<PAGE>
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-SB
General Form for Registration of Securities of
Small Business Issuers
Under Section 12(b) or (g) of the Securities Exchange Act of 1934
EntrePort Corporation
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(Name of Small Business Issuer in its charter)
Florida 65-0703923
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
10455 Sorrento Valley Road
Suite 204
San Diego, California 92121
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(Address of principal executive offices) (Zip Code)
Issuer's telephone number, including area code 619-643-5100
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Securities to be registered under Section 12(b) of the Act:
Title of each class Name of each exchange on which
to be so registered each class is to be registered
None N/A
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Securities to be registered pursuant to Section 12(g) of the Act:
Common Stock, $.001 par value
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(Title of class)
<PAGE>
Part 1
Item 1. Description of Business
Business Development
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EntrePort Corporation (the Company") is a developmental stage company engaged
in the business of developing Web portals on the Internet for purposes of
offering general information, communication tools and training to members of
certain targeted Internet communities. The Company was formed under the laws of
the State of Florida on October 4, 1996 under the name Dogwood Tree Capital
Corp. for the purpose of listing its securities on the OTC Bulletin Board and
then acquiring an interest in a suitable business. In October 1996, the Company
issued 5,025,000 shares of its $.001 par value common stock ("Common Stock") to
26 individuals, including 5,000,000 shares to its founder, at a price of $.001
per share. In October 1998, the Company listed its shares of Common Stock on
the OTC Bulletin Board.
The Company had no assets or operations from the time of its incorporation
until February 1999, at which time the Company hired Mr. David D'Arcangelo,
currently the Company's Chairman of the Board, to develop the Company's current
Web business. At that time, the Company's founder canceled, for no
consideration, 4,410,000 shares of Common Stock and resigned from all positions
with the Company, and the Company issued an aggregate of 3,800,000 shares of
Common Stock, including 2,400,000 shares to Mr. D'Arcangelo, in consideration of
marketing and business plans, consulting services and cash.
During March through May1999, the Company conducted the private placement sale
of convertible notes for the gross proceeds of $595,000. The notes were in the
aggregate principal amount of $595,000 and bore interest on the principal amount
at the rate of six percent (6%) per annum. The principal amount of the notes
were convertible into shares of Common Stock at the rate of $2.00 to $3.00 per
share. In June 1999, $215,000 of the principal amount of the notes was
converted into 107,500 shares of Common Stock and the remaining $380,000 in
principal was converted into 126,667 shares of Common Stock. On March 25, 1999,
the Company changed its corporate name to EntrePort Corporation.
The Company's executive offices are located at 10455 Sorrento Drive, Suite
204, San Diego, California 92121; telephone number (619) 643-5100.
Business of the Issuer
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General
The Company is a developmental stage company engaged in the business of
developing Web portals on the Internet for purposes of offering general
information, communication tools and training to members of certain targeted
Internet communities. The Company currently has three Web portals under
development, including Web portals devoted to golfing, real estate and the
African-American community. The Company intends to generate revenue through
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<PAGE>
membership fees charged to subscribers to the portals; advertising income from
third party advertisers at the portal sites; percentage interests in the income
derived by third parties who provide seminars, training and speeches at the
Company's Web portals; and through the sale of products and services at the Web
portals.
The Company intends to market its portals to the public through both on-line
and off-line media but initially will concentrate on off-line media such as
radio, television, direct mailing and seminars. The Company intends to
replicate its initial portals for additional targeted affinity groups large and
cohesive enough to support an Internet community. The Company's goal is to
become the leading on-line, target specific portal service.
In June 1999, the Company entered ino an agreement with Worldwide Health and
Business Solution Pty. Worldwide Health is a large distributor of an
international marketing concern. Worldwide has signed up over 150,000 sub-
distributors internationally in the last six years. Pursuant to the agreement,
Worldwide Health has engaged the Company to design and develop a Web site that
will be self replicating, thereby allowing Worldwide Health's sub-distributors
to create their own separate and customized Web site through which they can
market their business opportunity. Each Web site will provide a host of sales
tools and aids, career opportunities, frequently asked questions, articles,
business overview and upcoming events, to name a few. Participating
distributors who subscribe to the Company's personalized Web site service will
pay a one-time subscription fee of $50.00 to $150.00 and a monthly subscription
fee of $19.95.
In July 1999, the Company purchased 2.5% of the outstanding common stock of
SportsWare Technologies, Inc. ("STI") for $200,000, plus received an option to
purchase the remaining 97.5% on or before January 20, 2000. STI publishes the
National Golf Course Directory and provides Internet content through its URL
Play18.com. The agreement allows the Company to acquire the outstanding common
shares of STI for $8,000,000, of which $5,500,000 is payable in cash and
$2,500,000 is payable in common shares of the Company based on the average
closing price of the Company's common shares for the 30 days immediately
preceding exercise of the option.
As of the date of this registration statement, the Company had not completed
the development of any of its proposed Web portals nor otherwise commenced
meaningful revenue producing operations. The Company expects to complete its
initial Web portals devoted to golf and real estate in the fourth quarter of
1999. The Company expects to complete its portal devoted to the African-
American community in the first quarter of 2000. The Company's activities to
date have included the market analysis for and development of its initial Web
portals. In early 1999, the Company conducted in-house beta testing of several
marketing specific Web portals. These beta test sites generated $21,414 in
revenue during the initial test.
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The Internet
The Internet has emerged as a significant global communications medium,
enabling millions of people to share information and conduct business
electronically and providing businesses with an attractive means of marketing
and selling their products and services. The Internet enables features and
functions that are unavailable in traditional business process, permitting on-
line entrepreneurs and companies to interact effectively with customers and
prospects. International Data Corporation ("IDC") estimates the number of users
associated with accessing the Web to increase from approximately 69 million at
the end of 1997 to approximately 320 million by the end of 2002. According to
IDC, worldwide-commerce revenue on the Internet is expected to increase from
approximately $300 billion at the end of 1998 to more than $425 billion in 2002.
Jupiter Communications, Inc. estimates that the amount of advertising dollars
spent on the Internet is expected to increase from approximately $1.9 billion in
1998 to $7.7 billion by 2002, a compound annual growth rate of 42%.
The increasing use of the Internet as a commercial medium has been accompanied
by a diversification in the type of commerce that is conducted on the Internet
and a proliferation in the types of products and services available on the
Internet. The Internet has created a dynamic and particularly attractive medium
for business, empowering businesses and consumers to distribute and gather more
comparative data than is feasible with traditional commerce systems, to
communicate and shop in ways that can be more convenient for them and to
interact with each other in many new ways. As the Internet has become more
accessible and widely used for transactions, it has emerged as a primary
business channel alongside the telephone, paper-based communication and face-to-
face interaction.
The Company's Services and Products
General
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The Company's intends to develop Web portals at which it will offer general
information, communication tools, training and other goods and services. These
Web portals will be accessible by the general public, however, only established
subscribers or registered visitors will be permitted to use the Company's
portals as the case may be.
The Company's Web portals will be accessible by a minimum hardware
configuration consisting of a 486 personal computer with Windows `95 or greater,
with 16 megabytes of RAM, 20 megabytes of free hard disk space, a 14,400 modem
and a direct PPP Internet connection. All services will be provided in a
Windows-based menu driven format with "point and click" interactivity. Persons
who wish to use the Company's Web portals will be able to subscribe over the
Internet by completing an application available at the Web portal, opening an
account and making a deposit with the Company with the user's credit card. In
May 1998, the Company was approved as a credit card merchant by Imperial Bank.
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The Company's Initial Portals
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General. The Company's portals will provide rich content to specific targeted
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affinity groups. Each portal will offer a broad array of resources and services
such as e-mail, forums, search engines, and on-line shopping as well as both
live and recorded training. Certain channels such as e-mail, forums, search
engines, shopping and training will be common to all portals. However, each
portal will also contain channels tailored to the needs and interests of the
targeted affinity group for that portal. By adopting this approach, each portal
will be of more utility to its targeted users than are the majority of current
portals which seek to attract the public at large.
Real Estate Portal. This portal will be aimed at real estate professionals in
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the United States and throughout the world. According to the National
Association of Realtors there are over 720,000 members nationwide. The U.S.
Census Bureau estimates that this industry employs 1,231,471 people and
generates over $141,000,000,000 in revenue.
The Company believes, based on its internal marketing analysis and discussions
with senior executives in the real estate industry, that the real estate
industry is looking to increase operating efficiencies and profits through the
deployment of computer/Internet technologies, particularly in the area of sales
training. The Company will offer membership based on-line training for real
estate professionals.
Golf Portal. This portal will be aimed at golfers and members of their
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support groups such as family members and friends. According to the National
Golf Foundation in 1996 there were approximately 26,500,000 golfers in the
United States aged 12 and over compared to 19,900,000 golfers in 1986, an
increase of 33%. Statistics reveal that the typical golfer is male, 39 years
old and has a household income of approximately $63,000.00. In 1996, industry
statistics indicate that golfers spent about $15.1 billion on equipment compared
to $7.8 billion in 1986, a nearly 100% increase. The channels for the Golf
Portal will include on-line training, discount tee times, discount merchandise,
handicapping service and current news.
The African-American Portal. The African-American Portal will be targeted at
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the over 34,000,000 African-Americans in the United States and the millions of
African descent, living in other countries worldwide. According to industry
sources African-American buying power in the United States in 1997 was $392
billion. The channels to be included in the African-American Portal are
shopping, training, business opportunity, loans, work from home, travel,
community news, music, health and parenting, astrology and psychics line, better
health, fashion, careers, sports, African-American women and others as they are
developed.
Future Portal Possibilities. The Company intends to replicate its initial
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portals for additional targeted affinity groups large and cohesive enough to
support an Internet community. The Company's goal is to become the leading on-
line, target specific portal service.
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Content Production
The Company intends to create rich, useful content for its portals in order to
attract the largest number of users from each affinity group. The Company
intends to develop the content directly and to provide content indirectly
through licensing arrangements with third party content providers and links
other content-based Web sites. Each of the Company's portals will be run by a
key employee of the Company with significant experience in the related industry.
Technological Capability and Support
The Company intends to contract with various Web development companies
utilizing the latest available technologies to build its Web portals. The
Company will hire personnel to internally manage and service the portals on a
daily basis. Management believes that this strategy will be the most efficient
and productive method of building its portal network.
The Company intends to provide a high level of customer support to its
customer base. The Company intends to provide technical and customer service
support via its corporate e-mail, 24 hours a day, seven days a week. In
addition to the support channel, the Company intends to provide for instant
messaging and support chat rooms. To assist in providing quality and responsive
support, the Company intends to develop or acquire software programs that
record, acknowledge, route, queue, and generate reports on e-mail.
Marketing
The Company intends to market its products and services through a combination
of on-line and off-line advertising, including traditional print, radio and
television advertising, direct mail, telemarketing (phone fax and e-mail) and
through the visibility created by the seminars hosted or sponsored by the
Company.
The Company intends to use a direct sales force as well as alternative
distribution channels. Through the combination of a direct sales force and
alternative distribution channels, the Company believes it will be able to more
rapidly access markets and increase revenue-producing traffic on its portal
network. To implement its distribution strategy, the Company intends to develop
an in-house direct sales force to market its portal products and services
directly to large corporations in the target markets. In addition, the direct
sales force will target national and international accounts and target large
audiences of through an aggressive seminar program.
As part of its distribution strategy, the Company is developing several
alternative distribution channels, including agents and resellers. Agents will
be independent individuals selling the Company's portal services under the
"EntrePort" brand name in exchange for revenue based commissions. Resellers
will be independent organizations that will sell the Company's portal services
under the "EntrePort" brand name in exchange for revenue based commissions.
Reseller organizations will focus on small geographically dispersed
organizations.
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Intellectual Property
The Company relies on a combination of trademark, copyright and trade secret
laws, as well as confidentiality agreements and technical measures to protect
its proprietary rights. Much of the Company's proprietary information may not be
patentable, and the Company does not currently possess any patents. The Company
intends to seek trademark protection for the mark "EntrePort" and its portals.
Government Regulations
The Company is not currently subject to direct regulation by any government
agency, other than regulations applicable to businesses, and there are currently
few laws or regulations directly applicable to access to or commerce on the
Internet. It is possible, however, that a number of laws and regulations may be
adopted with respect to the Internet, covering issues such as user privacy,
pricing and characteristics and quality of products and services. Moreover, the
applicability to the Internet or other on-line services of existing laws in
various jurisdictions governing issues such as property ownership, sales and
other taxes, libel and personal privacy is uncertain.
Employees
As of the date of this registration statement, the Company employs 12 people
on a full-time basis. None of the Company's employees are covered by an ongoing
collective bargaining agreement with the Company and the Company believes that
its relationship with its employees is good.
Item 2. Management's Discussion and Analysis or Plan of Operation
Plan of Operations
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The Company is a developmental stage company engaged in the business of
developing Web portals on the Internet for purposes of offering general
information, communication tools and training to members of certain targeted
Internet communities. As of the date of this registration statement, the
Company has not completed the development of any of its proposed Web portals nor
otherwise commenced revenue producing operations. The Company expects to
complete its initial Web portals devoted to real estate and golf in the fourth
quarter of 1999. The Company expects to complete its portal devoted to the
African-American community in the first quarter of 2000. The Company's
activities to date have included the market analysis for and development of its
initial Web portals. In early 1999, the Company conducted in-house beta testing
of several marketing specific Web portals, though which the Company received
$21,414 revenues during the five months ended May 31, 1999.
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<PAGE>
The Company has financed its activities to date through the sale of its
securities. See Item 4, Part II - "Recent Sales of Unregistered Securities" for
a description of the Company's sale of shares of its securities since inception.
During March through May 1999, the Company conducted the private placement sale
of convertible notes for the gross proceeds of $595,000. The notes were in the
aggregate principal amount of $595,000 and bore interest on the principal amount
at the rate of six percent (6%) per annum. The principal amount of the notes
were convertible into shares of Common Stock at the rate of $2.00 to $3.00 per
share. In June 1999, $215,000 of the principal amount of the notes was
converted into 107,500 shares of Common Stock and the remaining $380,000 in
principal was converted into 126,667 shares of Common Stock
As of May 31, 1999, the Company had a working capital deficit and negative
book value of $224,315. The Company's plan of operations over the next 12
months includes the expected completion of its initial Web portals devoted to
real estate and golf in the fourth quarter of 1999 and the African-American
portal in the first quarter of 2000. The Company believes that it will require,
at least, $5,000,000 of capital over the next 12 months in order to fund the
completion of its presently proposed Web portals. In addition, the Company will
need an additional $5,500,000 by January 2000 should it elect to complete its
acquisition of SportsWare Technologies, Inc. The Company intends to pursue a
private placement of its securities in order to satisfy its working capital
requirements. However, there are no commitments or understandings on the part
of any third parties for the purchase of the Company's securities. Therefore,
there can be no assurance that the Company will be able to obtain sufficient
additional capital, either through the proposed private placement or otherwise,
in order to fund the Company's working capital requirements in a timely manner.
The report of the Company's independent accountants for the fiscal year ended
December 31, 1998 states that due to the absence of operating revenues, there is
substantial doubt about the Company's ability to continue as a going concern.
Year 2000 Compliance
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The Company utilizes computer software programs and operating systems,
including applications used in developing and operating its proposed Web
business. To the extent the Company's software applications contain source
codes that are unable to appropriately interpret the upcoming calendar year
2000, some level of modification, or even possibly replacement of such
applications, may be necessary. The Company has appointed a Year 2000 Committee
to perform an audit to assess the scope of the Company's risks and bring its
applications into compliance. The Committee is currently in the process of
completing its identification of applications that are not Year 2000 compliant,
if any. In addition, the Company has begun to ask its vendors about their
progress in identifying and addressing problems that their computer systems may
face in correctly processing date information related to the Year 2000.
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The Company is in the early stages of conducting its Year 2000 audit and
therefore is unable to make a reasonable estimate of the costs associated with
Year 2000 compliance. Accordingly, no assurance can be given that any or all of
the Company's or third party systems are or will be Year 2000 compliant or that
the costs required to address the Year 2000 issue or that the impact of the
Company's failure to achieve substantial Year 2000 compliance will not have a
material adverse effect on the Company's business, financial condition or
results of operations.
Forward Looking Statements
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This registration statement contains forward-looking statements that are based
on the Company's beliefs as well as assumptions made by and information
currently available to the Company. When used in this registration statement,
the words "believe," "endeavor," "expect," "anticipate," "estimate," "intends,"
and similar expressions are intended to identify forward-looking statements.
Such statements are subject to certain risks, uncertainties and assumptions,
including, without limitation, the Company's development stage status and lack
of commercial operations or revenues; the Company's present financial condition
and the risks and the availability of additional capital as and when required;
the going concern opinion included in the report of the Company's independent
accountants for the Company's fiscal 1998 financial statements; the risks and
uncertainties concerning technological changes; increased competition; and
general economic conditions. Should one or more of these risks or uncertainties
materialize, or should underlying assumptions prove incorrect, actual results
may vary materially from those anticipated, estimated, or projected. The
Company cautions potential investors not to place undue reliance on any such
forward-looking statements all of which speak only as of the date made.
Item 3. Description of Property
The Company's executive offices are located in San Diego, California and
consist of approximately 3,000 square feet for a monthly rent of $4,000.
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Item 4. Security Ownership of Certain Beneficial Owners and Management.
The following table sets forth certain information regarding the beneficial
ownership of the shares of Common Stock as of July 31, 1999 by (i) each person
who is known by the Company to be the beneficial owner of more than five percent
(5%) of the issued and outstanding shares of Common Stock, (ii) each of the
Company's directors and executive officers and (iii) all directors and executive
officers as a group.
<TABLE>
<CAPTION>
Name and Address Number of Shares Percentage Owned
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<S> <C> <C>
David J. D'Arcangelo (1)(2) 2,533,334 40.5%
William A. Shue (1)(3) 1,500,000 23.9%
Richard J. Kurtz (1)(4) 100,000 1.5%
Kym Yancey (1)(5) -0- --
All officers and directors 4,133,334 66.1%
as a group(6)
</TABLE>
_______________________
(1) Address is 10455 Sorrento Valley Road, Suite 204, San Diego, California
92121.
(2) Does not includes options granted to Mr. D'Arcangelo to purchase 50,000
shares of Common Stock .
(3) Does not include options granted to Mr. Shue to purchase 150,000 shares of
Common Stock.
(4) Does not include options granted to Mr. Kurtz to purchase 300,000 shares of
Common Stock.
(5) Does not include options granted to Mr. Yancey to purchase 450,000 shares
of Common Stock.
(6) Does not include options to granted to officers and directors to purchase
an aggregate of 950,000 shares of Common Stock.
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<PAGE>
Item 5. Directors, Executive Officers, Promoters and Control Persons.
Set forth below are the directors and officers of the Company.
<TABLE>
<CAPTION>
Name Age Position
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<S> <C> <C>
David J. D'Arcangelo 43 Chairman of the Board
William A. Shue 43 President, Chief Executive Officer, Chief Executive Officer, Secretary
and Director
Richard J. Kurtz 33 Senior Vice President/Real Estate Portal
Kim Yancey 44 Senior Vice President/African-American Portal
</TABLE>
Mr. D'Arcangelo has served as Chairman of the Board of Directors since
February 17, 1999. From February 17, 1999 to March 21, 1999, Mr. D'Arcangelo
also served as President and Chief Executive Officer of the Company. In 1991,
Mr. D'Arcangelo became President and co-founder of the Financial Destiny group
of companies with Anthony J. Robbins, and in 1993 he assumed the role as
President of Destiny Strategies, Inc. On June 1, 1994, Mr. D'Arcangelo merged
his day-to-day business with Rodman & Renshaw, Inc., a division of Rodman
Capitol Group formerly listed on the New York Stock Exchange. His book "Wealth
Starts at Home," published by McGraw-Hill, was released in 1997.
Mr. Shue has served as President, Chief Executive Officer, Chief Financial
Officer, Secretary and a director of the Company since April 17, 1999. Mr. Shue
was formerly President/Director and one of the original founders of Caribiner
International, Inc., a New York Stock Exchange company. From its inception in
1988, Mr. Shue built Caribiner into the leading business communications company
in the world with currently over $650 million in sales.
Mr. Kurtz has served as Senior Vice President-Real Estate of the Company since
June 22, 1999. Mr. Kurtz acquired The Achievement Group in 1986, a company he
joined in 1984 as National Director of Marketing. Under his leadership the
company was reorganized and renamed Resource Dynamics. As Resource Dynamics'
president Mr. Kurtz pioneered and defined the industry of "Real Estate Training
and Development."
Mr. Yancey has served as Senior Vice President-Afrocentric since June 5, 1999.
Mr. Yancey has over twenty years of marketing experience resulting in dynamic
leadership skills. Mr. Yancey has built his success on a foundation of targeted
marketing with special emphasis on speaking to the multi-culturalism and the
diversity of today's consumers.
Each director holds office until his successor is elected and qualified or
until his earlier resignation in the manner provided in the Bylaws of the
Company.
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Item 6. Executive Compensation
Cash Compensation of Executive Officers. The following table sets forth the
cash compensation paid by the Company to its Chief Executive Officer and to all
other executive officers for services rendered during the fiscal years ended
December 31, 1998, 1997 and 1996.
<TABLE>
<CAPTION>
Annual Compensation Long-Term Compensation
----------------------------------------- ----------------------------------------------------
Name and Position Year Salary Bonus Other Annual Restricted Common Shares All Other
Compensation Stock Awards ($) Underlying Options Compen-
Granted sation
(# Shares)
------------------ ---- ------ ----- ------------ --------------- ----------------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
David J. D'Arcangelo, 1998 -0- -0- -0- -0- -0- -0-
Chairman(1) 1997 -0- -0- -0- -0- -0- -0-
1996 -0- -0- -0- -0- -0- -0-
William A. Shue, President and 1998 -0- -0- -0- -0- -0- -0-
CEO(2) 1997 -0- -0- -0- -0- -0- -0-
1996 -0- -0- -0- -0- -0- -0-
Richard J. Kurtz, Senior VP(3) 1998 -0- -0- -0- -0- -0- -0-
1997 -0- -0- -0- -0- -0- -0-
1996 -0- -0- -0- -0- -0- -0-
Kym Yancey, Senior VP(4) 1998 -0- -0- -0- -0- -0- -0-
1997 -0- -0- -0- -0- -0- -0-
1996 -0- -0- -0- -0- -0- -0-
</TABLE>
_______________
(1) Commencing March 17, 1999, the Company has paid Mr. D'Arcangelo a salary of
$100,000 per year.
(2) Commencing April 17, 1999, the Company has paid Mr. Shue a salary of
$100,000 per year.
(3) Commencing June 22, 1999, the Company has paid Mr. Kurtz a salary of
$220,000 per year.
(4) Commencing June 5, 1999, the Company has paid Mr. Yancey a salary of
$90,000 per year.
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Option/SAR Grants in Last Fiscal Year
<TABLE>
<CAPTION>
Individual Grants
- --------------------------------------------------------------------------------------------------------------------------------
Name Number of Securities % of Total Options/SARs Exercise or Base Expiration Date
Underlying Options/SARs Granted to Employees in Price ($/Sh)
Granted (#) Fiscal Year
- ---------------- ----------------------- ----------------------- ---------------- ----------------
<S> <C> <C>
</TABLE>
None.
Aggregated Option/SAR Exercises in Last Fiscal Year
and FY-End Option/SAR Values
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------
Number of
Securities
Shares Acquired Underlying Value of
Name on Exercise Value Received Unexercised Unexercised
Options (SARs In-the-Money
at FY-End Options (SARs
(#) at FY-End($)
Exercisable/ Exercisable/
Unexercisable Unexercisable
- ------------------- ------------------- ---------------------- --------------- ----------------
<S> <C> <C> <C> <C>
</TABLE>
None.
Compensation of Directors. All directors receive reimbursement for out-of-
pocket expenses in attending Board of Directors meetings. The Company intends
to appoint additional members to its Board of Directors, including outside or
non-officer members to the board. Any outside directors may receive an
attendance fee for each meeting of the Board of Directors. From time to time
the Company may engage certain members of the Board of Directors to perform
services on behalf of the Company and will compensate such persons for the
services which they perform.
Item 7. Certain Relationships and Related Transactions.
None.
Item 8. Description of Securities.
Common Stock
The Company is authorized to issue 50,000,000 shares of Common Stock, $.001
par value, of which, as of July 31, 1999, 6,249,167 shares were issued and
outstanding and held of record by approximately 18 stockholders. Holders of
shares of Common Stock are entitled to one vote per share on all matters to be
voted upon by the stockholders generally. The approval of proposals submitted
to stockholders at a meeting other than for the election of directors requires
the favorable vote of a majority of the shares voting, except in the case of
certain fundamental matters (such as certain amendments to the Articles of
Incorporation, and certain mergers and reorganizations), in which cases Florida
law and the Company's Bylaws require the favorable vote of at least a majority
of all outstanding shares. Stockholders are entitled to
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<PAGE>
receive such dividends as may be declared from time to time by the Board of
Directors out of funds legally available therefor, and in the event of
liquidation, dissolution or winding up of the Company to share ratably in all
assets remaining after payment of liabilities. The holders of shares of Common
Stock have no preemptive, conversion, subscription or cumulative voting rights.
Part II
Item 1. Market Price of and Dividends on the Registrant's Common Equity and
Other Shareholder Matters.
The Company's Common Stock has been listed on the OTC Bulletin Board under the
symbol "ERTE" since October 1998. From inception of trading through July 31,
1999, the high and low last sale prices were $7.75 per share and $.0625 per
share, respectively. The Company considers its Common stock to be thinly traded
and that any reported bid or sale prices may not be a true market-based
valuation of the Common Stock.
As of July 31, 1999, there were approximately 18 record holders of the
Company's Common Stock.
The Company has not paid any cash dividends since its inception and does not
contemplate paying dividends in the foreseeable future. It is anticipated that
earnings, if any, will be retained for the operation of the Company's business.
Item 2. Legal Proceedings.
There are no pending legal proceedings to which the Company is a party or to
which the property interests of the Company are subject.
Item 3. Changes in and Disagreements with Accountants
In July 1999, the Company dismissed Barry L. Friedman, Certified Public
Accountant, as the independent auditor for the Company and appointed Ernst &
Young LLP as independent auditors. Mr. Friedman had previously audited the
Company's financial statements as of and for the fiscal years ended December 31,
1998, 1997 and 1966. The decision to change independent auditors was approved
by the Board of Directors of the Company. During the fiscal year ended December
31, 1997 and through July 1999, there were no disagreements between the Company
and Mr. Friedman on any matter of accounting principles or practices, financial
statement disclosure, or auditing scope or procedures which disagreements if not
resolved to the satisfaction of Mr. Friedman would have caused him to make
reference to the subject matter of the disagreement in connection with his
reports.
Except for the explanatory paragraph included in the firm's report on the
financial statements for the 1998, 1997 and 1996 fiscal years, relating to
substantial doubt existing about the Company's ability to continue as a going
concern, the audit reports of Mr. Friedman on the
-14-
<PAGE>
Company's financial statements as of December 31, 1998, 1997 and 1996 did not
contain an adverse opinion or a disclaimer of opinion, nor were they qualified
or modified as to uncertainty, audit scope, or accounting principles.
Item 4. Recent Sales of Unregistered Securities.
During the last three years the Company sold unregistered shares of its Common
Stock in the following transactions:
A. In October 1996, the Company issued 5,000,000 shares of Common Stock to
the founder of the Company, at a price of $.001 per share of which 4,410,000
were retired. There was no underwriter involved in this issuance. The issuance
was conducted pursuant to Section 4(2) under the Securities Act of 1933 ("1933
Act").
B. In October 1996, the Company conducted a private placement of 25,000
shares of Common Stock to 25 parties, at a price of $.001 per share. There was
no underwriter involved in the placement. The placement was conducted pursuant
to Section 4(2) of the 1933 Act.
C. In March 1999, the Company issued an aggregate of 2,800,000 shares of
Common Stock to three parties, including 2,533,334 shares to Mr. David J.
D'Arcangelo, the Company's Chairman of the Board, and 133,333 shares of Common
Stock each to two consultants to the Company, in consideration of marketing and
business plans and consulting services rendered. There was no underwriter
involved in the issuances. The issuances were conducted pursuant to Section
4(2) of the 1933 Act.
D. In February 1999, the Company conducted a private placement of 1,000,000
shares of Common Stock to four individuals, at a price of $.001 per share.
There was no underwriter involved in the placement. The placement was conducted
pursuant to Rule 504 under the 1933 Act.
E. During March through May 1999, the Company conducted a private placement
sale of convertible notes to six parties for the gross proceeds of $595,000.
The notes were in the aggregate principal amount of $595,000 and bore interest
on the principal amount at the rate of six percent (6%) per annum. The
principal amount of the notes were convertible into shares of Common Stock at
the rate of $2.00 to $3.00 per share. In June 1999, the holders of the notes
converted the entire principal amount into 234,167 shares of Common Stock.
There was no underwriter involved in the placement. The placement was conducted
pursuant to Section 4(2) of the 1933 Act.
F. During the first and second quarters of 1999, the Company issued an
aggregate of 1,600,000 shares of Common Stock and options to purchase an
aggregate of 950,000 to five officers and directors of the Company. There was
no underwriter involved in the issuances. The issuances were conducted pursuant
to Section 4(2) of the 1933 Act.
-15-
<PAGE>
Item 5. Indemnification of Directors and Officers.
Florida Statutes
- ----------------
Articles of Incorporation
- -------------------------
The Company's Articles of Incorporation provides that the directors of the
Company shall be protected from personal liability to the fullest extent
permitted by law. The Company's Articles of Incorporation also provide for the
indemnification of the Company's directors and officers.
Indemnity Agreements
- --------------------
The Company's Articles of Incorporation provide that the Company may indemnify
its directors and officers to the fullest extent permitted by law and the
Company has agreed to provide such indemnification to its officers and
directors, pursuant to written indemnity agreements.
-16-
<PAGE>
INDEX TO FINANCIAL STATEMENTS
ENTREPORT CORPORATION
Independent Auditors' Report............. 21
Balance Sheets........................... 22
Statements of Operations................. 24
Statements of Stockholders' Equity....... 25
Statements of Cash Flows................. 26
Notes to Financial Statements............ 27
Unaudited Balance Sheets................. 29
Unaudited Statements of Operations....... 30
Unaudited Statements of Cash Flows....... 31
Notes to Unaudited Financial Statements.. 32
-17-
<PAGE>
INDEPENDENT AUDITORS' REPORT
----------------------------
Board of Directors October 6, 1998
Dogwood Tree Capital Corp.
Miami, Florida
I have audited the accompanying Balance Sheets of Dogwood Tree Capital
Corp. (A Development Stage Company), as of December 31, 1998, December 31, 1997,
and December 31, 1996, and the related statements of operations, stockholders'
equity and cash flows for the years ended December 31, 1997 and 1998; and the
period October 4, 1996, (inception) to December 31, 1998. These financial
statements are the responsibility of the Company's management. My responsibility
is to express an opinion on these financial statements based on my audit. I
conducted my audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
I believe that my audit provides a reasonable basis for my opinion.
In my opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Dogwood Tree Capital
Corp. (A Development Stage Company) as of October 5, 1998, December 31, 1997,
and December 31, 1996, and the results of its operations and cash flows for the
period January l, 1998, to October 5, 1998, for the year ended December 31,
1997, and the period October 4, 1996, (inception) to December 31, 1996, in
conformity with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming the
Company will continue as a going concern. As I discussed in Note 3 to the
financial statements, the company has no established source of revenue. This
raises substantial doubt about its ability to continue as a going concern.
Management's plan in regard to these matters are also described in Note 3. The
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.
/s/ Barry L. Friedman
---------------------------
Barry L. Friedman
Certified public Accountant
-18-
<PAGE>
DOGWOOD TREE CAPITAL CORP.
(A Development Stage Company)
BALANCE SHEET
-------------
ASSETS
------
<TABLE>
<CAPTION>
December 31, December 31, December 31,
1998 1997 1996
------------- ----------- -----------
<S> <C> <C> <C>
CURRENT ASSETS:
TOTAL CURRENT ASSETS $ 0 $ 0 $ 0
OTHER ASSETS:
TOTAL OTHER ASSETS $ 0 $ 0 $ 0
------------- ---------- ----------
TOTAL ASSETS $ 0 $ 0 $ 0
============= ========== ==========
</TABLE>
-19-
<PAGE>
DOGWOOD TREE CAPITAL CORP.
(A Development Stage Company)
BALANCE SHEET
-------------
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
<TABLE>
<CAPTION>
December 31, December 31, December 31,
1998 1997 1996
------------------- ------------------- -------------------
<S> <C> <C> <C>
CURRENT LIABILITIES:
TOTAL CURRENT LIABILITIES $ 0 $ 0 $ 0
STOCKHOLDERS' EQUITY: (Note 1)
Common stock, $0.001 par value
authorized 50,000,000 Shares
issued and outstanding, at
December 31, 1996-5,025,000 shs 5,025
December 31, 1997-5,025,000 shs 5,025
October 5, 1998-5,025,000 shs 5,025
Additional paid in capital 0 0 0
Accumulated loss -5,025 -5,025 -5,025
------------------- ------------------- -------------------
TOTAL STOCKHOLDERS' EQUITY $ 0 $ 0 $ 0
------------------- ------------------- -------------------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 0 $ 0 $ 0
=================== =================== ===================
</TABLE>
-20-
<PAGE>
DOGWOOD TREE CAPITAL CORP.
(A Development Stage Company)
STATEMENT OF OPERATIONS
-----------------------
<TABLE>
<CAPTION>
Oct. 4, 1996
Year Ended Year Ended Oct. 4, 1996 to (inception)
Dec. 31, 1998 Dec. 31, 1997 Dec. 31, 1996 to Dec 31, 1998
----------------- ----------------- ----------------- -----------------
<S> <C> <C> <C> <C>
INCOME:
Revenue $ 0 $ 0 $ 0 $ 0
----------------- ----------------- ----------------- -----------------
EXPENSES:
General, Selling and Administrative $ 0 $ 0 $ 0 $ 0
----------------- ----------------- ----------------- -----------------
Total Expenses $ 0 $ 0 $ 0 $ 0
----------------- ----------------- ----------------- -----------------
Net Profit/Loss (-) $ 0 $ 0 $ -5,025 $ -5,025
================= ================= ================= =================
Net Profit/Loss (-) per
weighted share (Note 1) $ .0000 $ .0000 $ -.0010 $ -.0010
================= ================= ================= =================
Weighted average number of common shares
outstanding 5,025,000 5,025,000 5,025,000 5,025,000
================= ================= ================= =================
</TABLE>
-21-
<PAGE>
DOGWOOD TREE CAPITAL CORP.
(A Development Stage Company)
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
--------------------------------------------
<TABLE>
<CAPTION>
Common Stock
-------------------------------------
Additional Accumulated
Shares Amount Paid-In Capital Deficit
----------------- ----------------- ----------------- -----------------
<S> <C> <C> <C> <C>
October 4, 1996 issuance of common stock 5,025,000 $ 5,025 $ 0 $ 0
Net loss, October 4, 1996
to December 31, 1996 -5,025
Balance, December 31, 1996 5,025,000 $ 5,025 $ 0 $ -5,025
Net loss year ended December 31, 1997 0
----------------- ----------------- ----------------- -----------------
Balance, December 31, 1997 5,025,000 $ 5,025 $ 0 $ -5,025
Net loss, year ended December 31, 1998
----------------- ----------------- ----------------- -----------------
Balance, December 31, 1998 5,025,000 $ 5,025 $ 0 $ -5,025
================= ================= ================= =================
</TABLE>
-22-
<PAGE>
DOGWOOD TREE CAPITAL CORP.
(A Development Stage Company)
STATEMENT OF CASH FLOWS
-----------------------
<TABLE>
<CAPTION>
Oct. 4, 1996
Year Ended Year Ended Oct. 4, 1996 to (inception)
Dec. 31, 1998 Dec. 31, 1997 Dec. 31, 1996 to Dec 31, 1998
----------------- ----------------- ----------------- -----------------
<S> <C> <C> <C> <C>
Cash Flows from Operating Activities:
Net Loss $ 0 $ 0 $ -5,025 $ -5,025
Adjustment to net loss to net cash
provided by operating activities 0 0 0 0
Changes in assets and liabilities:
Increase in current liabilities: 0 0 0 0
----------------- ----------------- ----------------- -----------------
Net cash used in operating activities $ 0 $ 0 $ -5,025 $ -5,025
Cash Flows from investing activities 0 0 0 0
Cash Flows from Financing Activities:
Issuance of common stock for services 0 0 +5,025 +5,025
----------------- ----------------- ----------------- -----------------
Net increase (decrease) in cash $ 0 $ 0 $ 0 $ 0
Cash, beginning of period 0 0 0 0
----------------- ----------------- ----------------- -----------------
Cash, end of period $ 0 $ 0 $ 0 $ 0
================= ================= ================= =================
</TABLE>
-23-
<PAGE>
DOGWOOD TREE CAPITAL CORP.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
-----------------------------
December 31, 1998, December 31, 1997, and December 31, 1996
NOTE 1 - HISTORY AND ORGANIZATION OF THE COMPANY
The Company was organized October 4, 1996, under the laws of the State
of Florida, as Dogwood Tree Capital Corp. The Company currently has no
operations and, in accordance with SFAS #7, is considered a development stage
company.
On October 4, 1996, the company issued 5,025,000 shares of its $0.001
par value common stock for services of $5,025.
NOTE 2 - ACCOUNTING POLICIES AND PROCEDURES
Accounting policies and procedures have not been determined except as
follows:
1. The Company uses the accrual method of accounting.
2. Earnings per share is computed using the weighted average number of
common shares outstanding.
3. The Company has not yet adopted any policy regarding payment of
dividends. No dividends have been paid since inception.
NOTE 3 - GOING CONCERN
The Company's financial statements are prepared using the generally
accepted accounting principles applicable to a going concern, which contemplates
the realization of assets and liquidation of liabilities in the normal course of
business. However, the Company has no current source of revenue. Without
realization of additional capital, it would be unlikely for the Company to
continue as a going concern. It is management's plan to seek additional capital
through a merger with an existing operating company.
NOTE 4 - WARRANTS AND OPTIONS
There are no warrants or options outstanding to issue any additional
shares of common stock.
-24-
<PAGE>
DOGWOOD TREE CAPITAL CORP.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS CONTINUED
---------------------------------------
December 31, 1998, December 31, 1997, and December 31, 1996
NOTE 5 - RELATED PARTY TRANSACTION
The Company neither owns or leases any real or personal property. Office
services are provided without charge by a director. Such costs are immaterial to
the financial statements and, accordingly, have not been reflected therein. The
officers and directors of the Company are involved in other business activities
and may, in the future, become involved in other business opportunities. If a
specific business opportunity becomes available, such persons may face a
conflict in selecting between the Company and their other business interests.
The Company has not formulated a policy for the resolution of such conflicts.
-25-
<PAGE>
ENTREPORT CORPORATION
(A Development Stage Company)
BALANCE SHEET
-------------
<TABLE>
<CAPTION>
May 31, 1999 December 31, 1998
-------------------------- --------------------------
Assets (Unaudited) (Audited)
<S> <C> <C>
Current Assets
Cash and Cash Equivalents $ 372,981
Notes Receivable 10,000
Prepaid Expenses and Other Assets 9,000
-------------------------- --------------------------
Total Current Assets 391,981 -0-
Equipment, Net 79,950 -0-
Deposits and Prepaid Rent 25,621 -0-
Intangible Assets 2,800 -0-
--------------------------
$ 500,352 -0-
========================== ==========================
Liabilities and Stockholders' Equity
Current Liabilities
Accounts Payable and Accrued Expenses $ 20,496
Convertible Notes 595,000
Other Current Liabilities 800 800
------------------------- --------------------------
Total Current Liabilities 616,296 800
Stockholders' Equity
Common Stock, $.001 par value; authorized 50,000,000 shares;
issued and outstanding: May 31,1999: 6,015,000; December
31, 1998: 5,025,000
6,015 5,025
Additional Paid-In Capital -0-
Accumulated Deficit (121,959) (5,825)
------------------------- --------------------------
(115,944) -0-
-------------------------
$ 500,352 -0-
========================= ==========================
</TABLE>
-26-
<PAGE>
ENTREPORT CORPORATION
(A Development Stage Company)
STATEMENTS OF OPERATIONS
------------------------
<TABLE>
<CAPTION>
Cumulative from
Five Months Ended Year Ended Inception of Operations
May 31, December 31, October 4, 1996 to May
1999 1998 31,
1999
------------------- ---------------- ------------------------
<S> <C> <C> <C>
Revenue $ 21,414 $ -0- $ -21,414
Less Discounts -0- -0- -0-
------------------ ---------------- -----------------------
Net Revenue $ 21,414 $ -0- $ 21,414
------------------ ---------------- -----------------------
Operating Expenses:
Operating Expenses $ 141,457 $ 800 $ 142,257
------------------ ---------------- -----------------------
Loss from Operations $ (120,043) $ (800) $ (120,843)
Financial Income (Expense):
Interest Income $ -0- $ -0- $ -0-
Interest Expense -0- -0- -0-
------------------ ---------------- -----------------------
$ -0- $ -0- $ -0-
------------------ ---------------- -----------------------
Net (Loss) Before Income Taxes $ $(120,043) $ (800) $ (120,843)
------------------ ---------------- -----------------------
Tax Expense $ -0- $ -0- $ -0-
------------------ ---------------- -----------------------
Net (Loss) $ (120,043) $ (800) $ (120,843)
================== ================ =======================
</TABLE>
-27-
<PAGE>
ENTREPORT CORPORATION
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
------------------------
<TABLE>
<CAPTION>
Five Months Ended May 31, Cumulative from Inception
of Operation October 4,
1996 to May 31,
----------------------------------------
1999 1998 1999
------------------ ---------------- -------------------------
<S> <C> <C> <C>
Cash Flows from Operating Activities
Net (Loss) $ (120,043) $ -0- $ (120,043)
Adjustment to Reconcile Net (Loss) to Operating
Activities:
Depreciation and Amortization -0- -0- -0-
Loss on Sale of Securities Available for Sale -0- -0- -0-
Issuance of common stock options and warrants -0- -0- -0-
For Licensing and Consulting Fees and Compensation -0- -0- -0-
Changes in Assets and Working Capital Components:
(Increase) Decrease in:
Prepaid Expenses (8,210) $ -0- (8,210)
Notes Receivable (10,000) -0- (10,000)
Increase (Decrease) in:
Accounts Payable and Accrued Expenses 20,496 -0- 20,496
Convertible Notes 595,000 -0- 595,000
------------------ ---------------- ---------------------
Net Cash (Used in) Operating Activities $ 477,243 $ -0- $ 477,243
Cash Flows from Investing Activities
Increase in Deposits $ (25,621) $ -0- $ (25,621)
Purchase of Equipment and Furniture (79,950) -0- (79,950)
Intangible Assets (2,800) -0- (2,800)
------------------ ---------------- ---------------------
Net Cash Provided by (Used in) Investing Activities $ (108,371) $ -0- $ (108,371)
Cash Flows from Financing Activities
Net Proceeds from Retirement of Common Stock $ (4,109) $ -0- $ (4,109)
------------------ ---------------- ---------------------
Net Cash Provided by Financing Activities $ (4,109) $ -0- $ (4,109)
------------------ ---------------- ---------------------
Net Increase (Decrease) in Cash and Cash Equivalents $ 372,981 $ -0- $ 372,981
================== ================ =====================
</TABLE>
-28-
<PAGE>
ENTREPORT CORPORATION
(A Development Stage Company)
NOTES TO FINANCIAL INFORMATION
------------------------------
1. Basis of Presentation
These financial statements of EntrePort Corporation (the "Company") do
not include all of the information and footnotes required by generally accepted
accounting principles for complete financial statements. In the opinion of
management, the financial information set forth in the accompanying financial
statements reflect all adjustments necessary for a fair statement of the periods
reported, and all such adjustments were of a normal and recurring nature.
Interim results are not necessarily indicative of results for a full year.
a. Private Placement
In March and April of 1999, the Company commenced a private placement
of convertible notes with conversion rates of $2.00 to $3.00 per share. As of
May 31, 1999, the Company had issued $595,000 of convertible notes.
b. Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates.
c. Authorized Capital
As of May 31, 1999, the Company was authorized to issue 50,000,000
shares of common stock of which 6,249,167 shares were outstanding.
d. Plan of Operations
The Company is engaged in the business of developing niche portals for
Internet communities. Currently, the Company has two test sites that have
generated $21,414 of revenue for the period ended May 31, 1999. The Company
anticipates eliminating the test sites and to develop new sites that will
require considerable working capital.
As of May 31, 1999, the Company had working capital of ($235,105) of
which $595,000 are short term convertible notes. The notes were converted to
234,167 shares of stock of the Company during June 1999.
-29-
<PAGE>
ENTREPORT CORPORATION
(A Development Stage Company)
NOTES TO FINANCIAL INFORMATION
------------------------------
e. Employment Agreements
During the fiscal year 1999, the Company entered into employment
agreements with key management. Mr. D'Arcangelo, Chairman of the Company,
executed a three year employment agreement with an annual salary of $100,000.
Below are listed other key individuals with annual salary.
<TABLE>
<CAPTION>
Name Term Salary
---------------------- ------------------------------- -------------------------------
<S> <C> <C>
William A. Shue 3 Years $100,000
Kym Yancey 3 Years $ 90,000
Rick Kurtz 2 Years $220,000
</TABLE>
f. Common Stock
During the fiscal year 1999, the Company retired 4,410,000 shares of
Company stock from an original founder of the Company. Additionally, the
Company issued new stock to various individuals and key employees. Such shares
issued amounted to outstanding of 6,249,167.
g. Employee Stock Option Plan
During the fiscal year 1999, the Company adopted an Employee Stock
Option Plan ("ESOP") reserving 2,000,000 shares of common stock for key
employees and individuals. As of May 31, 1999, the Company has granted 950,000
options with various vesting periods, to purchase shares of common stock of the
Company at prices of $1.00 to $3.50 per share.
h. Year 2000 Compliance
The Company utilized computer software programs and operating systems,
including applications used in operations. The Company has appointed a Year
2000 Committee to perform an audit to assess the scope of the company's risks
and bring its applications into compliance. The Committee is currently in the
process of completing its identification of applications that are not Year 2000
compliant, if any. In addition, the Company has begun to ask its vendors about
-30-
<PAGE>
ENTREPORT CORPORATION
(A Development Stage Company)
NOTES TO FINANCIAL INFORMATION
------------------------------
their progress in identifying and addressing problems that their computer
systems may face in correctly processing date information related to the Year
2000.
The Company is in the early stages of conducting its Year 2000 audit
and therefore is unable to make a reasonable estimate of the costs associated
with Year 2000 compliance. Accordingly, no assurance can be given that any or
all of the Company's or third party systems are or will be Year 2000 compliant
or that the costs required to address the Year 2000 issue or that the impact of
the Company's failure to achieve substantial Year 2000 compliance will not have
a material adverse effect on the Company's business, financial condition or
results of operations.
i. Subsequent Event.
On July 20, 1999, the Company purchased 2.5% of SportsWare
Technologies, Inc. ("STI") for $200,000. The Company also received an option to
purchase all the remaining outstanding shares of STI for $8,000,000; $5,500,000
in cash and $2,500,000 in the Company's common stock. Such option expires
January 20, 2000.
-31-
<PAGE>
PART III
Item 1. Index To Exhibits Page
----
3.1 Certificate of Incorporation of the Company
3.2 Bylaws of the Company
3.3 Certificate of Amendment to Articles of Incorporation
4.1 Specimen of Common Stock Certificate
10.1 EntrePort Corporation 1999 Stock Option Plan
10.2 Stock Purchase and Option Agreement between the Company and SportsWare
Technologies, Inc.
27.1 Financial Data Schedule
-32-
<PAGE>
Signatures
In accordance with Section 12 of the Securities Exchange Act of 1934, the
registrant caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized.
ENTREPORT CORPORATION,
a Florida corporation
Date: August 2, 1999 By: /s/ William A. Shue
--------------------
William A. Shue, Chief Executive Officer
-33-
<PAGE>
Exhibit 3.1
ARTICLES OF INCORPORATION
OF
DOGWOOD TREE CAPITAL CORP.
The undersigned, desiring to form a corporation (the "Corporation") under
the laws of Florida, hereby adopts the following Articles of Incorporation:
ARTICLE I
CORPORATE NAME
The name of the Corporation is Dogwood Tree Capital Corp.
ARTICLE II
PURPOSE
The Corporation shall be organized for any and all purposes authorized
under the laws of the state of Florida.
ARTICLE III
PERIOD OF EXISTENCE
The period during which the Corporation shall continue is perpetual.
ARTICLE IV
SHARES
The capital stock of this corporation shall consist of 50,000,000 shares of
common stock, $.001 par value.
ARTICLE V
PLACE OF BUSINESS
The initial address of the principal place of business of this corporation
in the State of Florida shall be 1428 Brickell Avenue, 8th Floor, Miami, FL
33131. The Board of Directors may at any time and from time to time move the
principal office of this corporation.
ARTICLE VI
DIRECTORS AND OFFICERS
The business of this corporation shall be managed by its Board of
Directors. The number of such directors shall be not be less than one (1) and,
subject to such minimum may be increased or decreased from time to time in the
manner provided in the By-Laws.
1
<PAGE>
The number of persons constituting the initial Board of Directors shall be 1.
The Board of Directors shall be elected by the Stockholders of the corporation
at such time and in such manner as provided in the By-Laws. The name and
addresses of the initial Board of Directors and officers are as follows:
Eric P. Littman President/Director
1428 Brickell Avenue, 8th Floor
Miami, FL 331311
ARTICLE VII
DENIAL OF PREEMPTIVE RIGHTS
No shareholder shall have any right to acquire shares or other securities
of the Corporation except to the extent such right may be granted by an
amendment to these Articles of Incorporation or by a resolution of the board of
Directors.
ARTICLE VIII
AMENDMENT OF BYLAWS
Anything in these Articles of Incorporation, the Bylaws, or the Florida
Corporation Act notwithstanding, bylaws shall not be adopted, modified, amended
or repealed by the shareholders of the Corporation except upon the affirmative
vote of a simple majority vote of the holders of all the issued and outstanding
shares of the corporation entitled to vote thereon.
ARTICLE IX
SHAREHOLDERS
9.1 Inspection of Books. The board of directors shall make reasonable
------------------------
rules to determine at what times and places and under what conditions the books
of the Corporation shall be open to inspection by shareholders or a duly
appointed representative of a shareholder.
9.2 Control Share Acquisition. The provisions relating to any control
------------------------------
share acquisition as contained in Florida Statutes now, or hereinafter amended,
and any successor provision shall not apply to the Corporation.
9.3 Quorum. The holders of shares entitled to one-third of the votes at a
-----------
meeting of shareholder's shall constitute a quorum.
9.4 Required Vote. Acts of shareholders shall require the approval of
------------------
holders of 50.01% of the outstanding votes of shareholders.
2
<PAGE>
ARTICLE X
LIABILITY AND INDEMNIFICATION OF DIRECTORS AND OFFICERS
To the fullest extent permitted by law, no director or officer of the
Corporation shall be personally liable to the Corporation or its shareholders
for damages for breach of any duty owed to the Corporation or its shareholders.
In addition, the Corporation shall have the power, in its By-Laws or in any
resolution of its stockholders or directors, to undertake to indemnify the
officers and directors of this corporation against any contingency or peril as
may be determined to be in the best interests of this corporation, and in
conjunction therewith, to procure, at this corporation's expense, policies of
insurance.
ARTICLE XI
SUBSCRIBER
The name and address of the person signing these Articles of Incorporation
as subscriber is:
Eric P. Littman
1428 Brickell Avenue, 8th Floor
Miami, FL 33131
ARTICLE XII
CONTRACTS
No contract or other transaction between this corporation and any person,
firm or corporation shall be affected by the fact that any officer or director
of this corporation is such other party or is, or at some time in the future
becomes, an officer, director or partner of such other contracting party, or has
now or hereafter a direct or indirect interest in such contract.
ARTICLE XIII
RESIDENT AGENT
The name and address of the initial resident agent of this corporation is:
Eric P. Littman
1428 Brickell Avenue
8th Floor
Miami, FL 33131
3
<PAGE>
IN WITNESS WHEREOF, I have hereunto subscribed to and executed these
Articles of Incorporation this on September 25, 1996.
/s/ Eric P. Littman,
-------------------------------
Eric P. Littman, Subscriber
Subscribed and Sworn on September 25, 1996
Before me:
/s/ Isabel Cantera
- -----------------------------------
Isabel Cantera, Notary Public
[STAMP APPEARS HERE]
My Commission Expires
4
<PAGE>
CERTIFICATE DESIGNATING PLACE OF BUSINESS OR
DOMICILE FOR SERVICE OF PROCESS WITHIN THIS STATE
NAMING THE AGENT UPON WHOM PROCESS MAY BE SERVED
Having been named to accept service of process for Dogwood Tree Capital
Corp. at the place designated in the Articles of Incorporation, the undersigned
is familiar with and accepts the obligations of that position pursuant to F.S.
607.0501(3).
/s/ Eric P. Littman
--------------------------------
Eric P. Littman
<PAGE>
Exhibit 3.2
BY-LAWS
of
DOGWOOD TREE CAPITAL CORP.
ARTICLE 1. MEETINGS OF SHAREHOLDERS
-----------------------------------
Section 1. Annual Meeting. The annual meeting of the shareholders of this
-------------------------
corporation shall be held on the 30th day of June of each year or at such other
time and place designated by the Board of Directors of the corporation. Business
transacted at the annual meeting shall include the election of directors of the
corporation. If the designated day shall fall on a Sunday or legal holiday, then
the meeting shall be held on the first business day thereafter.
Section 2. Special Meetings. Special meetings of the shareholders shall be
---------------------------
held when directed by the President or the Board of Directors, or when requested
in writing by the holders of not less than 10% of all the shares entitled to
vote at the meeting. A meeting requested by shareholders shall be called for a
date not less than 3 nor more than 30 days after the request is made, unless the
shareholders requesting the meeting designate a later date. The call for the
meeting shall be issued by the Secretary, unless the President, Board of
Directors, or shareholders requesting the meeting shall designate another person
to do so.
Section 3. Place. Meetings of shareholders shall be held at the principal
----------------
place of business of the corporation or at such other place as may be designated
by the Board of
1
<PAGE>
Directors.
Section 4. Notice. Written notice stating the place, day and hour of the
-----------------
meeting and in the case of a special meeting, the purpose or purposes for which
the meeting is called, shall be delivered not less than 3 nor more than 30 days
before the meeting, either personally or by first class mail, or by the
direction of the President, the Secretary or the officer or persons calling the
meeting to each shareholder of record entitled to vote at such meeting. If
mailed, such notice shall be deemed to be delivered when deposited in the United
States mail addressed to the shareholder at his address as it appears on the
stock transfer books of the corporation, with postage thereon prepaid.
Section 5. Notice of Adjourned Meeting. When a meeting is adjourned to
--------------------------------------
another time or place, it shall not be necessary to give any notice of the
adjourned meeting if the time and place to which the meeting is adjourned are
announced at the meeting at which the adjournment is taken, and at the adjourned
meeting any business may be transacted that might have been transacted on the
original date of the meeting. If, however, after the adjournment the Board of
Directors fixes a new record date for the adjourned meeting, a notice of the
adjourned meeting shall be given as provided in this Article to each shareholder
of record on a new record date entitled to vote at such meeting.
Section 6. Shareholder Quorum and Voting. A majority of the shares entitled
----------------------------------------
to vote, represented in person or by proxy, shall constitute a quorum at a
meeting of shareholders. If a quorum is present, the affirmative vote of a
majority of the shares represented at the meeting and entitled to vote on the
subject matter shall be the act of the shareholders unless otherwise provided by
law.
Section 7. Voting of Shares. Each outstanding share shall be entitled to
---------------------------
one vote
2
<PAGE>
on each matter submitted to a vote at a meeting of shareholders.
Section 8. Proxies. A shareholder may vote either in person or by proxy
------------------
executed in writing by the shareholder or his duly authorized attorney-in-fact.
No proxy shall be valid after the duration of 11 months from the date thereof
unless otherwise provided in the proxy.
Section 9. Action by Shareholders Without a Meeting. Any action required by
---------------------------------------------------
law or authorized by these by-laws or the Articles of Incorporation of this
corporation or taken or to be taken at any annual or special meeting of
shareholders, or any action which may be taken at any annual or special meeting
of shareholders, may be taken without a meeting, without prior notice and
without a vote, if a consent in writing, setting forth the action so taken,
shall be signed by the holders of outstanding stock having not less than the
minimum number of votes that would be necessary to authorize or take such action
at a meeting at which all shares entitled to vote thereon were present and
voted.
ARTICLE II. DIRECTORS
---------------------
Section 1. Function. All corporate powers shall be exercised by or under
-------------------
the authority of, and the business and affairs of the corporation shall be
managed under the direction of, the Board of Directors.
Section 2. Qualification. Directors need not be residents of this state or
------------------------
shareholders of this corporation.
Section 3. Compensation. The Board of Directors shall have authority to fix
-----------------------
the compensation of directors.
Section 4. Presumption of Assent. A director of the corporation who is
--------------------------------
present at a meeting of the Board of Directors at which action on any corporate
matter is taken shall
3
<PAGE>
be presumed to have assented to the action taken unless he votes against such
action or abstains from voting in respect thereto because of an asserted
conflict of interest.
Section 5. Number. This corporation shall have a minimum of 1 director but
-----------------
no more than 7.
Section 6. Election and Term. Each person named in the Articles of
----------------------------
Incorporation as a member of the initial Board of Directors shall hold office
until the next shareholder meeting or until his earlier resignation, removal
from office or death. If no shareholder meeting takes place, each director shall
continue serve until such meeting takes place. At each shareholder the
shareholders shall elect directors to hold office until the next succeeding
shareholder meeting. Each director shall hold office for a term for which he is
elected and until his successor shall have been elected and qualified or until
his earlier resignation, removal from office or death.
Section 7. Vacancies. Any vacancy occurring in the Board of Directors,
--------------------
including any vacancy created by reason of an increase in the number of
Directors, may be filled by the affirmative vote of a majority of the remaining
directors though less than a quorum of the Board of Directors. A director
elected to fill a vacancy shall hold office only until the next election of
directors by the shareholders.
Section 8. Removal of Directors. At a meeting of shareholders called
-------------------------------
expressly for that purpose, any director or the entire Board of Directors may be
removed, with or without cause, by a vote of the holders of a majority of the
shares then entitled to vote at an election of directors.
Section 9. Quorum and Voting. A majority of the number of directors fixed
----------------------------
by these by-laws shall constitute a quorum for the transaction of business. The
act of a majority of
4
<PAGE>
the directors present at a meeting at which a quorum is present shall be the act
of the Board of Directors.
Section 10. Executive and Other Committees. The Board of Directors, by
------------------------------------------
resolution adopted by a majority of the full Board of Directors, may designate
from among its members an executive committee and one or more other committees
each of which, to the extent provided in such resolution shall have and may
exercise all the authority of the Board of Directors, except as is provided by
law.
Section 11. Place of Meeting. Regular and special meetings of the Board of
----------------------------
Directors shall be held at the principal place of business of the corporation or
as otherwise determined by the Directors.
Section 12. Time, Notice and Call of Meetings. Regular meetings of the
---------------------------------------------
Board of Directors shall be held without notice on the first Monday of the
calendar month two (2) months following the end of the corporation's fiscal, or
if the said first Monday is a legal holiday, then on the next business day.
Written notice of the time and place of special meetings of the Board of
Directors shall be given to each director by either personal delivery, telegram
or cablegram at least three (3) days before the meeting or by notice mailed to
the director at least 3 days before the meeting.
Notice of a meeting of the Board of Directors need not be given to any
director who signs a waiver of notice either before or after the meeting.
Attendance of a director at a meeting shall constitute a waiver of notice of
such meeting and waiver of any and all objections to the place of the meeting,
the time of the meeting, or the manner in which it has been called or convened,
except when a director states, at the beginning of the meeting, any objection to
the transaction of business because the meeting is not lawfully
5
<PAGE>
called or convened.
Neither the business to be transacted at, nor the purpose, of any regular
or special meeting of the Board of Directors need be specified in the notice of
waiver of notice of such meeting. A majority of the directors present, whether
or not a quorum exists, may adjourn any meeting of the Board of Directors to
another time and place. Notice of any such adjourned meeting shall be given to
the directors who were not present at the time of the adjournment, and unless
the time and place of adjourned meeting are announced at the time of the
adjournment, to the other directors. Meetings of the Board of Directors may be
called by the chairman of the board, by the president of the corporation or by
any two directors.
Members of the Board of Directors may participate in a meeting of such
board by means of a conference telephone or similar communications equipment by
means of which all persons participating in the meeting can hear each other at
the same time. Participation by such means shall constitute presence in person
at a meeting.
Section 13. Action Without a Meeting. 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 so to be taken, is signed by
such number of the directors, or such number of the members of the committee, as
the case may be, as would constitute the requisite majority thereof for the
taking of such actions, is filed in the minutes of the proceedings of the board
or of the committee. Such actions shall then be deemed taken with the same force
and effect as though taken at a meeting of such board or committee whereat all
members were present and voting throughout and those who signed such
6
<PAGE>
action shall have voted in the affirmative and all others shall have voted in
the negative. For informational purposes, a copy of such signed actions shall be
mailed to all members of the board or committee who did not sign said action,
provided however, that the failure to mail said notices shall in no way
prejudice the actions of the board or committee.
ARTICLE III. OFFICERS
---------------------
Section 1. Officers. The offices of this corporation shall consist of a
-------------------
president, a secretary and a treasurer, each of whom shall be elected by the
Board of Directors. Such other officers and assistant officers and agents as may
be deemed necessary may be elected or appointed by the Board of Directors from
time to time. Any two or more officer may be held by the same person.
Section 2. Duties. The officers of this corporation shall have the
-----------------
following duties:
The President shall be the chief executive officer of the corporation,
shall have general and active management of the business and affairs of the
corporation subject to the directions of the Board of Directors, and shall
preside at all meetings of the shareholders and Board of Directors.
The Secretary shall have custody of, and maintain, all of the
corporate records except the financial records; shall record the minutes of all
meetings of the shareholders and Board of directors, send all notices of all
meetings and perform such other duties as may be prescribed by the Board of
Directors or the President.
The Treasurer shall have custody of all corporate funds and financial
records, shall keep full and accurate accounts of receipts and disbursements and
render accounts thereof at the annual meetings of shareholders and whenever else
required by the Board
7
<PAGE>
of Directors or the President, and shall perform such other duties as may be
prescribed by the Board of Directors or the President.
Section 3. Removal of Officers. An officer or agent elected or appointed by
------------------------------
the Board of Directors may be removed by the board whenever in its judgment the
best interests of the corporation will be served thereby. Any vacancy in any
office may be filed by the Board of Directors.
ARTICLE IV. STOCK CERTIFICATES
------------------------------
Section 1. Issuance. Every holder of shares in this corporation shall be
-------------------
entitled to have a certificate representing all shares to which he is entitled.
No certificate shall be issued for any share until such share is fully paid.
Section 2. Form. Certificates representing shares in this corporation shall
---------------
be signed by the President or Vice President and the Secretary or an Assistant
Secretary and may be sealed with the seal of this corporation or a facsimile
thereof.
Section 3. Transfer of Stock. The corporation shall register a stock
----------------------------
certificate presented to it for transfer if the certificate is properly endorsed
by the holder of record or by his duly authorized attorney.
Section 4. Lost, Stolen or Destroyed Certificates. If the shareholder shall
-------------------------------------------------
claim to have lost or destroyed a certificate of shares issued by the
corporation, a new certificate shall be issued upon the making of an affidavit
of that fact by the person claiming the certificate of stock to be lost, stolen
or destroyed, and, at the discretion of the Board of Directors, upon the deposit
of a bond or other indemnity in such amount and with such sureties, if any, as
the board may reasonably require.
8
<PAGE>
ARTICLE V. BOOKS AND RECORDS
----------------------------
Section 1. Books and Records. This corporation shall keep correct and
----------------------------
complete books and records of accounts and shall keep minutes of the proceedings
of its shareholders, Board of Directors and committee of directors.
This corporation shall keep at its registered office, or principal place of
business a record of its shareholders, giving the names and addresses of all
shareholders and the number of the shares held by each.
Any books, records and minutes may be in written form or in any other form
capable of being converted into written form within a reasonable time.
Section 2. Shareholders' Inspection Rights. Any person who shall have been
------------------------------------------
a holder of record of shares of voting trust certificates thereof at least six
months immediately preceding his demand or shall be the holder of record of, or
the holder of record of voting trust certificates for, at least five percent of
the outstanding shares of the corporation, upon written demand stating the
purpose thereof, shall have the right to examine, in person or by agent or
attorney, at any reasonable time or times, for any proper purpose its relevant
books and records of accounts, minutes and records of shareholders and to make
extracts therefrom.
Section 3. Financial Information. Not later than four months after the
--------------------------------
close of each fiscal year, this corporation shall prepare a balance sheet
showing in reasonable detail the financial condition of the corporation as of
the close of its fiscal year, and a profit and loss statement showing the
results of the operations of the corporation during the fiscal year.
Upon the written request of any shareholder or holder of voting trust
certificates for shares of the corporation, the corporation shall mail to each
shareholder or holder of voting
9
<PAGE>
trust certificates a copy of the most recent such balance sheet and profit and
loss statement. The balance sheets and profit and loss statements shall be filed
in the registered office of the corporation in this state, shall be kept for at
least five years, and shall be subject to inspection during business hours by
any shareholder or holder of voting trust certificates, in person or by agent.
ARTICLE VI. DIVIDENDS
---------------------
The Board of Directors of this corporation may, from time to time, declare
and the corporation may pay dividends on its shares in cash, property or its own
shares, except when the corporation is insolvent or when the payment thereof
would render the corporation insolvent subject to the provisions of the Florida
Statutes.
ARTICLE VII. CORPORATE SEAL
---------------------------
The Board of Directors shall provide a corporate seal which shall be in
circular form.
ARTICLE VIII. AMENDMENT
-----------------------
These by-laws may be altered, amended or repealed, and new by-laws may be
adopted by the majority vote of the directors of the corporation.
10
<PAGE>
EXHIBIT 3.3
ARTICLES OF AMENDMENT
TO
ARTICLES OF INCORPORATION
OF
DOGWOOD TREE CAPITAL CORP.
Pursuant to the provisions of Section 607.1006, Florida Statutes, this
Florida profit corporation adopts the following articles of amendment to its
Articles of Incorporation:
FIRST: Amendment adopted: ARTICLE I is amended in its entirety to read as
follows:
"CORPORATE NAME
The name of the Corporation is EntrePort Corporation."
SECOND: The date of the amendment's adoption is: March 24, 1999.
THIRD: Adoption of Amendment:
The amendment was approved by the shareholders. The number of votes cast
for the amendment was sufficient for approval.
Signed this 24th day of March, 1999.
/s/ David J. D'Arcangelo
-------------------------------------
DAVID J. D'ARCANGELO, President
<PAGE>
EXHIBIT 4.1
NUMBER SHARES
ENTREPORT CORPORATION
Incorporated Under the Laws of the State of Nevada
50,000,000 Authorized Shares $0.001 par value
_________________
CUSIP 126147 10 7
-----------------
SEE REVERSE
FOR CERTAIN DEFINITIONS
THIS CERTIFIES THAT
Is The Owner of
FULLY PAID AND NON-ASSESSABLE SHARES OF $0.001 PAR VALUE COMMON STOCK OF
ENTREPORT CORPORATION
transferable only on the books of the Company in person or by duly authorized
attorney upon surrender of this Certificate properly endorsed. This Certificate
is not valid unless countersigned by the Transfer Agent and Registrar.
IN WITNESS WHEREOF, the said Company has caused this Certificate to be
executed by the facsimile signatures of its duly authorized officers and to be
sealed with the facsimile seal of the Company.
Dated:
SECRETARY PRESIDENT
[SEAL APPEARS HERE]
COUNTERSIGNED AND REGISTERED
Interwest Transfer Co, Inc.
1981 E. 4800 so., Suite 100
Salt Lake City, UT 84117
By ____________________________________________
Transfer Agent & Registrar Signature
<PAGE>
ENTREPORT CORPORATION
TRANSFER FEE: $20.00 PER NEW CERTIFICATE ISSUED
The following abbreviations when used in the inscription on the face of
this certificate, shall be construed as though they were written out in full
according to applicable laws of regulations:
<TABLE>
<S> <C>
TEN COM - as tenants in common UNIF GIFT MIN ACT -........Custodian........
TEN ENT - as tenants by the entireties (Cust) (Minor)
JT TEN - as joint tenants with right of under Uniform Gifts to Minors
survivorship and not as tenants Act.......................
in common (State)
</TABLE>
Additional abbreviations may also be used though not in the above list
________________________________________________________________________________
For Value Received, ______________________ hereby sell, assign and transfer unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
___________________________________
___________________________________
________________________________________________________________________________
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS, INCLUDING ZIP CODE, OF ASSIGNEE)
________________________________________________________________________________
________________________________________________________________________________
__________________________________________________________________________Shares
of the Common Stock represented by the within Certificate, and do hereby
irrevocably constitute and appoint
________________________________________________________________attorney-in-fact
to transfer the said stock on the books of the within-named Corporation, with
full power of substitution in the premises.
Dated ____________________
____________________________________________________________
____________________________________________________________
NOTICE: THE SIGNATURE(S) TO THIS ASSIGNMENT MUST CORRESPOND
WITH THE NAME(S) AS WRITTEN UPON THE PAGE OF THE
CERTIFICATE IN EVERY PARTICULAR, WITHOUT ALTERATION
OR ENLARGEMENT OR ANY CHANGE WHATSOEVER.
Signature(s) Guaranteed:
______________________________
The signature(s) must be guaranteed by an eligible guarantor institution (Banks,
Stockbrokers, Savings and Loan Associations and Credit Unions with membership in
an approved signature guarantee Medallion Program), pursuant to S.E.C. Rule
17Ad-15.
<PAGE>
EXHIBIT 10.1
ENTREPORT CORPORATION
1999 STOCK OPTION PLAN
1. PURPOSE. The purpose of the EntrePort Corporation 1999 Stock Option Plan
-------
(the "Plan") is to strengthen EntrePort Corporation, a Florida corporation
("Corporation"), by providing to employees, officers, directors, consultants and
independent contractors of the Corporation or any of its subsidiaries added
incentive for high levels of performance and unusual efforts to increase the
earnings of the Corporation. The Plan seeks to accomplish this purpose by
enabling specified persons to purchase shares of the common stock of the
Corporation, $.001 par value, thereby increasing their proprietary interest in
the Corporation's success and encouraging them to remain in the employ or
service of the Corporation.
2. CERTAIN DEFINITIONS. As used in this Plan, the following words and
-------------------
phrases shall have the respective meanings set forth below, unless the context
clearly indicates a contrary meaning:
2.1 "Board of Directors." The Board of Directors of the Corporation.
------------------
2.2 "Committee." The Committee which shall administer the Plan shall
---------
consist of the entire Board of Directors.
2.3 "Fair Market Value Per Share." The fair market value per share of the
---------------------------
Shares as determined by the Committee in good faith. The Committee is authorized
to make its determination as to the fair market value per share of the Shares on
the following basis: (i) if the Shares are traded only otherwise than on a
securities exchange and are not quoted on the National Association of Securities
Dealers' Automated Quotation System ("NASDAQ"), but are quoted on the bulletin
board or in the "pink sheets" published by the National Daily Quotation Bureau,
either (a) the average of the mean between the average daily bid and average
daily asked prices of the Shares during the thirty (30) day period preceding the
date of grant of an Option, as quoted on the bulletin board or in the "pink
sheets" published by the National Daily Quotation Bureau, or (b) the last sale
price on the date of grant, as published on the bulletin board or in such "pink
sheets;" (ii) if the Shares are traded on a securities exchange or on the NASDAQ
either (a) the average of the daily closing prices of the Shares during the ten
(10) trading days preceding the date of grant of an Option, as quoted in the
Wall Street Journal, or (b) the daily closing price of the Shares on the date of
grant of an Option, as quoted in the Wall Street Journal; or (iii) if the Shares
are traded only otherwise than as described in (i) or (ii) above, or if the
Shares are not publicly traded, the value determined by the Committee in good
faith based upon the fair market value as determined by completely independent
and well qualified experts.
2.4 "Incentive Stock Option." An Option intended to qualify for treatment
----------------------
as an incentive stock option under Code Sections 421 and 422, and designated as
an Incentive Stock Option.
2.5 "Nonqualified Option." An Option not qualifying as an Incentive Stock
-------------------
Option.
-1-
<PAGE>
2.6 "Option." A stock option granted under the Plan.
------
2.7 "Optionee." The holder of an Option.
--------
2.8 "Option Agreement." The document setting forth the terms and
----------------
conditions of each Option.
2.9 "Shares." The shares of common stock $.001 par value of the
------
Corporation.
2.10 "Code." The Internal Revenue Code of 1986, as amended.
----
2.11 "Subsidiary." Any corporation of which fifty percent (50%) or more
----------
of total combined voting power of all classes of stock of such corporation is
owned by the Corporation or another Subsidiary (as so defined).
3. ADMINISTRATION OF PLAN.
----------------------
3.1 In General. This Plan shall be administered by the Committee. Any
----------
action of the Committee with respect to administration of the Plan shall be
taken pursuant to (i) a majority vote at a meeting of the Committee (to be
documented by minutes), or (ii) the unanimous written consent of its members.
3.2 Authority. Subject to the express provisions of this Plan, the
---------
Committee shall have the authority to: (i) construe and interpret the Plan,
decide all questions and settle all controversies and disputes which may arise
in connection with the Plan and to define the terms used therein; (ii)
prescribe, amend and rescind rules and regulations relating to administration of
the Plan; (iii) determine the purchase price of the Shares covered by each
Option and the method of payment of such price, individuals to whom, and the
time or times at which, Options shall be granted and exercisable and the number
of Shares covered by each Option; (iv) determine the terms and provisions of the
respective Option Agreements (which need not be identical); (v) determine the
duration and purposes of leaves of absence which may be granted to participants
without constituting a termination of their employment for purposes of the Plan;
and (vi) make all other determinations necessary or advisable to the
administration of the Plan. Determinations of the Committee on matters referred
to in this Section 3 shall be conclusive and binding on all parties howsoever
concerned. With respect to Incentive Stock Options, the Committee shall
administer the Plan in compliance with the provisions of Code Section 422 as the
same may hereafter be amended from time to time. No member of the Committee
shall be liable for any action or determination made in good faith with respect
to the Plan or any Option.
4. ELIGIBILITY AND PARTICIPATION.
-----------------------------
4.1 In General. Only officers, employees and directors who are also
----------
employees of the Corporation or any Subsidiary shall be eligible to receive
grants of Incentive Stock Options. Officers, employees and directors (whether
or not they are also employees) of the Corporation or
-2-
<PAGE>
any Subsidiary, as well as consultants, independent contractors or other service
providers of the Corporation or any Subsidiary shall be eligible to receive
grants of Nonqualified Options. Within the foregoing limits, the Committee, from
time to time, shall determine and designate persons to whom Options may be
granted. All such designations shall be made in the absolute discretion of the
Committee and shall not require the approval of the stockholders. In determining
(i) the number of Shares to be covered by each Option, (ii) the purchase price
for such Shares and the method of payment of such price (subject to the other
sections hereof), (iii) the individuals of the eligible class to whom Options
shall be granted, (iv) the terms and provisions of the respective Option
Agreements, and (v) the times at which such Options shall be granted, the
Committee shall take into account such factors as it shall deem relevant in
connection with accomplishing the purpose of the Plan as set forth in Section 1.
An individual who has been granted an Option may be granted an additional Option
or Options if the Committee shall so determine. No Option shall be granted under
the Plan after April 29, 2009, but Options granted before such date may be
exercisable after such date.
4.2 Certain Limitations. In no event shall Incentive Stock Options be
-------------------
granted to an Optionee such that the sum of (i) aggregate fair market value
(determined at the time the Incentive Stock Options are granted) of the Shares
subject to all Options granted under the Plan which are exercisable for the
first time during the same calendar year, plus (ii) the aggregate fair market
value (determined at the time the options are granted) of all stock subject to
all other incentive stock options granted to such Optionee by the Corporation,
its parent and Subsidiaries which are exercisable for the first time during
such calendar year, exceeds One Hundred Thousand Dollars ($100,000). For
purposes of the immediately preceding sentence, fair market value shall be
determined as of the date of grant based on the Fair Market Value Per Share as
determined pursuant to Section 2.3.
5. AVAILABLE SHARES AND ADJUSTMENTS UPON CHANGES IN CAPITALIZATION.
---------------------------------------------------------------
5.1 Shares. Subject to adjustment as provided in Section 5.2 below, the
------
total number of Shares to be subject to Options granted pursuant to this Plan
shall not exceed 2,000,000 Shares. Shares subject to the Plan may be either
authorized but unissued shares or shares that were once issued and subsequently
reacquired by the Corporation; the Committee shall be empowered to take any
appropriate action required to make Shares available for Options granted under
this Plan. If any Option is surrendered before exercise or lapses without
exercise in full or for any other reason ceases to be exercisable, the Shares
reserved therefore shall continue to be available under the Plan.
5.2 Adjustments. As used herein, the term "Adjustment Event" means an
-----------
event pursuant to which the outstanding Shares of the Corporation are increased,
decreased or changed into, or exchanged for a different number or kind of shares
or securities, without receipt of consideration by the Corporation, through
reorganization, merger, recapitalization, reclassification, stock split, reverse
stock split, stock dividend, stock consolidation or otherwise. Upon the
occurrence of an Adjustment Event, (i) appropriate and proportionate adjustments
shall be made to the number and kind of shares and exercise price for the shares
subject to the Options which may
-3-
<PAGE>
thereafter be granted under this Plan, (ii) appropriate and proportionate
adjustments shall be made to the number and kind of and exercise price for the
shares subject to the then outstanding Options granted under this Plan, and
(iii) appropriate amendments to the Option Agreements shall be executed by the
Corporation and the Optionees if the Committee determines that such an amendment
is necessary or desirable to reflect such adjustments. If determined by the
Committee to be appropriate, in the event of an Adjustment Event which involves
the substitution of securities of a corporation other than the Corporation, the
Committee shall make arrangements for the assumptions by such other corporation
of any Options then or thereafter outstanding under the Plan. Notwithstanding
the foregoing, such adjustment in an outstanding Option shall be made without
change in the total exercise price applicable to the unexercised portion of the
Option, but with an appropriate adjustment to the number of shares, kind of
shares and exercise price for each share subject to the Option. The
determination by the Committee as to what adjustments, amendments or
arrangements shall be made pursuant to this Section 5.2, and the extent thereof,
shall be final and conclusive. No fractional Shares shall be issued under the
Plan on account of any such adjustment or arrangement.
6. TERMS AND CONDITIONS OF OPTIONS.
-------------------------------
6.1 Intended Treatment as Incentive Stock Options. Incentive Stock
---------------------------------------------
Options granted pursuant to this Plan are intended to be "incentive stock
options" to which Code Sections 421 and 422 apply, and the Plan shall be
construed and administered to implement that intent. If all or any part of an
Incentive Stock Option shall not be an "incentive stock option" subject to
Sections 421 or 422 of the Code, such Option shall nevertheless be valid and
carried into effect. All Options granted under this Plan shall be subject to the
terms and conditions set forth in this Section 6 (except as provided in Section
5.2) and to such other terms and conditions as the Committee shall determine to
be appropriate to accomplish the purpose of the Plan as set forth in Section 1.
6.2 Amount and Payment of Exercise Price.
------------------------------------
6.2.1 Exercise Price. The exercise price per Share for each Share
--------------
which the Optionee is entitled to purchase under a Nonqualified Option shall be
determined by the Committee. The exercise price per Share for each Share which
the Optionee is entitled to purchase under an Incentive Stock Option shall be
determined by the Committee but shall not be less than the Fair Market Value Per
Share on the date of the grant of the Incentive Stock Option; provided, however,
that the exercise price shall not be less than one hundred ten percent (110%) of
the Fair Market Value Per Share on the date of the grant of the Incentive Stock
Option in the case of an individual then owning (within the meaning of Code
Section 425(d)) more than ten percent (10%) of the total combined voting power
of all classes of stock of the Corporation or of its parent or Subsidiaries.
6.2.2 Payment of Exercise Price. The consideration to be paid for
-------------------------
the Shares to be issued upon exercise of an Option, including the method of
payment, shall be determined by the Committee and may consist of promissory
notes, shares of the common stock of
-4-
<PAGE>
the Corporation or such other consideration and method of payment for the Shares
as may be permitted under applicable state and federal laws.
6.3 Exercise of Options.
-------------------
6.3.1 Each Option granted under this Plan shall be exercisable at
such times and under such conditions as may be determined by the Committee at
the time of the grant of the Option and as shall be permissible under the terms
of the Plan; provided, however, in no event shall an Option be exercisable after
the expiration of ten (10) years from the date it is granted, and in the case of
an Optionee owning (within the meaning of Code Section 425(d)), at the time an
Incentive Stock Option is granted, more than ten percent (10%) of the total
combined voting power of all classes of stock of the Corporation or of its
parent or Subsidiaries, such Incentive Stock Option shall not be exercisable
later than five (5) years after the date of grant.
6.3.2 An Optionee may purchase less than the total number of Shares
for which the Option is exercisable, provided that a partial exercise of an
Option may not be for less than One Hundred (100) Shares and shall not include
any fractional shares.
6.4 Nontransferability of Options. All Options granted under this Plan
-----------------------------
shall be nontransferable, either voluntarily or by operation of law, otherwise
than by will or the laws of descent and distribution, and shall be exercisable
during the Optionee's lifetime only by such Optionee.
6.5 Effect of Termination of Employment or Other Relationship. Except as
---------------------------------------------------------
otherwise determined by the Committee in connection with the grant of
Nonqualified Options, the effect of termination of an Optionee's employment or
other relationship with the Corporation on such Optionee's rights to acquire
Shares pursuant to the Plan shall be as follows:
6.5.1 Termination for Other than Death, Disability or Cause. If an
-----------------------------------------------------
Optionee ceases to be employed by, or ceases to have a relationship with, the
Corporation for any reason other than for death, disability or cause, such
Optionee's Options shall expire not later than three (3) months thereafter.
During such three (30) month period and prior to the expiration of the Option by
its terms, the Optionee may exercise any Option granted to him, but only to the
extent such Options were exercisable on the date of termination of his
employment or relationship and except as so exercised, such Options shall expire
at the end of such three (3) month period unless such Options by their terms
expire before such date. The decision as to whether a termination for a reason
other than death, disability or cause has occurred shall be made by the
Committee, whose decision shall be final and conclusive, except that employment
shall not be considered terminated in the case of sick leave or other bona fide
leave of absence approved by the Corporation.
6.5.2 Death or Disability. If an Optionee ceases to be employed by,
-------------------
or ceases to have a relationship with, the Corporation by reason of disability
(within the meaning of Code Section 22(e)(3)) or death, such Optionee's Options
shall expire not later than six (6) months thereafter. During such six (6) month
period and prior to the expiration of the Option by its terms, the Optionee may
exercise any Option granted to him, but only to the extent such Options were
-5-
<PAGE>
exercisable on the date the Optionee ceased to be employed by, or ceased to have
a relationship with, the Corporation by reason of death or disability and except
as so exercised, such Options shall expire at the end of such six (6) month
period unless such Options by their terms expire before such date. The decision
as to whether a termination by reason of disability has occurred shall be made
by the Committee, whose decision shall be final and conclusive.
6.5.3 Termination for Cause. If an Optionee's employment by, or
---------------------
relationship with, the Corporation is terminated for cause, such Optionee's
Option shall expire immediately; provided, however, the Committee may, in its
sole discretion, within thirty (30) days of such termination, waive the
expiration of the Option by giving written notice of such waiver to the Optionee
at such Optionee's last known address. In the event of such waiver, the Optionee
may exercise the Option only to such extent, for such time, and upon such terms
and conditions as if such Optionee had ceased to be employed by, or ceased to
have a relationship with, the Corporation upon the date of such termination for
a reason other than death, disability or cause. Termination for cause shall
include termination for malfeasance or gross misfeasance in the performance of
duties or conviction of illegal activity in connection therewith or any conduct
detrimental to the interests of the Corporation. The determination of the
Committee with respect to whether a termination for cause has occurred shall be
final and conclusive.
6.6 Withholding of Taxes. As a condition to the exercise, in whole or in
--------------------
part, of any Options the Board of Directors may in its sole discretion require
the Optionee to pay, in addition to the purchase price of the Shares covered by
the Option an amount equal to any Federal, state or local taxes that may be
required to be withheld in connection with the exercise of such Option.
6.7 No Rights to Continued Employment or Relationship. Nothing contained
-------------------------------------------------
in this Plan or in any Option Agreement shall obligate the Corporation to employ
or have another relationship with any Optionee for any period or interfere in
any way with the right of the Corporation to reduce such Optionee's compensation
or to terminate the employment of or relationship with any Optionee at any time.
6.8 Time of Granting Options. The time an Option is granted, sometimes
------------------------
referred to herein as the date of grant, shall be the day the Corporation
executes the Option Agreement; provided, however, that if appropriate
resolutions of the Committee indicate that an Option is to be granted as of and
on some prior or future date, the time such Option is granted shall be such
prior or future date.
6.9 Privileges of Stock Ownership. No Optionee shall be entitled to the
-----------------------------
privileges of stock ownership as to any Shares not actually issued and delivered
to such Optionee. No Shares shall be purchased upon the exercise of any Option
unless and until, in the opinion of the Corporation's counsel, any then
applicable requirements of any laws or governmental or regulatory agencies
having jurisdiction and of any exchanges upon which the stock of the Corporation
may be listed shall have been fully complied with.
-6-
<PAGE>
6.10 Securities Laws Compliance. The Corporation will diligently
--------------------------
endeavor to comply with all applicable securities laws before any Options are
granted under the Plan and before any Shares are issued pursuant to Options.
Without limiting the generality of the foregoing, the Corporation may require
from the Optionee such investment representation or such agreement, if any, as
counsel for the Corporation may consider necessary or advisable in order to
comply with the Securities Act of 1933 as then in effect, and may require that
the Optionee agree that any sale of the Shares will be made only in such manner
as is permitted by the Committee. The Committee in its discretion may cause the
Shares underlying the Options to be registered under the Securities Act of 1933,
as amended, by the filing of a Form S-8 Registration Statement covering the
Options and Shares underlying such Options. Optionee shall take any action
reasonably requested by the Corporation in connection with registration or
qualification of the Shares under federal or state securities laws.
6.11 Option Agreement. Each Incentive Stock Option and Nonqualified
----------------
Option granted under this Plan shall be evidenced by the appropriate written
Stock Option Agreement ("Option Agreement") executed by the Corporation and the
Optionee in a form substantially the same as the appropriate form of Option
Agreement attached as Exhibit I or II hereto (and made a part hereof by this
reference) and shall contain each of the provisions and agreements specifically
required to be contained therein pursuant to this Section 6, and such other
terms and conditions as are deemed desirable by the Committee and are not
inconsistent with the purpose of the Plan as set forth in Section 1.
7. PLAN AMENDMENT AND TERMINATION.
------------------------------
7.1 Authority of Committee. The Committee may at any time discontinue
----------------------
granting Options under the Plan or otherwise suspend, amend or terminate the
Plan and may, with the consent of an Optionee, make such modification of the
terms and conditions of such Optionee's Option as it shall deem advisable;
provided that, except as permitted under the provisions of Section 5.2, the
Committee shall have no authority to make any amendment or modification to this
Plan or any outstanding Option thereunder which would: (i) increase the maximum
number of shares which may be purchased pursuant to Options granted under the
Plan, either in the aggregate or by an Optionee (except pursuant to Section
5.2); (ii) change the designation of the class of the employees eligible to
receive Incentive Stock Options; (iii) extend the term of the Plan or the
maximum Option period thereunder; (iv) decrease the minimum Incentive Stock
Option price or permit reductions of the price at which shares may be purchased
for Incentive Stock Options granted under the Plan; or (v) cause Incentive Stock
Options issued under the Plan to fail to meet the requirements of incentive
stock options under Code Section 422. An amendment or modification made
pursuant to the provisions of this Section 7 shall be deemed adopted as of the
date of the action of the Committee effecting such amendment or modification and
shall be effective immediately, unless otherwise provided therein, subject to
approval thereof (1) within twelve (12) months before or after the effective
date by stockholders of the Corporation holding not less than a majority vote of
the voting power of the Corporation voting in person or by proxy at a duly held
stockholders meeting when required to maintain or satisfy the requirements of
Code Section 422 with respect to Incentive Stock Options, and (2) by any
appropriate governmental agency. No Option may be granted during any suspension
or after termination of the Plan.
-7-
<PAGE>
7.2 Ten (10) Year Maximum Term. Unless previously terminated by the
--------------------------
Committee, this Plan shall terminate on April 29, 2009, and no Options shall be
granted under the Plan thereafter.
7.3 Effect on Outstanding Options. Amendment, suspension or termination
-----------------------------
of this Plan shall not, without the consent of the Optionee, alter or impair any
rights or obligations under any Option theretofore granted.
8. EFFECTIVE DATE OF PLAN. This Plan shall be effective as of April 29,
----------------------
1999, the date the Plan was adopted by the Board of Directors, subject to the
approval of the Plan by the affirmative vote of a majority of the issued and
outstanding Shares of common stock of the Corporation represented and voting at
a duly held meeting at which a quorum is present within twelve (12) months
thereafter. The Committee shall be authorized and empowered to make grants of
Options pursuant to this Plan prior to such approval of this Plan by the
stockholders; provided, however, in such event the Option grants shall be made
subject to the approval of both this Plan and such Option grants by the
stockholders in accordance with the provisions of this Section 8.
9. MISCELLANEOUS PROVISIONS.
------------------------
9.1 Exculpation and Indemnification. The Corporation shall indemnify and
-------------------------------
hold harmless the Committee from and against any and all liabilities, costs and
expenses incurred by such persons as a result of any act, or omission to act, in
connection with the performance of such persons' duties, responsibilities and
obligations under the Plan, other than such liabilities, costs and expenses as
may result from the gross negligence, bad faith, willful conduct and/or criminal
acts of such persons.
9.2 Governing Law. The Plan shall be governed and construed in
-------------
accordance with the laws of the State of California and the Code.
9.3 Compliance with Applicable Laws. The inability of the Corporation to
-------------------------------
obtain from any regulatory body having jurisdiction authority deemed by the
Corporation's counsel to be necessary to the lawful issuance and sale of any
Shares upon the exercise of an Option shall relieve the Corporation of any
liability in respect of the non-issuance or sale of such Shares as to which such
requisite authority shall not have been obtained.
-8-
<PAGE>
EXHIBIT I
INCENTIVE STOCK OPTION AGREEMENT
<PAGE>
EXHIBIT II
NONQUALIFIED STOCK OPTION AGREEMENT
<PAGE>
EXHIBIT 10.2
STOCK PURCHASE AND OPTION AGREEMENT
-----------------------------------
THIS STOCK PURCHASE AND OPTION AGREEMENT ("Agreement") is entered into as
of July 20, 1999, between ENTREPORT CORPORATION, a Florida corporation
("Purchaser"), SPORTSWARE TECHNOLOGIES, INC., a Texas corporation ("Seller"),
and the stockholders of Seller listed on the list of selling stockholders ("List
of Selling Stockholders") attached as Exhibit "A" hereto and who have executed
this Agreement ("Selling Stockholders").
R E C I T A L S
- - - - - - - -
A. Seller has authorized capital stock consisting of 1,000,000 shares of
common stock ("Seller Common Stock"), $.01 par value, of which 105,882 shares
are issued and outstanding.
B. The Selling Stockholders are the sole stockholders of Seller and
Exhibit A to this Agreement accurately lists all of the Seller Common Stock
owned by each Selling Stockholder
C. Seller desires to sell to Purchaser, and Purchaser desires to purchase
from Seller, up to 5,573 shares ("Shares") of Seller Common Stock, which, when
issued and conveyed to Purchaser, will represent five percent (5%) of all issued
and outstanding shares of Seller Common Stock, in accordance with the terms and
conditions contained in this Agreement.
D. As an inducement to Purchaser to enter into this Agreement and to
purchase the Shares, the Selling Stockholders desire to sell to Purchaser, and
Purchaser desires to purchase from the Selling Stockholders, an option to
purchase all of the issued and outstanding shares of Seller Common Stock held by
the Selling Stockholders for an aggregate of Eight Million Dollars
($8,000,000.00) payable Five Million, Five Hundred-Thousand Dollars
($5,500,000.00) in United States dollars and Two Million, Five Hundred-Thousand
Dollars ($2,50,000.00) in shares of Purchaser's $.001 par value common stock
based upon the average price per share of Purchaser's common stock for the most
recent thirty (30) days immediately preceding exercise of the Option, in
accordance with the terms and conditions contained in this Agreement.
A G R E E M E N T
- - - - - - - - -
In consideration of the foregoing and other good and valuable
considerations, the receipt and sufficiency of which are hereby acknowledged,
the parties hereto agree as follows:
I. PURCHASE AND SALE OF SHARES AND OPTIONS.
---------------------------------------
1.1 Agreement to Purchase and Sell Shares. Subject to the terms and
-------------------------------------
conditions of this Agreement, Seller agrees to sell, issue and deliver to
Purchaser, and the Purchaser agrees to purchase from Seller, the Shares at a
purchase price of Four Hundred Thousand Dollars ($400,000) or $71.78 per Share.
Purchaser shall purchase 2,715 of the Shares ("Initial Shares ") at the Initial
Closing (as defined below) in consideration of Purchaser's delivery of $200,000,
by
<PAGE>
wire or cashier's check. At any time commencing on August 1, 1999 and up to
but not beyond December 21, 1999, Purchaser shall purchase from Seller, at
Seller's election and upon 72 hours advance written notice ("Notice to Sell") to
Purchaser, all of the other 2,858 Shares ("Other Shares") at the purchase price
of $69.98 per Share.
1.2 Agreement to Purchase and Sell Options. Subject to the terms and
--------------------------------------
conditions of this Agreement, each Selling Stockholder, individually and not
jointly, hereby grants to Purchaser an option ("Option") to purchase all of the
Seller Common Stock owned by the Selling Stockholder. Each Option shall entitle
the Purchaser to purchase at any time, or from time to time, up to but not
beyond December 21, 1999 all or any portion of the Seller Common Stock owned by
the Selling Stockholder at an exercise price of $75.56 per share. The Options
shall otherwise be subject to the terms and conditions set forth in the form of
Option Agreement attached hereto as Exhibit B.
III. CLOSINGS
A. Initial Closing.
1. Date and Location. The initial closing ("Initial Closing") shall be
held at 2:00 p.m. on July 21, 1999, or such earlier or later date as may be
mutually agreed upon in writing by the parties hereto ("Initial Closing Date"),
at the offices of the Seller or such other location mutually acceptable to
Seller and Purchaser.
2. Delivery by Seller. At the Initial Closing, Seller shall cause to be
delivered to Purchaser the following documents, instruments and items, all of
which shall be dated on or effective as of the Initial Closing Date:
a. Certificates representing and evidencing the Initial Shares duly
endorsed by an appropriate officer of Seller;
b. Certified resolutions of Seller's officers and shareholders
authorizing the execution of this Agreement and the consummation of the
transactions contemplated hereby;
c. Option Agreements in the form attached hereto as Exhibit B duly
executed by each of the Selling Stockholders entitling the Purchaser to Purchase
all of the issued and outstanding shares of Seller Common Stock (other than the
Shares being purchased by Purchaser hereunder); and
d. All other documents reasonably requested by Purchaser.
3. Delivery by Purchaser. At the Initial Closing, Purchaser shall cause
to be delivered to Seller, as the case may be, the following documents,
instruments, and items, all of which shall be dated on or effective as of the
Initial Closing Date:
a. Cashier's check or wire transfer in the amount of $200,000;
2
<PAGE>
b. A certified resolution authorizing the execution of this
Agreement and the consummation of the transactions contemplated hereby; and
c. All other documents reasonably requested by Seller.
B. Additional Closings. Seller and Purchaser shall conduct additional
closings ("Additional Closings") from time to time hereunder for purposes of
effecting Seller's issuance and sale, and Purchaser's purchase, of the
Additional Shares. Each Additional Closing shall take place at the offices of
Seller at 10:00 a.m. on the third business day following Purchaser's receipt of
a Notice to Sell from Seller. At each of the Additional Closings, Purchaser
shall deliver to Seller the purchase price by way of cashier's check or wire
transfer and Seller shall deliver to Purchaser certificates representing and
evidencing the Other Shares duly endorsed by an appropriate officer of Seller.
C. Closing Costs. Each party shall be responsible for the payment of the
fees and expenses of the respective legal counsel involved in this transaction.
IV. SELLER'S COVENANTS, REPRESENTATIONS AND WARRANTIES
Seller makes the following covenants, representations and warranties to
Purchaser which covenants, representations and warranties shall be deemed to
have been restated on and as of the date of the Closing and the Option Closing:
A. Organization and Good Standing.
1. The Seller is a corporation duly organized, validly existing and in
good standing under the laws of Texas, and has full corporate power and
corporate authority to carry on its business as now conducted by it. Neither
the character of the properties and assets of Seller nor the nature of the
business transacted by Seller is such that it is required to qualify to do
business in any jurisdiction other than its jurisdiction of incorporation.
2. Seller has furnished to Purchaser complete and correct copies of the
Articles of Incorporation and Bylaws of Seller as in effect on the date hereof.
3. Seller has made available to Purchaser for its examination the minute
books and stock certificate books of Seller. Said minute books reflect all
resolutions adopted and all material actions expressly authorized or ratified by
the shareholders and directors of Seller. The stock certificate books reflect
all issuances, transfers and cancellations of capital stock of Seller.
4. Seller agrees that the funds received under this Agreement shall be
used for the Seller's business and no shareholders of Seller shall have any
loans or debts repaid.
B. Capitalization. The authorized capital stock of Seller consists of One
Million (1,000,000) shares of common stock, $0.01 par value, of which 105,882
shares are issued and outstanding on the date hereof. All such issued and
outstanding shares are validly issued, fully
3
<PAGE>
paid and nonassessable. There are no options, warrants, subscriptions or other
rights outstanding for the purchase of, nor any securities convertible into, the
capital stock of Seller. No shares of Seller are held as treasury stock. The
Shares issuable hereunder, when issued in accordance with the terms of this
Agreement, will be duly authorized, validly issued, fully paid and
nonassessable. The Shares will be free of any liens or encumbrances, except for
any restrictions imposed by federal or state securities laws. Until the earlier
of the termination of this Agreement in accordance with its terms or December
21, 1999, Seller shall not issue or sell any shares of the capital stock of
Seller without the prior written consent of Purchaser, which consent Purchaser
shall have the absolute right to withhold unless the proposed issuee agrees to
grant Purchaser an option to purchase the securities to be acquired from the
Seller pursuant to an Option Agreement on the terms and conditions set forth in
Exhibit B.
C. Authority of Seller. Seller has legal capacity and authority to
execute and deliver this Agreement, to perform its obligations hereunder and to
consummate the transactions provided for herein. This Agreement has been duly
executed and delivered by Seller and constitutes the valid and binding agreement
of Seller, enforceable against it in accordance with its terms, subject to
applicable bankruptcy, insolvency and other similar laws affecting the
enforceability of creditors' rights generally, general equitable principles and
the discretion of courts in granting equitable remedies.
D. Financial Statement and Tax Returns. Seller heretofore has delivered
to Purchaser Seller's tax returns for the years 1995, 1996 and 1997 ("Tax
Returns") and Seller's balance sheet and income statement for fiscal year ending
December 31, 1998, including the notes thereto ("Financial Statement"). The
Financial Statement has been prepared in accordance with generally accepted
accounting principles consistently applied throughout the period indicated and
fairly presents the financial position of Seller as of the dates thereof.
E. Absence of Certain Changes. Since December 31, 1998, there has not
been (a) any material change in the business, financial condition or operations
of Seller; (b) any damage, destruction or loss materially adversely affecting
Seller's properties and business; (c) any declaration, setting aside or payment
of any dividend, whether in cash, stock or property in respect of Seller's
common stock, or any redemption or acquisition of such stock of Seller; (d) any
entry into any Material Contract (as hereinafter defined) or any other material
commitment or transaction not in the ordinary course of business; or (e) any
change by Seller in its accounting methods or principles.
F. Contracts. Seller has provided to Purchaser a schedule of all
"Material Contracts" to which seller is a party or by which Seller is bound. As
used in this Agreement, the term "Material Contracts" means: (a) contracts or
commitments (i) entered into out of the ordinary course of business or (ii) of
material importance to the conduct of the business of Seller; (b) bonus,
incentive compensation, pension, profit sharing, stock option, group insurance,
medical reimbursement or employee welfare or benefit plans of any nature
whatsoever; (c) collective bargaining agreements or other contracts or
commitments to or with labor unions or other employee groups; (d) leases,
contracts or commitments affecting ownership of, title to, use of or any
interest in real estate; (e) employment contracts and other contracts or
agreements or
4
<PAGE>
commitments to or with the individual employees or consultants extending for a
period of more than one month from the date hereof or providing for earlier
termination only upon payment of a penalty of the equivalent thereof; (f)
contracts and commitments to which seller is a party or by which Seller is bound
which involve an annual commitment or annual payment by any party thereto of
more than Fifty Thousand Dollars ($50,000.00) individually, or which have a
fixed term extending more than twenty-four (24) months from the date hereof and
which involve an annual commitment or annual payment by any party thereto of
more than Fifty Thousand Dollars ($50,000.00) individually; (g) credit and loan
agreements, indentures, promissory notes and other documents representing
indebtedness for borrowed money; and (h) agreements and commitments with respect
to trademarks, service marks, trade names, patents, patent applications,
technical assistance, special processes, know-how, copyright or other like
items. To the best knowledge of Seller, the Material Contracts are valid and
binding contracts of Seller, enforceable in accordance with their terms (subject
to applicable bankruptcy, insolvency and other similar laws affecting the
enforceability of creditors' rights generally, general equitable principles and
the discretion of courts in granting equitable remedies), in each case to the
extent material to the assets, liabilities, results of operations, financial
condition and business of Seller. To the best knowledge of Seller, except for
events or occurrences, the consequences of which, individually or in the
aggregate, would not have a material adverse effect on the assets, liabilities,
results of operations, financial condition or business of Seller, there is not
under any of the Material Contracts any existing breach, default or event of
default by Seller or event that with notice or lapse of time or both would
constitute a breach, default or event of default by Seller, nor is Seller aware
of, and Seller has not received notice of, or made a claim with respect to, any
breach or default by any other party thereto.
G. Title to and Condition of Properties. Except as set forth on Exhibit
"C" attached hereto, Seller has good and marketable title to its properties
reflected in its Financial Statements or acquired after the date thereof (other
than properties sold or otherwise disposed of in the ordinary course of
business), and all of such properties are held free and clear of all title
defects, liens, encumbrances and restrictions.
H. Accounts Receivable. Each account receivable shown in the Financial
Statements generated since the date thereof represents a bona fide amount due
from an account debtor in the usual and ordinary course of business.
I. Outstanding Indebtedness. Seller has delivered a true and complete
schedule of all notes payable, trade payables and other indebtedness owed by
Seller, including a description of the material terms thereof and a description
of all properties or assets pledged, mortgaged or otherwise hypothecated
(voluntarily or involuntarily) as security therefor.
J. Absence of Undisclosed Liabilities. To the best knowledge of Seller,
Seller has no debt, liability, or obligation of any nature, whether accrued,
absolute, contingent, or otherwise, and whether due or to become due, that is
not reflected or reserved against in the Financial Statements, except for (a)
those that may have been incurred after the date of same and (b) those that are
not required by generally accepted accounting principles to be included in a
balance sheet. All debts, liabilities, and obligations incurred after that date
were incurred in the
5
<PAGE>
ordinary course of business and are usual and normal in amount both individually
and in the aggregate.
K. Taxes.
1. Seller has duly filed all federal, state, local and foreign tax returns
required to be filed by it, all such returns are true and correct in all
material respects, and Seller has duly paid or made adequate provision for the
payment of all taxes which are due and payable pursuant to such returns. The
Seller does currently owe the IRS Forty Thousand Dollars ($40,000.00) in back
payroll taxes and has arranged an agreed payment plan. The liability for taxes
reflected in the Financial Statements is sufficient for the payment of all
unpaid taxes, whether or not disputed, that are accrued or applicable for the
period ended as of the date thereof and for all years and periods ended prior
thereto. All deficiencies asserted as a result of any examinations by the
Internal Revenue Service or any other taxing authority have been paid, fully
settled or adequately provided for in the Financial Statements. There are no
pending claims asserted for taxes of the Seller or outstanding agreements or
waivers extending the statutory period of limitation applicable to any tax
return of Seller for any period. Seller has not filed a consent to the
application of Section 341(f) of the Internal Revenue Code of 1986, as amended
(the "Code"). Seller has provided Purchaser true, complete and correct copies
of each of the Seller's federal income tax returns for the last five years and
such other tax returns as have been requested by Purchaser.
2. All contributions due from Seller pursuant to any unemployment
insurance or workers compensation laws and all sales or use taxes which are due
or payable by Seller have been paid in full and will be so paid through the
Closing Date. Seller has withheld and paid to, or will cause to be paid to, the
appropriate taxing authorities all amounts required to be withheld from the
wages of their employees under state law and the applicable provisions of the
Code, and Seller will continue to do so with respect to all wages paid by them
through the Closing Date.
L. Legal Proceedings. Except as set forth on Exhibit "C" attached hereto,
there are no suits, actions, claims, proceedings or investigations pending or,
to the best knowledge of Seller, threatened against, relating to or involving
Seller (or any of their respective officers or directors in connection with the
business of any Seller) before any court, arbitrator or administrative or
governmental body, which, if finally determined adversely, are reasonably
likely, individually or in the aggregate, to have a material adverse effect on
the assets, liabilities, results of operations, financial condition or business
of Seller. Seller is not subject to any judgment, decree, injunction, rule or
order of any court which is reasonably likely to have a material adverse effect
on the assets, liabilities, results of operations, financial condition or
business of Seller or to cause a material limitation on Purchaser's ability to
operate the business of Seller after the Closing.
M. Labor Relations. Seller has not been a party to any contract or
agreement with a labor union or any local or subdivision thereof, nor has Seller
been charged with any unresolved unfair labor practices. Seller has no
knowledge of any present organizing activity among employees of Seller by any
union. There are no material controversies pending or, to the best
6
<PAGE>
knowledge of Seller, threatened between Seller and their employees. The best
knowledge of Seller, Seller has complied in all materiel respects with all laws
relating to the employment of labor, including any provisions thereof relating
to wages, hours, collective bargaining and the payment to social security and
similar taxes.
N. Insurance. Seller has provided a schedule of current insurance
coverages maintained by Seller including names of carriers and amounts of
coverage. Seller shall maintain such insurance through the Closing Date.
O. Compliance with Laws. To the best knowledge of Seller, Seller has not
failed to comply with any applicable law, statute, ordinance, regulation, decree
or any other legal requirement, except where the failure to comply would not
have a material adverse effect on the business, properties or financial
condition of Seller.
P. No Conflict with Other Instruments. The execution of this Agreement by
Seller, its delivery to Purchaser and the consummation of the transactions
contemplated hereby will not conflict with any provisions of the Articles of
Incorporation or Bylaws of Seller and will not conflict with or result in a
breach of any term or provision of, or constitute a default under, any
indenture, mortgage, deed of trust, contract or other agreement or instrument to
which Seller is a party or is subject or by which any of their properties or
assets are bound, or result in the creation of any lien, encumbrance or charge
upon any of the properties or assets of Seller.
Q. Brokerage and Finder's Fees. Neither Seller, nor any of its respective
officers, directors or employees, has employed any broker, finder or investment
banker or incurred any liability for any investment banking fees, financial
advisory fees, brokerage fees or finders' fees in connection with the
transactions contemplated herein.
R. Employee Benefit Plans. Seller does not maintain or contribute to any
"employee pension benefit plan" or employee welfare benefit plan" as defined in
Sections 3(2) and 3(1), respectively, of the Employee Retirement Income Security
Act of 1974 ("ERISA").
S. Material Misstatements or Omissions. No representation or warranty of
Seller in this Agreement, or in any exhibit, document, statement, certificate or
schedule furnished or to be furnished by Seller pursuant hereto, or in
connection with the transactions contemplated hereby, contains or will contain
any untrue statement of a material fact, or omits or will omit to state a
material fact necessary to make the statements or facts contained therein not
misleading.
T. Access to Properties and Records. Until the earlier of the termination
of this Agreement in accordance with its terms or December 21, 1999, Seller
shall afford to Purchaser and its counsel, accountants and other representatives
full access to all of the properties, assets, employees, books, commitments,
contracts and records of Seller and shall furnish Purchaser with such additional
financial and operating data and other information as to the business of Seller
as Purchaser shall from time to time reasonably request. Such access to these
items shall be at reasonable times during ordinary business hours and shall not
involve the interference with the operation of Seller's business.
7
<PAGE>
U. Conduct of Business. Between the date hereof and the Closing Date,
Seller shall conduct its business diligently and only in the ordinary course.
V. Corporate Matters. From and after the date hereof and until the
Closing Date, Seller shall not (a) amend its Articles of Incorporation or
Bylaws; (b) issue any shares of its capital stock; (c) issue or create any
warrants, obligations, subscriptions, options, convertible securities or other
commitments under which any additional shares of its capital stock of any class
might be directly or indirectly authorized, issued or transferred from treasure;
(d) alter the composition of its Board of Directors; (e) redeem, purchase or
otherwise acquire any shares of its capital stock or declare, pay or set aside
for payment any dividend or other distribution in respect of its capital stock;
(f) distribute any cash or property to its shareholders or any of its affiliates
as a loan; or (g) agree to do any of the acts listed above.
V. PURCHASER'S COVENANTS, REPRESENTATIONS AND WARRANTIES
Purchaser makes the following covenants, representations and warranties to
Seller, which covenants, representations and warranties shall be deemed to have
been restated on and as of the date of the Closing and the Option Closing.
A. Organization. Purchaser is a corporation duly organized, validly
existing and in good standing under the laws of its jurisdiction of
incorporation, has full corporate power and corporate authority to carry on its
business as now conducted by it and is entitled to own or lease and operate its
properties and assets now owned or leased and operated by it.
B. No Conflict with Other Instruments. The execution of this Agreement by
Purchaser, its delivery to Seller and the consummation of the transactions
contemplated hereby will not: (a) conflict with any provisions of the Articles
of Incorporation or Bylaws of Purchaser; (b) conflict with or result in a breach
of any term or provision of or constitute a default under any indenture,
mortgage, deed of trust or other material agreement or instrument to which
Purchaser is a party or to which it is subject or by which any of its properties
or assets are bound; (c) result I the creation of any lien, encumbrance or
charge upon any of the properties or assets of Purchaser; or (d) violate any
provision of any law, rule or regulation to which Purchaser is subject or any
order, writ, injunction or decree of any court or other governmental agency or
instrumentality to which Purchaser is subject.
C. Authorization. Purchaser has full corporate power and corporate
authority to execute and deliver this Agreement, to perform its obligations
hereunder and to consummate the transactions provided for herein. The execution
and delivery of this Agreement by Purchaser and the consummation of the
transactions contemplated hereby have been duly authorized by the Board of
Directors of Purchaser and no further corporate action is necessary on the part
of the Purchaser to make this Agreement binding upon Purchaser in accordance
with its terms. This Agreement has been duly executed and delivered by
Purchaser and constitutes the valid and binding agreement of Purchaser,
enforceable against Purchaser in accordance with its terms, subject to
applicable bankruptcy, insolvency and other similar laws affecting the
enforceability
8
<PAGE>
of creditors' rights generally, general equitable principles and the discretion
of courts in granting equitable remedies.
D. Brokerage and Finder's Fees. Neither Purchaser, nor any of its
respective officers, directors or employees, nor any affiliate of Purchaser has
employed any broker, finder or investment banker or incurred any liability for
any investment banking fees, financial advisory fees, brokerage fees or finders'
fees in connection with the transactions contemplated herein.
E. Material Misstatements or Omissions. No representation or warranty by
Purchaser in this Agreement, or in any exhibit, document, statement, certificate
or schedule furnished or to be furnished by Purchaser pursuant hereto, or in
connection with the transactions contemplated hereby, contains or will contain
any untrue statement of a material fact, or omits or will omit to state a
material fact necessary to make the statements or facts contained therein not
misleading.
VI. REPRESENTATIONS AND WARRANTIES OF THE SELLING STOCKHOLDERS.
----------------------------------------------------------
Each Selling Stockholder represents, warrants and covenants, separately and
not jointly, to and with Purchaser as follows:
A. Power and Authority. The Selling Stockholder has all requisite
-------------------
individual power and authority to enter into and to carry out all of the terms
of this Agreement, the Option Agreement and all other documents executed and
delivered in connection herewith. All individual action on the part of the
Selling Stockholder necessary for the authorization, execution, delivery and
performance of this Agreement and the option Agreement by the Selling
Stockholder has been taken and no further authorization on the part of the
Selling Stockholder is required to consummate the transactions provided for in
this Agreement or the Option Agreement. When executed and delivered by the
Selling Stockholder, this Agreement and the Option Agreement shall constitute
the valid and legally binding obligation of the Selling Stockholder enforceable
in accordance with its terms.
B. Ownership of and Title to Securities. The Recitals to this Agreement
------------------------------------
set forth all of the authorized, issued and outstanding capital of Seller.
Exhibit A sets forth all of the capital stock of Seller owned by the Selling
Stockholder and the Selling Stockholder represents that he does not , and to his
knowledge no one else, owns any options, warrants or rights entitling its holder
to purchase the capital stock of Seller. The Selling Stockholder represents
that the Selling Stockholder has and will transfer to Purchaser, upon
Purchaser's exercise of the Option and payment for the underlying shares of
Seller common Stock, good and marketable title to the Seller Common Stock owned
by Selling Stockholder, free and clear of all pledges, security interests,
mortgages, liens, claims, charges, restrictions or encumbrances except for any
restrictions under applicable state and federal securities laws.
C. Waiver and Consent. The Selling Stockholder hereby consents to the
------------------
execution of this Agreement and the Option Agreements by Seller and each of the
other Selling Stockholders and the performance of their obligations hereunder
and under the other Option
9
<PAGE>
Agreements, and specifically waives his right of first refusal to purchase any
shares of Seller Common Stock under that certain Shareholder's Agreement of
Sportsware Technologies, Inc. dated November 11, 1997 in connection with
Purchaser's exercise of the Option Agreements granted to Purchaser by the other
Selling Stockholders.
V. CONDITIONS PRECEDENT TO OBLIGATIONS OF PURCHASER
The obligations of Purchaser under this Agreement shall be subject to the
satisfaction on or before the Closing Date and the Option Closing Date of each
of the following conditions, except to the extent Purchaser may waive such
conditions in writing:
A. Representations and Warranties. All representations and warranties of
Seller contained in or made under or in connection with this Agreement shall be
true and correct in all material respects on and as of the Closing Date.
B. Performance of Obligations. Seller shall have performed in all
material respects all agreements and covenants required by this Agreement to be
performed by it on or prior to the Closing Date.
C. Delivery of Stock Certificates. Seller shall have delivered to
Purchaser the certificates representing the Stock together with appropriate
instruments of transfer in form and substance satisfactory to counsel for
Purchaser.
VII. CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER
The obligations of Seller under this Agreement shall be subject to the
satisfaction on or before the Closing Date and the Option Closing Date of each
of the following conditions, except to the extent Seller may waive any of such
conditions in writing:
A. Representations and Warranties. All representations and warranties of
Purchaser contained in or made under or in connection with this Agreement shall
be true and correct in all material respects on and as of the Closing Date.
B. Performance of Obligations. Purchaser shall have performed in all
material respects all agreements and covenants required by this Agreement to be
performed by it on or prior to the Closing Date.
C. Payment of Purchase Price. Purchaser shall have paid to Seller the
Purchase Price by cash, cashier's check and/or wire transfer.
10
<PAGE>
VIII. SURVIVAL
All statements contained herein or in any certificate or other instrument
delivered pursuant hereto by or on behalf of any party shall be deemed to be
representations and warranties made pursuant to this Agreement by such party.
All representations, warranties, covenants and agreements made herein or
otherwise by Purchaser and Seller shall survive the Closing, Option Closing and
any investigations made by or on behalf of any party hereto.
IX. INDEMNIFICATION
A. By Seller. Seller shall indemnify and hold harmless Purchaser against
all losses, liabilities, costs and expenses, including reasonable attorneys'
fees and court costs, resulting from any breach of any warranty, representation,
covenant or agreement made herein by Seller.
B. By Purchaser. Purchaser shall indemnify and hold harmless Seller
against all losses, liabilities, costs and expenses, including reasonable
attorneys' fees and court costs, resulting from any breach of any warranty,
representation, covenant or agreement made herein by Purchaser.
X. EVENT OF DEFAULT
Except as otherwise expressly provided herein, either party hereto shall be
deemed to be in default of this Agreement if such party fails or refuses to
comply with the terms and conditions set forth herein for any reason other than
the prior termination of this Agreement purchase to a right to so terminate
expressly set forth in this Agreement and said default continues for a period of
thirty (30) days after written notice from the non-defaulting party to the
defaulting party specifying the default (an "Event of Default").
XI. REMEDIES
A. Seller's Remedies Prior to Closing. Upon the occurrence of an Event of
Default by Purchaser prior to Closing, Seller shall be entitled to terminate
this Agreement by giving Purchaser written notice of termination in writing, and
the parties hereto shall be released from all obligations to each other
hereunder.
B. Seller's Remedies After Closing. Upon the occurrence of an Event of
Default by Purchaser after Closing which is not cured within the time permitted,
Seller may (i) require arbitration for specific performance under this Agreement
and/or (ii) require arbitration for damages sustained by Seller as a result of
Purchaser's default under this Agreement.
C. Purchaser's Remedies Prior to Closing. Upon the occurrence of an Event
of Default by Seller prior to Closing, Purchaser shall be entitled to (i)
terminate this Agreement by giving Seller notice of termination in writing, and
the parties hereto shall be released from all obligations to each other
hereunder, or (ii) require arbitration for specific performance of this
Agreement.
11
<PAGE>
D. Purchaser's Remedies After Closing. Upon the occurrence of an Event of
Default by Seller after Closing which is not cured within the time permitted,
Purchaser may (i) require arbitration for specific performance under this
Agreement and/or (ii) require arbitration for damages sustained by Purchaser as
a result of Seller's default under this Agreement.
XII. PURCHASER'S OBLIGATIONS
Seller recognizes and acknowledges that Purchaser is an independent
corporation, capitalized as required by applicable laws, chartered under the
laws of Florida, to whom Seller will solely look and who is solely responsible
for the obligations and liabilities of Purchaser recited herein, arising
hereunder, or in any manner related to the transactions contemplated hereby, and
Seller further recognizes and acknowledges that no other entity or entities,
including (i) Purchaser's parent corporation, (ii) any individual, or (iii) any
corporation affiliated with Purchaser is in any manner liable or responsible for
the obligations and liabilities of Purchaser, whether recited herein, arising
hereunder, or in any manner related to the transactions contemplated hereby.
Seller has made such inquiry and investigation as it deems appropriate as to the
financial ability of Purchaser to perform all of its obligations, duties,
liabilities, and undertakings contemplated by the transaction from which this
Agreement arises and that it has no further inquiry it desires to make. Seller
is not relying on any other entity to contribute to the financial where withal
of Purchaser to carry out its obligations, duties, liabilities, and
undertakings, and no oral representations have been made as to other financial
support of Purchaser by any party or entity. Seller is thus solely relying on
the financial ability of Purchaser, and Seller shall not attempt to pierce the
corporate veil of Purchaser in order to obtain financial contribution or
responsibility.
XIII. NOTICES
Any notices or other communications shall be deemed given if hand
delivered, or sent by certified mail, return receipt requested, postage prepaid,
addressed as shown below. All notices hand delivered shall be deemed received
on the date of delivery. All notices forwarded by mail shall be deemed received
on the earlier of (i) the date seven (7) days (excluding Sundays and legal
holidays when the U.S. mail is not delivered) immediately following date of
deposit in the U.S. mail or (ii) the date of actual receipt.
If to Seller: SportsWare Technologies
5495 Beltline Road, Suite 370
Dallas, Texas 75240
Attention: William J. Kassul
With a Copy to: Ted M. Benn, Esq.
Munsch, Hardt, Kopf & Harr, P.C.
4000 Fountain Place
1445 Ross Avenue
Dallas, Texas 75202
12
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
13
<PAGE>
If to Purchaser: EntrePort Corporation
10455 Sorrento Valley Road, Suite 204
San Diego, California 92121
Attention: William A. Shue
With a Copy to: Oppenheimer Wolff & Donnelly LLP
500 Newport Center Drive,
Suite 700
Newport Beach, California 92660
Attention: Daniel K. Donahue, Esq.
The addresses and addressees may be changed by giving notice of such change
in the manner provided herein for giving notice. Unless and until such written
notice is received, the last address and addressee given shall be deemed to
continue in effect for all purposes. No notice to either Purchaser or Seller
shall be deemed given or received unless the entity noted "With a Copy to" is
simultaneously delivered notice in the same manner as any notice given to either
Seller or Purchaser, as the case may be.
XIV. MISCELLANEOUS
A. Entire Agreement. This Agreement embodies the entire agreement and
understanding of Seller and Purchaser relating to the subject matter hereof and
supersedes all prior representations, agreements, and understandings, oral or
written, relating to such matter.
B. Assignment. Except as expressly provided herein, this Agreement and
any documents executed in connection herewith shall not be assigned by Seller or
Purchaser without the prior written consent of the other party, and any
assignment without such prior written consent shall be null and void.
C. Severability. Except as expressly provided to the contrary herein,
each section, part, term, or provision of this Agreement shall be considered
severable, and if for any reason any section, part, term, or provision herein is
determined to be invalid and contrary to or in conflict with any existing or
future law or regulation by a court or governmental agency having valid
jurisdiction, such determination shall not impair the operation of or have any
other effect on other sections, parts, terms, or provisions of this Agreement as
may remain otherwise intelligible, and the latter shall continue to be given
full force and effect and bind the parties hereto, and said invalid sections,
parts, terms, or provisions shall not be deemed to be a part of this Agreement.
D. Public Announcements. Prior to Closing, neither party hereto shall
make any public announcement or press release concerning this Agreement or the
transactions contemplated herein except as may be mutually agreed upon by the
parties in writing.
E. Construction and Interpretation of Agreement. This Agreement is to be
performed in the State of California and shall be governed by and construed in
accordance with the laws of the State of California. Should any provision of
this Agreement require
14
<PAGE>
interpretation, it is agreed that the presumption that the terms hereof shall be
more strictly construed against a party by reason of the rule or conclusion that
a document should be construed more strictly against the party who itself or
through its agent prepared the same shall not apply. It is agreed and stipulated
that all parties hereto have participated equally in the preparation of this
Agreement and legal counsel was consulted by each party before the execution of
this Agreement.
F. Amendment and Waiver. This Agreement may not be amended or modified in
any way except by an instrument in writing executed by all parties hereto.
G. Access and Information. Seller shall permit Purchaser and Purchaser's
representatives, employees, agents, or independent contractors of Purchaser
access to all books, records, and documents pertaining to Seller at all times
during normal business hours from the date hereof to the Closing Date. Seller
shall cooperate to the fullest extent in securing and providing to Purchaser all
such information which may be in the possession of others.
H. Counterparts. This Agreement may be executed in any number of
counterparts and all of such counterparts taken together shall be deemed to
constitute one and the same instrument.
I. Successors and Assigns. This Agreement and the terms and provisions
hereof shall inure to the benefit of and be binding upon the parties hereto and
their respective successors and assigns whenever the context so requires or
permits.
J. Time. Time is of the essence in this Agreement and each and all of its
provisions. Any extension of time granted for the performance of any duty under
this Agreement shall not be considered an extension of time for the performance
of any other obligation under this Agreement.
K. Captions. Captions, titles to sections, and paragraph headings used
herein are for convenience of reference and shall not be deemed to limit or
alter any provision hereof.
L. Governing Document. This Agreement shall govern in the event of any
inconsistency between this Agreement and any of the Schedules attached hereto or
any other document or instrument executed or delivered pursuant hereto or in
connection herewith.
M. Arbitration. Any controversy arising out of, or relating to, this
Agreement, or a breach, shall be settled by binding arbitration administered by
the American Arbitration Association in accordance with its rules. A judgment
upon an award rendered by the arbitrator may be entered in any court having
jurisdiction. The initiating party shall give written notice to the other party
of its decision to arbitrate by providing a specific statement setting forth the
nature of the dispute, the amount involved, the remedy sought, and the hearing
locale requested. The initiating party shall be responsible for all filing
requirements and the payment of any fees according to the rules of the
applicable regional office of the American Arbitration Association. The
arbitrator shall award to the prevailing party, if any, as determined by the
arbitrator, all of its
15
<PAGE>
costs and expenses including attorneys' fees, arbitrator's fees, and
out-of-pocket expenses of any kind. The consideration of the parties to be
bound by arbitration is not only the waiver of trial by jury, but also the
waiver of any rights to appeal the arbitration finding.
IN WITNESS WHEREOF, the parties have executed this Stock Purchase and
Option Agreement on the date first written above.
SELLER
SPORTSWARE TECHNOLOGIES, INC.,
a Texas corporation
By: /s/ William J. Kassul
--------------------------------
Name: William J. Kassul
--------------------------------
Title: President
--------------------------------
Date: 7/21/99
--------------------------------
PURCHASER
ENTREPORT CORPORATION,
a Florida corporation
By: /s/ W.A. Shue
--------------------------------
Name: William A. Shue
--------------------------------
Title: President
--------------------------------
Date: 7/21/99
--------------------------------
[Signatures of Selling Stockholders Appear on Exhibit "A"]
16
<PAGE>
EXHIBIT "A"
LIST OF SELLING STOCKHOLDERS
----------------------------
Number of Shares
Name and Address of Owned by Selling
Selling Stockholder Signature Stockholder
Michael Muhney /s/ Michael Muhney 1,000
P.O. Box 630388
Irving, TX 75063
William J. Kassul /s/ William J. Kassul 49,241
5495 Beltline Road, Suite 370
Dallas, TX 75240
William E. Brooks /s/ William E. Brooks 3,600
4500 Pebble Brook
Plano, TX 75093
BAI, LP /s/ William E. Brooks 11,647
4500 Pebble Brook
Plano, TX 75093
Alex Tsakiris /s/ Alex Tsakiris 24,512
1940 Seaview Avenue
Del Mar, CA 92014
<PAGE>
EXHIBIT "B"
<PAGE>
EXHIBIT "C"
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C> <C>
<PERIOD-TYPE> 5-MOS YEAR
<FISCAL-YEAR-END> DEC-31-1999 DEC-31-1998
<PERIOD-START> JAN-01-1999 JAN-01-1998
<PERIOD-END> MAY-31-1999 DEC-31-1998
<CASH> 372,981 0
<SECURITIES> 0 0
<RECEIVABLES> 10,000 0
<ALLOWANCES> 0 0
<INVENTORY> 0 0
<CURRENT-ASSETS> 391,981 0
<PP&E> 79,950 0
<DEPRECIATION> 0 0
<TOTAL-ASSETS> 500,352 0
<CURRENT-LIABILITIES> 616,296 800
<BONDS> 0 0
0 0
0 0
<COMMON> 6,015 5,025
<OTHER-SE> 0 0
<TOTAL-LIABILITY-AND-EQUITY> 500,352 0
<SALES> 0 0
<TOTAL-REVENUES> 21,414 0
<CGS> 0 0
<TOTAL-COSTS> 0 0
<OTHER-EXPENSES> 141,457 800
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 0 0
<INCOME-PRETAX> (120,043) (800)
<INCOME-TAX> 0 0
<INCOME-CONTINUING> (120,043) (800)
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (120,043) (800)
<EPS-BASIC> 0 0
<EPS-DILUTED> (.020) 0
</TABLE>
