, Cuidao Holding Corp., a Florida corporation (the
"Company"), hereby confirms its agreement with West America Securities Corp.
(the "Placement Agent") as follows:
SECTION 1. Description of Units. The Company is offering for sale an
aggregate of 260,000 units, each unit consisting of one share of the Company's
common stock, $.0001 par value ("Share") and one redeemable common stock
purchase warrant ("Warrant")(the aggregate of such 260,000 units being
hereinafter referred to as the "Units"). The offering of the Units is further
described in the Company's Registration Statement (File No. 33- )filed on Form
SB-2 with the United States Securities and Exchange Commission ("Commission").
The Placement Agent, as a licensed broker-dealer capable of participating in the
offering of the Units is invited to assist the Company in the offer and sale of
the Units by using its best efforts to solicit offers for the purchase of the
Units, and in this regard, the Placement Agent has agreed to act in such
capacity on the terms and conditions set forth in this Placement Agent Agreement
(the "Agreement").
SECTION 2. Representations and Warranties of the Company. In order to
induce the Placement Agent to enter into this Agreement, and to further the
offering of the Units, the Company hereby represents and warrants as follows:
(a) The Company has filed a Registration Statement (No. 33- ) on
Form SB-2 relating to the Units with the Commission pursuant to the Securities
Act of 1933, as amended (the "Securities Act"), and the Registration Statement
was declared effective on ________________, 1998. As used in this Agreement, the
term "Registration Statement" means the Registration Statement,
<PAGE> 2
including the Prospectus, the exhibits and the financial statements, and all
amendments thereto, including any amendments after the effective date of the
Registration Statement. The term "Prospectus" means the prospectus filed as a
part of Part I of the Registration Statement, including all pre-effective and
post-effective amendments and supplements thereto.
(b) The Registration Statement and all other documents previously
filed or filed after the date hereof with the Commission conform and will
conform with all of the requirements of the Securities Act in all material
respects. Neither the Registration Statement, the Prospectus nor the material
filed or to be filed with the Commission contains nor will contain any untrue
statements of material fact nor are there or will there be any omissions of
material facts required to be stated therein or that are necessary to make the
statements therein not misleading, except that this warranty does not apply to
any statements or omissions made in reliance upon and in conformity with
information furnished in writing to the Company by and with respect to the
Placement Agent, or any dealer through the Placement Agent, expressly for use in
the Registration Statement or Prospectus or any amendment or supplement thereto.
(c) The Company has obtained a CUSIP number for its common stock.
The materials previously filed or filed after the date hereof with any state do
not and will not contain any untrue statements of material fact nor are there or
will there be any omissions of material facts required to be stated therein or
that are necessary to make the statements therein not misleading.
(d) The Company has been legally incorporated and is now and
always during the period of the offering will be, a validly existing corporation
under the laws of the state of Florida, lawfully qualified to conduct the
business for which it was organized and which it proposes to conduct. The
Company will always during the period of the offering be qualified to conduct
business as a foreign corporation in each jurisdiction where the nature of its
business requires such qualification.
(e) The outstanding capital stock of the Company has been duly
and validly authorized, issued and is fully paid and non-assessable and conforms
to all statements made in the Registration Statement and Prospectus with respect
thereto. The Units, Shares, Warrants, shares underlying the Warrants (the
"Warrant Shares"), Placement Agent Unit Purchase Option (as defined in Section
4(e)(ii) hereof) and the shares of common stock underlying the Placement Agent
Unit Purchase Option (the "Placement Agent Option Shares") have been duly and
validly authorized and, when issued and delivered against payment as provided in
this Agreement, will be validly issued, fully paid and nonassessable. The Shares
and Warrant Shares, upon issuance, will not be subject to the preemptive rights
of any shareholders of the Company. The Warrants
2
<PAGE> 3
and Placement Agent Unit Purchase Option, when sold and delivered, will
constitute valid and binding obligations of the Company enforceable in
accordance with their terms. A sufficient number of shares of common stock have
been reserved for issuance upon exercise of the Warrants and Placement Agent
Unit Purchase Option. The Units, Shares, Warrant Shares, Placement Agent Unit
Purchase Option and the Placement Agent Option Shares will conform to all
statements in the Registration Statement and Prospectus. Upon delivery of the
payment for the Placement Agent Unit Purchase Option to be sold by the Company
as set forth in this Agreement, the Placement Agent and its designees will
receive good and marketable title thereto, free and clear of all liens,
encumbrances, charges and claims except those created by, through or under the
Placement Agent and except restrictions on transfer arising under federal and
state securities laws and the rules and regulations promulgated thereunder. The
Company will have on the Effective date (as hereinafter defined in subsection
(h) of this Section 2) of the Registration Statement and at the time of delivery
of such Placement Agent Unit Purchase Option full legal right and power and all
authorization and approval required by law to sell, transfer and deliver such
Placement Agent Unit Purchase Option in the manner provided thereunder.
(f) The Company has an authorized capitalization of 100,000,000
shares of Common Stock, $.0001 par value, and 10,000,000 shares of Preferred
Stock, $.0001 par value. If all of the Units are sold, the Shares will represent
at least 10% of the Company's shares of common stock outstanding after the
public offering. Common stock underlying outstanding options and warrants except
options issued pursuant to the Company's 1997 Incentive Stock Option Plan and
1997 Directors' Stock Option Plan described in subsection (g) of this Section 2
and except the Warrants and Placement Agent Unit Purchase Option will be deemed
to be outstanding for purposes of determining the number of shares of the
Company's common stock outstanding after the public offering. There are no
outstanding options, warrants or other rights to purchase securities of the
Company, however characterized, except as described in the Registration
Statement. There are no securities of the Company, however characterized, held
in its treasury. With respect to the sell, sale, offer to purchase or purchase
of any of its securities, the Company has not made any intentional or reckless
violations of the antifraud provisions of the federal securities laws, rules or
regulations promulgated thereunder or the laws, rules or regulations of any
jurisdiction wherein such securities transactions or solicitation occurred.
(g) The Board of Directors of the Company and the shareholders of
the Company have adopted a 1997 Incentive Stock Option Plan designed to qualify
under Section 422A of the Internal Revenue Code. The Board of Directors of the
Company and the shareholders of the Company have also adopted a 1997 Directors'
Stock Option Plan which is designed to attract and reward non-
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<PAGE> 4
employee directors. The Incentive Stock Option Plan relates to 750,000 shares of
the Company's common stock. The 1997 Directors' Stock Option Plan relates to
250,000 shares of the Company's common stock.
(h) During the period of the offering of the Units and for one
year from the date the Commission declares the Registration Statement to be
effective (the "Effective Date"), the Company will not sell any equity or
long-term debt securities (except options issued pursuant to the Company's 1997
Incentive Stock Option Plan and 1997 Directors' Stock Option Plan, except any
shares issued upon the exercise of such options, except any shares issued upon
the exercise of any other options or warrants outstanding on the Effective Date
and except the Warrants and Placement Agent Unit Purchase Option) without the
Placement Agent's prior written consent, which will not be unreasonably
withheld.
(i) The Company has caused each of its officers, directors,
promoters and principal stockholders to enter into a Promotional Share Lock-In
Agreement in the form attached hereto as Exhibit "A". The Company has obtained
such an agreement from shareholders owning at least 1,750,000 shares of the
Company's outstanding common stock.
(j) The Company has caused each of its shareholders, other than
its officers, directors, promoters and principal stockholders, to enter into a
Lock-Up Agreement with the Placement Agent in the form attached hereto as
Exhibit "B". The Company has obtained such an agreement from shareholders owning
at least 441,200 shares of the Company's outstanding common stock.
(k) The audited financial statements, together with related
schedules and notes, included in the Registration Statement and Prospectus
present fairly the financial condition of the Company and are reported upon by
independent public accountants according to generally accepted accounting
principles and as required by the rules and regulations of the Commission.
(l) Except as disclosed in the Registration Statement and the
Prospectus, the Company does not have any contingent liabilities, obligations,
or claims nor has it received threats of claims or regulatory action. Further,
except as disclosed in the Registration Statement and the Prospectus, subsequent
to the date information is given in the Registration Statement and definitive
Prospectus, and prior to the close of the offering: (a) there shall not be any
material adverse change in the management or condition, financial or otherwise,
of the Company or in its business taken as a whole; (b) there shall not have
been any material transaction entered into by the Company other than
transactions in the ordinary course of business; (c) the Company shall not have
incurred any material obligations, contingent or otherwise, which are not
disclosed in the Registration Statement
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<PAGE> 5
and the Prospectus; (d) there shall not have been nor will there be any change
in the capital or long-term debt (except current payments) of the Company; and
(e) the Company has not and will not have paid or declared any dividends or
other distributions on its common stock.
(m) The Company will have the legal right and authority to enter
into this Agreement upon its execution, to effect the proposed sale of the
Units, and to effect all other transactions contemplated by this Agreement.
(n) The Company knows of no person who rendered any services in
connection with the introduction of the Company to the Placement Agent. No
broker's or other finder's fees are due and payable by the Company and none will
be paid by it.
(o) The Company is eligible to use Form SB-2 for the offering of
the Units.
(p) The Company and its affiliates are not currently offering any
securities nor has the Company or its affiliates offered or sold any securities
except as required to be described in the Registration Statement.
(q) The Company will not file any amendment or supplement to the
Registration Statement, Prospectus, or exhibits if the Placement Agent and its
counsel have not been previously furnished a copy, or if the Placement Agent or
its counsel have objected in writing to the filing of the amendment or
supplement.
(r) The Company possesses adequate certificates or permits issued
by the appropriate federal, state or local regulatory authorities necessary to
conduct its business and to retain possession of its properties. The Company has
not received any notice of any proceeding relating to the revocation or
modification of any of these certificates or permits.
(s) The Company has filed all tax returns required to be filed
and is not in default in the payment of any taxes which have become due pursuant
to any law or any assessment.
(t) The Company has marketable title to all properties including
intellectual properties described in the Registration Statement as owned by it.
The properties are free and clear of all liens, charges, encumbrances or
restrictions, however characterized, except as described in the Registration
Statement. All of the contracts, leases, subleases, patents, copyrights,
licenses, and agreements, however characterized, under which the Company holds
its properties as described in the Registration Statement are in full force and
effect. The Company is not in default under any of the material terms or
provisions of any contracts, leases, subleases, patents, copyrights, licenses or
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<PAGE> 6
agreements under which the Company holds its properties. There are no known
claims against the Company concerning the Company's rights under the leases,
subleases, patents, copyrights, licenses and agreements and concerning its right
to continued possession of its properties.
(u) All original documents and other information relating to the
Company's affairs has and will continue to be made available upon request to the
Placement Agent and to the Placements Agent's counsel at the Placement Agent's
office or at the office of the Placement Agent's counsel and copies of any such
documents will be furnished upon request to the Placement Agent and to the
Placement Agent's counsel. Included within the documents made available have
been at least the Articles of Incorporation and any amendments thereto, minutes
of all of the meetings of the Incorporators, Directors and Shareholders of the
Company, all financial statements and copies of all contracts, leases, patents,
copyrights, licenses or agreements to which the Company is a party or in which
the Company has an interest.
(v) The Company has appointed Florida Atlantic Stock Transfer,
Tamarac, Florida, as the Company's transfer agent and warrant agent. The Company
will continue to retain a transfer agent for so long as the Company is subject
to the reporting requirements under Section 12(g) or Section 15(d) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"). The Company
will make arrangements to have available at the office of the transfer agent
sufficient quantities of the Company's common stock certificates and Warrant
certificates as may be needed for the quick and efficient transfer of the Units.
(w) The Company will use the proceeds from the sale of the Units
as set forth in the Registration Statement and Prospectus.
(x) There are no contracts or other documents required to be
described in the Registration Statement or to be filed as exhibits to the
Registration Statement which have not been described or filed as required.
(y) The Company is not in material default under any of the
contracts, leases, licenses or agreements to which it is a party. The proposed
offering of the Units will not cause the Company to become in material default
under any of its contracts, leases, subleases, patents, copyrights, licenses or
agreements nor will it create a conflict between the Company and any of the
contracting parties to the contracts, leases and other agreements. Further, the
Company is not in material default in the performance of any obligation,
agreement or condition contained in any debenture, note or other evidence of
indebtedness or any indenture or loan agreement of the Company. The execution
and delivery of this Agreement and the consummation of the transactions herein
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<PAGE> 7
contemplated and compliance with the terms of this Agreement will not conflict
with or result in a breach of any of the material terms, conditions or
provisions of, or constitute a material default under, the Articles of
Incorporation or Bylaws of the Company, as amended, or any note, indenture,
mortgage, deed of trust, or other agreement or instrument to which the Company
is a party or by which it or any of its property is bound, or any existing law,
order, rule, regulation, writ, injunction, or decree of any government,
governmental instrumentality, agency or body, arbitration, tribunal or court,
domestic or foreign, having jurisdiction over the Company or its property. The
consent, approval, authorization, or order of any court or governmental
instrumentality, agency or body is not required for the consummation of the
transactions herein contemplated except such as may be required under the Act,
under the Blue Sky or securities laws of any state or jurisdiction, or the rules
of the NASD (as defined in Section 3(c) hereof).
Each contract to which the Company is a party has been duly and
validly executed, is in full force and effect in all material respects in
accordance with its respective terms, and no contracts have been assigned by the
Company, except as disclosed in the Registration Statement and Prospectus by the
Company. The Company knows of no present situation, condition or fact which
would prevent compliance with the terms of such contracts. Except for amendments
or modifications of contracts in the ordinary course of business and except as
disclosed in the Registration Statement and Prospectus, the Company has no
intention of exercising any right which would cancel any of its obligations
under any contract, and has no knowledge that any other party to any contract,
in which the Company has an interest, has any intention not to render full
performance under such contract.
(z) Except as disclosed in the Registration Statement and
Prospectus, there is, and prior to the close of the offering of the Units to the
public there will be, no action, suit or proceeding before any court or
governmental agency, authority or body pending or to the knowledge of the
Company threatened which might result in judgments against the Company not
adequately covered by insurance or which collectively might result in any
material adverse change in the condition (financial or otherwise), the business
or the prospects of the Company, or would materially affect the properties or
assets of the Company.
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<PAGE> 8
SECTION 3. Representations and Warranties of the Placement Agent.
The Placement Agent hereby represents and warrants to the Company and agrees as
follows:
(a) This Agreement has been duly and validly authorized, executed
and delivered by the Placement Agent and is a valid, binding and enforceable
agreement of the Placement Agent.
(b) Neither the execution and delivery of this Agreement, and the
performance and consummation of the transactions contemplated in this Agreement
will result in any breach of any of the terms and conditions of, or constitute a
default under, the Placement Agent's Articles of Incorporation or Bylaws, or any
indenture, agreement, or instrument by which the Placement Agent is a party or
violate any order directed to the Placement Agent of any court or any federal or
state regulatory body or administrative agency having jurisdiction over the
Placement Agent or its affiliates.
(c) The Placement Agent represents that it is a member in good
standing of the National Association of Securities Dealers, Inc. ("NASD") and
registered as a broker-dealer with the Commission, or that it is a foreign
broker-dealer not eligible for membership under Section 1 of the Bylaws of the
NASD who agrees to make no sales within the United States, its territories or
possessions or to persons who are nationals thereof or residents therein. The
Placement Agent's attention is called to the following: (a) Article III, Section
1 of the Rules of Fair Practice of the NASD and the interpretations of said
Section promulgated by the Board of Governors of the NASD; (b) Section 10(b) of
the Exchange Act and Rule 10b-9 of the general rules and regulations promulgated
under the Exchange Act; (c) Section 15 of the Exchange Act and Rule 15c2-4 of
the general rules and regulations promulgated under the Exchange Act; and (d)
Rule 15c2-8 of the general rules and regulations promulgated under the Exchange
Act and Securities Act Release No. 4968 requiring the distribution of a
Preliminary Prospects to all persons reasonably expected to be purchasers of
Units from the Placement Agent at least 48 hours prior to the time it expects to
mail confirmations of purchase. The Placement Agent, if a member of the NASD, by
signing this Agreement, acknowledges that its is familiar with the cited law,
rules and releases and agrees that it will not directly and/or indirectly
violate any provisions of applicable law in connection with its participation in
the distribution of the Units.
(d) The Placement Agent will not, until advised by the Company in
writing or by wire that the offering of Units has been distributed and closed,
bid for or purchase Shares or Warrants in the open market or otherwise make a
market in the Shares or Warrants or otherwise attempt to induce others to
purchase Shares or Warrants in the open market.
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<PAGE> 9
(e) Neither the Placement Agent nor its directors or officers (or
any other person serving in a similar capacity):
(1) Has been convicted within ten years prior hereto of
any crime or offense involving the purchase or sale, or any conduct or practice
in connection with the purchase or sale, of any security; involving the making
of a false statement with the Commission; or has been convicted or charged with
a crime or offense arising out of the Placement Agent engaging in the business
of an underwriter, broker, dealer, municipal securities dealer, or investment
adviser.
(2) Is subject to any order, judgment, or decree of any
court of competent jurisdiction temporarily or permanently enjoining or
restraining such person from engaging in or continuing any conduct or practice
in connection with the purchase or sale of any security; involving the making of
a false statement with the Commission; or has been convicted or charged with a
crime or offense arising out of such person engaging in the business of an
underwriter, broker, dealer, municipal securities dealer, or investment adviser.
(3) Is subject to an order of the Commission entered
pursuant to Section 15(b), 15B(a) or 15B(c) of the Exchange Act; has been found
by the Commission to be a cause of any such order which is still in effect; or
is subject to an order of the Commission entered pursuant to Section 203(e) or
(f) of the Investment Advisers Act of 1940.
(4) Has been and is suspended or expelled from membership
in a national or regional securities dealers association or a national
securities exchange or a Canadian securities exchange for conduct inconsistent
with just and equitable principles of trade.
(5) Is subject to a United States Postal Service fraud
order or is subject to any restraining order or preliminary injunction entered
under Section 3007 of Title 30, United States Code, with respect to any conduct
alleged to constitute postal fraud.
(6) Has been an underwriter or named as an underwriter of
any securities covered by any registration statement which is the subject of any
proceeding or examination under Section 8 of the Securities Act, or is the
subject of any refusal order or stop order entered thereunder within five (5)
years prior to the date hereof.
(f) To the Placement Agent's knowledge, no action or proceeding
is pending against it or any of its officers or directors concerning its
activities as a broker or dealer that would affect the Company's offering of the
Units.
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<PAGE> 10
(g) The Placement Agent will offer the Units only in those states
and in the quantities that are identified in the Blue Sky Memorandum from the
Company's counsel to the Placement Agent that the offering of the Units has been
qualified for sale under applicable state statutes and regulations.
(h) The Placement Agent, in connection with the offer and sale of
the Units, and in the performance of its duties and obligations under this
Agreement, agrees to use its best efforts to comply with all applicable federal
laws, the laws of the states or other jurisdictions in which the Units are
offered and sold, and the Rules and Regulations of the NASD.
(i) The Placement Agent will not make any offer or sale of Units
unless the offer or sale is made in compliance with the Securities Act, the
Rules of Fair Practice of the NASD, and the applicable securities or Blue Sky
laws of jurisdictions in which offers or sales are made, and the rules and
regulations thereunder. The Placement Agent agrees that it will not offer or
sell Units to any subscriber unless it has reasonable grounds to believe that
the investment in Units is suitable for the subscriber.
(j) The Placement Agent will, reasonably promptly after the
closing of the offering of the Units, supply the Company with all information as
the Company may reasonably request to be supplied to the securities commission
of such states in which the Units have been qualified for sale.
All of the above representations and warranties shall survive the
performance or termination of this Agreement.
SECTION 4. Retention of Placement Agent. In reliance upon the
representations and warranties set forth herein, and subject to the terms and
conditions of this Agreement:
(a) The Placement Agent hereby agrees to solicit, as an
independent contractor and not as the Company's agent, persons who will acquire
the Units. The Placement Agent will be promptly advised when the Registration
Statement becomes effective. The Placement Agent, in selling Units pursuant
hereto, agrees that it will comply with the applicable requirements of the
Securities Act and the Exchange Act and any applicable rules and regulations
issued under the Securities Act and/or the Exchange Act. Neither the Placement
Agent nor any other person is or has been authorized to give any information or
to make any representations other than those contained in the Prospectus in
connection with the sale of the Units, and the Placement Agent hereby agrees not
to give any such information or make any such representations.
(b) The Company shall have full authority to take such action as
it may deem advisable in respect of all matters pertaining to the offering or
arising thereunder. The Company
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<PAGE> 11
shall be under no liability to the Placement Agent, except such as may be
incurred under the Securities Act and the rules and regulations thereunder,
except for lack of good faith and except for obligations expressly assumed by
the Company in this Agreement, and no obligation on the Company's part shall be
implied or inferred herefrom.
(c) The Placement Agent will be informed by the Company as to the
states in which the Company has been advised by counsel that the Units have been
qualified for sale or are exempt under the respective securities or blue sky
laws of such states, but the Company has not assumed and will not assume any
obligation or responsibility as to the right of the Placement Agent or any other
participating broker-dealer to sell Units in any states.
(d) An escrow account shall be established for the Company's
offering at __________ Bank, __________, California (the "Escrow Agent"). The
Placement Agent shall deliver all checks received from purchasers of the Units
solicited by it to the Escrow Agent by twelve o'clock noon of the next business
day after the date of receipt, and all checks should be made payable to " Bank,
as Escrow Agent for Cuidao Holding Corp."
(e) Subject to the sale of 95,000 of the Units to be offered by
the Company, the Company agrees to:
(i) pay a cash commission equal to ten percent (10%) of
the purchase price of all Units sold by the Placement Agent. In the event that a
sale of a Unit for which the Placement Agent has solicited a purchaser shall not
occur, no payment with respect to such Unit shall be paid to the Placement
Agent. Payment of commissions due the Placement Agent will be made promptly
after the release of the funds which have been deposited in the escrow account;
and
(ii) simultaneously with the payment of the cash
commission set forth in subsection (i) hereinabove, sell, at a price of $260,
and issue and deliver to the Placement Agent or its designees, a Placement Agent
Unit Purchase Option to purchase up to 26,000 Units. Such Placement Agent Unit
Purchase Option shall be in the form and substance of the Placement Agent Unit
Purchase Option attached hereto as Exhibit "C" and shall represent the right to
purchase up to an aggregate of 26,000 Units for the four-year period commencing
on the first and ending on the fifth anniversary of the effective date of the
Registration Statement, at a price of $7.00 per Unit. The Placement Agent Unit
Purchase Option shall not be sold, transferred, assigned or hypothecated for a
period of twelve (12) months from the effective date of the Registration
Statement except to partners or officers of the Placement Agent.
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SECTION 5. Expenses.
(a) Subject to the sale of all of the Units offered by the
Company, the Company shall reimburse the Placement Agent for its expenses on a
nonaccountable basis in an amount equal to two and one-half percent (2.5%) of
the aggregate gross dollar amount of Units sold by the Placement Agent. Subject
to the provisions of this Section, the nonaccountable expense allowance shall be
due on the release of the funds in the escrow account to the Company.
(b) Except as stated elsewhere in this Agreement, the Placement
Agent agrees that out of its nonaccountable expense allowance, it will pay all
costs incurred or to be incurred by it or its personnel in connection with the
offering of the Units, except those to be paid by the Company as described in
Section 6 hereof.
SECTION 6. Payment of Expenses and Fees. The Company agrees that
it will pay the following fees and expenses:
(a) All fees and expenses of its legal counsel who will be
engaged to prepare certain information, documents and papers for filing with the
Commission, and with state or local securities authorities;
(b) All fees and expenses of its accountants incurred in
connection with the offering of the Units and preparation of all documents and
filings made as part of the offering;
(c) All costs in issuing and delivering the Units;
(d) All costs of printing and delivering to the Placement Agent
as many copies of the Registration Statement and amendments thereto, Preliminary
Prospectuses and definitive Prospectuses as reasonably requested by the
Placement Agent;
(e) All of the Company's mailing, telephone, travel, clerical and
other office costs incurred or to be incurred in connection with the offering of
the Units;
(f) All fees and costs which may be imposed by the various state
or local securities authorities and the NASD for review of the offering of the
Units; and
(g) All other expenses incurred by the Company in performance of
its obligations under this Agreement.
SECTION 7. Company Indemnification. The Company agrees to
indemnify, defend and hold the Placement Agent harmless against any losses,
claims, damages or liabilities, joint or several:
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(a) To which the Placement Agent may become subject under
applicable law, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon any untrue statement
or alleged untrue statement of a material fact contained in the Registration
Statement, Prospectus, or any amendment or supplement thereto or in any sales
literature, or arise out of or are based upon the omission or alleged omission
to state therein a material fact required to be stated therein or necessary to
make the statements therein not misleading; or
(b) To which the Placement Agent may become subject due to the
misrepresentation by the Company or its agents (other than the Placement Agent
or any other participating broker-dealer) of material facts in connection with
the sale of the Units, unless the misrepresentation of such material facts was
the direct result of misleading information provided to the Company or its
agents by the Placement Agent; or
(c) To which the Placement Agent may become subject as a result
of any breach by the Company of the representations and warranties contained in
this Agreement.
The Company will reimburse the Placement Agent for any legal or
other expenses reasonably incurred in connection with investigating or defending
any such loss, claim, damage or liability (or actions in respect thereof);
provided, however, that the Company shall not be liable in any such case to the
extent that any such loss, claim, damage or liability arises out of or is based
upon an untrue statement or alleged untrue statement or omission or alleged
omission made in the Registration Statement, Prospectus or such amendment or
supplement or in any sales literature, in reliance upon and in conformity with
written information furnished to the Company by the Placement Agent specifically
for use in the preparation thereof. This indemnity agreement shall be in
addition to any liabilities which the Company may otherwise have in connection
with this offering.
The foregoing indemnity agreement shall extend upon the same
terms and conditions to, and shall inure to the benefit of, each person, if any,
who controls the Placement Agent.
SECTION 8. Placement Agent Indemnification. The Placement Agent agrees
to indemnify, defend and hold the Company harmless against any losses, claims,
damages or liabilities, joint or several to which the Company may become subject
under applicable law, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon any untrue statement
or alleged untrue statement of a material fact contained in the Registration
Statement, Prospectus, or any amendment or supplement thereto or in any sales
literature, or arise out of or are based upon the omission or alleged omission
to state therein a material fact required to be stated therein or
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<PAGE> 14
necessary to make the statements therein not misleading, in each case to the
extent, but only to the extent, that such untrue statement or alleged untrue
statement or omission or alleged omission was made in the Registration
Statement, Prospectus, or any amendment or supplement thereto or in any sales
literature, in reliance upon and in conformity with written information
furnished to the Company by the Placement Agent specifically for use in the
preparation thereof; and will reimburse the Company for any legal or other
expenses reasonably incurred in connection with investigating or defending any
such loss, claim, damage or liability (or actions in respect thereof). This
indemnity agreement shall be in addition to any liabilities which the Company
may otherwise have in connection with this offering.
The foregoing indemnity agreement shall extend upon the same
terms and conditions to, and shall inure to the benefit of, each person, if any,
who controls the Company.
SECTION 9. Indemnification Procedures: Promptly after receipt by
an indemnified party of notice of the commencement of any action, such
indemnified party shall, if a claim in respect thereof is to be made against the
indemnifying party under Section 7 or Section 8 of this Agreement, notify the
indemnifying party in writing of the commencement thereof; but the omission to
so notify the indemnifying party shall not relieve it from any liability which
it may have to any indemnified party otherwise than under such Sections. In case
any such action shall be brought against such indemnified party, it shall notify
the indemnifying party of the commencement thereof, the indemnifying party shall
be entitled to participate in, and, to the extent that it shall wish, jointly
with any other indemnifying party, similarly notified, assume the defense
thereof, with counsel satisfactory to such indemnifying and indemnified parties.
Any indemnified party shall have the right to employ separate counsel in any
such action and participate in the defense thereof, but the fees and expenses of
such counsel shall be at the expense of such indemnified party unless (a) the
employment thereof has been specifically authorized by the indemnifying party in
writing, or (b) the indemnifying party has failed to assume the defense and
employ counsel or (c) the named parties to any such action (including any
impleaded parties) include both such indemnified party and the indemnifying
party, and such indemnified party shall have been advised by such counsel that
representation of such indemnified party and the indemnifying party by the same
counsel would be inappropriate under applicable standards of professional
conduct due to actual or potential differing interests between them, in which
case the indemnifying party shall not have the right to assume the defense of
such action on behalf of such indemnified party; provided, however, that the
indemnifying party shall, in connection with any one such action or separate or
substantially similar or related actions in the same jurisdiction arising out of
the same general allegations or circumstances, be liable for the reasonable fees
and expenses of
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<PAGE> 15
only one separate firm of attorneys at any time for all such indemnified
parties, which firm shall be designated in any settlement of any such action
effected without the written consent of the indemnifying party, but if settled
with such written consent, or if there be a final judgment or decree for the
plaintiff in any such action by a court of competent jurisdiction and the time
to appeal shall have expired or the last appeal shall have been denied, the
indemnifying party agrees to indemnify and hold harmless any indemnified party
from and against any loss or liability by reason of such settlement or judgment.
SECTION 10. Termination. This Agreement may be terminated by
either party hereunder at any time upon five days' written notice to the other
party. The Placement Agent's participation in the offer and sale of the Units
will be governed by the conditions herein set forth until this Agreement is
terminated. If this Agreement is not terminated sooner as provided in this
Section, then this Agreement will terminate when the offering is completed.
SECTION 11. Notices. Except as otherwise expressly provided in
this Agreement:
(a) Whenever notice is required by the provisions of this
Agreement to be given to the Company, such notice shall be in writing addressed
to the Company as follows:
Cuidao Holding Corp.
3201 West Griffin Road, Suite 204
Ft. Lauderdale, Florida 33312-6900
Attention: Mr. C. Michael Fisher, President
With a copy to:
John W. Martin, Esq.
5777 West Century Boulevard, Suite 1540
Los Angeles, California 90045
(b) Whenever notice is required by the provisions of this
Agreement to be given to the Placement Agent, such notice shall be given in
writing addressed to the Placement Agent as follows:
West America Securities Corp.
4510 E. Thousand Oaks Boulevard, Suite 100
Westlake Village, California 91362
Attention: Mr. Robert B. Kay, President
With a copy to:
David R. Kagel, Esq.
1801 Century Park East, Suite 2400
Los Angeles, California 90067
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SECTION 12. Binding Effect. This Agreement shall inure to the
benefit of and be binding upon the Placement Agent and the Company and the
Company's respective successors. Nothing expressed in this Agreement is intended
to give any person other than the persons mentioned in the preceding sentence
any legal or equitable right, remedy or warranties included in this Agreement.
SECTION 13. Miscellaneous Provisions.
(a) Nothing contained herein shall constitute the relationship
between the Placement Agent and the Company as an association, partnership,
unincorporated business or other separate entity.
(b) This Agreement shall be construed according to the laws of
the State of California.
(c) The representations and warranties made in this Agreement
shall survive the termination of this Agreement and shall continue in full force
and effect regardless of any investigation made by the party relying upon any
such representation or warranty.
(d) This Agreement may be executed in one or more counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
Please confirm your agreement to solicit persons to acquire Units on the
foregoing terms and conditions by signing and returning the form enclosed
herewith.
Very truly yours,
CUIDAO HOLDING CORP.
a Florida corporation
By
---------------------------------
C. Michael Fisher, President
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Cuidao Holding Corp.
3201 West Griffin Road
Suite 204
Ft. Lauderdale, Florida 33312-6900
Gentlemen:
The undersigned confirms its agreement to act as Placement Agent
as referred to in the foregoing Placement Agent Agreement, subject to the terms
and conditions of such agreement. The undersigned confirms that it is a member
in good standing of the National Association of Securities Dealers, Inc.
WEST AMERICA SECURITIES CORP.
By
----------------------------------
(Signature)
-----------------------------------
(Print Name and Title of
Authorized Representative)
-----------------------------------
(NASD Firm Number)
Dated:_____________________ , 1998 4510 E. Thousand Oaks Boulevard
Suite 100
Westlake Village, CA 91362
Telephone (805) 777-9124
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<PAGE> 18
NO SALE, OFFER TO SELL OR TRANSFER OF THE SECURITIES REPRESENTED BY THIS
CERTIFICATE OR ANY INTEREST THEREIN SHALL BE MADE UNLESS A REGISTRATION
STATEMENT UNDER THE SECURITIES ACT OF 1933, AS AMENDED, WITH RESPECT TO SUCH
TRANSACTION IS THEN IN EFFECT, OR THE ISSUER HAS RECEIVED AN OPINION OF COUNSEL
SATISFACTORY TO IT THAT SUCH TRANSFER DOES NOT REQUIRE REGISTRATION UNDER THAT
ACT.
This Unit Purchase Option will be void after 5:00 p.m. New York time on
______________, _______ (i.e. five years from the effective date of the
Registration Statement).
CUIDAO HOLDING CORP.
PLACEMENT AGENT UNIT PURCHASE OPTION
THIS CERTIFIES THAT WEST AMERICA SECURITIES CORP. (herein
sometimes called "West America") is entitled to purchase from CUIDAO HOLDING
CORP., a Florida corporation (hereinafter called the "Company"), at the price
and during the period hereinafter specified, 26,000 Units ("Units"), each Unit
consisting of one (1) share of the Company's common stock, $.0001 par value
("Common Stock"), and one (1) Common Stock Purchase Warrant (the "Warrant").
Each Warrant entitles the holder thereof to purchase one share of the Company's
Common Stock at a price of $8.00 per share of Common Stock for a period of three
years after the effective date of the Registration Statement. The Units have
been registered under a Registration Statement on Form SB-2 (File No. 33- ),
declared effective by the Securities and Exchange Commission on ___________,
19__ (the "Registration Statement"). The option (the "Option") herein granted
(the document granting the Option and the rights represented thereby are
sometimes hereinafter
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<PAGE> 19
referred to as "this Option") to purchase 26,000 Units was originally issued at
an aggregate price of $260 pursuant to a Placement Agent Agreement between the
Company and West America in connection with a public offering of up to 260,000
Units (the "Offering") through West America. Except as otherwise specially
provided herein the Common Stock and the Warrants issued pursuant to the option
herein granted shall bear the same terms and conditions as described under the
caption "Description of Securities" in the Registration Statement. The Warrants
shall have the same terms as the Warrants contained in the Units sold to the
public. In the event the number of shares of Common Stock into which the
Warrants may be exercised is changed, or there are any other adjustments in the
terms or conditions of the Warrants included in the Units sold pursuant to the
Registration Statement, the terms and conditions of the Warrants issued pursuant
to this Option shall likewise be adjusted.
1. During the period from ____________, 19__ to ___________,
200__, inclusive, West America shall have the option to purchase the Units
hereunder at a price per Unit of $7.00 (equal to approximately 120% of the
offering price of the Units to the public (the "Exercise Price")).
2. The rights represented by this Option may be exercised at any
time within the period above specified, in whole or in part, by (i) the
surrender of this Option (with the purchase form at the end hereof properly
executed) at the principal
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<PAGE> 20
executive office of the Company, located at 3201 West Griffin Road, Suite 204,
Ft. Lauderdale, Florida 33312-6900 (or such other office or agency of the
Company as it may designate by notice in writing to West America at the address
of West America appearing on the books of the Company) and (ii) payment to the
Company of the Exercise Price for the number of Units specified in the
above-mentioned purchase form together with applicable stock transfer taxes, if
any. This Option shall be deemed to have been exercised, in whole or in part to
the extent specified, immediately prior to the close of business on the date
this Option is surrendered and payment is made in accordance with the foregoing
provisions of this paragraph 2, and the person or persons in whose name or names
the certificates for shares of Common Stock and the Warrants shall be issuable
upon such exercise shall become the holder or holders of record of such Common
Stock and Warrants at that time and date. The Common Stock and Warrants and the
certificates for the Common Stock and Warrants so purchased shall be delivered
to West America within a reasonable time, not exceeding ten (10) days, after the
rights represented by this Option shall have been so exercised.
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<PAGE> 21
3. This Option shall not be transferred, sold, assigned or
hypothecated for a period of one year commencing ___________, 19__, except that
it may be assigned during such period, in whole or in part to an officer of West
America or to a related person of any broker/dealer participating in the
Offering. Any such assignment shall be effected by West America (i) executing a
form of assignment at the end hereof and (ii) surrendering this Option for
cancellation at the office or agency of the Company referred to in paragraph 2
hereof, accompanied by a certificate (signed by an officer of West America),
stating that each transferee is a permitted transferee under this paragraph 3
hereof; whereupon the Company shall issue, in the name or names specified by
West America (including West America) a new Option or Options of like tenor and
representing in the aggregate rights to purchase the same number of Units as are
purchasable hereunder.
4. The Company covenants and agrees that all shares of Common
Stock which are sold as part of the Units purchased hereunder and the Common
Stock which may be issued upon exercise of the Warrants will, upon issuance, be
duly and validly issued, fully paid and nonassessable and no personal liability
will attach to the holder thereof. The Company further covenants and agrees that
during the periods within which this Option may be exercised, the Company will
at all times have authorized and reserved a sufficient number of shares of its
Common Stock to provide for the exercise of this Option and that it will have
authorized and reserved a
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<PAGE> 22
sufficient number of shares of Common Stock for issuance upon exercise of the
Warrants included in the Units.
5. This Option shall not entitle West America or any other holder
thereof to any voting rights or other rights as a stockholder of the Company.
6. In the event that the Warrants or the outstanding shares of
Common Stock of the Company are at any time increased or decreased or changed
into or exchanged for a different number or kind of share or other security of
the Company or of another corporation through reorganization, merger,
consolidation, liquidation, recapitalization, or, in the case of Common Stock,
stock split, combination of shares or stock dividends payable with respect to
such Common Stock, appropriate adjustments in the number and kind of such
securities then subject to this Option shall be made effective as of the date of
such occurrence so that the position of the holder of this Option, upon
exercise, will be the same as it would have been had he owned immediately prior
to the occurrence of such events the Warrants and Common Stock subject to this
Option. Such adjustment shall be made successively whenever any event listed
above shall occur.
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<PAGE> 23
IN WITNESS WHEREOF, Cuidao Holding Corp. has caused this
Placement Agent Unit Purchase Option to be signed by its duly authorized
officers under its corporate seal, and this Placement Agent Unit Purchase Option
to be dated ___________, 19___.
CUIDAO HOLDING CORP.
By:
--------------------------------
, President
(Corporate Seal)
Attest:
- ----------------------------
, Secretary
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<PAGE> 24
PURCHASE FORM
Dated: , 199
The undersigned hereby irrevocably elects to exercise the within
Placement Agent Unit Purchase Option to the extent of purchasing _______ Units
and hereby makes payment of $_______ in payment of the actual exercise price
thereof.
-----------------------------
INSTRUCTIONS FOR REGISTRATION OF
COMMON STOCK AND WARRANTS
COMPRISING UNITS
Name____________________________________________________________________________
(please typewrite or print in block letters)
Address_________________________________________________________________________
Signature_______________________________________________________________________
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<PAGE> 25
ASSIGNMENT FORM
FOR VALUE RECEIVED, ________________________________________ hereby
sells, assigns and transfers unto
Name____________________________________________________________________________
(please typewrite or print in block letters)
Address_________________________________________________________________________
the right to purchase Units represented by this Placement Agent Unit Purchase
Option as to which such right is exercisable and does hereby irrevocably
constitute and appoint _________________________________________________________
attorney, to transfer the same on the books of the Company with full power of
substitution in the premises.
Signature__________________________
Dated:___________________, 199_.
8
<PAGE> 1
EXHIBIT 1.2
ESCROW AGREEMENT
THIS ESCROW AGREEMENT ("Agreement") is made and entered into as of
___________, 1997, by and among Bank (the "Escrow Agent"), having its
Principal place of business at , , California and Cuidao Holding
Corp., a Florida corporation (the"Company"), having its principal place of
business at 3201 West Griffin Road, Suite 204, Ft. Lauderdale, Florida
33312-6900.
RECITALS
A. The Company proposes to offer for sale to investors up to 260,000
Units, each Unit consisting of one share of the Company's common stock, $.0001
par value ("Common Stock") and one Common Stock Purchase Warrant, for a maximum
aggregate offering price of $1,495,000 (the "Proceeds").
B. The Company has engaged West America Securities Corp., a member of
the National Association of Securities Dealers, Inc. (the "Placement Agent") to
use its best efforts to sell, as exclusive agent for the Company, the Units. The
Placement Agent shall be bound by this Agreement. However, for purposes of
communications and directives, the Escrow Agent need only accept those signed by
the Company.
C. The Company desires to establish an escrow account in which funds
received from subscribers for the Units will be deposited pending completion of
the escrow period. Bank agrees to serve as Escrow Agent in accordance
with the terms and conditions set forth herein and subject to the approval of
the state securities administrators set forth on the list attached hereto as
Exhibit "A" (hereinafter referred to as the "State Administrators"). The purpose
of this Agreement is to comply with the provisions of Rules 10(b)-9 and 15c2-4
promulgated under the Securities Exchange Act of 1934, as amended, and under the
applicable securities laws of all states in which the offering of Units (the
"Offering") is made.
D. The Escrow Agent must be satisfactory to the State Administrators
and it is not affiliated with the Company.
AGREEMENT
1. ESTABLISHMENT OF ESCROW ACCOUNT. Effective as of the date of the
commencement of the Offering, the parties hereby establish an escrow account
with the Escrow Agent, which escrow account shall be entitled "Cuidao Holding
Corp./ Bank Escrow Account (the "Escrow Account"). The Company and the
Placement Agent will instruct subscribers to make checks for subscriptions
payable to " BANK , AS ESCROW AGENT FOR CUIDAO HOLDING CORP." until a
minimum of 95,000 Units have been sold in the Offering. Any checks received that
are made payable to a party other than the Escrow Agent shall be returned to the
Company or the Placement Agent.
<PAGE> 2
2. ESCROW PERIOD. The period for the existence of the escrow (the
"Escrow Period") shall begin with the commencement of the Offering and shall
terminate upon the earlier to occur of the following dates:
A. The date upon which the Escrow Agent confirms to the State
Administrators as hereinafter provided that it has received in the Escrow
Account gross proceeds of $546,250 in deposited funds (the "Minimum Offering
Amount"); or
B. The expiration of ninety (90) days from the date of
commencement of the Offering (unless extended as permitted in the Registration
Statement filed with the Securities and Exchange Commission in connection with
the Offering for an additional ninety (90) days at the sole discretion of the
Company with a copy of such extension to the Escrow Agent and the State
Administrators); or
C. The date upon which a determination is made by the Company to
terminate the Offering prior to the sale of the Minimum Offering Amount.
During the Escrow Period, the Company is aware and understands that it is
not entitled to any funds received into escrow and no amounts deposited in the
Escrow Account shall become the property of the Company or any other entity, or
be subject to the debts of the Company or any other entity.
3. DEPOSITS INTO THE ESCROW ACCOUNT. All monies received from
subscribers of the Units will be deposited with the Escrow Agent by twelve
o'clock noon of the next business day after receipt of said monies from
subscribers, together with a written account of each sale, which account shall
set forth, among other things, the subscriber's name and address, the number of
Units purchased, the amount paid therefor, whether the consideration received
was in the form of a check, draft, or money order, the date of said check,
draft, or money order, and the date received and delivered to the Escrow Agent.
All monies so deposited in the Escrow Account are hereinafter referred to as the
"Escrow Amount." The State Administrators shall have the authority to inspect
the Escrow Account without obtaining any further permission from the Company
and/or the Escrow Agent.
Unless and until all of the State Administrators order the release of the
Escrow Amount to the Company, such Escrow Amount shall not be, nor shall such
Escrow Amount be considered to be, assets of the Company.
4. DISBURSEMENTS FROM THE ESCROW ACCOUNT.
A. In the event the Escrow Agent does not receive deposits
totalling the Minimum Offering Amount prior to the termination of the Escrow
Period, the Escrow Agent shall promptly notify the State Administrators by
telephone, confirmed in writing, of such fact and shall, upon approval by the
State Administrators, promptly thereafter refund to each subscriber the amount
received from the subscriber, without deduction, penalty, or expense to
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<PAGE> 3
the subscriber, and the Escrow Agent shall notify the Company and the Placement
Agent of its distribution of the funds. The purchase money returned to each
subscriber shall be free and clear of any and all claims of the Company or any
of its creditors.
B. In the event the Escrow Agent receives the Minimum Offering
Amount prior to termination of the Escrow Period, the Escrow Amount will not be
released to the Company until such amount is received by the Escrow Agent in
collected funds and the release provisions set forth in paragraph C below are
complied with. For purposes of this Agreement, the term "collected funds" shall
mean all funds received by the Escrow Agent which have cleared normal banking
channels and are in the form of cash. The Minimum Offering Amount may be met by
funds that are deposited from the effective date of the Offering up to and
including the date on which the contingency must be met, i.e., during the Escrow
Period. However, escrow cannot be broken and the Offering may not proceed to
closing until customer checks have been collected through the normal banking
channels in an aggregate amount sufficient to meet the Minimum Offering Amount.
Purchases made after the Escrow Period has terminated, but prior to the date
escrow is broken pending clearance of subscribers' funds, may not subsequently
be counted to meet the Minimum Offering Amount should checks tendered prior to
the termination of the Escrow Period fail to clear the banking system. In no
event may the Placement Agent substitute its own good check for the check of a
purchaser that has insufficient funds nor otherwise purchase Units to satisfy
the offering contingency unless purchasing for investment prior to the
termination of the Escrow Period and the offering document discloses the maximum
amount of such potential purchase and such arrangement has been approved by the
State Administrators.
C. In no event will funds be released to the Company until the
State Administrators have entered an Order authorizing the release of funds in
the Escrow Account. Such Order will be entered only five business days after
receipt by the State Administrators of an application that includes the
following:
(1) A verified statement duly executed by the Escrow Agent
setting forth the total amount in collected funds on deposit with the Escrow
Agent on the termination date (including purchases for which check or other
payment had been received by the purchaser and were subsequently collected as
provided in paragraph 4B hereof) and states therein that all of the conditions
of this Agreement have been met.
(2) A verified statement duly executed by the Company which
states:
(a) That all required proceeds from the sale of the
Units have been placed with the Escrow Agent in accordance with the terms and
conditions of this Agreement and that there have been no material omissions or
changes in the financial condition of the Company, or other changes of
circumstances, that would render the amount of the proceeds inadequate to
finance the Company's proposed plan of operations, business or enterprise;
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<PAGE> 4
(b) That the required proceeds are represented by
unconditional subscription agreements which are not loans and are not subject to
rescission or rejection by the Company or the subscribers;
(c) That there have been no material omissions or
changes that would render the representations contained in the Registration
Statement to be fraudulent, false or misleading; and
(d) Such other information as the State Administrators
may require.
5. COLLECTION PROCEDURE. The Escrow Agent is hereby authorized to
forward each check for collection and, upon collection of the proceeds of each
check, deposit the collected proceeds in the Escrow Account. As an alternative,
the Escrow Agent may telephone the bank on which the check is drawn to confirm
that the check has been paid.
Any check returned unpaid to the Escrow Agent shall be returned to the
Company or the Placement Agent. In such cases, the Escrow Agent will promptly
notify the Company of such return.
If the Company rejects any subscription for which the Escrow Agent has
already collected funds, the Escrow Agent shall promptly issue a refund check to
the rejected subscriber. If the Company rejects any subscription for which the
Escrow Agent has not yet collected funds but has submitted the subscriber's
check for collection, the Escrow Agent shall promptly issue a check in the
amount of the subscriber's check to the rejected subscriber after the Escrow
Agent has cleared such funds. If the rejected subscriber's check which has been
submitted for collection by the Escrow Agent is uncollectible, and if the Escrow
Agent has issued a check to the rejected subscriber hereunder, then the Escrow
Agent shall notify the Company and the Company shall immediately reimburse the
Escrow Agent for the amount of such funds. If the Escrow Agent has not yet
submitted a rejected subscriber's check for collection, the Escrow Agent shall
promptly remit the subscriber's check directly to the subscriber.
6. INVESTMENT OF ESCROW AMOUNT. The Escrow Agent may invest the Escrow
Amount only in such accounts or investments as the Company may specify by
written notice. The Company may only specify investment in (1) bank accounts,
(2) bank money-market accounts, (3) short-term certificates of deposit issued by
a bank, or (4) short-term securities issued or guaranteed by the U.S.
Government.
7. COMPLIANCE WITH TAXATION MATTERS. The Company shall provide the
Escrow Agent with a completed Internal Revenue Service ("IRS") Form W-8 or Form
W-9 upon the execution of this Agreement. The Escrow Agent may delay accepting
escrow funds until the IRS forms have been provided. For purposes of reporting
to tax authorities, the Escrow Agent will treat all income earned by the Escrow
Agent as paid to the Company at the time income is received by the Escrow
Account.
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<PAGE> 5
The Company shall be responsible for determining any requirements for
paying taxes or reporting any payments for tax purposes. The Company shall give
written directions to the Escrow Agent to prepare and file tax information or to
withhold any payments hereunder for tax purposes. The Company covenants and
agrees to indemnify and hold the Escrow Agent harmless against all liability for
tax withholding and/or reporting for any payments made by the Escrow Agent
pursuant to this Agreement.
8. COMPENSATION OF ESCROW AGENT. The Company shall pay the Escrow Agent
a fee for its escrow services hereunder in accordance with the fee schedule
attached hereto as Exhibit "B". However, no such fee or any monies whatsoever
shall be paid out of or chargeable to the funds on deposit in the Escrow
Account.
In the event Escrow Agent performs any service not specifically provided
hereinabove, or that there is any assignment or attachment of any interest in
the subject matter of this escrow or modification thereof, or that any
controversy arises hereunder, or that Escrow Agent is named a party to, or
intervenes in, any litigation pertaining to this escrow or the subject matter
thereof, Escrow Agent shall be reasonably compensated therefor and reimbursed
for all costs and expenses including attorneys' fees occasioned thereby. Escrow
Agent shall have a first lien on the property and papers held by it hereunder
for such compensation and expenses, and the Company agrees to pay the same.
9. RESIGNATION OF ESCROW AGENT. The Escrow Agent may not resign as
escrow agent without the express consent of the State Administrators, and may
further do so upon giving ten (10) days written notice of such resignation to
the Company at the address set forth hereinbelow. On the effectiveness of such
resignation, the Escrow Agent shall deliver to any escrow agent appointed by the
Company (or if there is no escrow agent appointed by the Company, then to the
purchasers of the Units), all documents and money in the Escrow Account, and
thereupon the Escrow Agent will be released of any further responsibility or
obligation in connection with the Escrow Account or this Agreement.
10. LIABILITY OF THE ESCROW AGENT. The Escrow Agent may rely on and
shall be protected, indemnified and held harmless by the Company in acting upon
the written or oral instructions of any officer or director of the Company or of
the Company's counsel, and the Escrow Agent will be entitled to request that
further instructions be given by such persons or to request that instructions be
given in writing.
In performing duties under this Agreement, the Escrow Agent is authorized
to rely upon any statement, consent, agreement or other instrument not only as
to its due execution, its validity, and the effectiveness of its provisions, but
also as to the truth and accuracy of any information contained therein, which
the Escrow Agent in good faith believes to be genuine or to have been
represented or signed by a proper person or persons. The Escrow Agent shall not
be liable for any error of judgement made in good faith by one of its officers
or directors, unless it shall be proved that the Escrow Agent or such officer or
director was grossly negligent in ascertaining the pertinent facts or acted
intentionally in bad faith. The Escrow Agent will have
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<PAGE> 6
no liability for any action or omission to act with respect to its duties under
this Agreement undertaken in good faith reliance upon reasonable advice of its
counsel or the Company's counsel.
Should the Escrow Agent, before or after the performance of its
obligations under this Agreement, receive or become aware of any conflicting
demands or claims with respect to funds deposited in the Escrow Account or the
rights of the Company or any of the subscribers, the Escrow Agent shall have the
right to discontinue any or all acts conducted pursuant to the terms of this
Agreement until such conflict has been resolved to its satisfaction. The Escrow
Agent shall have a further right to commence or defend any actions or
proceedings for the determination of such conflicting demands or complaints. The
Company hereby covenants and agrees to indemnify the Escrow Agent and hold it
harmless against any loss, liability or expense, and pay all costs, damages,
judgments and expenses, including reasonable attorneys' fees, suffered or
incurred by the Escrow Agent in connection with, or arising out of, this
Agreement, including without limitation, any suit in interpleader brought by the
Escrow Agent, except, that the Escrow Agent will not be indemnified against any
such loss, liability or expense arising out of the Escrow Agent's gross
negligence or willful misconduct. The Escrow Agent will be under no obligation
to institute, or defend any action, suit or legal proceeding in connection
herewith unless first indemnified and held harmless to the Escrow Agent's
satisfaction in accordance with the foregoing. In the event the Escrow Agent
shall bring a suit in interpleader, the Escrow Agent shall ipso facto be fully
released and discharged from all its obligations to perform any and all duties
or obligations under this Agreement. Such indemnity shall survive the
termination or discharge of this Agreement or resignation of the Escrow Agent.
11. MAINTENANCE OF RECORDS. The Escrow Agent shall at all times keep and
maintain a complete set of books, records and accounts relating to the
subscriptions received by the Escrow Agent hereunder, and the disposition by the
Escrow Agent of the proceeds thereof. All such records maintained by the Escrow
Agent shall be available for inspection by the State Administrators, and the
Escrow Agent shall furnish to the State Administrators, upon demand, at such
place designated in such demand, true, correct, complete and current copies of
any or all of such records.
12. MISCELLANEOUS.
A. All notices, reports, instructions, requests and other
communications given under this Agreement shall be either (a) sent in writing
and served personally by delivery to a responsible officer at the party's
offices listed on the signature pages hereto; or delivered by first class
registered or certified U.S. mail, return receipt requested, postage prepaid; or
(b) sent by telex or telecopier and then acknowledged as received by return
telex or telecopier by the intended recipient. Notices shall be deemed received
only upon receipt. Notices shall be directed to the addresses or telex or
telecopier numbers indicated on the signature pages hereto; provided that a
party may change its address or numbers for notices by giving notice to all
other
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<PAGE> 7
parties in accordance with this paragraph. Escrow Agent shall be protected in
acting upon any notice, request, waiver, consent, receipt or other paper or
document believed by Escrow Agent to be signed by the proper party or parties.
B. This Agreement shall be governed by, and construed and
enforced in accordance with, the laws of the State of California. This
Agreement, together with any exhibits and/or schedules referred to herein,
constitutes the entire agreement among the parties pertaining to the subject
matter hereof and supersedes all prior and contemporaneous agreements and
undertakings of the parties in connection herewith.
C. All of the terms, covenants, conditions and provisions of this
Agreement shall bind and inure to the benefit of the parties hereto and to their
respective representatives, successors and assigns.
D. No failure or delay on the part of the Escrow Agent in
exercising any right, power or remedy may be, or may be deemed to be, a waiver
thereof; nor may any single or partial exercise of any right, power or remedy
preclude any other or further exercise of any other right, power or remedy.
E. The invalidity of any provision hereof shall in no way affect
the validity of any other provision hereof. Each of the parties hereto shall at
the request of the other party, deliver to the requesting party all further
documents or other assurances as may reasonably be necessary or desirable in
connection with this Agreement.
F. This Agreement may be executed in any number of counterparts,
each of which shall be deemed to be an original and all of which together shall
be deemed to be one and the same instrument.
G. In the event of any dispute arising out of the subject matter
of this Agreement, the prevailing party shall recover, in addition to any other
damages assessed, its attorneys' fees and court costs incurred in litigating or
otherwise settling or resolving such dispute.
H. Escrow Agent may consult with legal counsel in the event of
any dispute or question as to the instructions provided hereunder or Escrow
Agent's duties thereunder, and Escrow Agent shall incur no liability and/or
expense therefor by acting in accordance with instructions of legal counsel.
I. Escrow Agent shall not be required to take or be bound by
notice of such default involving any expense or liability, unless notice in
writing is given to the Escrow Agent at the office above named, and unless it is
indemnified in a manner satisfactory to it against such expense or liability.
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<PAGE> 8
J. In the event the escrow created by this Agreement is canceled
for any reason, the Company will nevertheless pay the escrow fee, plus all other
costs and expenses of Escrow Agent, as established under Section 8 of this
Agreement. Should the Escrow Agent resign as escrow hereunder pursuant to
Section 9 of this Agreement, Escrow Agent shall be entitled to reimbursement
only for those costs and expenses incurred by Escrow Agent to date of such
resignation.
The Company and the Escrow Agent have entered into this Agreement on this
___ day of _____, 1998 in multiple counterparts, each of which shall be
considered an original. Escrow Agent, by its signature hereon, accepts the
escrow agency created by this Agreement, and agrees to carry out its duties as
escrow agent pursuant to the terms and conditions contained herein.
COMPANY
Cuidao Holding Corp.
By:________________________________________
President
Address for Notices:
3201 West Griffin Road, Suite 204
Ft. Lauderdale, Florida 33312-6900
Facsimile: (954) 964-7087
ESCROW AGENT
Bank
By:________________________________________
Authorized Officer
Address for Notices:
, California
8
<PAGE> 9
EXHIBIT A
STATE SECURITIES COMMISSIONS
1. Colorado Department of Regulatory Agencies, Division of Securities
2. Delaware Division of Securities
3. Florida Division of Securities and Investor Protection
4. Georgia Secretary of State, Securities Division
5. Illinois Securities Department
6. Maryland Office of the Attorney General, Division of Securities
7. New Jersey Department of Law and Public Safety, Division of Consumer
Affairs, Bureau of Securities
8. New York Department of Law
9. North Carolina Secretary of State, Securities Division
10. Ohio Division of Securities
11. Virginia Corporation Commission, Division of Securities and Retail
Franchising
9
<PAGE> 10
EXHIBIT B
ESCROW FEE SCHEDULE
10
<PAGE> 1
EXHIBIT 1.3
WARRANT AGREEMENT
BETWEEN
CUIDAO HOLDING CORP.
AND
FLORIDA ATLANTIC STOCK TRANSFER, INC.,
AS WARRANT AGENT
DATED AS OF _______________, 1998
<PAGE> 2
WARRANT AGREEMENT dated as of __________, 199__ between Cuidao Holding
Corp., a Florida corporation (the "COMPANY") and Florida Atlantic Stock
Transfer, Inc. (together with its permitted successors and assigns, the "WARRANT
AGENT").
WHEREAS, the Company proposes to offer for sale 260,000 Units, consisting
of 260,000 shares of its common stock, $.0001 par value (the "COMMON STOCK")
260,000 Common Stock Purchase Warrants (the "WARRANTS") at a price of $5.75 per
Unit, for an aggregate offering price of $1,495,000;
WHEREAS, each Warrant entitles the holder thereof to purchase one share of
Common Stock at an exercise price of $8.00, subject to adjustment, at any time
until ________, 2001 (the Common Stock issuable upon exercise of the Warrants
shall hereinafter be referred to as the "WARRANT SHARES");
WHEREAS, the Company wishes the Warrant Agent to act as warrant agent on
behalf of the Company in connection with the issuance, division, transfer,
exchange, substitution and exercise of the Warrants, and the Warrant Agent is
willing to so act.
NOW, THEREFORE, in consideration of the premises and the mutual agreements
herein set forth, the parties hereto agree as follows:
SECTION 1. Appointment of Warrant Agent. The Company hereby appoints the
Warrant Agent to act as agent for the Company in accordance with the
instructions set forth hereinafter in this Agreement, and the Warrant Agent
hereby accepts such appointment.
SECTION 2. Warrant Certificates. The certificates evidencing the Warrants
(the "WARRANT CERTIFICATES") shall be substantially in the form set forth in
Exhibit A attached hereto.
SECTION 3. Execution of Warrant Certificates. Warrant Certificates shall
be signed on behalf of the Company by its Chairman of the Board, its President
or a Vice President, and by its Secretary or an Assistant Secretary. Each such
signature may be in the form of a facsimile signature of the present or any
future Chairman of the Board, President, Vice President, Secretary or Assistant
Secretary and may be imprinted or otherwise reproduced on the Warrant
Certificates and for that purpose the Company may adopt and use the facsimile
signature of any person who shall have been Chairman of the Board, President,
Vice President, Secretary or Assistant Secretary, notwithstanding the fact that
at the time the Warrant Certificates shall be delivered or disposed of he shall
have ceased to hold such office.
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In case any officer of the Company who shall have signed any of the
Warrant Certificates shall cease to be such officer before the Warrant
Certificates so signed shall have been disposed of by the Company, such Warrant
Certificates nevertheless may be delivered or disposed of as though such person
had not ceased to be such officer of the Company; and any Warrant Certificate
may be signed on behalf of the Company by any person who, at the actual date of
the execution of such Warrant Certificate, shall be a proper officer of the
Company to sign such Warrant Certificate, although at the date of the execution
of this Warrant Agreement any such person was not such officer.
SECTION 4. Registration and Countersignature. Warrant Certificates shall
be manually countersigned by the Warrant Agent and shall not be valid for any
purpose unless so countersigned. The Warrant Agent shall, upon written
instructions of the Chairman of the Board, Chief Executive Officer, Chief
Operating Officer, or Chief Financial Officer of the Company, countersign and
deliver Warrant Certificates as provided in this Agreement entitling the holders
thereof initially to purchase not more than the number of Warrant Shares
referred to in the first recital hereof. The Company has appointed the Warrant
Agent as the register with respect to the Warrants. The Warrant Agent shall
number and register the Warrant Certificates in a register.
The Company and the Warrant Agent may deem and treat the registered
holder(s) of the Warrants as the absolute owner(s) thereof (notwithstanding any
notation of ownership or other writing on the certificate relating thereto), for
all purposes, and shall not be affected by any notice to the contrary and shall
not be bound to recognize any equitable or other claim to or in the Warrant on
the part of any other person.
SECTION 5. Registration of Transfers and Exchanges.
(a) Transfer and Exchange of Warrants. When Warrants are presented to
the Warrant Agent with a request (i) to register the transfer of the Warrants or
(ii) to exchange such Warrants for an equal number of Warrants of other
authorized denominations, the Warrant Agent shall register the transfer or make
the exchange as requested if its requirements for such transactions are met;
provided, however, that the Warrants so presented have been duly endorsed or
accompanied by a written instruction of transfer in form satisfactory to the
Warrant Agent, duly executed by the holder thereof or by his attorney and duly
authorized in writing.
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(b) Obligations with Respect to Transfers and Exchanges of Warrants. To
permit registrations of transfers and exchanges, the Company shall execute and
the Warrant Agent is hereby authorized to countersign, in accordance with the
provisions of Sections 3 and 4 and this Section 5, Warrants as required pursuant
to the provisions of this Section 5. All Warrants issued upon any registration
of transfer or exchange of Warrants shall be the valid obligations of the
Company, entitled to the same benefits under this Warrant Agreement, as the
Warrants surrendered upon such registration of transfer or exchange.
Prior to due presentment for registration of transfer of any Warrant, the
Warrant Agent and the Company may deem and treat the person in whose name any
Warrant is registered as the absolute owner of such Warrant and neither the
Warrant Agent, nor the Company shall be affected by notice to the contrary.
No service charge shall be made to a holder for any registration, transfer
or exchange.
SECTION 6. Exercise of Warrants.
(a) Subject to the terms of this Agreement, each Warrant holder shall
have the right, which may be exercised commencing on ________, 1998 and until
5:00 P.M., New York Time, on __________, 2001 to receive from the Company the
number of fully paid and nonassessable Warrant Shares which the holder may at
the time be entitled to receive on exercise of such Warrants and payment of the
Exercise Price (as herein defined) then in effect for such Warrant Shares. Each
Warrant not exercised prior to 5:00 P.M., New York Time, on _________, 2001
shall become void and all rights thereunder and all rights in respect thereof
under this Agreement shall cease as of such time.
(b) A Warrant may be exercised upon surrender to the Company at the
principal office of the Warrant Agent of the certificate or certificates
evidencing the Warrants to be exercised, with the form of election to purchase
on the reverse thereof duly filled in and signed, which signature shall be
guaranteed by an "eligible guarantor institution" as defined in Rule 17Ad-
15(a)(2) promulgated under the Securities Exchange Act of 1934, as amended (the
"EXCHANGE ACT"), and upon payment to the Company of the exercise price of $8.00
(the "EXERCISE PRICE"), as adjusted as provided herein, for each
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Warrant Share in respect of which a Warrant is then exercised. Payment of the
aggregate Exercise Price shall be made in cash or by certified or official bank
check in lawful money of the United States of America to the order of the
Company.
Subject to the provisions of Section 7 hereof, upon such surrender of
Warrants and payment of the Exercise Price, the Company shall issue and cause to
be delivered with all reasonable dispatch to or upon the written order of the
holder and in such name or names as the holder may designate, a certificate or
certificates for the number of full Warrant Shares issuable upon the exercise of
such Warrants together with cash as provided in Section 13 hereof.
The Warrants shall be exercisable, at the election of the holders thereof,
either in full or from time to time in part and, in the event that a certificate
evidencing Warrants is exercised in respect of fewer than all of the Warrant
Shares issuable on such exercise at any time prior to the date of expiration of
the Warrants, a new certificate evidencing the remaining Warrant or Warrants
will be issued and the Warrant Agent is hereby irrevocably authorized to
countersign and to deliver the required new Warrant Certificate or Certificates
pursuant to the provisions of this Section and of Section 4 hereof, and the
Company, whenever required by the Warrant Agent, will supply the Warrant Agent
with Warrant Certificates duly executed on behalf of the Company for such
purpose.
(c) All Warrant Certificates surrendered upon exercise of Warrants shall
be canceled by the Warrant Agent and disposed of by the Company in accordance
with applicable law. The Warrant Agent shall account promptly to the Company
with respect to Warrants exercised and concurrently pay to the Company all
monies received by the Warrant Agent for the purchase of the Warrant Shares
through the exercise of such Warrants. The Warrant Agent shall keep copies of
this Agreement and any notices given or received hereunder available for
inspection by the holders and the Company during normal business hours at its
office. The Company shall supply the Warrant Agent from time to time with such
numbers of copies of this Agreement as the Warrant Agent may request.
SECTION 7. Redemption Right. The Company shall have the right, exercisable
immediately, to redeem all or, at the discretion of the Company, any portion of
the Warrants at a price of $.05 per Warrant, at any time prior to their
expiration on not less than 30 days' written notice, if the Quoted Price (as
defined in Section 13 hereof) of the Common Stock equals or exceeds $10.00 per
share for 30 consecutive trading days ending within 10 days of a notice of
redemption from the Company. The redemption right provided for
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herein shall be exercisable by written notice (the "REDEMPTION NOTICE")
delivered to a registered holder of a Warrant. The Redemption Notice shall at
least indicate the number of Warrants to be repurchased and the date on which
the redemption is to be effected, such date to be not more than forty-five (45)
days after the date of the Redemption Notice. No fractional Warrants shall be
repurchased by the Company.
SECTION 8. Payment of Taxes. The Company shall pay any documentary stamp
taxes attributable to the initial issuance of Warrant Shares upon the exercise
of Warrants; provided that the Company shall not be required to pay any tax or
taxes that may be payable in respect of any transfer involved in the issuance of
any Warrant Certificates or any certificates for Warrant Shares in a name other
than that of the registered holder of a Warrant Certificate surrendered upon the
exercise of a Warrant, and the Company shall not be required to issue or deliver
such Warrant Certificates unless or until the person or persons requesting the
issuance thereof shall have paid to the Company the amount of such tax or shall
have established to the satisfaction of the Company that such tax has been paid
or is not due.
SECTION 9. Mutilated or Missing Warrant Certificates.If any mutilated
Warrant Certificate is surrendered to the Warrant Agent, or the Company and the
Warrant Agent receive evidence to their satisfaction of the destruction, loss or
theft of any Warrant Certificate, the Company shall issue and the Warrant Agent,
upon the written order of the Company signed by two officers of the Company,
shall countersign a replacement Warrant Certificate if the Warrant Agent's
requirements for replacements of Warrant Certificates are met. If required by
the Warrant Agent or the Company, an indemnity bond must be supplied by the
holder of such Warrant Certificate that is sufficient in the judgment of the
Warrant Agent and the Company to protect the Company, the Warrant Agent or any
agent from any loss that any of them may suffer if a Warrant Certificate is
replaced. The Company or the Warrant Agent may charge for the expenses in
replacing a Warrant Certificate.
Every replacement Warrant Certificate is an obligation of the Company and
shall be entitled to all of the benefits of this Agreement equally and
proportionately with all other Warrant Certificates duly issued hereunder.
SECTION 10. Reservation of Warrant Shares. The Company shall at all times
reserve and keep available, free from preemptive rights, out of the aggregate of
its authorized but unissued Common Stock or its authorized and issued Common
Stock held in its treasury, for the purpose of enabling it to satisfy any
obligation to issue Warrant Shares upon exercise of Warrants, the maximum number
of shares of Common Stock that may then be deliverable upon the exercise of all
outstanding Warrants.
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The Company or, if appointed, the transfer agent for the Common Stock
shall be irrevocably authorized and directed at all times to reserve such number
of authorized shares of Common Stock as shall be required for such purpose. The
Company shall keep a copy of this Agreement on file with the transfer agent for
the Common Stock.
Before taking any action that would cause an adjustment pursuant to
Section 12 hereof to reduce the Exercise Price below the then par value (if any)
of the Warrant Shares, the Company shall take all action that may, in the
opinion of its counsel, be necessary in order that the Company may validly and
legally issue fully paid and nonassessable Warrant Shares at the Exercise Price
as so adjusted.
The Company covenants that all Warrant Shares issued upon exercise of
Warrants shall, upon issue, be fully paid, nonassessable, free of preemptive
rights and free from all taxes, liens, charges and security interests with
respect to the issue thereof.
SECTION 11. Government Approvals and Stock Exchange Listings. The Company
shall use its best efforts to (a) obtain and keep effective any and all permits,
consents and approvals of governmental agencies and authorities and to make
securities acts filings under federal and state laws, if any, that are required
to permit the exercise of the Warrants and the issuance, sale, transfer and
delivery of the Warrant Shares issued upon exercise of the Warrants, and (b)
have the Warrant Shares, immediately upon their issuance, listed on the
principal securities exchanges and markets within the United States of America,
if any, on which other shares of Common Stock are then listed.
SECTION 12. Adjustments; Etc. The Exercise Price and the number of shares
purchasable hereunder are subject to adjustment from time to time as follows:
(a) Merger, Sale of Assets, etc.
If at any time while the Warrants, or any portion thereof, are
outstanding and unexpired there shall be (1) a reorganization (other than a
combination, reclassification, exchange or subdivision of shares otherwise
provided for herein), (2) a merger or consolidation of the Company with or into
another corporation in which the Company is not the surviving entity, or a
reverse triangular merger in which the Company is the surviving entity but the
shares of the Company's capital stock outstanding immediately prior to the
merger are converted by virtue of the merger into other property, whether in the
form of securities, cash, or otherwise, or (3) a sale or transfer of the
Company's properties and assets as, or substantially as, an entirety to any
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other person, then as part of such reorganization, merger, consolidation, sale
or transfer, lawful provision shall be made so that the holder of Warrants shall
thereafter be entitled to receive upon exercise of the Warrants, during the
period specified herein and upon payment of the Exercise Price then in effect,
the number of shares of stock or other securities or property of the successor
corporation resulting from such reorganization, merger, consolidation, sale or
transfer that a holder of the Warrant Shares deliverable upon exercise of the
Warrants would have been entitled to receive in such reorganization,
consolidation, merger, sale or transfer if the Warrants had been exercised
immediately before such reorganization, merger, consolidation, sale or transfer,
all subject to further adjustment as provided in this Section 12. The foregoing
provisions of this Section 12(a) shall similarly apply to successive
reorganizations, consolidations, mergers, sales and transfers and to the stock
or securities of any other corporation that are at the time receivable upon the
exercise of Warrants. If the per-share consideration payable to the holder
thereof for shares in connection with any such transaction is in a form other
than cash or marketable securities, then the value of such consideration shall
be determined in good faith by the Company's Board of Directors. In all events,
appropriate adjustment (as determined in good faith by the Company's Board of
Directors) shall be made in the application of the provisions of the Warrants
with respect to the rights and interests of the holders thereof after the
transaction, to the end that the provisions of the Warrants shall be applicable
after that event, as near as reasonably may be, in relation to any shares or
other property deliverable after that event upon exercise of Warrants.
(b) Reclassification, etc.
If the Company, at any time while Warrants, or any portion thereof,
remain outstanding and unexpired, by reclassification of securities or
otherwise, shall change any of the securities as to which purchase rights under
the Warrants exist into the same or a different number of securities of any
other class or classes, the Warrants shall thereafter represent the right to
acquire such number and kind of securities as would have been issuable as the
result of such change with respect to the securities that were subject to the
purchase rights under the Warrants immediately prior to such reclassification or
other change and the Exercise Price thereof shall be appropriately adjusted, all
subject to further adjustment as provided in this Section 12.
(c) Split, Subdivision or Combination of Shares.
If the Company at any time while Warrants, or any portion thereof,
remain outstanding and unexpired, shall split, subdivide or combine the
securities as to which purchase rights under the Warrants exist, into a
different number of securities of the same class, the Exercise Price for such
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securities shall be proportionately decreased in the case of a split or
subdivision or proportionately increased in the case of a combination.
(d) Adjustments for Dividends in Stock or Other Securities or Property.
If while Warrants, or any portion thereof, remain outstanding and
unexpired, the holders of the securities as to which purchase rights under the
Warrants exist at the time shall have received, or, on or after the record date
fixed for the determination of eligible stockholders, shall have become entitled
to receive, without payment therefor, other or additional stock or other
securities or property (other than cash) of the Company by way of dividend, then
and in each case, Warrants shall represent the right to acquire, in addition to
the number of shares of the security receivable upon exercise of Warrants, and
without payment of any additional consideration therefor, the amount of such
other or additional stock or other securities or property (other than cash) of
the Company that such holder would hold on the date of such exercise had he been
the holder of record of the security receivable upon exercise of a Warrant on
the date hereof and had thereafter, during the period from the date hereof to
and including the date of such exercise, retained such shares and/or all other
additional stock available by it as aforesaid during such period, giving effect
to all adjustments called for during such period by the provisions of this
Section 12.
(e) Form of Warrants.
The Company may, at its option, issue new Warrant Certificates
evidencing Warrants in such form as may be approved by its Board of Directors to
reflect any adjustment or change in the Exercise Price per Warrant Share and the
number or kind or class of shares or other securities or property purchasable
under the Warrant Certificate made in accordance with the provisions of this
Agreement. However, irrespective of any adjustments in the Exercise Price or the
number or kind of shares purchasable upon the exercise of the Warrants, Warrants
theretofore or thereafter issued may continue to express the same price and
number and kind of shares as are used in the Warrants initially issuable
pursuant to this Agreement.
SECTION 13. Fractional Interests. The Company shall not be required to
issue fractional Warrant Shares on the exercise of Warrants. If more than one
Warrant shall be presented for exercise in full at the same time by the same
holder, the number of full Warrant Shares which shall be issuable upon the
exercise thereof shall be computed on the basis of the aggregate number of
Warrant Shares purchasable on exercise of the Warrants so presented. If any
fraction of a Warrant Share would, except for the provisions of this Section
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13, be issuable on the exercise of any Warrants (or specified portion thereof),
upon payment in full of the Exercise Price with respect to such fraction of a
Warrant Share the Company shall pay an amount in cash equal to the same fraction
of the Current Market Price of such share of Common Stock on the day immediately
preceding the date the Warrant is presented for exercise, provided that at the
request of the Warrant holder, the Exercise Price with respect to such fraction
of a Warrant Share may be netted against the cash to be paid by the Company
under this Section 13.
With respect to this Agreement, the "CURRENT MARKET PRICE" per share of
Common Stock on any date is the average of the Quoted Prices of the Common Stock
for 30 consecutive trading days commencing 45 trading days before the date in
question. The "QUOTED PRICE" of the Common Stock is the last reported sales
price of the Common Stock as reported by the Nasdaq Stock Market, or if the
Common Stock is listed on a securities exchange, the last reported sales price
of the Common Stock on such exchange which shall be for consolidated trading if
applicable to such exchange, or if neither so reported or listed, the last
reported bid price of the Common Stock. In the absence of one or more such
quotations, the Current Market Price shall be determined in good faith by a
nationally recognized investment banking firm that is a member firm of the
National Association of Securities Dealers, Inc. and independent of the Company.
SECTION 14. Notices to Warrant Holders. Upon any adjustment or action
required to be taken pursuant to Section 12 of this Agreement, the Company shall
(a) promptly prepare a certificate setting forth such adjustment or action and a
brief statement of the facts accounting for such adjustment or action, (b)
promptly file with the Warrant Agent and with each transfer agent for the Common
Stock a copy of such certificate and (c) send a brief summary thereof to each
holder of a Warrant Certificate in accordance with Section 19 hereof.
In case:
(a) of any consolidation or merger to which the Company is a party and
for which approval of any stockholders of the Company is required, or of the
conveyance or transfer of the properties and assets of the Company substantially
as an entirety, or of any reclassification or change of Common Stock issuable
upon exercise of the Warrants (other than a change in par value, or from par
value to no par value, or from no par value to par value, or as a result of a
subdivision or combination), or a tender offer or exchange offer for shares of
Common Stock; or
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(b) of the voluntary or involuntary dissolution, liquidation or winding
up of the Company; then the Company shall cause to be given to each of the
registered holders of the Warrant Certificates at his address appearing on the
Warrant register, at least 20 days prior to the applicable record date
hereinafter specified, or promptly in the case of events for which there is no
record date, in accordance with Section 19 hereof, a written notice stating, as
appropriate, (i) the initial expiration date set forth in any tender offer or
exchange offer for shares of Common Stock, or (ii) the date on which any such
consolidation, merger, conveyance, transfer, dissolution, liquidation or winding
up is expected to become effective or consummated, and the date as of which it
is expected that holders of record of shares of Common Stock shall be entitled
to exchange such shares for securities or other property, if any, deliverable
upon such reclassification, consolidation, merger, conveyance, transfer,
dissolution, liquidation or winding up. The failure to give the notice required
by this Section 14 or any defect therein shall not affect the legality or
validity of any consolidation, merger, conveyance, transfer, dissolution,
liquidation or winding up, or the vote upon any action.
Nothing contained in this Agreement or in any of the Warrant Certificates
shall be construed as conferring upon the holders thereof the right to vote or
to consent or to receive notice as stockholders in respect of the meetings of
stockholders or the election of Directors of the Company or any other matter, or
any rights whatsoever as stockholders of the Company.
SECTION 15. Concerning the Warrant Agent. The Company agrees to pay to the
Warrant Agent reasonable compensation for all services rendered by it hereunder
and, from time to time, on demand of the Warrant Agent, its reasonable expenses
and counsel fees and disbursements and other reasonable disbursements incurred
in the administration and execution of this Agreement and the exercise and
performance of its duties hereunder. The Company also agrees to indemnify the
Warrant Agent for, and to hold it harmless against, any loss, liability, or
expense incurred without negligence, bad faith or willful misconduct on the part
of the Warrant Agent for anything done or omitted by the Warrant Agent in
connection with the acceptance and administration of this Agreement, including
the costs and expenses of defending against any claim of liability arising
therefrom, directly or indirectly. The indemnification provided for hereunder
shall survive the expiration of the Warrants and the termination of this
Agreement.
The Warrant Agent shall be protected and shall incur no liability for, or
in respect of, any action taken, suffered or omitted by it in connection with
its administration of this Agreement in reliance upon any Warrant Certificate or
certificate for Warrant Shares or for other securities of the Company,
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instrument of assignment or transfer, power of attorney, endorsement, affidavit,
letter, notice, direction, consent, certificate, statement, or other paper or
document believed by it, after proper inquiry or examination, to be genuine and
to be signed, executed and, where necessary, verified or acknowledged, by the
proper person or persons.
SECTION 16. Merger or Consolidation or Change of Name of Warrant Agent.
Any corporation into which the Warrant Agent or any successor Warrant Agent may
be merged or with which it may be consolidated, or any corporation resulting
from any merger or consolidation to which the Warrant Agent or any successor
Warrant Agent shall be a party, or any corporation succeeding to the corporate
trust or stock transfer business of the Warrant Agent or any successor Warrant
Agent, shall be the successor to the Warrant Agent under this Agreement without
the execution or filing of any paper or any further act on the part of any of
the parties hereto, provided that such corporation would be eligible for
appointment as a successor Warrant Agent under the provisions of Section 18
hereof. In case at the time such successor Warrant Agent shall succeed to the
agency created by this Agreement any of the Warrant Certificates shall have been
countersigned but not delivered, any such successor Warrant Agent may adopt the
countersignature of the predecessor Warrant Agent and deliver such Warrant
Certificates so countersigned; and, in case at that time any of the Warrant
Certificates shall not have been countersigned, any successor Warrant Agent may
countersign such Warrant Certificate either in the name of the predecessor or in
the name of the successor Warrant Agent; and in all such cases such Warrant
Certificates shall have the full force provided in the Warrant Certificates in
this Agreement.
In case at any time the name of the Warrant Agent shall be changed, and at
such time any of the Warrant Certificates shall have been countersigned but not
delivered, the Warrant Agent may adopt the countersignature under its prior name
and deliver Warrant Certificates so countersigned; and, in case at that time any
of the Warrant Certificates shall not have been countersigned, the Warrant Agent
may countersign such Warrant Certificates either in its prior name or in its
changed name; and in all such cases such Warrant Certificates shall have the
full force provided in the Warrant Certificates and in this Agreement.
SECTION 17. Duties of Warrant Agent. The Warrant Agent undertakes the
duties and obligations imposed by this Agreement upon the following terms and
conditions, all of which the Company, by its acceptance hereof, and the holders
of Warrant Certificates, by their acceptance thereof, shall be bound:
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(a) The Warrant Agent may consult with legal counsel selected by it (who
may be legal counsel for the Company), and the opinion of such counsel shall be
full and complete authorization and protection to the Warrant Agent as to any
action taken or omitted by it in good faith and in accordance with such opinion.
(b) Whenever in the performance of its duties under this Agreement the
Warrant Agent shall deem it necessary or desirable that any fact or matter be
proved or established by the Company prior to taking or suffering any action
hereunder, such fact or matter (unless other evidence in respect thereof be
herein specifically prescribed) may be deemed to be conclusively proved and
established by a certificate signed by a person reasonably believed by the
Warrant Agent to be the Chairman of the Board, the President, any Vice
President, the Treasurer, the Secretary or any Assistant Secretary of the
Company and delivered to the Warrant Agent; and such certificate shall be full
authorization to the Warrant Agent for any action taken or suffered in good
faith by it under the provisions of this Agreement in reliance upon such
certificate.
(c) The Warrant Agent shall be liable hereunder only for its own
negligence, bad faith or willful misconduct.
(d) The Warrant Agent shall not be liable for, or by reason of, any
statements of fact or recitals contained in this Agreement or in the Warrant
Certificates (except as to the fact that it has countersigned the Warrant
Certificates) or be required to verify the same, but all such statements and
recitals are and shall be deemed to have been made by the Company only.
(e) The Warrant Agent shall not be under any responsibility in respect
of the validity of this Agreement or the execution and delivery hereof (except
the due execution hereof by the Warrant Agent) or in respect of the validity or
execution of any Warrant Certificate (except its countersignature thereof); nor
shall it be responsible for any breach by the Company of any covenant or
condition contained in this Agreement or in any Warrant Certificate; nor shall
it be responsible for any adjustment required under the provisions of Section 12
hereof or responsible for the manner, method or amount of any such adjustment or
the ascertaining of the existence of facts that would require any such
adjustment (except with respect to the exercise of Warrants evidenced by Warrant
Certificates after receipt of the certificate described in Section 14 hereof);
nor shall it by any act hereunder be deemed to make any representation or
warranty as to the authorization or reservation of
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any shares of Common Stock or other securities to be issued under this Agreement
or any Warrant Certificate or as to whether any shares of Common Stock or other
securities shall, when so issued, be validly authorized and issued, fully paid
and nonassessable.
(f) The Warrant Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder and
certificates delivered pursuant to any provision hereof from any person
reasonably believed by the Warrant Agent to be the Chairman of the Board, the
President, any Vice President, the Secretary, any Assistant Secretary or the
Treasurer of the Company, and is authorized to apply to such officers for advice
or instructions in connection with its duties, and it shall not be liable for
any action taken or suffered to be taken by it in good faith in accordance with
written instructions of any such person. Any application by the Warrant Agent
for written instructions from the Company may, at the option of the Warrant
Agent, set forth in writing any action proposed to be taken or omitted by the
Warrant Agent under this Agreement and the date on and/or after which such
action shall be taken or such omission shall be effective. The Warrant Agent
shall not be liable for any action taken by, or omission of, the Warrant Agent
in accordance with a proposal included in such application on or after the date
specified in such application (which date shall not be less than five business
days after the date any officer of the Company actually receives such
application, unless any such officer shall have consented in writing to any
earlier date) unless, prior to taking any such action (or the effective date in
the case of an omission), the Warrant Agent shall have received written
instructions in response to such application specifying the action to be taken
or omitted.
(g) The Warrant Agent and any stockholder, director, officer or employee
of the Warrant Agent may buy, sell or deal in any of the Warrants or other
securities of the Company or become pecuniarily interested in any transaction in
which the Company may be interested, or contract with or lend money to the
Company or otherwise act as fully and freely as though it were not Warrant Agent
under this Agreement to the extent lawfully permitted to so act. Nothing herein
shall preclude the Warrant Agent from acting in any other capacity for the
Company or for any other legal entity.
(h) The Warrant Agent may execute and exercise any of the rights or
powers hereby vested in it or perform any duty hereunder either itself or by or
through its attorneys or agents (which shall not include its employees), and the
Warrant Agent shall not be answerable or accountable for any act or omission,
default, neglect or misconduct of any such attorneys or agents or for
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any loss to the Company or to the holders of the Warrants resulting from any
such act, omission, default, neglect or misconduct, provided reasonable care was
exercised in the selection and continued employment thereof.
(i) No provision of this Agreement shall require the Warrant Agent to
expend or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder or in the exercise of its rights if
there shall be reasonable grounds for believing that repayment of such funds or
adequate indemnification against such risk or liability is not reasonably
assured to it.
(j) If, with respect to any Warrant Certificate surrendered to the
Warrant Agent for exercise or transfer, the form of election to purchase or
transfer, as the case may be, has not been completed, the Warrant Agent shall
not take any further action with respect to such requested exercise or transfer
without first consulting with the Company.
(k) The Warrant Agent shall not be required to take notice of, or be
deemed to have notice of, any fact, event or determination under this Agreement
unless and until the Warrant Agent shall be specifically notified in writing of
such fact, event or determination.
SECTION 18. Change of Warrant Agent. The Warrant Agent or any successor
Warrant Agent may resign and be discharged from its duties under this Agreement
upon 30 days' notice in writing mailed to the Company and to each transfer agent
of the Common Stock by registered or certified mail. The Company may remove the
Warrant Agent or any successor Warrant Agent upon 30 days' notice in writing
mailed to the Warrant Agent or successor Warrant Agent, as the case may be, and
to each transfer agent of the Common Stock by registered or certified mail. If
the Warrant Agent shall resign or be removed or shall otherwise become incapable
of acting, the Company shall appoint a successor to the Warrant Agent. If the
Company shall fail to make such appointment within a period of 30 days after
giving notice of such removal or after it has been notified in writing of such
resignation or incapacity by the resigning or incapacitated Warrant Agent, then
the holder of any Warrant Certificate may apply to any court of competent
jurisdiction for the appointment of a new Warrant Agent. Notwithstanding any
provision to the contrary contained herein, the removal or resignation of the
Warrant Agent will not be effective until such time as a successor Warrant Agent
has been appointed in accordance with the terms of this Agreement. Any successor
Warrant Agent, whether appointed by the Company or by such a court, shall be a
corporation or other business organization organized and doing business under
the laws of the United States or any state of the United States, in good
standing, which is authorized under such laws to exercise corporate trust or
14
<PAGE> 16
stock transfer powers. After appointment, the successor Warrant Agent shall be
vested with the same powers, rights, duties and responsibilities as if it had
been originally named as Warrant Agent without further act or deed; but the
predecessor Warrant Agent shall deliver and transfer to the successor Warrant
Agent any property at the time held by it hereunder and execute and deliver any
further assurance, conveyance, act or deed necessary for the purpose. Not later
than the effective date of any such appointment, the Company shall file notice
thereof in writing with the predecessor Warrant Agent and each transfer agent of
the Common Stock and mail notice thereof in writing to the registered holders of
the Warrant Certificates. Failure to give any notice provided for in this
Section 18, or any defect therein, shall not affect the legality or validity of
the resignation or removal of the Warrant Agent or the appointment of the
successor Warrant Agent, as the case may be.
SECTION 19. Notices. Any notice or demand authorized by this Agreement to
be given or made by the registered holder of any Warrant Certificate to or on
the Company shall be sufficiently given or made when and if deposited in the
mail, first class or registered, postage prepaid, or next-day air courier,
addressed to the office of the Company expressly designated by the Company at
its office for purposes of this Agreement (until the Warrant holders are
otherwise notified in accordance with this Section by the Company) as follows:
Cuidao Holding Corp.
3201 West Griffin Road, Suite 204
Ft. Lauderdale, Florida 33312-6900
Attention: Mr. C. Michael Fisher, President
with a copy to:
Law Offices of John W. Martin
5777 West Century Boulevard, Suite 1540
Los Angeles, California 90045
Attention: John W. Martin, Esq.
Subject to the provisions of Section 16 hereof, any notice or demand
authorized by this Agreement to be given or made by the Company or by the
registered holder of any Warrant Certificate to or on the Warrant Agent shall be
sufficiently given or made if sent by first-class mail, postage prepaid,
addressed (until another address is filed in writing with the Company) as
follows:
15
<PAGE> 17
Florida Atlantic Stock Transfer, Inc.
5701 N. Pine Island Road, Suite 310B
Tamarac, Florida 33321
Attention: Mr. Rene Garcia, President
Any notice pursuant to this Agreement to be given by the Company to the
registered holder(s) of any Warrant Certificate shall be sufficiently given and
when and if deposited in the mail, first class or registered, postage prepaid,
or next-day air courier, addressed (until the Company is otherwise notified in
accordance with this Section by such holder) or next-day air courier to such
holder at the address appearing on the Warrant register of the Company.
SECTION 20. Supplements and Amendments. The Company and the Warrant Agent
may from time to time supplement or amend this Agreement without the approval of
any holders of Warrant Certificates in order (i) to cure any ambiguity or (ii)
to correct or supplement any provision contained herein that may be defective or
inconsistent with any other provision herein, or to make any other provisions in
regard to matters or questions arising hereunder which the Company may deem
necessary or desirable and which shall not in any way materially adversely
affect the interests of the holders of Warrant Certificates. Any amendment or
supplement to this Agreement that has a material adverse effect on the interests
of holders shall require the written consent of registered holders of a majority
of the then outstanding Warrants. The consent of each registered holder of a
Warrant affected shall be required for any amendment pursuant to which the
Exercise Price would be increased or the number of Warrant Shares purchasable
upon exercise of Warrants would be decreased. The Warrant Agent shall be
entitled to receive and, subject to Section 17 hereof shall be fully protected
in relying upon an officers' certificate and opinion of counsel as conclusive
evidence that any such amendment or supplement is authorized or permitted
hereunder, that it is not inconsistent herewith, and that it will be valid and
binding upon the Company in accordance with its terms. The Company may not sign
any amendment or supplement until the Company's board of directors approves it.
SECTION 21. Determinations and Actions by the Board of Directors, etc. All
actions, calculations, interpretations and determinations (including, without
limitation, all omissions with respect to the foregoing) which are done or made
by the Board of Directors in good faith shall not subject the Board of
Directors, or any member thereof, to any liability to the holders of the Warrant
Certificates.
16
<PAGE> 18
SECTION 22. Successors. All the covenants and provisions of this Agreement
by or for the benefit of the Company shall bind and inure to the benefit of its
successors and assigns hereunder. Upon becoming a successor to the Company, such
successor shall be deemed to be the Company for the purposes of this Agreement.
SECTION 23. Governing Law. THIS AGREEMENT SHALL BE CONSTRUED, INTERPRETED
AND THE RIGHTS OF THE PARTIES DETERMINED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF FLORIDA, AS APPLIED TO CONTRACTS MADE AND PERFORMED WITHIN THE STATE OF
FLORIDA, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW.
SECTION 24. Severability. If any term, provision, covenant or restriction
of this Agreement is held by a court of competent jurisdiction or other
authority to be invalid, void or unenforceable, the remainder of the terms,
provisions, covenants and restrictions of this Agreement shall remain in full
force and effect and shall in no way be affected, impaired or invalidated.
SECTION 25. Descriptive Headings. Descriptive headings of the several
Sections of this Agreement are inserted for convenience only and shall not
control or affect the meaning or construction of any of the provisions hereof.
SECTION 26. Counterparts. This Agreement may be executed in any number of
counterparts and each of such counterparts shall for all purposes be deemed to
be an original, and all such counterparts shall together constitute but one and
the same instrument.
17
<PAGE> 19
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed, as of the day and year first above written.
CUIDAO HOLDING CORP.
By______________________________________
Name: C. Michael Fisher
Title: President
FLORIDA ATLANTIC STOCK TRANSFER,
INC.
By:_____________________________________
Name: Rene Garcia
Title: President
18
<PAGE> 20
EXHIBIT A
[Form of Warrant Certificate]
[Face]
CUIDAO HOLDING CORP.
Void After ______________, 2001
COMMON STOCK PURCHASE WARRANT CERTIFICATE
THIS CERTIFIES THAT, for value received, ____________________ or
registered assigns, is the owner of the number of Common Stock Purchase Warrants
("Warrants") set forth above. Each Warrant (subject to adjustments as
hereinafter referred to) entitles the owner hereof to purchase during the three
year period commencing _____________, 1998 until 5:00 P.M., New York Time, on
______________, 2001, one fully paid and nonassessable share of common stock,
$.0001 par value, of Cuidao Holding Corp., a Florida corporation (hereinafter
called the "Corporation") (such shares of common stock being hereinafter
referred to as the "Common Stock"), upon payment of the warrant price (as
hereinafter described); provided, however, that under certain conditions set
forth in the Warrant Agreement hereinafter mentioned, the number of shares of
Common Stock purchasable upon the exercise of the Warrants may be increased or
reduced and the warrant price may be adjusted. Subject to adjustment as
aforesaid, the initial warrant price per Warrant (hereinafter called the
"warrant price") shall be $8.00 per Warrant. As provided in said Warrant
Agreement, the warrant price and any and all applicable taxes due in connection
with the exercise of the Warrants, the exchange of the initial Warrants for
Common Stock and the issuance of the Common Stock is payable, upon the exercise
of the Warrants, in lawful money of the United States either in cash or by
certified check or bank draft to the order of the Corporation.
Under certain conditions as set forth in the Warrant Agreement, the
Warrants may be called for redemption as a whole at any time or in part from
time to time after the Warrants become exercisable and prior to the expiration
of the Warrants at a redemption price of $.05 per Warrant upon not less than 30
days' prior written notice if the closing bid price of the Common Stock equals
or exceeds $10.00 per share for 30 consecutive trading days ending within 10
days of the notice of redemption.
A-1
<PAGE> 21
Upon the exercise of the Warrants, the form of election to purchase on the
reverse hereof must be properly completed and executed and this Warrant
Certificate surrendered. In the event that less than all of the Warrants
represented by this certificate are exercised at any one time, a new Warrant
Certificate for the remaining number of unexercised Warrants will be issued upon
such surrender.
Prior to the due presentment for registration of transfer of this Warrant
Certificate, the Corporation and the Warrant Agent may deem and treat the
registered holder as the absolute owner hereof and of each Warrant represented
hereby (notwithstanding any notation of ownership or other writing herein made
by anyone other than a duly authorized officer of the Corporation or the Warrant
Agent), for all purposes, and neither the Corporation nor the Warrant Agent
shall be affected by any notice to the contrary.
This Warrant Certificate is issued under, and the rights represented
hereby are subject to, the terms and provisions contained in a Warrant Agreement
dated , 1998, by and among the Corporation and Florida Atlantic Stock
Transfer, Inc., as Warrant Agent (the "Warrant Agent"), and is further subject
to all the terms and provisions of which the registered holder of this Warrant
Certificate, by acceptance hereof, assents. Reference is hereby made to said
Warrant Agreement for a more complete statement of the rights and limitations of
rights of the registered holders hereof, the rights and duties of the Warrant
Agent and the rights and obligations of the Corporation thereunder. Copies of
said Warrant Agreement are on file at the office of the Warrant Agent.
The Corporation shall not be required upon the exercise of the Warrants to
issue fractions of shares of Common Stock.
The Warrants are transferable at the office of the Warrant Agent (or of
its successor as Warrant Agent) by the registered holder hereof in person or by
attorney duly authorized in writing but only in the manner and subject to the
limitations provided in the Warrant Agreement and upon surrender of this Warrant
Certificate and the payment of any transfer taxes. Upon any such transfer, a new
Warrant Certificate, or new Warrant Certificates of different denomination, of
like tenor and representing an equal aggregate number of Warrants will be issued
to the transferee in exchange for this Warrant Certificate which shall be
canceled. This Warrant Certificate when surrendered at the office of the Warrant
Agent (or of its successors as Warrant Agent) by the registered holder hereof in
person or by attorney duly authorized in writing may be exchanged, in the manner
and subject to the limitations provided in the Warrant Agreement for another
Warrant Certificate, or other Warrant Certificates of different denominations,
of like tenor and representing
A-2
<PAGE> 22
an equal number of Warrants; provided, however, that in the event that a Warrant
Certificate surrendered for transfer bears a restrictive legend, the Warrant
Agent shall not cancel such certificate and issue new Warrant Certificates in
exchange therefor until the Warrant Agent has received an opinion of counsel for
the Corporation stating that such transfer may be made and indicating whether
the new Warrant Certificate must also bear a restrictive legend.
If this Warrant Certificate shall be surrendered for exercise within any
period during which the transfer books for the Common Stock purchasable upon the
exercise of the Warrants are closed for any purpose, the Corporation shall not
be required to make delivery of certificates for the Common Stock purchasable
upon such exercise until the date of the reopening of said transfer books.
The Corporation shall not be obligated to deliver any shares of Common
Stock pursuant to the exercise of the Warrants unless a registration statement
under the Securities Act of 1933, as amended, is effective with respect to such
Common Stock. Warrants shall not be exercisable by the owner in any state where
such exercise would be unlawful.
The holder of Warrants shall not be entitled to any of the rights of a
stockholder of the Corporation prior to the exercise thereof.
This Warrant Certificate shall not be valid unless countersigned by the
Warrant Agent.
This Warrant Certificate shall be governed by and construed in accordance
with the laws of the State of Florida.
A-3
<PAGE> 23
IN WITNESS WHEREOF, the Corporation has caused this certificate to be
executed by the facsimile signature of the President and attested by the
facsimile signature of its Secretary.
Dated:
CUIDAO HOLDING CORP.
By:________________________________________
President
By:________________________________________
Secretary
COUNTERSIGNED
FLORIDA ATLANTIC STOCK TRANSFER, INC.
Warrant Agent
By:_____________________________
Authorized Signature
A-4
<PAGE> 24
[Reverse Side of Warrant Certificate]
ELECTION TO PURCHASE
To be Executed by the Registered Holder in Order to Exercise Warrants
To: Cuidao Holding Corp.
c/o Florida Atlantic Stock Transfer, Inc.
5701 N. Pine Island Road, Suite 310B
Tamarac, Florida 33321
The undersigned hereby irrevocably elects to exercise the right of
purchase represented by the within Warrant(s) for and to purchase thereunder
___________________ shares of Common Stock provided for therein and tenders
herewith payment of the purchase price in full to the order of the Corporation
and requests that certificates for such shares shall be issued in the name of
__________________ and be delivered to _________________ and, if said number of
shares shall not be all the shares purchasable thereunder, that a new Warrant
Certificate for the balance remaining of the shares purchasable under the within
Warrant(s) be registered in the name of, and delivered to, the undersigned at
the address stated below.
Dated:_______________________ Signature____________________
NOTE: The above signature must
Name:________________________ correspond with the name as
written upon the face of this Warrant
Address:_____________________ Certificate or with the
name of the assignee appearing in
_____________________________ the assignment form below in every
particular without alteration or
enlargement or any change
whatever.
*Signature Guaranteed:_________
A-5
<PAGE> 25
ASSIGNMENT
To Be Executed by the Registered Holder in Order to Assign Warrants
For value received______________________ hereby sell, assign and transfer unto
__________________________________________________(_____) Warrants represented
by the within Warrant Certificate, together with all right, title and interest
therein, and do hereby irrevocably constitute and appoint
____________________________ attorney, to transfer said Warrants on the books of
the within named Corporation, with full power of substitution in the premises.
Dated__________________, 19_____
Signature:_________________________________
NOTE: The above signature must correspond
with the name as written upon the face of
this Warrant Certificate in every
particular without alteration or
enlargement or any change whatever.
*Signature Guaranteed:_____________________
*In case of assignment, or if the Common Stock issued upon exercise is to be
registered in the name of a person other than the holder, the holder's signature
must be guaranteed by an eligible guarantor institution (Bank,Stockbrokers,
Savings and Loan Association and Credit Unions), with membership in an approved
signature guarantee medallion program pursuant to S.E.C. Rule 17Ad-15.
A-6
<PAGE> 1
EXHIBIT 3.0
AMENDED AND RESTATED
ARTICLES OF INCORPORATION
OF
CUIDAO HOLDING CORP.,
a Florida corporation
C. MICHAEL Fisher and Edward L. Magdycz certify that:
1. They are the duly elected and acting President and Secretary, respectively,
of Cuidao Holding Corp, a Florida corporation (hereinafter, "Corporation").
2. In accordance with Section 607.1007 of the Florida Business Corporation Act,
the Articles of Incorporation of this Corporation shall be amended and restated
to read as follows:
ARTICLE I - NAME
The name of this Corporation is CUIDAO HOLDING CORP.
ARTICLE 2 - PURPOSE OF CORPORATION
The Corporation shall engage in any activity or business permitted under
the laws of the United States and of the State of Florida.
ARTICLE 3 - PRINCIPAL OFFICE
The address of the principal office of this Corporation is 3201 W.
Griffin Rd., Suite 204 Ft. Lauderdale Florida 33312 and the mailing address is
P.O. Box 820, Hallandale, Florida 33008.
ARTICLE 4 - INCORPORATOR
The name and street address of the incorporator of this Corporation is:
Elsie Sanchez
343 Almeria Avenue
Coral Gables, Florida. 33134
<PAGE> 2
ARTICLE 5 OFFICERS
The officers of the Corporation shall be:
President: C. Michael Fisher
Secretary: Edward L. Magdycz
Chief Financial Officer: Francis X. Scanlan
whose addresses shall be the same as the principal address of the Corporation.
ARTICLE 6 - DIRECTORS
The Director(s) of the Corporation shall be:
C. Michael Fisher
Edward L. Magdycz
Francis J. Hornik, Jr.
whose addresses shall be the same as the principal address of the Corporation.
ARTICLE 7 - CORPORATE CAPITALIZATION
7.1 The Corporation is authorized to issue two classes of shares
designated "Common Stock", $.0001 par value (the "Common Stock") and "Preferred
Stock", $.0001 par value (the "Preferred Stock").
The total number of shares of Common Stock authorized to be issued is
100,000,000. The total number of shares of Preferred Stock authorized to be
issued is 10,000,000. Upon the amendment of this Article 7 to read as set forth
herein, each 2.5 shares of outstanding Common Stock shall be reverse split into
one share of Common Stock. No fractional shares shall be issued to the current
shareholders of Common Stock as a result of this 1-for-2.5 reverse stock split,
but instead, all fractional shares of Common Stock resulting from this 1-for-2.5
reverse stock split shall be rounded, if necessary, to the next lower whole
share.
The Preferred Stock authorized by these Articles of
Incorporation may be issued from time to time in one or more series. The Board
of Directors is authorized to determine or alter any or all of the rights,
preferences, privileges and restrictions granted to or imposed upon any wholly
unissued series of Preferred Stock other than the Series A Preferred Stock
described herein, and to fix, alter or reduce (but not below the number then
outstanding) the number of shares comprising any such series and the
designation thereof, or any of them, and to provide for the rights and terms of
redemption or conversion of the shares of any such series.
<PAGE> 3
7.2 The initial series of Preferred Stock shall comprise 100,000 shares
and shall be designated "Series A Preferred Stock." The powers, designations,
preferences and relative participating, optional or other special rights and the
qualifications, limitations, and restrictions of, the Series A Preferred Stock
shall be as follows:
(A) Dividends. Holders of the Series A Preferred Stock are
entitled to receive dividends at the rate of $.25 per share (as adjusted for any
stock dividends, combinations or splits with respect to such shares) per annum,
respectively, payable out of funds legally available therefor. Such dividends
shall be payable only when, as, and if declared by the Board of Directors and
shall be non-cumulative. No dividends (other than those payable solely in the
Common Stock of the Corporation) shall be paid on any Common Stock of the
Corporation during any fiscal year of the Corporation until dividends in the
total amount $.25 per share (as adjusted for any stock dividends, combinations
or splits with respect to such shares) on the Series A Preferred Stock shall
have been paid or declared and set apart during that fiscal year.
(B) Voting Rights. Except as otherwise required by law, holders
of shares of Series A Preferred Stock will not be entitled to vote on matters
submitted to a vote of stockholders of the Corporation.
(C) Liquidation. Upon any liquidation, dissolution or winding up
of the Corporation, whether voluntary or involuntary, before any distribution or
payment shall be made to any person holding Common Stock or of any shares
ranking junior to the Series A Preferred Stock in respect of distribution of
assets, the persons holding Series A Preferred Stock will be entitled to be paid
an amount in cash equal to $2.50 per share (as adjusted for any stock dividends,
combinations or splits with respect to such shares), plus all declared but
unpaid dividends on such share for each share of Series A Preferred Stock then
held by them. Thereafter, holders of Series A Preferred Stock will not be
entitled to any further payment. If upon such liquidation, dissolution or
winding up, the assets of the Corporation are insufficient to pay the holders of
the Series A Preferred Stock the full amount in cash to which they shall be
entitled, all legally available funds of the Corporation will be distributed to
the persons holding Series A Preferred Stock in proportion to the amounts to
which each such person shall be entitled as aforesaid. The Corporation will mail
written notice of such liquidation, dissolution or winding up, not less than 60
days prior to the payment dates stated therein, to each person of record holding
Series A Preferred Stock (by air mail if addressed outside the United States).
Neither the consolidation or merger of the Corporation into or with any other
corporation or corporations, nor the sale or transfer by the Corporation of all
or any part of its assets, nor the reduction of the capital stock of the
Corporation, will be deemed to be a liquidation, dissolution or winding up of
the Corporation within the meaning of this paragraph (C).
(D) Conversion Rights. The holders of Series A Preferred Stock
shall have conversions rights as follows:
(i) Right to Convert. Each share of Series A Preferred
Stock shall be convertible, at the option of the holder thereof, at any time
after the date of issuance of such share, at the office of the Corporation or
any transfer agent for such stock,
<PAGE> 4
into such number of fully paid and nonassessable shares of Common Stock as is
determined by dividing $2.50 by the Conversion Price (as hereinafter defined)
applicable to such share, in effect on the date the certificate is surrendered
for conversion. The price at which shares of Common Stock shall be deliverable
upon conversion of shares of the Series A Preferred Stock (the "Series A
Conversion Price") shall initially be $2.50 per share of Common Stock.
(ii) Automatic Conversion. Each share of Series A
Preferred Stock shall automatically be converted into shares of Common Stock at
the then effective Conversion Price upon the earlier of (a) the date specified
by vote or written consent or agreement of holders of at least two-thirds (2/3)
of the shares of such series then outstanding, or (b) immediately upon the
closing of the sale of the Corporation's Common Stock in a firm commitment or
best efforts public offering registered under the Securities Act of 1933, as
amended (the "Securities Act"), other than a registration relating solely to a
transaction under Rule 145 under such Act (or any successor thereto) or to an
employee benefit plan of the Corporation, at a public offering price (prior to
underwriters' discounts and expenses) equal to or exceeding $3.50 per share of
Common Stock (as adjusted for any stock dividends, combinations or splits with
respect to such shares).
If the number of outstanding shares of Common Stock have been
increased or decreased since the initial subscription and payment for the Series
A Preferred Stock by the holders thereof, by reason of any additional Common
Stock issuance, split, stock dividend, merger, consolidation or other capital
change or reorganization affecting the number of shares of Common Stock, the
number of shares of Common Stock to be issued on conversion to the holders of
the Series A Preferred Stock shall be adjusted so as to preserve fairly and
equitably, as far as reasonably possible, the original conversion rights of the
shares being converted.
If any capital reorganization, reclassification, consolidation,
merger or any sale of all or substantially all of the Corporation's assets to
another individual, partnership or corporation (collectively, any "Organic
Change") is effected in such a way that holders of Common Stock are entitled to
receive (either directly or upon subsequent liquidation) stock, securities or
assets with respect to or in exchange for Common Stock, then, as a condition to
such Organic Change, lawful and adequate provision (in form and substance
satisfactory to the holders of a majority of the Series A Preferred Stock then
outstanding) will be made whereby each of the holders of Series A Preferred
Stock will thereafter have the right to acquire and receive in lieu of shares of
Common Stock immediately theretofore acquirable and receivable upon the
conversion of such holder's Series A Preferred Stock, such shares of stock,
securities or assets as may be issued or payable with respect to or in exchange
for the number of shares of Common Stock immediately theretofore acquirable and
receivable upon conversion of the Series A Preferred Stock had such Organic
Change not taken place.
The holder of any shares of Series A Preferred Stock may exercise
the conversion rights granted by this Article by delivering to the Corporation
during regular business hours, the certificate or certificates for the shares to
be converted, duly endorsed for
4
<PAGE> 5
transfer to the Corporation (if required by it), accompanied by written notice
stating that the holder elects to convert such shares. Conversion shall be
deemed to have been effected on the date when such delivery is made. As promptly
as practicable thereafter the Corporation shall issue and deliver to, or upon
the written order of such holder, at such office or other place designated by
the Corporation, a certificate or certificates for the number of full shares of
Common Stock to which such holder is entitled together with a scrip certificate
or cash in lieu of any fraction of a share as provided hereunder. The holder
shall be deemed to have become a shareholder of record on the next succeeding
date on which the transfer books are open. Upon conversion of only a portion of
the number of shares of Series A Preferred Stock represented by a certificate
surrendered for conversion, the Corporation, upon written order and at its own
expense, shall issue and deliver to the holder of the certificate so surrendered
for conversion, a new certificate covering the number of shares of Series A
Preferred Stock representing the unconverted portion of the certificate so
surrendered.
No fractional shares of Common Stock shall be issued upon
conversion of shares of Series A Preferred Stock. If more than one share of
Series A Preferred Stock shall be surrendered for conversion at any one time by
the same holder, the number of full shares of Common Stock issuable upon
conversion thereof shall be computed on the basis of the aggregate number of
shares of Series A Preferred Stock so surrendered. Instead of any fractional
shares of Common Stock which would otherwise be issuable upon conversion of any
shares of Series A Preferred Stock, the Corporation shall, in lieu of delivering
the fractional share therefor, at its option either (i) adjust the fractional
interest by payment to the holder of the converted Series A Preferred Stock in
an amount equal (computed to the nearest cent) to the then current market value
of the fractional interest, or (ii) issue nondividend bearing and nonvoting
scrip certificates for fractions of a share which would otherwise be issuable,
in form and containing terms and conditions as determined by the Board of
Directors, and exchangeable, within the period following the date of issue as
the Board of Directors shall fix, together with other unexpired scrip
certificates or like tenor aggregating one or more full shares, for share
certificates representing the full share or shares.
The Corporation shall at all times reserve and keep available,
out of its authorized but unissued Common Stock, solely for the purpose of
effecting the conversion of the Series A Preferred Stock, the full number of
shares of Common Stock deliverable upon the conversion of all Series A Preferred
Stock from time to time (subject to obtaining necessary director and shareholder
action), and in accordance with the laws of the State of Florida, increase the
authorized amount of its Common Stock if at any time the authorized number of
shares of its Common Stock remaining unissued shall not be sufficient to permit
the conversion of all of the shares of Series A Preferred Stock at the time
outstanding.
7.3 No holders of shares of stock of any class shall have any preemptive
right to subscribe to or purchase any additional shares of any class, or any
bonds or convertible securities of any nature; provided, however, that the Board
of Directors(s) may, in authorizing the issuance of shares of stock of any
class, confer any preemptive right that the Board of Director(s) may deem
advisable in connection with such issuance.
5
<PAGE> 6
7.4 The Board of Director(s) of the Corporation may authorize the
issuance from time to time of shares of its stock of any class, whether now or
hereafter authorized, or securities convertible into shares of its stock of any
class, whether now or hereafter authorized, for such consideration as the Board
of Director(s) may deem advisable, subject to such restrictions or limitations,
if any, as may be set forth in the bylaws of the Corporation.
7.5 The Board of Directors(s) of the Corporation may, by Restated
Articles of Incorporation, classify or reclassify any unissued stock from time
to time by setting or changing the preferences, conversions or other rights,
voting powers, restrictions, limitations as to dividends, qualifications, or
terms or conditions of redemption of the stock.
ARTICLE 8 - POWERS OF CORPORATION
The Corporation shall have the same powers as an individual to do all
things necessary or convenient to carry out its business and affairs, subject to
any limitations or restrictions imposed by applicable law or these Articles of
Incorporation.
ARTICLE 9 - TERM OF EXISTENCE
This Corporation shall have perpetual existence.
ARTICLE 10 - REGISTERED OWNER(S)
The Corporation, to the extent permitted by law, shall be entitled to
treat the person in whose name any share or right is registered on the books of
the Corporation as the owner thereto, for all purposes, and except as may be
agreed in writing by the Corporation, the Corporation shall not be bound to
recognize any equitable or other claim to, or interest in, such share or right
on the part of any other person, whether or not the Corporation shall have
notice thereof.
ARTICLE 11 - REGISTERED OFFICE AND REGISTERED AGENT
The initial address of the registered office of this Corporation is The
Law Firm of Lawrence J. Spiegel, Chartered, doing business as AmeriLawyer,
located at 343 Almeria Avenue, Coral Gables, Florida 33134. The name and address
of the registered agent of this Corporation is The Law Firm of Lawrence J.
Spiegel, Chartered, doing business as AmeriLawyer, 343 Almeria Avenue, Coral
Gables, Florida 33134.
ARTICLE 12 - BYLAWS
The Board of Director(s) of the Corporation shall have power, without
the assent or vote of the shareholders, to make, alter, amend, or repeal the
Bylaws of the Corporation, but the
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affirmative vote of a number of Directors equal to a majority of the number who
would constitute a full Board of Director(s) at the time of such action shall be
necessary to take any action for the making, alteration, amendment or repeal of
the Bylaws.
ARTICLE 13 - INDEMNIFICATION
The Corporation shall indemnify its officers, directors and authorized
agents for all liabilities incurred directly, indirectly or incidentally for
services performed for the Corporation, to the fullest extent permitted under
Florida law existing now or hereinafter enacted.
ARTICLE 14 - EFFECTIVE DATE
These Articles of Incorporation shall be effective immediately upon
approval of the Secretary of State, State of Florida.
ARTICLE 15 - AMENDMENT
The Corporation reserves the right to amend, alter, change or repeal any
provision contained in these Articles of Incorporation, or in any amendment
hereto, or to add any provision to these Articles of Incorporation or to any
amendment hereto, in any manner now or hereafter prescribed or permitted by the
provisions of any applicable statute of the State of Florida, and all rights
conferred upon shareholders in these Articles of Incorporation or any amendment
hereto are granted subject to this reservation.
3. The foregoing Amended and Restated Articles of Incorporation have been duly
approved by the Board of Directors of the Corporation.
4. The foregoing Amended and Restated Articles of Incorporation have been duly
approved by the required vote of shareholders in accordance with Section
607.1003 and Section 607.1007 of the Florida Business Corporation Act; the total
number of outstanding shares of the Corporation is 5,565,000 shares of Common
Stock. The number of shares voting in favor of the amendment equaled or exceeded
the vote required, such required vote being a majority of the outstanding shares
of Common Stock on July 24, 1997.
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IN WITNESS WHEREOF, we have subscribed our names this 24th day of
July, 1997
[SIG]
-------------------------------
C. Michael Fisher, President
[SIG]
-------------------------------
Edward L. Magdycz, Secretary
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Exhibit 3.1
AMENDED AND RESTATED
BYLAWS
OF
CUIDAO HOLDING CORP
(A Florida Corporation)
ARTICLE I
OFFICES
SECTION 1. Principal Office. The principal executive office of
the Corporation shall be at such place as the Board of Directors may from time
to time determine, but until a change is effected such principal office shall be
at: 3201 West Griffin Road, Suite 204, Ft. Lauderdale, Florida 33312.
SECTION 2. Other Offices. The Corporation may also have other
offices at such places, within or without the State of Florida, as the Board of
Directors may from time to time determine or as the business of the Corporation
may require.
ARTICLE II
MEETING OF STOCKHOLDERS
SECTION 1. Time and Place of Meetings. A meeting of stockholders
for any purpose may be held at such time and place, within or without the State
of Florida, as shall be stated on the notice thereof or in a duly executed
waiver of notice thereof.
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SECTION 2. Annual Meeting. The annual meeting of the stockholders
of the Corporation shall be held on the tenth day of May in each year if not a
legal holiday, and if a legal holiday, at such place, either within or without
the State of Florida, and at such time as set forth in the notice of the meeting
or in a duly executed waiver of notice thereof, for the election of the Board of
Directors and for the transaction of such other business as may properly be
brought before the meeting. In the event the annual meeting is not held on the
date above provided, the Board of Directors shall cause the meeting to be held
as soon thereafter as may be convenient. Such subsequent meeting shall be called
in the same manner as hereinafter provided for special meetings of stockholders.
SECTION 3. Special Meetings. Special meetings of the
stockholders, unless otherwise prescribed by statute, may be called at any time
for any purpose or purposes by the Board of Directors or the holders of not less
than 10 percent of all the shares entitled to be cast in any issue proposed to
be considered at the proposed special meeting; provided that said persons sign,
date and deliver to the Corporation one or more written demands for the meeting
describing the proposal for which it is to be held, and shall be held at such
place, either within or without the State of Florida, and at such hour as may be
designated by the Board of Directors in the notice of the meeting; provided,
however, that the time so fixed shall permit the giving of notice as provided in
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Section 4 of this Article II, unless such notice is waived as provided by law or
by these Bylaws. At a special meeting only such matters as may be specified in
the notice thereof shall be considered. Special meetings shall also be called
and held in such cases and in such manner as may be specifically required by law
or by the Articles of Incorporation.
SECTION 4. Notice of Meetings. Written notice of each meeting of
the stockholders, which shall state the place, date and hour of the meeting and,
in the case of a special meeting or where otherwise required by law, the purpose
or purposes for which it is called, shall be given, unless a different period is
required by law, not less than ten (10) nor more than sixty (60) days before the
date of such meeting, by or at the direction of the person calling the meeting.
If mailed, the notice of a meeting of stockholders shall be deemed to be given
when deposited in the United States mail, postage prepaid, directed to the
stockholder at his address as it appears on the records of the Corporation. No
business other than that stated in the notice shall be transacted at any meeting
without the unanimous consent of all the stockholders entitled to vote thereat.
Any such notice for any meeting other than the annual meeting shall, if issued
at the direction of the Board of Directors, so indicate. When a meeting is
adjourned to another time or place, notice need not be given if the time and
place thereof are announced at the meeting at which the adjournment is taken. At
such an adjourned meeting, any
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business may be transacted that might have been transacted on the original date
of the meeting. If the adjournment is for more than thirty days after the date
of the original meeting, or if after the adjournment a new record date is fixed
for the adjourned meeting, a notice of the adjourned meeting shall be given to
each stockholder of record entitled to vote at the meeting.
SECTION 5. Quorum. Except as otherwise required by law, the
Articles of Incorporation or these Bylaws, at all meetings of the stockholders,
the holders of a majority of the shares issued and outstanding and entitled to
vote shall be present in person or represented by proxy in order to constitute a
quorum for the transaction of any business. The holders of a majority of the
shares present in person or represented by proxy and entitled to vote thereat,
whether or not a quorum shall be present, may adjourn the meeting from time to
time, to a specified date or place. At any such adjourned meeting at which a
quorum may be present, the Corporation may transact any business which might
have been transacted at the original meeting.
As to any matter with respect to which a separate class vote is
required by the Articles of Incorporation, the holders of a majority of the
shares of such class which are then outstanding and entitled to vote shall be
present in person or represented by proxy in order to constitute a quorum for
the purpose of any separate vote required by such class.
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The absence from any meeting of the number of shares required by
law, the Articles of Incorporation or these Bylaws for action upon one matter
shall not prevent action at such meeting upon any other matter or matters which
may properly come before the meeting, if the number of shares required in
respect of such other matters shall be present.
SECTION 6. Organization. At each meeting of the stockholders, the
Chairman of the Board or, in his absence or inability to act, the Vice-Chairman
or, in his absence or inability to act, the President or, in his absence or
inability to act, a Vice President or, in his absence or inability to act any
person as may be designated by the Board of Directors or, in the absence of such
person or if there shall be no such designation, a chairman present in person or
represented by proxy shall act as chairman of the meeting. The Secretary or, in
his absence or inability to act, an Assistant Secretary, or in his absence or
inability to act, any person as may be designated from time to time by the Board
of Directors shall act as secretary of each meeting of stockholders and keep the
minutes thereof; if no such person is present or has been chosen, the holders of
record of a majority of shares of stock present in person or represented by
proxy and entitled to vote at the meeting shall choose any person present to act
as secretary of the meeting.
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SECTION 7. Order of Business. The order of business at all
meetings of the stockholders shall be as determined by the chairman of the
meeting.
SECTION 8. Voting and Required Vote. At each meeting of
stockholders, each stockholder shall be entitled to one vote for each share of
capital stock held by such stockholder except as otherwise provided in the
Articles of Incorporation. Except as otherwise provided in the Articles of
Incorporation, and subject to statute, at each meeting of stockholders if there
shall be a quorum, the affirmative vote of the holders of a majority of shares
present in person or represented by proxy and entitled to vote thereat, shall
decide all matters brought before such meeting.
SECTION 9. Proxies. Each stockholder entitled to vote at any
meeting of stockholders or to express consent or dissent to corporate action in
writing without a meeting may authorize another person or persons to act for him
by proxy. Any such proxy shall be delivered to the secretary of such meeting at
or prior to the time designated in the order of business for so delivering such
proxies. Each such proxy shall be in writing and executed by the stockholder or
his duly authorized attorney-in-fact, but no such proxy shall be voted after
eleven (11) months from its date unless such proxy provides for a longer period.
A duly executed proxy shall be irrevocable if it states that it is irrevocable
and if, and only as long as, it is coupled with an interest sufficient in law to
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support an irrevocable power. A proxy may be made irrevocable regardless of
whether the interest with which it is coupled is an interest in the stock itself
or an interest in the Corporation generally.
SECTION 10. List of Stockholders. A complete list of the
stockholders entitled to vote at any annual or special meeting, arranged in
alphabetical order, with the address of each, and the number of shares held by
each, shall be prepared, or shall be caused to be prepared, by the Secretary and
shall be open to examination by any stockholder, for any purpose germane to the
meeting, during ordinary business hours, for a period of at least ten (10) days
prior to the meeting, either at a place within the city in which the meeting is
to be held, which place shall be specified in the notice of the meeting, or, if
not so specified, at the place where the meeting is to be held. The list shall
also be produced and kept at the place of the meeting during the whole time
thereof, and may be inspected by any stockholder who is present. The stock
ledger shall be the only evidence as to the stockholders entitled to examine the
stock ledger, the list required by these Bylaws or the books of the Corporation,
or to vote in person or by proxy at any meeting of the stockholders.
SECTION 11. Voting by Fiduciary, Fiduciary, and Joint Owners.
Persons holding stock in a fiduciary capacity shall be entitled to vote the
shares so held. Persons whose stock is
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pledged shall be entitled to vote, unless in the transfer by the pledgor on the
books of the corporation he has expressly empowered the pledgee to vote thereon,
in which case only the pledgee, or his proxy, may represent such stock and vote
thereon.
If the shares or other securities having voting power stand of
record in the names of two or more persons, whether fiduciaries, members of a
partnership, joint tenants, tenants-in common, tenants by the entirety or
otherwise, or if two or more persons have the same fiduciary relationship
respecting the same shares, unless the Secretary is given written notice to the
contrary and is furnished with a copy of the instrument or order appointing them
or creating the relationship wherein it is so provided, their acts with respect
to voting shall have the following effect:
(a) if only one votes, his act binds all;
(b) if more than one votes, the act of the majority so voting
binds all;
(c) if more than one votes, but the vote is evenly split on
any particular matter, each fraction may vote the
securities in question proportionally, or any person
voting the shares, or a beneficiary, if any, may apply to
the Circuit Court or such other court as may have
jurisdiction to appoint an additional person to act with
the persons so voting the shares, which shall then be
voted as determined by a majority of such persons and the
person
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appointed by the court. If the instrument so filed shows
that any such tenancy is held in unequal interest, a
majority or even-split for the purpose of this paragraph
shall be a majority or even-split in interest.
SECTION 12. Consent of Stockholders in Lieu of Meeting. Unless
otherwise provided by the Articles of Incorporation, any action required or
permitted to be taken at any annual or special meeting of stockholders of the
Corporation may be taken without a meeting, without prior notice and without a
vote, if a consent or consents in writing, setting forth the action so taken,
shall be signed by the holders of outstanding stock of each voting group
entitled to vote thereon having not less than the minimum number of votes with
respect to each voting group that would be necessary to authorize or take such
action at a meeting at which all voting groups and shares entitled to vote
thereon were present and voted, as provided by law. Within ten (10) days after
obtaining such authorization by written consent, notice shall be given to those
shareholders who have not consented in writing or who are not entitled to vote,
said notice shall fairly summarize the material features of the authorized
action and if the action requires the providing of dissenters' rights, said
notice shall comply with the disclosure requirements pertaining to dissenters'
rights of Florida law.
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ARTICLE III
BOARD OF DIRECTORS
SECTION 1. General Powers. The business and affairs of the
Corporation shall be managed by or under the direction of a Board of Directors,
which may exercise all such authority and powers of the Corporation and do all
such lawful acts and things as are not by statute, by the Articles of
Incorporation or by these Bylaws directed or required to be exercised or done
by the stockholders or such other persons as provided therein.
SECTION 2. Qualification. Directors must be natural persons of 18
years of age or older but need not be residents of the State of Florida and need
not be shareholders of the Corporation.
SECTION 3. Number of Directors. The Corporation shall have no
fewer than three (3) nor more than seven (7) directors; the exact number to be
determined from time to time by resolution adopted by approval of the
outstanding shares or by the affirmative vote of a majority of the whole Board
of Directors, and such exact number shall be three (3) until otherwise
determined.
SECTION 4. Presumption of Assent. A director of the Corporation
who is present at a meeting of the Board of Directors at which an action on any
corporate matter is taken will be presumed to have assented to the action unless
such director votes
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against such action or abstains from voting in respect thereto because of an
asserted conflict of interest.
SECTION 5. Resignations. Any director may resign at any time upon
written notice to the Board of Directors, the Chairman or the Corporation. Any
such resignation shall take effect at the time specified therein or, if the time
when it shall become effective shall not be specified therein, immediately upon
its receipt thereof by the Board of Directors or by any such officer. If the
resignation is made effective at a date later than the date of receipt of the
written resignation by the Board of Directors or an authorized officer, then the
Board of Directors may fill the pending vacancy before the effective date if the
Board of Directors provides that the successor does not take office until the
effective date.
SECTION 6. Annual Meetings. The annual meeting of the Board of
Directors for the purpose of organizing the Board, appointing officers and
members of committees and transacting other business, shall be held immediately
following the annual meeting of the stockholders at the same place where such
meeting of stockholders shall be held. No notice shall be required for any such
meeting if held immediately after the adjournment, and at the site, of the
meeting of the stockholders. If not so held, notice shall be given in the same
manner as required for special meetings of the Board of Directors.
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SECTION 7. Regular Meetings. Additional regular meetings of the
Board of Directors may be held without notice at such times and places (within
or without the State of Florida) as shall have been approved and agreed to at
any prior meeting of the Board of Directors.
SECTION 8. Special Meetings. A special meeting of the Board of
Directors may be called at any time by the Chairman of the Board, the Vice
Chairman, the President or any Vice President or by two or more directors and
shall be held at such time and place (within or without the State of Florida) as
may be fixed by the person or persons calling the meeting; provided, however,
that the time so fixed shall permit the giving of notice as provided in Section
9 of this Article III.
SECTION 9. Notice of Special Meeting. Written notice of the time
and place of each special meeting of the Board of Directors shall be delivered
at least five (5) business days before the day on which such meeting is to be
held to each director personally, or by certified, registered or express mail,
postage prepaid, or telegram or cablegram or nationwide overnight courier
service addressed to such director at his address as it appears on the records
of the Corporation, confirmed on the same day by telegraph, telex, cable,
facsimile, wireless or telephone, and the method used for notice of such special
meeting need not be the same
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for each director being notified except as otherwise required by law, the
Articles of Incorporation or these Bylaws.
SECTION 10. Organization. The Chairman of the Board shall preside
over all meetings of the Board of Directors at which he is present. In his
absence or inability to act, the Vice Chairman shall preside. In the absence or
inability to act of the Chairman and Vice Chairman, the Board of Directors shall
select a chairman of the meeting from among the directors present. The Secretary
or, in his absence or inability to act, an Assistant Secretary, or in his
absence or inability to act, another director selected by the Board of Directors
shall act as secretary of the meeting and keep the minutes thereof.
SECTION 11. Quorum. A majority of the number of directors fixed
by these Bylaws shall constitute a quorum for the transaction of business. The
act of a majority of the directors present at a meeting at which a quorum is
present will be the act of the Board of Directors. At any meeting of the Board
of Directors, no action shall be taken (except adjournment, in the manner
provided below) until after a quorum has been established, except as otherwise
provided by law, the Articles of Incorporation or these Bylaws.
Except as otherwise provided by law, the Articles of
Incorporation or these Bylaws, the act of a majority of directors who are
present at a regular meeting at which a quorum previously
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has been established (or at any adjournment of such meeting, provided that a
quorum shall have previously been established at such adjourned meeting) shall
be the act of the Board of Directors, regardless of whether or not a quorum is
present at the time such action is taken. In determining the number of directors
who are present at the time any such action is taken, any director who is in
attendance at such meeting but who, for just cause, is disqualified to vote on
such matter, shall not be considered as being present at the time of such action
for the purpose of establishing the number of votes required to take action on
any matter submitted to the Board of Directors, but shall be considered as being
present for purposes of determining the existence of a quorum.
In the event a quorum cannot be established at the beginning of a
meeting, a majority of the directors present at the meeting, or the Secretary of
the Corporation, if there be no director present, may adjourn the meeting from
time to time until a quorum be present. Only such notice of such adjournment
need be given as the Board of Directors may from time to time prescribe.
SECTION 12. Regulations. The Board of Directors may adopt such
rules and regulations for the conduct of its meetings and for the management of
the business and affairs of the Corporation as it may deem proper and not
inconsistent with law, the Articles of Incorporation and these Bylaws.
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SECTION 13. Written Consent in Lieu of Meetings. Any action
required to be taken at a meeting of the Board of Directors, or any action which
may be taken at a meeting of the Board of Directors or a committee thereof, may
be taken without a meeting if a consent in writing, setting forth the action to
be so taken, signed by all the directors, or all the members of the committee,
as the case may be, is filed in the minutes of the proceedings of the board or
of the committee. Such consent will have the same effect as a unanimous vote.
SECTION 14. Telephonic Participation. Any and all members of the
Board of Directors may participate in a meeting of the Board of Directors by
means of a conference telephone or similar communications equipment by means of
which all persons participating in such meeting can hear each other.
Participation in a meeting pursuant to this Section shall constitute presence in
person at such meeting.
SECTION 15. Compensation. Directors shall be entitled to such
compensation for their services as directors and to such reimbursement for any
reasonable expenses incurred in attending meetings of the Board of Directors as
may from time to time be fixed by the Board of Directors. The compensation of
directors may be on such basis as is determined by the Board of Directors. Any
director may waive compensation for any meeting. Any director receiving
compensation under these provisions shall not be barred
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from serving the Corporation in any other capacity and receiving compensation
and reimbursement for reasonable expenses for such other services.
ARTICLE IV
COMMITTEES
SECTION 1. Executive Committee. The Board of Directors, by
resolution adopted by a majority of the total number of directors constituting
the entire Board, whether then in office or not, may appoint an Executive
Committee consisting of one or more directors, one of whom shall be designated
as Chairman of the Executive Committee. Each member of the Executive Committee
shall continue as a member thereof until the expiration of his term as a
director or his earlier resignation or removal as a member of the Executive
Committee or as a director or until his death.
SECTION 2. Powers. The Executive Committee shall have and may
exercise those rights, powers and authority of the Board of Directors to the
extent permitted by law, and may authorize the seal of the Corporation to be
affixed to all papers that may require it, but shall not have the power or
authority with respect to approving or recommending to shareholders actions or
proposals required by law to be approved by shareholders, filling vacancies on
the Board of Directors or any committee thereof, adopting, amending or
repealing these Bylaws, authorizing or approving the reacquisition of shares
unless pursuant to a general formula or
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method specified by the Board of Directors and authorizing or approving the
issuance or sale or contract for the sale of shares, or determine the
designation and relative rights, preferences, and limitations of a voting group
except that the Board of Directors may authorize the Executive Committee to do
so within limits specifically prescribed by the Board of Directors.
SECTION 3. Procedure and Meetings. The Executive Committee shall
fix its own rules of procedure and shall meet at such times and at such place or
places as may be provided by such rules or as the members of the Executive
Committee shall fix. The Executive Committee shall keep minutes of its meetings,
which it shall deliver to the Board of Directors from time to time. The Chairman
of the Executive Committee or, in his absence, a member of the Executive
Committee chosen by a majority of the members present shall preside at meetings
of the Executive Committee, and the Secretary, or in his absence, an Assistant
Secretary, or in his absence another member of the Executive Committee chosen by
the Executive Committee, shall act as secretary of the Executive Committee.
SECTION 4. Quorum. All of the members of the Executive Committee
must be present in person or by electronic means for the transaction of
business, and the affirmative vote of all of the members shall be required for
any action of the Executive Committee.
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SECTION 5. Other Committees. The Board of Directors, by
resolutions adopted by a majority of the total number of directors constituting
the entire Board, whether then in office or not, shall establish an audit
committee and a compensation committee and may appoint such other committee or
committees as it shall deem advisable and with such rights, powers, and
authority as it shall prescribe. Each such committee shall consist of one or
more directors. Unless otherwise provided by the Board of Directors, a majority
of the members of each such other committee shall constitute a quorum, and the
acts of a majority of the members present at a meeting at which a quorum is
present shall be the act of such committee.
SECTION 6. Vacancies; Committee Changes. In the absence or
disqualification of a member of any committee, the member or members thereof
present at any meeting and not disqualified from voting, whether or not he or
they constitute a quorum, may unanimously appoint another member of the Board of
Directors to act at the meeting in the place of any such absent or disqualified
member.
The Board of Directors shall have the power at any time to fill
vacancies in, to change the membership of, and to discharge, any committee or
any member of any committee.
SECTION 7. Compensation. Members of the committee shall be
entitled to such compensation for their services as members of
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the committee and to such reimbursement for any reasonable expenses incurred in
attending committee meetings as may from time to time be fixed by the Board of
Directors. Any committee member receiving compensation under these provisions
shall not be barred from serving the Corporation in any other capacity and from
receiving compensation and reimbursement of reasonable expenses for such other
services.
SECTION 8. Telephonic Participation. Any and all members of the
committee designated by the Board of Directors may participate in a meeting of
such committee by means of conference telephone or similar communications
equipment by means of which all persons participating in such meeting can hear
each other, and participation in such a meeting pursuant to this Section shall
constitute presence in person at such meeting.
SECTION 9. Action by Consent. Any action required or permitted to
be taken at any meeting of any committee of the Board of Directors may be taken
without a meeting if a written consent thereto shall be signed by all members of
the committee then in office, provided that the number of such members is
sufficient to constitute a quorum for such action, if any, and such written
consent is filed with the minutes of its proceedings.
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ARTICLE V
NOTICES
SECTION 1. Waiver of Notice. Whenever any notice is required to
be given by law, the Articles of Incorporation or these Bylaws, a written waiver
thereof, signed by the person or persons entitled to such notice, whether before
or after the time stated therein, shall be deemed equivalent to such notice.
Neither the business to be transacted at, nor the purpose of any regular or
special meeting of stockholders, any meeting of other security-holders, the
Board of Directors, or any committee of the Board of Directors need be specified
in any written waiver of notice unless so required by law, the Articles of
Incorporation or these Bylaws.
SECTION 2. Attendance at Meeting. Attendance of a person at any
meeting, whether of stockholders or other security-holders (in person or by
proxy), or the Board of Directors or any committee of the Board of Directors,
shall constitute a waiver of notice of such meeting, except when such person
attends such meeting for the express purpose of objecting, and objects, at the
beginning of the meeting, to the transaction of any business on the ground that
the meeting is not legally called or convened.
ARTICLE VI
OFFICERS
SECTION 1. Number and Qualifications. The officers of the
Corporation shall include the Chairman, the Vice Chairman, the
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President, one or more Vice Presidents, a Treasurer, and a Secretary and such
other officers as may elected or appointed in accordance with the provisions of
Section 2 of this Article VI. Any number of offices may be held by the same
person. The Board of Directors shall determine who shall be the chief executive
officer of the Company.
SECTION 2. Selection, Term of Office and Qualification. The
officers shall be elected from time to time by the Board of Directors at its
first regular meeting after each annual meeting of stockholders. Each officer
shall hold his office until his successor is elected and qualified or until he
shall resign in the manner provided in Section 3 of this Article VI, or until he
shall have been removed in the manner provided in Section 4 of this Article VI,
or until his death. Other officers, including without limitation one or more
Assistant Treasurers and one or more Assistant Secretaries shall be chosen in
such manner, hold office for such period, have such authority, perform such
duties and be subject to removal as may be prescribed by the Board of Directors.
SECTION 3. Resignations. Any officer may resign at any time upon
written notice to the Board of Directors, the President or the Secretary. Any
such resignation shall take effect at the time specified therein or, if the time
when it shall become effective shall not be specified therein, immediately upon
its receipt thereof by the Board of Directors or any such officer.
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SECTION 4. Removal. Any officer may be removed at any time,
either with or without cause, by the Board of Directors; and any officer not
elected by the Board of Directors may be removed in such manner as may be
determined by the Board of Directors. Removal from office however, shall not
prejudice the contract rights, if any, of the person removed except as provided
in such contract.
SECTION 5. Vacancies. Any vacancy occurring in any office of the
Corporation which is required by Section 2 of this Article VI to be elected by
the Board of Directors, whether by death, resignation, removal or otherwise,
shall be filled for the unexpired portion of the term by the Board of Directors.
A vacancy in any other office shall be filled in such manner as may be
determined by the Board of Directors.
SECTION 6. Chairman. The Chairman may be the chief executive
officer of the Corporation if the Board of Directors shall so determine and, in
such case and subject to the direction of the Board of Directors, shall have
general charge of the business, affairs and property of the Corporation, shall
have general supervision over its other officers and agents and shall see that
all orders and resolutions of the Board of Directors are carried into effect.
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SECTION 7. Vice Chairman. The Vice Chairman shall have such
powers and perform such duties as may from time to time be assigned to him by
the Board of Directors and shall report to the Chairman, subject to the control
of the Board of Directors.
SECTION 8. The President. The President shall have, subject to
the control of the Chairman, if the Chairman is designated as the chief
executive officer of the Corporation and the Board of Directors, general and
active management of the business of the Corporation and general and active
supervision and direction over the business operations and affairs of the
Corporation and over its several officers, agents and employees. He shall be an
ex officio member of all committees of the Board. In general, he shall have
such other powers and shall perform such other duties as usually pertain to the
office of the President or as from time to time may be assigned to him by the
Board or these Bylaws. The President may be the chief executive officer of the
Corporation if the Board of Directors shall so determine and, in such case and
subject to the direction of the Board of Directors, shall have general charge of
the business, affairs and property of the Corporation, shall have general
supervision over its other officers and agents and shall see that all orders and
resolutions of the Board of Directors are carried into effect.
SECTION 9. Vice President. The Vice President or, in the event
there be more than one, the Vice Presidents in the order
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<PAGE> 24
designated, or in the absence of any designation, in the order of their
seniority, shall have such powers and perform such duties as from time to time
may be assigned to them by the Board of Directors.
SECTION 10. The Treasurer and Assistant Treasurers. The Treasurer
shall:
(a) have charge and custody of, and be responsible for, all
the funds and securities of the Corporation;
(b) keep full and accurate accounts of receipts and
disbursements in books belonging to the Corporation;
(c) cause all moneys and other valuables to be deposited to
the credit of the Corporation in such depositories as may
be designated by the Board of Directors;
(d) receive moneys due and payable to the Corporation from any
source whatsoever and give receipts for moneys so paid;
(e) disburse the funds of the Corporation and supervise the
investment of its funds as ordered or authorized by the
Board of Directors, taking proper vouchers therefor;
(f) render to the President and the Board of Directors at the
regular meetings of the Board, or whenever they may
request it, an account of all his trans-
24
<PAGE> 25
actions as Treasurer and of the financial condition of the
Corporation; and
(g) in general, have all the powers and perform all the duties
incident to the office of Treasurer and such other duties
as from time to time may be assigned to him by the Board
of Directors or the President.
The Assistant Treasurer or Assistant Treasurers, if any, shall in the absence or
disability of the Treasurer or at his request, perform his duties and exercise
his powers and authority as may be assigned to him by the Board of Directors or
the President.
SECTION 11. The Secretary and Assistant Secretaries. The
Secretary shall:
(a) attend all meetings of the Board of Directors, any
committee of the Board of Directors, stockholders and
other security-holders and record all votes and the
proceedings of such meetings in minute books to be kept by
him for that purpose;
(b) see that all notices are duly given in accordance with the
provisions of these Bylaws and as required by law;
(c) be custodian of the records and the seal of the
Corporation and affix and attest the seal to all stock
certificates of the Corporation (unless the seal of the
Corporation on such certificates shall be a facsimile, as
hereinafter provided) and affix
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<PAGE> 26
and attest the seal to all other documents to be executed
on behalf of the Corporation under its seal;
(d) see that the books, reports, statements, certificates and
other documents and records required by law to be kept and
filed are properly kept and filed; and
(e) in general, have all the powers and perform all the duties
incident to the office of Secretary and such other duties
as from time to time may be assigned to him by the Board
of Directors or the President.
The Assistant Secretary or Assistant Secretaries, if any, shall, in the absence
or disability of the Secretary or at his request, perform his duties and
exercise his powers and authority as may be assigned to him by the Board of
Directors or the President.
SECTION 12. Compensation. The compensation of all officers of the
Corporation shall be fixed from time to time by the Board of Directors; no
officer of the Corporation shall be prevented from receiving compensation
because he is also a director of the Corporation.
ARTICLE VII
CAPITAL STOCK AND DIVIDENDS
SECTION 1. Stock Certificates for Shares. Every holder of shares
of capital stock of the Corporation will be entitled to
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<PAGE> 27
have a certificate representing all shares to which he is a holder. No
certificate representing shares will be issued until such shares are fully paid.
Certificates for shares of the capital stock of the Corporation shall be in such
form, not inconsistent with the Articles of Incorporation, as shall be approved
by the Board of Directors and shall be signed by or in the name of the
corporation by the Chairman or Vice-Chairman or by the President or a Vice
President, and by the Treasurer or an Assistant Treasurer, or the Secretary or
an Assistant Secretary, provided that the signatures of any such officers
thereon may be facsimiles. The seal of the Corporation shall be impressed, by
original or by facsimile, printed or engraved, on all such certificates. A
certificate may also be signed by the transfer agent and a registrar as the
Board of Directors may determine, and in such case the signature of the transfer
agent or the registrar may also be facsimile, engraved or printed. In case any
officer, transfer agent or registrar who has signed or whose facsimile signature
has been placed upon such certificate shall have ceased to be such officer,
transfer agent or registrar before such certificate is issued, it may
nevertheless be issued by the Corporation with the same effect as if he were
such officer, transfer agent or registrar at the date of issue.
SECTION 2. Stock Records. The Corporation shall keep at such
place or places, within or without the State of Florida, as the Board of
Directors may from time to time determine, the stock record books in which shall
be recorded the number of shares
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<PAGE> 28
issued, the names of the owners of the shares, the number of shares owned by
them respectively, and the transfer of such shares with the date of transfer.
Blank stock certificate books shall be kept by the Secretary or by any officer
or agent designated by the Board of Directors.
SECTION 3. Registration of Transfers. Registration of transfer of
certificates representing shares of stock of the Corporation shall be effected
only on the books of the Corporation only upon authorization by the registered
holder thereof, or by his attorney duly executed and filed with the Secretary or
with a designated transfer agent or transfer clerk, and upon surrender to the
Corporation or any transfer agent of the Corporation of the certificate or
certificates being transferred, which certificate or certificates shall be
properly endorsed or accompanied by a duly executed stock transfer power and the
payment of all taxes thereon. Whenever a certificate is endorsed by or
accompanied by a stock power executed by someone other than the person or
persons named in the certificate, evidence of authority to transfer shall also
be submitted with the certificate. Whenever any transfers of shares shall be
made for collateral security and not absolutely, and both the transferor and
transferee request the Corporation to do so, such fact shall be stated in the
entry of the transfer.
SECTION 4. Determination of Stockholders. Except as otherwise
provided by law, the Corporation shall be entitled to
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<PAGE> 29
recognize the exclusive right of a person in whose name any share or shares
stand on the record of stockholders as the owner of such share or shares for all
purposes, including, without limitation, the right to receive dividends or other
distributions, and to vote as such owner. The Corporation may hold any such
stockholder of record liable for calls and assessments and the Corporation shall
not be bound to recognize any equitable or legal claim to or interest in any
such share or shares on the part of any other person whether or not it shall
have express or other notice thereof.
SECTION 5. Regulations Governing Issuance and Transfer of Shares.
The Board of Directors shall have the power and authority to make all such rules
and regulations, not inconsistent with these Bylaws, as it may deem expedient
concerning the issue, transfer and registration of certificates for shares of
stock of the Corporation. It may appoint, or authorize any officer or officers
to appoint, one or more transfer agents or one or more transfer clerks and one
or more registrars and may require all certificates for shares of stock to bear
the signature or signatures of any of them.
SECTION 6. Fixing of Record Date. In order that the Corporation
may determine the stockholders of record entitled to notice of, or to vote at,
any meeting of stockholders or any adjournment thereof, or entitled to express
consent to corporate
29
<PAGE> 30
action in writing without a meeting, or entitled to receive payment of any
dividend or other distribution or allotment of any rights, or entitled to
exercise any rights in respect of any change, conversion or exchange of stock or
for the purpose of any other lawful action, the Board of Directors may fix, in
advance, a record date, which shall not be more than sixty (60) nor less than
ten (10) days before the date of such meeting, nor more than sixty (60) days
prior to any other action. Except as otherwise provided by law, the Articles of
Incorporation, these Bylaws or by resolution of the Board of Directors:
(1) The record date for determining stockholders entitled to
notice of or to vote at a meeting of stockholders shall be
at the close of business on the day next preceding the day
on which notice is given, or, if notice is waived, at the
close of business on the day next preceding the day on
which the meeting is held;
(2) The record date for determining stockholders entitled to
express consent to corporate action in writing without a
meeting, when no prior action by the Board of Directors is
necessary, shall be the day on which the first written
consent is expressed; and
(3) The record date for determining stockholders for any other
purpose shall be at the close of business
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<PAGE> 31
on the day on which the Board adopts the resolution
relating thereto.
A determination of stockholders of record entitled to notice of
or to vote at a meeting of stockholders shall apply to any adjournment of the
meeting; provided, however, that the Board may affix a new record date for the
adjourned meeting.
SECTION 7. Lost, Stolen or Destroyed Stock Certificates. The
holder of any certificates representing shares of stock of the Corporation shall
immediately notify the Corporation of any loss, theft, destruction or mutilation
of such certificate, and the Board of Directors may authorize the issuance of a
new certificate of stock in lieu thereof upon satisfactory proof of such loss,
theft or destruction upon the giving of an open penalty bond with surety
satisfactory to the Treasurer and the Corporation's counsel, to protect the
Corporation or any person injured on account of the alleged loss, theft or
destruction of any such certificate or the issuance of a new certificate from
any liability or expense which it or they may incur by reason of the original
certificates remaining outstanding and upon payment of the Corporation's
reasonable costs incident thereto.
SECTION 8. Dividends and Reserves. Subject to the provisions of
law or of the Articles of Incorporation, the Board of Directors may, out of
funds available therefor at any regular or special meeting, declare dividends
upon the capital stock of the
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<PAGE> 32
Corporation as and when they deem expedient. Before declaring any dividend there
may be set apart out of any funds of the Corporation available for dividends,
such sum or sums as the Board of Directors may from time to time in their
discretion deem proper as a reserve fund for working capital, to meet
contingencies, or for equalizing dividends, or for the purpose of repairing,
maintaining or increasing the property or business of the Corporation, or for
such other purposes as the Board of Directors shall deem to be in the best
interests of the Corporation. The Board of Directors may, in its discretion,
modify or abolish any such reserve at any time.
ARTICLE VIII
BOOKS AND RECORDS
SECTION 1. Books and Records. The Corporation shall keep as
permanent records minutes of all meetings of its shareholders and Board of
Directors, a record of all actions taken by the shareholders or Board of
Directors without a meeting, and a record of all actions taken by a committee of
the Board of Directors in place of the Board of Directors on behalf of the
Corporation. Furthermore, the Corporation shall maintain accurate accounting
records. Furthermore, the corporation shall maintain the following:
(i) A record of its shareholders in a form that permits preparation of a
list of the names and addresses of all shareholders in alphabetical order by
class of shares showing the number and series of shares held by each;
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<PAGE> 33
(ii) The Corporation's Articles or Restated Articles of Incorporation
and all amendments thereto currently in effect;
(iii) The Corporation's Bylaws (or Restated Bylaws and all amendments
thereto currently in effect;
(iv) Resolutions adopted by the Board of Directors creating one or more
classes or series of shares and fixing their relative rights, preferences and
limitations if shares issued pursuant to those resolutions are outstanding;
(v) The minutes of all shareholders' meeting and records of all actions
taken by shareholders without a meeting for the past three years;
(vi) Written communications to all shareholders generally or all
shareholders of a class or series within the past three years including the
financial statements furnished for the past three years to shareholders as may
be required under Florida law;
(vii) A list of the names and business street addresses of the
corporation's current directors and officers; and
(viii) A copy of the Corporation's most recent annual report delivered
to the Department of State.
Any books, records and minutes may be in written form or in any other
form capable of being converted into written form.
SECTION 2. Shareholder's Inspection Rights. A shareholder of the
Corporation (including a beneficial owner whose shares are held in a voting
trust or a nominee on behalf of a beneficial owner) may inspect and copy, during
regular business
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<PAGE> 34
hours at the Corporation's principal office, any of the corporate records
required to be kept pursuant to Section 1 of this Article of these Bylaws, if
said shareholder gives the Corporation written notice of such demand at least
five business days before the date on which the shareholder wishes to inspect
and copy. The foregoing right of inspection is subject however to such other
restrictions as are applicable under Florida law, including, but not limited to,
the inspection of certain records being permitted only if the demand for
inspection is made in good faith and for a proper purpose (as well as the
shareholder describing with reasonable particularity the purpose and records
desired to be inspected and such records are directly connected with the
purpose).
SECTION 3. Financial Information. Unless modified by resolution
of the shareholders within 120 days of the close of each fiscal year, the
Corporation shall furnish the shareholders annual financial statements which may
be consolidated or combined statements of the Corporation and one or more if its
subsidiaries as appropriate, that include a balance sheet as of the end of the
fiscal year, an income statement for that year, and a statement of cash flow for
that year. If financial statements are prepared on the basis of generally
accepted accounting principles, the annual financial statements must also be
prepared on that basis. If the annual financial statements are reported on by a
public accountant, said accountant's report shall accompany said statements. If
said annual financial statements are not reported on by a public
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<PAGE> 35
accountant, then the statements shall be accompanied by a statement of the
Chairman or the person responsible for the Corporation's accounting records (a)
stating his reasonable belief whether the statements were prepared on the basis
of generally accepted accounting principles and if not, describing the basis of
preparation; and (b) describing any respects in which the statements were not
prepared on a basis of accounting consistent with the statements prepared for
the preceding year. The annual financial statements shall be mailed to each
shareholder of the Corporation within 120 days after the close of each fiscal
year or within such additional time as is reasonably necessary to enable the
Corporation to prepare same, if, for reasons beyond the Corporation's control,
said annual financial statement cannot be prepared within the prescribed period.
SECTION 4. Other Reports to Shareholders. The Corporation shall
report any indemnification or advanced expenses to any director, officer,
employee, or agent (for indemnification relating to litigation or threatened
litigation) in writing to the shareholders with or before the notice of the next
shareholders' meeting, or prior to such meeting if the indemnification or
advance occurs after the giving of such notice but prior to the time such
meeting is held, which report shall include a statement specifying the persons
paid, the amounts paid, and the nature and status, at the time of such payment,
of the litigation or threatened litigation.
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<PAGE> 36
Additionally, if the Corporation issues or authorizes the issuance of
shares for promises to render services in the future, the Corporation shall
report in writing to the shareholders the number of shares authorized or issued
and the consideration received by the Corporation, with or before the notice of
the next shareholders' meeting.
ARTICLE IX
CORPORATE INDEMNIFICATION
The Corporation shall indemnify any person:
(1) Who was or is a party, or is threatened to be made a party, to any
threatened, pending, or completed action, suit, or proceeding, whether civil,
criminal, administrative, or investigative (other than an action by, or in the
right of, the Corporation) by reason of the fact that he is or was a director,
officer, employee, or agent of the Corporation or is or was serving at the
request of the Corporation as a director, officer, employee, or agent of another
Corporation, partnership, joint venture, trust, or other enterprise against such
costs and expenses, and to the extent and in the manner provided under Florida
law.
(2) Who was or is a party, or is threatened to be made a party, to any
threatened, pending, or completed action or suit by or in the right of the
Corporation to procure a judgment in its favor by reason of the fact that he is
or was a director, officer, employee, or agent of the Corporation or is or was
serving at the request of the Corporation as a director, officer, employee, or
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<PAGE> 37
agent of another corporation, partnership, joint venture, trust, or other
enterprise against such costs and expenses, and to the extent and in the manner
provided under Florida law.
The extent, amount, and eligibility for the indemnification provided
herein will be made by the Board of Directors. Said determinations will be made
by a majority vote to a quorum consisting of directors who were not parties to
such action, suit, or proceeding or by the shareholders by a majority vote of a
quorum consisting of shareholders who were not parties to such action suit or
proceeding.
The corporation will have the power to make further indemnification as
provided under Florida law except to indemnify any person against gross
negligence or willful misconduct.
The Corporation is further authorized to purchase and maintain insurance
for indemnification of any person as provided herein and to the extent provided
under Florida law.
ARTICLE X
GENERAL PROVISIONS
SECTION 1. Execution of Contracts, Papers and Documents. Except
as otherwise required by law, the Articles of Incorporation or these Bylaws, any
contract or other instrument may be executed and delivered in the name and on
behalf of the Corporation by such officers or employees of the Corporation as
the Board of Directors may from time to time determine, or in the absence of
such determination, by the Chairman or the President. Such authority
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<PAGE> 38
may be general or confined to specific instances as the Board of Directors may
determine. Unless authorized by the Board of Directors or expressly permitted by
these Bylaws, no officer or agent or employee shall have any power or authority
to bind the Corporation by any contract or engagement or to pledge its credit or
to incur a pecuniary liability for any purpose.
SECTION 2. Voting Shares in Other Corporations. The Corporation
may vote any and all shares of stock and other securities having voting rights
which may at any time and from time to time be held by it in any other
corporation or corporations and such vote may be cast either in person or by
proxy by such officer of the Corporation as the Board of Directors may appoint
or, in the absence of such appointment, by the Chairman or President.
SECTION 3. Checks, Drafts, etc. All checks, drafts, bills of
exchange or other orders for the payment of money out of the funds of the
Corporation, and all notes or other evidences of indebtedness of the
Corporation, shall be signed in the name and on behalf of the Corporation by
such persons and in such manner as shall from time to time be authorized by the
Board.
SECTION 4. Corporate Seal. The Board of Directors shall provide a
suitable seal which shall bear the name of the Corporation, the year of
incorporation and shall include the words "Corporate Seal, Florida." Said seal
shall be in the custody of
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<PAGE> 39
the Secretary of the Corporation, and the Board of Directors may prescribe that
one or more duplicates thereof be kept in the custody of such other officer or
officers of the Corporation.
SECTION 5. Fiscal Year. The fiscal year of the Corporation shall
be a period of either fifty-two (52) or fifty-three (53) weeks as may be
determined by the Board of Directors from time to time.
ARTICLE XI
TRANSACTIONS WITH DIRECTORS AND OFFICERS
SECTION 1. Affiliated Transactions. No contract or transaction
between the Corporation and one or more of its directors or officers, or between
the Corporation and any other corporation, partnership, association, or other
organization in which one or more of its directors or officers are directors or
officers or have a financial interest, shall be valid unless, at the time of the
contract or transaction, the Board of Directors consists of at least two (2)
independent directors, and a majority of such independent directors, after
having access, at the Corporation's expense, to the Corporation's or independent
legal counsel, approve such contract or transaction. For purposes of this
Section 1 of this Article XI of the Bylaws, an independent director shall be a
member of the Board of Directors who is not an officer or employee of the
Corporation, its subsidiaries or
39
<PAGE> 40
affiliates, a promoter or does not have a material business or professional
relationship with the Corporation.
SECTION 2. Determining Quorum. Interested directors may be
counted in determining the presence of a quorum at a meeting of the Board of
Directors or of a committee thereof which authorized an affiliated contract or
transaction.
ARTICLE XII
AMENDMENT
The power to adopt, amend or repeal these Bylaws shall be in the
stockholders entitled to vote and may be exercised by the affirmative vote of a
majority of the stock issued and outstanding and entitled to vote thereat at any
annual meeting of the stockholders or at any special meeting thereof if notice
of the proposed amendment or repeal be contained in the notice of such special
meeting. Such power shall also be conferred upon the directors and may be
exercised by the affirmative vote of a majority of the Board of Directors at any
regular meeting of the Board of Directors or at any special meeting of the Board
of Directors if notice of the proposed amendment or repeal be contained in the
notice of such special meeting, but the fact that such power has been so
conferred upon the directors shall not divest the stockholders of the power, nor
limit their power to adopt, amend or repeal the Bylaws.
40
<PAGE> 41
THIS IS TO CERTIFY:
That I am the duly elected, qualified and acting Secretary of Cuidao
Holding Corp., a Florida corporation (the "Corporation"), and that the foregoing
Amended and Restated Bylaws were adopted as the Bylaws of the Company on October
30, 1997, by the duly elected directors of the Company.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed the
corporate seal the 30th day of October, 1997.
[SIG]
-------------------------------
Edward L. Magdycz, Secretary
41
<PAGE> 1
EXHIBIT 4.0
- --------------------------------------------------------------------------------
- ----------- -----------
NUMBER SHARES
- ----------- -----------
***000*** ***000***
- ----------- -----------
CUIDAO HOLDING CORP.
- --------------------------------------------------------------------------------
ORGANIZED UNDER THE LAWS OF THE STATE OF FLORIDA
100,000,000 Common Stock Shares $.001 par value
- --------------------------------------------------------------------------------
THIS CERTIFIES THAT ______________ is the registered holder of _________ shares
transferable only on the books of the Corporation by the holder hereof in
person or by Attorney upon surrender of this Certificate properly endorsed.
THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933. THE
CORPORATION WILL NOT TRANSFER THIS CERTIFICATE UNLESS (i) THERE IS AN EFFECTIVE
REGISTRATION COVERING THE SHARES REPRESENTED BY THIS CERTIFICATE UNDER THE
SECURITIES ACT OF 1933 AND ALL APPLICABLE STATE SECURITIES LAWS, (ii) IT FIRST
RECEIVES A LETTER OF OPINION FROM AN ATTORNEY, ACCEPTABLE TO THE BOARD OF
DIRECTORS OR ITS AGENTS, STATING THAT IN THE OPINION OF THE ATTORNEY THE
PROPOSED TRANSFER IS EXEMPT FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933
AND UNDER ALL APPLICABLE STATE SECURITIES LAWS, (iii) THE TRANSFER IS MADE
PURSUANT TO RULE 144 UNDER THE SECURITIES ACT OF 1933.
IN WITNESS WHEREOF, the said Corporation has caused this Certificate to be
signed by its duly authorized officers and its Corporate Seal to be hereunto
affixed this ___ day of ___________, 19__, A.D.
________________________ _____________________
President Secretary
- --------------------------------------------------------------------------------
AmeriLawyer(R) (800) 603-3900
<PAGE> 1
EXHIBIT 5.0
[JOHN W. MARTIN LAW OFFICE LETTERHEAD]
December 18, 1997
Cuidao Holding Corp.
3201 West Griffin Road, Suite 204
Ft. Lauderdale, Florida 33312-6900
Gentlemen:
At your request, we have examined the Registration Statement on Form SB-2
that you have filed with the Securities and Exchange Commission in connection
with the registration under the Securities Act of 1933, as amended, of up to
260,000 Units, each Unit consisting of one share of the common stock, $.0001 par
value of Cuidao Holding Corp. (the "Common Stock") and one Common Stock purchase
warrant (the "Warrant"). We are familiar with the proceedings taken and to be
taken by you in connection with the authorization, issuance and sale of the
Units.
Based upon the foregoing, it is our opinion that the Units, as well as the
Common Stock and Warrants comprising the Units, upon the issuance or transfer
and sale thereof in the manner referred to in said Registration Statement, will
constitute legally and validly issued and outstanding securities of Cuidao
Holding Corp., fully paid and nonassessable.
We consent to the use of this opinion as an exhibit to said Registration
Statement and to the use of our name in said Registration Statement and to
references to our firm in the prospectus incorporated therein
Very truly yours,
LAW OFFICES OF JOHN W. MARTIN
By: /s/ JOHN W. MARTIN
-----------------------------------
John W. Martin
<PAGE> 1
EXHIBIT 10
CUIDAO HOLDING CORP.
1997 INCENTIVE STOCK OPTION PLAN As adopted by
the Board of Directors in October 1997
1. Purposes of the Plan. The purposes of this Stock Plan are to attract
and retain the best available personnel for positions of substantial
responsibility, to provide additional incentive to Employees and Consultants of
the Company and its Subsidiaries and to promote the success of the Company's
business. Options granted under the Plan may be incentive stock options (as
defined under Section 422 of the Code) or non-statutory stock options, as
determined by the Administrator at the time of grant of an option and subject to
the applicable provisions of section 422 of the Code, as amended, and the
regulations promulgated thereunder.
2. Definitions. As used herein, the following definitions shall apply:
(a) "Administrator" means the Board or any of its Committees
appointed pursuant to Section 4 of the Plan.
(b) "Applicable Laws" means the meaning set forth in Section 4(a)
below.
(c) "Board" means the Board of Directors of the Company.
(d) "Code" means the Internal Revenue Code of 1986, as amended.
(e) "Committee" means a Committee appointed by the Board of
Directors in accordance with Section 4 of the Plan.
(f) "Common Stock" means the Common Stock of the Company.
(g) "Company" means Cuidao Holding Corp., a Florida corporation.
(h) "Consultant" means any person, including an advisor, who is
engaged by the Company or any Parent or Subsidiary to render services and is
compensated for such services, and any director of the Company whether
compensated for such services or not; provided that the term Consultant shall
not include directors who are not compensated for their services or are paid
only a director's fee by the Company.
(i) "Continuous Status as an Employee or Consultant" means that
the employment or consulting relationship is not interrupted or terminated by
the Company, any Parent or
<PAGE> 2
Subsidiary. Continuous Status as an Employee or Consultant shall not be
considered interrupted in the case of: (i) any leave of absence approved by the
Board, including sick leave, military leave, or any other personal leave;
provided, however, that for purposes of Incentive Stock Options, any such leave
may not exceed ninety (90) days, unless reemployment upon the expiration of such
leave is guaranteed by contract (including certain Company policies) or statute;
or (ii) transfers between locations of the Company or between the Company, its
Parent, its Subsidiaries or its successors.
(j) "Employee" means any person, including officers and directors,
employed by the Company or any Parent or Subsidiary of the Company. The payment
of a director's fee by the Company shall not be sufficient to constitute
"employment" by the Company.
(k) "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
(l) "Fair Market Value" means, as of any date, the value of Common
Stock determined as follows:
(i) If the Common Stock is listed on any established stock
exchange or a national market system including without limitation the National
Market System of the National Association of Securities Dealers, Inc. Automated
Quotation ("NASDAQ") System, its Fair Market Value shall be the closing sales
price for such stock(or the closing bid, if no sales were reported, as quoted on
such exchange or system for the last market trading day prior to the time of
determination) as reported in The Wall Street Journal or such other source as
the Administrator deems reliable;
(ii) If the Common Stock is quoted on the NASDAQ System (but
not on the National Market System thereof) or regularly quoted by a recognized
securities dealer but selling prices are not reported, its Fair Market Value
shall be the mean between the high bid and low asked prices for the Common Stock
or;
(iii) In the absence of an established market for the Common
Stock, the Fair Market Value thereof shall be determined in good faith by the
Administrator.
(m) "Incentive Stock Option" means an Option intended to qualify
as an incentive stock option within the meaning of Section 422 of the Code, as
designated in the applicable option agreement.
(n) "Named Executive" shall mean any individual who, on the last
day of the Company's fiscal year, is the chief executive officer of the Company
(or is acting in such capacity) or among the three highest compensated officers
of the Company
2
<PAGE> 3
(other than the chief executive officer). Such officer status shall be
determined pursuant to the executive compensation disclosure rules under the
Exchange Act.
(o) "Nonstatutory Stock Option" means an Option not intended to
qualify as an Incentive Stock Option, as designated in the applicable option
agreement.
(p) "Option" means a stock option granted pursuant to the Plan.
(q) "Optioned Stock" means the Common Stock subject to an Option.
(r) "Optionee" means an Employee or Consultant who receives an
Option.
(s) "Parent" means a "parent corporation", whether now or
hereafter existing, as defined in section 424(e) of the Code.
(t) "Plan" means this 1996 Incentive Stock Option Plan.
(u) "Share" means a share of the Common Stock, as adjusted in
accordance with Section 14 below.
(v) "Subsidiary" means a "subsidiary corporation", whether now or
hereafter existing, as defined in Section 424(f) of the Code.
3. Stock Subject to the Plan. Subject to the provisions of Section 14
of the Plan, the maximum aggregate number of shares which may be optioned and
sold under the Plan is 750,000 shares of Common Stock.
If an Option should expire or become unexercisable for any reason
without having been exercised in full, the unpurchased Shares which were subject
thereto shall, unless the Plan shall have been terminated, become available for
future grant under the Plan.
4. Administration of the Plan.
(a) Composition of Administrator.
(i) Multiple Administrative Bodies. If permitted by Rule
16b-3, and by the legal requirements relating to the administration of incentive
stock option plans, if any, of applicable securities laws and the Code
(collectively, the "Applicable Laws"), the Plan may (but need not) be
administered by different administrative bodies with respect to Directors,
Officers who are not directors and Employees who are neither
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Directors nor Officers.
(ii) Administration with respect to Directors and Officers.
With respect to grants of Options to Employees or Consultants who are also
Officers or Directors of the Company, the Plan shall be administered by (A) the
Board, if the Board may administer the Plan in compliance with Rule 16b-3 as it
applies to a plan intended to qualify thereunder as a discretionary plan and
Section 162(m)of the Code as it applies so as to qualify grants of Options to
Named Executives as performance-based compensation, or (B) a Committee
designated by the Board to administer the Plan, which Committee shall be
constituted in such a manner as to permit the Plan to comply with Rule 16b-3 as
it applies to a plan intended to qualify thereunder as a discretionary plan, to
qualify grants of Options to Named Executives as performance-based compensation
under Section 162(m) of the Code and otherwise so as to satisfy the Applicable
Laws.
(iii) Administration with respect to Other Persons. With
respect to grants of Options to Employees or Consultants who are neither
Directors nor Officers of the Company, the Plan shall be administered by (A) the
Board or (B) a Committee designated by the Board, which Committee shall be
constituted in such a manner as to satisfy the Applicable Laws.
(iv) General. If a Committee has been appointed pursuant to
subsection (ii) or (iii) of this Section 4(a), such Committee shall continue to
serve in its designated capacity until otherwise directed by the Board. From
time to time the Board may increase the size of any Committee and appoint
additional members thereof, remove members (with or without cause) and appoint
new members in substitution therefor, fill vacancies (however caused) and remove
all members of a committee and thereafter directly administer the Plan, all to
the extent permitted by the Applicable Laws and, in the case of a Committee
appointed under subsection (ii), to the extent permitted by Rule 16b-3 as it
applies to a plan intended to qualify thereunder as a discretionary plan, and to
the extent required under Section 162(m) of the Code to qualify grants of
Options to Named Executives as performance-based compensation.
(b) Powers of the Administrator. Subject to the provisions of the
Plan and in the case of a Committee, the specific duties delegated by the Board
to such Committee, and subject to the approval of any relevant authorities,
including the approval, if required, of any stock exchange upon which the Common
Stock is listed, the Administrator shall have the authority, in its discretion:
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(i) to determine the Fair Market Value of the Common Stock,
in accordance with Section 2(k) of the Plan;
(ii) to select the Consultants and Employees to whom Options
may from time to time be granted hereunder;
(iii) to determine whether and to what extent Options are
granted hereunder;
(iv) to determine the number of shares of Common Stock to be
covered by each such award granted hereunder;
(v) to approve forms of agreement for use under the Plan;
(vi) to determine the terms and conditions, not inconsistent
with the terms of the Plan, of any award granted hereunder;
(vii) to determine whether and under what circumstances an
Option may be settled in cash under subsection 9(f) instead of Common Stock; and
(viii) to reduce the exercise price of any Option to the then
current Fair Market Value if the Fair Market Value of the Common Stock covered
by such Option shall have declined since the date the Option was granted.
(c) Effect of Administrator's Decision. All decisions,
determinations and interpretations of the Administrator shall be final and
binding on all Optionees and any other holders of any Options.
5. Eligibility.
(a) Nonstatutory Stock Options may be granted to Employees and
Consultants. Incentive Stock Options may be granted only to Employees. An
Employee or Consultant who has been granted an Option may, if otherwise
eligible, be granted additional Options.
(b) Each Option shall be designated in a written option agreement
as either an Incentive Stock Option or a Nonstatutory Stock Option. However,
notwithstanding such designations, to the extent that the aggregate Fair Market
Value of the Shares with respect to which Options designated as Incentive Stock
Options are exercisable for the first time by any Optionee during any calendar
year (under all plans of the Company or any Parent or Subsidiary) exceeds
$100,000, such excess Options shall be treated as Nonstatutory Stock Options.
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(c) For purposes of Section 5(b), Incentive Stock Options shall be
taken into account in the order in which they were granted, and the Fair Market
value of the Shares shall be determined as of the time the Option with respect
to such Shares is granted.
(d) The Plan shall not confer upon any Optionee any right with
respect to continuation of employment or consulting relationship with the
Company, nor shall it interfere in any way with his or her right or the
Company's right to terminate his or her employment or consulting relationship at
any time, with or without cause.
6. Term of Plan. The Plan shall become effective upon the earlier to
occur of its adoption by the Board of Directors or its approval by the
shareholders of the Company as described in Section 20 of the Plan. It shall
continue in effect for a term of ten (10) years unless sooner terminated under
Section 16 of the Plan.
7. Term of Option. The term of each Option shall be the term stated in
the Option Agreement; provided, however, that the term shall be no more than ten
(10) years from the date of grant thereof. However, in the case of an Incentive
Stock Option granted to an Optionee who, at the time the Option is granted, owns
stock representing more than ten percent (10%) of the voting power of all
classes of stock of the Company or any Parent or Subsidiary, the term of the
Option shall be five (5) years from the date of grant thereof or such shorter
term as may be provided in the Option Agreement.
8. Limitation on Grant to Employees. Subject to adjustment as provided
in this Plan, the maximum number of Shares which may be subject to options
granted to any one Employee under this Plan for any fiscal year of the Company
shall be 500,000.
9. Option Exercise Price and Consideration.
(a) Exercise Price. The per share exercise price for the Shares to
be issued pursuant to exercise of an Option shall be such price as is determined
by the Board, but shall be subject to the following:
(i) In the case of an Incentive Stock Option
(A) granted to an Employee who, at the time of the
grant of such Incentive Stock Option, owns stock representing more than ten
percent (10%) of the voting power of all classes of stock of the Company or any
Parent or Subsidiary, the per Share exercise price shall be no less than 110% of
the Fair Market Value per Share on the date of grant.
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<PAGE> 7
(B) granted to any other Employee, the per Share
exercise price shall be no less than 100% of the Fair Market Value per Share on
the date of grant.
(ii) In the case of a Nonstatutory Stock Option
(A) granted to a person who, at the time of the grant
of such Option, owns stock representing more than ten percent (10%) of the
voting power of all classes of stock of the Company or any Parent or Subsidiary,
the per Share exercise price shall be no less than 110% of the Fair Market
Value per Share on the date of the grant.
(B) granted to a person who, at the time of grant of
such Option, is a Named Executive of the Company, the per share Exercise Price
shall be no less than 100% of the Fair Market Value on the date of grant; and
(C) granted to any person other than a Named
Executive, the per Share exercise price shall be no less than 85% of the Fair
Market Value per Share on the date of grant.
(b) Permissible Consideration. The consideration to be paid for
the Shares to be issued upon exercise of an Option, including the method of
payment, shall determined by the Administrator (and, in the case of an Incentive
Stock Option, shall be determined at the time of grant) and may consist entirely
of (1) cash,(2) check, (3) promissory note, (4) other Shares which (x) in the
case of Shares acquired upon exercise of an Option either have been owned by the
Optionee for more than six months on the date of surrender or were not acquired,
directly or indirectly, from the Company, and (y) have a Fair Market Value on
the date of surrender equal to the aggregate exercise price of the Shares as to
which said Option shall be exercised (5) delivery of a properly executed
exercise notice together with such other documentation as the Administrator and
the broker, if applicable, shall require to effect an exercise of the Option and
delivery to the Company of the sale or loan proceeds required to pay the
exercise price, or (6) any combination of the foregoing methods of payment. In
making its determination as to the type of consideration to accept, the Board
shall consider if acceptance of such consideration may be reasonably expected to
benefit the Company.
10. Exercise of Option.
(a) Procedure for Exercise; Rights as a Shareholder. Any Option
granted hereunder shall be exercisable at such times and under such conditions
as determined by the Board, including performance criteria with respect to the
Company and/or the Optionee, and as shall be permissible under the terms of the
Plan.
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<PAGE> 8
An Option may not be exercised for a fraction of a Share.
An Option shall be deemed to be exercised when written notice
of such exercise has been given to the Company in accordance with the terms of
the Option by the person entitled to exercise the Option and full payment for
the Shares with respect to which the Option is exercised has been received by
the Company. Full payment may, as authorized by the Board, consist of any
consideration and method of payment allowable under Section 9(b) of the Plan.
Until the issuance (as evidenced by the appropriate entry on the books of the
Company or of a duly authorized transfer agent of the Company) of the stock
certificate evidencing such Shares, no right to vote or receive dividends or any
other rights as a shareholder shall exist with respect to the Optioned Stock,
notwithstanding the exercise of the Option. The Company shall issue (or cause to
be issued) such stock certificates promptly upon exercise of the Option. No
adjustment will be made for a dividend or other right for which the record date
is prior to the date the stock certificate is issued, except as provided in
Section 14 of the Plan.
Exercise of an Option in any manner shall result in a decrease
in the number of Shares which thereafter may be available, both for purposes of
the Plan and for sale under the Option, by the number of Shares as to which the
Option is exercised.
(b) Termination of Employment. In the event of termination of an
Optionee's Continuous Status as an Employee or Consultant with the Company, such
Optionee may, but only within such period of time as is determined by the
Administrator, of at least thirty (30) days, with such determination in the case
of an Incentive Stock Option not exceeding three (3) months after the date of
such termination (but in no event later than the expiration date of the term of
such Option as set forth in the Option Agreement), exercise his or her Option to
the extent that Optionee was entitled to exercise it at the date of such
termination. To the extent that Optionee was not entitled to exercise the Option
at the date of such termination, or if Optionee does not exercise such Option to
the extent so entitled within the time specified herein, the Option shall
terminate.
(c) Disability of Optionee. Notwithstanding the provisions of
Section 10(b) above, in the event of termination of an Optionee's Continuous
Status as an Employee or Consultant as a result of his total and permanent
disability (as defined in Section 22(e)(3) of the Code), Optionee may, but only
within twelve (12) months from the date of such termination (but in no event
later than the expiration date of the term of such Option as set forth in the
Option Agreement), exercise the Option to the extent otherwise entitled to
exercise it at the date of such
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<PAGE> 9
termination. To the extent that Optionee was not entitled to exercise the Option
at the date of termination, or if Optionee does not exercise such Option to the
extent so entitled within the time specified herein, the Option shall terminate.
(d) Death of Optionee. In the event of termination of an
Optionee's Continuous Status as an Employee or Consultant as a result of the
death of an Optionee, the Option may be exercised, at any time within twelve
(12) months following the date of death (but in no event later than the
expiration date of the term of such Option as set forth in the Option
Agreement), by the Optionees' estate or by a person who acquired the right to
exercise the Option by bequest or inheritance, but only to the extent the
Optionee was entitled to exercise the Option at the date of death. To the extent
that Optionee was not entitled to exercise the Option at the date of death, or
if Optionee does not exercise such Option to the extent so entitled within the
time specified herein, the Option shall terminate.
(e) Rule 16b-3. Options granted to persons subject to Section
16(b) of the Exchange Act must comply with Rule 16b-3 and shall contain such
additional conditions or restrictions as may be required thereunder to qualify
for the maximum exemption from Section 16 of the Exchange Act with respect to
Plan transactions.
(f) Buyout Provisions. The Administrator may at any time offer to
buy out for a payment in cash or Shares, an Option previously granted, based on
such terms and conditions as the Administrator shall establish and communicate
to the Optionee at the time that such offer is made.
11. Withholding Taxes. As a condition to the exercise of Options granted
hereunder, the Optionee shall make such arrangements as the Administrator may
require for the satisfaction of any federal, state, local or foreign withholding
tax obligations that may arise in connection with the exercise, receipt or
vesting of such Option. The Company shall not be required to issue any Shares
under the Plan until such obligations are satisfied.
12. Stock Withholding to Satisfy Withholding Tax Obligations. At the
discretion of the Administrator, Optionees may satisfy withholding obligations
as provided in this paragraph. When an Optionee incurs tax liability in
connection with an Option which tax liability is subject to tax withholding
under applicable tax laws, and the Optionee is obligated to pay the Company an
amount required to be withheld under applicable tax laws, the Optionee may
satisfy the withholding tax obligation by one or some combination of the
following methods: (a) by cash payment, or (b) out of Optionee's current
compensation, (c) if permitted by the Administrator, in its discretion, by
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surrendering to the Company Shares that (i) in the case of Shares previously
acquired from the Company, have been owned by the Optionee for more than six
months on the date of surrender, and (ii) have a fair market value on the date
of surrender equal to or less than Optionee's marginal tax rate times the
ordinary income recognized, or (d) by electing to have the Company withhold from
the Shares to be issued upon exercise of the Option that number of Shares having
a fair market value equal to the amount required to be withheld. For this
purpose, the fair market value of the Shares to be withheld shall be determined
on the date that the amount of tax to be withheld is to be determined (the "Tax
Date").
Any surrender by an Officer or Director of previously owned
Shares to satisfy tax withholding obligations arising upon exercise of this
Option must comply with the applicable provisions of Rule 16b-3 and shall be
subject to such additional conditions or restrictions as may be required
thereunder to qualify for the maximum exemption from Section 16 of the Exchange
Act with respect to Plan transactions.
All elections by an Optionee to have Shares withheld to
satisfy tax withholding obligations shall be made in writing in a form
acceptable to the Administrator and shall be subject to the following
restrictions:
(a) the election must be made on or prior to the applicable Tax
Date;
(b) once made, the election shall be irrevocable as to the
particular Shares of the Option as to which the election is made;
(c) all elections shall be subject to the consent or disapproval
of the Administrator;
(d) if the Optionee is an Officer or Director, the election must
comply with the applicable provisions of Rule 16b-3 and shall be subject to such
additional conditions or restrictions as may be required thereunder to qualify
for the maximum exemption from Section 16 of the Exchange Act with respect to
Plan transactions.
In the event the election to have Shares withheld is made by
an Optionee and the Tax Date is deferred under Section 83 of the Code because no
election is filed under Section 83(b) of the Code, the Optionee shall receive
the full number of Shares with respect to which the Option is exercised but such
Optionee shall be unconditionally obligated to tender back to the Company the
proper number of Shares on the Tax Date.
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<PAGE> 11
13. Non-Transferability of Options. Options may not be sold, pledged,
assigned, hypothecated, transferred, or disposed of in any manner other than by
will or by the laws of descent or distribution and may be exercised, during the
lifetime of the Optionee, only by the Optionee.
14. Adjustments Upon Changes in Capitalization; Corporate Transactions.
(a) Changes in Capitalization. Subject to any required action by
the shareholders of the Company, the number of shares of Common Stock covered by
each outstanding Option, and the number of shares of Common Stock which have
been authorized for issuance under the Plan but as to which no Options have yet
been granted or which have been returned to the Plan upon cancellation or
expiration of an Option, the maximum number of Shares of Common Stock for which
Options may be granted to any Employee under Section 8 of the Plan and the price
per share of Common Stock covered by each such outstanding Option, shall be
proportionately adjusted for any increase or decrease in the number of issued
shares of Common Stock resulting from a stock split, reverse stock split, stock
dividend, combination or reclassification of the Common Stock, or any other
increase or decrease in the number of issued shares of Common Stock effected
without receipt of consideration by the Company; provided, however, that
conversion of any convertible securities of the Company shall not be deemed to
have been "effected without receipt of consideration." Such adjustment shall be
made by the Board, whose determination in that respect shall be final, binding
and conclusive. Except as expressly provided herein, no issuance by the Company
of shares of stock of any class, or securities convertible into shares of stock
of any class, shall affect, and no adjustment by reason thereof shall be made
with respect to, the number or price of shares of Common Stock subject to an
Option.
(b) Corporate Transactions. In the event of the proposed
dissolution or liquidation of the Company, the Option will terminate immediately
prior to the consummation of such proposed action, unless otherwise provided by
the Administrator. The Administrator may, in the exercise of its sole discretion
in such instances, declare that any Option shall terminate as of a date fixed by
the Administrator and give each Optionee the right to exercise his or her Option
as to all or any part of the Optioned Stock, including Shares as to which the
Option would not otherwise be exercisable. In the event of a proposed sale of
all or substantially of the assets of the Company, or the merger of the Company
with or into another corporation, the Option shall be assumed or an equivalent
option shall be substituted by such successor corporation or a parent or
subsidiary of such successor corporation, unless the Administrator determines,
in the exercise of its sole discretion and in lieu of such assumption or
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substitution, that the Optionee shall have the right to exercise the Option as
to some or all of the Optioned Stock, including Shares as to which the Option
would not otherwise be exercisable. If the Administrator makes an Option
exercisable in lieu of assumption or substitution in the event of a merger or
sale of assets, the Administrator shall notify the Optionee that the Option
shall be exercisable for a period of thirty (30) days from the date of such
notice, and the Option will terminate upon the expiration of such period.
15. Time of Granting Options. The date of grant of an Option shall, for
all purposes, be the date on which the Administrator makes the determination
granting such Option, or such other date as is determined by the Board. Notice
of the determination shall given to each Employee or Consultant to whom an
Option is so granted within a reasonable time after the date of such grant.
16. Amendment and Termination of the Plan.
(a) Amendment and Termination. The Board may amend or terminate
the Plan from time to time in such respects as the Board may deem advisable,
provided that, the following revisions or amendments shall require approval of
the shareholders of the Company in the manner described in Section 20 of the
Plan.
(i) any increase in the number of Shares subject to the
Plan, other than an adjustment under Section 14 of the Plan;
(ii) any change in the designation of the class of persons
eligible to be granted Options;
(iii) any change in the limitation on grants to employees as
described in Section 8 of the Plan or other changes which would require
shareholder approval to qualify options granted hereunder as performance-based
compensation under Section 162(m) of the Code; or
(iv) any revision or amendment requiring shareholder approval
in order to preserve the qualification of the Plan under Rule 16b-3.
(b) Shareholder Approval. If any amendment requiring shareholder
approval under Section 16(a) of the Plan is made subsequent to the first
registration of any class of equity securities by the Company under Section 12
of the Exchange Act, such shareholder approval shall be solicited as described
in Section 20 of the Plan.
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(c) Effect of Amendment or Termination. Any such amendment or
termination of the Plan shall not affect Options already granted and such
Options shall remain in full force and effect as if this Plan had not been
amended or terminated, unless mutually agreed otherwise between the Optionee and
the Board, which agreement must be in writing and signed by the Optionee and the
Company.
17. Conditions Upon Issuance of Shares. Shares shall not be issued
pursuant to the exercise of an Option unless the exercise of such Option and the
issuance and delivery of such Shares pursuant thereto shall comply with all
relevant provisions of law, including, without limitation, the Securities Act of
1933, as amended, the Exchange Act, the rules and regulations promulgated
thereunder, and the requirements of any stock exchange upon which the Shares may
then be listed, and shall be further subject to the approval of counsel for the
Company with respect to such compliance.
As a condition to the exercise of an Option, the Company may require
the person exercising such Option to represent and warrant at the time of any
such exercise that the Shares are being purchased only for investment and
without any present intention to sell or distribute such Shares if, in the
opinion of counsel for the Company, such a representation is required by any of
the aforementioned relevant provisions of law.
18. Reservation of Shares. The Company, during the term of this Plan,
will at all times reserve and keep available such number of Shares as shall be
sufficient to satisfy the requirements of the Plan. The inability of the Company
to obtain authority from any regulatory body having jurisdiction, which
authority is deemed by the Company's counsel to be necessary to the lawful
issuance and sale of any Shares hereunder, shall relieve the Company of any
liability in respect of the failure to issue or sell such Shares as to which
such requisite authority shall not have been obtained.
19. Agreements. Options shall be evidenced by written agreements in such
form as the Board shall approve from time to time.
20. Shareholder Approval.
(a) Continuance of the Plan shall be subject to approval by the
shareholders of the Company within twelve (12) months before or after the date
of the Plan is adopted. Such shareholder approval shall be obtained in the
manner and to the degree required under applicable federal and state law and the
rules of any stock exchange upon which the Shares are listed.
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(b) In the event that the Company registers any class of equity
securities pursuant to Section 12 of the Exchange Act, any required approval of
the shareholders of the Company obtained after such registration shall be
solicited substantially in accordance with Section 14(a) of the Exchange Act and
the rules and regulations promulgated thereunder.
(c) If any required approval by the shareholders of the Plan
itself or of any amendment thereto is solicited at any time otherwise than in
the manner described in Section 20(b) hereof, then the Company shall, at or
prior to the first annual meeting of shareholders held subsequent to the later
of (1) the first registration of any class of equity securities of the Company
under Section 12 of the Exchange Act or (2) the granting of an Option hereunder
to an officer or director after such registration, do the following:
(i) furnish in writing to the holders entitled to vote for
the Plan substantially the same information that would be required (if proxies
to be voted with respect to approval or disapproval of the Plan or amendment
were then being solicited) by the rules and regulations in effect under Section
14(a) of the Exchange Act at the time such information is furnished; and
(ii) file with, or mail for filing to, the Securities and
Exchange Commission four copies of the written information referred to in
subsection (i) hereof not later than the date on which such information is first
sent or given to shareholders.
21. Information to Optionees. The Company shall provide to each
Optionee, during the period for which such Optionee has one or more Options
outstanding, copies of all annual reports and other information which are
provided to all shareholders of the Company.
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EXHIBIT 10.1
CUIDAO HOLDING CORP.
1997 DIRECTORS' STOCK OPTION PLAN
1. Purposes of the Plan. The purposes of this Directors' Stock Option
Plan are to attract and retain the best available personnel for service as
Directors of the Company, to provide additional incentive to the Outside
Directors of the Company to serve as Directors, and to encourage their continued
service on the Board.
All options granted hereunder shall be "nonstatutory stock options".
2. Definitions. As used herein, the following definitions shall apply:
(a) "Board" means the Board of Directors of the Company.
(b) "Code" means the Internal Revenue Code of 1986, as amended.
(c) "Common Stock" means the Common Stock of the Company.
(d) "Company" means Cuidao Holding Corp., a Florida corporation.
(e) "Continuous Status as a Director" means the absence of any
interruption or termination of service as a Director.
(f) "Director" means a member of the Board.
(g) "Employee" means any person, including officers and directors,
employed by the Company or any Parent or Subsidiary of the Company. The payment
of a director's fee by the Company shall not be sufficient to constitute
"employment" by the Company.
(h) "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
(i) "Option" means a stock option granted pursuant to the Plan.
All options shall be nonstatutory stock options (i.e., options that are not
intended to qualify as incentive stock options under Section 422 of the Code).
(j) "Optioned Stock" means the Common Stock subject to an Option.
<PAGE> 2
(k) "Optionee" means an Outside Director who receives an Option.
(l) "Outside Director" means a Director who is not an Employee.
(m) "Parent" means a "parent corporation", whether now or
hereafter existing, as defined in Section 424(e) of the Code.
(n) "Plan" means this 1997 Directors' Stock Option Plan.
(o) "Share" means a share of the Common Stock, as adjusted in
accordance with Section 11 of the Plan.
(p) "Subsidiary" means a "subsidiary corporation", whether now or
hereafter existing, as defined in Section 424(f) of the Code.
3. Stock Subject to the Plan. Subject to the provisions of Section 11
of the Plan, the maximum aggregate number of shares which may be optioned and
sold under the Plan is 250,000 shares (the "Pool") of Common Stock.
If an Option should expire or become unexercisable for any reason
without having been exercised in full, the unpurchased Shares which were subject
thereto shall, unless the Plan shall have been terminated, become available for
future grant under the Plan. If Shares which were acquired upon exercise of an
Option are subsequently repurchased by the Company, such Shares shall not in any
event be returned to the Plan and shall not become available for future grant
under the Plan.
4. Administration of and Grants of Options under the Plan.
(a) Administrator. Except as otherwise required herein, the Plan
shall be administered by the Board.
(b) Procedure for Grants. All grants of Options hereunder shall be
automatic and nondiscretionary and shall be made strictly in accordance with the
following provisions:
(i) No person shall have any discretion to select which
Outside Directors shall be granted Options or to determine the number of Shares
to be covered by Options granted to Outside Directors.
(ii) Each Outside Director shall be automatically granted an
Option to purchase Shares (the "First Option") as follows: (A) with respect to
persons who are Outside Directors on the effective date of this Plan, as
determined in accordance with Section 6 hereof, 1,000 shares on such effective
date, and (B) with respect to any other person, 500 shares on the date on which
such person first becomes an Outside Director,
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whether through election by the shareholders of the Company or appointment by
the Board of Directors to fill a vacancy.
(iii) After the First Option has been granted to an Outside
Director, such Outside Director shall thereafter be automatically granted an
Option to purchase 500 Shares (a "Subsequent Option") on January 1 of each year,
with the first such grant being made on January 1, 1998, provided that, on such
date, he or she shall have served on the Board for at least six (6) months prior
to the grant of such Subsequent Option.
(iv) Notwithstanding the provisions of subsections (ii) and
(iii) hereof, in the event that a grant would cause the number of Shares subject
to outstanding Options plus the number of Shares previously purchased upon
exercise of Options to exceed the Pool, then each such automatic grant shall be
for that number of Shares determined by dividing the total number of Shares
remaining available for grant by the number of Outside Directors receiving an
Option on such date on the automatic grant date. Any further grants shall then
be deferred until such time, if any, as additional Shares become available for
grant under the Plan through action of the shareholders to increase the number
of Shares which may be issued under the Plan or through cancellation or
expiration of Options previously granted hereunder.
(v) Notwithstanding the provisions of subsections (ii) and
(iii) hereof, any grant of an Option made before the Company has obtained
shareholder approval of the Plan in accordance with Section 17 hereof shall be
conditioned upon obtaining such shareholder approval of the Plan in accordance
with Section 17 hereof.
(vi) The terms of each First Option granted hereunder shall
be as follows:
(1) the First Option shall be exercisable only while
the Outside Directors remains a Director of the Company, except as set forth in
Section 9 hereof.
(2) the exercise price per Share shall be 100% of the
fair market value per Share on the date of grant of the First Option, determined
in accordance with Section 8 hereof.
(3) the First Option shall become exercisable in
installments cumulatively as to 25% of the Shares subject to the First Option on
each of the first, second, third and fourth anniversaries of the date of grant
of the Option.
(vii) The terms of each Subsequent Option granted hereunder
shall be as follows:
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(1) the Subsequent Option shall be exercisable only
while the Outside Director remains a Director of the Company, except as set
forth in Section 9 hereof.
(2) the exercise price per Share shall be 100% of the
fair market value per Share on the date of grant of the Subsequent Option on the
first anniversary of the date of grant of the Subsequent Option.
(c) Powers of the Board. Subject to the provisions and
restrictions of the Plan, the Board shall have the authority in its discretion:
(i) to determine, upon review of relevant information and in accordance with
Section 8(b) of the Plan, the fair market value of the Common Stock;(ii) to
determine the exercise price per share of Options to be granted, which exercise
price shall be determined in accordance with Section 8(a) of the Plan; (iii) to
interpret the Plan; (iv) to prescribe, amend and rescind rules and regulations
relating to the Plan; (v) to authorize any person to execute on behalf of the
Company any instrument required to effectuate the grant of an Option previously
granted hereunder; and (vi) to make all other determinations deemed necessary or
advisable for the administration of the Plan.
(d) Effect of Board's Decision. All decisions, determinations and
interpretations of the Board shall be final and binding on all Optionees and any
other holders of any Options granted under the Plan.
(e) Suspension or Termination of Option. If the President or his
or her designee reasonably believes that an Optionee has committed an act of
misconduct, the President may suspend the Optionee's right to exercise any
option pending a determination by the Board of Directors (excluding the Outside
Director accused of such misconduct). If the Board of Directors (excluding the
Outside Director accused of such misconduct) determines an Optionee has
committed an act of embezzlement, fraud, dishonesty, nonpayment of an obligation
owed to the Company, breach of fiduciary duty or deliberate disregard of the
Company rules resulting in loss, damage or injury to the Company, or if an
Optionee makes an unauthorized disclosure of any Company trade secret or
confidential information, engages in any conduct constituting unfair
competition, induces any Company customer to breach a contract with the Company
or induces any principal for whom the Company acts as agent to terminate such
agency relationship, neither the Optionee nor his or her estate shall be
entitled to exercise any option whatsoever. In making such determination, the
Board of Directors (excluding the Outside Director accused of such misconduct)
shall act fairly and shall give the Optionee an opportunity to appear and
present evidence on Optionee's behalf at a hearing before the Board or a
committee of the Board.
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5. Eligibility. Options may be granted only to Outside Directors. All
Options shall be automatically granted in accordance with the terms set forth in
Section 4(b) hereof. An Outside Director who has been granted an Option may, if
he or she is otherwise eligible, be granted an additional Option in accordance
with such provisions.
The Plan shall not confer upon any Optionee any right with respect
to continuation of service as a Director or nomination to serve as a Director,
nor shall it interfere in any way with any rights which the Director or the
Company may have to terminate his or her directorship any time.
6. Term of Plan; Effective Date. The Plan shall become effective upon
the earlier to occur of its adoption by the Board of Directors or its approval
by the shareholders of the Company as described in Section 17 of the Plan. It
shall continue in effect for a term of ten (10) years unless sooner terminated
under Section 13 of the Plan.
7. Term of Options. The term of each Option shall be ten (10) years
from the date of grant thereof.
8. Exercise Price and Consideration.
(a) Exercise Price. The per Share exercise price for the Shares to
be issued pursuant to exercise of an Option shall be 100% of the fair market
value per Share on the date of grant of the Option.
(b) Fair Market Value. The fair market value shall be determined
by the Board; provided, however, that where there is a public market for the
Common Stock, the fair market value per Share shall be the mean of the bid and
asked prices of the Common Stock in the over-the-counter market on the date of
grant, as reported in The Wall Street Journal (or, if not so reported, or
otherwise reported by the National Association of Securities Dealers Automated
Quotation System ("Nasdaq Stock Market")) or, in the event the Common Stock is
traded on the Nasdaq National Market or listed on a stock exchange, the fair
market value per Share shall be the closing price on such system or exchange on
the date of grant of the Option, as reported in The Wall Street Journal.
(b) Form of Consideration. The consideration to be paid for the
Shares to be issued upon exercise of an Option shall consist entirely of cash,
check, other shares of Common Stock having a fair market value on the date of
surrender equal to the aggregate exercise price of the Shares as to which said
Option shall be exercised (which, if acquired from the Company, shall have been
held for at least six months), or any combination of
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such methods of payment and/or any other consideration or method of payment as
shall be permitted under applicable corporate law.
9. Exercise of Option.
(a) Procedure for Exercise; Rights as a Shareholder. Any Option
granted hereunder shall be exercisable at such times as are set forth in Section
4(b) hereof; provided, however, that no Options shall be exercisable prior to
shareholder approval of the Plan in accordance with Section 17 hereof has been
obtained.
An Option may not be exercised for a fraction of a Share.
An Option shall be deemed to be exercised when written notice
of such exercise has been given to the Company in accordance with the terms of
the Option by the person entitled to exercise the Option and full payment for
the Shares with respect to which the Option is exercised has been received by
the Company. Full payment may consist of any consideration and method of payment
allowable under Section 8(C) of the Plan. Until the issuance (as evidenced by
the appropriate entry on the books of the Company or of a duly authorized
transfer agent of the Company) of the stock certificate evidencing such Shares,
no right to vote or receive dividends or any other rights as a shareholder shall
exist with respect to the Optioned Stock, notwithstanding the exercise of the
Option. The Company shall issue (or cause to be issued) such stock certificates
promptly upon exercise of the Option. No adjustment will be made for a dividend
or other right for which the record date is prior to the date the stock
certificate is issued, except as provided in Section 11 of the Plan.
Exercise of an Option in any manner shall result in a decrease
in the number of Shares which thereafter may be available, both for purposes of
the Plan and for sale under the Option, by the number of Shares as to which the
Option is exercised.
(b) Termination of Status as a Director. If an Outside Director
ceases to serve as a Director, he or she may, but only within ninety (90) days
after the date he or she ceases to be a Director of the Company, exercise his or
her Option to the extent that he or she was entitled to exercise it at the date
of such termination. Notwithstanding the foregoing, in no event may the Option
be exercised after its term set forth in Section 7 has expired. To the extent
that such Outside Director was not entitled to exercise an Option at the date of
such termination, or does not exercise such Option (which he or she was entitled
to exercise) within the time specified herein, the Option shall terminate.
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(c) Disability of Optionee. Notwithstanding the provisions of
Section 9(b) above, in the event a Director is unable to continue his or her
service as a Director with the Company as a result of his or her total and
permanent disability (as defined in Section 22(e)(3) of the Code), he or she
may, but only within six (6) months (or such other period of time not exceeding
twelve (12) months as is determined by the Board)from the date of such
termination exercise his or her Option to the extent he or she was entitled to
exercise it at the date of such termination. Notwithstanding the foregoing, in
no event may the Option be exercised after its term set forth in Section 7 has
expired. To the extent that he or she was not entitled to exercise the Option at
the date of termination, or if he or she does not exercise such Option to the
extent so entitled within the time specified herein, the Option shall terminate.
(d) Death of Optionee. In the event of the death of an Optionee:
(i) the Option may be exercised, at any time within six (6)
months following the date of death (but in no event later than the expiration
date of the term of such Option as set forth in the Option Agreement), by the
Optionees' estate or by a person who acquired the right to exercise the Option
by bequest or inheritance, but only to the extent the Optionee was entitled to
exercise the Option at the date of death. To the extent that Optionee was not
entitled to exercise the Option at the date of death, or if Optionee does not
exercise such Option to the extent so entitled within the time specified herein,
the Option shall terminate.
(ii) Within three (3) months after the termination of
Continuous Status as a Director, the Option may be exercised, at any time within
six (6) months following the date of death, by the Optionee's estate or by a
person who acquired the right to exercise the Option by bequest or inheritance,
but only to the extent of the right to exercise that had accrued at the date of
termination. Notwithstanding the foregoing, in no event may the option be
exercised after its term set forth in Section 7 has expired.
10. Non-Transferability of Options. Options may not be sold, pledged,
assigned, hypothecated, transferred, or disposed of in any manner other than by
will or by the laws of descent or distribution or pursuant to a qualified
domestic relations order (as defined by the Code or the rules thereunder). The
designation of a beneficiary by an Optionee does not constitute a transfer. An
Option may be exercised during the lifetime of an Optionee only by the Optionee
or a transferee permitted by this Section.
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11. Adjustments Upon Changes in Capitalization; Corporate Transactions.
(a) Changes in Capitalization. Subject to any required action by
the shareholders of the Company, the number of shares of Common Stock covered by
each outstanding Option, and the number of shares of Common Stock which have
been authorized for issuance under the Plan but as to which no Options have yet
been granted or which have been returned to the Plan upon cancellation or
expiration of an Option, as well as the price per share of Common Stock covered
by each such outstanding Option, shall be proportionately adjusted for any
increase or decrease in the number of issued shares of Common Stock resulting
from a stock split, reverse stock split, stock dividend, combination or
reclassification of the Common Stock, or any other increase or decrease in the
number of issued shares of Common Stock effected without receipt of
consideration by the Company; provided, however, that conversion of any
convertible securities of the Company shall not be deemed to have been "effected
without receipt of consideration." Such adjustment shall be made by the Board,
whose determination in that respect shall be final, binding and conclusive.
Except as expressly provided herein, no issuance by the Company of shares of
stock of any class, or securities convertible into shares of stock of any class,
shall affect, and no adjustment by reason thereof shall be made with respect to,
the number or price of shares of Common Stock subject to an Option.
(b) Corporate Transactions. In the event of (i) a dissolution or
liquidation of the Company, (ii) a sale of all or substantially all of the
Company's assets, (iii) a merger or consolidation in which the Company is not
the surviving corporation or (iv) any other capital reorganization in which more
than fifty percent (50%) of the shares of the Company entitled to vote are
exchanged, the Company shall give to the Eligible Director, at the time of
adoption of the plan for liquidation, dissolution, sale, merger, consolidation
or reorganization, either a reasonable time thereafter within which to exercise
the Option, including Shares as to which the Option would not be otherwise
exercisable, prior to the effectiveness of such liquidation, dissolution, sale,
merger, consolidation or reorganization, at the end of which time the Option
shall terminate, or the right to exercise the Option, including Shares as to
which the Option would not be otherwise exercisable (or receive a substitute
option with comparable terms), as to an equivalent number of shares of stock of
the corporation succeeding the Company acquiring its business by reason of such
liquidation, dissolution, sale, merger, consolidation or reorganization.
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12. Time of Granting Options. The date of grant of an Option shall, for
all purposes, be the date determined in accordance with Section 4(b) hereof.
Notice of the determination shall be given to each Outside Director to whom an
Option is so granted within a reasonable time after the date of such grant.
13. Amendment and Termination of the Plan.
(a) Amendment and Termination. The Board may amend or terminate
the Plan from time to time in such respects as the Board may deem advisable,
provided that, to the extent necessary and desirable to comply with rule 16b-3
under the Exchange Act (or any other applicable law or regulation), the Company
shall obtain approval of the shareholders of the Company to Plan amendments to
the extent and in the manner required by such law or regulation. Notwithstanding
the foregoing, the provisions set forth in Section 4 of this Plan (and any other
Sections of this Plan that affect the formula award terms required to be
specified in this Plan by Rule 16b-3) shall not be amended more than once every
six (6) months, other than to comport with changes in the Code, the Employee
Retirement Income Security Act of 1974, as amended, or the rules thereunder.
(b) Effect of Amendment or Termination. Any such amendment or
termination of the Plan that would impair the rights of any Optionee shall not
affect Options already granted to such Optionee and such Options shall remain in
full force and effect as if this Plan had not been amended or terminated, unless
mutually agreed otherwise between the Optionee and the Board, which agreement
must be in writing and signed by the Optionee and the Company.
14. Conditions Upon Issuance of Shares. Shares shall not be issued
pursuant to the exercise of an Option unless the exercise of such Option and the
issuance and delivery of such Shares pursuant thereto shall comply with all
relevant provisions of law, including, without limitation, the Securities Act of
1933, as amended, the Exchange Act, the rules and regulations promulgated
thereunder, state securities laws, and the requirements of any stock exchange
upon which the Shares may then be listed, and shall be further subject to the
approval of counsel for the Company with respect to such compliance.
As a condition to the exercise of an Option, the Company may
require the person exercising such Option to represent and warrant at the time
of any such exercise that the Shares are being purchased only for investment and
without any present intention to sell or distribute such Shares if, in the
opinion of counsel for the Company, such a representation is required by any of
the aforementioned relevant provisions of law.
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<PAGE> 10
15. Reservation of Shares. The Company, during the term of this Plan,
will at all times reserve and keep available such number of Shares as shall be
sufficient to satisfy the requirements of the Plan. The inability of the Company
to obtain authority from any regulatory body having jurisdiction, which
authority is deemed by the Company's counsel to be necessary to the lawful
issuance and sale of any Shares hereunder, shall relieve the Company of any
liability in respect of the failure to issue or sell such Shares as to which
such requisite authority shall not have been obtained.
16. Option Agreement. Options shall be evidenced by written agreements
in such form as the Board shall approve from time to time.
17. Shareholder Approval. Continuance of the Plan shall be subject to
approval by the shareholders of the Company at or prior to the first annual
meeting of shareholders held subsequent to the granting of an Option hereunder.
If such shareholder approval is obtained at a duly held shareholders' meeting,
it may be obtained by the affirmative vote of the holders of a majority of the
outstanding shares of the Company present or represented and entitled to vote
thereon. If such shareholder approval is obtained by written consent, it may be
obtained by the written consent of the holders of a majority of the outstanding
shares of the Company. Options may be granted, but not exercised, before such
shareholder approval.
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EXHIBIT 10.2
DISTRIBUTION AGREEMENT
This Agreement is made and entered into this 24th day of November, 1997,
by and between the People's Republic of China, TSINGTAO BREWERY NO.3
CO.,LTD.("BREWER") and CUIDAO (USA) IMPORT CO., INC., a subsidiary of CUIDAO
HOLDING CORP., a Florida U. S. A. corporation, with its principal place of
business at 3120 West Griffin Road, Suite #204, Ft. Lauderdale, Florida
33312-6900, U.S.A ("DISTRIBUTOR").
RECITALS
WHEREAS, BREWER is engaged in the brewing, production and sale of beer
and wishes to expand the distribution of such product by having DISTRIBUTOR sell
such product in the territory described in Paragraph 3 hereof; and
WHEREAS, DISTRIBUTOR desires to market the beer products brewed by
BREWER, and to be designated as the exclusive distributor of BREWER for the
purposes of selling such products in the territory assigned to it.
NOW, THEREFORE, for good and valuable consideration, the receipt of
which is hereby acknowledged by each party, the parties hereto agree as follows:
1. Appointment.
a) BREWER HEREBY APPOINTS DISTRIBUTOR as its exclusive distributor for
the sale and promotion of the Products described in Paragraph 2 below in the
Territory described in Paragraph 3 below and agrees not to appoint other
distributors in the Territory.
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BREWER agrees that while this Agreement is in effect, it will not sell Products
to persons other than DISTRIBUTOR in the Territory or to persons, other than
DISTRIBUTOR, who BREWER has reason to believe will resell Products in the
Territory.
(b) DISTRIBUTOR hereby accepts such appointment subject to the terms and
conditions of this Agreement and agrees that it shall use its best efforts to
promote demand for and sale of the Products in the Territory and that in the
sale and promotion of the Products it shall at all times carry out to the best
of its ability a merchandising policy designed to promote and maintain the
excellence of quality and to preserve the goodwill which is associated with the
name and reputation of BREWER and its products.
(c) Notwithstanding the foregoing, should DISTRIBUTOR, commencing with
the 2000 calendar year, fail to meet the minimum annual purchase requirements
set forth in Section 4(c) of this Agreement, the DISTRIBUTOR shall become a
non-exclusive distributor of the Products.
2. Products.
The term "Products" as used in this Agreement shall mean any and all
beers and beer styles and types brewed and produced by BREWER. BREWER shall have
the right to stop brewing and selling any of the Products without incurring any
obligation or liability to DISTRIBUTOR.
3. Territory.
The term "Territory" as used in this Agreement shall mean the Continent
of North America. The Territory may be subsequently enlarged, reduced or
otherwise changed by agreement in writing of
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the parties hereto
4. Sales Activities
DISTRIBUTOR shall conduct the sales activities contemplated under this
Agreement by purchasing Products from BREWER for resale to DISTRIBUTOR's
customers within the Territory. DISTRIBUTOR shall conduct its sales activities
in a lawful manner consistent with the highest standards of fair trade, fair
competition, and business ethics; shall cause all of its employees to do the
same and use its best efforts to ensure that its agents will do the same; and
in addition shall be bound by the following duties and obligations:
(a) Advertising. DISTRIBUTOR may undertake, at its own expense, such
advertising and promotional efforts as it may deem necessary to achieve a proper
recognition of the products in the Territory. DISTRIBUTOR shall have the right
to use the name "CUIDAO" or any derivation thereof, or any other name or mark
associated with BREWER.
(b) Inventory. DISTRIBUTOR agrees to maintain at all times an
inventory of the products sufficient to fill reasonably anticipated orders from
its customers and to deliver promptly all such orders.
(c) Minimum Purchases. During the calendar year beginning January 1,
1998 DISTRIBUTOR shall make a minimum annual total purchase of products having a
net plant net volume of 21357 cases per year. Commencing with the calendar year
beginning January 1, 1999, DISTRIBUTOR shall make a minimum annual total
purchase of Products having a net plant volume of 27,000 cases. Commencing with
the calendar year beginning January 1, 2000, DISTRIBUTOR shall make a minimum
annual total purchase of Products having a net volume of 106,000 cases.
(d) Orders. DISTRIBUTOR shall in submitting orders describe the
Products in a clear and unambiguous manner and shall include precise
instructions for packaging, invoicing. and shipping. Overall purchase order for
each consecutive year needs to be provided to the Brewery in the month of
December preceding said year, with price
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to be agreed on.
(e) Resale Prices. DISTRIBUTOR shall distribute the Products through all
available means, including restaurant accounts, store and market retail
accounts, or otherwise, which may be commensurate with good development of the
Territory. DISTRIBUTOR shall set resale prices for the Products at its own
discretion.
5 Payments.
(a) All terms of this agreement, (including but not limited to "cost",
"payments", "amounts", "value", "discounts", "price", "credits", "set-off",
"dollars", or "$") shall be calculated and construed in terms of currency of the
United States of America.
(b) In order to secure DISTRIBUTOR's obligation to accept and purchase
any Products ordered under the terms of this Agreement, DISTRIBUTOR shall
establish a confirmed, irrevocable and transferable letter of credit in favor of
BREWER or an affiliate of BREWER at a bank within the United States of America
acceptable to BREWER or the BREWER's bank in China; and the conditions for
payment thereunder shall be satisfied upon the delivery by BREWER of the usual
shipping documents.
6 Confidential Information.
DISTRIBUTOR and BREWER shall not use of disclose to third parties any
confidential information concerning the business, affairs, or the products of
the other party which it may acquire in the course of its activities under this
Agreement and shall take all necessary precautions to prevent any such
disclosure by any of its employees, officers or affiliated persons and entities.
For purposes of this Article, confidential information shall include trade
secrets and other unpatentable information.
7 Sub-Distributors.
DISTRIBUTOR shall have the right to appoint sub-distributors for
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the sale and promotion of the products in the Territory, Additionally,
DISTRIBUTOR shall have the right to enter into alliances and cooperative
arrangements for the sale, promotion and distribution of the product in the
Territory.
8 Product warranty.
BREWER warrants to DISTRIBUTOR that Products shall be of merchantable
quality at the time title thereto passes to DISTRIBUTOR in accordance with this
Agreement. BREWER, at its option, shall replace any products which fail to
comply with such warranty or shall refund the purchase price paid by DISTRIBUTOR
for any claims for liabilities made against DISTRIBUTOR arising out of personal
injuries or death or damage to property caused by defective products, unless
such defect is created by DISTRIBUTOR's handling of the products. The
DISTRIBUTOR should have insurance against the liability Insurance on behalf of
the BREWER
9 Relationship Between Parties.
(a) DISTRIBUTOR agrees that in all matters relating to this Agreement it
is and shall be acting as an independent contractor and shall bear all of its
expenses in connection with this Agreement. It shall not have any authority to
assume or create any obligation, express or implied, on behalf of BREWER.
DISTRIBUTOR shall not make quotations or write letters in the name of BREWER but
in every instance shall use its own name.
(b) At such time, as Distributor ceases to operate as a Distributor for
Brewery herein, distributor shall assign rights of "CUIDAO" to Brewery herein.
10. Effective Date and Duration
(a) This Agreement shall take effect as of the date first above written.
This Agreement shall be effective for five (5) years from the effective date,
unless sooner terminated as hereinafter provided. This Agreement shall be
automatically renewed for additional terms
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of five (5) years each, unless not less than nine(9) months prior to the end of
the initial or any renewal term either party shall give the other written notice
of non-renewal.
(b) This Agreement may be terminated prior to the expiration of the
initial term of this Agreement, or any renewals thereof, by either party if the
other party:
(i) breaches any material provision of this agreement, and breach is
not cured within ninety (90)days written notice thereof;
(ii) insolvency or bankruptcy of either party under applicable law,
and/or the appointment of a trustee or receiver for either party; or
(iii) any inability or prospective failure of either party to perform
its obligations hereunder.
11. Rights and obligations Upon Termination.
Upon expiration or termination of this Agreement for any reason, all
orders received from DISTRIBUTOR but not shipped by BREWER prior to the
effective date of termination shall be shipped by BREWER, and DISTRIBUTOR agrees
to accept shipment of and make payment for any such orders shipped by BREWER.
12. No Assignment.
This Agreement shall not be assigned by either party, either by
operation of law or by contract, without the prior written consent of the other
party hereto, and any attempt to assign without such consent shall be null and
void. Nothing herein contained, however, shall prevent DISTRIBUTOR from
assigning this Agreement to any subsidiary, an affiliate, sister, or parent
corporation of DISTRIBUTOR.
13. Government Regulation.
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(a)DISTRIBUTOR agrees to obtain at its own expense any import license,
foreign exchange permit, or other permit or approval it may need for the
performance of its obligations under this Agreement, and in essence, to comply
at its own expense with all applicable laws, regulations, and orders of the
government(s) of the Territory, the United States or any instrumentality
thereof.
(b)DISTRIBUTOR agrees to furnish to BREWER, by affidavit or other
reasonable means from time to time at BREWER'S request, and to the reasonable
satisfaction of BREWER, assurances that the appointment of DISTRIBUTOR
hereunder, its activities under this Agreement and the payment to BREWER of any
monies or consideration contemplated hereunder are proper and lawful under the
law in force in the Territory and in the United States of America. DISTRIBUTOR
further represents that no person employed by it is an official of any
government agency or a corporation owned by the government(s) of the Territory,
the United States of America, or any state thereof and that no part of any
monies or consideration paid hereunder shall accrue for the benefit of any such
official.
14. Force Majeure
This Agreement and BREWER'S and DISTRIBUTOR'S performances hereunder are
subject to all contingencies beyond their reasonable control, including but not
limited to force majeure; strikes; lockouts; labor disputes; floods; civil
commotion; riot; acts of God; rules; laws; orders; restrictions; embargoes;
quotas or actions of any government; foreign or domestic or any agency or
subdivision thereof; casualties; fires; accidents; shortages of transportation
facilities; detention of the products by custom authorities; or losses of the
products in public or private warehouses. In any such event, the party not
subject to force majeure shall have the right, in its sole discretion and
without any liability to the other party,
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to (a) cancel all or any portion of this Agreement, of (b) require performance
of this Agreement within a reasonable time after the causes for nonperformance
or delay have terminated.
15. Separability.
If any provision of this Agreement is found by any court of competent
jurisdiction to be invalid or unenforceable, the invalidity of such provision
shall not affect the other provisions of this Agreement and all provisions not
affected by such invalidity or unenforceability shall remain in full force and
effect.
16. Waiver.
The waiver by either party hereto of a breach or default in any of the
provisions of this Agreement by the other party shall not be construed as a
waiver of any succeeding breach of the same or other provisions; nor shall any
delay or omission on the part of either party to exercise or avail itself of
any right, power, or privilege that it has or may have hereunder operate as a
waiver of any breach or default by the other party.
17. Language.
This Agreement is written in Chinese and English in two counterparts in
each language. One copy of each language text shall be retained by each party.
Chinese and English texts shall have equal validity and legal effect.
18. Notices.
(a)Unless otherwise specifically provided, all notices, demands, or
requests required or permitted by this Agreement shall be in writing and in
English and sent in a letter form or by telex,
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facsimile (facsimile to be accompanied by a telex notice requesting confirmation
of receipt), telegram or cable to the address of the parties first set forth
hereinabove, or to such other address as may from time to time be designated by
any party through notification to the other party at its address as in effect
from time to time.
The dates on which notices shall be deemed to have been effectively
given shall be determined as follows:
(a) Notices given by personal delivery shall be deemed effectively give
on the date of personal delivery;
(b) Notices given in letter form shall be deemed effectively give on the
tenth day after the date mailed (as indicated by the postmark) by registered
airmail; postage prepaid, or the fourth day after delivery to an internationally
recognized courier service;
(e) Notices given by telex, telegram or cable shall be deemed
effectively given on the second business day following the date of transmission,
as indicated on the document in question; and
(d) Notices given by facsimile shall be deemed effectively give on the
first business day following the date of transmission of a telex notice
requesting confirmation of receipt as indicated on the telex in question.
Nothing contained herein shall justify or excuse failure to give oral
notice for the purpose of informing the other party thereof when notification is
appropriate, but such oral notice shall not satisfy the requirement of written
notice.
19. Governing Law.
The formation, validity, execution, amendment and termination of this
Agreement shall be governed by the United Nation's convention on contracts for
the Internation Sale of Goods and other concerning international legal
principles and practices.
20. Resolution of Disputes.
(a) Any dispute, controversy or claim arising out of or relating
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to this Agreement, or the interpretation, breach, termination or validity
hereof, shall be resolved through friendly consultation. Such consultation shall
begin immediately after one party has delivered to the other party a written
request for such consultation. If within thirty (30) days following the date on
which such notice is given, the dispute cannot be resolved, the dispute shall he
submitted to arbitration upon the request of one party with notice to the other
party.
(b) Any arbitration to be conducted pursuant to the terms of this
Agreement shall be conducted in Stockholm, Sweden under the auspices of the
Arbitration Institute of the Stockholm Chamber of Commerce (the "Institute").
There shall be three arbitrators. Each party shall select on arbitrator within
thirty (30) days after giving or receiving the demand for arbitration. Such
limited in their selection to any prescribed list. The President of the
Institute shall select the third arbitrator. If the other party does not appoint
and arbitrator who has consented to participate within thirty (30) days after
the selection of the first arbitrator, the relevant appointment shall be made by
the President of the Institute.
(e) The arbitration proceedings shall be conducted in English. The
arbitration tribunal shall apply the Arbitration Rules of the United Nations
Commission on International Trade Law in effect at the time of arbitration.
However, if such rules are in conflict with the provisions of this Section 23,
including the provisions concerning the appointment of arbitrators, the
provisions of this Section 23 shall prevail.
(d) Each party shall cooperate with the other in making full disclosure
of and providing complete access to all information and documents requested by
the other party in connection with such proceeding, subject only to any
confidentiality obligations binding on such party.
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The award of the arbitration tribunal shall be final and binding upon
the parties, and either party may apply to a court of competent jurisdiction for
enforcement of such award.
21. Entire Agreement; Modifications and Waivers.
This Agreement is the entire agreement of the parties with respect to
the subject matter described in this Agreement and all oral and written prior
negotiations and agreements and any conflicting prior course of dealing or trade
usage are superseded hereby. The parties hereto agree that no representations
have been made or relied upon except as specifically stated in this Agreement.
This Agreement may be modified only by a writing signed by both parties.
IN WITNESS WHEREOF, and intending to be legally bound hereby,
DISTRIBUTOR and BREWER have each caused this Agreement to be delivered and
executed by their proper and duly authorized officers on this 24th day of
November, 1997.
This agreement supersedes the previous agreement between the parties
hereunder date on August 9th, 1996.
BREWER :
[SIG]
------------------------------- -------------------------------
TISNGTAO BREWERY NO. 3, LTD
Date
DISTRIBUTOR
[SIG]
------------------------------- -------------------------------
CUIDAO HOLDING CORP. Date
BY: C. MICHAEL FISHER, PRESIDENT
-11-
<PAGE> 1
EXHIBIT 10.3
IMPORT AND DISTRIBUTION AGREEMENT
This Agreement is made and entered into this 13th day of December, 1996,
by and between the Cave du Vignoble Gursonnais, with its principal place of
business at 24610 Carsac de Gurson, France ("Winery") and, R&R (Bordeaux)
Imports, Inc. (or Assigns) a Florida, U.S.A. corporation, with its principal
place of business at 3201 West Griffin Road, Suite #204, Ft. Lauderdale, Florida
33312- 6900, U.S.A. ("Distributor").
RECITALS
WHEREAS, WINERY is engaged in the production and sale of wine and wishes
to expand the distribution of such product by having DISTRIBUTOR sell such
product in the territory described in Paragraph 3 hereof; and
WHEREAS, DISTRIBUTOR desires to market the wine products produced by
WINERY and the be designated as the exclusive distributor of WINERY for the
purposed of selling such products in the territory assigned to it.
NOW, THEREFORE, for good and valuable consideration, the receipt of
which is hereby acknowledged by each party, the parties hereto agree as follows:
<PAGE> 2
1. APPOINTMENT.
(a) WINERY hereby appoints DISTRIBUTOR as its exclusive
distributor for the sale and promotion of the Products described in Paragraph 2
below in the Territory described in Paragraph 3 below and agrees not to appoint
other distributors in the Territory. WINERY agrees that while this Agreement is
in effect, it will not sell Products to persons other than DISTRIBUTOR in the
Territory or to persons, other than DISTRIBUTOR, who WINERY has reason to
believe will resell the Products in the Territory.
(b) DISTRIBUTOR hereby accepts such appointment subject to the
terms and conditions of this Agreement and agrees that it shall use its best
efforts to promote demand for and sale of the Products in the Territory and that
in the sale and promotion of the Products it shall at all times carry out to the
best of its ability a merchandising policy designed to promote and maintain the
excellence of quality and to preserve the goodwill which is associated with the
name and reputation of WINERY and its products.
(c) Notwithstanding the foregoing, should DISTRIBUTOR, commencing
with the 1999 calendar year, fail to meet the minimum annual purchase
requirements set forth in Section 4 (c) of this Agreement, then DISTRIBUTOR
shall become at non-exclusive distributor of the Products.
2
<PAGE> 3
2. PRODUCTS.
The term "Products" as used in this Agreement shall mean any and all
WINE and CHAMPAGNE styles and any other types brewed and produced by WINERY.
WINERY shall have the right to stop producing and selling any of the Products
without incurring any obligation or liability to Distributor.
3. TERRITORY.
The term "Territory" as used in this Agreement shall mean the Continent
of North America, and the Caribbean Islands. The Territory may be subsequently
enlarged, reduced or otherwise changed by agreement in writing of the parties
hereto.
4. SALES ACTIVITIES.
DISTRIBUTOR shall conduct the sales activities contemplated under this
Agreement by purchasing Products from WINERY for resale to DISTRIBUTOR'S
customers within the Territory. DISTRIBUTOR shall conduct its sales activities
in a lawful manner consistent with the highest standards of fair trade, fair
competition, and business ethics; shall cause all of its employees to do the
same and use its best efforts to ensure that its agents will do the same; and in
addition shall be bound by the following duties and obligations:
3
<PAGE> 4
(a) Advertising. DISTRIBUTOR may undertake, at its own expense,
such advertising and promotional efforts as it may deem necessary to achieve a
proper recognition of the Products in the Territory. DISTRIBUTOR shall have the
right to use the names or any derivation thereof, or any other name or mark
associated with WINERY.
(b) Inventory. DISTRIBUTOR agrees to maintain at all times an
inventory of the Products sufficient to fill reasonably anticipated orders from
its customers and to deliver promptly all such orders.
(c) Minimum Purchases. During the calendar year beginning January
1, 1997, DISTRIBUTOR shall make a minimum annual total purchase of Products
having a net plant invoice value of $100,000 U.S. Commencing with the calendar
year beginning January 1, 1998, DISTRIBUTOR shall make a minimum annual total
purchase of Products having a net plant invoice value of $150,000 U.S.
Commencing with the calendar year beginning January 1, 1999, DISTRIBUTOR shall
make a minimum annual total purchase of Products having a net plant invoice
value of $400,000 U.S.
(d) Orders. DISTRIBUTOR shall in submitting orders describe the
Products in a clear and unambiguous manner and shall include precise
instructions for packaging, invoicing, and shipping.
(e) Resale Prices. DISTRIBUTOR shall distribute the Products
through all available means, including restaurant accounts, store and market
retail accounts, or otherwise, which may
4
<PAGE> 5
be commensurate with good development of the Territory. DISTRIBUTOR shall set
resale prices for the Products at its own discretion.
5. LIST PRICES.
(a) The prices to be paid by DISTRIBUTOR to WINERY for each order
of Products shall be WINERY'S prices in effect on the date said order for
Products from time to time on thirty (30) days' written notice to DISTRIBUTOR to
compensate for increases in its cost of manufacturing Products due to changes in
currency exchange rates or increases in energy, labor, raw materials or
transportation costs or in duties or other governmental charges, impositions or
assessments. No price increase shall effect the prices of Products sold to
DISTRIBUTOR pursuant to orders placed by DISTRIBUTOR and accepted by WINERY
prior to the effective date of such price increase.
(b) Any and all taxes assessed to WINERY by federal, state, or
local governments on sales of WINERY'S Products to DISTRIBUTOR shall be included
on invoices rendered by WINERY to DISTRIBUTOR.
5
<PAGE> 6
6. PLACEMENT OF ORDERS AND SHIPMENT.
(a) Upon the placing of a written order for Products to WINERY by
DISTRIBUTOR, a binding agreement will be created whereby WINERY will agree to
sell and ship, and DISTRIBUTOR will agree to purchase and pay for, the Products
ordered under the terms of this Agreement.
(b) Any terms or conditions stated in DISTRIBUTOR'S order
inconsistent with this Agreement shall be null and void.
(c) WINERY shall ship the Products to DISTRIBUTOR within a
reasonable time after receipt of any order. Shipping dates shall be approximate
and shall be computed from the date of receipt of the order by WINERY. Weights
given shall be estimated weights. All typographical and clerical errors shall be
subject to correction.
(d) WINERY shall in no event be obligated to make any such
shipment if such shipment would, at the time thereof, constitute a violation of
any laws, regulations, or policies of the Territory or of the United States of
America or France.
(e) WINERY's obligation to effect shipment of the Products shall
be fully discharged; and ownership, legal title, and all risk of loss or damage
shall pass to DISTRIBUTOR when the Products have been delivered to the carrier
at WINERY's place of business or any other place designated by WINERY.
6
<PAGE> 7
(f) DISTRIBUTOR shall be entitled to conduct a reasonable
investigation of the Products upon receipt thereof. All claims for defects in
the Products or shortages shall be made in writing by DISTRIBUTOR within twenty
(20) days of the receipt of the Products. Acceptance of the Products by
DISTRIBUTOR shall constitute a waiver of all claims by DISTRIBUTOR for loss or
damage due to defects or shortages in the Products, or to delay in delivery of
the Products.
(g) No Products shall be returned for credit without first
obtaining the written permission of WINERY to return such Products. In the event
WINERY does agree to accept goods and all such returned Products must be
received by WINERY in an unused condition and in condition for resale as new
merchandise.
7. PAYMENTS.
(a) All terms of this Agreement, (including but not limited to
"cost", "payments", "amounts", "value", "discounts", "price", "credits"
"set-off", "dollars" or "$") shall be calculated and constructed in terms of
currency of the United States of America.
(b) In order to secure DISTRIBUTOR's obligation to accept and
purchase any Products ordered under the terms of this
7
<PAGE> 8
Agreement, DISTRIBUTOR shall establish a confirmed, irrevocable and
transferrable letter of credit in favor of WINERY, or an assignee of WINERY or
an affiliate of WINERY at a bank within the United States of America acceptable
to WINERY; and the conditions for payment thereunder shall be satisfied upon the
delivery by WINERY of the usual shipping documents.
8. Confidential Information.
DISTRIBUTOR and WINERY shall not use or disclose to third parties any
confidential information concerning the business, affairs, or the products of
the other party which it may acquire in the course of its activities under this
Agreement and shall take all necessary precautions to prevent any such
disclosure by any of its employees, officers, or affiliated persons and
entities. For purposes of this Article, confidential information shall include
trade secrets and other unpatentable information.
9. Sub-Distributors.
DISTRIBUTOR shall have the right to appoint sub-distributors for the
sale and promotion of the Products in the Territory. Additionally DISTRIBUTOR
shall have the right to enter into alliances and cooperative arrangements for
the sale, promotion and distribution of the Product in the Territory.
8
<PAGE> 9
10. CONSEQUENTIAL DAMAGES - INDEMNITY.
(a) The parties hereto acknowledge that the ability of WINERY to
comply with the terms of this Agreement is of the utmost importance to the
business operations of DISTRIBUTOR. As a result, the parties understand that
should WINERY breach any provision of this Agreement, that is shall be liable to
DISTRIBUTOR for all damages which consequentially occur as a result of said
breach including, but hot limited to, lost goodwill, lost resale profits, and
lost customers of DISTRIBUTOR.
(b) DISTRIBUTOR shall indemnify WINERY and hold it harmless from
any claims, demands, liabilities, suits, or expenses of any kind arising out of
DISTRIBUTOR'S business, and these provisions shall survive the termination of
this Agreement.
11. PRODUCT WARRANTY.
WINERY warrants to DISTRIBUTOR that Products shall be of merchantable
quality at the time title there passes to DISTRIBUTOR in accordance with this
Agreement. WINERY at is option, shall replace any Products which fail to comply
with such warranty or shall refund the purchase price paid by DISTRIBUTOR
therefor. Further, WINERY hereby agrees to indemnify DISTRIBUTOR for any claims
for liabilities made against DISTRIBUTOR arising out of personal injuries or
death or damage to property caused by
9
<PAGE> 10
defective Products, unless such defect is created by DISTRIBUTOR'S handling of
the Products.
12. RELATIONSHIP BETWEEN PARTIES.
DISTRIBUTOR agrees that in all matters relating to this Agreement it is
and shall be acting as an independent contractor and shall bear all of its
expenses in connection with this Agreement. It shall not have any authority to
assume or create any obligation, express or implied, on behalf of WINERY.
DISTRIBUTOR shall not make quotations or write letters in the name of WINERY
but in every instance shall use its own name.
13. EFFECTIVE DATE AND DURATION.
(a) This Agreement shall be effective for three (3) years from
the effective date, unless sooner terminated as hereinafter provided. This
Agreement shall be automatically renewed for additional terms of ten (10) years
each, unless not less than nine (9) months prior to the end of the initial or
any renewal term either party shall give the other written notice of
non-renewal.
(b) This Agreement may be terminated prior to the expiration of
the initial term of this Agreement, or any renewals thereof, by either party if
the other party;
10
<PAGE> 11
(i) breaches any material provision of this Agreement, and
such breach is not cured within ninety (90) days written notice thereof;
(ii) insolvency or bankruptcy of either party under
applicable law, and/or the appointment of a trustee or receiver for either
party; or
(iii) any inability or prospective failure of either party
to perform its obligations hereunder.
14. RIGHTS AND OBLIGATIONS UPON TERMINATION.
Upon expiration or termination of this Agreement for any reason, all
orders received from DISTRIBUTOR but not shipped by WINERY prior to the
effective date of termination shall be shipped by WINERY, and DISTRIBUTOR agrees
to accept shipment of and make payment for any such orders shipped by WINERY.
15. NO ASSIGNMENT.
This Agreement shall not be assigned by either party, either by
operation of law or by contract, without the prior written consent of the other
party hereto, and any attempt to assign without such consent shall be null and
void. Nothing herein contained, however, shall prevent DISTRIBUTOR from
assigning this Agreement to any subsidiary, an affiliate, sister, or parent
corporation of DISTRIBUTOR.
11
<PAGE> 12
16. GOVERNMENT REGULATION.
(a) DISTRIBUTOR agrees to obtain at its own expense import
license, foreign exchange permit, or other permit or approval it may need for
the performance of its obligations under this Agreement, and in essence, to
comply at its own expense with all applicable laws, regulations, and orders of
the government(s) of the Territory, the United States or any instrumentality
thereof.
(b) DISTRIBUTOR agrees to furnish to WINERY, by affidavit or
other reasonable means from time to time at WINERY'S request, and the reasonable
satisfaction of WINERY, assurances that the appointment of DISTRIBUTOR
hereunder, its activities under this Agreement, and the payment to WINERY of any
monies or consideration contemplated hereunder ARE PROPER AND LAWFUL under the
law in force in the Territory and in the United States of America. DISTRIBUTOR
further represents that no person employed by it is an official of any
government agency or a corporation owned by the government(s) of the Territory,
the United States of America, or any State thereof and that no part of any
monies or considerations paid hereunder shall accrue for the benefit of any such
official.
17. FORCE MAJEURE.
This agreement and WINERY'S and DISTRIBUTOR'S performance hereunder are
subject to all contingencies beyond their reasonable control, including but not
limited to force majeure; strikes;
12
<PAGE> 13
lockouts; labor disputes; floods; civil commotion; riot; acts of God; rules;
laws; orders; restrictions; embargoes; quotas or actions of any government;
foreign or domestic or any agency or subdivision thereof; casualties; fires;
accidents; shortages of transportation facilities; detention of the Products by
custom authorities; or losses of the Products in public or private warehouses.
In any such event, the party not subject to force majeure shall have the right,
in its sole discretion and without any liability to the other party, to (a)
cancel all or any portion of this Agreement, or (b) require performance of this
Agreement within a reasonable time after the causes for nonperformance or delay
have terminated.
18. SEPARABILITY.
If any provision of this Agreement is found by any court of competent
jurisdiction to be invalid or unenforceable, the invalidity of such provision
shall not affect the other provisions of this Agreement and all provisions not
affected by such invalidity or unenforceability shall remain in full force and
effect.
19. WAIVER.
The waiver by either party hereto of a breach or default in any of the
provisions of this Agreement by the other party
13
<PAGE> 14
not be construed as a waiver of any succeeding breach of the same or other
provisions; nor shall any delay or omission on the part of either party to
exercise or avail itself of any right, power, or privilege that it has or may
have hereunder operate as a waiver of any breach or default by the other party.
20. LANGUAGE.
This Agreement is written in French and English in two counterparts in
each language. One copy of each language text shall be retained by each party.
French and English texts shall have equal validity and legal effect, provided
however that in case of disagreement, the English language text shall prevail.
21. NOTICES.
(a) Unless otherwise specifically provided, all notices, demands, or
requests required or permitted by this Agreement shall be in writing and in
English and sent in a letter form or by telex, facsimile (facsimile to be
accompanied by a telex notice requesting confirmation of receipt), telegraph or
cable to the address of the parties first set forth hereinabove, or to such
other address as may from time to time be designated by any party through
notification to the other party at its address as in effect from time to time.
14
<PAGE> 15
The dates on which notices shall be deemed to have been effectively
given shall be determined as follows:
(a) Notices given by personal delivery shall be deemed
effectively given on the date of personal delivery;
(b) Notices given in letter form shall be deemed effectively
given on the tenth day after the date mailed (as indicated by the postmark) by
registered airmail; postage prepaid, or the fourth day after delivery to an
internationally recognized courier service;
(c) Notices given by telex, telegram or cable shall be deemed
effectively given on the second business day following the date of transmissions
as indicated on the document in question; and
(d) Notices given by facsimile shall be deemed effectively given
on the first business day following the date of transmission of a telex notice
requesting confirmation of receipt as indicated on the telex in question.
Nothing contained herein shall justify or excuse failure to give oral
notice for the purpose of informing the other party thereof when notification is
appropriate, by such oral notice shall not satisfy the requirement of written
notice.
22. GOVERNING LAW.
The formation, validity, execution, amendment and termination of this
Agreement shall be governed by the applicable laws of the
15
<PAGE> 16
State of Florida, U.S.A. and international legal principles and practices.
23. Resolution of Disputes.
(a) Any dispute, controversy or claim arising out of or relating to this
Agreement, or the interpretation, breach, termination or validity hereof, shall
be resolved through friendly consultation. Such consultation shall begin
immediately after one party has delivered to the other party a written request
for such consultation. If within thirty (30) days following the date on which
such notice is given, the dispute cannot be resolved, one dispute shall be
submitted to arbitration upon the request of one party with notice to the other
party.
(b) Any arbitration to be conducted pursuant to the terms of this
Agreement shall be conducted in Stockholm, Sweden under the auspices of the
Arbitration Institute of the Stockholm Chamber of Commerce (the "Institute").
There shall be three arbitrators. Each party shall select one arbitrator within
thirty (30) days after giving or receiving the demand for arbitration. Such
arbitrators shall be freely selected, and the parties shall not be limited in
their selection to any prescribed list. The President of the Institute shall
select the third arbitrator. If the other party does not appoint an arbitrator
who has consented to
16
<PAGE> 17
participate within thirty (30) days after the selection of the first arbitrator,
the relevant appointment shall be made by the President of the Institute.
(c) The arbitration proceedings shall be conducted in English. The
arbitration tribunal shall apply the Arbitration Rules of the United Nations
Commission on International Trade Law in effect at the time of arbitration.
However, if such rules are in conflict with the provisions of this Section 23,
including the provisions concerning the appointment of arbitrators, the
provisions of this Section 23 shall prevail.
(d) Each party shall cooperate with the other in making full disclosure
of and providing complete access to all information and documents requested by
the other party in connection with such proceeding, subject only to any
confidentiality obligations binding on such party.
(e) The award of the arbitration tribunal shall be final and binding
upon the parties, and either party, may apply to a court of competent
jurisdiction for enforcement of such award.
24. Entire Agreement; Modifications and Waivers.
This Agreement is the entire agreement of the parties with respect to
the subject matter described in this Agreement and all oral and written prior
negotiations and agreements and any conflicting prior course of dealing or trade
usage are superseded hereby. The parties hereto agree that no representations
have been
17
<PAGE> 18
made or relied upon, except as specifically stated in this Agreement. This
Agreement may be modified only, by a writing signed by both parties.
IN WITNESS WHEREOF, and intending to be legally bound
hereby, DISTRIBUTOR and WINERY have each caused this Agreement to be delivered
and executed by their proper and duly authorized officers on this _____ day of
December, 1996.
WINERY: Cave du Vignoble Gursonnais
- ------------------------------- -------------------------------
By: DATE
DISTRIBUTOR: R & R (Bordeaux) Imports, Inc.
- ------------------------------- -------------------------------
By: Robert K. Walker, President DATE
18
<PAGE> 1
EXHIBIT 10.4
IMPORT AND DISTRIBUTION AGREEMENT
This Agreement is made and entered into this 07TH, day of March _, 1997,
by and between the ARMADIS - P.O. BOX 8 - 40190 VILLENEUVE DE MARSAN (FRANCE)
and, R & R (Bordeaux) Imports, Inc. a Florida, U.S.A. corporation, with its
principal place of business, at 3201 West Griffin Road, Suite #204, Ft.
Lauderdale, Florida 33312-6900, U.S.A, ("Distributor").
RECITALS
WHEREAS, WINERY is engaged in the production and sale of wine and wishes
to expand the distribution of such product by having DISTRIBUTOR sell such
product in the territory described in Paragraph 3 hereof; and
WHEREAS, DISTRIBUTOR desires to market the wine products produced by
WINERY and the be designated as the exclusive distributor of WINERY for the
purposed of selling such products in the territory assigned to it.
NOW, THEREFORE, for good and valuable consideration, the receipt of
which is hereby acknowledged by each party, the parties hereto agree as follows:
<PAGE> 2
1. APPOINTMENT.
(a) WINERY hereby appoints DISTRIBUTOR as its exclusive
distributor for the sale and promotion of the Products described in Paragraph 2
below in the Territory described in Paragraph 3 below and agrees not to appoint
other distributors in the Territory. WINERY agrees that while this Agreement is
in effect, it will not sell Products to persons other than DISTRIBUTOR in the
Territory or to persons, other than DISTRIBUTOR, who WINERY has reason to
believe will resell the Products in the Territory.
(b) DISTRIBUTOR hereby accepts such appointment subject to the
terms and conditions of this Agreement and agrees that it shall use its best
efforts to promote demand for and sale of the Products in the Territory and that
in the sale and promotion of the Products it shall at all times carry out to the
best of its ability a merchandising policy designed to promote and maintain the
excellence of quality and to preserve the goodwill which is associated with the
name and reputation of WINERY and its products.
(c) Notwithstanding the foregoing, should DISTRIBUTOR,
commencing with the 1999 calendar year, fail to meet the minimum annual purchase
requirements set forth in Section 4(c) of this Agreement, then DISTRIBUTOR
shall become a non-exclusive distributor of the Products.
2
<PAGE> 3
2. PRODUCTS.
The term "Products" as used in this Agreement shall mean any and all
WINE and CHAMPAGNE styles and any other types brewed and produced by WINERY.
WINERY shall have the right to stop brewing and selling any of the Products
without incurring any obligation or liability to Distributor.
3. TERRITORY.
The term "Territory" as used in this Agreement shall mean the Continent
of North America, and the Caribbean Islands. The Territory may be subsequently
enlarged, reduced or otherwise changed by agreement in writing of the parties
hereto.
4. SALES ACTIVITIES.
DISTRIBUTOR shall conduct the sales activities contemplated under this
Agreement by purchasing Products from WINERY for resale to DISTRIBUTOR'S
customers within the Territory. DISTRIBUTOR shall conduct its sales activities
in a lawful manner consistent with the highest standards of fair trade, fair
competition, and business ethics; shall cause all of its employees to do the
same and use its best efforts to ensure that its agents will do the same; and in
addition shall be bound by the following duties and obligations:
3
<PAGE> 4
(a) Advertising. DISTRIBUTOR may undertake, at its own expense,
such advertising and promotional efforts as it may deem necessary to achieve a
proper recognition of the Products in the Territory. DISTRIBUTOR shall have the
right to use the names or any derivation thereof, or any other name or mark
associated with WINERY.
(b) Inventory. DISTRIBUTOR agrees to maintain at all times an
inventory of the Products sufficient to fill reasonably anticipated orders from
its customers and to deliver promptly all such orders.
(c) Minimum Purchases. During the calendar year beginning
January 1, 1997, DISTRIBUTOR shall make a minimum annual total purchase of
Products having a net plant invoice value of $300,000 U.S. Commencing with the
calendar year beginning January 1, 1998, DISTRIBUTOR shall make a minimum annual
total purchase of Products having a net plant invoice value of $500,000 U.S.
Commencing with the calendar year beginning January 1, 1999, DISTRIBUTOR shall
make a minimum annual total purchase of Products having a net plant invoice
value of $1,000,000 U.S.
(d) Orders. DISTRIBUTOR shall in submitting orders describe the
Products in a clear and unambiguous manner and shall include precise
instructions for packaging, invoicing, and shipping.
(e) Resale Prices. DISTRIBUTOR shall distribute the Products
through all available means, including restaurant accounts, store and market
retail accounts, or otherwise, which may
4
<PAGE> 5
be commensurate with good development of the Territory. DISTRIBUTOR shall set
resale prices for the Products at its own discretion.
5. LIST PRICES.
(a) The prices to be paid by DISTRIBUTOR to WINERY for each
order of Products shall be WINERY'S prices in effect on the date said order for
Products from time to time on thirty (30) days' written notice to DISTRIBUTOR to
compensate for increases in its cost of manufacturing Products due to changes in
currency exchange rates or increases in energy, labor, raw materials or
transportation costs or in duties or other governmental charges, impositions or
assessments. No price increase shall effect the prices of Products sold to
DISTRIBUTOR pursuant to orders placed by DISTRIBUTOR and accepted by WINERY
prior to the effective date of such price increase.
(b) Any and all taxes assessed to WINERY by federal, state, or
local governments on sales of WINERY'S Products to DISTRIBUTOR shall be included
on invoices rendered by WINERY to DISTRIBUTOR.
5
<PAGE> 6
6. PLACEMENT OF ORDERS AND SHIPMENT.
(a) Upon the placing of a written order for Products to WINERY
by DISTRIBUTOR, a binding agreement will be created whereby WINERY will agree to
sell and ship, and DISTRIBUTOR will agree to purchase and pay for, the Products
ordered under the terms of this Agreement.
(b) Any terms or conditions stated in DISTRIBUTOR'S order
inconsistent with this Agreement shall be null and void.
(c) WINERY shall ship the Products to DISTRIBUTOR within a
reasonable time after receipt of any order. Shipping dates shall be approximate
and shall be computed from the date of receipt of the order by WINERY. Weights
given shall be estimated weights. All typographical and clerical errors shall be
subject to correction.
(d) WINERY shall in no event be obligated to make any such
shipment if such shipment would, at the time thereof, constitute a violation of
any laws, regulations, or policies of the Territory or of the United States of
America or France.
(e) WINERY'S obligation to effect shipment of the Products shall
be fully discharged; and ownership, legal title, and all risk of loss or damage
shall pass to DISTRIBUTOR when the Products have been delivered to the carrier
at WINERY'S place of business or any other place designated by WINERY.
6
<PAGE> 7
(f) DISTRIBUTOR shall be entitled to conduct a reasonable
investigation of the Products upon receipt thereof. All claims for defects in
the Products or shortages shall be made in writing by DISTRIBUTOR within ten
(10) days of the receipt of the Products. Acceptance of the Products by
DISTRIBUTOR shall constitute a waiver of all claims by DISTRIBUTOR for loss or
damage due to defects or shortages in the Products, or to delay in delivery of
the Products.
(g) No Products shall be returned for credit without first
obtaining the written permission of WINERY to return such Products. In the event
WINERY does agree to accept goods, a minimum of two percent (2%) of the invoice
price plus any other expenses WINERY may have incurred in packing, shipping,
transportation, or otherwise shall be returned at the expense of DISTRIBUTOR,
and all such returned Products must be received by WINERY in an unused condition
and in condition for resale as new merchandise.
7. PAYMENTS.
(a) All terms of this Agreement, (including but not limited to
"cost", "payments", "amounts", "value", "discounts", "price", "credits",
"set-off", "dollars" or "$" shall be calculated and constructed in terms of
currency of the United States of America.
(b) In order to secure DISTRIBUTOR's obligation to accept and
purchase any Products ordered under the terms of this
7
<PAGE> 8
Agreement, DISTRIBUTOR shall establish a confirmed, irrevocable and
transferrable letter of credit in favor of WINERY, or ARMADIS or an assignee of
WINERY or an affiliate of WINERY at a bank within the United States of America
acceptable to WINERY, and the conditions for payment thereunder shall be
satisfied upon the delivery by WINERY of the usual shipping documents.
9. CONFIDENTIAL INFORMATION.
DISTRIBUTOR and WINERY shall not use of disclose to third parties any
confidential information concerning the business, affairs, or the products of
the other party which it may acquire in the course of its activities under this
Agreement and shall take all necessary precautions to prevent any such
disclosure by any of its employees, officers, or affiliated persons and
entities. For purposes of this Article, confidential information shall include
trade secrets and other unpatentable information.
9. SUB-DISTRIBUTORS.
DISTRIBUTOR shall have the right to appoint sub-distributors for the
sale and promotion of the Products in the Territory. Additionally, DISTRIBUTOR
shall have the right to enter into alliances and cooperative arrangements for
the sale, promotion and distribution of the Product in the Territory.
8
<PAGE> 9
10. CONSEQUENTIAL DAMAGES - INDEMNITY.
(a) The parties hereto acknowledge that the ability of WINERY to
comply with the terms of this Agreement is of the utmost importance to the
business operations of DISTRIBUTOR. As a result, the parties understand that
should WINERY breach any provision of this Agreement, that is shall be liable to
DISTRIBUTOR for all damages which consequentially occur as a result of said
breach including, but not limited to, lost goodwill, lost resale profits, and
lost customers of DISTRIBUTOR.
(b) DISTRIBUTOR shall indemnify WINERY and hold it harmless from
any claims, demands, liabilities, suits, or expenses of any kind arising out of
DISTRIBUTOR'S business, and these provisions shall survive the termination of
this Agreement.
11. PRODUCT WARRANTY.
WINERY warrants to DISTRIBUTOR that Products shall be of merchantable
quality at the time title there passes to DISTRIBUTOR in accordance with this
Agreement. WINERY at is option, shall replace any Products which fail to comply
with such warranty or shall refund the purchase price paid by DISTRIBUTOR
therefor. Further, WINERY hereby agrees to indemnify DISTRIBUTOR for any claims
for liabilities made against DISTRIBUTOR arising out of personal injuries or
death or damage to property caused by
9
<PAGE> 10
defective Products, unless such defect is created by DISTRIBUTOR'S handling of
the Products.
12. RELATIONSHIP BETWEEN PARTIES.
DISTRIBUTOR agrees that in all matters relating to this Agreement it is
and shall be acting as an independent contractor and shall bear all of its
expenses in connection with this Agreement. It shall not have any authority to
assume or create any obligation, express or implied, on behalf of WINERY.
DISTRIBUTOR shall not make quotations or write letters in the name of WINERY but
in every instance shall use its own name.
13. EFFECTIVE DATE AND DURATION.
(a) This Agreement shall be effective for thirty (30) years from
the effective date, unless sooner terminated as hereinafter provided. This
Agreement shall be automatically renewed for additional terms of ten (10) years
each, unless not less than nine (9) months prior to the end of the initial or
any renewal term either party shall give the other written notice of
non-renewal.
(b) This Agreement may be terminated prior to the expiration of
the initial term of this Agreement, or any renewals thereof, by either party if
the other party;
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<PAGE> 11
(i) breaches any material provision of this Agreement, and
such breach is not cured within ninety (90) days written notice thereof;
(ii) insolvency or bankruptcy of either party under
applicable law, and/or the appointment of a trustee or receiver for either
party; or
(iii)any inability or prospective failure of either party
to perform its obligations hereunder.
14. RIGHTS AND OBLIGATIONS UPON TERMINATION.
Upon expiration or termination of this Agreement for any reason, all
orders received from DISTRIBUTOR but not shipped by WINERY prior to the
effective date of termination shall be shipped by WINERY, and DISTRIBUTOR agrees
to accept shipment of and make payment for any such orders shipped by WINERY.
15. NO ASSIGNMENT.
This Agreement shall not be assigned by either party, either by
operation of law or by contract, without the prior written consent of the other
party hereto, and any attempt to assign without such consent shall be null and
void. Nothing herein contained, however, shall prevent DISTRIBUTOR from
assigning this Agreement to any subsidiary, an affiliate, sister, or parent
corporation of DISTRIBUTOR.
11
<PAGE> 12
16. GOVERNMENT REGULATION.
(a) DISTRIBUTOR agrees to obtain at its own expense import
license, foreign exchange permit, or other permit or approval it may need for
the performance of its obligations under this Agreement, and in essence, to
comply at its own expense with all applicable laws, regulations, and orders of
the government(s) of the Territory, the United States or any instrumentality
thereof.
(b) DISTRIBUTOR agrees to furnish to WINERY, by affidavit or
other reasonable means from time to time at WINERY'S request, and the reasonable
satisfaction of WINERY, assurances that the appointment of DISTRIBUTOR
hereunder, its activities under this Agreement, and the payment to WINERY of any
monies or consideration contemplated hereunder are proper and lawful under the
law in force in the Territory and in the United States of America. DISTRIBUTOR
further represents that no person employed by it is an official of any
government agency or a corporation owned by the government(s) of the Territory,
the United States of America, or any State thereof and that no part of any
monies or considerations paid hereunder shall accrue for the benefit of any such
official.
17. FORCE MAJEURE.
This agreement and WINERY'S and DISTRIBUTOR'S performance hereunder are
subject to all contingencies beyond their reasonable control, including but not
limited to force majeure; strikes;
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<PAGE> 13
lockouts; labor disputes; floods; civil commotion; riot; acts of God; rules,
laws, orders, restrictions, embargoes, quotas or actions of any government,
foreign or domestic or any agency or subdivision thereof; casualties; fires;
accidents; shortages of transportation facilities; detention of the Products by
custom authorities; or losses of the Products in public or private warehouses.
In any such event, the party not subject to force majeure shall have the right,
in its sole discretion and without any liability to the other party, to (a)
cancel all or any portion of this Agreement, or (b) require performance of this
Agreement within a reasonable time after the causes for nonperformance or delay
have terminated.
18. SEPARABILITY.
If any provision of this Agreement is found by any court of competent
jurisdiction to be invalid or unenforceable, the invalidity of such provision
shall not affect the other provisions of this Agreement and all provisions not
affected by such invalidity or unenforceability shall remain in full force and
effect.
19. WAIVER.
The waiver by either party hereto of a breach or default in any of the
provisions of this Agreement by the other party
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<PAGE> 14
not be construed as a waiver of any succeeding breach of the same or other
provisions; nor shall any delay or omission on the part of either party to
exercise or avail itself of any right, power, or privilege that it has or may
have hereunder operate as a waiver of any breach or default by the other party.
20. LANGUAGES
This Agreement is written in French and English in two counterparts in
each language. One copy of each language text shall be retained by each party.
French and English texts shall have equal validity and legal effect, provided
however that in case of disagreement, the English language text shall prevail.
21. NOTICES.
(a) Unless otherwise specifically provided, all notices, demands, or
requests required or permitted by this Agreement shall be in writing and in
English and sent in a letter form or by telex, facsimile (facsimile to be
accompanied by a telex notice requesting confirmation of receipt), telegraph or
cable to the address of the parties first set forth hereinabove, or to such
other address as may from time to time be designated by any party through
notification to the other party at its address as in effect from time to time.
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<PAGE> 15
The dates on which notices shall be deemed to have been effectively
given shall be determined as follows:
(a) Notices given by personal delivery shall be deemed
effectively given on the date of personal delivery;
(b) Notices given in letter form shall be deemed effectively
given on the tenth day after the date mailed (as indicated by the postmark) by
registered airmail; postage prepaid, or the fourth day after delivery to an
internationally recognized courier service;
(c) Notices given by telex, telegram or cable shall be deemed
effectively given on the second business day following the date of transmission,
as indicated on the document in question; and
(d) Notices given by facsimile shall be deemed effectively given
on the first business day following the date of transmission of a telex notice
requesting confirmation of receipt as indicated on the telex in question.
Nothing contained herein shall justify or excuse failure to give oral
notice for the purpose of informing the other party thereof when notification is
appropriate, by such oral notice shall not satisfy the requirement of written
notice.
22. GOVERNING LAW.
The formation, validity, execution, amendment and termination of this
Agreement shall be governed by the applicable laws of the
15
<PAGE> 16
State of Florida, U.S.A. and international legal principles and practices.
23. RESOLUTION OF DISPUTES.
(a) Any dispute, controversy or claim arising out of or relating to this
Agreement, or the interpretation, breach, termination or validity hereof, shall
be resolved through friendly consultation. Such consultation shall begin
immediately after one party has delivered to the other party a written request
for such consultation. If within thirty (30) days following the date on which
such notice is given, the dispute cannot be resolved, one dispute shall be
submitted to arbitration upon the request of one party with notice to the other
party.
(b) Any arbitration to be conducted pursuant to the terms of this
Agreement shall be conducted in Stockholm, Sweden under the auspices of the
Arbitration Institute of the Stockholm Chamber of Commerce (the "Institute").
There shall be three arbitrators. Each party shall select one arbitrator within
thirty (30) days after giving or receiving the demand for arbitration. Such
arbitrators shall be freely selected, and the parties shall not be limited in
their selection to any prescribed list. The President of the Institute shall
select the third arbitrator. If the other party does not appoint an arbitrator
who has consented to
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<PAGE> 17
participate within thirty (30) days after the selection of the first arbitrator,
the relevant appointment shall be made by the President of the Institute.
(c) The arbitration proceedings shall be conducted in English. The
arbitration tribunal shall apply the Arbitration Rules of the United Nations
Commission on International Trade Law in effect at the time of arbitration.
However, if such rules are in conflict with the provisions of this Section 23,
including the provisions concerning the appointment of arbitrators, the
provisions of this Section 23 shall prevail.
(d) Each party shall cooperate with the other in making full disclosure
of and providing complete access to all information and documents requested by
the other party in connection with such proceeding, subject only to any
confidentiality obligations binding on such party.
(e) The award of the arbitration tribunal shall be final and binding
upon the parties, and either party may apply to a court of competent
jurisdiction for enforcement of such award.
24. ENTIRE AGREEMENT; MODIFICATIONS AND WAIVERS.
This Agreement is the entire agreement of the parties with respect to
the subject matter described in this Agreement and all oral and written prior
negotiations and agreements and any conflicting prior course of dealing or trade
usage are superseded hereby. The parties hereto agree that no representations
have been
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<PAGE> 18
made or relied upon, except as specifically stated in this Agreement. This
Agreement may be modified only by a writing signed by both parties.
IN WITNESS WHEREOF, and intending to be legally bound hereby,
DISTRIBUTOR and WINERY have each caused this Agreement to be delivered and
executed by their proper and duly authorized officers on this 07TH day of March,
1997.
WINERY: ARMADIS
ARMADIS
40190 VILLENEUVE de MARSAN
ALAIN LOUBERE, GENERAL DIRECTOR MARCH 07, 1997
- ------------------------------- ------------------------------------
DATE
DISTRIBUTOR: R & R (Bordeaux)
Imports, Inc.
[SIG] MARCH 07, 1997
- ------------------------------- ------------------------------------
By: Robert K. Walker, President DATE
WITNESS [SIG] MARCH 07, 1997.
-------------------------
WITNESS [SIG] MARCH 07, 1997.
------------------------
<PAGE> 1
EXHIBIT 10.5
IMPORT AND DISTRIBUTION AGREEMENT
This Agreement is made and entered into this 11th day of March, 1997 by
and between the SICA "les Chais du Prevot" 33670 Creon (Gironde - France) and,
R & R (Bordeaux) Imports, Inc. (or Assignees) a Florida, U.S.A. corporation,
with its principal place of business at 3201 West Griffin Road, Suite #201, Ft.
Lauderdale, Florida 33312-6900, U.S.A. ("Distributor").
RECITALS
WHEREAS, WINERY is engaged in the production and sale of wine and wishes
to expand the distribution of such product by having DISTRIBUTOR sell such
product in the territory described in Paragraph 3 hereof; and
WHEREAS, DISTRIBUTOR desires to market the wine products produced by
WINERY and be designated as the exclusive distributor of WINERY for the purpose
of selling such products in the territory assigned to it.
NOW, THEREFORE, for good and valuable consideration, the receipt of
which is hereby acknowledged by each party, the parties hereto agree as follows:
<PAGE> 2
1. APPOINTMENT.
(a) WINERY hereby appoints DISTRIBUTOR as its exclusive distributor for
the sale and promotion of the Products described in Paragraph 2 below in the
Territory described in Paragraph 3 below and agrees not to appoint other
distributors in the Territory. WINERY accepts that while this Agreement is in
effect, it will not sell Products to persons other that DISTRIBUTOR, who WINERY
has reason to believe will resell the Products in the Territory.
(b) DISTRIBUTOR hereby accepts such appointment subject to the terms and
conditions of this Agreement and agrees that it shall use its best efforts to
promote demand for and sale of the Products in the Territory and that in the
sale and promotion of the Products it shall at all times carry out to the best
of its ability a merchandising policy designed to promote and maintain the
excellence of quality and to preserve the goodwill which is associated with the
name and reputation of WINERY and its products.
(c) Notwithstanding the foregoing, should DISTRIBUTOR, commencing with
the 1999 calendar year, fail to meet the minimum annual purchase requirements
set forth in Section 4(c) of this Agreement, then DISTRIBUTOR shall become a
non-exclusive distributor of the Products.
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<PAGE> 3
2. PRODUCTS.
The term "Products" as used in this Agreement shall mean any and all
wine styles and any other types brewed and produced by WINERY. WINERY shall have
the right to stop producing and selling any of the Products without incurring
any obligation or liability to Distributor.
3. TERRITORY.
The term "Territory" as used in this Agreement shall mean the Continent
of North America, and the Caribbean Islands. The Territory may be subsequently
enlarged, reduced or otherwise changed by agreement in writing of the parties
hereto.
4. SALES ACTIVITIES.
DISTRIBUTOR shall conduct the sales activities contemplated under this
Agreement by purchasing Products from WINERY for resale to DISTRIBUTOR'S
customers within the Territory. DISTRIBUTOR shall conduct its sales activities
in a lawful manner consistent with the highest standards of fair trade, fair
competition, and business ethics; shall cause all of its employee to do the same
and use its best efforts to ensure that its agents do the same; and in addition
shall be bound by the following duties and obligations:
3
<PAGE> 4
(a) Advertising. DISTRIBUTOR may undertake, at its own expense, such
advertising and promotional efforts as it may deem necessary to achieve a proper
recognition of the Products in the Territory. DISTRIBUTOR shall have the right
to use the names or any derivation thereof, or any other name or mark associated
with WINERY.
(b) Inventory. DISTRIBUTOR agrees to maintain at all times an inventory
of the Products sufficient to fill reasonably anticipated orders from its
customers and to deliver promptly all such orders.
(c) Minimum Purchases. During the calendar year beginning January 1,
1997, DISTRIBUTOR shall make a minimum annual total purchase of Products having
a net plant invoice value of $100,000 U.S. Commencing with calendar year
beginning January 1, 1998, DISTRIBUTOR shall make a minimum annual total
purchase of Products having a net plant invoice value of $150,000 U.S.
Commencing with calendar year beginning January 1, 1999, DISTRIBUTOR shall make
a minimum annual total purchase of Products having a net plant invoice value of
$400,000 U.S. For the following calendar years, DISTRIBUTOR shall maintain a
minimum annual total purchase of Products having at least the same net plant
invoice value as the 1999 calendar year and will aim if possible to increase it.
(d) Orders. DISTRIBUTOR shall in submitting orders describe the Products
in a clear and unambiguous manner and shall include precise instructions for
packaging, invoicing, and shipping.
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<PAGE> 5
(e) Resale Prices. DISTRIBUTOR shall distribute the Products through all
available means, including restaurant accounts, store and market retail
accounts, or otherwise, which may be commensurate with good development of the
Territory. DISTRIBUTOR shall set resale prices for the Products at its own
discretion.
5. LIST PRICES.
(a) The prices to be paid by DISTRIBUTOR to WINERY for each
order of Products shall be WINERY's prices in effect on the date said order for
Products from time to time on thirty (30) days' written notice to DISTRIBUTOR to
compensate for increases in its cost of manufacturing Products due to changes in
currency exchange rates or increases in energy, labor, raw materials or
transportation costs or in duties or other French governmental charges,
impositions or assessments. No price increase shall effect the prices of Product
sold to DISTRIBUTOR pursuant to orders placed by DISTRIBUTOR and accepted by
WINERY prior to the effective date of such price increase.
(b) The prices will be reevaluated and DISTRIBUTOR will be
notified in writing annually thirty (30) days prior anniversary date (date of
signature agreement) by WINERY.
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<PAGE> 6
6. PLACEMENT OF ORDERS AND SHIPMENT.
(a) Upon the placing of a written order for Products to WINERY by
DISTRIBUTOR, a binding agreement will be created whereby WINERY will agree to
sell and ship, and DISTRIBUTOR will agree to purchase and pay for, the Products
ordered under the terms of this Agreement.
(b) Any terms or conditions stated in DISTRIBUTOR'S order inconsistent
with this Agreement shall be null and void.
(c) WINERY shall ship the Products to DISTRIBUTOR in a 30 day period,
time necessary to obtain COFACE's preliminary agreement and prepare the order.
Shipping dates shall be approximate and shall be computed from the date of
receipt of the order by WINERY. Weights given shall be estimated weights. All
typographical and clerical errors shall be subject to correction.
(d) WINERY shall in no event be obligated to make any such shipment if
such shipment would, at the time thereof, constitute a violation of any laws,
regulations, or policies of the Territory or of the United States of America or
France.
(e) WINERY shall be fully obligated to maintain in its storehouses
Products available to the Carrier, named by DISTRIBUTOR, or shall forward such
Products to DISTRIBUTOR's designated place for a transportation cost; and
ownership, legal title, and all risk of loss or damage shall pass to DISTRIBUTOR
when the Products have been delivered to the carrier at WINERY'S place of
business.
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<PAGE> 7
(f) DISTRIBUTOR shall be entitled to conduct a reasonable investigation
of the Products upon receipt thereof. All claims for defects in the Products or
shortages shall be made in writing by DISTRIBUTOR within twenty (20) days of the
receipt of the Products. Acceptance of the Products by DISTRIBUTOR for loss or
damage due to defects or shortages in the Products, or to delay in delivery of
Products.
(g) No Products shall be returned for credit without first obtaining the
written permission of WINERY to return such Products. In the event WINERY does
agree to accept goods and all such returned Products must be received by WINERY
in an unused condition for resale as new merchandise.
7. PAYMENTS.
(a) All terms of this Agreement, (including but not limited to
"cost", "payments", "amounts", "value", "discounts", "price", "credits",
"set-off", "dollars" or "$", shall be calculated and constructed in terms of
currency of the United States of America.
(b) In order to secure DISTRIBUTOR's obligation to accept and
purchase any Products ordered under the terms of this Agreement, upon order
DISTRIBUTOR shall effect a "SWIFT" transfer in the name of WINERY for an amount
corresponding to this order with a 2% discount.
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<PAGE> 8
8. CONFIDENTIAL INFORMATION.
DISTRIBUTOR and WINERY shall not use or disclose to third party any
confidential information concerning the business, affairs, or the products of
the other party which it may acquire in the course of its activities under this
Agreement and shall take all necessary precautions to prevent any such
disclosure by any of its employees, officers, or affiliated persons and
entities. For purposes of this Article, confidential information shall include
trade secrets and other unpatentable information.
9. SUB-DISTRIBUTORS.
DISTRIBUTORS shall have the right to appoint sub-distributors for the
sale and promotion of the Products in the Territory. Additionally, DISTRIBUTOR
shall have the right to enter into alliances and cooperative arrangements for
the sale, promotion and distribution of the Product in the Territory.
8
<PAGE> 9
10. CONSEQUENTIAL DAMAGES INDEMNITY.
(a) The parties hereto acknowledge that the ability of WINERY to
comply with the terms of this Agreement is of the utmost importance to the
business operations of DISTRIBUTOR. As a result, the parties understand that
should WINERY breach any provision of this Agreement (except if mandatory French
law overrules), that it shall be liable to DISTRIBUTOR for all damages which
consequentially occur as a result of said breach including, but not limited to,
lost goodwill, lost resale profits, and lost customers of DISTRIBUTOR.
(b) DISTRIBUTOR shall indemnify WINERY and hold it harmless from
any claims, demands, liabilities, suits, or expenses of any kind arising out of
DISTRIBUTOR's business, and these provisions shall survive the termination of
this Agreement.
11. PRODUCT WARRANTY.
WINERY warrants to DISTRIBUTOR that shall be of merchantable
quality at the time title there passes to DISTRIBUTOR in accordance with this
Agreement. WINERY at its option, shall replace any which fail to comply
with such warranty or shall refund the purchase price paid by DISTRIBUTOR
therefor. Further, WINERY hereby agrees to indemnify DISTRIBUTOR for any claims
for liabilities made against DISTRIBUTOR arising out of personal injuries or
death or damage
9
<PAGE> 10
to property caused by defective , unless such defect is created by
DISTRIBUTOR's handling the .
12. RELATIONSHIP BETWEEN PARTIES.
DISTRIBUTOR agrees that in all matters relating to this Agreement it is
and shall be acting as an independent contractor and shall bear all of its
expenses in connection with this Agreement. It shall not have any authority to
assume or create any obligation, express or implied, on behalf of WINERY.
DISTRIBUTOR shall not make quotations or write letters in the name of WINERY but
in every instance shall use its own name.
13. EFFECTIVE DATE AND DURATION.
(a) This Agreement shall and will remain effective for three (3)
years from the effective date, and shall be automatically renewed, unless
written notice of non-renewal by either party is given nine (9) months prior to
the end of the initial or any renewal term.
(b) This Agreement may be terminated prior to the expiration of
the initial term of this Agreement, or any renewals thereof, by either party if
the other party:
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<PAGE> 11
(i) breaches any material provision of this Agreement, and such
breach is not cured within ninety (90) days written notice thereof;
(ii) insolvency or bankruptcy of either party under applicable
law, and/or the appointment of a trustee or receiver for either party; or
(iii) any inability or prospective failure of either party to
perform its obligations hereunder.
14. SUSPENSION CLAUSE.
Enforcement of this Agreement between DISTRIBUTOR and WINERY shall only
be effective after COFACE's agreement.
15. RIGHTS AND OBLIGATIONS UPON TERMINATION.
Upon expiration or termination of this Agreement for any reason, all
orders received from DISTRIBUTOR but not shipped by WINERY prior to the
effective date of termination shall be shipped by WINERY, and DISTRIBUTOR agrees
to accept shipment of and make payment for any such orders shipped by WINERY.
16. NO ASSIGNMENT.
This Agreement shall not be assigned by either party, either by
operation of law or by contract, without the prior written consent of the other
party hereto, and any attempt to assign without such consent shall be null and
void. Nothing herein contained, however, shall prevent DISTRIBUTOR from
assigning this Agreement to any subsidiary, an affiliate, sister, or parent
corporation of DISTRIBUTOR.
11
<PAGE> 12
17. GOVERNMENT REGULATION.
(a) DISTRIBUTION agrees to obtain at its own expense import
license, foreign exchange permit, or other permit or approval it may need for
the performance of its obligations under this Agreement, and in essence, to
comply at its own expense with all applicable laws, regulations, and orders of
the government(s) of the Territory, the United States or any instrumentality
thereof.
(b) DISTRIBUTOR agrees to furnish annually to WINERY, by
affidavit or other reasonable means at WINERY's request, and the reasonable
satisfaction of WINERY, assurances that the appointment of DISTRIBUTOR
hereunder, its activities under this Agreement, and the payment to WINERY of any
monies or consideration contemplated hereunder are proper and lawful under the
law in force in the Territory and in the United States of America. DISTRIBUTOR
further represents that no person employed by it is an official of any
government agency or a corporation owned by the governments of the Territory,
the United States of America, or any State thereof and that no part of any
monies or considerations paid hereunder shall accrue for the benefit of any such
official.
18. FORCE MAJEURE.
This Agreement and WINERY's and DISTRIBUTOR's performance hereunder are
subject to all contingencies beyond their reasonable control, including but not
limited to force majeure,
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<PAGE> 13
strikes; lockouts; labor disputes; flood; civil commotion; riot; acts of God;
rules, laws, orders, restrictions, embargoes, quotas or actions of any
government, foreign or domestic or any agency or subdivision thereof;
casualties; fires; accidents; shortages of transportation facilities; detention
of the by custom authorities; or losses of the Products in public or
private warehouses. In any such event, the party not subject to force majeure
shall have the right, in its sole discretion and without any liability to the
other party, to (a) cancel all or any portion of this Agreement, or (b) require
performance of this Agreement within a reasonable time after the causes for
nonperformance or delay have terminated.
19. SEPARABILITY.
If any provision to this Agreement is found by any court of competent
jurisdiction to be invalid or unenforceable, the invalidity of such provision
shall not affect the other provisions of this Agreement and all provisions not
affected by such invalidity or unenforceability shall remain in full force and
effect.
20. WAIVER.
The waiver by either party hereto of a breach or default in any of the
provisions of this Agreement by the other party not be
13
<PAGE> 14
construed as a waiver of any succeeding breach of the same or other provisions;
nor shall any delay or omission on the part of either party to exercise or avail
itself of any right, power, or privilege that it has or may have hereunder
operate as a waiver of any breach of default by the other party.
21. LANGUAGE.
This Agreement is written in French and English in two counterparts in
each language. One copy of each language text shall be retained by each party.
French and English texts shall have equal validity and legal effect, provided
however that in case of disagreement, the English language text shall prevail.
22. NOTICES.
(a) Unless otherwise specifically provided, all notices, demands, or
requests required or permitted by this Agreement shall be in writing and in
French and sent a letter form or by telex, facsimile (facsimile to be
accompanied by a telex notice requesting confirmation of receipt), telegraph or
cable to the address of the parties first set forth hereinabove, or to such
other address as may from time to time be designated by any party through
notification to the other party at its address as in effect from time to time.
14
<PAGE> 15
The dates on which notices shall be deemed to have been effectively
given shall be determined as follows:
(a) Notices given by personal delivery shall be deemed
effectively given on the date of personal delivery;
(b) Notices given in letter form shall be deemed effectively
given on the tenth day after the date mailed (as indicated by the postmark) by
registered airmail; postage prepaid, or the fourth day after delivery to an
internationally recognized courier service;
(c) Notices given by telex, telegraph or cable shall be deemed
effectively given on the second business day following the date of transmission,
as indicated on the document in question; and
(d) Notices given by facsimile shall be deemed effectively given
on the first business day following the date of transmission of a telex notice
requesting confirmation of receipt as indicated on the telex in question.
Nothing contained herein shall justify or excuse failure to give oral
notice for the purpose of informing the other party thereof when notification is
appropriate, by such oral notice shall not satisfy the requirement of written
notice.
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<PAGE> 16
23. GOVERNING LAW.
The formation, validity, execution, amendment and termination of this
Agreement shall be governed by international judicial laws, principles and
practices.
24. RESOLUTION OF DISPUTES.
(a) Any dispute, controversy or claim arising out of or relating to this
Agreement, or the interpretation, breach, termination or validity hereof, shall
be resolved through friendly consultation. Such consultation shall begin
immediately after one party has delivered to the other party a written request
for such consultation. If within thirty (30) days following the date on which
such notice is given the dispute cannot be resolved, one dispute shall be
submitted to arbitration upon the request of one party with notice to the other
party.
(b) Any arbitration to be conducted pursuant to the terms of this
Agreement shall be conducted in Stockholm, Sweden under the auspices of the
Arbitration Institute of the Stockholm Chamber of Commerce (the "Institute").
There shall be three arbitrators. Each party shall select one arbitrator within
thirty (30) days after giving or receiving the demand for arbitration. Such
arbitrators shall be freely selected, and the parties shall not be limited in
their selection to any prescribed
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<PAGE> 17
list. The President of the Institute shall select the third arbitrator. If the
other party does not appoint an arbitrator who has consented to participate
within thirty (30) days after the selection of the first arbitrator, the
relevant appointment shall be made by the President of the Institute.
(c) The arbitration proceedings shall be conducted in English. The
arbitration tribunal shall apply the Arbitration Rules of the United Nations
Commission on International Trade Law in effect at the time of arbitration.
However, if such rules are in conflict with the provisions of this Section 23,
including the provisions concerning the appointment of arbitrators, the
provisions of this Section 23 shall prevail.
(d) Each party shall cooperate with the other in making full disclosure
of and providing complete access to all information and documents requested by
the other party in connection with such proceeding, subject only to any
confidentiality obligations binding on such party.
(e) The award of the arbitration tribunal shall be final and binding
upon the parties, and either party may apply to a court of competent
jurisdiction for enforcement of such award.
25. ENTIRE AGREEMENT; MODIFICATIONS AND WAIVERS.
This Agreement is the entire agreement of the parties with respect to
the subject matter described in this Agreement and all oral and written prior
negotiations and agreements and any conflicting prior course of dealing or trade
usage are superseded
17
<PAGE> 18
hereby. The parties hereto agree that no other representations have been made,
and that this Agreement does not rely upon any representations, except as
specifically stated in this Agreement. This Agreement may be modified only by a
document signed by both parties.
IN WITNESS WHEREOF, and intending to be legally bound hereby,
DISTRIBUTOR and WINERY have each caused this Agreement to be delivered and
executed by their proper and duly authorized officers on this 11th day of
March, 1997.
WINERY agrees to sign the exact copy of this Agreement in English within
10 days after receiving it, failing to do so will render this Agreement null and
void.
WINERY: LES CHAIS DU PREVOT S.I.C.A. (stampl)
33670 CREON
March 11, 1997
- ---------------------------------- -----------------------------------
By: Dominique Porcher, DATE
Managing Director
DISTRIBUTOR: R & R (Bordeaux)
Imports, Inc.
ROBERT K. WALKER 3/11/97
- ---------------------------------- ------------------------------------
By: Robert K. Walker, President DATE
18
<PAGE> 1
EXHIBIT 10.6
IMPORT AND DISTRIBUTION AGREEMENT
This Agreement is made and entered into this 16th day of April, 1997, by and
between the VIGNERONS DE BUZET - B.P. 17 F 47160 BUZET SUR BAISE, "WINERY"
and, R & R (BORDEAUX) IMPORTS, Inc.,
a Florida, U.S.A. corporation, with its principal place of business at 3201 West
Griffin Road, Suite 204, Ft. Lauderdale, Florida 33312-6900, U.S.A.
("Distributor").
RECITALS
WHEREAS, WINERY is engaged in the production and sale of wine and
wishes to expand the distribution of such product by having DISTRIBUTOR sell
such product in the territory described in Paragraph 3 hereof; and
WHEREAS, DISTRIBUTOR desires to market wines assigned in the limited
list of wines described in the section 2 and the DISTRIBUTOR is designated as a
exclusive DISTRIBUTOR of WINERY for this list described in section 2 for the
purposed of selling such product in the territory assigned to it, see section 3.
NOW, THEREFORE, for good and valuable consideration, the receipt of
which is hereby acknowledged by each party, the parties hereto agree as follows:
<PAGE> 2
1. APPOINTMENT.
(a) WINERY hereby appoints DISTRIBUTOR as its exclusive distributor for
the sale and promotion of the Products described in Paragraph 2 below in the
Territory described in Paragraph 3.
WINERY agrees that while this Agreement is in effect, it will not sell the
mentioned products in the section 2 to persons other than DISTRIBUTOR in the
Territory or to persons, other than DISTRIBUTOR, who WINERY has reason to
believe will resell the Products in the Territory.
(b) DISTRIBUTOR hereby accepts such appointment subject to the terms and
conditions of this Agreement and agrees that it shall use its best efforts to
promote demand for and sale of the Products in the Territory and that in the
sale and promotion of the Products it shall at all times carry out to the best
of its ability a merchandising policy designed to promote and maintain the
excellence of quality and to preserve the goodwill which is associated with the
name and reputation of WINERY and its products.
(c) Notwithstanding the foregoing, should DISTRIBUTOR, commencing with
the 2000 calendar year, fail to meet the minimum annual purchase requirements
set forth in Section 4 (c) of this Agreement, then DISTRIBUTOR shall become a
non-exclusive distributor of the Products.
2
<PAGE> 3
2. PRODUCTS.
The terms "Products" as used in this Agreement shall mean the following wine
list :
o AC BUZET WHITE SPECIAL SEAFOOD N/V
o AC BUZET RED GOLD HERALDRY
o AC BUZET RED RENAISSANCE
o AC BUZET WHITE RENAISSANCE
o AC BUZET ROSE RENAISSANCE
o AC BUZET RED L'EXCELLENCE
o AC BUZET WHITE L'EXCELLENCE
o AC BUZET ROSE L'EXCELLENCE
o AC BUZET RED INSTANT NATURE
WINERY shall have the right to stop selling any of the over-mentioned Products
without incurring any obligation or liability to Distributor.
3. TERRITORY.
The term "Territory" as used in this Agreement shall mean the United States of
America (excluding the State of New York), and the Caribbean Islands. The
Territory may be subsequently enlarged, reduced or otherwise changed by
agreement in writing of the parties hereto.
4. SALES ACTIVITIES.
DISTRIBUTOR shall conduct the sales activities contemplated under this Agreement
by purchasing Products selected in section 2 from WINERY for resale to
DISTRIBUTOR'S customers within the Territory assigned in section 3. DISTRIBUTOR
shall conduct its sales activities in a lawful manner consistent with the
highest standards of fair trade, fair competition, and business ethics; shall
cause all of its employees to do the same and use its best efforts to ensure
that its agents will do the same; and in addition shall be bound by the
following duties and obligations:
3
<PAGE> 4
(a) Advertising. DISTRIBUTOR may undertake, at its own expense, such
advertising and promotional efforts as it may deem necessary to achieve a proper
recognition of the Products in the Territory assigned in section 3. DISTRIBUTOR
shall have the right to use the names or any derivation thereof, or any other
name or mark associated with brands assigned by WINERY, see section 2.
(b) Inventory. DISTRIBUTOR agrees to maintain at all times an inventory
of the Products sufficient to fill reasonably anticipated orders from its
customers and to deliver promptly all such orders.
(c) Minimum Purchases. During the calendar year beginning January 1,
1997, DISTRIBUTOR shall make a minimum annual total purchase of Products having
an ex-cellar free of charges invoice value of 275,000 FF. Commencing with the
calendar year beginning January 1, 1998, DISTRIBUTOR shall make a minimum annual
total purchase of Products having an ex-cellar free of charges invoice value of
825,000 FF. Commencing with the calendar year beginning January 1, 1999, and
January 1, 2000 and the following years, DISTRIBUTOR shall make a minimum annual
total purchase of Products having an ex-cellar free of charges invoice value of
2 200 000 FF.
(d) Orders. DISTRIBUTOR shall in submitting orders describe the Products
in a clear and unambiguous manner and shall include precise instructions for
packaging, invoicing, and shipping.
(e) Resale Prices. DISTRIBUTOR shall distribute the Products through all
available means, including restaurant accounts, store and market retail
accounts, or otherwise, which may be commensurate with good development of the
Territory. DISTRIBUTOR shall set resale prices for the products at its own
discretion.
4
<PAGE> 5
5. LIST PRICES.
(a) The prices to be paid by DISTRIBUTOR to WINERY for each order of
Products shall be WINERY'S prices in effect on the date said order for Products
from time to time on thirty (30) days' written notice to DISTRIBUTOR to
compensate for increase in its cost of manufacturing Products due to changes in
currency exchange rates or increases in energy, labor, raw materials or
transportation costs or in duties or other governmental charges, impositions or
assessments. No price increase shall effect the prices of Products sold to
DISTRIBUTOR pursuant to orders places by DISTRIBUTOR and accepted by WINERY
prior to the effective date of such price increase.
(b) The WINERY'S prices are ex-cellar, free of charges, in FF, per
bottle and will be invoiced only under these conditions.
6. PLACEMENT OF ORDERS AND SHIPMENT.
(a) Upon the placing of a written order for Products to WINERY by
DISTRIBUTOR, a binding agreement will be created whereby WINERY will agree to
sell and ship, and DISTRIBUTOR will agree to purchase and pay for, the Products
ordered under the terms of this Agreement.
(b) Any terms or conditions stated in DISTRIBUTORS order inconsistent
with this Agreement shall be null and void.
5
<PAGE> 6
(c) WINERY shall ship the products to DISTRIBUTOR within a reasonable
time after receipt of any order, a minimum time of 3 weeks is asked for the
preparation of the goods and this, after receipt of the order. Shipping dates
shall be approximated and shall be computed from the date of receipt of the
order by WINERY. Weights given shall be estimated weights. All typographical and
clerical errors shall be subject to correction.
(d) WINERY shall in no event be obligated to make any such shipment if
such shipment would, at the time thereof, constitute a violation of any laws,
regulations, or policies of the Territory or of the United States of America or
France.
(e) All risk of loss or damage shall pass to DISTRIBUTOR when the
Products have been collected by the WINERY'S place of business or any other
place designated by WINERY. DISTRIBUTOR agrees to take possession in its
responsibility ex-cellar.
(f) DISTRIBUTOR shall be entitled to conduct a reasonable investigation
of the Products upon receipt thereof. All claims for defects in the Products or
shortages shall be made in writing by DISTRIBUTOR within twenty (20) days of the
receipt of the Products. Acceptance of the Products by DISTRIBUTOR shall
constitute a waiver of all claims by DISTRIBUTOR for loss or damage due to
defects or shortages in the Products, or to delay in delivery of the Products.
6
<PAGE> 7
(g) No products shall be returned for credit without first obtaining the
written permission of WINERY to return such Products. In the event, WINERY does
agree to accept goods, a minimum of two percent (2%) of the invoice price plus
any other expenses WINERY may have incurred in packing, shipping,
transportation, or otherwise shall be returned at the expense of DISTRIBUTOR,
and all such returned Products must be received by WINERY in an unused condition
and in condition for resale as new merchandise.
7. PAYMENTS.
(a) All terms of this Agreement, including but not limited to "cost",
"payments", "amounts", "value", "discounts", "price", "credits", "set-off",
"F.F.", shall be calculated and constructed in terms of currency of France.
(b) In order to secure DISTRIBUTOR's obligation to accept and purchase
any Products ordered under the terms of this Agreement, DISTRIBUTOR shall
establish a confirmed, irrevocable and transferrable letter of credit in favor
of WINERY, transferred in a bank accepted by the WINERY, or with a pre-payment
through SWIFT Transfer with 2% discount, delivery of goods after creditation of
the WINERY'S account.
8. CONFIDENTIAL INFORMATION.
DISTRIBUTOR and WINERY shall not use of disclose to third parties any
confidential information concerning the business, affairs, or the products of
the other party which it may acquire in the course of its activities under this
Agreement and shall take all necessary precautions to prevent any such
disclosure by any of its employees, officers, or affiliated persons and
entities. For purposes of this Article, confidential information shall include
trade secrets and other unpatentable information.
7
<PAGE> 8
9. SUB-DISTRIBUTORS.
DISTRIBUTOR shall have the right to appoint sub-distributors for the sale and
promotion of the Products in the Territory. Additionally, DISTRIBUTOR shall have
the right to enter into alliances and cooperative arrangements for the sale,
promotion and distribution of the Product in the Territory.
10. CONSEQUENTIAL DAMAGES - INDEMNITY
(a) The parties hereto acknowledge that the ability of WINERY to comply
with the terms of this Agreement is of the utmost importance to the business
operations of DISTRIBUTOR. As a result, the parties understand that should
WINERY breach the provision of exclusivity of the wine list mentioned in section
2, that is shall be liable to DISTRIBUTOR for all damages which consequentially
occur as a result of said breach including, but not limited to, lost goodwill,
lost resale profits, and lost customers of DISTRIBUTOR.
(b) DISTRIBUTOR shall indemnify WINERY and hold it harmless from any
claims, demands, liabilities, suits, or expenses of any kind arising out of
DISTRIBUTOR's business, and these provisions shall survive the termination of
this Agreement.
11. PRODUCT WARRANTY
WINERY warrants to DISTRIBUTOR that Products shall be of merchantable quality as
per samples previously delivered and accepted by DISTRIBUTOR at the time title
there passes to DISTRIBUTOR in accordance with this agreement. WINERY at is
option, shall replace any Products which fail to comply with such warranty or
shall refund the purchase price paid by DISTRIBUTOR therefor. Further, WINERY
hereby agrees to indemnify DISTRIBUTOR for any claims for liabilities made
against DISTRIBUTOR arising out of personal injuries or death or damage to
property caused by defective products, unless such defect is created by
DISTRIBUTOR's handling of the Products.
8
<PAGE> 9
12. RELATIONSHIP BETWEEN PARTIES
DISTRIBUTOR agrees that in all matters relating to this Agreement it is
and shall be acting as an independent contractor and shall bear all of its
expenses in connection with this Agreement. It shall not have any authority to
assume or create any obligation, express or implied, on behalf of WINERY.
DISTRIBUTOR shall not make quotations or write letters in the name of WINERY but
in every instance shall use its own name.
13. EFFECTIVE DATE AND DURATION
(a) This Agreement shall be effective for ten (10) years from the
effective date, unless sooner terminated as hereinafter provided. This agreement
shall be automatically renewed for additional terms of five (5) years each,
unless not less than nine (9) months prior to the end of the initial or any
renewal term either party shall give the other written notice of non-renewal.
(b) This Agreement may be terminated prior to the expiration of the
initial term of this Agreement, or any renewals thereof, by either party if the
other party ;
(i) breaches any material provision of this Agreement, and such breach
is not cured within ninety (90) days written notice thereof;
(ii) insolvency or bankruptcy of either party under applicable law,
and/or the appointment of a trustee or receiver for either party; or
(iii) any inability or prospective failure of either party to perform
its obligations hereunder.
9
<PAGE> 10
14. RIGHTS AND OBLIGATIONS UPON TERMINATION.
Upon expiration or termination of this Agreement for any reason, all orders
received from DISTRIBUTOR but not shipped by WINERY prior to the effective date
of termination shall be shipped by WINERY, and DISTRIBUTOR agrees to accept
shipment of and make payment for any such orders shipped by WINERY.
15. NO ASSIGNMENT.
This agreement shall not be assigned by either party, either by operation of law
or by contract, without the prior written consent of the order party hereto, and
any attempt to assign with out such consent shall be null and void. Nothing
herein contained, however, shall prevent DISTRIBUTOR from assigning this
Agreement to any subsidiary, an affiliate, sister, or parent corporation of
DISTRIBUTOR.
16. GOVERNMENT REGULATION
(a) DISTRIBUTOR agrees to obtain at its own expense import license,
foreign exchange permit, or other permit or approval it may need for the
performance of its obligations under this Agreement, and in essence, to comply
at its own expense with all applicable laws, regulations, and orders of the
governments of the Territory, the United States or any instrumentality thereof.
(b) DISTRIBUTOR agrees to furnish to WINERY, by affidavit or other
reasonable means from time to time at WINERY'S request, and the reasonable
satisfaction of WINERY, assurances that the appointment of DISTRIBUTOR
hereunder, its activities under this Agreement, and the payment to WINERY for
any monies or consideration contemplated hereunder are proper and lawful under
the law in force in the Territory and in the United States of America.
10
<PAGE> 11
DISTRIBUTOR further represents that no person employed by it is an official of
any government agency or a corporation owned by the government(s) of the
Territory, the United States of America, or any State thereof and that no part
of any monies or consideration paid hereunder shall accrue for the benefit of
any such official.
17. FORCE MAJEURE
This agreement and WINERY'S and DISTRIBUTOR'S performance hereunder are subject
to all contingencies beyond their reasonable control, including but not limited
to force majeure; strikes; lockouts; labor disputes; floods; civil commotion;
riot; acts of God; rules; laws; orders; restrictions embargoes, quotas or
actions of any government, foreign or domestic or any agency or subdivision
thereof; casualties; fires; accidents; shortages of transportation facilities ;
detention of the Products by custom authorities, or losses of the Products in
public or private warehouses. In any such event, the party not subject to force
majeure shall have the right, in its sole discretion and without any liability
to the other party, to (a) cancel all or any portion, or (b) require performance
of this Agreement within a reasonable time after the causes for nonperformance
or delay have terminated.
18. SEPARABILITY
If any provision of this Agreement is found by any court of competent
jurisdiction to be invalid or unenforceable, the invalidity of such provision
shall not affect the other provisions of this Agreement and all provision is not
affected by such invalidity or unenforceability shall remain in full force and
effect.
11
<PAGE> 12
19. WAIVER.
The waiver by either party hereto of a breach or default in any of the
provisions of this Agreement by the other party not be construed as a waiver of
any succeeding breach of the same or other provisions; nor shall any delay or
omission on the part of either party to exercise or avail itself on any right,
power, or privilege that it has or may have hereunder operate as a waiver of any
breach or default by the other party.
20. LANGUAGE
This agreement is written in French and English in two counterparts in each
language. One copy of each language text shall be retained by each party. French
and English texts shall have equal validity and legal effect.
21. NOTICES.
(a) Unless otherwise specifically provided, all notices, demands, or
requests required or permitted by this Agreement shall be in writing and in
English and French and sent in a letter form or by telex, facsimile (facsimile
to be accompanied by a telex notice requesting confirmation of receipt),
telegraph or cable to the address of the parties first set forth hereinabove, or
to such other address as may from time to time be designated by any party
through notification to the other party at its address as in effect from time to
time.
The dates on which notices shall be deemed to have been effectively
given shall be determined as follows:
(a) Notices given by personal delivery shall be deemed effectively given
on the date of personal delivery;
12
<PAGE> 13
(b) Notices given in letter form shall be deemed effectively given on
the tenth day after the date mailed (as indicated by the postmark) by registered
airmail, postage prepaid, or the fourth day after delivery to an internationally
recognized courier service.
(c) Notices given by telex, telegram or cable shall be deemed
effectively given on the second business day following the date of transmission,
as indicated on the document in question; and
(d) Notices given by facsimile shall be deemed effectively given on the
first business day following the date of transmission of a telex notice
requesting confirmation of receipt as indicated on the telex in question.
Nothing contained herein shall justify or excuse failure to give oral notice for
the purpose of informing the other party thereof when notification is
appropriate, by such oral notice shall not satisfy the requirement of written
notice.
22. GOVERNING LAW
The formation, validity, execution, amendment and termination of this Agreement
shall be governed by the applicable laws of the international legal principles
and practices.
23. RESOLUTION OF DISPUTES
(a) Any dispute, controversy or claim arising out of or relating to
this Agreement, or the interpretation, breach, termination or validity hereof,
shall be resolved through friendly consultation. Such consultation shall begin
immediately after one party has delivered to the other party a written request
for such consultation.
13
<PAGE> 14
If within thirty (30) days following the date on which such notice is given, the
dispute cannot be resolved, one dispute shall be submitted to arbitration upon
the request of one party with notice to the other party.
(b) Any arbitration to be conducted pursuant to the terms of this
Agreement shall be conducted in Geneva Switzerland under the auspices of the
International Chamber of Commerce in Paris.
(c) The arbitration proceedings shall be conducted in English and
French.
(d) Each party shall cooperate with the other in making full disclosure
of and providing complete access to all information and documents requested by
the other party in connection with such proceeding, subject only to any
confidentiality obligations binding on such party.
24. ENTIRE AGREEMENT, MODIFICATIONS AND WAIVERS.
This Agreement is the entire agreement of the parties with respect to the
subject matter described in this Agreement and all oral and written prior
negotiations and agreements and any conflicting prior course of dealing or trade
usage are superseded hereby. The parties hereto agree that no representations
have been made or relied upon, except as specifically stated in this Agreement.
This Agreement may be modified only by a writing signed by both parties.
14
<PAGE> 15
IN WITNESS WHEREOF, and intending to be legally bound hereby,
DISTRIBUTOR and WINERY have each caused this Agreement to be delivered and
executed by their proper and duly authorized officers on this 16th day of April,
1997.
WINERY: DATE
LES VIGNERONS DE BUZET 16/04/1997
B.P. 17
47160 BUZET SUR BAISE (FRANCE)
/s/ JEAN-MICHEL RENAUD
- ----------------------------------
Mr Jean-Michel RENAUD,
Managing Director.
DISTRIBUTOR: DATE
4/16/97
R&R (BORDEAUX) IMPORTS Inc.
/s/ ROBERT K. WALKER
- ----------------------------------
By Robert K. Walker,
Managing Director
15
<PAGE> 1
EXHIBIT 10.7
IMPORT AND DISTRIBUTION AGREEMENT
This agreement is made and entered into this 29th day of September 1997 by and
between the Cognac Godet Freres, 1 rue du Duc B.P., 17003 La Rochelle Cedex,
France, and R & R (Bordeaux) Imports, Inc., a FLORIDA, USA CORPORATION, with its
principal place of business at 3201 West Griffin Road, Suite # 204, Ft.
Lauderdale, Florida 33312-6900, USA Distributor).
RECITALS
***
WHEREAS, GODET FRERES is engaged in the production and sale of Champagne Maxime
Godet to expand the distribution of such product by having DISTRIBUTOR sell such
product in the territory described in paragraph 3 hereof; and
WHEREAS, DISTRIBUTOR desires to market the wine products produced by GODET
FRERES and be designated as the exclusive distributor of champagne Maxime Godet
for the purposed of selling such products in the territory assigned to it.
NOW, THEREFORE, for good and valuable consideration, the receipt of which is
hereby acknowledged by each party, the parties hereto agree as follows:
1
<PAGE> 2
1. APPOINTMENT
(a) GODET FRERES hereby appoints DISTRIBUTOR as its exclusive
distributor for the sale and promotion of the products described in Paragraph 2
below in the territory described in paragraph 3 below and agrees not to appoint
other distributors in the Territory. GODET FRERES agrees that while this
Agreement is in effect, it will not sell products to persons other than
DISTRIBUTOR in the Territory or to persons, other than DISTRIBUTOR, who GODET
FRERES has reason to believe will resell the products in the Territory.
(b) DISTRIBUTOR hereby accepts such appointment subject to the terms and
conditions of this agreement and agrees that it shall use it best efforts to
promote demand for and sale of the products in the Territory and that in the
sale and promotion of the products it shall at all times carry out to the best
of its ability a merchandising policy designed to promote and maintain the
excellence of quality and to preserve the goodwill which is associated with the
name and reputation of GODET FRERES and its products.
(c) Notwithstanding the foregoing, should DISTRIBUTOR, commencing with
the 1998 calendar year, fail to meet the minimum annual purchase requirements
set forth in Section 4 (c) of this Agreement, then DISTRIBUTOR shall become a
non exclusive distributor of the products.
2. PRODUCTS
The term "Products" as used in this Agreement shall mean Champagne
produced by GODET FRERES and selling any of the products without incurring any
obligation or liability to Distributor.
3. TERRITORY
The term "Territory" as used in this Agreement shall mean the
Continent of North America, and the Carribean Islands. The Territory may be
subsequently enlarged, reduced or otherwhise changed by agreement in writing of
the parties hereto.
4. SALES ACTIVITIES
DISTRIBUTOR shall conduct the sales activities cotemplated under this
agreement by purchasing Products from GODET FRERES for resale to DISTRIBUTOR'S
customers within the Territory. DISTRIBUTOR shall conduct its sales activities
in a lawful manner consistent with the highest standards of fair trade, fair
competition, and business ethics; shall cause all its employees to do the same;
and in addition shall be bound by the following duties and obligations:
2
<PAGE> 3
(a) Advertising. DISTRIBUTOR may undertake, at its own expense, such
advertising and promotional efforts as it may deem necessary to achieve a proper
recognition of the Products in the Territory. DISTRIBUTOR shall have the right
to use the names or any derivation thereof, or any other name or mark associated
with GODET FRERES.
(b) Inventory. DISTRIBUTOR agrees to maintain at all times an inventory
of the products sufficient to fill reasonably anticipated orders from its
customers and to deliver promptly all such orders.
(c) Minimum Purchases. During the calendar year beginning 1997,
DISTRIBUTOR shall make a minimum annual total purchase of 400 cases 12 bottles.
Commencing with the calendar year beginning just after receiving the label
approuval by the B.A.T.F. Year 2: 600 cases, Year 3: 800 cases. Year 4: 1000
cases.
(d) Orders. DISTRIBUTOR shall in submitting orders describe the products
in a clear and unambiguous manner and shall include precise instructions for
packaging, invoicing, and shipping.
(e) Resale Prices. DISTRIBUTOR shall distribute the products through all
available means, including restaurant accounts, store and market retail
accounts, or otherwise, which may be commensurate with good development of the
Territory. DISTRIBUTOR shall set resale prices for the Products at its own
discretion.
5. LIST PRICES
(a) The prices to be paid by DISTRIBUTOR to GODET FRERES for each order
of products shall be GODET FRERES's prices in effect on the date said order for
products from time to time on thirty (30) days' written notice to DISTRIBUTOR to
compensate for increases in its cost of manufacturing Products due to changes in
currency exchange rates or increases in energy, labor, raw materials or
transportation costs or in duties or other governmental charges, impositions or
assessments. No price increase shall effect the prices of products sold to
DISTRIBUTOR and accepted by GODET FRERES prior to the effective date of such
price increase.
(b) Any and all taxes assessed to GODET FRERES by federal, state, or
local governments on sales of GODET FRERES's products to DISTRIBUTOR shall be
included on invoices rendered by GODET FRERES to DISTRIBUTOR.
3
<PAGE> 4
6. PLACEMENT OF ORDERS AND SHIPMENT
(a) Upon the placing of a written order for products to GODET FRERES by
DISTRIBUTOR, a binding agreement will be created whereby GODET FRERES will agree
to sell and ship, and distributor will agree to purchase and pay for, the
products ordered under the terms of this agreement.
(b) Any terms or conditions stated in DISTRIBUTOR'S order inconsistent
with this agreement shall be null and void.
(c) GODET FRERES shall ship the products to DISTRIBUTOR within a
reasonable time after receipt of any order. Shipping dates shall be approximate
and shall be computed from the date of receipt by GODET FRERES. Weights given
shall be estimated weights. All typographical and clerical errors shall be
subject to correction.
(d) GODET FRERES shall in no event be obligated to make any such
shipment would, at the time thereof, constitute a violation of any laws,
regulations, of United States of America or France.
(e) GODET FRERES'S obligation to effect shipment of the products shall
be fully discharged, and ownership, legal title, and all risk of loss or damage
shall pass to DISTRIBUTOR when the products have been delivered to the carrier
at GODET FRERES's place of business or any other place designated by GODET
FRERES.
(f) DISTRIBUTOR shall be entitled to conduct a reasonable investigation
of the products upon receipt thereof. All claims for defects in the products or
shortages shall be made in writing by DISTRIBUTOR within ten (10)days of the
receipt of the products. Acceptance of the products by DISTRIBUTOR for loss or
damage due to defects or shortages in the products, or to delay in delivery of
the products.
(g) No products shall be returned for credit without first obtaining the
written permission of GODET FRERES to return such products.
7. PAYMENTS
(a) All terms of this Agreement are in French Francs.
(b) In order to secure DISTRIBUTOR'S obligation to accept and purchase
any products ordered under the terms of this Agreement, DISTRIBUTOR shall
establish a confirmed, irrevocable and transferable letter of credit in favor of
GODET FRERES, or an assignee of GODET FRERES or an affiliate of GODET FRERES at
a bank within the United States of America acceptable to GODET FRERES; and the
conditions for payment thereunder shall be satisfied upon the delivery by GODET
FRERES of the usual shipping documents.
4
<PAGE> 5
8. CONFIDENTIAL INFORMATION
DISTRIBUTOR and GODET FRERES shall not use or disclose to third parties
any confidential information concerning the business, affairs, or the products
of the order party which it may acquire in the course of its activities under
this Agreement and shall take all necessary precautions to prevent any such
disclosure by any of its employees, officers, or affiliated persons and
entities. For purposes of this Article, confidential information shall include
trade secrets and other unpatentable information.
9. SUB-DISTRIBUTORS
DISTRIBUTOR shall have the right to appoint sub-distributors for the
sale and promotion of the products in the territory. Additionally, DISTRIBUTOR
shall have the right to enter into alliances and cooperative arrangements for
the sale, promotion and distribution of the product in the Territory.
10. CONSEQUENTIAL DAMAGES - INDEMNITY
(a) The parties hereto acknowledge that the ability of GODET FRERES to
comply with the terms of this agreement is of the utmost importance to the
business operations of DISTRIBUTOR. As a result, the parties understand that
should GODET FRERES breach any provision of this agreement, that is shall be
liable to DISTRIBUTOR for all damages which consequentially occur as a result of
said breach including, but not limited to, lost goodwill, lost resale profits,
and lost customers of DISTRIBUTOR.
(b) DISTRIBUTOR shall indemnity GODET FRERES and hold it harmless from
any claims, demands, liabilities, suits, or expenses of any kind arising out of
DISTRIBUTOR'S business, and these provisions shall survive the termination of
this Agreement.
11. RELATIONSHIP BETWEEN PARTIES
DISTRIBUTOR agrees that in all matters relating to this Agreement it is
and shall be acting as an independent contractor and shall bear all of its
expenses in connection with this Agreement. It shall not have any authority to
assume or create any obligation, express or implied, on behalf of GODET FRERES.
DISTRIBUTOR shall not make quotations or write letters in the name of GODET
FRERES but in every instance shall use its own name.
12. EFFECTIVE DATE AND DURATION
(a) This agreement shall be effective for five (5) years from the
effective date, unless sooner terminated as hereinafter provided. This agreement
shall be automatically renewed for additional terms of five (5) years each, no
less than three (3) months prior to the end of the initial or any renewal term
either party shall give the other written notice of nonrenewal.
5
<PAGE> 6
(b) This agreement may be terminated prior to the expiration of the
initial term of this agreement, or any renewals thereof, by either party if the
other party;
1- breaches any material provision of this agreement, and such breach is not
cured within ninety (90) days written notice thereof;
2- insolvency or bankruptcy of either party under applicable law, and/or the
appointment of a trustee or receiver for either party; or
3- any inability or prospective failure of either party to perform its
obligations hereunder.
4- Not to achieve the minimum quantity per year mentioned in the paragraph
4 (c).
13. RIGHTS AND OBLIGATIONS UPON TERMINATION
Upon expiration or termination of this agreement for any reason, all
orders received from DISTRIBUTOR but not shipped by GODET FRERES prior to the
effective date of termination shall be shipped by GODET FRERES, and DISTRIBUTOR
agrees to accept shipment of and make payment for any such orders shipped by
GODET FRERES.
14. NO ASSIGNMENT
This agreement shall not be assigned by either party, either by
operation of law or by contract, without the prior written consent shall be null
and void. Nothing herein contained, however, shall prevent DISTRIBUTOR from
assigning this agreement to any subsidiary, an affiliate, sister, or parent
corporation of DISTRIBUTION.
15. GOVERNMENT REGULATION
(a) DISTRIBUTOR agrees to obtain at its own expense import license,
forein exchange permit or other permit or approval it may need for the
performance of its obligations under this agreement, and in essence, to comply
at its own expense with all applicable laws, regulations, and orders of the
government(s) of the territory, the United States or any instrumentality
thereof.
(b) DISTRIBUTOR agrees to furnish to GODET FRERES, by affidavit or other
reasonable means from time to time at GODET FRERES' request, and the reasonable
satisfaction of GODET FRERES, assurances that the appointment of DISTRIBUTOR
hereunder, its activities under this agreement, and the payment to GODET FRERES
of any monies or consideration contemplated hereunder are proper and lawful
under the law in force in the territorry and in the United States of America.
6
<PAGE> 7
DISTRIBUTOR further represents that no person employed by it is an official of
any government agency or a corporation owned by the government(s) of the
territory, the United States of America or in a state thereof and that no part
of any monies or considerations paid hereunder shall accrue for the benefit of
any such official.
16. FORCE MAJEURE
This agreement and GODET FRERES and DISTRIBUTOR's performance hereunder
are subject to all contingencies beyond their reasonable control, including but
not limited to force majeure; strikes; lockouts; labor disputes; floods; civil
commotion; riot; acts of God; rules; laws orders, restrictions, embargoes,
quotas or actions of any government, foreign or domestic or any agency or
subdivision thereof; casualties; fires; accidents; shortages of transportation
facilities, detention of the products by custom authorities, or losses of the
products in public or private warehouses. In any such event, the party not
subject to force majeure shall have the right, in its sole discretion and
without any liability to the other party, to cancel all or any portion of this
agreement within a reasonable time after the causes for nonperformance or delay
have terminated.
17. SEPARABILITY
If any provision of this agreement is found by any court of competent
jurisdiction to be invalid or unenforceable, the invalidity of such provision
shall not affect the other provisions of this agreement and all provisions not
affected by such invalidity or unenforceability shall remain in full force and
effect.
18. WAIVER
The waiver by either party hereto of a breach or default in any of the
provisions of this agreement by the other party not be construed as a waiver of
any succeeding breach of the same or other provisions; nor shall any delay or
omission on the part of either party to exercise or avail itself of any right,
power or privilege that it has or may have hereunder operate as a waiver of any
breach or default by the other party.
19. LANGUAGE
This agreement is written in French and English in two
counterparts in each language. French and English texts shall have equal
validity and legal effect, provided however that in case of disagreement, the
English language text shall prevail.
20. NOTICES
(a) Unless otherwise specifically provided, all notices, demands, or
requests required or permitted by this agreement shall be in writing and in
English and sent in a letter form or by telex, facsimile (facsimile to be
accompanied by a telex notice requesting confirmation of receipt), telegraph
7
<PAGE> 8
or cable to the address of the parties first set forth hereinabove, or to such
other address as may from time to time be designated by any party through
notification to the other party at its address as in effect from time to time.
The dates on which notices shall be deemed to have been effectively
given shall be determined as follows:
(a) Notices given by personal delivery shall be deemed effectively given
on the date of personal delivery.
(b) Notices given in letter form shall be deemed effectively given on
the tenth day after the date mailed (as indicated by the postmark) by registered
airmail; postage prepaid, or the fourth day after delivery to an internationally
recognized courier service;
(c) Notices given by facsimile shall be deemed effectively given on the
first business day following the date of transmission of a telex notice
requesting confirmation of receipt as indicated on the telex in question.
Nothing contained herein shall justify or excuse failure to give oral
notice for the purpose of informing the other party thereof when notification is
appropriate, by such oral notice shall not satisfy the requirement of written
notice.
21. GOVERNING LAW
The formation, validity, execution, amendment and termination of this
agreement shall be governed by the applicable laws of the State of Florida, USA
and international legal principles and practices.
22. RESOLUTION OF DISPUTES
(a) Any dispute, controversy or claim arising out of or relating to this
agreement, or the interpretation, breach, termination or validity hereof, shall
be resolved through friendly consultation. Such consultation shall begin
immediately after one party has delivered to the other party. If within thirty
(30) days following the date on which such notice is given, the dispute shall be
submitted to arbitration upon the request of one party with notice to the other
party.
(b) Any arbitration to be conducted pursuant to the terms of this
agreement shall be conducted in Paris France under the auspices of the
Arbitration Institute of the Paris Chamber of Commerce (the institute). There
shall be three arbitrators. Each party shall select one arbitrator within thirty
(30) days after giving or receiving the demand for arbitration. Such arbitrators
shall be freely selected, and the parties shall not be limited in their
selection to any prescribed list. The President of the Institute shall select
the third arbitrator. If the other party does not appoint an arbitrator who has
consented to participate within thirty (30) days after the selection of the
first arbitrator, the relevant appointment shall be made by the President of the
Institute.
8
<PAGE> 9
(c) The arbitration proceedings shall be conducted in English and
French. The arbitration tribunal shall apply the Arbitration Rules of the
United Nations Commission on International Trade Law in effect at the time of
arbitration. However, if such rules are in conflict with the provisions
concerning the appointment of arbitrators, the provisions of this section 23
shall prevail.
(d) Each party shall cooperate with the other in making full disclosure
of and providing complete access to all information and documents requested by
the other party in connection with such proceeding, subject only to any
confidentiality obligations binding on such party.
(e) The award of the arbitration tribunal shall be final and binding
upon the parties, and either party may apply to a court of competent
jurisdiction for enforcement of such award.
23. ENTIRE AGREEMENT; MODIFICATIONS AND WAIVERS
This agreement is the entire agreement of the parties with respect to
the subject matter described in this agreement and all oral and written prior
negotiations and agreements and any conflicting prior course of dealing or trade
usage are superseded hereby. The parties hereto agree that no representations
have been made or relied upon, except as specifically stated in this agreement.
This agreement may be modified only by a writing signed by both parties.
IN WITNESS WHEREOF, and intending to be legally bound hereby, DISTRIBUTOR and
GODET FRERES have each caused this agreement to be delivered and executed by
their proper and duly authorized officers on this 29th of September 1997.
GODET FRERES Date: 9/29/97
[SIG]
- ------------------------------
DISTRIBUTOR
- - R & R (Bordeaux) Imports, Inc. Date: 9/29/97
[SIG]
- -------------------------------
President
[SIG]
- ------------------------
Managing Director
<PAGE> 1
EXHIBIT 10.8
December __, 1997
West America Securities Corp.
4510 E. Thousand Oaks Boulevard
Suite 100
Westlake Village, California 91362
Dear Sirs:
The undersigned understands that you, as Placement Agent, propose to enter
into a Placement Agent Agreement with Cuidao Holding Corp., a Florida
corporation (the "Company") providing for the public offering by you of Units,
consisting of one share of the Company's common stock, $.0001 par value (the
"Common Stock") and one Common Stock Purchase Warrant (the "Warrant"), to be
offered by the Company.
In consideration of the Placement Agent Agreement to make a public
offering of the Units, and for other good and valuable consideration, receipt of
which is hereby acknowledged, the undersigned agrees that he/she will not offer
to sell, sell or otherwise dispose of any shares of Common Stock beneficially
owned by the undersigned during a period of thirty (30) months after the date of
the Placement Agent Agreement without your prior written consent.
However, notwithstanding the foregoing, you acknowledge that the
undersigned will be able to offer to sell, sell or otherwise dispose of any
shares of Common Stock beneficially owned by the undersigned if at any time any
of the following conditions occur:
1. The Company has had annual gross revenues according to generally
accepted accounting principles ("GAAP") equal to $10,000,000; or
2. The Company has had annual net earnings per share according to
generally accepted accounting principles ("GAAP") equal to, or
greater than, ten percent (10%) of the public offering price of
the Units after taxes and excluding extraordinary items; or
<PAGE> 2
3. The Company's shares of Common Stock have traded in a reliable
public market, e.g., either the New York Stock Exchange, the
American Stock Exchange or the Nasdaq Stock Market (including
the Nasdaq SmallCap Market), at a price of at least one hundred
fifty percent (150%) of the initial public offering price of
the Units for at least ninety (90) consecutive trading days
after at least six (6) months from the date of the Placement
Agent Agreement.
The undersigned further understands that stop transfer orders with respect
to any and all stock certificates which represent the shares of Common Stock
beneficially owned by the undersigned may be placed into effect with the
Company's transfer agent during said 30-month period, and that such stock
certificates may bear the following restrictive legend: "THE SHARES REPRESENTED
BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN RESTRICTIONS, AND IT IS UNLAWFUL TO
CONSUMMATE A SALE OR TRANSFER THEM, OR ANY INTEREST THEREIN, OR RECEIVE ANY
CONSIDERATION THEREFOR, WITHOUT THE PRIOR WRITTEN CONSENT OF CUIDAO HOLDING
CORP. AND WEST AMERICA SECURITIES CORP.
Very truly yours,
_________________________________
Print
Name:__________________________
Accepted as of the date
first set forth above
By West America Securities Corp.
By:_____________________________
2
<PAGE> 1
EXHIBIT 10.9
PROMOTIONAL SHARES LOCK-IN AGREEMENT
1. This Promotional Shares Lock-In Agreement ("Agreement"), which was entered
into on the______________ day of______________, 1997, by and between Cuidao
Holding Corp., a Florida corporation ("Issuer"), whose principal place of
business is located at 3201 West Griffin Road, Suite 204, Ft. Lauderdale,
Florida 33312-6900, and ______________________________ ("Security Holder")
witnesses that:
A. The Issuer has filed an application with the Securities
Administrators of the States set forth in Exhibit "A" hereto
("Administrators") to register 260,000 of its units ("Units"),
each Unit consisting of one share of the Company's $.0001 par
value common stock ("Common Stock") and one Common Stock
Purchase Warrant ("Warrant"), for sale to public investors who
are residents of those states ("Registration").
B. The Security Holder is the owner of _______ shares of Common
Stock which are deemed to be "Promotional Shares" as defined in
the North American Securities Administrators Association
("NASAA") Statement of Policy on Promotional Shares (the
"Promotional Shares").
C. As a condition to Registration, the Issuer and Security Holder
("Signatories") agree to be bound by the terms of this
Agreement.
II. The Security Holder agrees not to sell, pledge, hypothecate, assign, grant
any option for the sale of, or otherwise transfer or dispose of, whether or not
for consideration, directly or indirectly, the Promotional Shares while the
Promotional Shares are subject to this Agreement.
III. The term of this Agreement shall commence on the date first set forth
hereinabove, and shall terminate on the ninth anniversary of this Agreement,
unless terminated earlier with respect to some or all of the Promotional Shares
in accordance with the provisions of Paragraph IV of this Agreement.
IV. The restrictions on the transferability or disposition of the Promotional
Shares set forth in Paragraph II of this Agreement may be terminated as follows:
A. With respect to twenty-five percent (25%) of the Promotional
Shares on the sixth, seventh, eighth and ninth anniversary dates
of this Agreement; or
B. With respect to one hundred percent (100%) of the Promotional
Shares after the Issuer has had annual net earnings per share
equal to, or greater than, five percent (5%) of the public
offering price of the Units (the "Initial Public Offering
Price"), according to generally accepted accounting principles
<PAGE> 2
("GAAP"), after taxes and excluding extraordinary items, for any
two consecutive fiscal years after the date of effectiveness of
the Registration Statement; or
C. With respect to one hundred percent (100%) of the Promotional
Shares after the Issuer has had average annual net earnings per
share equal to, or greater than, five percent (5%) of the
Initial Public Offering Price, according to GAAP, after taxes
and excluding extraordinary items, for any five consecutive
fiscal year period after the date of effectiveness of the
Registration Statement; or
D. With respect to one hundred percent (100%) of the Promotional
Shares on the date the securities subject to this Agreement
become "Covered Securities" as defined under the National
Securities Markets Improvement Act of 1996; or
E. With respect to one hundred percent (100%) of the Promotional
Shares on the date the Registration of the Units has been
terminated if no Units were sold pursuant thereto.
V. The signatories to this Agreement agree and will cause the following:
A. So long as the Promotional Shares are restricted from transfer
pursuant to the terms of this Agreement, Security Holder shall
waive all of his/her/its rights, title and interests to receive
cash or property dividends with respect to any Promotional
Shares which are restricted from transfer hereunder.
B. So long as the Promotional Shares are restricted from transfer
pursuant to the terms of this Agreement, Security Holder shall
waive all of his/her/its rights, title and interests and
participations in the assets of the Issuer with respect to the
dissolution, liquidation, merger, consolidation, sale of assets,
exchange, or any transaction or proceeding that results in the
distribution of the assets of the Issuer.
C. Promotional Shares may be transferred by will, the laws of
descent and distribution, the operation of law, or by order of
any court of competent jurisdiction and proper venue.
D. Promotional Shares of a deceased Security Holder may be
hypothecated to pay the expenses of the deceased Security
Holder's estate. The hypothecated Promotional Shares shall
remain subject to the terms of this Agreement. Promotional
Shares may not be pledged to secure any other debt.
2
<PAGE> 3
E. Promotional Shares may be transferred by gift to the Security
Holder's family members, provided that the Promotional Shares
shall remain subject to the terms of this Agreement.
F. A notice shall be placed on the face of each stock certificate
of the Promotional Shares covered by the terms of the Agreement
stating that the transfer of the stock evidenced by the
certificate is restricted in accordance with the conditions set
forth on the reverse side of the certificate, and a typed legend
shall be placed on the reverse side of each stock certificate of
the Promotional Shares representing stock covered by the
Agreement which states that the sale or transfer of the shares
evidenced by the certificate is subject to certain restrictions
on transferability pursuant to an agreement between the Security
Holder (whether beneficial or of record) and the Issuer, which
agreement is on file with the Issuer and the stock transfer
agent from which a copy is available upon request and without
charge.
G. While this Agreement remains in effect, the Issuer shall not
increase the compensation and benefits to its officers and
directors beyond that which is reasonable and customary for the
industry in which the Issuer operates.
H. While this Agreement remains in effect, loans to the Issuer's
officers, directors and employees shall comply in all respects
with the NASAA Statement of Policy Regarding Affiliated
Transactions.
VI. A summary of the terms of this Agreement shall be included in any and all
offering documents related to the public offer and sale of the Units and in
subsequent annual reports of the Issuer.
VII. THEREFORE, the Issuer will cause the following:
A. A manually signed copy of this Agreement signed by the
Signatories to be filed with the Administrators prior to the
effective date of the Registration;
B. Copies of this Agreement and a statement of the per share
Initial Public Offering Price to be provided to the Issuer's
stock transfer agent;
C. Appropriate stock transfer orders to be placed with the Issuer's
stock transfer agent against the sale or transfer of the shares
covered by this Agreement prior to its expiration, except as may
otherwise be provided in this Agreement;
D. The above stock restriction legends to be placed on the periodic
statement sent to the registered owner if the securities subject
to this Agreement are uncertificated securities.
3
<PAGE> 4
Pursuant to the requirements of this Agreement, the Signatories have entered
into this Agreement, which may be written in multiple counterparts and each of
which shall be considered an original. The Signatories have signed the Agreement
in the capacities, and on the dates, indicated.
IN WITNESS WHEREOF, the Signatories have executed this Agreement.
CUIDAO HOLDING CORP.
By:____________________________________________
C. Michael Fisher, President
_______________________________________________
Signature
_______________________________________________
Printed Name of Security Holder
_______________________________________________
Title, if applicable
4
<PAGE> 1
EXHIBIT 24
BAUM & COMPANY, P. A.
Certified Public Accountants
1515 University Drive, Suite 209
Coral Springs, Florida 33071
(954) 752-1712
Cuidao Holding Corp.
3201 West Griffin Road, Suite 204
Fort Lauderdale, Florida 33312-6900
RE: CUIDAO HOLDING CORP.
Dear Sir or Madam:
We hereby consent to the use in the Prospectus constituting a part of this
Registration Statement on Form SB-2 of our report dated July 15, 1997, relating
to the financial statements of Cuidao Holding Corp. which are contained in this
Prospectus.
We also consent to the reference to us under the captions "Selected Financial
Data" and "Experts" in the Prospectus.
BAUM & COMPANY, P.A.
Coral Springs, Florida
December 18,1997
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM (A) THE
INTERIM UNAUDITED FINANCIAL STATEMENTS OF CUIDAO HOLDING CORP. FOR THE TEN MONTH
PERIOD ENDED OCTOBER 31, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH (B) FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 10-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> OCT-31-1997
<CASH> 39,044
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 59,828
<PP&E> 10,326
<DEPRECIATION> 1,842
<TOTAL-ASSETS> 95,736
<CURRENT-LIABILITIES> 793
<BONDS> 0
0
4
<COMMON> 223
<OTHER-SE> 210,254
<TOTAL-LIABILITY-AND-EQUITY> 95,736
<SALES> 0
<TOTAL-REVENUES> 149
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 94,164
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> (94,015)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (94,015)
<EPS-PRIMARY> (.046)
<EPS-DILUTED> (.046)
</TABLE>
