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United States
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
HotYellow98.Com, Inc.
- --------------------------------------------------------------------------------
(Name of Small Business Issuer in its Charter)
Nevada 88-0376328
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(State or Other Jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or Organization)
2727 Broadway Street, Suite 3, Buffalo, New York 14227
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(Address of Principal Executive Offices) (Zip Code)
716-895-8018
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Issuer's Telephone Number
................................................................................
Securities to be registered pursuant to Section 12(b) of the Act:
Title of Each Class Name of Each Exchange on Which Registered
None N/A
Securities to be registered pursuant to Section 12(g) of the
Act:
Common Stock, par value $.001 per share
(Title of Class)
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ITEM 1. DESCRIPTION OF BUSINESS.
HotYellow98.Com, Inc. (the "Company") is a Nevada corporation
incorporated in June 1997 as "Union Chemical Corporation." The Company was
formed in order to be a partner in a joint venture that was never consummated
and had no operations as Union Chemical Corporation. Its operations commenced in
June 1999, as more fully described below, when its name change became effective.
The Company's executive offices are located in Buffalo, New York. Its sales,
support and marketing offices are located in Scottsdale, Arizona.
On June 15, 1999, the Company acquired the internet domain name
HotYellow98.com, the related webmaster hosting business and all incidental
computer hardware and software as well as a Consulting Agreement with Project
Finance Associates, Inc from HotYellow98.com, an Arizona corporation (the "Prior
Entity") in exchange for 20,000,000 shares of Company Common Stock (and an
additional 919,908 shares which are expected to be issued to certain Company
webmasters as described elsewhere herein) and three year non-competition
agreements from the certain shareholders of the Prior Entity. On July 15, 1999,
the Company acquired an 80% interest in NetSurf, Inc., a Toronto, Canada-based
software and systems developer specializing in internet servicing and solutions.
NetSurf, which was organized in November 1994 was previously beneficially owned,
inter alia, by Andrzej Rok. Prior to its acquisition the Company utilized the
services of NetSurf to develop copyrighted software. See, Item 5 below
(Directors and Executive Officers, Promoters and Control Persons).
From March through September 1998 the Prior Entity was engaged in
research and development and software implementation. Beta-testing followed in
the fall of 1998 and the operations of the Prior Entity commenced in February
1999.
The Company is an emerging internet corporation which was formed to
assist entrepreneurs, small to medium-sized home-based businesses and
traditional retail establishments in the use of the internet to promote their
products and services. The Company's current source of income is derived
primarily from the set-up and monthly fees obtained from its webmasters,
individuals and entities who obtain, among other things, a website and the
ability to distribute an unlimited number of additional websites which can be
used without the payment of any fees.
The Company offers a turn-key package to individuals and businesses who
wish a presence on the worldwide web. Through the Company's website,
www.HotYellow98.com, visitors are able to create their own personal, lifetime
websites without charge. In addition by agreeing to become webmasters a visitor
can give-away an unlimited number of free websites to the public at large
through the payment of an initial $99.00 set-up fee (which includes the first
month's fee). Continued webmaster status is based upon the payment of a $49.50
monthly fee. The Company believes that webmaster status is considered desirable
since each free website that is generated by a webmaster contains a link/banner
to his own website. This approach is considered a meaningful method of obtaining
advertisement and increased traffic at a minimal cost. The free websites come
with an assortment of benefits, such as 24-hour hosting, unlimited E-mail
addresses, free file uploading and discounts from local, national and global
merchants. In addition, the Company through a series of e-mail communications
stresses to free site holders the benefits of converting to webmaster status.
Those that acquire a free website can in turn become a second
generation webmaster for the same set-up and monthly costs described above.
Second generation webmasters can also offer free websites each of which, in
turn, has a link/banner providing access to his own website. When this happens
the original webmaster's link/banner is removed. However, in such an event the
original
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webmaster obtains a 15% commission on the monthly fees paid by the second
generation webmaster directly from the Company. The original webmaster can also
obtain a 10% commission directly from the Company in the event third generation
webmasters result.
Visitors to the Company's home-page can also obtain a free website
without being directly sponsored by a webmaster. However, in such a case a
webmaster still obtains credit through the Company's system of automatic
rotation. All Company webmasters are automatically rotated to the Company's
home-page. The webmaster who is so rotated when the visitor's website is
generated automatically obtains credit for the new website.
The Company believes that the ability of webmasters to give-away free
sites will be particularly attractive to traditional retail establishments. Once
a retailer becomes a webmaster it can give-away free websites to its entire
customer-base. Since each free website contains a link to the retailer, the
retailer can advertise specials, develop coupon programs and offer discounts as
well as generate additional income from those customers who themselves become
webmasters.
The Company estimates it currently has over 1,700 webmasters.
Webmasters currently reside in the United States, Australia, South Africa,
Germany, the Netherlands, France and the U.K.
An additional source of revenue is the Company's domain name hosting
services for non-webmasters. The Company charges $14.95 per month to host a
customer's domain name for those who have the ability to write in the html
internet language. For those who do not the Company charges $29.95 per month to
host a customer's domain name and website that is created through the use of the
Company's "Page Wizard." The Company has a direct link to Network Solutions, the
company that has the exclusive right to register all domain names.
The Company also generates income through its merchant services program
that provides real-time, online purchasing opportunities. It anticipates that it
will seek to create future sources of income such as e-commerce for proprietary
products and the products and services offered by webmasters, advertising
revenues on its home-page and search engine and the Company's discount
merchandise card although there can be no assurance that it will be successful
in doing so. On July 13, 1999, the Company entered into an agreement granting
E-Commerce Exchange, LLC the exclusive right to solicit all persons that the
Company comes into contact with as a result of its business for the purpose of
providing them with merchant accounts, e-commerce software and electronic
processing equipment. The agreement, which provides for payments to the Company
for customers E-Commerce obtains, is for a one-year term expiring July 1, 2000
which is automatically renewed for additional one year terms unless earlier
terminated. The Company's growth in its core business operations has delayed its
entry into other lucrative internet applications and services and its ability to
increase the content component of its own website.
The Company has numerous competitors and competition is expected to
increase in the future. Several well-known internet companies have used the free
site giveaway concept and thus are in direct competition to the Company's
operations. The Company believes, however, that no other internet company
presently provides a system comparable to the Company's where website owners can
promote and develop their own sites through the give-away of free websites.
Among the Company's competitors are the following.
GeoCities.com began business in 1995 and was one of the first internet
companies to give away free websites. Yahoo, one of the internet's primary
search engines, invested heavily in GeoCities.com and such support is expected
to continue in the future. GeoCities.com offers a
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website building program as well as GeoShop, a small business solution allowing
subscribers to take their business online with a customized pre-built
store-front. Enhancements include newsletters, membership updates and other
information. The Company estimates that GeoCities.com has a community of
approximately 4 million sites. The Company believes that it is the fifth highest
trafficked site on the internet. GeoCities.com is a public company which is
estimated to have annual earnings of approximately $9 million.
TheGlobe.com was founded in 1994 and has received substantial
investment capital from former Alamo-Rent-A-Car owner Michael Egan. TheGlobe.com
built its community as did GeoCities.com by giving away free websites.
Subsequently it recruited content providers to give users a wide array of news,
entertainment and other information to provide an interactive site opportunity.
Forty percent of theGlobe.com's visitors are international users. Its primary
source of revenue is derived from the sale of advertising with additional
revenues generated through e-commerce and the sale of membership subscriptions
for enhanced services. It is traded on the NASDAQ.
Tripod.com is a Lycos network site and is owned by USA TV Network. It
also was established to build a community through the gifting of free website
and the provision of web building tools to allow users to develop their own
sites. The Company believes that Tripod.com has 3 million members. Tripod.com
also offers domain name registration and hosting as well as a variety of other
content to its users. Its main revenues come from a two-level membership
structure. It provides members with the opportunity to build their own site,
have chat room experiences with members and access to discounts and specials on
books, CDs and other merchandise. The Company believes that Tripod.com is one of
the top fifteen most popular sites on the internet.
Register.com advertises itself as the "first step on the Web." While it
does not give away free websites it competes with the Company by providing web
registration and procurement of domain names. As of April 18, 1999 the Company
believes register.com had registered 482,053 domain names.
Siteamerica.com also offers web hosting and e-commerce services. Its
services are priced from $25 per month for web hosting services to $299 per
month for its advertised site developer. Rather than focusing on their own
internet applications Siteamerica.com has been developed to provider such
services for its own customers.
As of July 31, 1999, the Company employed fifteen full-time and one
part-time employees. Of these, two full-time employees are engaged in marketing
and sales, two full-time employees are administrative personnel and eleven
full-time and one part-time are clerical and support personnel. None of the
Company's employees are members to any collective bargaining agreement. The
Company considers its relationships with its employees to be excellent.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.
The Company's plan of operation for the next twelve months includes
primarily the continued implementation of its on-going operations. The Company
believes that its current cash requirements can be met through its cash flow as
the Company is currently debt-free. Management, however, is discussing the
possibility of raising capital through a small private placement to fund
short-term needs. Management is also discussing raising additional capital
through a registered public offering under the Securities Act of 1933. Any such
public offering is expected to seek approximately $20 million the proceeds of
which are currently expected to be used to implement an
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additional phase of the Company's advertising and marketing program, increase
the Company's staff to meet then existing needs, acquire additional computer and
peripheral equipment and support any strategic acquisitions deemed necessary in
order to meet the Company's longer-term goals.
The Company is continually researching possibilities for
revenue-generation on the internet and expects to do so for the balance of its
plan. The use of the internet for a wide variety of purposes is a rapidly
developing technology. The Company is thus unable to predict with any certainty
what research it will engage in during the balance of its plan of operation.
However, the Company has no plans to engage in research or development outside
of the internet arena.
The Company does not anticipate any purchase or sale of significant
plant or equipment in the next twelve months. The Company's growth has resulted
in a significant increase in the number of its employees and expects that
additional employees will be added in the near future.
Forward-looking statements in this document are intended to be subject
to the safe harbor provisions of the Private Securities Litigation Reform Act of
1995. Readers are cautioned that all forward-looking statements involve risks
and uncertainties, including risks of uncertainties in customer acquisition and
retention, risks inherent in internet technology and operations. No assurances
can be given that actual results will not differ materially from those contained
herein.
ITEM 3. DESCRIPTION OF PROPERTY.
The Company's executive offices are located in Buffalo, New York. Its
sales, support and marketing offices are located in Scottsdale, Arizona. The
Company leases both offices.
The Scottsdale facility contains 2,253 square feet of space and two
covered parking spaces and is leased for a three-year term which commenced
February 15, 1999. Monthly rental is $2,295.80.
The Buffalo facility contains 1,800 square feet and is leased on a
month to month basis. Base monthly rental is $925. The Company also pays common
area maintenance charges which amount to approximately $425 per month.
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ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The Company has one class of securities outstanding, Common Stock, par
value $.001 per share. There is an aggregate of 23,321,932 shares issued and
outstanding and an additional 919,908 shares which may be issued to certain
webmasters as explained elsewhere herein. The following table sets forth certain
information regarding each person or group who is known to the Company to be the
beneficial owner of more than 5% of the Company's issued and outstanding shares
of Common Stock as of July 31, 1999 (excluding such 919,908 shares and the
200,000 shares issuable on exercise of the warrants owned by Project Finance
Associates).
<TABLE>
<CAPTION>
Name and Address Amount and Nature of Ownership(1) Percent
---------------- ------------------------------- -------
<S> <C> <C>
Apocalypse, LLC(2) 9,300,000 39.9%
37 Fruehauf Avenue
Snyder, New York 14226
Duaine R. Warren(3) 4,300,000 18.4
16530 Nicklaus Drive
Fountain Hills, Az. 85268
Patricia A. Warren 4,300,000 18.4
9882 East Aster Drive
Scottsdale, Az. 85260
</TABLE>
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(1) All shares are held of record and beneficially except as otherwise
indicated. Percent figures assume only 100,000 shares are issued in connection
with the acquisition of NetSurf, Inc. as described elsewhere herein.
(2) Company is wholly-owned by Sandra DeLeo who may be considered the beneficial
owner of these shares. Ms. Deleo's husband, Neal C. Deleo, owns of record an
additional 300,000 shares of Company Common Stock (1.29% of the issued and
outstanding.)
(3) Duaine Warren is Patricia Warren's father-in-law. For purposes of
Regulation S-B they may be deemed to constitute a group although each hereby
disclaims beneficial ownership of the other's shares of Common Stock.
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The following table sets forth certain information regarding the shares
of Company Common Stock owned beneficially by each executive officer and
director of the Company and all executive officers and directors as a group as
of July 31, 1999 (excluding the 919,908 shares which may be issued to certain
webmasters as described above and the 200,000 shares issuable on exercise of the
warrants owned by Project Finance Associates). Mr. Fox's employment arrangement
with the Company expires August 31, 1999. His successor is currently being
sought.
<TABLE>
<CAPTION>
Name and Address Amount and Nature of Ownership(1) Percent
- ---------------- ------------------------------- -------
<S> <C> <C>
Duaine R. Warren 4,300,000 18.4%
Chairman of the Board
16530 Nickalus Drive
Fountain Hills, Az. 85268
J. Daniel Fox None 0
President, Chief Executive
Officer and Director
7550 East Redfield Road, # 150
Scottsdale, Az. 85260
Patricia A. Warren 4,300,000 18.4
Vice President and Director
9882 East Aster Drive
Scottsdale, Az. 85260
Francis R. Law 1,000,000 4.3
Secretary/Treasurer, Chief
Financial Officer and Director
54 Brookdale Drive
Williamsville, New York 14221
Troy Warren(2) 0 0
Marketing Director
9882 East Aster Drive
Scottsdale, Az. 85260
Andrzej Rok 63,000(3) .27%
Technical Services Administrator
482 Country Club Crescent
Mississauga, Ontario L5J2R2
All executive officers and Directors as a group (6 persons) 9,663,000 41.4%
</TABLE>
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(1) All shares are held of record and beneficially except as otherwise
indicated. Percent figures assume only 100,000 shares are issued in connection
with the acquisition of NetSurf, Inc. as described elsewhere herein.
(2) Mr. Warren is Patricia's wife and Duaine's son. Each of these persons
disclaim beneficial ownership of the shares held by others.
(3) Includes shares owned by Mrs. Rok and Mr. Rok's wholly-owned corporation.
Subject to increase in connection with the acquisition of NetSurf, Inc. as
described elsewhere herein.
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ITEM 5. DIRECTORS AND EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS.
The following sets forth the names and ages of the directors and
executive officers of the Company. Each director will serve until the next
annual meeting of the stockholders or until his/her successor is duly elected
and shall qualify. Each executive officer of the Company will serve until
his/her successor is duly elected. Each director and executive officer of the
Company has served since June 15, 1999. Mr. Fox's employment arrangement with
the Company expires August 31, 1999. His successor is currently being sought.
<TABLE>
<CAPTION>
Name and Age Positions Held
- ------------ --------------
<S> <C>
Duaine R. Warren (67) Chairman of the Board
J. Daniel Fox (37) President, Chief Executive
Officer and Director
Patricia A. Warren (44) Vice President and Director
Francis R. Law (42) Secretary/Treasurer, Chief
Financial Officer and Director
Troy Warren (38) Marketing Director
Andrzej Rok (33) Technical Services
Administrator
</TABLE>
J. Daniel Fox served as Chief Executive Officer of Purified Products
International, Inc., a beverage consolidator company, immediately prior to
joining the Company. Previously he acted for three years as project consultant
to emerging growth companies in a variety of industries. From 1985-1995 he was
managing partner of a Southern California based real estate development and
investment firm which dealt in commercial, residential and mixed-use properties.
He has a B.S. degree in Business Administration from the University of Southern
California.
Patricia Warren has been a salesperson for Coldwell Banker Real Estate,
for several automobile dealerships and then for the yellow pages, both print
media and internet media. She attended Lamar University. She is married to Troy
Warren and is Duaine Warren's daughter-in-law.
Francis Law was the owner of Francis R. Law & Associates, Certified
Public Accountants, from 1988-1997. He obtained his B.A. degree from LaVerne
University, California, with a major in accounting and business.
Duaine Warren has been retired since 1988. Previously he served in
various capacities with Beatrice Foods, Chicago, Illinois, and Weaver Popcorn,
Van Buren, Indiana. He attended Western Michigan University and Purdue
University with a major in Industrial Engineering.
Troy Warren has spent the past five years in the direct mail and
mailing list industry. Previously he operated a travel agency and worked for
Ramada Inns. He graduated Indiana University with a degree in Business
Administration and Hotel Management.
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Andrzej Rok before joining the Company was Senior Consultant with
NetSurf, Inc., Toronto, Canada, a software and systems developer. He obtained
his B.S. degree with honors in Computer Science from York University.
ITEM 6. EXECUTIVE COMPENSATION.
The following table sets forth information regarding the compensation
payable to the executive officers and directors of the Company for the current
fiscal year. Except as provided below there are currently no other items of
compensation payable to such persons. None of such persons were affiliated with
the Company prior to 1999. Mr. Fox's employment arrangement with the Company
expires August 31, 1999. His successor is currently being sought.
<TABLE>
<CAPTION>
Name and Position Annual Salary
- ----------------- -------------
<S> <C>
J. Daniel Fox $ 78,000
President, Chief Executive
Officer and Director
Patricia A. Warren 220,000
Vice President and Director
Francis R. Law 78,000
Secretary/Treasurer, Chief
Financial Officer and Director
Duaine R. Warren 13,000
Chairman of the Board
</TABLE>
The Company does not currently have any stock option, restricted stock
award or any other plan which provides for compensation to its officers and/or
directors.
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The operations and assets of the Company were acquired from a
predecessor company (also named "Hotyellow98.com"--herein the "Prior Entity") on
June 15, 1999, in exchange for 20,000,000 shares of Company Common Stock which
were then distributed by the Prior Entity to its stockholders, including
Patricia, Troy and Duaine Warren; Francis R. Law; Apocalypse, LLC; Neal C.
DeLeo. In addition, an aggregate of 919,908 shares of Common Stock are expected
to be issued to approximately 1,900 persons who had previously become webmasters
of the Prior Entity. The Company expects to file a Registration Statement
covering such shares.
Andrzej Rok, the Company's Technical Services Administrator, was
previously Senior Consultant at and a shareholder of NetSurf, Inc., Toronto,
Canada. In July 1999 he and the remaining NetSurf shareholders sold 80% of their
NetSurf shares to the Company. The purchase agreement provided for the issuance
of 100,000 shares of Common Stock to the NetSurf shareholders, subject to
increase to a maximum of 1,000,000 additional shares if the bid price for
Company Common Stock remains below $5.00 per share during the period of July 8,
2000 through July 14, 2000. Thus, the NetSurf shareholders have in effect been
assured that they will receive shares of Common Stock equivalent to $500,000 in
market value.
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ITEM 8. DESCRIPTION OF SECURITIES.
The Company is authorized to issue 100,000,000 shares of Common Stock,
par value $.001 per share. As of July 31, 1999, there were 23,321,932 shares
issued and outstanding. Holders of Common Stock are entitled to cast one vote
for each share held of record at all stockholder meetings for all purposes.
Holders of Common Stock do not have cumulative voting rights in the election of
directors and do not have preemptive rights. All outstanding shares of Common
Stock are fully paid and non-assessable.
The Company has issued warrants to purchase an aggregate of 200,000
shares of Common Stock to Project Finance Associates as described elsewhere
herein. All warrants are exercisable for a period of two years. A total of
50,000 warrants are exercisable at $.25 per share, 50,000 warrants are
exercisable at $.50 per share, 50,000 warrants are exercisable at $.75 per share
and 50,000 warrants are exercisable at $1.00 per share.
Holders of Common Stock are entitled to receive ratably such dividends,
if any, as may be declared from time to time by the Board of Directors in its
sole discretion from funds legally available therefor.
PART II
ITEM 1. MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON EQUITY AND
RELATED STOCKHOLDER MATTERS.
The Company's Common Stock is currently traded in the over-the-counter
market. Prior to July 1999, there was no trading market for Company Common Stock
and the trading, if any, that occurred consisted of privately negotiated
transactions between private persons.
For the period from July 1, 1999 through August 6, 1999, the closing
bid price for Company Common Stock has ranged from $1.00 to $1.625 and the
closing asked price has ranged from $1.75 to $2.25. (Source: National Quotation
Bureau, LLC). Such prices reflect inter-dealer prices, without retail mark-up,
mark-down or commissions and may not represent actual transactions.
As of July 31, 1999, the Company had approximately 130 holders of
record.
The Company has paid no cash dividends since inception and anticipates
that no cash dividends will be payable in the foreseeable future.
ITEM 2. LEGAL PROCEEDINGS.
The Company is not a party to any litigation or formal governmental
proceedings.
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ITEM 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS.
The Company dismissed its prior principal independent accountant, A.E.
Bell, Certified Public Accountant, St. Louis, Missouri on approximately June 15,
1999 contemporaneously with its acquisition of the HotYellow98.com business and
operations. The change in accountants bore no relationship to any disagreements
with A.E. Bell and resulted solely from the personal preferences of new
management. A.E. Bell's prior reports on the Company's financial statements
contained no adverse opinion or disclaimer of opinion and were not modified as
to uncertainty, audit scope or accounting principles. The dismissal of A.E. Bell
was not the result of any disagreement on any matter of accounting principles or
practices or any other matter required to be disclosed pursuant to Item 304 of
Regulation S-B.
The Company's new independent public accountants are Feldman, Sherb and
Ehrlich & Co., 805 Third Avenue, New York, New York 10022.
.
ITEM 4. RECENT SALES OF UNREGISTERED SECURITIES.
The Company has 23,321,932 shares issued and outstanding of which
2,081,840 are freely transferable and 21,240,092 are restricted within the
meaning of Rule 144 promulgated by the Securities and Exchange Commission under
the Securities Act of 1933.
The Company was incorporated as Union Chemical Corporation in June 1997
and thereafter sold 1,521,840 shares of Common Stock at a price of $.01 per
share in reliance upon Rule 504 promulgated under the Securities Act of 1933
(the "Act"). Such shares were offered and sold directly by the Company without
the use of an underwriter.
On April 3, 1999, the Company sold 560,000 shares of Common Stock at a
price of $.01 per share in reliance upon Rule 504. Such shares were offered and
sold directly by the Company without the use of an underwriter.
On June 15, 1999, the Company acquired the internet domain name
HotYellow98.com, the related webmaster hosting business and all incidental
computer hardware and software as well as a Consulting Agreement with Project
Finance Associates, Inc in exchange for 20,000,000 shares of Company Common
Stock (and an additional 919,908 shares which are expected to be issued to
certain of the Company's webmasters as described elsewhere herein.) and three
year non-competition agreements from certain shareholders of the Prior Entity.
The 20,000,000 shares were sold in reliance upon the exemption contained in
Section 4(2) of the Act as not involving any public offering.
The additional 919,908 shares of Common Stock referred to in the
immediately preceding paragraph have not yet been issued. Such shares reflect
the commitments of the Prior Entity to approximately 1,900 persons to provide
them with equity interests as partial consideration for their becoming
webmasters. While the Company does not believe it is under any obligation to
satisfy such commitments it presently expects to do so. However, the Company
does not believe that such shares can be issued without the benefit of
registration under the Act and anticipates that registration will be sought in
the near future. The Company also believes that such commitments may have
violated the registration provisions of the Act and therefore anticipate that
any such registration would be accompanied by an offer to the webmasters to
repurchase the shares of the Prior Entity that they purchased. The Company
hereby specifically disclaims any responsibility or liability for any actions or
inactions which may have been taken by the Prior Entity.
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As described elsewhere herein on June 15, 1999, the Company assumed the
obligations under the Consulting Agreement with Project Finance Associates,
Inc., dated April 20, 1999. Pursuant to that Agreement the Company agreed to
issue 1,140,092 shares of Common Stock to Project Finance Associates, Inc. and
to issue warrants to purchase an additional of 200,000 shares of Company Common
Stock. All warrants are exercisable for a period of two years. A total of 50,000
warrants are exercisable at $.25 per share, 50,000 warrants are exercisable at
$.50 per share, 50,000 warrants are exercisable at $.75 per share and 50,000
warrants are exercisable at $1.00 per share. The shares of Common Stock and
warrants were issued in reliance upon the exemption contained in Section 4(2) of
the Act as not involving any public offering.
On July 15, 1999 the Company acquired an 80% interest in NetSurf, Inc.,
a Toronto, Canada-based software and systems developer specializing in internet
servicing and solutions. Prior to its acquisition the Company utilized the
services of NetSurf to develop copyrighted software. The purchase agreement
provided for the issuance of 100,000 shares of Common Stock to the NetSurf
shareholders, subject to increase to a maximum of 1,000,000 additional shares if
the bid price for Company Common Stock remains below $5.00 per share during the
period of July 8, 2000 through July 14, 2000. Thus, the NetSurf shareholders
have in effect been assured that they will receive shares of Common Stock
equivalent to $500,000 in market value. The shares of Common Stock were issued
in reliance upon the exemption contained in Section 4(2) of the Act as not
involving any public offering.
ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Article VIII, Section 3 of the Company's By-laws provides that every
Company director, officer, agent or employee shall be indemnified by the Company
against all expenses and liabilities, including counsel fees and court costs,
reasonably incurred by or imposed upon the indemnified party in connection with
any proceeding to which they may be a party, or in which they may become
involved, by reason of their being or having been a director, officer, agent or
employee, whether they are or were serving at the request of the Company as a
director, officer, agent or employee of the Company or divisions of the Company
at the time said expenses were incurred, except in such cases wherein the
director, officer, agent or employee is adjudged guilty of willful misfeasance
or malfeasance in the performance of duties; provided that in the event of a
settlement the indemnification herein shall apply only when the Board of
Directors approves such settlement and reimbursement as being for the best
interests of the Company.
The Nevada Revised Statutes also deal with the indemnification of
officers and directors.
NRS 78.7502 states as follows:
"1. A corporation may indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative,
except an action by or in the right of the corporation, by reason of the fact
that he is or was a director, officer, employee or agent of the corporation, or
is or was serving at the request of the corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise, against expenses, including attorneys' fees, judgments, fines
and amounts paid in settlement actually and reasonably incurred by him in
connection with the action, suit or proceeding if he acted in good faith and in
a manner which he reasonably believed to be in or not opposed to the best
interests of the corporation, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his conduct was unlawful. The
termination of any action, suit or proceeding by judgment, order, settlement,
11
<PAGE> 13
conviction or upon a plea of nolo contendere or its equivalent, does not, of
itself, create a presumption that the person did not act in good faith and in a
manner which he reasonably believed to be in or not opposed to the best
interests of the corporation, and that, with respect to any criminal action or
proceeding, he had reasonable cause to believe that his conduct was unlawful.
2. A corporation may indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action or
suit by or in the right of the corporation to procure a judgment in its favor by
reason of the fact that he is or was a director, officer, employee or agent of
the corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against expenses, including amounts paid in
settlement and attorneys' fees actually and reasonably incurred by him in
connection with the defense or settlement of the action or suit if he acted in
good faith and in a manner which he reasonably believed to be in or not opposed
to the best interests of the corporation. Indemnification may not be made for
any claim, issue or matter as to which such a person has been adjudged by a
court of competent jurisdiction, after exhaustion of all appeals therefrom, to
be liable to the corporation or for amounts paid in settlement to the
corporation, unless and only to the extent that the court in which the action or
suit was brought or other court of competent jurisdiction determines upon
application that in view of all the circumstances of the case, the person is
fairly and reasonably entitled to indemnity for such expenses as the court deems
proper.
3. To the extent that a director, officer, employee or agent of a
corporation has been successful on the merits or otherwise in defense of any
action, suit or proceeding referred to in subsections 1 and 2, or in defense of
any claim, issue or matter therein, the corporation shall indemnify him against
expenses, including attorneys' fees, actually and reasonably incurred by him in
connection with the defense."
NRS 78.751 states as follows:
"1. Any discretionary indemnification under NRS 78.7502 unless ordered
by a court or advanced pursuant to subsection 2, may be made by the corporation
only as authorized in the specific case upon a determination that
indemnification of the director, officer, employee or agent is proper in the
circumstances. The determination must be made:
(a) By the stockholders;
(b) By the board of directors by majority vote of a quorum consisting
of directors who were not parties to the action, suit or proceeding;
(c) If a majority vote of a quorum consisting of directors who were not
parties to the action, suit or proceeding so orders, by independent
legal counsel in a written opinion; or (d) If a quorum consisting of
directors who were not parties to the action, suit or proceeding cannot
be obtained, by independent legal counsel in a written opinion.
2. The articles of incorporation, the bylaws or an agreement made by
the corporation may provide that the expenses of officers and directors incurred
in defending a civil or criminal action, suit or proceeding must be paid by the
corporation as they are incurred and in advance of the final disposition of the
action, suit or proceeding, upon receipt of an undertaking by or on behalf of
the director or officer to repay the amount if it is ultimately determined by a
court of competent jurisdiction that he is not entitled to be indemnified by the
corporation. The provisions of this subsection do not affect any rights to
advancement of expenses to which corporate personnel other than directors or
officers may be entitled under any contract or otherwise by law.
12
<PAGE> 14
3. The indemnification and advancement of expenses authorized in or
ordered by a court pursuant to this section:
(a) Does not exclude any other rights to which a person seeking
indemnification or advancement of expenses may be entitled under the
articles of incorporation or any bylaw, agreement, vote of stockholders
or disinterested directors or otherwise, for either an action in his
official capacity or an action in another capacity while holding his
office, except that indemnification, unless ordered by a court pursuant
to NRS 78.7502 or for the advancement of expenses made pursuant to
subsection 2, may not be made to or on behalf of any director or
officer if a final adjudication establishes that his acts or omissions
involved intentional misconduct, fraud or a knowing violation of the
law and was material to the cause of action. (b) Continues for a person
who has ceased to be a director, officer, employee or agent and inures
to the benefit of the heirs, executors and administrators of such a
person."
NRS 78.752 states as follows:
"1. A corporation may purchase and maintain insurance or make other
financial arrangements on behalf of any person who is or was a director,
officer, employee or agent of the corporation, or is or was serving at the
request of the corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise for any
liability asserted against him and liability and expenses incurred by him in his
capacity as a director, officer, employee or agent, or arising out of his status
as such, whether or not the corporation has the authority to indemnify him
against such liability and expenses.
2. The other financial arrangements made by the corporation pursuant to
subsection 1 may include the following:
(a) The creation of a trust fund.
(b) The establishment of a program of self-insurance.
(c) The securing of its obligation of indemnification by granting a
security interest or other lien on any assets of the corporation.
(d) The establishment of a letter of credit, guaranty or surety.
No financial arrangement made pursuant to this subsection may provide
protection for a person adjudged by a court of competent jurisdiction, after
exhaustion of all appeals therefrom, to be liable for intentional misconduct,
fraud or a knowing violation of law, except with respect to the advancement of
expenses or indemnification ordered by a court.
3. Any insurance or other financial arrangement made on behalf of a
person pursuant to this section may be provided by the corporation or any other
person approved by the board of directors, even if all or part of the other
person's stock or other securities is owned by the corporation.
4. In the absence of fraud:
(a) The decision of the board of directors as to the propriety of the
terms and conditions of any insurance or other financial arrangement
made pursuant to this section and the choice of the person to provide
the insurance or other financial arrangement is conclusive; and
(b) The insurance or other financial arrangement:
(1) Is not void or voidable; and
13
<PAGE> 15
(2) Does not subject any director approving it to personal
liability for his action, even if a director approving the
insurance or other financial arrangement is a beneficiary of
the insurance or other financial arrangement.
5. A corporation or its subsidiary which provides self-insurance for
itself or for another affiliated corporation pursuant to this section is not
subject to the provisions of Title 57 of NRS."
PART III
ITEM 1. INDEX TO EXHIBITS.
<TABLE>
<CAPTION>
ITEM PAGE
---- ----
<S> <C>
(2)(a) Articles of Incorporation, as amended
(2)(b) By-Laws, as amended
(3)(a) Form of Common Stock certificate
(3)(b) Warrant for Project Finance Consultants, Inc.
(6)(a) Consulting Agreement, dated April 20, 1999 by and between the
Company and Project Finance Associates, Inc.
(6)(b) Form of Non-Competition Agreement with Prior Owners
(12)(a) Acquisition Agreement by and between Company and
Hotyellow98.com dated June 15, 1999.
(12)(b) Acquisition Agreement by and between
Company, Netsurf, Inc. and its Shareholders, dated July 15, 1999.
(12)(c) Marketing and Confidentiality Agreement between Company and
E-Commerce Exchange, LLC dated July 13, 1999.
ITEM 2. DESCRIPTION OF EXHIBITS.
(2)(a) Articles of Incorporation, as amended
(2)(b) By-Laws, as amended
(3)(a) Form of Common Stock certificate
(3)(b) Warrant for Project Finance Consultants, Inc.
(6)(a) Consulting Agreement, dated April 20, 1999, by and between the
Company and Project Finance Associates, Inc.
(6)(b) Form of Non-Competition Agreement with Prior Owners.
</TABLE>
14
<PAGE> 16
<TABLE>
<S> <C>
(12)(a) Acquisition Agreement by and between Company and
Hotyellow98.com dated June 15, 1999.
(12)(b) Acquisition Agreement by and between
Company, Netsurf, Inc. and its Shareholders, dated July 15, 1999.
(12)(c) Marketing and Confidentiality Agreement between Company and
E-Commerce Exchange, LLC dated July 13, 1999.
</TABLE>
PART F/S
Audited financial statements for years ended December 31, 1998 and 1997
and unaudited financial statements for four months ended April 30, 1999 are
attached hereto.
SIGNATURES
Pursuant to the requirements of Section 12 of the Securities Exchange
Act of 1934, the registrant has duly caused this registration statement to be
signed on its behalf by the undersigned, thereunto duly authorized.
HotYellow98.Com, Inc.
---------------------
Registrant
Date: August 20, 1999 By: /s/ Francis. R. Law
--------------------
Francis R. Law
Chief Financial Officer
15
<PAGE> 17
[A.E. BELL LETTERHEAD]
INDEPENDENT AUDITORS' REPORT
To the Shareholders and Board of Directors Union Chemical Corporation
We have audited the accompanying balance sheets of Union Chemical
Corporation (a development stage Company) as of December 31, 1998 and December
31, 1997 and the related statement of income, stockholders equity and cash flows
for the year ended December 31, 1998 and December 31, 1997. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Union Chemical Corporation
(a development stage Company) as of December 31, 1998 and December 31, 1997 and
the results of its operations and its cash flows for the years ended December
31, 1998 and December 31, 1997 in conformity with generally accepted accounting
principles.
As discussed in Note 1 to the financial statements, the Company has been in
the development stage since its inception on June 9, 1997. Realization of a
major portion of the assets is dependent upon the Company's ability to meet its
future financing requirements, and the success of future operations. These
factors raise substantial doubt about the Company's ability to continue as a
going concern.
St. Louis, Missouri
October 14, 1998
and
January 5, 1999
-1-
<PAGE> 18
UNION CHEMICAL CORPORATION
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEETS
DECEMBER 31, 1998 & 1997
(See Independent Auditors Report)
ASSETS
<TABLE>
<CAPTION>
DECEMBER DECEMBER
31, 1998 31, 1997
-------- --------
<S> <C> <C>
CASH $ 10,070 $ 10,070
OTHER
Organization costs 3,482 3,482
Deferred tax asset,
Net of valuation allowance (Note 3) - -
-------- --------
$ 13,552 $ 13,552
======== ========
</TABLE>
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<S> <C> <C>
Stockholders' Equity
Common stock, no par value -
shares authorized, 25,000,000;
issued and outstanding, 1,521,840 $ 15,218 $ 15,218
Deficit accumulated during the
Development stage (1,666) (1,666)
-------- --------
TOTAL $ 13,552 $ 13,552
======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
-2-
<PAGE> 19
UNION CHEMICAL CORPORATION
(A DEVELOPMENT STAGE COMPANY)
INCOME STATEMENT
FOR THE PERIODS ENDING
DECEMBER 31, 1998 AND DECEMBER 31, 1997
(See Independent Auditors' Report)
<TABLE>
<CAPTION>
CUMULATIVE
DURING
YEAR ENDED YEAR ENDED DEVELOPMENT
1998 1997 STAGE
--------- -------- --------
<S> <C> <C> <C>
Revenues $ -- $ -- $ --
Expenses $ -- $ 1,666 $ 1,666
-------- -------- --------
Net Loss Before Income Taxes $ -- $ 1,666 $ 1,666
Income Taxes (Note 3) $ -- $ -- $ --
-------- -------- --------
Net Loss $ -- $ 1,666 $ 1,666
-------- -------- --------
Net Loss per Common Share
Continuing Operations $ -- $ -- $ --
-------- -------- --------
Weighted Average
Shares Outstanding 823,439 823,439 823,439
======== ======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
-3-
<PAGE> 20
UNION CHEMICAL CORPORATION
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE PERIODS ENDED DECEMBER 31, 1998 AND 1997
(See Independent Auditors' Report)
<TABLE>
<CAPTION>
EQUITY
ACCUMULATED
COMMON COMMON DURING THE
STOCK STOCK DEVELOPMENT
SHARES AMOUNT STAGE TOTAL
------ ------ ----- -----
<S> <C> <C> <C> <C>
Inception, June 9, 1997 -- $ -- $ -- --
Issuance of common stock
during the period ended
December 31, 1997 1,521,840 $ 15,218 -- 15,218
Net Loss for year ended
December 31, 1998 -- -- (1,666) (1,666)
--------- --------- --------- ---------
Balance, December 31, 1998 1,521,840 $ 15,218 $ (1,666) $ 13,552
========= ========= ========= =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
-4-
<PAGE> 21
UNION CHEMICAL CORPORATION
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CASH FLOWS
FOR THE PERIOD ENDED
DECEMBER 31, 1998 AND 1997
(See Independent Auditors' Report)
<TABLE>
<CAPTION>
YEAR YEAR CUMULATIVE
END ENDED DURING
DECEMBER 31 DECEMBER 31 DEVELOPMENT
1998 1997 STAGE
---- ---- -----
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net (loss) $ -- $ (1,666) $ (1,666)
Adjustments to reconcile net
Loss to net cash used in operating activities:
Changes in assets & liabilities:
Increase in organization costs -- (3,482) (3,482)
Increase in deferred tax asset -- -- --
Increase in valuation allowance -- -- --
--------- -------- --------
Cash Used in Operating Activities $ $ (5,148) $ (5,148)
--------- -------- --------
Financing Activities
Stock issued for cash $ $ 15 218 $ 15,218
--------- -------- -------
Cash Provided Financing Activities $ $ 15,218 $ 15,218
--------- -------- -------
Net Change in Cash $ $ 10,070 $ 10,070
Cash at Beginning of Period $ 10,070 $ -- $ --
--------- -------- --------
Cash at End of Period $ 10,070 $ 10,070 $ 10,070
======== ======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements,
-5-
<PAGE> 22
UNION CHEMICAL CORPORATION
(A DEVELOPMENT STAGE COMPANY)
SUMMARY OF ACCOUNTING POLICIES
Noncash Securities Issuance Shares of common stock issued for other than
cash have been assigned amounts equivalent to
the fair value of the services received in
exchange.
Earnings (Loss) per Share Earnings (loss) per share are based on the
weighted average number of common equivalent
shares outstanding during the periods
presented.
Cash Equivalents The Company considers all highly liquid Debt
instruments purchased with a maturity of three
months or less to be cash equivalent for
purposes of the statements of cash flows.
Income Taxes The Company accounts for income taxes on
the liability method, deferred income taxes
are provided on the differences of assets and
liabilities between financial reporting and
tax returns using enacted tax rates.
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,
disclosure of contingent assets and
liabilities at the date of financial
statements, and the reported amounts of
revenues and expenses during the reporting
period. Actual results could differ from those
estimates.
-6-
<PAGE> 23
UNION CHEMICAL CORPORATION
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
1. Business The Company, a Nevada corporation located in St. Louis,
Missouri, was incorporated on June 9, 1997, and is
currently in the development stage. At the time of its
incorporation, the main purpose of the Company was to
operate as a financial consultant to other companies by
assisting them in management, mergers or acquisitions, and
to arrange funding by either the private sectors or by IPO
of securities. At the present time, the Company is looking
into acquiring other companies to build its asset base for
operations.
2. Development
Stage Company The Company is a development stage company as defined in
Financial Accounting Standards Board Statement No. 7. It
has yet to commence full-scale operations. From inception
through the date of these financial statements, the
Company did not have any revenues or earnings.
If a public market develops for the Company's shares,
certain privately-held companies or business opportunities
may be interested in merging with the Company because the
Company's securities would be publicly traded, thereby
allowing the privately held company to become publicly
traded through the merger.
At the current time, the Company has no agreement,
understanding or arrangement to acquire or participate in
any specific business opportunity nor has it identified
any opportunities for investigation. The Company's
potential future success depends upon its management and
its continuing search for a business opportunity.
3. Income Taxes Deferred income taxes arise from temporary differences
resulting from income and expense items reported for
financial accounting and tax purposes in different
periods. Deferred taxes are classified as current or
noncurrent, depending on the classification of the assets
and liabilities to which they relate. Deferred taxes
arising from temporary differences that are not related
to an asset or liability are classified as current or
noncurrent depending on the periods in which the temporary
differences are expected to reverse.
-7-
<PAGE> 24
UNION CHEMICAL CORPORATION
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
Amounts for deferred tax assets are as follows:
December 31, 1998
---------------------------------------------------------------------
Deferred tax asset, net of
Valuation allowance of $ $
---------------------------------------------------------------------
The following temporary differences gave rise to the deferred
tax asset at December 31, 1998:
December 31, 1998
---------------------------------------------------------------------
Tax benefit of net operating loss carryforward $ 250
-----
Valuation allowance for judgement of realizability
of net operating loss carryforward in future years $(250)
-----
Because the Company has not generated taxable income since its
inception, no provision for income taxes has been made.
The Company has a carryforward of $1,666 in net operating
losses.
If such expenses could not be deducted, the net operating loss
carryforward would be reduced by $1,666.
Supplemental Disclosures December 31, 1998
-------------------------------------------
Amount paid for interest $
Amount paid for income taxes $
-------------------------------------------
-8-
<PAGE> 25
[FELDMAN SHERB HOROWITZ & CO., P.C. LETTERHEAD]
To the Board of directors and Shareholders of
Union Chemical Corporation
We have compiled the accompanying balance sheet of Union Chemical Corporation as
of April 30, 1999, and the related statements of operations, shareholders'
equity and cash flows for the period from January 1, 1999 to April 30, 1999, in
accordance with Statements on Standards for Accounting and Review Services
issued by the American Institute of Certified Public Accountants.
A compilation is limited to presenting information that is the representation of
management in the form of financial statements. We have not audited or reviewed
the accompanying financial statements and, accordingly, do not express an
opinion or any other form of assurance on them.
Certified Public Accountants
August 11, 1999
1
<PAGE> 26
UNION CHEMICAL CORPORATION
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEET
APRIL 30, 1999
(UNAUDITED)
ASSETS
NONE
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<S> <C>
STOCKHOLDERS' EQUITY
Common stock, par value $.001, shares authorized, 25,000,000;
issued and outstanding,1,521,840 $ 1,522
Additional paid-in capital 13,696
Deficit accumulated during the
development stage (15,218)
--------
TOTAL $
========
</TABLE>
See accountant's compilation report and accompanying notes
2
<PAGE> 27
UNION CHEMICAL CORPORATION
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
For the four Cumulative
months ended During the
April 30, Development
1999 Stage
------------ ------------
<S> <C> <C>
Revenue $ $
Expenses 13,552 15,218
----------- -----------
Net loss $ (13,552) $ (15,218)
=========== ===========
Basic loss per common share $ (0.01) $ (0.01)
----------- -----------
Weighted average shares outstanding 1,521,840 1,521,840
=========== ===========
</TABLE>
See accountant's compilation report and accompanying notes
3
<PAGE> 28
-UNION CHEMICAL CORPORATION
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF STOCKHOLDERS' EQUITY
(UNAUDITED)
<TABLE>
<CAPTION>
Deficit
Accumulated
Common Common During the
Stock Stock Development
Shares Amount Stage Total
---------- ---------- ------------- ----------
<S> <C> <C> <C> <C>
Balance, December 31,1998 1,521,840 $ 15,218 $ (1,666) $ 13,552
Net loss for the four months ended
April 30, 1999 (13,552) (13,552)
---------- ---------- ---------- ----------
Balance, April 30, 1999 1,521,840 $ 15,218 $ (15,218) $ --
========== ========== ========== ==========
</TABLE>
See accountant's compilation report and accompanying notes
4
<PAGE> 29
UNION CHEMICAL CORPORATION
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH PLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
For the four Cumulative
Months ended During the
April 30 Development
1999 Stage
-------- -------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $(13,552) $(15,218)
-------- --------
Adjustments to reconcile net loss to net cash
used in operations:
Depreciation and amortization 3,482 3,482
Changes in assets and liabilities:
Increase in organization costs (3,482)
-------- --------
Total Adjustments 3,482
-------- --------
NET CASH USED IN OPERATIONS (10,070) (15,218)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Stock issued for cash -- 15,218
-------- --------
NET CASH PROVIDED BY FINANCING
ACTIVITIES -- 15,218
-------- --------
NET DECREASE IN CASH (10,070)
CASH - beginning of period 10,070
-------- --------
CASH - end of period $ $
======== ========
</TABLE>
See accountant's compilation report and accompanying notes
5
<PAGE> 30
UNION CHEMICAL CORPORATION.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENT
1. THE COMPANY
The Union Chemical Corporation ("the Company"), a Nevada corporation
located in St. Louis, Missouri, was incorporated on June 9, 1997, and
is currently in the development stage. At the time of its
incorporation, the main purpose of the Company was to operate as a
financial consultant to other companies by assisting them in
management, mergers or acquisitions, and to arrange funding by either
the private sectors or by IPO of securities. The Company is looking
into acquiring other companies to build its asset base for operations.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a. Use of Estimates
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts
of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates.
b. Earning per share
Basic loss per share common share is based upon the weighted
average number of shares outstanding.
3. SUBSEQUENT EVENTS
a. In May 1999, the Company issued 560,000 shares of its common
stock for consulting services.
b. On June 15, 1999, the Company issued 20,720,000 shares of its
common stock to the shareholders of HotYellow98.Com, Inc., an
Arizona corporation, for the assets of its website business
including the use of the name "HotYellow98.Com." The Company then
changed its name to HotYellow98.Com, Inc.
c. On July 20, 1999, the Company acquired 80% of the outstanding
shares of Netsurf. Net, a provider of internet services and
solutions.
6
<PAGE> 31
UNAUDITED PRO FORMA FINANCIAL STATEMENTS
The following unaudited pro forma financial statements as of April 30, 1999
presents the pro forma financial position of HotYellow98.Com, Inc. ("HotYellow,"
formerly known as Union Chemical Corporation (the "Company")) at April 30, 1999
as if the Company had issued 20,700,000 shares of its common stock to the
shareholders of HotYellow98.Com, Inc., an Arizona corporation, for certain
assets and the use of the name of HotYellow98.Com, Inc. at such date.
The unaudited pro forma statement of operations for the four months ended April
30, 1999, reflect the results of HotYellow as if the transaction summarized in
the preceding paragraph had occurred as of January 1, 1999.
The unaudited pro forma statement of operations do not necessarily represent
actual results that would have been achieved had HotYellow and certain assets
including the operations of HotYellow98.Com, Inc. had been purchased at the
beginning of the period, nor is this necessarily indicative of future results.
These unaudited pro forma financial statements should be read in conjunction
with the historical financial statements of the Company.
7
<PAGE> 32
HOTYELLOW98.COM, INC.
PRO FORMA BALANCE SHEET
APRIL 30, 1999
(UNAUDITED)
<TABLE>
<CAPTION>
Historical
--------------
Union Chemical Pro-Forma
Corporation Adjustments Pro-Forma
-------------- ----------- ---------
<S> <C> <C> <C>
ASSETS
Other assets:
Intangible assets $ $ 200,000 $ 200,000
--------- --------- ---------
$ $ 200,000 $ 200,000
========= ========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Stockholders' equity:
Common stock, par value $.001,
shares authorized, 25,000,000;
issued and outstanding,
22,241,840 $ 1,522 $ 20,720 $ 22,242
Additional paid in capital 13,696 179,280 192,976
Accumulated deficit (15,218) -- (15,218)
--------- --------- ---------
TOTAL $ -- $ 200,000 $ 200,000
========= ========= =========
</TABLE>
See notes to the pro forma financial statements
8
<PAGE> 33
HOTYELLOW98.COM, INC.
PRO FORMA STATEMENTS OF OPERATIONS
FOR THE FOUR MONTHS ENDED APRIL 30, 1999
(UNAUDITED)
<TABLE>
<CAPTION>
Historical
--------------
Union Chemical HotYellow98.Com,
Corporation Inc. Pro-Forma
-------------- ---------------- -----------
<S> <C> <C> <C>
Revenue $ -- $ 832,589 $ 832,589
Cost of revenue -- 106,437 106,437
----------- ----------- -----------
Gross profit 726,152 726,152
----------- ----------- -----------
Expenses 13,552 546,187 559,739
----------- ----------- -----------
Net income (loss)
before income taxes (13,552) 179,965 166,413
Income taxes 56,580 56,580
----------- ----------- -----------
Net income (loss) $ (13,552) $ 123,385 $ 109,833
=========== =========== ===========
Basic loss per common
share $ (0.01) $ 0.01 $ --
----------- ----------- -----------
Weighted average
shares outstanding 1,521,840 20,720,000 22,241,840
=========== =========== ===========
</TABLE>
See notes to the pro forma financial statements
9
<PAGE> 34
HOTYELLOW98.COM, INC.
NOTES TO PRO FORMA FINANCIAL STATEMENTS
APRIL 30, 1999
(UNAUDITED)
1. The unaudited pro forma balance sheet as of April 30, 1999 presents the pro
forma financial position of HotYellow98.Com, Inc. ("HotYellow," formerly known
as Union Chemical Corporation (the "Company)) at April 30, 1999 as if the
Company had issued 20,700,000 shares of its common stock to the shareholders of
HotYellow98.Com, Inc., an Arizona corporation, for intangible assets at such
date. The intangible assets have been valued at $200,000.
2. The unaudited pro forma statement of operations for the four months ended
April 30,1999 reflect the results of HotYellow as if the transaction summarized
in note 1 had occurred as of January 1,1999. Income taxes have been provided at
a rate of 34%.
10
<PAGE> 1
EXHIBIT 2A
SECRETARY OF STATE
STATE OF NEVADA
THE GREAT SEAL OF THE STATE OF NEVADA
CORPORATE CHARTER
I, DEAN HELLER, the duly elected and qualified Nevada Secretary of State,
do hereby certify that UNION CHEMICAL CORP. did on June 9 1997, file in
this office the original Articles of Incorporation; that said Articles are
now on file and of record in the office of the Secretary of State of the
State of Nevada, and further, that said Articles contain all the provisions
required by the law of said State of Nevada.
IN WITNESS WHEREOF, I have hereunto
set my hand and the Great Seal of
State, at my office, in Carson
City, Nevada, on June 10, 1997.
Secretary of State
By Certification Clerk
<PAGE> 2
EXHIBIT 2A
Articles of Incorporation
(PURSUANT TO NRS 78)
STATE OF NEVADA
Secretary of State
NAME OF CORPORATION: UNION CHEMICAL CORP.
RESIDENT AGENT: (designated resident agent and his street address in Nevada
where process may be served)
Name of Resident Agent: 1ST CLASS ONLY
Street Address: 1504 HWY #395 N. Ste.#8-01000-Gardnerville, NV
89410-5273
Shares: (number of shares the corporation is authorized to issue)
Number of shares with par value: 25,000,000 Par value $001. Number of shares
without par value:
GOVERNING BOARD: shall be styled as (check one):
XXX Directors Trustees
The FIRST BOARD OF DIRECTORS shall consist of 1 members and the names and
addresses are as follows (attach additional pages if necessary):
Terrall W. Chilcoat 1504 #8-00059 Main St.-Gardnerville, NV 89410-5273
PURPOSE (optional--see reverse side): The purpose of the corporation shall be:
INTENTIONALLY LEFT BLANK
Other matters: This form includes the minimal statutory requirements to
incorporate under NRS 78. You may attach additional information pursuant to NRS
78.037 or any other information you deem appropriate. If any of the additional
information is contradictory to this form, it cannot be filed and shall be
returned to you for correction. Number of pages attached: 6.
SIGNATURES OF INCORPORATORS: The names and addresses of each of the
incorporators signing the articles: (signatures must be notarized). Attach
additional pages (if there are more than two incorporators).
TERRALL W. CHILCOAT
Name (print)
1504 #8-00059 Main St.-Gardnerville, NV 89410-5273
Address City/State/Zip
/s/ Terrall W. Chilcoat
Signature
This instrument was as acknowledged before me on June 9, 1997 by
Terrall W. Chilcoat
Incorporator Union Chemical Corp.
(name of party on behalf of whom instrument was executed)
/s/ Kari Rhodes
Notary Public Signature
<PAGE> 3
Articles of Incorporation
of
UNION CHEMICAL CORP.
KNOW ALL MEN BY THESE PRESENTS:
That I, TERRALL W. CHILCOAT, the incorporator, do hereby form a
corporation under the laws of the State of Nevada relating to general
corporations.
I do hereby certify:
FIRST: That the name of the Corporation is:
UNION CHEMICAL CORP.
SECOND:
That the registered office and the statutory address of this
Corporation is to be located at 1504 Hwy #395 N. Suite
18-01000, Gardnerville, Douglas County, Nevada, although the
Corporation may maintain an office or offices in places, towns
and cities within or without the State of Nevada as the duly
elected and qualified Board of Directors may, from time to
time, determine or as may be designated by the Bylaws of this
Corporation.
THIRD: The objects for which this Corporation is formed are: To
engage in any lawful activity, except banking, insurance,
gaming and engineering unless approved by the appropriate
licensing bodies of the State of Nevada, although including
but not limited to the following;
(a) Shall have all rights, privileges and powers as may be
conferred upon corporations by any existing law, and may at
any time exercise those rights, privileges and powers, when
not inconsistent with the purposes and objects for which this
Corporation is formed. It is the intention that the objects,
purposes and powers specified herein shall be nowise limited
or restricted by reference to or inference from the terms of
any other clause or paragraph in this Articles of
Incorporation, but that the objects, purposes and powers
specified in each of the clauses or paragraphs of this charter
shall be regarded as independent objects, purposes and powers.
(b) Shall have the power to have succession by its corporate
name for the period limited in its Articles of Incorporation,
and when no period is limited or specified, to exist in
perpetuity, or until it dissolves itself or is dissolved and
its affairs wound up according to law.
(c) Shall have the power to sue and be sued, complain and
defend, in its name, in any court of law or equity.
(d) Shall have the power to make legal and binding contracts
with whomever it wishes as directed by the Board of Directors.
(e) Shall have the power to hold, purchase and convey real
and personal estate and to mortgage or lease said real and
personal estate with its franchises, including the power to
take the same by devise or bequest in the State of Nevada, or
in any other state, territory or country.
(f) Shall have the power to appoint all officers and agents
as the affairs of this Corporation shall require, and to allow
them suitable compensation as established in the Bylaws.
(g) Shall have the power to make Bylaws not inconsistent
with the constitution or laws of the United States, or the
State of Nevada, for the management regulation and
<PAGE> 4
government of its affairs and property, the transfer of its
stock, the transaction of its business, and the calling and
holding of meetings of its stockholders.
(h) Shall have the power to adopt and use a common seal or
stamp and alter the same at its pleasure. The use of a seal or
stamp by this Corporation on any corporate documents is not
necessary or required. The Corporation may use a seal or
stamp, if it desires, although said use or nonuse shall not in
any way affect the legality of its documents.
(i) Shall have the power to borrow or lend money and
contract debts when necessary for the transaction of its
business, or for the exercise of its corporate rights,
privileges or franchises, to draw, make, accept, endorse,
negotiate, discount, buy, sell, deal in, execute or issue
bonds, promissory notes, bills of exchange, warrants,
debentures, negotiable or transferable instruments and other
obligations and evidences of indebtedness, payable upon the
happening of a specified event or events, whether secured by
mortgage, pledge or otherwise, or unsecured, for money
borrowed, or in payment for property purchased, or acquired,
or for any other lawful object or purpose of its
incorporation.
(j) Shall have the power to own, use, employ, guarantee,
convey, lease, exchange, purchase, hold, receive, take, sell,
assign, barter, trade, endorse, discount, lend, transfer,
subscribe for or otherwise acquire, mortgage, pledge or
otherwise dispose of the shares of the capital stock, or any
bonds, securities or evidences of the indebtedness created by
any other corporation or corporations of the State of Nevada,
or any other state or government, and in further, while owners
of said stock, bonds, securities or evidences of indebtedness,
to exercise all the rights, powers and privileges of
ownership, including the right to vote, if any voting
privileges exist.
(k) Shall have the power and use thereof, of its capital,
capital surplus, surplus, or other property or fund to further
the objects of this Corporation and to purchase, hold, sell
and transfer shares of its own capital stock, known as
"treasury shares", either directly or indirectly, by the
Corporation or a wholly owned subsidiary of the Corporation,
so long as aforementioned purchase does not impair the
corporate capital to the detriment of the stockholders and
creditors if any creditors exist, except that shares of its
own stock belonging to the Corporation must not be voted upon,
directly or indirectly, nor counted as outstanding shares for
any purpose, to compute any stockholders' quorum or vote, nor
participate in distributions or as assets for the purpose of
computing the amount available for distributions, or the
purchase of shares issued by this Corporation. Unless the
Articles of Incorporation provide otherwise, treasury shares
may be retired and restored to the status of authorized and
unissued shares without an amendment to the Articles of
Incorporation or may be disposed of for any consideration as
the Board of Directors may determine.
(1) Shall have the power to conduct business, have one or
more offices for said purposes, and hold, purchase, mortgage
and convey real and personal property in the State of Nevada,
and in any of the several states, territories, possessions and
dependencies of the United States, the District of Columbia,
and any foreign countries allowed by law.
(m) Shall have the power to do all and everything necessary
and proper for the accomplishment of the objects enumerated in
its Articles of Incorporation or Bylaws, or any amendment
thereof, or necessary or incidental to the protection and
benefit of the Corporation and, in general, to carry on any
lawful business necessary or incidental to the attainment of
the objects of this Corporation, or any amendment thereof.
<PAGE> 5
(n) Shall have the power to make donations for the public
good and welfare, or for charitable, scientific advancement or
educational purposes and to use these donations for taxable
deductions.
(o) Shall have the power to enter into partnerships, limited
or general, or joint ventures, in connection with any lawful
activities.
(p) Shall be recognized as a legal entity beyond the limits
of this state and that, subject to any reasonable requirement
of registration, any business or activities transacted outside
this state be granted protection of full faith and credit
under Section 1 of Article IV of the Constitution of the
United States.
FOURTH: No stockholder shall be entitled as a preemptive right to
subscribe for or receive additional or unissued shares of any
class of stock of this Corporation, or any bonds, debentures
or securities convertible into stock, although any stated
additional shares of stock or other securities convertible
into stock may be issued or disposed of by the Board of
Directors to those persons and on those terms as in its
discretion it shall deem advisable. That the total number of
common stock authorized that may be issued by this Corporation
is TWENTY FIVE MILLION (25,000,000) shares of stock with a
nominal or par value of ONE TENTH OF ONE CENT ($00.001) per
share of stock and no other class of stock shall be authorized
without amendment to the Articles of Incorporation by the
Board of Directors. Said shares of stock may be issued by the
Corporation, from time to time, for any stated considerations
as may be fixed by the Board of Directors, although before the
Corporation may issue shares of stock the Board of Directors
must determine that the consideration received or to be
received for the shares of stock to be issued is adequate. The
judgement of the Board of Directors as to the adequacy of the
consideration received for the shares of stock issued is
conclusive in the absence of actual fraud in the transaction.
FIFTH: The capital stock, after the amount of the subscription price,
or par value, has been paid in, shall not be subject to
assessment to pay the debts of the Corporation and shall have
full entitlement to receive the net assets of this Corporation
upon dissolution.
SIXTH: The governing board of this Corporation shall be known as
directors and shall be natural persons who are at least
eighteen (18) years of age and the number of directors may,
from time to time, be increased or decreased in any stated
manner as shall be provided by the Bylaws of this Corporation,
providing that the number of directors shall not be reduced to
less than one (1). The Board of Directors shall have full
control over the affairs of the Corporation subject only to
any and all limitations as may be provided by statute, these
Articles of Incorporation and Bylaws.
The name and post office address of the first members of the
Board of Directors, until the first annual meeting of
stockholders and their successors are elected and qualify,
shall be ONE (1) in number and listed as follows:
POST OFFICE ADDRESS
NAME TERRALL W. CHILCOAT 1504 #8-00059 Main St.
Gardnerville, Nevada 89410-5273
SEVENTH: The powers of the Incorporator are to terminate after the
first Board of Directors meeting. The name and post office
address of the incorporator signing the Articles of
Incorporation is as follows:
<PAGE> 6
POST OFFICE ADDRESS
NAME TERRALL W. CHILCOAT 1504 #8-00059 Main St.
Gardnerville, Nevada 89410-5273
EIGHTH: The resident agent for this Corporation shall be;
1ST CLASS ONLY
The address of said agent in the State of Nevada is;
1504 Highway #395 N. Suite #8-01000
Gardnerville, Nevada 89410-5273
NINTH: The Corporation is to have perpetual existence.
TENTH: In furtherance and not in limitation of the powers conferred
by statute, the Board of Directors is expressly authorized:
(a) Subject to the Bylaws, if any have been adopted by the
stockholders, if none be made, to make, alter or amend the
Bylaws of this Corporation for the regulation of the internal
affairs of this Corporation subject to the approval of the
stockholders.
(b) To fix the amount to be reserved as working capital over
and above its capital stock paid in; to authorize and cause
to be executed, mortgages and liens upon the real and
personal property of this Corporation.
(c) By resolution passed by majority of the whole Board of
Directors, to designate one (1) or more committees, each
committee to consist of one or more directors of the
Corporation, and may have additional committee members who
are natural persons, although not directors, and must be
approved by the Board of Directors, which, to the extent
provided in the resolution, or in the Bylaws of this
Corporation, shall have and may exercise the powers of the
Board of Directors in the management of the business and
affairs of the Corporation. The aforementioned committee, or
committees, shall have any and all names, or name, as may be
stated in the Bylaws of this Corporation, or as may be
determined, from time to time, by resolution adopted by the
Board of Directors.
(d) When and as authorized by the affirmative vote of the
stockholders holding stock entitling them to exercise at
least a majority of the voting power given at a stockholders
meeting called for that purpose, or when authorized by
written consent of the holders of at least a majority of the
voting stock issued and outstanding, the Board of Directors
shall have power and authority at any so stated meeting to
sell, lease or exchange all, or any part, of the property and
assets of this Corporation, including its good will and its
corporate franchises, upon any and all terms and conditions
as its Board of Directors deems expedient and or the best
interests of the Corporation.
ELEVENTH: No director or officer of this Corporation shall be
personally liable to this Corporation or any of its
stockholders for damages for breach of fiduciary duty as a
director or officer involving any act of omission of any said
director or officer; provided, however, that the foregoing
provision shall not eliminate or limit the liability of said
director or officer (i) for acts or acts of omission which
involve intentional misconduct, fraud or a knowing violation
of the law, or (ii) the payment of dividends in violation of
Section 78.300 of the Nevada Revised Statutes. Any repeal or
modification of this Article by the stockholders of the
Corporation shall be prospective only, and shall not
adversely affect any limitation of the personal liability of
any director or officer of this Corporation for acts or acts
of omissions prior to aforesaid repeal or modification.
<PAGE> 7
TWELFTH: This Corporation, upon any and all terms and conditions as its
Board of Directors deems expedient and for the best interests
of the Corporation, reserves the right to amend, alter, change
or repeal, in any manner, any provision contained in the
Articles of Incorporation, in the manner now or hereafter
prescribed by statute, and all rights conferred upon
stockholders herein are granted subject to this reservation.
THIRTEEN: Whenever possible, each provision of these Articles
of Incorporation shall be interpreted in such a manner as to
be effective and valid under applicable law. However, if any
provision of these Articles of Incorporation shall be held to
be prohibited by or invalid under any law, it shall be deemed
modified to conform to the minimum requirements of said law
or, if for any reason it is not deemed so modified, it shall
be prohibited or invalid only to the extent of said
prohibition or invalidity without the remainder thereof or any
other said provision of these Articles of Incorporation being
prohibited or invalid.
<PAGE> 8
CERTIFICATE OF AMENDMENT OF ARTICLES OF INCORPORATION
UNION CHEMICAL CORPORATION
Name of Corporation
We the undersigned President Richard S. Berger and Richard S. Berger Secretary
of UNION CHEMICAL CORPORATION do hereby certify:
That the Board of Directors of said corporation at a meeting duly convened, held
on the 15th day of June 1999 adopted a resolution to amend the original articles
as follows:
Article 1 and 4 is hereby amended to read as follows:
FIRST: The name of the corporation shall be "HotYellow98.Com, Inc."
FOURTH: The authorized shares shall be increased to 100 million. The Par
Value shall remain 00$.001.
The number of shares of the corporation outstanding and entitled to vote on
an amendment to the Articles of Incorporation is 2,081,840; that the said
change(s) and amendment have been consented to and approved by a majority vote
of the stockholders holding at least a majority of each class of stock
outstanding and entitled to vote thereon.
/s/ R.S. Berger
---------------------------------
President or Vice President
/s/ R.S. Berger
---------------------------------
Secretary of Assistant Secretary
)
State of Illinois )ss.
County of Cook )
On June 15th, 1999, personally appeared before me, a Notary Public,
Richard S. Berger, who acknowledged that they executed the above instrument.
Cheryle Ann Stone
---------------------------------
Signature of Notary
<PAGE> 1
EXHIBIT 2B
BYLAWS
OF
UNION CHEMICAL CORP.
ARTICLE I - OFFICES
SECTION 1. The principal office for the transaction of the business of the
Corporation is hereby fixed and located at:
UNION CHEMICAL CORP.
450 OCEAN TERRACE
STATEN ISLAND, NY 10301
SECTION 2. The registered office to serve as the suppository of record
as required by Nevada Revised Statute 78.090 is hereby fixed and located at:
1504 Highway #395 N. Suite #8-01000
Gardnerville, Douglas County, Nevada
SECTION 3. The resident agent for the Corporation and street address
for said resident agent shall be:
1ST CLASS ONLY
1504 Highway #395 N. Suite #8-01000
Gardnerville, Douglas County, Nevada
SECTION 4. The Corporation may have offices, either within or without
the State of Nevada as the Corporation may designate or as the business of the
Corporation may require from time to time or as may be designated by these
Bylaws.
ARTICLE II - MEETING OF STOCKHOLDERS
SECTION 1. ANNUAL MEETINGS. Annual meetings of the stockholders for the
election of directors and for other business as may be stated in the notice of
the meeting, shall be held at any stated place, time and date, either within or
without the State of Nevada, as the Board of Directors, by resolution shall
determine and as set forth in the notice of the meeting. In the event the Board
of Directors fails to so determine the time, date and place of the meeting, the
annual meeting of stockholders shall be held at the registered office of the
corporation in the State of Nevada on:
Date of 1st annual stockholders meeting July 20th of 1998. If the date of
the annual meeting shall fall upon a legal holiday, the so stated meeting shall
be held on the next succeeding business day. At each annual meeting, the
stockholders, entitled to vote, shall elect a board of directors and may
transact other corporate business as shall be stated in the notice of the
proposed meeting. Failure to hold the annual meeting shall not constitute the
dissolution or forfeiture of the Corporation and a special meeting of the
stockholders may take the place thereof if said special meeting is held within
any limit of time as set by the Nevada Revised Statutes. The first board of
directors appointed by the incorporator at the time of incorporation shall
remain the Board of Directors until the first general stockholders meeting and
election of directors are voted upon at that time.
SECTION 2. VOTING - Each stockholder, entitled to vote, in accordance
with the terms and provisions of the Articles of Incorporation and these Bylaws
shall be entitled to one vote, in person or by proxy, for each share of stock
entitled to vote held by said stockholder, but no proxy shall be voted after
three years from its date unless said proxy provides for a longer period set out
by date at its inception,
<PAGE> 2
which in no case shall exceed seven (7) years from the date of its execution.
Upon the demand of any stockholder the vote, for directors and upon any question
before the meeting, shall be so settled by ballot. All elections for directors
shall be decided by plurality vote of all registered stockholders; all other
questions shall be decided by majority vote of stockholders in attendance except
as otherwise provided by the Articles of Incorporation, these bylaws and the
laws of the State of Nevada.
SECTION 3. STOCKHOLDER LIST. The officer who is in charge of the stock
ledger of this Corporation shall at least ten days before each proposed meeting
of stockholders, holding an election, prepare a complete alphabetically
addressed list of the stockholders, entitled to vote, at the ensuing election,
with the number of shares of stock held by each. Said list shall be open to the
examination by any stockholder, for any purpose germane to the meeting during
ordinary business hours for a period of at least ten days prior to the meeting
at a place within the city where the meeting is to be held the location of which
shall be specified in the notice of the so stated meeting. The list shall also
be available for inspection by qualified stockholders at the meeting.
SECTION 4. QUORUM. Except as otherwise required by law, by the Articles
of Incorporation or by these Bylaws, the presence, in person or by proxy, of
holders holding a majority of the stock of this Corporation, entitled to vote,
shall constitute a quorum at any type of stockholders meeting. A majority in
interest of the stockholders, entitled to vote, at so stated meeting, present in
person or by proxy, shall have power to adjourn the meeting from time to time,
without notice other than announcement at the meeting, until the requisite
amount of stock, represented by proxy or in person and entitled to vote, shall
be present, but in the absence of a quorum, no other business may be transacted
at so stated meeting. If a quorum is present at a meeting of the stockholders,
the vote of a majority of the shares represented at said meeting shall be
sufficient to legally bind the Corporation.
SECTION 5. SPECIAL MEETING. Special meetings of the stockholders, for
any purpose other than the election of directors, unless otherwise prescribed by
statute or by the Articles of Incorporation, may be called by the President or
Secretary at the request in writing of a majority of the directors or
stockholders entitled to vote. The aforesaid request shall state the purpose of
the proposed meeting.
SECTION 6. NOTICE OF MEETINGS. Written notice, stating the place, time
and date of the proposed meeting and the general nature of the business to be
considered, shall be given to each stockholder, entitled to vote, at their
address as it appears on the records of the Corporation list of stockholders,
not less than ten nor more than fifty days before the date of said meeting.
SECTION 7. NOTICE AND WAIVER OF NOTICE. Whenever any notice is required
by these Bylaws to be given, personal notice is not meant unless expressly
state, and any notice so required shall be deemed to be sufficient if given by
depositing the same in the United States mail, postage prepaid, addressed to the
person entitled thereto at their address as it appears on the records of this
Corporation, and any and all notices shall be deemed to have been given on the
day mailing was posted. Stockholders not entitled to vote shall not be entitled
to receive notice of any meetings except as otherwise provided by statute.
Whenever any notice whatever is required to be given under the provisions of any
law, or under the provisions of the Articles of Incorporation or these Bylaws a
waiver thereof in writing signed by the person or persons entitled to said
notice, whether before or after the time stated herein, shall be deemed proper
notice.
SECTION 8. BUSINESS TRANSACTED. No business other than that stated in
the notice shall be transacted at any meeting without the unanimous consent of
all the stockholders, entitled to vote, at said meeting.
SECTION 9. ACTION WITHOUT MEETING. Whenever the vote of stockholders at
a meeting thereof is required or permitted to be taken in connection with any
corporate action by any provisions of the statutes or the Articles of
Incorporation or these Bylaws, the meeting and vote of stockholders may be
dispensed with if all the stockholders who would have been entitled to vote upon
said action, if said meeting were held, shall consent in writing to the
corporate action being taken and these writings duly filed in the minutes of the
next meeting by the Secretary of the Corporation.
<PAGE> 3
ARTICLE III - DIRECTORS
SECTION 1. TERM AND INCREASE OR DECREASE OF NUMBER. The first Board of
Directors, until the first annual meeting of stockholders and their successors
are elected and qualify, shall be ONE (1) in number. The directors shall be
elected at the annual meeting of stockholders and each director shall be elected
to serve until the successor shall be elected and qualified. The number of
elective positions as directors may not be less than three except when the
number of beneficially owned stockholders of record are less than three. The
number of elective positions as directors shall always equal the number of
stockholders up to a total of five. The total number of available elective
positions as directors, above the number of five, shall be determined by
dividing the number of stockholders by one hundred. The number reached or
fraction thereof, rounded upward to the nearest whole, shall be the added number
of elective positions as directors. In all instances the number of elective
positions as directors shall be determined by amendment of these Bylaws by the
affirmative vote of a majority of the directors, though less than a quorum, or
by the affirmative vote of a majority in interest of the stockholders, at the
annual meeting or at a special meeting called for that purpose, and by like vote
the additional directors may be chosen at said meeting to hold office until the
next annual election and until their successors are elected and qualify. No
decrease in number shall shorten the term of any director then in office. At no
time shall the elective positions as directors exceed the number willing to
serve.
SECTION 2. RESIGNATIONS. Any director, member of a committee or other
officer may resign at any time. Any resignation shall be made in writing and
shall take effect at the time specified therein, and if no time is specified, at
the time of its receipt by any officer of the Corporation. The acceptance of a
resignation need not be necessary to make it effective.
SECTION 3. VACANCIES. If the office of any director, member of a
committee or other officer becomes vacant, the remaining directors in office,
though less than a quorum by a majority vote, may appoint any qualified person
or persons to fill said vacancy. The appointed person or persons shall hold
office for the unexpired term until the duly elected successor(s) shall
supersede. If the directors fail to elect, for any reason, a successor or
successors to said vacancy or vacancies then the stockholders may act to do so
at any stockholders meeting.
SECTION 4. REMOVAL. Any director or directors may be removed either
with or without cause at any time by the affirmative vote of the stockholders of
the majority shares of stock outstanding and entitled to vote at a special
meeting of the stockholders called for that purpose. The vacancies thus created
may be filled at the meeting held for the purpose of removal by the affirmative
vote of a majority in interest of the stockholders entitled to vote.
SECTION 5. COMPENSATION. Directors shall not receive any stated salary
for their services as directors or as members of committees, but by resolution
of the board a fixed fee and expenses of attendance may be allowed for
attendance at each meeting. Nothing herein contained shall be construed to
preclude any director from serving this Corporation in any other capacity as an
officer, agent or otherwise, and receiving compensation thereof.
SECTION 6. ANNUAL MEETINGS. The annual meeting of the Board of Directors
for the yearly election of officers and for other business as may be stated in
the notice of the proposed meeting, shall be held at any stated place, time and
date, either within or without the State of Nevada, as the Board of Directors,
by resolution, shall determine and as set forth in the notice of said meeting,
although at no time shall the annual meeting be held later than thirty days
after the annual meeting of the stockholders for the election of the Board of
Directors. At each annual meeting, the directors, entitled to vote, shall elect
all the officers that shall serve for the following year.
SECTION 7. VOTING. Each director, entitled to vote, in accordance with
the terms and provisions of the Articles of Incorporation, these Bylaws and the
laws of the State of Nevada shall be entitled to one vote, in person only and no
write-in votes shall be acceptable unless approved by a majority vote of the
directors present at the so stated meeting. The action, by vote of the majority
of the directors present at a meeting at which a quorum is present, shall be the
act and authorized directive of the Board of Directors.
SECTION 8. PRESUMPTION OF ASSENT. A director of the Corporation who is
present at a
<PAGE> 4
meeting of the Board of Directors at which action on any corporate matter is
taken shall be presumed to have assented to the action taken unless the
director's dissent shall be entered in the minutes of the meeting or unless a
written dissent by said director to said action is filed with the person acting
as secretary of the meeting before the adjournment thereof, or shall forward
said dissent by registered mail to the Secretary of the Corporation immediately
after the adjournment of aforesaid meeting. The right to dissent shall not apply
to a director who voted in favor of said action.
SECTION 9. QUORUM. Except as otherwise required by law, by the Articles
of Incorporation or by these Bylaws, the presence of a majority, in person of
elected directors, entitled to vote, shall constitute a quorum, unless those
directors unable to attend submit in writing their disapproval of said meeting,
five (5) days before the aforementioned meeting is to be held, and these
writings duly recorded by the Secretary of the Corporation.
SECTION 10. SPECIAL MEETING. Special meeting of the Board of Directors,
for any purpose, other than the election of officers, unless otherwise
prescribed by statute, the Articles of Incorporation or Bylaws, may be called by
the President or Secretary at the request in writing of a majority of the
directors entitled to vote. The aforesaid request shall state the purpose of the
proposed meeting.
SECTION 11. NOTICE OF MEETINGS. Written notice, stating the place, time
and date of the proposed meeting and the general nature of the business to be
considered, shall be given to each director, entitled to vote, at their address
as it appears on the records of this Corporation list of directors, not less
than ten nor more than fifty days before the date of said meeting.
SECTION 12. NOTICE AND WAIVER OF NOTICE. Whenever any notice is required
by these Bylaws to be given, personal notice is not meant unless expressly
state, and any notice so required shall be deemed to be sufficient if given by
depositing the same in the United States mail, postage prepaid, addressed to the
person entitled thereto at their address as it appears on the records of this
Corporation, and any and all notices shall be deemed to have been given on the
day mailing was posted. Directors not entitled to vote shall be entitled to
receive notice of any meetings except as otherwise provided by statute. Whenever
any notice whatever is required to be given under the provisions of any law, or
under the provisions of the Articles of Incorporation or these Bylaws, a waiver
thereof in writing signed by the person or persons entitled to said notice,
whether before or after the time stated herein, shall be deemed proper notice.
SECTION 13. BUSINESS TRANSACTED. No business other than that stated in
the notice of the meeting shall be transacted at any meeting without the
unanimous consent of all the directors entitled to vote, at said meeting.
SECTION 14. ACTION WITHOUT MEETING. Any action required or permitted to
be taken at any proposed meeting of the Board of Directors, or any committee
thereof in connection with any corporate action by any provisions of the
statutes or the Articles of Incorporation or these Bylaws, may be taken without
a meeting if prior to said action a written consent thereto is signed by all
members of the board, or members of said committee who would have been entitled
to vote upon said action. if said meeting were held, shall consent in writing to
the corporate action being taken and these writings duly filed in the minutes of
the next meeting by the Secretary of the Corporation.
ARTICLE IV - OFFICERS
SECTION 1. OFFICERS. The officers of this Corporation shall consist of
a president, a treasurer, and a secretary, and shall be elected by the Board of
Directors and shall hold office until their successors are elected and
qualified. In addition, the Board of Directors may elect a chairperson, one or
vice presidents and any and all assistant secretaries and assistant treasurers
as it may deem necessary and proper. None of the officers of this Corporation
need be directors. The officers shall be elected at the first meeting of the
Board of Directors after each annual meeting. More than one office may be held
by the same person.
SECTION 2. OTHER OFFICERS AND AGENTS. The Board of Directors may appoint
all
<PAGE> 5
officers and agents as it may deem advisable, who shall hold their respective
offices for there stated terms and shall exercise said power and perform said
duties as shall be determined from time to time by the Board of Directors.
SECTION 3. CHAIRPERSON. The Chairperson of the Board of Directors, if one
be elected, shall preside over all meetings of the Board of Directors, and shall
have and perform said duties as from time to time may be assigned by the Board
of Directors.
SECTION 4. PRESIDENT. The President shall be the chief executive officer
of this Corporation and shall have the general powers and duties of supervision,
direction, control, and management over the operation of the Corporation. The
President shall preside at all meetings of the stockholders, if present, and if
not present said meeting shall be presided over by the Chairperson of the Board
of Directors. The President shall preside, in the absence or nonelection of the
Chairperson of the Board of Directors, at all meetings of the Board of Directors
if the President is also a director. Except as the Board of Directors shall
authorize the execution thereof in some other manner, the President shall
execute bonds, mortgages, and other contracts in behalf of this Corporation, and
those shall be attested to by the signature of the Secretary or the Treasurer or
an assistant secretary or an assistant treasurer.
SECTION 5. VICE PRESIDENT. Each vice president shall have any and all
powers as shall be assigned by the directors.
SECTION 6. TREASURER. The Treasurer shall have the custody of the
corporate funds and securities and shall keep full and accurate account of
receipts and disbursements in books belonging to this Corporation. The Treasurer
shall deposit all moneys and other valuables in the name and to the credit of
this Corporation in those depositories as may be designated by the Board of
Directors by resolution. The Treasurer shall disburse the funds of the
Corporation as may be ordered by the Board of Directors or the President, taking
proper vouchers for any and all disbursements. The Treasurer shall render to the
President and Board of Directors at the regular meetings of the Board of
Directors or whenever they may request it, an account of all transactions and of
the financial condition of the Corporation. If required by the Board of
Directors, and at the Corporation's expense, the Treasurer shall give the
corporation a bond for the faithful discharge of duties in sufficient amount and
with sufficient surety as the board shall prescribe. The Treasurer shall cause
to be timely prepared and filed all necessary Federal, State, County and City
income taxes, business licenses, sales tax returns and any and all other
requirements of law to maintain the corpus of this Corporation before the courts
of this land.
SECTION 7. SECRETARY. The Secretary shall give, or cause to be given,
notice of all proposed meetings of stockholders and directors, and all other
notices required by law or by these Bylaws. In the case of the Secretary's
absence or refusal or neglect to do so, any aforesaid notice may be given by any
person thereunto directed by the President, or by the directors, or
stockholders, upon whose requisition the said meeting is called as provided in
these Bylaws. The Secretary shall record all the proceedings of the meetings of
this Corporation and of directors in a book to be kept for that purpose and
shall affix the seal or stamp to all instruments requiring it, when authorized
by the directors or the President, and attested to by the same.
SECTION 8. ASSISTANT TREASURERS & ASSISTANT SECRETARIES. Assistant
treasurers and assistant secretaries, if any, shall be elected and shall have
said powers and shall perform said duties as shall be assigned to them,
respectively, by the Board of Directors.
ARTICLE V - ISSUED CORPORATE STOCK CERTIFICATES
SECTION 1. CERTIFICATE OF STOCK. Every holder of stock in this
Corporation shall be entitled to have a certificate signed by, or in the name of
the Corporation by, the Chairperson or Vice Chairperson of the Board of
Directors, or the President or a vice president and the Treasurer or an
assistant treasurer, or the Secretary or an assistant secretary of the
Corporation, certifying the number of shares owned by the stockholder in this
Corporation. If the Corporation shall be authorized to issue more than one class
of stock or more than one series or any class, the designations, preferences and
relative participating, optional or other special rights of each class of stock
or series thereof, and the
<PAGE> 6
qualifications, limitations, or restrictions of aforementioned preferences
and/or rights shall be set forth in full or summarized on the face or back of
the certificate that the Corporation shall issue to represent said class or
series of stock except as otherwise provided in Nevada Revised Statutes CHAPTERS
78 and 80 of the Domestic and Foreign Corporation Laws and Nevada Revised
Statutes CHAPTERS 90 and 91 of Securities Laws of the State of Nevada in lieu of
the foregoing requirement, there may be set forth on the face or back of the
certificate that this Corporation shall issue to represent said class or series
of stock, a statement that the Corporation will furnish without charge to each
stockholder who so requests so stated powers, designation, preferences and
relative, participating, optional or other special rights of each class of stock
or series thereof and the qualifications, limitations or restrictions of
aforementioned preferences and/or rights. Where a certificate is countersigned
(1) by a transfer agent other than this Corporation or its employee, or (2) by a
registrar other than this Corporation or its employee, the signatures of any and
all officers may be facsimiles.
SECTION 2. LOST CERTIFICATES. New certificates of stock may be issued in
the place of any certificate therefore issued by this Corporation, alleged to
have been lost or destroyed, and the directors may, in their discretion, require
the owner of the lost or destroyed certificate or the owner's legal
representatives to give the Corporation a bond, of a stated sum as they may
direct, not exceeding double the value of the stock, to indemnify this
Corporation against the reappearance of aforesaid certificate.
SECTION 3. TRANSFER OF SHARES. The shares of stock of this Corporation
shall be transferable only upon its books of record of corporate stockholders by
the holders thereof in person or by their duly authorized attorneys or legal
representatives, and upon said transfer the old certificates shall be
surrendered to this Corporation by the delivery thereof to the designate, by
whom they shall be canceled by stamp and puncture and filed as evidence of
cancellation, and new certificates shall thereupon be issued. A record shall be
made of each transfer and whenever a transfer shall be made for collateral
security, and not absolutely, it shall be so expressed in the entry of the
transfer.
SECTION 4. STOCKHOLDERS RECORD DATE. In order that the Corporation may
determine the stockholders entitled to notice of or to vote at any proposed
meeting of stockholders or any adjournment thereof, or to express consent to
corporate action in writing without a meeting, or entitled to payment of any
dividend or other distribution or allotment of any rights, or entitled to
exercise any rights in respect of any change, conversion, or exchange of stock,
or for the purpose of any other lawful action, the Board of Directors may fix,
in advance, a record date, i.e., the date upon which a person must be a
stockholder if he or she is to have the right to vote. Persons acquiring shares
after the record date may not vote at the meeting unless they obtain a proxy
from the person who sold the shares. The aforesaid record date shall not be more
than fifty (50) nor less than ten (10) days before the day of so stated meeting,
nor more than fifty (50) days prior to any so stated action. A determination of
stockholders of record entitled to notice of or to vote at a proposed meeting of
stockholders or aforesaid action shall apply to any adjournment of aforesaid
meeting, provided however, that the Board of Directors shall fix a new record
date for the adjourned meeting.
SECTION 5. DIVIDENDS. Subject to the provisions of the Articles of
Incorporation, the Board of Directors may, out of funds legally available,
therefore at any regular or special meeting, declare dividends upon the capital
stock of this Corporation as and when they deem expedient. Before declaring any
dividends there may be set apart out of any funds of this Corporation available
for dividends, all or any sums as the directors from time to time in their
discretion deem proper working capital or as a reserve fund to meet
contingencies or for equalizing dividends or for any other purpose as the
directors shall deem conducive to the interests of the Corporation.
<PAGE> 7
ARTICLE VI - ACTIONS BY RESOLUTION
SECTION 1. FISCAL YEAR. The fiscal year of this Corporation shall be
determined by resolution of the Board of Directors and shall agree with
the laws of these United States.
SECTION 2. BANKING AND CHECKING. The selection of the banking
institution to be used by this Corporation shall be determined by resolution
of the Board of Directors. All checks, drafts, or other orders for the
payment of money, notes, or other evidenced indebtedness issued in the name
of this Corporation shall be signed or endorsed by an officer or officers,
agent or agents of the Corporation, and in a manner that shall be determined
by resolution of the Board of Directors.
ARTICLE VII - AMENDMENTS
SECTION 1. AMENDING THESE BYLAWS. These Bylaws may be altered,
amended or repealed, and new bylaws may be made, at any annual meeting of
the stockholders or at any special meeting thereof if notice thereof is
contained in the notice of aforesaid special meeting, by the affirmative
vote, as specified by these Bylaws, of a majority of the stockholders
holding stock issued and outstanding or entitled to vote thereat, or by the
regular meeting of the Board of Directors, and by the affirmative vote of a
majority of the Board of Directors, as specified by these Bylaws, if notice
thereof is contained in the notice of aforesaid meeting.
ARTICLE VIII - GENERAL PROVISIONS
SECTION 1. SEVERABILITY OF PROVISIONS. Whenever possible, each
provision of these Bylaws shall be interpreted in such a manner as to be
effective and valid under applicable law. However, if any provision of these
Bylaws shall be held to be prohibited by or invalid under any law, it shall
be deemed modified to conform to the minimum requirements of said law or, if
for any reason it is not deemed so modified, it shall be prohibited or
invalid only to the extent of said prohibition or invalidity without the
remainder thereof or any other said provision of these Bylaws being
prohibited or invalid.
SECTION 1. PERSONAL LIABILITY. No director or officer of this
Corporation shall be personally liable to this Corporation or any of its
stockholders for damages for breach of fiduciary duty as a director or
officer involving any act of omission of any said director or officer,
provided, however, that the foregoing provision shall not eliminate or limit
the liability of said director or officer (i) for any acts or acts of
omission which involve intentional misconduct, fraud or a knowing violation
of the law, or (ii) the payment of dividends in violation of Section 78.300
of the Nevada Revised Statutes. Any repeal or modification of this Article
by the stockholders of the Corporation shall be prospective only, and shall
not adversely affect any limitation of the personal liability of any
director or officer of this Corporation for overt acts or acts of omissions
prior to aforesaid repeal or modification.
SECTION 3. INDEMNITY. Every director, officer, agent or employee of
the Corporation shall be indemnified by the Corporation against all expenses
and liabilities, including counsel fees and court costs, reasonably incurred
by or imposed upon the indemnified party in connection with any proceeding
to which they may be a party, or in which they may become involved, by
reason of their being or having been a director, officer, agent or employee
of the Corporation. Whether they are or were serving at the request of the
Corporation as a director, officer, agent or employee of the Corporation or
divisions of the Corporation at the time said expenses were incurred, except
in such cases wherein the director, officer, agent or employee of the
Corporation is adjudged guilty of willful misfeasance or malfeasance in the
performance of duties; provided that in the event of a settlement the
indemnification herein shall apply only when the Board of Directors approves
such settlement and reimbursement as being for the best interests of the
Corporation.
SECTION 4. INSPECTION OF CORPORATE RECORDS. The stock register or
duplicate stock
<PAGE> 8
register, the books of account, records of proceedings of the stockholders
and directors and the original or a certified copy of these Bylaws shall be
open to inspection upon the written demand made upon the President,
Secretary or assistant secretary by any stockholder or the holder of a
voting trust certificate, in person or by an agent or attorney showing
written legal proof of representation (power of attorney) of said person
holding at least five percent (5%) of all outstanding shares of stock and
shall include the right to make extracts, at their expense, at a reasonable
time and date during usual business hours within five (5) days from the date
of the request, and shall state the reason for which inspection is
requested. This inspection may be refused and denied to a stockholder or
other person, under Nevada Revise Statute 78.105 Section 4, upon their
refusal to furnish to the Corporation an affidavit that the inspection is
not desired for a purpose which is in the interest of a business or object
other than the business of the Corporation and that they have not at any
time sold or offered for sale any list of stockholders of any domestic or
foreign corporation or aided or abetted any person in procuring any such
record of stockholders for any such purpose.
SECTION 5. ANNUAL REPORT. The Board of Directors shall cause to be
sent to the stockholders not later than one hundred twenty (120) days after
the close of the fiscal year, as established under Article V Section 1 of
these Bylaws, an annual report duly approved by the officers of this
Corporation.
<PAGE> 1
EXHIBIT 3A
INCORPORATED UNDER THE LAWS OF THE STATE OF NEVADA
CUSIP NO. 44148P 10 5
HOT YELLOW98.COM
Authorized common stock: 100,000 Shares
Par value: $.001 Per Share
This Certifies that
Is the record holder of shares of HotYellow98.com Common Stock transferable on
the books of the Corporation in person or by duly authorized attorney upon
surrender of this Certificate properly endorsed. This Certificate is not valid
until countersigned by the Transfer Agent and registered by the Registrar.
Witness the facsimile seal of the Corporation and the facsimile signatures of
its duly authorized officers.
/s/ Francis R. Law /s/ J. Daniel Fox
Secretary President
Not valid unless countersigned by Transfer Agent Countersigned
Standard Registrar & Transfer
Company, Inc.
12528 South 1840 East
Draper, Utah 84020
<PAGE> 1
EXHIBIT 3B
NO SALE OR OFFER TO SELL ANY OF THE SECURITIES ISSUABLE UPON EXERCISE OF THIS
WARRANT SHALL BE MADE IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, WITH RESPECT TO SUCH SECURITIES,
OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT REGISTRATION OF SUCH
SECURITIES UNDER SAID ACT IS NOT REQUIRED.
HOTYELLOW98.COM, INC.
WARRANT FOR THE PURCHASE OF
200,000 SHARES OF COMMON STOCK, PAR VALUE $.001 PER SHARE
This certifies that for value received Project Finance Associates, Inc. is
entitled (subject to the terms and conditions hereinafter set forth) to purchase
from HotYellow98.Com, Inc., a Nevada corporation ("Company"), 200,000 shares of
Common Stock, par value $.001 per share, of the Company, subject to adjustment,
on presentation and surrender of this Warrant, at any time during the period
commencing with the date hereof and ending two (2) years thereafter, to the
Company at its principal executive offices in Buffalo, New York, or at such
other location within the United States of which notice shall have been given to
the holder hereof, and on payment therefor of the following consideration (all
subject to adjustment):
The first 50,000 shares: $.25 per share
The next 50,000 shares: $.50 per share
The next 50,000 shares: $.75 per share
The next 50,000 shares: $1.00 per share.
This Warrant is exercisable at the option of the holder hereof in whole or
in part from time to time within the period above specified at the price above
specified. In the case of the purchase of less than all the shares of Common
Stock as to which this Warrant is exercisable, the Company shall cancel this
Warrant upon the surrender thereof and shall execute and deliver a new Warrant
of like tenor for the balance of the shares of Common Stock purchasable
hereunder.
This Warrant is not transferable by the holder hereof.
IN WITNESS WHEREOF the Company has caused this Warrant to be issued and
delivered this 15th day of June, 1999.
HotYellow98.Com, Inc.
By:
--------------------------
President
Attest:
---------------------
Secretary
<PAGE> 1
CONSULTING AGREEMENT
THIS AGREEMENT (the "Agreement") made this 20 day of April, 1999 by and
between and Project Finance Associates, Inc., a corporation organized under the
laws of the State of Nevada, hereinafter, individually or collectively referred
to as ("PFA") or ("Consultant"), located at 19816 N. 76th Ave., Glendale,
Arizona 85308 and HotYellow98.com, a corporation organized under the laws of the
State of Arizona, hereinafter individually or collectively known as the
("Client) or the ("Company") located at 2727 Broadway Ave., Suite 3, Buffalo,
New York 14227.
WITNESSETH:
WHEREAS, Consultant provides a number of services, including but not
limited to providing Client with certain financial advisory services for the
transaction or transactions set forth below. In addition, Consultant provides
development services, organizational and structure services, management
services, business plan and business plan marketing, accounting and financing
assistance, product marketing services, and other products, services and
elements, needed to have a well organized and managed company including the
potential to become a publicly traded company, collectively referred to
hereinafter as ("Services"); and
WHEREAS, Client desires to become a public company and have Client's
shares traded on a recognized exchange and also anticipates the need for
additional capital and wishes to enter into agreements with the Consultant and
other professionals introduced to the Client by the Consultant for the purposes
of assisting Client to become a public company; and
WHEREAS, Consultant has certain specialized knowledge that will
assist Company in the negotiation and performance of the above-referenced
services; and
WHEREAS, the Company desires Consultant to perform certain Services
for the Company upon the terms and conditions contained herein;
NOW THEREFORE, in consideration of the mutual promises and covenants
contained herein the parties agree as follows.
I. Engagement of Consultant.
The Company hereby engages the Consultant and the Consultant hereby agrees to
provide the Services listed in Description of Services as provided below, in
accordance with the terms of this Agreement.
II. Description of Services
PFA agrees to provide Client, on a best effort's basis, consulting services as
outlined below.
1
<PAGE> 2
Scope of Work
PFA will assist, facilitate and coordinate the creation of a
comprehensive strategic public company model and business plan to be utilized in
the production of the Client's strategy to reverse into a public company.
Consultant will assist in the design and creation of the financial terms and
conditions of the structure as well as assist in the drafting and reviewing of
the work product along with the Client's securities legal counsel. Consultant
will represent Company and assist the officers and directors of the Company to
identify a public company opportunity and execute a strategy to assist the
Company in its goal to have its shares publicly traded.
PFA will utilize its investment banking and Broker/Dealer contacts that
include registered investment advisors, analysts, private investors, and
investment companies and market makers. In addition, Consultant will contact
venture capital firms, institutional investors, and commercial investment
banking firms and other investment professionals. Consultant is being retained
for the express purpose of locating a public company, negotiate the acquisition
of such a company and effect an acquisition of the Client by the public company
through a reverse merger.
PFA will advise the Client on strategic alternatives, including but
not limited to possible appropriate mergers and acquisitions, business
combinations, joint ventures, and equity investments in the Company and
strategic alliances to include:
a) Assisting Client in determining the appropriate value of any financial
transaction.
b) Assisting Client in identifying, approaching and negotiating satisfactory
and acceptable financial transactions specifically including mergers and
acquisitions.
c) Assisting Client in analyzing potential transactions including merger and
acquisition due diligence, market research and financial modeling where
appropriate.
d) Recommend and assist Client to evaluate potential new executives and skilled
professional advisors such as attorneys, accountants, valuation experts and
others when required.
e) Assisting client with the assembly and production of all SEC. and each
individual State required due diligence, disclosure material and regulatory and
compliance matters.
Program Services:
PFA is willing to perform the following services where necessary to include:
(a) Assistance in the development of time-lines for development of the Program
(b) Assistance in the initial and ongoing development of a business plan
package for the officers and directors as well as private, institutional and
public investors.
(c) Assistance in the development of budgets and financial planning.
(d) Assistance in selection of management personnel and a well balanced Board
of Directors.
(e) Assistance in developing an appropriate corporate and management structure
to meet die needs of the Company.
(f) Assistance in working with capital resources and underwriters, to review
the pricing and/or operation of the Program.
(g) Assistance in the development and ongoing maintenance of appropriate
relationships with capital sources.
(h) Assistance in the Selection of broker dealers for the sale of securities.
2
<PAGE> 3
(i) Assistance in the Selection and introduction of an appropriate
number of market makers for the trading of the company's stock.
(j) Assistance in the selection and ongoing oversight of management
services vendors, consultants, and/or in-house personnel for the
ongoing operation of appropriate systems to deal effectively with:
1. Accounting systems producing meaningful financial reports for
the management team, board of directors, SEC, and investor
community.
2. Private placement to accredited investors
3. Legal issues for securities transactions and SEC reporting
4. Director relations
5. Investor relations
6. Shareholder relations
7. Human Resource requirements
III. Term of Contract
This Agreement will become effective on the date of execution by Client. This
engagement shall be for an initial term of 3 years and may be extended by mutual
agreement between the parties. Upon termination, Client shall have no further
obligation except as provided by this Consulting Agreement with respect to
amounts already owing to Consultant and the rights of Consultant during its
protection period. Consultant shall have no further obligation to Client.
Termination of this Agreement shall not prejudice or in any way invalidate
Consultant's rights as provided herein. This agreement further binds any
successors, assigns, affiliates and subsidiaries of Client. Client or Consultant
may terminate this Agreement upon 60 days prior written notice to the other,
provided that Consultant shall be entitled to the compensation described
elsewhere herein as set forth in the Compensation Section of this Agreement and
incorporated herein by reference through the date of termination. Consultant
shall also be entitled to any success fees and warrants due Consultant through
the date of termination as set forth in the Compensation Section and any success
fees and warrants earned by Consultant during the protection period as set forth
elsewhere herein.
IV. Compensation
a) Costs
Client shall pay to PFA an Advance on expenses of U.S. $15,000 (Fifteen Thousand
U.S. Dollars) within five (5) business days of the date of the execution of this
Agreement as a non-refundable retainer against Project Costs to be incurred by
Consultant on behalf of the Client. Consultant shall provide the Client with a
monthly invoice itemizing expenses which shall include, but not be limited to,
communications, travel and per diem, printing and binding costs and the like. At
such time as the Advance has been expended, Client shall automatically pay to
Consultant a further Advance in the same amount, and Consultant shall continue
to provide services on the terms agreed herein.
b) Third Party Charges In addition, Client shall pre-pay, or be responsible to
pay, all costs, including but not limited to, the costs of a public shell and
for all professional Third Party charges (legal, financial, technical etc.) in
connection with the preparation of documents (Business Plans, Investment
Memoranda, Joint Venture Agreements, Licenses, Memorandum of Agreements and the
like), as may be required from time to time. Client shall also pre-pay, on the
basis of a written proposal of costs, for all charges in connection with Third
Party reviews (Auditors, Technical Evaluation of Product and
3
<PAGE> 4
Patents or Patent Applications, Engineering Reports, Product
Testimonials and the like) as may be required from time to time. It is
specifically understood by the Company that employees who will be paid
by Company and other consultants used by the Company to develop any of
the systems listed in item (j) 1 above may not be employees of the
Consultant and will bill the Company separately for their services as
mutually agreed with the Company and that the Consultant shall
not be responsible in any way, for the performance of other
consultants or of the Company employees.
c) Success Fee (Development Capital Funding, Acquisitions etc.)
If a transaction is consummated with a prospect, Client shall pay PFA
a Fee based on the total face value of the consideration
("Consideration") paid by the Prospect directly or indirectly in
connection with the Transaction. Consideration may include, but is not
limited to, payments in cash, stock, real and personal property;
warrants and options; fees; notes; debentures; earn outs the total
amount of non-compete, employment, consulting and lease agreements or
amendments thereto; corporate debt or refinancing of any kind; and all
other things of value exchanged or to be exchanged with the
Transaction.
The amount of the Fee shall be five percent (5%) of the Consideration.
Consideration is payable in certified funds at closing. If a portion
of the Consideration is incalculable at closing, such as a royalty or
earnout, the portion of Consultant's fee relating to the Consideration
shall be paid to Consultant when that portion of the Consideration is
payable.
d) Equity Fee for Arranging a Public Company
Further, PFA shall be entitled to receive, as a Fee, not less than
five percent (5%) of the common stock of the public company based on
the total number of shares of common stock of the public company
following the completion of a reverse merger into a public company or
the acquisition of the Client by a public company. This transfer shall
be non-dilutable through the initial trading and through the first
Five Hundred thousand dollars ($500,000) of capital raise.
e) Warrants
In addition to the equity described in III (d) above, the Company
shall provide PFA with warrants to purchase common stock of the public
company as follows:
1. 50.000 warrants at an exercise price of Twenty-five cents
($0.25) per share
2. 50,000 warrants at an exercise price of Fifty cents ($0.50)
per share
3. 50,000 warrants at an exercise price of Seventy-five cents
($0.75) per share
4. 50.000 warrants at an exercise price of One Dollar ($1.00)
per share
The warrants shall be good for two years from the date of issue.
f.) Charter Webmaster Positions
In addition, Client shall register and "gift" two lifetime Charter
Webmaster positions, including all benefits, for Consultants own use
or for Consultant to provide to third parties whose assistance may be
necessary to complete the Services outlined elsewhere herein.
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<PAGE> 5
V. OBLIGATIONS OF CLIENT
a) Provision of Information. Client shall provide Consultant any and
all financial and other business information reasonably required by
Consultant to perform the services set forth herein and shall keep
Consultant informed of all business activities on a timely basis.
b) Accuracy of Information. Client expressly acknowledges and agrees
that it shall use its best efforts to provide full, complete and
accurate business and financial information to Consultant and that
Client is and shall remain solely and exclusively responsible for
the accuracy of any and all such information supplied. Client
expressly agrees to defend, indemnify, and hold Consultant harmless
for any errors, omissions or inaccuracies as set forth below. Client
shall keep and maintain full and adequate books of account and such
other records reflecting the results of operations Such books and
records shall be kept in all material respects in accordance with
GAAP (generally accepted accounting principals) and in accordance
with existing U.S. Tax Code practice.
c) Indemnification. Client agrees to defend, indemnify and hold PFA,
its officers, directors, employees. controlling persons, agents and
assigns harmless from any and all claims, demands, losses, costs,
expenses, obligations, liabilities, damages, recoveries, and
deficiencies, including interest, penalties and reasonable attorneys
fees and costs, that Consultant may incur as a result of a breach by
Client of this agreement and/or the performance of services
thereunder, except to the extent any such claims, demands, losses,
costs, expenses, obligations, liabilities, damages, recoveries and
deficiencies are attributable to the negligence or bad faith of
Consultant or its agents.
d) Proprietary Information. Client agrees that any written, printed,
graphic, or electronically or magnetically recorded information
furnished by PFA for Client's use, which is not based upon
information provided by Client, is the sole property of Consultant
and Client. Client, including its officers, directors, controlling
persons, employees and agents, will keep this information in the
strictest confidence during the term of this Agreement.
e) Prospects. All Prospects shall remain the exclusive and
proprietary interest of PFA. Client agrees: to receive and hold in
confidence and with the terms and conditions herein stated all
information which they shall receive from Consultant, its agents or
advisors, that they will not discuss the information they receive
with any other third party except for those individuals within their
employ or retained professional advisors with whom they must consult
in order to evaluate the information they receive, without the prior
written consent of Consultant (which consent where given may include
a condition that a representative of Consultant be present at any
such discussions), that they will not use the information and
introductions they receive to circumvent any interest of PFA in any
manner whatsoever and shall not enter into, or attempt to enter
into, or cause any other party to enter into or attempt to enter
into any Transactions to the detriment of Consultant under the terms
of this Agreement.
f) Exclusivity and Protection. Client agrees that Consultant shall
be the exclusive agent for the provision of the services referenced
in this Agreement. During the term of this agreement if Client
enters into an agreement for a financing commitment with a buyer, a
lender or other financing source of which Client became aware of as
a result of efforts made by Consultant, Client shall pay Consultant
the fee as set forth in the Compensation section of this Agreement.
5
<PAGE> 6
(f) Tax and Legal Advice. Client acknowledges that PFA will not provide
tax or legal advice regarding any proposed transaction. Client agrees
to retain tax and legal advisors to advise Client on the tax and legal
consequences of any proposed transaction and agrees that he will not
rely upon Consultant for such advice or counsel.
VI. Obligations of Project Finance Associates, Inc.
a) Provision of Services. PFA agrees to use its best effort to perform
the services set forth in the Description of Services and to comply
with all reasonable requests of Client. Consultant is not, and does not
purport to be qualified to render legal opinions in any form
whatsoever. It will be necessary for Client to submit any work product
developed by Consultant to qualified counsel for review and correction
as to form and substance where necessary and for final conformance with
any and all regulatory agencies that may be affected.
b) Proprietary Information. PFA agrees that any written, printed,
graphic, or electronically or magnetically recorded information
furnished by Client for Consultant's use is the sole property of
Client. Consultant will keep this information in the strictest
confidence, and will not disclose it by any means to any person except
with Client's approval, and only to the extent necessary to perform the
services under this Agreement. This prohibition applies to Consultant's
officers, directors, controlling persons, employees, and agents.
VII. Termination of this Agreement
If either party defaults in the performance of this Agreement or
materially breaches any of its provisions. the non-breaching party may
terminate this agreement by giving written notification to the
breaching party. Termination will take effect immediately on receipt of
notice by the breaching party or five days after mailing of notice,
whichever occurs first.
VIII. Rights of Observation
During the Term of this Agreement, PFA or its designee shall receive
notice of all meetings of the Board of Directors of the Company any and
shall have the right to attend and observe all such Board meetings and
shall be compensated for all normal business expenses.
IX. General Provisions
a) Waiver. No Waiver by any party of any provision of this Agreement
shall constitute a waiver of such party's right to demand exact
compliance with the terms of this Agreement. Waiver by any party of any
default shall not affect or impair such party's rights in respect of
any subsequent default of the same or different provision or
provisions.
b) Non-Assignment. Neither this Agreement nor any duties or
obligations under this Agreement maybe assigned by other party without
the prior written consent of the non-assigning party, provided however,
that this Agreement shall survive any merger or similar transaction and
be binding on any public company that may acquire Client.
c) Modification. This Agreement may only be modified or amended, in
writing, executed by both parties.
d) Arbitration. In the event of a breach or default of this agreement
which does not require injunctive or other non-monetary relief in
addition to a claim for damages, such solely monetary
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<PAGE> 7
breach or default shall be adjudicated under the rules of Judicial
Arbitration and Mediation Services, Inc. ("JAMS") before one
arbitrator.
c) Choice of Law and Venue. This Agreement is entered into in
Maricopa County, Arizona United States of America. The parties
expressly agree that this Agreement shall be interpreted and governed
by the laws of the State of Arizona and that Maricopa County shall be
the only, and proper venue for the resolution of any and all disputes
which may arise regarding the terms and provisions of this Agreement
f) Attorney's Fees. In the event legal action is required to enforce
or interpret the terms or provisions of this Agreement the prevailing
party shall be entitled to recover reasonable attorney's fees and
costs.
g) Notices. Any notices to be given under the terms of this
Agreement shall be deemed to have been given when delivered in
person or mailed postage pre-paid by first-class certified mail,
receipt then certified, to the parties at their current addresses. The
parties' addresses for purpose of Notice may be changed at any time
and Notice provided to the other party accordingly.
h) Successors and Assigns. This Agreement is binding upon and enures
to the benefit of the parties, their executors, administrator, heirs
and any other lawful successors in interest.
i) Titles and Captions. Titles of captions and sections contained
within this Agreement are inserted for reference only and in no way
define, limit, extend or describe the scope of this Agreement and or
the intent of any provision.
j) Integration. This Agreement constitutes the entire agreement by
and between the parties on the subject matter contained heron. No other
agreements, whether oral or written, prior or contemporaneous,
pertaining to the subject matter, exist between the parties.
k) Severability. In the event any provisions of this Agreement are
determined to be invalid or unenforceable, those provisions shall be
deemed severable from the remainder of this Agreement and shall not
cause the invalidity or unenforceability of the remainder of this
Agreement.
THIS SPACE INTENTIONALLY LEFT BLANK
7
<PAGE> 8
1) Capacity and Authorization: The parties each agree, represent and
warrant that the undersigned signatories have the legal capacity and
binding authority to execute this Agreement.
APPROVED AND ACCEPTED:
Project Finance Associates, Inc. HotYellow98.com
By: /s/ Stanley R. Reilly By: /s/ Neal C. DeLeo,
--------------------- -------------------
Stanley R. Reilly, President Neal C. DeLeo, President
By: /s/ Troy Warren VP
---------------------
Troy Warren, Vice President
Dated: April 13, 1999 Dated: 4/20/99
All notices shall be sent to:
Project Finance Associates, Inc. HotYellow98.com
PO Box 10665 2727 Broadway Ave., Suite 3
Glendale, Arizona 85308 Buffalo, New York 14227
8
<PAGE> 1
EXHIBIT 6B
NON-DISCLOSURE AND NON-COMPETITION AGREEMENT
THIS AGREEMENT, is made and entered into between HotYellow98.com, Inc.,
a Nevada corporation ("Corporation"), and the individual identified on the
signature page hereof, being one of the owners of certain technology and related
business operations and know-how ("Property") which is it desirous of selling to
Corporation ("Signatory").
WITNESSETH:
WHEREAS, Corporation has agreed to purchase the Property but only upon
the precondition that this Agreement be first executed by the Signatory and
other persons similarly situated;
NOW, THEREFORE, in consideration of the premises and for other good and
valuable consideration receipt of which is hereby acknowledged, the parties
hereby agree as follows:
1. NON-COMPETITION.
A. Signatory agrees that so long as he is either an employee,
officer, director, shareholder or consultant to the Corporation (whether
directly or indirectly through the ownership of any corporation, partnership or
other entity) and for a period of three (3) years thereafter, he shall not,
directly or indirectly, through any corporation, partnership, company or any
other person or entity:
(i) compete directly or indirectly in any manner whatsoever with the
business or operations of the Corporation;
(ii) solicit, entice, persuade or induce any individual how is then or
has been within the preceding twelve-month period an employee, officer,
director, shareholder or consultant to the Corporation to terminate his or her
employment with the Corporation or to become employed by or enter into
contractual relations with any other individual or entity, and Signatory shall
not approach any such person for any purpose or authorize or knowingly approve
the taking of any such actions by any other individual or entity;
(iii) solicit, entice, persuade or induce any individual or entity
which is then or has within the preceding twelve-month period been a client,
customer or supplier of the Corporation to terminate its contractual or other
relationship with the Corporation, and Signatory shall not approach any such
client, customer or supplier for such purpose or authorize or knowingly approve
the taking of any such actions by any other individual or entity;
(iv) offer, directly or indirectly, to any party which has been a
customer of the Corporation, which has been solicited as a customer of the
Corporation in the preceding twelve-month period, or which is a potential
customer of the Corporation and is known or reasonably known to the Signatory to
be a potential customer of the Corporation because of the business and affairs
it then conducts, any product or service which competes with, or materially
replicates, any product or service (or is a reasonable extension of any such
product or service) offered by the Corporation, or perform services for, or
accept employment with or act as agent, consultant, adviser, officer or partner
for, or acquire
<PAGE> 2
any interest in (or negotiate with respect to the acquisition of) any entity,
product or service which competes with, or materially replicates any product or
service (or is a reasonable extension of such product or service) offered by the
Corporation , except that nothing contained herein shall prevent or restrict
Signatory from owing or acquiring, directly or indirectly, not more than 1% of
the securities of any publicly-held and traded corporation for the purpose of
passive investment; or
(v) solicit, entice persuade or induce any employee, officer,
director, shareholder or consultant to the Corporation to engage in any activity
which, were it done by Signatory, would violate any provision of this Agreement.
B. Signatory acknowledges that because of the nature of the
Corporation's business and operations there is no geographical restriction
contained in this Agreement and no restriction as to specific clients or
customers or prospective clients or customers.
C. Signatory agrees that prior to the commencement of any employment
or business relationship with a new employer or associate in a business similar
to that of the Corporation, he will furnish the new employer or associate, as
the case may be, with a copy of this Agreement. Signatory also agrees that the
Corporation may advise any new or prospective employer or associate of the
Signatory of the existence and the terms of this Agreement and furnish a copy
hereof to said employer or associate.
2. TRADE SECRET PROTECTION.
(i) In the course of his relationship with the Corporation, Signatory
understands and acknowledges that he will have access to confidential
information, technical or non-technical data, formulae, patterns, compilations,
programs, devices, methods, techniques, drawings, processes, financial data,
lists of actual or potential customers or supplies, records, specifications, and
other knowledge owned by the Corporation, including those referred to in P. 3 of
this Agreement, business methods, plans, policies and/or personnel of the
Corporation, all of which constitutes the trade secrets and proprietary
information of the Corporation (hereinafter, "trade secrets"). Signatory agrees
that at no time during or after his relationship with the Corporation shall the
Signatory remove or caused to be removed from the premises of the Corporation
any record, file, memorandum, document, equipment or like item relating to the
business of the Corporation or its trade secrets except in furtherance of his
duties to the Corporation, and, immediately following the termination of
Signatory's relationship with the Corporation or at any other time at the
request of the Corporation or any person authorized thereby, all such records,
files, memoranda, documents, equipment or trade secrets then in Signatory's
possession shall promptly be returned to the Corporation.
(ii) Signatory further agrees that, during and after his relationship
with the Corporation, he shall not without the prior written approval of the
Corporation or any person authorized thereby, disclose to any person, other than
those specifically authorized by the Corporation or any person authorized
thereby and to whom such disclosure is reasonably necessary or appropriate in
connection with the performance by him of his duties to the Corporation, any
trade secrets obtained by him during or in furtherance of his relationship with
the Corporation, whether or not he knows or has reason to believe will be
damaging to the Corporation; provided, however, that the above shall
<PAGE> 3
not preclude disclosure of any information which is generally known to the
public (other than as a direct or indirect result of unauthorized disclosure by
the Signatory or others similarly situated).
3. INTELLECTUAL PROPERTY.
(i) This P. 3 covers all inventions, developments, and improvements
("Inventions") conceived, invented or suggested during the period of Signatory's
relationship with the Corporation, whether conceived, invented or suggested
during normal business operations or during his own personal time, including
Inventions conceived, invented or suggested prior to the execution of this
Agreement and regardless of whether or not a patent is applied for or obtained
during the period of said relationship for any such Invention.
(ii) All Inventions conceived, invented or suggested by Signatory
relating to any matter or thing, including processes and methods of production,
connected in any way with any business or activity of the Corporation, shall
immediately be brought to the attention of the Corporation in writing.
(iii) If an Invention is related, directly or indirectly, in any way
with work performed for the Corporation, Signatory shall, at the sole option of
Corporation, either promptly apply for and seek to obtain a patent on such
Invention, or, if requested by the Corporation, cooperate fully with the
Corporation in Corporation's obtaining a patent on such Invention. Signatory
agrees that he shall unconditionally assign to the Corporation all of his
rights, title and interest to any such patent on any such Invention immediately
upon obtaining the same or, if requested by the Corporation, assign to the
Corporation all of his rights, title and interest to such Invention prior to
applying for such patent.
(iv) Signatory understands and acknowledges that the Corporation is
retained from time to time by others to perform services that may similarly
result in the conceiving of Inventions. Signatory agrees that all such
Inventions will be deemed covered by the provisions of this P. 3.
(v) In connection with the foregoing provisions of this P. 3, the
Signatory agrees to execute any and all instruments, documents or papers which
Corporation shall deem necessary or advisable in furthering the intent of this
P. 3.
(vi) Without limiting the foregoing, Signatory agrees that this P. 3
shall be deemed to relate to and cover any and all computer programs or systems,
whether or not patentable, developed or worked on by Signatory, which shall be
deemed to remain the sole and exclusive property of Corporation. Signatory
further agrees that, whether or not said programs or systems shall be
patentable, he shall have no right or claim any interest to said programs or
systems. Corporation shall be deemed the owner of said programs or systems and
shall be deemed the exclusive owner of any copyrights therein.
4. INDEMNIFICATION.
The Signatory hereby agrees to indemnify and hold harmless, the
Corporation, its officers, directors, employees, agents, consultants and
attorneys (herein, the "Indemnified Parties") from and against any loss,
expense, damage or injury suffered or sustained by any of the Indemnified
parties
<PAGE> 4
by reason of any breach or alleged breach of the terms of this Agreement or by
reason of any breach or alleged breach of the terms of any other agreement
between the Signatory and the Corporation entered into in furtherance of this
Agreement, including, but not limited to any judgment, award, settlement,
attorneys' fees and other costs or expenses incurred in connection with the
Corporation's bringing of any lawsuit against the Signatory for any breach or
alleged breach of this Agreement or incurred in connection with the defense of
any actual or threatened action, proceeding or claim arising, directly or
indirectly, as a result of the breach of this Agreement by the Signatory.
5. ASSIGNMENT.
This Agreement shall inure to the benefit of and be binding upon the
Corporation, its successors and assigns, including without limitation, any
person, partnership or other entity which may acquire all or substantially all
of the Corporation's assets or business, or with or into which the Corporation
may be consolidated or merged, and shall be binding upon the Signatory, his
successors, assigns, executors and personal representatives, except that this
Agreement may not be assigned by the Signatory without the prior written consent
of the Corporation.
6. APPLICABLE LAW.
This Agreement shall be construed according to the laws of the State of
Nevada. In furtherance thereof, the Corporation shall have all legal and
equitable remedies provided by any Nevada statute dealing with Trade Secrets and
the common law. It is expressly agreed that, notwithstanding such applicable
law, the United States Copyright Act shall be deemed equally applicable to any
breach of the terms of this Agreement by the Signatory, the Signatory thereby
waiving any claim of preemption of state law by said Act.
7. ENFORCEABILITY.
The invalidity or unenforceability of any particular provision or
provisions of this Agreement shall not affect or impair the other provisions
herein and this Agreement shall be construed in all respects as if such invalid
or unenforceable provision or provisions were omitted.
8. INJUNCTIVE RELIEF.
Signatory acknowledges that any breach by it of this Agreement cannot
reasonably or adequately be compensated in damages in an action at all and that
breach of this Agreement would result in irreparable and continuing harm to the
Corporation. Signatory therefore agrees that in addition to any other remedy
which the Corporation may have at law or equity for any breach of this
Agreement, the Corporation shall be entitled to injunctive relief for a breach
of this Agreement by Signatory. Signatory agrees as aforesaid to pay any costs
and expenses including attorneys' fees incurred by the Corporation in connection
with the obtaining of any such injunctive relief.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the 15th day of June, 1999.
HotYellow98.com, Inc.
<PAGE> 5
By:
-----------------------
--------------------------
("Signatory")
<PAGE> 1
EXHIBIT 12A
ACQUISITION AGREEMENT BY AND BETWEEN
HOTYELLOW98.COM, CORPORATION
(FORMERLY UNION CHEMICAL CORP.)
A NEVADA CORPORATION
AND
HOTYELLOW98.COM. INC.
(AN ARIZONA CORPORATION)
This Acquisition Agreement dated as of the 15th day of June, 1999 among
HotYellow98.com (formerly Union Chemical Corp.), a Nevada corporation (the
"Company") and HotYellow98.com Inc., an Arizona corporation (the "Owner") and
its shareholders, (the "Selling Shareholders").
Whereas, the respective Boards of Directors of the business entities party to
this Acquisition Agreement, with the satisfaction of certain conditions, have
determined to effect a business transaction by and among the parties to this
Acquisition Agreement through the tax free exchange of securities for certain
assets and rights between the shareholders of the Owner and the Company; and,
Whereas, the parties have determined to set forth the terms and conditions upon
which the aforementioned business transaction shall be completed in this
Acquisition Agreement.
Now, Therefore, in consideration of the mutual promises, covenants and
conditions contained herein, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
1.1 Terms. As used in the Acquisition Agreement, the following terms shall
have the following meanings:
a. "Company" shall mean HotYellow98.com Corporation, (formerly
Union Chemical Corp. a publicly held Nevada corporation which is
non-reporting under the Securities Act of 1933, as amended, and
the Securities Exchange Act of 1934.
b. "Owner" shall mean HotYellow98.com, Inc., a privately held
Arizona corporation.
c. "Company Common Stock" shall mean the $.001 par value common
stock of HotYellow98.com Corporation.
d. "Selling Shareholders" shall mean the individual shareholders
of Owner as fully set forth in Exhibit A.
e. "Effective date" shall mean the closing date.
f. "Acquisition Agreement" shall mean this Acquisition
Agreement.
g. "Closing Date" shall mean the date of execution of this
Acquisition Agreement and satisfaction of the conditions set
forth in Article X hereof.
h. "Property" shall mean the trademarked domain name of
HotYellow98.com and the exclusive license in perpetuity to the
HotYellow98.com Inc., (an Arizona corporation) business, business
blueprint, business hardware and software together
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with all property necessary and incidental thereto and the
contract with Project Finance Associates Inc. for consulting
services.
ARTICLE II
COMPANY ACQUISITION OF OWNER
2.1 Tax Free Acquisition. A tax free Plan of Acquisition pursuant to the
provisions of Section 368 of the Internal Revenue Code of 1986, as amended,
is hereby adopted to effectuate the following:
a. Subject to the terms and conditions hereinafter set forth on the Effective
Date of the Acquisition, and in the manner hereinafter provided: (i) the
COMPANY shall acquire the trademarked domain name of HotYellow98.com from
the Owner together with an exclusive license in perpetuity for the
blueprint and know how for the business of the Owner in exchange for
COMPANY Common Stock: (ii) to effect the acquisition, COMPANY shall pay the
Selling Shareholders 20,720,000 shares of COMPANY common stock in exchange
for all Property and the 3 year non-compete agreements with the Selling
Shareholders.
b. Supplemental Corporate Action.
COMPANY, Selling Shareholders and OWNER, respectively, shall take, or cause
to be taken, all such actions as may be necessary or appropriate in order
to effectuate the transactions contemplated hereby. In the event at any
time after the Effective Date of the Acquisition that any further action is
necessary or desirable to carry out the purpose of the Acquisition
Agreement and to vest COMPANY with full title to all of the Property.
2.2 Federal Securities Laws Exemption. The parties hereto intend that the
COMPANY Common Stock to be issued to the Selling Shareholders shall be
exempt from the registration requirements of the Securities Act of 1933, as
amended, and pursuant to Section 4(2) and/or Section 3(b) thereof, and the
rules and regulations promulgated thereunder.
2.3 Effective Date of the Acquisition for Accounting Purposes. The transactions
contemplated by this Acquisition Agreement shall be effective as of the
Effective Date of the Acquisition for accounting and all other purposes to
the extent permissible by law.
2
<PAGE> 3
ARTICLE III
INVESTMENT REPRESENTATIONS
As a condition to the issuance by COMPANY to the Selling Shareholders
of share certificates for COMPANY common stock, the Selling
Shareholders shall each execute and deliver to COMPANY an investment
letter containing the investment representations contained in Section
3.1 and acknowledging receipt of the disclosure materials referred to
in Section 3.2.
3.1 Investment Representation to be given by Selling Shareholders to COMPANY
Selling Shareholders hereby agree to execute and deliver on the Effective
Date of Acquisition an investment letter and acknowledgment in a form
substantially as follows:
a. Selling Shareholder's are acquiring COMPANY common stock for his/its
own account for the purpose of investment, and not with view to, or
for sale in connection with, any distribution thereof;
and
b. Selling Shareholder: (i) has such knowledge and experience in
financial and business matters that he/it is capable of evaluating the
merits and risks of his proposed investment in COMPANY common stock:
or (ii) has been advised by attorneys, accountants or other
representatives having such knowledge and experience. Selling
Shareholder acknowledges that his attorneys, accountants and other
representatives, had, prior to his actions as Selling Shareholder in
voting upon or otherwise consenting to the Acquisition, the
opportunity to ask questions of, and to receive answers from COMPANY
concerning COMPANY, its affiliates and their business and financial
condition; and
c. Selling Shareholder understands and acknowledges that shares of
COMPANY common stock to be delivered to him/it pursuant to the
provisions of Article II and Article III of this Acquisition Agreement
will be "restricted securities" within the meaning of the Securities
Act of 1933, as amended (the "1933 Act"), and agrees that the
certificates therefore shall bear the following legend:
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933 AND MAY NOT BE TRANSFERRED WITHIN TWELVE MONTHS
AFTER ISSUANCE UNLESS COVERED BY AN EFFECTIVE REGISTRATION
STATEMENT UNDER SAID ACT, OR A NO ACTION LETTER FROM THE
SECURITIES AND EXCHANGE COMMISSION WITH RESPECT TO SUCH
TRANSFER MEETING THE REQUIREMENTS OF RULE 144 OF THE
SECURITIES AND EXCHANGE COMMISSION OR IS ACCOMPANIED BY AN
OPINION OF COUNSEL SATISFACTORY TO THE ISSUER TO THE EFFECT
THAT ANY SUCH TRANSFER IS EXEMPT FROM SUCH REGISTRATION.
d. Selling Shareholders understand and acknowledge that shares of the
COMPANY common stock to be delivered pursuant to the provisions of
this Acquisition Agreement will not have been registered under the
1933 Act and, accordingly Selling Shareholders recognize that he/it
may be required to bear the economic risk of his/its investment until
such shares are registered. Selling Shareholders agree on
3
<PAGE> 4
behalf of himself/itself, and his heirs, executors, successors and
assigns, that he/it will only sell, transfer, pledge or
hypothecate any of the COMPANY common stock to be acquired by
him/it under the provisions of this Acquisition Agreement pursuant
to an effective registration statement under the 1933 Act, in a
transaction wherein registration under the 1933 Act is not
required or after the anniversary date hereof. Selling
Shareholders understand that COMPANY has no obligation to register
such COMPANY common stock under the 1933 Act.
3.1 Disclosure Materials
COMPANY has distributed to the Selling Shareholders or a representative of
the Selling Shareholders and given each the opportunity to review, prior
to their execution of and closing under this Acquisition Agreement: (i) a
copy of the Articles of Incorporation, (ii) copy of the bylaws, (iii) copy
of the most recent audit December 31, 1998 and (iv) such other data in the
possession of COMPANY regarding the business and or finances of COMPANY as
the Selling Shareholders have reasonably requested.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF COMPANY
COMPANY, as of the Effective Date of the Acquisition hereof, represents
and warrants as follows:
4.1 Full Disclosure. None of the representations and warranties made by
COMPANY herein, or in any exhibit, certificate of memorandum, furnished or
to be furnished by COMPANY, or on its behalf by officers and directors of
COMPANY, contains or will contain any untrue statement of material fact,
or omit any material fact the omission of which would be misleading.
4.2 No Governmental Consents. No consent, authorization or approval of,
exemption by, or filing with, any domestic governmental or administrative
authority, or any court, is required to be obtained or made by COMPANY in
connection with the execution, delivery and performance of this
Acquisition Agreement or the consummation of the transactions contemplated
hereby.
4.3 Finder. There is no firm, corporation, agency or other person that is
entitled to a finder's fee or any type of brokerage commission in relation
to or in connection with the transactions contemplated by this Acquisition
Agreement as a result of any agreement or understanding with COMPANY.
4.4 Organization and Good Standing. COMPANY is a corporation duly organized,
validly existing and in good standing under the laws of the State of
Nevada and has full corporate power and authority to conduct its business
as now conducted and to own or lease and operate the assets and properties
now owned or leased and operated by it. COMPANY is duly qualified to do
business and is in good standing in each jurisdiction in which the nature
of its business or the character of its properties requires such
qualifications or will file to become so qualified immediately upon the
closing of this transaction.
4.5 Capitalization of COMPANY The total authorized capital stock of COMPANY
consists of 24,000,000 shares of common stock, $.001 par value, which is
being amended to authorize 100,000,000 shares of common stock and
2,000,000 shares of Preferred Stock, $10.00 par value, of which as of June
10, 1999, 2,081,840 shares of common stock outstanding: all of
4
<PAGE> 5
such issued and outstanding shares have been duly authorized and validly
issued, and are fully paid and non-assessable, It is understood and agreed
that COMPANY, as an operating Company may from time to time issue
additional shares to provide working capital, acquisition payments and
such other matters as the board of directors shall decide and authorize.
There are no preemptive rights with respect to any prior issuance of any
shares of the capital stock of COMPANY.
4.6 Options Warrants and Other Conversion Rights. COMPANY has no warrants or
options outstanding as set forth in the Certificate of Outstanding Shares.
4.7 No Restrictions on Securities. COMPANY is not a party to any written or
oral agreement:
a. creating rights in any person with respect to shares of the
capital stock of COMPANY, excepting the shares due to Project
Finance Associates Inc.; or
b. relating to voting of shares of the capital stock of the COMPANY.
4.8 Directors and Officers. Immediately prior to the Effective Date of the
Acquisition, names, addresses, and title of all officers and directors of
COMPANY are as set forth on Exhibit A hereto:
4.9 Books and Records.
a. The books of account and other financial records of COMPANY are,
in all material respects, complete and correct and are maintained
in accordance with good business practices.
b. The minute books of COMPANY contain accurate records of all
meetings and accurately reflect all other corporate action of the
shareholders and directors and any committees of directors of
COMPANY
c. Financial Statements. COMPANY has delivered their audit for the
period ending December 31, 1998.
4.10 Absence of Certain Events. As of the Effective Date of the Acquisition
Agreement, COMPANY has not:
a. Amended its Certificate of Incorporation or By-laws;
b. Changed its authorized capital stock or issued or sold, or
purchased, redeemed or otherwise acquired, or issued any rights
to subscribe for, or warrants to purchase, or entered into any
agreement, commitment or obligation (including, without
limitation, any convertible securities) to issue, sell, purchase,
redeem or otherwise acquire, any share of its capital stock, or
made any declaration or any payment or distribution of any
dividend or any other distribution with respect to its capital
stock:
c. Incurred any liabilities, other than liabilities incurred in the
ordinary course of business consistent with past practice, or
discharged or satisfied any lien or encumbrance, or paid any
liabilities, other than in the ordinary course of business
consistent with past practice, or failed to pay or discharge when
due any liabilities the failure to pay or discharge of which has
caused or may cause any material damage or risk of material loss
to it or its assets or properties;
d. Sold, assigned or transferred any of its assets or properties
except in the ordinary course of business consistent with past
practice.
e. Created, incurred, assumed or guaranteed any indebtedness for
money borrowed, or mortgaged, pledged or subjected to any lien,
pledge, mortgage, security interest, conditional sales contract
or other encumbrance of any nature whatsoever any of its assets
or properties, other than the liens, if any , of current taxes
not yet due and payable;
f. Changed any of the accounting principles followed by it or the
methods of applying such principles; or
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<PAGE> 6
g. Entered into any transaction other than in the course of ordinary
business consistent with past practice or any other material
transaction.
4.11 Taxes and Tax Returns. COMPANY has duly made all deposits required by law
to be made with respect to employee's withholding taxes. COMPANY has duly
filed with all appropriate governmental agencies and bodies, whether federal,
state or local, all income, sales, license, franchise, excise, gross receipts,
employment and payroll-related and real and personal property reflect the
taxes owed by COMPANY for the periods covered thereby, and COMPANY has paid,
or established adequate liabilities or reserves for the payment of, all taxes
shown to be due on such returns.
4.12 Legal Proceedings Etc. There are no disputes, claims, actions, suits,
proceedings, arbitrations or investigations, either administrative or
judicial, pending or threatened or contemplated, by or against or
affecting COMPANY or its business or any of its assets, properties or
prospects, or the transactions contemplated by this Acquisition Agreement,
at law or in equity or otherwise, before or by any court or governmental
agency or body, domestic or foreign, or before an arbitrator of any kind
which, if determined adversely to COMPANY, would materially adversely
affect COMPANY; nor do any facts exist which could give rise to any such
dispute, claim, action, suit, proceeding, arbitration or investigation
affecting COMPANY or its business or any of its assets, properties or
prospects or the transactions contemplated by this Agreement.
4.13 No Third Party Options. There are no existing contracts or other rights
with, to or in any person to acquire any of the assets or properties or
any interest therein of COMPANY, except for those contracts entered into
in the normal course of business consistent with business practices.
4.14 Delivery of Documents. COMPANY has delivered to OWNER true, correct and
complete copies of its Certificate of Incorporation, and all amendments
thereto, and the Bylaws, as amended.
4.15 Authority and Compliance. COMPANY has full corporate power and lawful
authority to execute and deliver this Agreement. The consummation and
performance by COMPANY of the transactions contemplated by this Agreement
have been duly and validly authorized by all necessary corporate and other
proceedings. This Agreement has been duly and validly executed and
delivered on behalf of COMPANY and constitutes a valid obligation of
COMPANY, enforceable in accordance with its terms. No consent,
authorization or approval of, exemption by or filing with, any domestic
governmental or administrative authority, or any court, is required to be
obtained or made by COMPANY in connection with the execution, delivery and
performance of this Agreement by COMPANY. Such delivery and performance
will not conflict with or result in the breach or violation of any term or
provisions of, or constitute a default under, the Articles of
Incorporation or Bylaws of COMPANY, or conflict with or result in the
breach or violation of any term or provision of, or constitute a default
under, any statute, indenture, mortgage, deed of trust, note agreement or
other material agreement or instrument to which COMPANY is a party or by
which it is a party or by which it is bound, or any law, order, writ,
injunction, decree, rule or regulation of any court or any governmental
agency or body.
4.16 Indemnification. COMPANY agrees to indemnify, defend and hold OWNER and
each of the Selling Shareholders harmless against and in respect of any
and all claims, demands, losses, costs, expenses, obligations,
liabilities, damages, recoveries and deficiencies, including interest,
penalties, and reasonable attorney's fees, that OWNER or any of such
Selling Shareholders shall incur or suffer, which arise out of or result
from or relate to any breach of, or failure by COMPANY to perform any of
its representations or warranties
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contained in this Agreement or in any schedule, certificate, exhibit or
other instrument furnished or to be furnished by COMPANY under this
Agreement.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF OWNER
OWNER hereby, as of the Effective Date of the Acquisition represents and
warrants as follows:
5.1 Full Disclosure. None of the representations and warranties made by
OWNER herein, or in any exhibit, certificate of memorandum, furnished or
to be furnished by OWNER, or on its behalf by officers and directors of
OWNER, contains or will contain any untrue statement of material fact, or
omit any material fact the omission of which would be misleading.
5.2 No Governmental Consents. No consent, authorization or approval of,
exemption by, filing with, any domestic governmental or administrative
authority, or any court, is required to be obtained or made by OWNER in
connection with the execution, delivery and performance of this
Acquisition Agreement or the consummation of the transactions contemplated
hereby.
5.3 Finder. There is no firm, corporation, agency or other person that is
entitled to a finder's fee or any type of brokerage commission in relation
to or in connection with the transactions contemplated by this Acquisition
Agreement as a result of any agreement or understanding with OWNER.
5.4 Organization and Good Standing. OWNER is a corporation duly organized,
validly existing and in good standing under the laws of the State of
Arizona and has full corporate power and authority to conduct its business
as now conducted and to own or lease and operate the assets and properties
now owned or leased and operated by it. OWNER is duly qualified to do
business and is in good standing in each jurisdiction in which the nature
of its business or the character of its properties requires such
qualifications.
5.5 The Property of OWNER. The Property of the Owner is not subject to any
encumbrance, lien or claim by any third party.
5.6 Options, Warrants and Other Conversion Rights. OWNER has no options or
warrants outstanding.
5.7 No Restrictions on Securities. OWNER is not a party to any written or
oral agreement:
a. creating rights in any person with respect to shares of the
capital stock of OWNER; or
b. relating to voting of shares of the capital stock of OWNER except
for the Consulting Contract with Project Finance Associates,
Inc. which contract is being assigned to the Company.
5.8 Absence of Certain Events. As of the Effective Date of the
Acquisition Agreement, OWNER has not:
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a. Amended its Certificate of Incorporation or By-laws;
b. Changed it authorized capital stock or issued or sold, or
purchased, redeemed or otherwise acquired, or issued any rights
to subscribe for, or warrants to purchase, or entered into any
agreement, commitment or obligation (including, without
limitation, any convertible securities) to issue, sell, purchase,
redeem or otherwise acquire, any share of its capital stock, or
made any declaration or any payment or distribution of any
dividend or any other distribution with respect to its capital
stock:
c. Incurred any liabilities, other than liabilities incurred in the
ordinary course of business consistent with past practice , or
discharged or satisfied any lien or encumbrance, or paid any
liabilities, other than in the ordinary course of business
consistent with past practice, or failed to pay or discharge when
due any liabilities the failure to pay or discharge of which has
cause or may cause any material damage or risk of material loss
to it or its assets or properties;
d. Sold, assigned or transferred any of its assets or properties
except in the ordinary course of business consistent with past
practice.
e. Created, incurred, assumed or guaranteed any indebtedness for
money borrowed, or mortgaged, pledged or subjected to any lien,
pledge, mortgage, security interest, conditional sales contract
or other encumbrance of any nature whatsoever any of its assets
or properties, other than the liens, if any , of current taxes
not yet due and payable;
f. Changed any of the accounting principles followed by it or the
methods of applying such principles; or
g. Entered into any transaction other than in the course of ordinary
business consistent with past practice or any other material
transaction.
5.9 Taxes and Tax Returns. OWNER has duly made all deposits required by law to
be made with respect to employees withholding taxes. OWNER has duly filed with
all appropriate governmental agencies and bodies, whether federal, state or
local, all income, sales, license, franchise, excise, gross receipts, employment
and payroll-related and real and personal property reflect the taxes owned by
OWNER for the periods covered thereby, and OWNER has paid, or established
adequate liabilities or reserves for the payment of, all taxes shown to be due
on such returns.
5.10 Legal Proceedings, Etc. There are no disputes, claims, actions, suits,
proceedings, arbitration's or investigations, either administrative or judicial,
pending or threatened or contemplated, by or against or affecting OWNER or its
business or any of its assets, properties or prospects, or the transactions
contemplated by this Acquisition Agreement, at law or in equity or otherwise,
before or by any court or governmental agency or body, domestic or foreign, or
before an arbitrator of any kind which, if determined adversely to OWNER, would
materially adversely affect OWNER; nor do any facts exist which could give rise
to any dispute, claim, action, suit, proceeding, arbitration or investigation
affecting OWNER or its business or any of its assets, properties or prospects or
the transactions contemplated by this Agreement.
5.11 No Third Party Options. There are no existing contracts or other rights
with, to or in any person to acquire any of the assets or properties or any
interest therein of OWNER, except for those contracts entered into in the normal
course of business consistent with business practices.
5.12 Delivery of Documents. OWNER has delivered to COMPANY true, correct and
complete copies of its Articles of Incorporation, all amendments thereto, its
Bylaws,
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unaudited financial statements for the period ending _________ 1999,
minutes of the board of directors approving the Acquisition Agreement.
5.13 Authority and Compliance. OWNER has full corporate power to execute
and deliver this Acquisition Agreement. The consummation and performance
by OWNER of the transactions contemplated by this Acquisition Agreement
have been duly and validly authorized by all necessary corporate and other
proceedings. This Agreement has been duly and validly executed and
delivered on behalf of OWNER and constitutes a valid obligation of OWNER,
enforceable in accordance with its terms. No consent, authorization or
approval of, exemption by, or filing with, any domestic governmental or
administrative authority, or any court, is required to be obtained or made
by OWNER in connection with the execution, delivery and performance of
this Agreement or the consummation of the transaction contemplated hereby.
The execution, delivery, consummation and performance of this Agreement by
OWNER will not conflict with or result in the breach or violation of any
term or provision of, or constitute a default under, the Articles of
Incorporation or Bylaws of OWNER, or conflict with or result in the breach
or violation of any term or provision of, or constitute a default under,
any statute, indenture, mortgage, deed of trust, note agreement or other
material agreement or instrument to which OWNER is a party or by which it
is bound, or any law, order, writ, injunction, decree, rule or regulation
of any court or any governmental agency or body.
5.14 Indemnification. OWNER and the Selling Shareholders agree to
indemnify, defend and hold harmless COMPANY against and in respect of any
and all claims, demands, losses, costs and expenses, obligations,
liabilities, damages, recoveries and deficiencies, including interest,
penalties, and reasonable attorney's fees, that COMPANY shall incur or
suffer, which arises out of, result from or relate to any breach of, or
failure by OWNER to perform any of its representations, warranties,
covenants or agreements in this Agreement or in any schedule, certificate,
exhibit or other instrument furnished or to be furnished by OWNER under
this Agreement provided, however, that any demand for indemnification
hereunder shall be made in writing to all indemnitors within in one year
after the date hereof, or be forever barred.
ARTICLE VI
COVENANTS
6.1 Investigative Rights. Up to and including the date of closing of this
Agreement, each party shall provide to the other, and such others party's
counsel, accountants, auditors, and other authorized representatives, full
access during normal business hours and upon reasonable advance written
notice to all of each party's property, books, contracts, commitments, and
records for the purpose of examining the same, Each party shall furnish
the other party with all information concerning such party's affairs as
may reasonably be requested.
6.2 Conduct of Business. Prior to the Effective Date of the Agreement, OWNER
shall conduct its business in the normal course and shall not sell,
pledge, or assign any assets, without the prior written approval of
COMPANY, except in the regular course of business. OWNER shall not amend
its Certificate or Articles of Incorporation, or Bylaws, declare any
dividends, redeem or sell stock or other securities, acquire or dispose of
fixed assets, change employment terms, enter into any material or
long-term contract, guarantee obligations of any third party, settle or
discharge any balance sheet receivable for less that its stated amount,
pay more on any liability than its stated amount, or enter into any other
transaction other than in the regular course of business.
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<PAGE> 10
ARTICLE VII
CLOSING
7.1 Closing. The closing under this Agreement shall be held at the offices of
COMPANY at 2727 Broadway Street, Suite 3 Buffalo, New York, or at such
other place as the parties may agree and at such date as shall be mutually
agreed upon by the parties. Unless otherwise agreed, the rights,
liabilities, obligations and duties of performance of the respective
parties to this Agreement shall automatically terminate, without liability
to any of the respective parties hereto, if the closing does not occur
hereunder prior to June 30, 1999.
7.2 Deliver of Documentation. At the closing, the following documents, in
form reasonably acceptable to the parties and their respective counsel,
shall be delivered to the respective parties
a. A COMPANY Officer's Certificate, dated the Closing
Date that all representations, warranties, covenants and
conditions set forth in this Agreement on behalf of
COMPANY are true and correct as of, or have been fully
performed and complied with by, the Closing Date; and
b. A OWNER officer's certificate, dated the Closing Date
that all representations, warranties, covenants and
conditions set forth in this Agreement on behalf of OWNER
are true and correct as of, or have been fully performed
and complied with by, the Closing Date; and
c. A signed consent and or minutes of the Directors of
COMPANY approving the Acquisition Agreement and each
matter to be approved by the Directors of COMPANY under
this Agreement.
d. A signed consent and or minutes of the
Directors of OWNER and each matter to be approved by the
Directors of OWNER under this Agreement; and
e. An affidavit of Company's president that the shares
of COMPANY common Stock to be issued to the Selling
Shareholders, pursuant to this Agreement will, upon
issuance, be duly and validly authorized and issued and
will be fully paid and non-assessable; and
f. Original COMPANY certificates evidencing 20,720,000
shares of COMPANY common stock in the name of the parties
as set forth in Exhibit B, which certificates shall bear
the appropriate "restrictive legend" under the Securities
Act of 1933, as amended; and
g. This Acquisition Agreement executed in triplicate by
each of the respective parties hereto.
7.3 Escrow. The parties to this Acquisition Agreement hereby nominate and
appoint W. Edward Nichols Attorney at Law as the Escrow Agent under this
Agreement. It is understood and acknowledged by the parties that such law
firm is counsel to COMPANY in the subject transaction and has agreed to
act in the capacity as Escrow Agent at the request and with the express
consent of all parties hereto. The Escrow Agent is charged and instructed
by the parties to collect each and every document set forth under Section
7.2 hereof. Once the Escrow Agent receives all such documents, all
conditions of closing hereunder shall have
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occurred and the Escrow Agent is instructed and directed to deliver all
documents received to the appropriate parties. Each of the parties to this
Agreement hereby undertake to use their best efforts to cause all
documentation referenced hereunder to be delivered to effect a closing.
On June 30,1999, if the Escrow Agent has not received all the documents
set forth in Section 7.2, then unless otherwise notified in writing by both
parties the Escrow Agent is hereby authorized, directed and instructed to return
to each of the respective parties of this Agreement the documents previously
delivered by said parties to the Escrow Agent.
ARTICLE VIII
REMEDIES
8.1 Disputes. Any dispute that might arise over the enforcement, interpretation
or execution of this Agreement and which is not amicably settled will be
submitted to arbitration in Buffalo, New York or Scottsdale, Arizona before
a panel of arbitrators selected as follows: within 10 days of demand by a
party to this Agreement for arbitration, COMPANY and OWNER will each select
one (1) arbitrator and those two arbitrators will select a third arbitrator
and those three (3) persons shall constitute the panel of arbitrators. The
arbitrators will conduct the hearings on continuous business days, and
their decisions will be by majority vote. All costs of the arbitrators will
be shared equally, but the arbitrators are authorized to award costs and
counsel fees to the prevailing party, if necessary. All documents to be
brought into evidence will be produced within 10 days of notice of request
for arbitration.
8.2 Costs. If any legal action or any arbitration or other proceeding is
brought for the enforcement of this Agreement, or because of an alleged
dispute, breach, default or misrepresentation in connection with any of the
provisions of this Agreement, the successful or prevailing party or parties
shall be entitled to recover reasonable attorney's fees and other costs
incurred in that action or proceeding, in addition to any other relief to
which it or they may be entitled.
8.3 Termination. In addition to the other remedies, any of the parties hereto
may on the Closing Date terminate this Agreement, without liability:
a. If the respective Boards of Directors of the parties
shall consent to the termination.
b. If any bona fide action or proceeding shall be
pending against any of the parties hereto on the Closing
Date that could result in a judgment, decree or order
rendering this Agreement null, void, unenforceable or
against public policy or if any agency of the federal or
of any state government shall have objected in writing
at or before the Closing Date to this acquisition or to
any other action required by or in connection with the
Agreement.
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ARTICLE IX
GENERAL PROVISIONS
9.1 Survival of Representations Warranties, Covenants and Agreements. The
representations, warranties, covenants and agreements contained in this
Agreement shall survive the Effective Date of the Acquisition.
9.2 Amendments. This Agreement cannot be altered or otherwise amended
except pursuant to an instrument in writing signed by each party hereto.
This Agreement shall be binding upon, and subject to the terms of the
foregoing sentence, inure to the benefit of the parties, their successors,
legal representatives and assigns.
9.3 Notices. Any notice, request, instruction or other document to be
given hereunder by any party to any of the other parties shall be in
writing and shall be deemed to have been duly given when delivered
personally or 5 days after dispatch by registered or certified mail,
postage prepaid, return receipt requested, to the party to whom the same
is so given or made:
If to COMPANY addressed to:
J. Daniel Fox
2727 Broadway Street
Suite 3
Buffalo, NY 14227
If to OWNER to:
Troy Warren
7950 E. Redfield
Suite 150
Suite 3
Scottsdale, AZ 14227
or at such other address as the one party shall specify to the other party
in writing.
9.4 Expenses. Whether or not the transactions contemplated by this
Agreement are consummated, each party hereto shall bear the expenses
incurred by it in connection with the transactions contemplated hereby.
9.5 Entire Agreement. This Agreement and the Exhibits and Schedules which
are a part hereof and the other writings and agreements specifically
identified herein contain the entire agreement between the parties with
respect to the transactions contemplated herein and supersede all previous
written or oral negotiations, commitments and understandings.
9.6 Waivers, Remedies. Any waiver must be in writing. A waiver of any
breach or failure to enforce any of the terms or conditions of this
Agreement shall not in any way affect, limit or waive a party's rights at
any time to enforce strict compliance thereafter with every other term or
condition of this Agreement. All remedies under this Agreement shall be
cumulative and not alternative.
9.7 Counterparts and Headings. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original and all of
which shall constitute on together, shall constitute on and the same
document. All headings, the cover page, and the
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index of this Agreement are inserted for convenience of reference only and
shall not affect its meaning or interpretation.
9.8 Severability. If and to the extent that any court of competent
jurisdiction holds any provision of this Agreement to be invalid or
unenforceable, such holding shall in no way affect the validity of
the remainder of this Agreement.
9.9 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Nevada.
IN WITNESS WHEREOF, the Parties hereto have duly executed this Acquisition
Agreement as of the day and year first above written.
COMPANY
HOTYELLOW98.COM, CORPORATION
Formerly Union Chemical Corp.
By:
J. Daniel Fox, President
OWNER
HOTYELLOW98.COM. INC.
(An Arizona Corporation)
By
President
SELLING SHAREHOLDERS
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<PAGE> 1
EXHIBIT 12B
REORGANIZATION AGREEMENT BY AND BETWEEN
HOTYELLOW98.COM, INC.
(FORMERLY UNION CHEMICAL CORPORATION)
A NEVADA CORPORATION
AND
NETSURF, INC.
AN ONTARIO, CANADA CORPORATION
AND THE SELLING SHAREHOLDERS
----------------------------------
This Reorganization Agreement dated as of the 15th day of July 1999 among
Hotyellow98.com Corporation formerly Union Chemical Corporation, a Nevada
corporation (the "COMPANY") and NetSurf, Inc. an Ontario, Canada Corporation
("NETSURF") and its shareholders, (the "Selling Shareholders").
Whereas, the respective Boards of Directors of the business entities party to
this Reorganization Agreement, with the satisfaction of certain conditions, have
determined to effect a business combination by and among the parties to this
Reorganization Agreement through the tax free exchange of securities between the
shareholders of NETSURF and the COMPANY; and,
Whereas, the parties have determined to set forth the terms and conditions upon
which the aforementioned business combination shall be completed in this
Reorganization Agreement.
Now, Therefore, in consideration of the mutual promises, covenants and
conditions contained herein, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
1.1 Terms. As used in the Reorganization Agreement, the following terms shall
have the following meanings:
a. "Company" shall mean Hotyellow98.com Corporation, formerly Union
Chemical Corporation, a publicly held Nevada corporation which is non
reporting under the Securities Act of 1933, as amended, and the
Securities Exchange Act of 1934.
b. "Company Common Stock" shall mean the $.001 par value common stock of
Hotyellow98.com Corporation.
c. "Selling Shareholders" shall mean the individual shareholders of
NetSurf, Inc. as fully set forth in Exhibit A.
d. "Effective date" shall mean the closing date.
e. "Reorganization Agreement" shall mean this Reorganization Agreement.
f. "NetSurf" shall mean NetSurf, Inc., a privately held Ontario, Canada
corporation
g. "Closing Date" shall mean the date of execution of this
Reorganization Agreement and satisfaction of the conditions set forth
in Article IX, hereof.
<PAGE> 2
ARTICLE II
REORGANIZATION OF NETSURF
2.1 Tax Free Reorganization. A tax free Plan of Reorganization pursuant to the
provisions of Section 368 of the United States Internal Revenue Code of
1986, as amended, is hereby adopted to effectuate the following:
a. Subject to the terms and conditions hereinafter set forth on the
Effective Date of the Reorganization, and in the manner
hereinafter provided: (i) COMPANY shall acquire 80 percent of the
issued and outstanding share capital of NETSURF from the Selling
Shareholders; (ii) NETSURF shall thereafter be 80 percent owned by
the Company; (iii) to effect the Reorganization, COMPANY shall pay
the Selling Shareholders $ 500,000 in value by the issuance of
100,000 shares of COMPANY common stock in exchange for 80 percent
of all the issued and outstanding share capital of NETSURF; and
(iv) all corporate acts, plans, policies, contracts, approvals and
authorizations of NETSURF and its shareholders, board of
directors, officers and agents which were valid and effective
immediately prior to the Effective Date of the Reorganization,
shall be as effective and binding thereon as the same were prior
to the Effective Date of the Reorganization with respect to
NETSURF.
b. In the event that the bid price of COMPANY common stock is less
than $5.00 per share for the five trading days immediately prior to a date 12
months from the date of this Agreement, COMPANY will, within ten (10) business
days after said date, authorize the issuance to the Selling Shareholders, in the
same proportion as the original shares were issued to the Selling Shareholders,
additional number of shares of COMPANY common stock, up to a maximum of
1,000,000 additional shares, to compensate for the evaluation shortfall. It is
the intent of this Section that NETSURF receive value of no less than $500,000
USD, but no more than 1,000,000 additional shares of the COMPANY's common stock
will be issued to fulfill any evaluation shortfall. Example: In the event that
the average trading bid in the five days prior to the anniversary date is $4.00
USD the shortfall is $100,000, and COMPANY would issue an additional 25,000
shares.
2.2 Supplemental Corporate Action. COMPANY and NETSURF respectively, shall
take, or cause to be taken, all such actions as may be necessary or
appropriate in order to effectuate the transactions contemplated hereby. In
the event at any time after the Effective Date of the Reorganization any
further action is necessary or desirable to carry out the purpose of the
Reorganization Agreement and to vest COMPANY with full title to 80 percent
of NETSURF issued and outstanding stock, the officers and directors of such
corporation shall take all such necessary action. In the event at any time
after the Effective Date of the Reorganization any further action is
necessary or desirable to carry out the purpose of the Reorganization
Agreement and to vest NETSURF with full title to COMPANY issued and
outstanding stock as enumerated in Sections 2.1.a. and 2.1.b., the officers
and directors of such corporation shall take all such necessary action.
2.3 Federal Securities Laws Exemption. The parties hereto intend that the
COMPANY Common Stock to be issued to the Selling Shareholders shall be
exempt from the registration requirements of the Securities Act of 1933, as
amended, and pursuant to Section 4 (2) and/or Section 3 (b) thereof, and
the rules and regulations promulgated thereunder.
2.4 Effective Date of the Reorganization for Accounting Purposes. The
transactions contemplated by this Reorganization Agreement shall be
effective as of the Effective Date of the Reorganization for accounting and
all other purposes to the extent permissible by law.
<PAGE> 3
ARTICLE III
INVESTMENT REPRESENTATIONS
As a condition to the issuance by COMPANY to the Selling Shareholders of share
certificates for COMPANY common stock, the Selling Shareholders shall each
execute and deliver to COMPANY an Investment Letter containing the investment
representations contained in Section 3.1 and acknowledging receipt of the
disclosure materials referred to in Section 3.2.
3.1 Investment Representation to be given by Selling Shareholders to COMPANY.
Selling Shareholders hereby agree to execute and deliver on the Effective Date
of Reorganization, an Investment Letter and acknowledgment in a form
substantially as follows:
a. Selling Shareholders are acquiring COMPANY common stock for their
own account for the purpose of investment, and not with view to,
or for sale in connection with, any distribution thereof; and
b. Selling Shareholder: (i) has such knowledge and experience in
financial and business matters that he is capable of evaluating
the merits and risks of his proposed investment in COMPANY common
stock; or (ii) has been advised by attorneys, accountants or other
representatives having such knowledge and experience. Selling
Shareholder acknowledges that his attorneys, accountants and other
representatives, had, prior to his actions as Selling Shareholder
in voting upon or otherwise consenting to the Reorganization, the
opportunity to ask questions of, and to receive answers from
COMPANY concerning COMPANY, its affiliates and their business and
financial condition; and
c. Selling Shareholders understand and acknowledge that shares of
COMPANY common stock to be delivered to him pursuant to the
provisions of Article II and Article III of this Reorganization
Agreement will be "restricted securities" within the meaning of
the Securities Act of 1933, as amended (the "1933 Act"), and
agrees that the certificates therefore shall bear the following
legend:
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933 AND MAY NOT BE TRANSFERRED WITHIN TWELVE MONTHS AFTER ISSUANCE
UNLESS COVERED BY AN EFFECTIVE REGISTRATION STATEMENT UNDER SAID ACT, OR A NO
ACTION LETTER FROM THE SECURITIES AND EXCHANGE COMMISSION WITH RESPECT TO SUCH
TRANSFER MEETING THE REQUIREMENTS OF RULE 144 OF THE SECURITIES AND EXCHANGE
COMMISSION OR IS ACCOMPANIED BY AN OPINION OF COUNSEL SATISFACTORY TO THE ISSUER
TO THE EFFECT THAT ANY SUCH TRANSFER IS EXEMPT FROM SUCH REGISTRATION.
Selling Shareholders further understand and acknowledge that stop transfer
instructions will be issued by COMPANY to its transfer agent with respect to all
of COMPANY common stock to be delivered to him pursuant to the provisions of
this Reorganization Agreement; and
(d) Selling Shareholders understand and acknowledge that shares of the
COMPANY common stock to be delivered pursuant to the provisions of this
Reorganization Agreement will not have been registered under the 1933 Act and,
accordingly Selling Shareholders recognize that they may be required to bear the
economic risk of their investment until such shares are registered. Selling
Shareholders agree on behalf of themselves, and their heirs, executors,
successors and assigns, that they will only sell, transfer, pledge or
hypothecate any of the COMPANY common stock to be acquired by them under the
<PAGE> 4
provisions of this Reorganization Agreement pursuant to an effective
registration statement under the 1933 Act, in a transaction wherein registration
under the 1933 Act is not required or after the anniversary date hereof. Selling
Shareholders understand that COMPANY has no obligation to register such COMPANY
common stock under the 1933 Act. However, COMPANY agrees that, in the event it
undertakes to register any stock under said Act during the twelve months after
the date of this Agreement, it will include the stock issued (or expected to be
issued under Section 2.1(b) of this Agreement) to the Selling Shareholders in
such registration process.
3.2 Disclosure Materials
COMPANY has distributed to the Selling Shareholders or a representative of the
Selling Shareholders and given each the opportunity to review, prior to their
execution of and closing under this Reorganization Agreement: (i) a copy of the
Articles of Incorporation, (ii) copy of the by-laws, (iii) copy of the most
recent financial statements and (iv) such other data in the possession of
COMPANY regarding the business and or finances of COMPANY as the Selling
Shareholders have reasonably requested.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF COMPANY
COMPANY hereby, as of the Effective Date of the Reorganization hereof,
represents and warrants as follows:
4.1 Full Disclosure None of the representations and warranties made by COMPANY
herein, or in any exhibit, certificate of memorandum, furnished or to be
furnished by COMPANY, or on its behalf by officers and directors of
COMPANY, contains or will contain any untrue statement of material fact, or
omit any material fact the omission of which would be misleading.
4.2 No Governmental Consents. No consent, authorization or approval of,
exemption by, filing with, any domestic governmental or administrative
authority, or any court, is required to be obtained or made by COMPANY in
connection with the execution, delivery and performance of this
Reorganization Agreement or the consummation of the transactions
contemplated hereby.
4.3 Finder. There is no firm, corporation, agency or other person that is
entitled to a finder's fee or any type of brokerage commission in relation
to or in connection with the transactions contemplated by this
Reorganization Agreement as a result of any agreement or understanding with
COMPANY.
4.4 Organization and Good Standing. COMPANY is a corporation duly organized,
validly existing and in good standing under the laws of the State of Nevada
and has full corporate power and authority to conduct its business as now
conducted and to own or lease and operate the assets and properties now
owned or leased and operated by it. COMPANY is duly qualified to do
business and is in good standing in each jurisdiction in which the nature
of its business or the character of its properties requires such
qualifications.
4.5 Capitalization of COMPANY. The total authorized capital stock of COMPANY
consists of 100,000,000 shares of common stock, $.001 par value, of which
as of 1 July 1999 there were 22,800,840 shares of common stock outstanding:
all of such issued and outstanding shares have been duly authorized and
validly issued, and are fully paid and non-assessable. It is understood and
agreed that COMPANY, as an operating Company may from time to time issue
additional shares to provide working capital. There are no preemptive
rights with respect to any prior issuance of any shares of the capital
stock of COMPANY.
4.6 Subsidiaries of COMPANY. COMPANY has no subsidiaries or ownership interest
in any other entities as of the effective date of this Reorganization
Agreement.
<PAGE> 5
4.7 Options, Warrants and Other Agreements . COMPANY has no outstanding
Warrants, Options or any agreements with respect to the issuance of
additional shares of Common Stock except for the shares to be issued to
Project Finance Associates, Inc. pursuant to a consulting agreement.
4.8 Directors and Officers. Immediately prior to the Effective Date of the
Reorganization, names, addresses, and title of all officers and directors
of COMPANY are as follows:
Name/Title Address
J. Daniel Fox 7950 E.Redfield Rd, Suite 150
President/CEO Scottsdale, AZ 85260
Duaine R. Warren 16530 Nicklaus Dr
Chairman of the Board Fountain Hills, AZ 85268
Patricia A. Warren 9882 East Astor Rd
Director Scottsdale, AZ 85260
Francis R. Law 54 Brookdale Dr
Secretary & Treasurer Williamsville, NY 14221
4.10 Financial Statements. COMPANY has delivered their unaudited financial
statements for the period ending March 31, 1999.
4.11 Books and Records.
a. The books of account and other financial records of COMPANY are,
in all material respects, complete and correct and are maintained
in accordance with good business practices.
b. The minute books of COMPANY contain accurate records of all
meetings and accurately reflect all other corporate action of the
shareholders and directors and any committees of directors of
COMPANY.
4.12 Absence of Certain Events. As of the Effective Date of the Reorganization
Agreement, COMPANY has not:
a. Amended its Certificate of Incorporation or By-laws;
b. Changed its authorized capital stock or issued or sold, or purchased,
redeemed or otherwise acquired, or issued any rights to subscribe
for, or warrants to purchase, or entered into any agreement,
commitment or obligation (including, without limitation, any
convertible securities) to issue, sell, purchase, redeem or
otherwise acquire, any share of its capital stock, or made any
declaration or any payment or distribution of any dividend or any
other distribution with respect to its capital stock;
c. Incurred any liabilities, other than liabilities incurred in the
ordinary course of business consistent with past practice, or
discharged or satisfied any lien or encumbrance, or paid any
liabilities, other than in the ordinary course of business
consistent with past practice, or failed to pay or discharge when
due any liabilities the failure to pay or discharge of which has
caused or may cause any material damage or risk of material loss
to it or its assets or properties;
d. Sold, assigned or transferred any of its assets or properties except
in the ordinary course of business consistent with past practice;
e. Created, incurred, assumed or guaranteed any indebtedness for
money borrowed, or mortgaged, pledged or subjected to any lien,
pledge, mortgage, security interest, conditional sales contract or
other encumbrance of any nature whatsoever any of its assets or
properties,
<PAGE> 6
other than the liens, if any, of current taxes not yet due and
payable;
f. Changed any of the accounting principles followed by it or the methods
of applying such principles; or
g. Entered into any transaction other than in the course of ordinary
business consistent with past practice or any other material
transaction.
4.13 Taxes and Tax Returns COMPANY has duly made all deposits required by law to
be made with respect to employees withholding taxes. COMPANY has duly filed
with all appropriate governmental agencies and bodies, whether federal,
state or local, all income, sales, license, franchise, excise, gross
receipts, employment and payroll-related and real and personal property
returns to reflect the taxes owed by COMPANY for the periods covered
thereby, and COMPANY has paid, or established adequate liabilities or
reserves for the payment of, all taxes shown to be due on such returns.
4.14 Legal Proceedings, Etc. There are no disputes, claims, actions, suits,
proceedings, arbitration's or investigations, either administrative or
judicial, pending or threatened or contemplated, by or against or affecting
COMPANY or its business or any of its assets, properties or prospects, or
the transactions contemplated by this Reorganization Agreement, at law or
in equity or otherwise, before or by any court or governmental agency or
body, domestic or foreign, or before an arbitrator of any kind which, if
determined adversely to COMPANY, would materially adversely affect COMPANY;
nor do any facts exist which could give rise to any such dispute, claim,
action, suit, proceeding, arbitration or investigation affecting COMPANY or
its business or any of its assets, properties or prospects or the
transactions contemplated by this Agreement.
4.15 No Third Party Options. There are no existing contracts or other rights
with, to or in any person to acquire any of the assets or properties or any
interest therein of COMPANY, except for those contracts entered into in the
normal course of business consistent with business practices.
4.16 Delivery of Documents. COMPANY has delivered to NETSURF true, correct and
complete copies of its Certificate of Incorporation, and all amendments
thereto, and the Bylaws, as amended.
4.17 Authority and Compliance. COMPANY has full corporate power and lawful
authority to execute and deliver this Agreement. The consummation and
performance by COMPANY of the transactions contemplated by this Agreement
have been duly and validly authorized by all necessary corporate and other
proceedings. This Agreement has been duly and validly executed and
delivered on behalf of COMPANY and constitutes a valid obligation of
COMPANY, enforceable in accordance with its terms. No consent,
authorization or approval of, exemption by or filing with, any domestic
governmental or administrative authority, or any court, is required to be
obtained or made by COMPANY in connection with the execution, delivery and
performance of this Agreement by COMPANY. Such delivery and performance
will not conflict with or result in the breach or violation of any term or
provisions of, or constitute a default under, the Articles of Incorporation
or Bylaws of COMPANY, or conflict with or result in the breach or violation
of any term or provision of, or constitute a default under any statute,
indenture, mortgage, deed of trust, note agreement or other material
agreement or instrument to which COMPANY is a party or by which it is a
party or by which it is bound, or any law, order, writ, injunction, decree,
rule or regulation of any court or any governmental agency or body.
4.18 Indemnification. COMPANY agrees to indemnify, defend and hold NETSURF and
each of the Selling Shareholders harmless against and in respect of any and
all claims, demands, losses, costs, expenses, obligations, liabilities,
damages, recoveries and deficiencies, including interest, penalties, and
reasonable attorney's fees, that NETSURF or any of such Selling
Shareholders shall incur or suffer, which arise out of or result from or
relate to any breach of, or failure by COMPANY to perform any of its
representations or warranties, contained in this Agreement or in any
schedule, certificate, exhibit or other instrument furnished or to be
furnished by COMPANY under this Agreement.
<PAGE> 7
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF NETSURF
NETSURF hereby, as of the Effective Date of the Reorganization hereof,
represents and warrants as follows:
5.1 Full Disclosure None of the representations and warranties made by NETSURF
herein, or in any exhibit, certificate of memorandum, furnished or to be
furnished by NETSURF, or on its behalf by officers and directors of
NETSURF, contains or will contain any untrue statement of material fact, or
omit any material fact the omission of which would be misleading.
5.2 No Governmental Consents. No consent, authorization or approval of,
exemption by, filing with, any domestic governmental or administrative
authority, or any court, is required to be obtained or made by NETSURF in
connection with the execution, delivery and performance of this
Reorganization Agreement or the consummation of the transactions
contemplated hereby.
5.3 Finder. There is no firm, corporation, agency or other person that is
entitled to a finder's fee or any type of brokerage commission in relation
to or in connection with the transactions contemplated by this
Reorganization Agreement as a result of any agreement or understanding with
NETSURF.
5.4 Organization and Good Standing. NETSURF is a corporation duly organized,
validly existing and in good standing under the laws of Ontario, Canada and
has full corporate power and authority to conduct its business as now
conducted and to own or lease and operate the assets and properties now
owned or leased and operated by it. NETSURF is duly qualified to do
business and is in good standing in each jurisdiction in which the nature
of its business or the character of its properties requires such
qualifications.
5.5 Capitalization of NETSURF. The total authorized capital stock of NETSURF
consists of unlimited shares of common stock, of which as of 1 July, 1999,
100 shares of common stock were issued and outstanding. No shares of any
other class of stock is issued and outstanding. All of such issued and
outstanding shares have been duly authorized and validly issued, and are
fully paid and non-assessable. There are no preemptive rights with respect
to any prior issuance of any shares of the capital stock of NETSURF.
5.6 Subsidiaries of NETSURF. NETSURF has no subsidiaries as of the effective
date of this Reorganization Agreement.
5.7 Options, Warrants and Other Conversion Rights. NETSURF has no options or
warrants outstanding.
5.8 No Restrictions on Securities. NETSURF is not a party to any written or
oral agreement:
a. creating rights in any person with respect to shares of the capital
stock of NETSURF or
b. relating to voting of shares of the capital stock of NETSURF on any
matter.
5.9 Directors and Officers. Immediately prior to the Effective Date of the
Reorganization, names, addresses, and title of all officers and directors of
NETSURF are as follows:
Name/Title Address
<PAGE> 8
Andrzej Rok 482 Country Club Crescent
President Mississauga, Ontario L5J 2R2
Bozidar Bosiljevac 2905 Cartwright Crescent
Secretary Mississauga, Ontario L5M 5W4
5.10 Financial Statements. NETSURF will deliver their unaudited statement for
the period ending June 30, 1999.
5.11 Books and Records.
a. The books of account and other financial records of NETSURF are,
in all material respects, complete and correct and are maintained
in accordance with good business practices.
b. The minute books of NETSURF contain accurate records of all
meetings and accurately reflect all other corporate action of the
shareholders and directors and any committees of directors of
NETSURF.
5.12 Absence of Certain Events. As of the Effective Date of the Reorganization
Agreement, NETSURF has not:
a. Amended its Certificate of Incorporation or By-laws;
b. Changed its authorized capital stock or issued or sold, or
purchased, redeemed or otherwise acquired, or issued any rights to
subscribe for, or warrants to purchase, or entered into any
agreement, commitment or obligation (including, without
limitation, any convertible securities) to issue, sell, purchase,
redeem or otherwise acquire, any share of its capital stock, or
made any declaration or any payment or distribution of any
dividend or any other distribution with respect to its capital
stock;
c. Incurred any liabilities, other than liabilities incurred in the
ordinary course of business consistent with past practice, or
discharged or satisfied any lien or encumbrance, or paid any
liabilities, other than in the ordinary course of business
consistent with past practice, or failed to pay or discharge when
due any liabilities the failure to pay or discharge of which has
caused or may cause any material damage or risk of material loss
to it or its assets or properties;
d. Sold, assigned or transferred any of its assets or properties except
in the ordinary course of business consistent with past practice;
e. Created, incurred, assumed or guaranteed any indebtedness for
money borrowed, or mortgaged, pledged or subjected to any lien,
pledge, mortgage, security interest, conditional sales contract or
other encumbrance of any nature whatsoever any of its assets or
properties, other than the liens, if any, of current taxes not yet
due and payable;
f. Changed any of the accounting principles followed by it or the
methods of applying such principles; or
g. Entered into any transaction other than in the course of ordinary
business consistent with past practice or any other material
transaction.
5.13 Taxes and Tax Returns NETSURF has duly made all deposits required by law to
be made with respect to employees withholding taxes. NETSURF has duly filed
with all appropriate governmental agencies and bodies, whether federal,
provincial or local, all income, sales, license, franchise, excise, gross
receipts, employment and payroll-related and real and personal property
returns to reflect the taxes owed by NETSURF for the periods covered
thereby, and NETSURF has paid, or established adequate liabilities or
reserves for the payment of, all taxes shown to be due on such returns.
<PAGE> 9
5.14 Legal Proceedings, Etc. There are no disputes, claims, actions, suits,
proceedings, arbitration's or investigations, either administrative or
judicial, pending or threatened or contemplated, by or against or affecting
NETSURF or its business or any of its assets, properties or prospects, or
the transactions contemplated by this Reorganization Agreement, at law or
in equity or otherwise, before or by any court or governmental agency or
body, domestic or foreign, or before an arbitrator of any kind which, if
determined adversely to NETSURF, would materially adversely affect NETSURF;
nor do any facts exist which could give rise to any dispute, claim, action,
suit, proceeding, arbitration or investigation affecting NETSURF or its
business or any of its assets, properties or prospects or the transactions
contemplated by this Agreement.
5.15 No Third Party Options. There are no existing contracts or other rights
with, to or in any person to acquire any of the assets or properties or any
interest therein of NETSURF, except for those contracts entered into in the
normal course of business consistent with business practices.
5.16 Delivery of Documents. NETSURF has delivered to COMPANY true, correct and
complete copies of its Articles of Incorporation, all amendments thereto,
its Bylaws, minutes of the board of directors approving the Reorganization
Agreement.
5.17 Authority and Compliance. NETSURF has full corporate power to execute and
deliver this Reorganization Agreement. The consummation and performance by
NETSURF of the transactions contemplated by this Reorganization Agreement
have been duly and validly authorized by all necessary corporate and other
proceedings. This Agreement has been duly and validly executed and
delivered on behalf of NETSURF and constitutes a valid obligation of
NETSURF, enforceable in accordance with its terms. No consent,
authorization or approval of , exemption by, or filing with, any domestic
governmental or administrative authority, or any court, is required to be
obtained or made by NETSURF in connection with the execution, delivery and
performance of this Agreement or the consummation of the transaction
contemplated hereby. The execution, delivery, consummation and performance
of this Agreement by NETSURF will not conflict with or result in the breach
or violation of any term or provision of, or constitute a default under,
the Articles of Incorporation or Bylaws of NETSURF, or conflict with or
result in the breach or violation of any term or provision of, or
constitute a default under, any statute, indenture, mortgage, deed of
trust, note agreement or other material agreement or instrument to which
NETSURF is a party or by which it is bound, or any law, order, writ,
injunction, decree, rule or regulation of any court or any governmental
agency or body.
5.18 Indemnification. NETSURF and the Selling Shareholders agree to indemnify,
defend and hold harmless COMPANY against and in respect of any and all claims,
demands, losses, costs and expenses, obligations, liabilities, damages,
recoveries and deficiencies, including interest, penalties, and reasonable
attorney's fees, that COMPANY shall incur or suffer, which arises out of, result
from or relate to any breach of, or failure by NETSURF to perform any of its
representations, warranties, covenants or agreements in this Agreement or in any
schedule, certificate, exhibit or other instrument furnished or to be furnished
by NETSURF under this Agreement provided, however, that any demand for
indemnification hereunder shall be made in writing to all indemnitors within one
year after the date hereof, or be forever barred.
ARTICLE VI
COVENANTS
6.1 Investigative Rights. Up to and including the date of closing of this
Agreement, each party shall
<PAGE> 10
provide to the other, and such others party's counsel, accountants,
auditors, and other authorized representatives, full access during normal
business hours and upon reasonable advance written notice to all, of each
party's property, books, contracts, commitments, and records for the
purpose of examining the same. Each party shall furnish the other party
with all information concerning such party's affairs as may reasonable be
requested.
6.2 Conduct of Business. Prior to the Effective Date of the Agreement, NETSURF
shall conduct its business in the normal course and shall not sell, pledge,
or assign any assets, without the prior written approval of COMPANY, except
in the regular course of business. NETSURF shall not amend its Certificate
or Articles of Incorporation, or Bylaws, declare any dividends, redeem or
sell stock or other securities, acquire or dispose of fixed assets, change
employment terms, enter into any material or long-term contract, guarantee
obligations of any third party, settle or discharge any balance sheet
receivable for less that its stated amount, pay more on any liability than
its stated amount, or enter into any other transaction other than in the
regular course of business.
ARTICLE VII
CLOSING
7.1 Closing. The closing under this Agreement shall be held at the offices of
Escrow Agent hereinafter appointed at 175 Water Street, Exeter, New
Hampshire or at such other place as the parties may agree and at such date
as shall be mutually agreed upon by the parties. Unless otherwise agreed,
the rights, liabilities, obligations and duties of performance of the
respective parties to this Agreement shall automatically terminate, without
liability to any of the respective parties hereto, if the closing does not
occur hereunder prior to July 31, 1999.
7.2 Delivery of Documentation. At the closing, the following documents, in form
reasonably acceptable to the parties and their respective counsel, shall be
delivered to the respective parties :
a. A COMPANY officer's certificate, dated the Closing Date that all
representations, warranties, covenants and conditions set forth in
this Agreement on behalf of COMPANY are true and correct as of, or
have been fully performed and complied with by, the Closing Date;
and
b. A NETSURF officer's certificate, dated the Closing Date that all
representations, warranties, covenants and conditions set forth in
this Agreement on behalf of NETSURF are true and correct as of, or
have been fully performed and complied with by, the Closing Date;
and
c. A signed consent and or minutes of the Directors of COMPANY
approving the Reorganization Agreement and each matter to be
approved by the Directors of COMPANY under this Agreement.
d. A signed consent and or minutes of the Directors of NETSURF and each
matter to be approved by the Directors of NETSURF under this
Agreement; and
e. An affidavit of COMPANY's president that the shares of COMPANY
common Stock to be issued to the Selling Shareholders, pursuant to
this Agreement will, upon issuance, be duly and validly authorized
and issued and will be fully paid and non-assessable; and
f. Original COMPANY certificates evidencing 100,000 shares of COMPANY
common stock in the name of the Selling Shareholders as set forth in
Exhibit B, which certificates shall bear the appropriate
"restrictive legend" under the Securities Act of 1933, as amended;
an
g. An original certificate(s) of NETSURF common stock in the name of
COMPANY, which certificate(s) shall be accompanied by a duly
executed stock power with the signature guaranty of Selling
Shareholder transferring all right, title and interest in and to 80%
of all the
<PAGE> 11
issued and outstanding shares of NETSURF.
h. An original Opinion of COMPANY's counsel that the shares of COMPANY
stock to be issued to the Selling Shareholders pursuant hereto shall
be freely tradeable under Rule 144 as promulgated by the Securities
and Exchange Commission twelve months after the date of issuance of
such stock.
i. This Reorganization Agreement executed in triplicate by each of the
respective parties hereto.
7.3 Escrow . The parties to this Reorganization Agreement hereby nominate and
appoint W. Edward Nichols, Esq., Nichols and Nichols, 175 Water Street,
Exeter, New Hampshire, Telephone 603.772.7336/772.4219 as the Escrow Agent
under this Agreement. It is understood and acknowledged by the parties that
W. Edward Nichols and Nichols and Nichols are not acting as legal counsel
to the COMPANY or NETSURF. W. Edward Nichols has agreed to act in the
capacity as Escrow Agent at the request and with the express consent of all
parties hereto. The Escrow Agent is charged and instructed by the parties
to collect each and every document set forth under Section 7.2 hereof. Once
all such documents are received by the Escrow Agent, all conditions of
Closing hereunder shall have occurred and the Escrow Agent is instructed
and directed to deliver all documents received to the appropriate parties.
Each of the parties to this Agreement hereby undertake to use their best
efforts to cause all documentation referenced hereunder to be delivered to
effect a closing. It is also acknowledged that Mr. Nichols is part of the
Project Finance Associates Inc. consulting team under contract to the
Company.
On July 31, 1999, if the Escrow Agent has not received all the
documents set forth in Section 7.2, then unless otherwise notified in writing by
both parties the Escrow Agent is hereby authorized, directed and instructed to
return to each of the respective parties of this Agreement the documents
previously delivered by said parties to the Escrow Agent.
ARTICLE VIII
REMEDIES.
8.1 Disputes. Any dispute that might arise over the enforcement, interpretation
or execution of this Agreement and which is not amicably settled will be
submitted to arbitration in Buffalo, New York, before a panel of
arbitrators selected as follows: within 10 days of demand by a party to
this Agreement for arbitration, COMPANY and NETSURF will each select one
(1) arbitrator and those two arbitrators will select a third arbitrator and
those three (3) persons shall constitute the panel of arbitrators. The
arbitrators will conduct the hearings on continuous business days, and
their decisions will be by majority vote. All costs of the arbitrators will
be shared equally, but the arbitrators are authorized to award costs and
counsel fees to the prevailing party, if necessary. All documents to be
brought into evidence will be produced within 10 days of notice of request
for arbitration.
8.2 Costs. If any legal action or any arbitration or other proceeding is
brought for the enforcement of this Agreement, or because of an alleged
dispute, breach, default or misrepresentation in connection with any of the
provisions of this Agreement, the successful or prevailing party or parties
shall be entitled to recover reasonable attorney's fees and other costs
incurred in that action or proceeding, in addition to any other relief to
which it or they may be entitled.
8.3 Termination. In addition to the other remedies, any of the parties hereto
may on the Closing Date terminate this Agreement, without liability:
a. If the respective Boards of Directors of the parties shall consent
to the termination.
b. If any bona fide action or proceeding shall be pending against any
of the parties hereto on the Closing Date that could result in a
judgment, decree or order rendering
<PAGE> 12
this Agreement null, void, unenforceable or against public policy or
if any agency of the federal or of any state government shall have
objected in writing at or before the Closing Date to this
Reorganization or to any other action required by or in connection
with the Agreement.
ARTICLE IX
GENERAL PROVISIONS
9.1 Survival of Representations, Warranties, Covenants, and Agreements. The
representations, warranties, covenants and agreements contained in this
Agreement shall survive the Effective Date of the Reorganization.
9.2 Amendments. This Agreement cannot be altered or otherwise amended except
pursuant to an instrument in writing signed by each party hereto. This
Agreement shall be binding upon, and subject to the terms of the foregoing
sentence, inure to the benefit of the parties, their successors , legal
representatives and assigns.
9.3 Notices. Any notice, request, instruction or other document to be given
hereunder by any party to any of the other parties shall be in writing and
shall be deemed to have been duly given when delivered personally or 5 days
after dispatch by registered or certified mail, postage prepaid, return
receipt requested, to the party to whom the same is so given or made:
If to COMPANY addressed to: J. Daniel Fox
President/CEO
7950 E. Redfield Rd, Suite 150
Scottsdale, AZ 85260
If to NETSURF to:
Andrzej Rok
75 The East Mall
Suite 204
Etobicoke, Ontario, Canada M8Z 5W3
or at such other address as the one party shall specify to the other party
in writing.
9.4 Expenses. Whether or not the transactions contemplated by this Agreement
are consummated, each party hereto shall bear the expenses incurred by it
in connection with the transactions contemplated hereby.
9.5 Entire Agreement. This Agreement and the Exhibits and Schedules which are a
part hereof and the other writings and agreements specifically identified
herein contain the entire agreement between the parties with respect to the
transactions contemplated herein and supersede all previous written or oral
negotiations, commitments and understandings.
9.6 Waivers, Remedies. Any waiver must be in writing. A waiver of any breach or
failure to enforce any of the terms or conditions of this Agreement shall
not in any way affect, limit or waive a party's rights at any time to
enforce strict compliance thereafter with every other term or condition of
this Agreement. All remedies under this Agreement shall be cumulative and
not alternative.
9.7 Counterparts and Headings. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original and all of which
together shall constitute one and the same document. All headings, the
cover page, and the index of this Agreement are inserted for convenience of
reference only and shall not affect its meaning or interpretation.
9.8 Severability. If and to the extent that any court of competent jurisdiction
holds any provision of this
<PAGE> 13
Agreement to be invalid or unenforceable, such holding shall in no way
affect the validity of the remainder of this Agreement.
9.9 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Nevada.
IN WITNESS WHEREOF, the Parties hereto have duly executed this Reorganization
Agreement as of the day and year first above written.
COMPANY
HotYellow98.com, Inc.
By: /s/ J. Daniel Fox
---------------------------------
J. Daniel Fox, President
NETSURF
By: /s/ Andrzej Rok
---------------------------------
Andrzej Rok, President
<PAGE> 1
EXHIBIT 12C
MARKETING AND CONFIDENTIALITY AGREEMENT
This Marketing and Confidentiality Agreement ("Agreement") entered into
on the date shown below, by and between E-Commerce Exchange, LLC (hereinafter
referred to as "E-Commerce"), and Hotyellow98.com, Inc. (hereinafter referred to
as "Source"), shall set forth the terms and conditions under which E-Commerce
and Source shall market certain services of E-Commerce.
WHEREAS Source is in the business of providing websites and software
and as a part of its business it comes in contact with numerous persons and
businesses that could utilize the services marketed by E-Commerce; and
WHEREAS Source and E-Commerce wish to memorialize their agreement for
Source to provide E-Commerce with information, including, but not limited to,
phone numbers, addresses and e-mail addressees, and completed mini-applications
and on-line applications for all persons that Source comes in contact with as a
result of its business ("Leads") and for E-Commerce and Source to share any
income derived from the sale of E-Commerce products to the Leads.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:
Section 1 - Term of Agreement.
1.01. This Agreement shall become effective July 2, 1999 and shall
continue in effect for one (1) year, unless sooner terminated as provided
herein. After the one (1) year time period has passed, this Agreement shall
continue to renew automatically on an annual basis. Each party shall have the
right to terminate the Agreement by providing the other party with at least
sixty (60) days written notice under the notice provisions of this Agreement.
Section 2 - Terms of the Agreement.
2.01. Source agrees to provide E-Commerce with Leads for the sole
purpose of soliciting them to provide them with merchant accounts, e-commerce
software and electronic processing equipment. During the term of this Agreement,
Source shall not provide Leads or any other information to any direct or
indirect competitor of E-Commerce that would allow any such competitor to
solicit, call on or sell any of the competitor's products to the Leads.
2.02. Source and E-Commerce will cooperate in joint marketing
activities including, but not limited to, opt-in e-mail listings, advertising
presence websites, presence in newsletter(s) and affiliate site marketing. The
intent of this section is, that in the event of any advertising by either party
here to, relating to the scope and purpose of this agreement that the other
party shall be included but not charged by the party initiating the advertising.
2.03. Nothing in this Agreement, with the exception of section 2.01,
shall be construed in any way to limit E-Commerce's or Source's ability to enter
into any kind of agreement or contract
1
<PAGE> 2
with any other person or entity. E-Commerce and Source may represent, perform
services for, and contract with as many additional persons or companies as they,
in their sole discretion, see fit as long as section 2.01 is not violated.
2.04. Both parties acknowledge that E-Commerce owns any rights in the
portfolio of business including, but not limited to, the merchant accounts and
lease rights, that result from the Leads submitted by Source to E-Commerce.
Source will provide all reasonable assistance to E-Commerce to perfect, protect
and transfer E-Commerce's right, title and interest in said items.
Section 3 - Payment
3.01. For each Lead that agrees to purchase a Services Package, as
defined below, E-Commerce shall pay Source the following:
For Leads provided to E-Commerce where E-Commerce must contact the
potential customer to sell the credit card processing goods and services (those
leads where no substantially filled out mini-application or on-line application
are submitted) two hundred and fifty dollars ($250.00) for each customer that
has A, B or C credit that purchases credit card processing services from
E-Commerce including, but not limited to, a fully funded lease at the rate of
forty-nine dollars and ninety-five cents ($49.95) per month for forty-eight (48)
months and a merchant account (the "Services Package") and one hundred
twenty-five dollars ($125.00) for each customer with D or lower credit that
purchases the Services Package.
For Leads provided to E-Commerce where Source provides a substantially
filled out mini-application or on-line application six hundred and twenty five
dollars ($625.00) for each customer that has A, B or C credit that purchases the
Services Package and three hundred dollars ($300.00) for each customer with D or
lower credit that purchases the Services Package.
If E-Commerce changes the package its offers to its customer to one different
than the lease at the rate of forty-nine dollars and ninety-five cents ($49.95)
per month for forty-eight (48) months E-Commerce and Source will negotiate in
good faith for a new payment schedule to pay Source for the Leads which will be
offered within one hundred twenty (120) days of the effective date of this
Agreement.
3.02. E-Commerce will provide Source with one free package per day,
with a retail value of fifteen hundred dollars ($1,500.00) consisting of the
Quickcommerce software and application fee, but not any statement fee, monthly
minimum fee or monthly gateway access fee, to be given away free as a promotion
by Source and E-Commerce.
3.03. Payments shall be made to Source for any amounts due under this
agreement on the first and the fifteenth of the month following the mutual
execution of this agreement.
Section 4 - Termination.
4.01. Notwithstanding any other provision or term in this Agreement,
either party may terminate this Agreement for a material breach of the terms of
this Agreement at any time by giving
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the other party written notice of termination. Said notice of termination and
the termination of this Agreement will be effective immediately upon delivery of
said notice of termination as set forth in this Agreement. Either party shall
have the option of rescinding the termination of this Agreement by taking
corrective action that cures the material breach, if such corrective action is
taken within thirty (30) days of the written notice of termination, and if there
are no other material breaches during such time period. Notwithstanding other
provision or term in this Agreement, upon the bankruptcy, insolvency or
dissolution proceedings of any party to this Agreement the other party shall
have the right to immediately cancel this Agreement by providing written notice.
Section 5 - Confidentiality
5.01. In reliance upon this agreement, each of the parties (acting as a
"Disclosing Party") may disclose to the other (acting as a "Receiving Party")
Confidential Information of the Disclosing Party. Receiving Party hereby
acknowledges and agrees that certain items of information currently in Receiving
Party's possession or later to come into Receiving Party's possession presently
constitute or shall constitute in the future valuable trade secrets or
proprietary business information of Disclosing Party. Such items of information,
which are herein collectively referred to as the "Confidential Information,"
shall include the following:
(i) Product formulae, customer requirements, and all other technical
data used or useful in Disclosing Party's business or related to any
research and development activities carried on by Disclosing Party.
(ii) All customer lists, accounting, costs, sales, and other
information relating to Disclosing Party's business.
(iii) All other information of any type or description whatsoever
which is protected by law as a trade secret or as proprietary
information of Disclosing Party, or which has been designated to
Receiving Party either orally or in writing as a trade secret or
proprietary information of Disclosing Party. For purposes of the
foregoing sentence, "trade secret" shall include, without limitation,
any formula, device, or compilation of information not generally known
in the industry which Disclosing Party uses in its business and which
gives Disclosing Party an opportunity to obtain an advantage over
competitors who do not know it.
(iv) All Confidential Information (as herein defined) of all
customers, contractors, and others with whom Disclosing Party had, has
or will have a business relationship learned or acquired by Receiving
Party during the course of or as a result of Receiving Party's
contractual relationship with Disclosing Party.
All of the foregoing information shall be deemed "Confidential
Information" until such time as it becomes generally known in the
industry by means other than improper disclosures or other improper
action or inaction made by Receiving Party.
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5.02. Receiving Party shall not, directly or indirectly, either during
the term of its relationship with Disclosing Party or thereafter, disclose or
use the Confidential Information other than in the business of or as directed
by, Disclosing Party without the prior written consent of Disclosing Party.
Receiving Party shall not, directly or indirectly, either during the term of its
relationship with Disclosing Party or thereafter, take, copy, or remove any of
the Confidential Information from Disclosing Party's premises, whether in the
form of manuals, printed sheets, reproductions, personal notes, or otherwise,
without the prior written consent of Disclosing Party.
5.03. Receiving Party shall at all times and forever safeguard and
protect all of the Confidential Information of Disclosing Party to prevent its
being exposed to, or taken by, unauthorized persons, and when entrusted to
Receiving Party will exercise its best efforts to assure its safekeeping.
5.04. Upon request of a Disclosing Party, Receiving Party will deliver
to Disclosing Party, within three (3) days of receiving such request, all
Confidential Information which is in the possession or control of the Receiving
Party.
5.05. The Receiving Party not shall provide any confidential
information to any third party without the prior written consent of the
Disclosing Party, which such consent shall be the sole discretion of the
Disclosing Party.
Section 6 - General Terms and Conditions
6.01. Assignment and Delegation. Neither party shall assign any rights
or delegate any duties hereunder unless permitted by this Agreement or by the
express prior written consent to the other which shall not be unreasonably
withheld.
6.02. Entire Agreement. This Agreement sets forth the entire agreement
and understanding of the parties hereto in respect of the subject matter
contained herein, and supersedes all prior agreements, promises, covenants,
arrangements, communications, representations or warranties, whether oral or
written, by any officer, partner, employee or representative of any party
hereto.
6.03. Controlling Law. The validity, interpretation and performance of
this Agreement shall be controlled by and construed under the laws of the State
of Nevada.
6.04. Attorney's Fees. In any action arising from the alleged breach of
this Agreement, to enforce this Agreement, the final prevailing party will
recover its reasonable attorneys' fees, costs and expenses.
6.05. Failure to Object. The failure of either party to this Agreement
to object to or to take affirmative action with respect to any conduct of the
other which is in violation of the terms of this Agreement, shall not be
construed as a waiver of that conduct or any future breach or subsequent
wrongful conduct.
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6.06. No Partnership or Joint Venture. This Agreement does not
constitute and shall not be construed as constituting a partnership or joint
venture between Source and E-Commerce. Neither party shall have any right to
obligate or bind the other party in any manner whatsoever.
6.07. Validity of Provisions. If any part, term or provision of this
Agreement is declared and determined by any court or arbitrator to be illegal or
invalid, such declaration and determination shall not effect the validity of the
remaining parts, terms or provisions. Any illegal or invalid part, term or
revision shall be deemed not a part of this Agreement.
6.08 Notices. Each notice, request, demand or other communication by a
party to another party required or permitted by this Agreement ("Notice") shall
be in writing and shall be personally delivered, sent by U.S. certified mail,
return receipt requested (postage prepaid), by overnight commercial courier
(charges prepaid), or sent by facsimile transmission (but each such facsimile
transmission shall be confirmed by sending a copy thereof to the other party by
certified mail or commercial courier as provided herein no later than the
following business day), addressed to the address of the receiving party set
forth below or to such other address as such party shall have communicated to
the other parties in accordance with this Section. Any notice shall be deemed to
have been given when personally delivered, on the date of sending when sent by
facsimile transmission, on the second business day following the date of sending
when sent by certified mail or on the first business day following the date of
sending when sent by overnight commercial courier.
(a) If to E-Commerce, to:
E-Commerce Exchange, LLC
Attention Darrin Ginsberg
26072 Merit Circle, Suite 112
Laguna Hills, California 92553
Fax (949) 367-9745
(b) If to Source, to:
HotYellow98.com, Inc.
7950 Redfield Road, Suite 150
Scottsdale, Arizona 85260
Fax (602) 998-1498
6.09. Representation. All parties have been advised and have had an
opportunity to consult with legal counsel of their choosing regarding the force
and effect of the terms set forth herein. This Agreement shall be deemed to be
jointly prepared by the parties and therefore any ambiguity or uncertainty shall
be interpreted accordingly.
6.10. Authority. Each individual executing this Agreement represents
that he/she is duly authorized to execute and deliver this Agreement on behalf
of the corporation or other entity which he/she represents. This document is
binding upon the representative corporation or other entity in accordance with
its terms.
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6.11. Headings. The various headings in this Agreement are inserted for
convenience only and shall not affect this Agreement or any portion thereof.
6.12. Counter-parts. This Agreement may be executed in two or more
counter-parts, each of which shall be deemed an original, all of which together
shall constitute one and the same instrument.
The parties have executed this Agreement on the dates indicated
opposite their signatures.
E-COMMERCE EXCHANGE, LLC
Dated: July 13, 1999 By: /s/ Jon Engleking
--------------------------------------
Jon Engleking, Chief Operating Officer
HOTYELLOW98.COM, INC.
Dated: By:
-------------- --------------------------------------
J. Daniel Fox, President and Chief Executive Officer
HOTYELLOW98.COM, INC.
Dated: July 13, 1999 By: /s/ Francis R. Law
--------------------------------------
Francis R. Law, Secretary and Treasurer
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