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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
AUCTIONANYTHING.COM, INC.
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(Name of Small Business Issuer in its charter, as amended)
Delaware 13-2640971
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
35 West Pine Street, Suite 211, Orlando, Florida 32801
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(Address of principal executive offices) (Zip code)
(407) 481-2140
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(Issuer's telephone number)
Securities to be registered under Section 12(b) of the Act:
Title of each class Name of each exchange on which
To be so registered each class is to be registered
N/A N/A
--- ---
Securities to be registered under Section 12(g) of the Act:
Common Stock, par value $0.001 per share
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(Title of class)
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AUCTIONANYTHING.COM, INC.
FORM 10-SB
TABLE OF CONTENTS
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Page
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PART I.................................................................................................... 3
ITEM 1- DESCRIPTION OF BUSINESS........................................................................... 3
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND PLAN OF OPERATIONS............... 9
ITEM 3 - DESCRIPTION OF PROPERTY.......................................................................... 13
ITEM 4 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT................................... 13
ITEM 5 - DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS..................................... 14
ITEM 6 - EXECUTIVE COMPENSATION........................................................................... 16
ITEM 7 - CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS............................................. 16
ITEM 8 - DESCRIPTION OF SECURITIES........................................................................ 16
PART II................................................................................................... 17
ITEM 1 - MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.. 17
ITEM 2 - LEGAL PROCEEDINGS................................................................................ 17
ITEM 3 - CHANGES IN AND DISAGREEMENT WITH ACCOUNTANTS..................................................... 18
ITEM 4 - RECENT SALES OF UNREGISTERED SECURITIES.......................................................... 18
ITEM 5 - INDEMNIFICATION OF DIRECTORS AND OFFICERS........................................................ 18
PART F/S.................................................................................................. 19
FINANCIAL STATEMENTS...................................................................................... 19
PART III.................................................................................................. 32
ITEM 1- INDEX TO EXHIBITS................................................................................. 32
ITEM 2- DESCRIPTION OF EXHIBITS........................................................................... 33
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PART I
ITEM 1- DESCRIPTION OF BUSINESS
Corporate History
AuctionAnything.com, Inc. ("UBUY" or the "Company") is a publicly
traded company (OTC BB: UBUY). The Company was originally incorporated in
Delaware under the name "Mediplex Corporation" on February 25, 1969. According
to documents filed in the State of Delaware, Mediplex Corporation forfeited its
Certificate of Incorporation on December 3, 1973, as a result of not having
named a registered agent as required by Delaware law; however, the Company was
renewed and revived pursuant to a Certificate of Renewal and Revival filed on
June 4, 1974. On June 5, 1974, the Company changed its name to "The Lawton-York
Corporation." On January 31, 1975, the Company merged into it a New York
corporation of identical name, which had been incorporated on February 10, 1966.
The Company was the surviving corporation of that merger.
The Company was, for many years, a wholesaler of custom one-, two-,
three- and four-color processed commercial printing, as well as disposable and
durable office equipment including stock paper, fax paper, fax and copy
machines, computers, file cabinets and safes. The Company conducted its
business throughout the United States of America and Puerto Rico from its
headquarters in New York.
On March 10, 1999, the Company changed the focus of its business and
closed a transaction by which it acquired 100% of the outstanding capital stock
of North Orlando Sports Promotions, Inc., a privately held Florida corporation
("NOSP"), from the shareholders of NOSP. As consideration for that acquisition,
the Company issued 24,003,133 shares of its common stock, $0.001 par value (the
"Common Stock"), which amounted to approximately 85% of the Company's
outstanding Common Stock, to the three former shareholders of NOSP. In
connection with the transaction, the Company adopted the name,
"AuctionAnything.com, Inc.," in order to more accurately reflect its new core
business. Also, prior to the closing of the acquisition transaction, the Company
sold substantially all of its assets to its major shareholder, director and
president, Joel E. Cavalier, in exchange for his assignment to the Company of
747,116 shares of Common Stock and his assumption of all of the Company's
liabilities. At the Closing of the acquisition transaction, the Company's
directors and officers resigned, and the Company elected a new management team
consisting of the three former shareholders of NOSP, who are experienced in
providing Internet auctions.
Business and Properties
Industry Overview
Growth of the Internet and Online Commerce
------------------------------------------
The Internet has emerged as a global medium enabling millions of
people worldwide to share information, communicate and conduct business
electronically. An estimated 25% of U.S. households now use the Internet, which
is projected to rise to 33% in 1999 and to 66% by 2003/1/. Some 55% of the U.S.
adult population (108 million) accessed the Internet during the final three
months of 1998, up from 40% in the first three months of the year/2/.
International Data Corporation ("IDC") estimates that the number of Internet
users will grow from approximately 69 million worldwide in 1997 to approximately
320 million worldwide by the end of 2002. This growth is expected to be driven
by the large and growing number of personal computers ("PCs") installed in homes
and offices, the decreasing cost of PCs, easier, faster and cheaper access to
the Internet, improvements in network infrastructure, the proliferation of
Internet content and the increasing familiarity and acceptance of the Internet
by businesses and consumers. The Internet possesses a number of unique
characteristics that differentiate it from traditional media: users communicate
or access information without geographic or temporal limitations; users access
dynamic and interactive content on a real-time basis; and users communicate and
interact instantaneously with a single individual or with entire groups of
individuals. As a result of these characteristics, Internet usage is expected
____________________________
/1/ Yankee Group survey, March, 1999.
/2/ INTECO Corp. survey, January, 1999.
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to continue to grow rapidly. The growing acceptance of the Internet represents
an enormous opportunity for businesses to conduct commerce over the Internet.
IDC estimates that commerce over the Internet will increase from approximately
$32 billion worldwide in 1998 to approximately $130 billion worldwide in 2000.
While companies initially focused on facilitating and conducting
transactions between businesses over the Internet, a number of companies more
recently have focused on facilitating a wide variety of business-to-consumer
transactions. These companies typically use the Internet to offer standard
products and services that can be easily described with graphics and text and do
not necessarily require physical presence for purchase, such as books, CDs,
videocassettes, automobiles, home loans, airline tickets and on-line banking and
stock trading. The Internet gives these companies the opportunity to develop
one-to-one relationships with customers worldwide from a central location
without having to make the significant investments required to build a number of
local retail presences, manage a worldwide distribution infrastructure or
develop the printing and mailing infrastructure associated with traditional
direct marketing activities. While companies have generally focused on applying
these benefits in business-to-business and business-to-consumer transactions, a
significant market opportunity exists to apply these same advantages to
facilitate person-to-person trading over the Internet.
In addition, the Internet offers advertisers the ability to target
their messages and to make changes quickly and frequently in response to market
factors, current events and consumer feedback. Ad effectiveness is measured by
the number of "impressions" delivered to customers and the "click-through" rate
to advertisers' web sites. This level of targetability, flexibility, and
measurability is not available through traditional print or broadcast media.
Online advertising revenue was estimated at $266.9 million in 1996, $907 million
in 1997/3/, and $2.1 billion in 1998. Internet ad revenue of $5.5 billion is
predicted for 1999, which represents a 161.9% increase over last year/4/. Online
ad spending is expected to reach $7.1 billion by 2002/5/, and will climb to an
estimated $15 billion by 2003/6/. Online advertising is showing significantly
stronger yearly growth than television advertising/7/, has proven to be
efficacious/8/, and continues to gain ground on print advertising, as people
move from the newspaper to the Internet for news and information. Its 240%
projected growth rate has dwarfed cable television's 15.5% growth rate/9/.
The Person-to-Person Trading Market
-----------------------------------
The exchange of goods between individuals--person-to-person trading--
has traditionally been conducted through trading forums such as classified
advertisements, collectibles shows, garage sales and flea markets or through
intermediaries, such as auction houses and local dealer shops. These markets are
highly inefficient, making person-to-person trading difficult for buyers and
sellers. Their fragmented, regional nature makes it difficult and expensive for
buyers and sellers to meet, exchange information and complete transactions. The
localized nature of these markets also results in a limited variety and breadth
of goods available in any one location. Buyers are limited to searching through
local classified ads or to traveling to numerous geographically-dispersed flea
markets, trade shows or dealer shops in order to find items of interest. These
markets often have high transaction costs because intermediaries either mark up
goods for resale or charge a commission. Because these markets are information
inefficient, buyers and sellers lack a reliable and convenient means of setting
prices for sales or purchases. Despite
_____________________________
/3/ Fox Market Wire: "1997 - a Breakthrough Year of Online Advertising", April
8, 1998, citing figures compiled by Coopers and Lybrand.
/4/ Simba Information report: "Web Advertising 1998-1999 Market Analysis and
Forecast", February, 1999 (including $2.1 billion figure for 1998); earlier
reports predicted $3.8 billion in ad revenues by the year 2000 (6/th/ E Overview
Report of eMarketer, August, 1998). Another study by eMarketer estimates ad
revenues as follows: 1998: $1.5 billion, 1999: $2.61 billion, 2000: $4.2
billion, 2001: $6.7 billion, 2002: $8.9 billion. (CyberAtlas: Advertising:
"Increase in Ad Spending Predicted" March 25, 1999).
/5/ Supra
/6/ PC World: "Online Advertising to Increase Tenfold", August 21, 1998, citing
Forrester Research, Inc. report.
/7/ Internet Advertising Bureau, press release, April 8, 1998, citing figures
compiled by Coopers & Lybrand.
/8/ The Ipsos-ASI/AOL study of February 1999 shows that consumers are as likely
to remember an online banner ad as a television commercial; the Netratings
survey of October, 1998, concludes that "Web banner ads significantly increase
the audience reach of a product", and the February, 1999 study of online brand
loyalty by Cyber Dialogue, found that one third of consumers have changed their
perception of a brand because of online advertising.
/9/ Coopers and Lybrand report, April 1998.
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these inefficiencies, the Company believes that the market for traditional
person-to-person trading in the U.S. through auctions and classified ads
exceeded $50 billion in goods sold in 1997.
The Internet offers, for the first time, the opportunity to create a
compelling global marketplace that overcomes the inefficiencies associated with
traditional person-to-person trading while offering the benefits of Internet-
based commerce to the person-to-person trading market. An Internet-based,
centralized trading place facilitates buyers' and sellers' meeting, listing
items for sale, exchanging information, interacting with each other and,
ultimately, consummating transactions. It allows buyers and sellers to trade
directly, bypassing traditional intermediaries and lowering costs for both
parties. This trading place is global in reach, offering buyers a significantly
broader selection of goods to purchase and providing sellers the opportunity to
sell their goods efficiently to a broader base of buyers. It offers significant
convenience, allowing trading at all hours and providing continually-updated
information. By leveraging the interactive nature of the Internet, this trading
place also facilitates a sense of community through direct buyer and seller
communication, thereby enabling the interaction between individuals with mutual
interests. As a result, there exists a significant market opportunity for an
Internet-based, centralized trading place that applies the unique attributes of
the Internet to facilitate person-to-person trading.
General Business
AuctionAnything.Com, Inc., operates a variety of Internet-related
services. Currently, the Company has three operations: (i) an online person-to-
person trading service, known as the AuctionAnything.com person-to-person
network; (ii) a service that establishes and hosts auctions for other
businesses, known as Auction Business Solutions (ABS); and (iii) an Internet
service provider (ISP) service, known as Tish.net. The Company remains committed
to pursuing all commercial opportunities in the online person-to-person,
business-to-consumer and business-to-business trading service areas.
AuctionAnything.com
-------------------
The Company owns and operates the AuctionAnything.com person-to-person
network, an online person-to-person trading website. The website is located at
http://www.auctionanything.com. This site serves as a centralized trading place
for buyers and sellers to meet, negotiate sales, and finally consummate
transactions directly, thereby bypassing the time and expense of intermediaries.
Sales are conducted by auction hosted by the Company. Although users are
required to register, the Company does not currently charge for these services
in order to attract potential customers for its other products, such as its ABS
program (see below).
Currently, the Company has consolidated all person-to-person trading
services into one centralized site with an expanding list of categories. The
site is available at http://Auctions.AuctionAnything.com.
The Company sells Gold Memberships to AuctionAnything.com person-to-
person sites. The membership includes free listings for one year, no commissions
on items sold for one year, free Internet service via a third-party vendor known
as WebCombo and a discounted long distance telephone service via another third-
party vendor known as StarTouch.
Auction Business Solutions
--------------------------
Auction Business Solutions (ABS) is a business-to-consumer service
whereby the Company establishes and then hosts auctions for other businesses.
This service was designed for businesses whose product inventory has a
relatively high-turnover rate, particularly businesses that sell bulk-items that
are easily shipped. The Company provides the milieu and the technical support,
while the customer is responsible for all listed items, content, delivery,
collections, and other incidentals. The Company charges an initial installation
fee, then a flat monthly fee plus a percentage of the successful sales
thereafter.
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The ABS auctions appear on and are accessed through the
AuctionAnything.com website. Also, AuctionAnything.com registered users are
automatically registered to participate in all ABS sites. Currently, there are
six ABS auction sites found at the AuctionAnything.com website:
(i) Sportsauction.com (www.SportsAuction.com) is an ABS site wholly
-----------------------------------------
owned by the Company. In addition to being the main site for the
Company, it has served as a test site for all technical
components. At this site, the Company auctions off sports and
celebrity material, all of which are owned by the Company. The
auctions are conducted weekly, beginning every Monday and
concluding every Sunday. The Company typically runs between 500
and 3000 lots per week. These weekly lots are combined with
occasional daily lots, which begin and end on the same day. The
daily lots are designed to attract buyers to the site on off
days. The Company offers a weekly auction giveaway to that
week's bidders. Each time a person bids, they are entered into a
drawing; thus, people are encouraged to bid more in order to
increase their chances of winning.
(ii) Autographauctions.com (www.AutographAuctions.com) is also an ABS
-------------------------------------------------
site wholly owned by the Company. The site eventually feeds the
visitor to the sportsauction.com site. This site was established
to eliminate confusion concerning the large amount of non-sports
celebrity autographs offered in the sportsauction.com site, and
also to facilitate advertising in celebrity autograph magazines.
(iii) Stogiesauction.com (www.StogiesAuction.com) is an ABS site
-------------------------------------------
established for a customer based in Boca Raton, Florida. They
auction off cigar and related merchandise.
(iv) TCI Industries (www.TCIIndustries.com) is an ABS site
--------------------------------------
established for a customer based in Columbia, South Carolina.
They auction off computer equipment.
(v) Showcases USA (www.UniqueMemorabilia.com) is an ABS site
-----------------------------------------
established for a customer in Tampa, Florida. They auction off
sports and celebrity memorabilia.
(vi) Christian Help (www.AuctionsForCharity.com) is an ABS site
-------------------------------------------
established for a charitable service based in Orlando, Florida.
The auction, to be held in November of 1999, will serve as a
fundraiser. This client will only be charged a percentage of the
successful sales.
The Company's current plan is to aggressively market its ABS program
to businesses that could potentially thrive in the online business-to person
field. The Company is committed to expanding its marketing and advertising of
the ABS program via media, personal contacts, and trade shows.
ISP Services
------------
Tish.net is an ISP that provides Internet service for the Company and
for other customers. Currently, Tish.net provides ISP services for approximately
50 clients. There are no immediate plans to solicit new clients for these
services.
Revenue Sources
Tish.net
Tish.net offers ISP services to approximately 50 clients. There are no
immediate plans to solicit new clients for these services. Services provided
include dial-up through high-speed Internet access and design and hosting of
Internet web and e-mail services. Customer costs range from $16 per month to
$1,500 per month for access and hosting services, and other services are
provided based on hourly rates.
Auction Business Solutions
Auction Business Solutions (ABS) is a service whereby the Company
establishes and hosts auctions for other businesses. Currently, the Company has
established six ABS sites, four of which were established for customers.
Typically, the Company charges each customer an initial set up charge of
$5,000.00, and then $250.00
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per month, plus two percent of their successful sales. The Company expects to
increase the successful sales percentage fee from two percent to three percent.
The Company is actively seeking more customers for this service.
SportsAuction.com
SportsAuction.com and AutographAuction.com are ABS sites owned by the
Company. The Company auctions off sports and celebrity material weekly via the
web site, SportsAuction.com, a/k/a AutographAuction.com. All of the items
offered for sale by auction on this web site are owned by the Company. The
Company runs between 500 and 3000 lots per week. These weekly lots are combined
with occasional daily lots. All auctions are non-reserve auctions and subject to
a $1.00 minimum bid. Currently, the Company generates approximately $10,000 per
week in gross sales from SportsAuction.com.
Gold Memberships
The Company sells Gold Membership to AuctionAnything.com to customers
at a rate of $99. The membership includes free listings for one year, no
commission charges on items sold for one year, free Internet service and a
discounted long distance telephone service.
Commissions
The Company receives a five percent commission on all usage of the
long distance carrier, StarTouch, by any customer who signs up for long distance
telephone service through the Company.
Banner Advertising
The Company plans on selling banner advertising on its website in the
near future. The competition for advertising dollars is intense, but the dollars
available are growing. Jupiter Communications, a leading Internet research firm,
estimates that Web advertising in the U.S. will grow from $940 million in 1997
to over $7.6 billion by the year 2002. Ad rates for many web sites have remained
stable at $10 to $50 per 1,000 pages viewed, but significant discounting is
prevalent in the market. Initially, the Company may discount its rates in order
to establish itself in the market.
Sales Through Other Auction Sites
The Company also generates modest revenue through sales of its own
inventory through other Internet auction sites, such as eBay. Gross sales from
these activities are approximately $1,000 per week.
Competition
The market for person-to-person and business-to-customer trading over
the Internet is relatively new, rapidly evolving and intensely competitive, and
the Company expects competition to intensify further in the future. Barriers to
entry are relatively low, and current and new competitors can launch new sites
at a relatively low cost using commercially available software. The Company
currently or potentially competes with a number of other companies. The
Company's direct competitors include various online person-to-person auction
services, including Onsale Exchange, Auction Universe, Excite, eBay, Ubid, and a
number of other services, including those that serve specialty markets. Also,
the Company will compete directly with emerging networks of online person-to-
person and business-to-customer auction services, such as the FairMarket
network, which combine the services of competing auction sites, thereby exposing
items to a larger number of buyers. The Company also competes indirectly with
business-to-consumer online auction services such as Onsale, First Auction,
ZAuction and Surplus Auction. The Company potentially faces competition from a
number of large online communities and services that have expertise in
developing online commerce and in facilitating online person-to-person
interaction. Certain of these potential competitors, including Amazon.com, AOL,
Microsoft and Yahoo! currently offer a variety of business-to-consumer trading
services and classified ad services, and certain of these companies may
introduce person-to-person trading to their large user populations. Other large
companies with strong brand recognition and experience in online commerce, such
as Cendant Corporation, QVC and large newspaper or media companies may also seek
to compete in the online auction market. Competitive pressures created by any
one of these companies, or by the Company's
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competitors collectively, could have a material adverse effect on the Company's
business, results of operations and financial condition.
The Company believes that the principal competitive factors in its
market are volume and selection of goods, population of buyers and sellers,
customer service, reliability of delivery and payment by users, brand
recognition, Web site convenience and accessibility, price, quality of search
tools and system reliability. Many of the Company's current and potential
competitors have longer operating histories, larger customer bases, greater
brand recognition and significantly greater financial, marketing, technical and
other resources than the Company. In addition, other online trading services may
be acquired by, receive investments from or enter into other commercial
relationships with larger, well-established and well-financed companies as use
of Internet and other online services increases. Therefore, certain of the
Company's competitors may be able to devote greater resources to marketing and
promotional campaigns, adopt more aggressive pricing policies or may try to
attract traffic by offering services for free and devote substantially more
resources to Web site and systems development than the Company. Increased
competition may result in reduced operating margins, loss of market share and
diminished value in the Company's brand. There can be no assurance that the
Company will be able to compete successfully against current and future
competitors. Further, as a strategic response to changes in the competitive
environment, the Company may, from time to time, make certain pricing, service
or marketing decisions or acquisitions that could have a material adverse effect
on its business, results of operations and financial condition. New technologies
and the expansion of existing technologies may increase the competitive
pressures on the Company by enabling the Company's competitors to offer a lower-
cost service. Certain Web-based applications that direct Internet traffic to
certain Web sites may channel users to trading services that compete with the
Company. Although the Company has established Internet traffic arrangements with
several large online services and search engine companies, there can be no
assurance that these arrangements will be renewed on commercially reasonable
terms or that they will otherwise continue to result in increased users of the
Company's service. In addition, companies that control access to transactions
through network access or Web browsers could promote the Company's competitors
or charge the Company substantial fees for inclusion. Any and all of these
events could have a material adverse effect on the Company's business, results
of operations and financial condition.
Government Approval and Regulation
The Company is not currently subject to direct federal, state or local
regulation, and laws or regulations applicable to access to or commerce on the
Internet, other than regulations applicable to businesses generally. However,
due to the increasing popularity and use of the Internet and other online
services, it is possible that a number of laws and regulations may be adopted
with respect to the Internet or other online services covering issues such as
user privacy, freedom of expression, pricing, content and quality of products
and services, taxation, advertising, intellectual property rights and
information security. Although the laws that, among other things, proposed to
impose criminal penalties on anyone distributing "indecent" material to minors
over the Internet, were held to be unconstitutional by the U.S. Supreme Court,
there can be no assurance that similar laws will not be proposed and adopted.
Certain members of Congress have recently discussed proposing legislation that
would regulate the distribution of "indecent" material over the Internet in a
manner that they believe would withstand challenge on constitutional grounds.
The nature of such similar legislation and the manner in which it may be
interpreted and enforced cannot be fully determined and, therefore, such
legislation could subject the Company and/or its customers to potential
liability, which in turn could have an adverse effect on the Company's business,
results of operations and financial condition. The adoption of any such laws or
regulations might also decrease the rate of growth of Internet use, which in
turn could decrease the demand for the Company's service or increase the cost of
doing business or in some other manner have a material adverse effect on the
Company's business, results of operations and financial condition. In addition,
applicability to the Internet of existing laws governing issues such as property
ownership, copyrights and other intellectual property issues, taxation, libel,
obscenity and personal privacy is uncertain. The vast majority of such laws
were adopted prior to the advent of the Internet and related technologies and,
as a result, do not contemplate or address the unique issues of the Internet and
related technologies.
In addition, numerous states have regulations regarding the manner in
which "auctions" may be conducted and the liability of "auctioneers" in
conducting such auctions. The Company does not believe that such regulations,
which were adopted prior to the advent of the Internet, govern the operations of
the Company's business nor have any claims been filed by any state implying that
the Company is subject to such legislation. There can be no assurance, however,
that a state will not attempt to impose these regulations upon the Company in
the future or that
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such imposition will not have a material adverse effect on the Company's
business, results of operations and financial condition. Several states have
also proposed legislation that would limit the uses of personal user information
gathered online or require online services to establish privacy policies. The
Federal Trade Commission has also initiated action against at least one online
service regarding the manner in which personal information is collected from
users and provided to third parties. Changes to existing laws or the passage of
new laws intended to address these issues, including some recently proposed
changes, could create uncertainty in the marketplace that could reduce demand
for the services of the Company or increase the cost of doing business as a
result of litigation costs or increased service delivery costs, or could in some
other manner have a material adverse effect on the Company's business, results
of operations and financial condition. In addition, because the Company's
services are accessible worldwide and the Company facilitates sales of goods to
users worldwide, other jurisdictions may claim that the Company is required to
qualify to do business as a foreign corporation in a particular state or foreign
country. Failure by the Company to qualify as a foreign corporation in a
jurisdiction where it is required to do so could subject the Company to taxes
and penalties for the failure to qualify and could result in the inability of
the Company to enforce contracts in such jurisdictions. Any such new legislation
or regulation, or the application of laws or regulations from jurisdictions
whose laws do not currently apply to the Company's business, could have a
material adverse effect on the Company's business, results of operations and
financial condition.
Research and Development Expenses
The Company does not presently budget or isolate all its research and
development costs. These costs are generally included in overhead as they are
attributed principally to salary and other expenses associated with maintaining
programming personnel who spend varying amounts of time dedicated to both
research and development of new online features and applications and to the
administration and maintenance of those sites and applications.
Costs and Effects of Compliance with Environmental Law
The Company is not aware of any significant present or future impact on its
business due to compliance with environmental laws.
Employees
As of October 20, 1999, the Company had fourteen employees, including six
in customer support, three in product development, one in sales and marketing,
and four in administration and business development. The Company has never had a
work stoppage, and no employees are represented under collective bargaining
agreements. The Company considers its relations with its employees to be good.
The Company believes that its future success will depend in part on its
continued ability to attract, integrate, retain and motivate highly qualified
technical and managerial personnel, and upon the continued service of its senior
management and key technical personnel. Competition for qualified personnel in
the Company's industry and geographical location is intense, and there can be no
assurance that the Company will be successful in attracting, integrating,
retaining and motivating a sufficient numbers of qualified personnel to conduct
its business in the future.
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND PLAN OF
OPERATIONS
Important Considerations Related to Forward-Looking Statements
The statements contained in this report that are not historical facts are
forward-looking statements that involve certain risks and uncertainties. These
forward-looking statements include the plans and objectives of management for
future operations relating to the products and future economic performance of
the Company.
The forward-looking statements are based on assumptions that the Company
will continue to market its products and services competitively. The forward-
looking statements are also based upon assumptions that (i) competitive
conditions within the Internet auction business will not change materially or
adversely; (ii) demand for sports and celebrity memorabilia will remain strong;
and (iii) the market will accept the Company's new products
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and services. Assumptions relating to the foregoing are difficult or impossible
to predict accurately and many are beyond the control of the Company. In light
of the significant uncertainties inherent in the forward-looking information
included herein, the inclusion of such information should not be regarded as a
representation by the Company or any other person that the objectives or plans
of the Company will be achieved.
General
The Company's primary source of revenues is through a variety of Internet
related services. Currently, the Company has three main operations: (i) an on-
line, person-to-person trading service, known as AuctionAnything.com; (ii) a
service that establishes and hosts auctions for other businesses, known as
Auction Business Solutions; and (iii) an Internet service provider known as
Tish.net.
The Company's financial position and results of operations are subject to
fluctuations due to a variety of factors. Fluctuations in the quality and value
of items sold on the Company's Internet auction site can result in significant
increases or decreases in revenues. The Company's historical results of
operations are not necessarily indicative of future results.
Selected Balance Sheet Items
As noted above, the Company raised approximately $925,000 in capital
through a private placement of securities. That transaction had a significant
impact on certain balance sheet accounts and the effects are described below.
Cash and Cash Equivalents
Cash and cash equivalents increased from $1,597 at December 31, 1997 to
$3,506 at December 31, 1998. This change resulted primarily from cash generated
from sales. Cash and cash equivalents increased from $3,506 at December 31, 1998
to $301,485 at August 31, 1999. This increased resulted primarily from the cash
generated in the Company's private placement of securities, which is described
above.
Accounts Receivable
Accounts receivable decreased from $4,323 at December 31, 1997 to $1,983 at
December 31, 1998. This change resulted primarily from enhanced collection
efforts by the Company. Accounts receivable increased from $1,983 at December
31, 1998 to $18,433 at August 31, 1999. This increase resulted from increased
sales volumes and from a larger product inventory.
Inventory
Inventory increased from $22,987 at December 31, 1997 to $39,886 at
December 31, 1998. This change resulted principally from increased purchases of
sports and celebrity memorabilia for auction during 1998. Inventory increased
from $39,886 at December 31, 1998 to $278,236 at August 31, 1999. This increase
resulted from large inventory purchases made in the second and third quarters of
1999.
Prepaid Expenses
Prepaid expenses and other assets increased from $0 at December 31, 1997
and December 31, 1998, to $51,094 at August 31, 1999. This change resulted
principally from the additional financial burdens placed on the Company as a
consequence of its public status.
Equipment
Equipment decreased from $11,450 at December 31, 1997 to $8,082 at December
31, 1998. This change resulted primarily from depreciation recorded during 1998.
Equipment increased from $8,082 at December 31, 1998 to $45,485 at August 31,
1999. The change resulted from the acquisition of computer equipment by the
Company and from the acquisition of Tish.net previously described.
-10-
<PAGE>
Accounts Payable and Accrued Expenses
Accounts payable and accrued expenses increased from $14,081 at December
31, 1997 to $20,733 at December 31, 1998.
This change resulted principally from increased inventory purchases.
Accounts payable and accrued expenses increased from $20,733 at December 31,
1998 to $34,837 at August 31, 1999. This change resulted principally from
increased numbers of employees of the Company and the growth of other overhead
costs.
Due to Related Parties
Due to related parties increased from $16,612 at December 31, 1997 (current
and long-term portions) to $34,304 at December 31, 1998. This increase was due
to loans made by officers of the Company. Due to related parties decreased from
$34,304 at December 31, 1998 to $0 at August 31, 1999. This change resulted from
payment of the aforementioned loans by the Company during 1999.
Common Stock and Additional Paid-In Capital
Common stock and additional paid-in capital increased from $500 and $7,500,
respectively at December 31, 1998 to $28,239 and $915,053, respectively at
August 31, 1999. This change resulted principally from the private placement of
securities in 1999, mentioned above.
Results of Operations
Year ended December 31, 1998 to Year Ended December 31, 1997
Sales
Sales increased from $212,379 during the year ended December 31, 1997 to
$399,392 during the year ended December 31, 1998. This increase resulted
principally from increased volume of transactions caused by increased visitation
to the Company's Internet site by potential customers.
Commission Income
Commission income increased from $9,780 for the year ended December 31,
1997 to $10,031 for the year ended December 31, 1998. This increase resulted
principally because the Company sold more consigned inventory during 1998 than
1997.
Cost of Sales
Cost of sales increased from $166,555 during the year ended December 31,
1997 to $290,511 during the year ended December 31, 1998. This increase resulted
from increased sales volume in 1998 over 1997.
Selling, General and Administrative Expenses
Selling, general and administrative expenses increased from $31,505 for the
year ended December 31, 1997 to $112,934 for the year ended December 31, 1998.
This increase resulted principally from the increase in salaries and employee
benefits from $0 in 1997 to $68,069 in 1998. During 1997 the Company had no
employees as all matters were handled by officers of the Company without
compensation. Beginning in April 1998, the officers of the Company began
receiving compensation and as of December 31, 1998 the Company had four
employees.
Depreciation
Depreciation expense increased from $5,795 for the year ended December 31,
1997 to $7,067 for the year ended December 31, 1998. This increase resulted
principally due to the increase in depreciable assets.
-11-
<PAGE>
Interest
Interest expense increased from $1,332 for the year ended December 31, 1997
to $3,167 for the year ended December 31, 1998. This increase resulted
principally due to the increase in 1998 in the amounts due to related parties,
which bore interest.
Results of Operations
Eight Months Ended August 31, 1999 to August 31, 1998
Sales
Sales increased from $250,720 during the eight months ended August 31, 1998
to $400,198 during the eight months ended August 31, 1999. This increase
resulted principally from increased volume of transactions caused by increased
visitation to Company's Internet site by potential customers.
Internet Service Revenue
Internet service revenue increased from $0 during the eight months ended
August 31, 1998 to $43,615 during the eight months ended August 31, 1999. This
increase resulted from the 1999 acquisition of Tish.net, previously described.
Commission Income
Commission income decreased from $7,393 during the eight months ended
August 31, 1998 to $4,015 for the eight months ended August 31, 1999. This
decrease resulted principally because of a decrease in the volume of consigned
inventory sold.
Cost of Goods Sold
Cost of goods sold increased from $155,946 during the eight months ended
August 31, 1998 to $290,602 during the eight months ended August 31, 1999. The
increase resulted principally from the increase in auction sales offset by a
decline in gross margin. Cost of goods sold as a percentage of auction sales
increased from 62% during the eight months ended August 31, 1998 to 73% during
the eight months ended August 31, 1999. This increase is due to the increase of
items offered for sale, which diluted the bidding process and reduced margins
during the period.
Selling, General and Administrative Expenses
Selling, general and administrative expenses increased from $84,339 during
the eight months ended August 31, 1998 to $429,904 during the eight months ended
August 31, 1999. This increase resulted principally because of an increase in
payroll and related costs from $35,501 during the eight months ended August 31,
1998 to $227,072 during the eight months ended August 31, 1999, an increase in
professional fees from $4,032 during the eight months ended August 31, 1998, to
$64,438 during the eight months ended August 31, 1999, and a increase in
advertising expense from $0 during the eight months ended August 31, 1998, to
$30,183 during the eight months ended August 31, 1999. The increase in payroll
and related costs was caused as the number of employees of the Company increased
from four at August 31, 1998 to fourteen at August 31, 1999. The increase in
professional fees is due to the costs incurred related to the public offering.
The increase in advertising expense is due to management's efforts to increase
sales.
Risks Associated with the Year 2000
The Year 2000 issue is the result of computer programs written using two
digits rather than four to define the applicable year. As a result, date-
sensitive software may recognize a date using "00" as the year 1900 rather than
the year 2000. This could result in system failures or miscalculations causing
disruptions of operations, including, among others, a temporary inability to
process transactions, send invoices, or engage in similar normal business
activities.
Since the Company's systems and software are relatively new, management
does not expect Year 2000 issues related to its own internal systems to be
significant and does not anticipate that it will incur significant
-12-
<PAGE>
operating expenses or be required to invest heavily in computer systems
improvements to be Year 2000 compliant. As the Company makes arrangements with
significant suppliers and service providers, the Company intends to determine
the extent to which the Company's interface systems may be vulnerable should
those third parties fail to address and correct their own Year 2000 issues. The
Company anticipates that this will be an ongoing process as the Company begins
to implement supplier and service provider arrangements through 1999. There can
be no assurance that the systems of suppliers or other companies on which the
Company relies will be converted in a timely manner and will not have a material
adverse effect on the Company's systems. Additionally, there can be no assurance
that the computer systems necessary to maintain the viability of the Internet or
any of the Web sites that direct consumers to the Company's websites will be
Year 2000 compliant. As part of the Company's Year 2000 compliance plan, the
Company is developing plans to operate its websites from different systems
and/or at a different location in the event of any significant disruption as a
result of the Year 2000 issues. The Company believes it is taking the steps
necessary regarding Year 2000 compliance with respect to matters within its
control. However, no assurance can be given that the Company's systems will be
made Year 2000 compliant in a timely manner or that the Year 2000 problem will
not have a material adverse effect on the Company's business, financial
condition and results of operations.
ITEM 3 - DESCRIPTION OF PROPERTY
Office Space
The Company leases approximately 871 square feet of office space at 35 West
Pine Street, Suites 211 and 226, Orlando, Florida 32801, at the current rental
rate of $692.44 per month (increasing to $769.37 per month on November 10, 1999.
The lease is for two years ending May 9, 2001, but the lease is renewable at the
Company's option for an additional one years. Currently, the facility is
adequate for the Company's operations, but Management expects that additional
facilities will be needed prior to the expiration of the lease.
Other
The Company owns or leases various computer equipment, telecommunications
equipment, furniture and office machinery at its location in Orlando, Florida.
ITEM 4 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
(a) The following individuals hold five percent (5%) or more of the
outstanding voting stock of the Company. No other individual or any group is
known to the Company to be the beneficial owner of more than five percent (5%)
of any class of the Company's voting securities.
<TABLE>
<CAPTION>
Name and Address of Amount and nature of Percent of
Title of Class Beneficial Owner Beneficial Owner Class
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Common Stock Raymond J. Hotaling III 8,471,694 owned directly 29.9%
35 West Pine St., Ste. 211
Orlando, Florida 32801
Common Stock Dennis A Kurir 8,471,694 owned directly 29.9%
35 West Pine St., Ste. 211
Orlando, Florida 32801
Common Stock Martin M. Meads 7,059,745 owned directly 24.9%
35 West Pine St., Ste. 211
Orlando, Florida 32801
</TABLE>
(b) The following includes beneficial ownership information for all
current executive officers and directors, and all who served as directors or
executive officers in the fiscal years ended January 31, 1998 and 1999.
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<PAGE>
Tabular information is provided for outstanding securities plus any securities
that a person has a right to acquire within 60 days pursuant to options,
warrants, conversion privileges or other rights.
<TABLE>
<CAPTION>
Name and Address of Amount and nature of Percent of
Title of Class Beneficial Owner Beneficial Owner Class
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Common Stock Raymond J. Hotaling III 8,471,694 owned directly 29.9%
President/ Secretary/
Chairman/ Director
35 West Pine St., Ste. 211
Orlando, Florida 32801
Common Stock Dennis A Kurir 8,471,694 owned directly 29.9%
CEO/Director
35 West Pine St., Ste. 211
Orlando, Florida 32801
Common Stock Martin M. Meads 7,059,745 owned directly 24.9%
Co-CEO/ Treasurer/
Director
35 West Pine St., Ste. 211
Orlando, Florida 32801
Common Stock Joel E. Cavalier - 0 - 0.0%
FORMER
President/Chairman/Director
65-55 Woodhaven Blvd.
Rego Park, NY 11374
Common Stock Nancy Scalia-Dunn - 0 - 0.0%
FORMER
Secretary/Treasurer/Director
65-55 Woodhaven Blvd.
Rego Park, NY 11374
Common Stock Matthew J. Cavalier 10,000 owned directly 0.04%
FORMER Director
65-55 Woodhaven Blvd.
Rego Park, NY 11374
Common Stock Jesse Clayton - 0 - 0.0%
FORMER Director
65-55 Woodhaven Blvd.
Rego Park, NY 11374
Common Stock All directors and officers 24,013,133 owned directly 84.8%
(current and former) as
a group (7 persons)
</TABLE>
(c) Management knows of no arrangements that may result in a change
of control of the Company.
ITEM 5 - DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
The following presents directors, executive officers, promoters and control
persons of the Company as of October 20, 1999:
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<PAGE>
<TABLE>
<CAPTION>
Name Age Title Term of Office
- -----------------------------------------------------------------------------------
<S> <C> <C> <C>
Raymond J. Hotaling III 33 President Indefinite
Secretary Indefinite
Chairman of the Board (Director) 1 Year
Dennis A. Kurir 53 Chief Executive Officer Indefinite
Director 1 Year
Martin M. Meads 38 Co-Chief Executive Officer Indefinite
Treasurer Indefinite
Director 1 Year
</TABLE>
Raymond J. Hotaling III. Mr. Hotaling has been President, Secretary, a
-----------------------
Director and Chairman of the Board of the Company since March 10, 1999. He also
serves as the President and Secretary of the Company's wholly-owned subsidiary,
North Orlando Sports Promotions, Inc. Mr. Hotaling has been the President of
NOSP since its incorporation in 1995, and he has been responsible for its day-
to-day operations, including the design, development and marketing of the
corporate web site and Internet auction system, as well as daily accounting
functions. From 1993 to 1995, Mr. Hotaling was a materials engineer with Matrix
Composites, Inc. He also served as Flight Crew Systems Engineer with Lockheed
Space Operations Company from 1990 to 1993. Mr. Hotaling attended the State
University of New York at Binghamton from 1984 to 1986 and graduated from the
Florida Institute of Technology in 1989 with a B.S. in mechanical engineering.
Dennis A. Kurir. Mr. Kurir has been the Chief Executive Officer and a
---------------
Director of the Company since March 10, 1999. He also serves as the Chief
Executive Officer of NOSP, a position that he has held since 1995. From 1994 to
1995, Mr. Kurir served as the Orlando Print Show Manager, the North Florida Vice
President of Operations and then the Membership Director of the Printing
Association of Florida. Mr. Kurir graduated from Michigan Technological
University in 1967 with a B.S. in biological sciences. In 1971, after service
in the United States Army during the Vietnam War, he earned his M.B.A. from
Michigan Technological University.
Martin M. Meads. Mr. Meads has been the Treasurer and a Director of
---------------
the Company since March 10, 1999. He was also the Company's Senior Vice
President of Business Operations from March 10, 1999, until June 11, 1999, at
which time he became co-Chief Executive Officer. Mr. Meads also serves as the
Vice President and Treasurer of NOSP, a position he has held since February 18,
1999. Prior to March, 1999, Mr. Meads served as the President of The
Information SuperHighway Corporation ("TISH"), an Orlando, Florida based
Internet Service Provider (ISP) since June 1995. Mr. Meads was a senior systems
engineer at Coleman Research Corporation between September ,1992, and April,
1996. Mr. Meads holds B.S. and M.S. degrees in electrical engineering from
Michigan Technological University and also holds a M.S. degree in electro-optics
from the University of Central Florida.
As of October 20, l999, there were no family relationships among the
directors and executive officers. Further, to the knowledge of Management, no
director, executive officer, promoter or control person has been involved in any
legal proceedings during the past five years that are material to an evaluation
of the ability or integrity of such director, person nominated to become a
director, executive officer, promoter or control person of the Company. None of
the individuals listed in this Item 5 has had a bankruptcy petition filed by or
against any business of which such person was a general partner or executive
officer either at the time of such bankruptcy, if any, or within two years prior
to that time. No director, executive officer, promoter or control person was or
has been convicted in a criminal proceeding or is subject to a pending criminal
proceeding or subject to any order, judgment, or decree, not subsequently
reversed, suspended, or vacated, of any court of competent jurisdiction,
permanently or temporarily enjoining, borrowing, or otherwise limiting his or
her involvement in any type of business, securities or banking activities. No
director, executive officer, promoter or control person has been found by a
court of competent jurisdiction in a civil action to have violated federal or
state securities or commodities laws.
-15-
<PAGE>
ITEM 6 - EXECUTIVE COMPENSATION
The following table sets forth the compensation paid during the last two
fiscal years to the chief executive officer of the Company. No information has
been shown for other executive officers, each of whom received less than
$100,000 in compensation in the last fiscal year. Due to the change of control
of the Company that occurred on March 10, 1999, the information provided below
reflects compensation paid during the past two fiscal years to the chief
executive officer of North Orlando Sports Promotions, Inc., who has served as
the chief executive officer of the Company since said change in control. All of
the current executive officers of the Company have served since March 10, 1999.
SUMMARY COMPENSATION TABLE
--------------------------
<TABLE>
<CAPTION>
Annual compensation Long term compensation
Awards Payouts
Securities
Restricted underlying Other
Name and principal position Year Salary Bonus Total stock options/SARs Compensation
($) ($) ($) award(s) (#)
(a) (b) (c) (d) (e) ($) (g)
(f)
<S> <C> <C> <C> <C> <C> <C> <C>
Dennis A. Kurir, CEO 1998 19,434 -0- 19,434 -0- -0- -0-
1997 -0- -0- -0- -0- -0-
</TABLE>
Employment Contracts
As of October 20, 1999, there are no existing employment contracts.
ITEM 7 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On February 18, 1999, prior to the acquisition transaction by which the
Company acquired North Orlando Sports Promotions, Inc., NOSP acquired
substantially all of the assets, and assumed certain liabilities, of The
Information SuperHighway Corporation, a Florida corporation ("TISH"), in
exchange for 208 1/3 shares of the common stock of NOSP. TISH was wholly-owned
by Martin M. Meads, who also serves as the President and as a Director of TISH,
and Mr. Meads was ultimately beneficial owner of the shares of stock in NOSP
received by TISH in that transaction. Subsequent to that transaction, Mr. Meads
became the Vice President and Treasurer of NOSP, and he now also serves as the
co-CEO, Treasurer and a Director of the Company, positions he has held
subsequent to the Company's acquisition of NOSP on March 10, 1999. In that
acquisition transaction, Mr. Meads' 208 1/3 shares of stock in NOSP were
acquired by the Company for 7,059,745 shares of the Company's Common Stock.
ITEM 8 - DESCRIPTION OF SECURITIES
The Company is authorized to issue 50,000,000 shares of Common Stock, par
value $0.001 per share. As of October 20, 1999, 28,321,946 shares of Common
Stock are outstanding, held of record by approximately 189 persons. The holders
of Common Stock are entitled to one vote for each share held of record on all
matters to be voted on by stockholders. There is no cumulative voting with the
result that the holders of more than 50% of the shares voting for the election
of directors can elect all of the directors. The holders of Common Stock are
entitled to receive dividends when, as and if declared by the Board of Directors
out of the funds legally available therefor. In the event of the liquidation,
dissolution or winding up of the Company, the holders of Common Stock are
entitled to share ratably in all assets remaining available for distribution
after payment of liabilities and after provision has been made for each class of
stock, if any, having preference over the Common Stock. Holders of shares of
Common Stock, as such, have no conversion, preemptive or other subscription
rights, and there are no redemption provisions applicable to the Common Stock.
The Company is not currently authorized to issue any shares of preferred
stock.
-16-
<PAGE>
The Company has never paid any dividends. Future dividends, if any, will be
contingent upon the Company's revenues and earnings, if any, capital
requirements and general financial condition subsequent to the consummation of a
business combination. The payment of dividends is within the discretion of the
Company's Board of Directors. The Company presently intends to retain all
earnings, if any, for use in the Company's business operations and accordingly,
the Board does not anticipate declaring any dividends in the foreseeable future.
However, there are no current restrictions on the payment of dividends either by
contract or regulation.
PART II
ITEM 1 - MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON EQUITY AND
RELATED STOCKHOLDER MATTERS
At the time of filing, only a limited market existed for common shares of
the Company. As of October 20, 1999, the Company had outstanding 28,321,946
shares of Common Stock with a par value of $0.001 per share. According to the
records of the Company's transfer agent, Olde Monmouth Stock Transfer Co., Inc.,
a total of 4,308,813 of those shares were freely tradeable over the counter.
(a) The Common Stock of the Company has been traded on the over-the-
counter market since September of 1998, initially under the symbol, LWTN. The
stock began trading under the symbol, UBUY, on March 22, 1999. The high and low
bid prices each fiscal quarter, in fraction and decimal form, since the second
quarter of 1998 are as follows:
<TABLE>
<CAPTION>
1998
----
High Low
<S> <C> <C>
3rd Quarter (9/1 to 9/30) 4/43 (0.093) 4/43 (0.093)
4th Quarter 4/43 (0.093) 4/43 (0.093)
1999
----
High Low
1st Quarter 2-1/2 (2.500) 4/43 (0.093)
2nd Quarter 3 (3.000) 81/85 (0.953)
3rd Quarter 11/16 (0.6875) 5/8 (1.625)
</TABLE>
The quotations above reflect interdealer prices without retail markup, mark down
or commission, and may not represent actual transactions.
(b) As of October 20, 1999, the Company had 189 Shareholders of record of
its common stock.
(c) The Company has not previously paid cash dividends on its Common
Stock. The payment of cash dividends from current earnings is not prohibited by
any agreements to which the Company is a party, but is subject to the discretion
of the Board of Directors and will be dependent upon many factors, including the
Company's earnings, its capital needs and its general financial condition. The
Company currently does not intend to pursue a policy of payment of dividends,
but rather to utilize any excess proceeds to finance the development and
expansion of its business.
ITEM 2 - LEGAL PROCEEDINGS
No legal proceedings are pending against the Company.
-17-
<PAGE>
ITEM 3 - CHANGES IN AND DISAGREEMENT WITH ACCOUNTANTS
On or about May 5, 1999, the Company engaged KPMG LLP as its independent
auditors. Prior to that date, the company had not engaged the services of an
independent auditor. To Management's knowledge, the Company has had no
disagreements with its accountants regarding accounting or financial disclosure
matters.
ITEM 4 - RECENT SALES OF UNREGISTERED SECURITIES
On or about February 18, 1999, the Company concluded a private offering of
securities in reliance upon the exemption from registration requirements
provided by Rule 504, promulgated under the Securities Act of 1933, as amended
(the "Securities Act"). The Company sold one million units to 18 investors at
the offering price of $0.10 per unit, and each unit consisted of one share of
Common Stock, par value $0.001 per share, and one stock purchase warrant. Each
warrant entitled the holder thereof to purchase three additional shares of
Common Stock at a purchase price of $0.30 per share. Consequently, the total
offering price was $100,000, and an additional $900,000 would be received upon
the exercise of all of the warrants. No underwriting discounts or commissions
were paid. The warrants were exercisable by the holder at any time upon the
payment of the exercise price and a transfer agent fee of $25.00, until the
expiration of the warrant May 31, 1999. In addition, the Company could call a
warrant if the Common Stock traded at or above a $5.00 reported closing bid or
trade price for 10 consecutive trading days, upon 15 days' written notice to the
warrant holder of the Company's intention to do so, if the warrant holder shall
not have exercised the warrant prior to the end of such 15-day notice period.
Each investor in the offering executed a subscription agreement in which
such investor represented, among other things, that he, she or it was an
accredited investor, as such term is defined in the Securities Act. In
conducting the offering, the Company utilized an offering document that
disclosed the terms of the offering and the securities offered, as well as
information about the Company. It should be noted that the offering was
conducted and concluded by the Company's previous management prior to the
acquisition transaction by which the current controlling shareholders of the
Company obtained control of the Company. The current controlling shareholders,
in connection with the acquisition transaction, received assurances, in the form
of representations and warranties, that the offering was properly conducted in
accordance with the requirements of Rule 504 and applicable state securities
laws.
The exemption under Rule 504 is available to any issuer that is not a
reporting company pursuant to Section 13 or Section 15(d) of the Securities
Exchange Act of 1934, as amended, or not a development stage company that either
has no specific business plan or purpose or has indicated that its business plan
is to engage in a merger or acquisition with an unidentified company or
companies, or other entity or person. Rule 504 allows companies to sell up to
$1,000,000 of its securities within a 12-month period in an exempt transaction
to an unlimited number of investors without regard to the investment
sophistication of the investor. In the registration provisions which require the
delivery of a prospectus before sale, there was no restriction on resale of the
securities by investors. Thus, the Common Stock issued under the Rule 504
exemption was "free-trading" and not restricted under federal law. Rule 504 was
amended effective April 7, 1999, subsequent to the completion of the offering,
and stock sold pursuant to that exemption would now be restricted and not "free-
trading."
Since the closing of the offering and the aforementioned acquisition
transaction, all of the holders of the stock purchase warrants sold during the
offering have exercised such warrants, resulting in the issuance of an
additional three million shares of Common Stock at the warrant exercise price of
$0.30 per share. Most of the shares of Common Stock issued pursuant to the
warrant exercises were issued as "free-trading"; however, 40,000 of such shares
of Common Stock were issued as restricted stock because the warrant holder
exercised his warrant subsequent to April 6, 1999, the effective date of the
amendment to Rule 504.
ITEM 5 - INDEMNIFICATION OF DIRECTORS AND OFFICERS
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<PAGE>
The Company is incorporated in Delaware. Under Section 145 of the
Corporation Law of Delaware, a Delaware Company may, under specified
circumstances, 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, by reason of the fact
that he is or was a director, officer, employee or agent of the Company, or is
or was serving at the request of the Company 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 a director,
officer, employee or agent of the Company in connection with the action, suit or
proceeding, provided that such provision shall not eliminate or limit the
liability of an individual applying for indemnification if, unless otherwise
ordered by a court, a final adjudication establishes that (i) his acts or
omissions involved intentional misconduct, fraud, or a knowing violation of the
law and (ii) the act or omission was material to the cause of action.
The Company's Articles of Incorporation and Bylaws provide that the Company
may indemnify its officers, directors, employees and agents to the fullest
extent permissible under Delaware law. Directors and officers shall be, and
employees and agents may be, upon adoption of a resolution of the Board of
Directors, indemnified if made a party or threatened to be made a party, or
involved in any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative, arbitrative or investigative, or any
appeal of such an action or any inquiry or investigation that could lead to such
an action, against judgments, penalties (including excise and similar taxes and
punitive damages), fines, settlements and reasonable expenses (including,
without limitation, attorneys' fees) actually incurred in connection with such
action. The Board of Directors has the option of making any indemnification
payments in advance and to purchase and maintain insurance to protect itself and
its officers, directors, employees and agents. These indemnification rights are
non-exclusive, but they will not eliminate or limit the liability of any
directors, officer, employee or agent to the extent that such person is found
liable for: (i) a breach of a duty of loyalty to the Company or its members;
(ii) an act or omission not in good faith that constitutes a breach of duty to
the Company or involves intentional misconduct or a knowing or reckless
violation of the law; (iii) a transaction from which the director, officer,
employee or agent received an improper benefit, whether or not the benefit
resulted from an action taken within the scope of the individual's duties; or
(iv) an act or omission for which liability is expressly provided by an
applicable statute.
The Company currently maintains a Directors and Officers liability
insurance policy with an annual aggregate limit of $1,000,000.
PART F/S
FINANCIAL STATEMENTS
NORTH ORLANDO SPORTS PROMOTIONS, INC.
Financial Statements
December 31, 1998 and 1997
(With Independent Auditors' Report Thereon)
Independent Auditors' Report
To The Shareholders
North Orlando Sports Promotions, Inc.:
We have audited the accompanying balance sheets of North Orlando Sports
Promotions, Inc. as of December 31, 1998 and 1997 and the related statements of
operations, stockholders' equity and cash flows for the years then ended. 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.
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<PAGE>
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of North Orlando Sports
Promotions, Inc. as of December 31, 1998 and 1997 and the results of its
operations and its cash flows for the years then ended in conformity with
generally accepted accounting principles.
Orlando, Florida
September 24, 1999
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
NORTH ORLANDO SPORTS PROMOTIONS, INC.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Balance Sheets
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
December 31, 1998 and 1997
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
1998 1997
- --------------------------------------------------------------------------------
<S> <C> <C>
- --------------------------------------------------------------------------------
Assets
- --------------------------------------------------------------------------------
Current assets:
- --------------------------------------------------------------------------------
Cash and cash equivalents $ 3,506 1,597
- --------------------------------------------------------------------------------
Accounts receivable 1,983 4,323
- --------------------------------------------------------------------------------
Inventory 39,886 22,987
- --------------------------------------------------------------------------------
Due from related parties 6,988 --
- --------------------------------------------------------------------------------
Total current assets 52,363 28,907
- --------------------------------------------------------------------------------
Equipment, less accumulated depreciation of $16,124 in
1998 and $9,057 in 1997 8,082 11,450
- --------------------------------------------------------------------------------
$60,445 40,357
- --------------------------------------------------------------------------------
Liabilities and Stockholders' Equity
- --------------------------------------------------------------------------------
Current liabilities:
- --------------------------------------------------------------------------------
Accounts payable and accrued expenses $20,733 14,081
- --------------------------------------------------------------------------------
Due to related parties 34,304 5,353
- --------------------------------------------------------------------------------
Total current liabilities 55,037 19,434
- --------------------------------------------------------------------------------
Long-term liabilities:
- --------------------------------------------------------------------------------
Due to related parties -- 11,259
- --------------------------------------------------------------------------------
Total long-term liabilities -- 11,259
- --------------------------------------------------------------------------------
Stockholders' equity:
- --------------------------------------------------------------------------------
Common stock, par value $1; 500 shares authorized,
issued and outstanding 500 500
- --------------------------------------------------------------------------------
Additional paid-in capital 7,500 7,500
- --------------------------------------------------------------------------------
Retained earnings (accumulated deficit) (2,592) 1,664
- --------------------------------------------------------------------------------
Total stockholders' equity 5,408 9,664
- --------------------------------------------------------------------------------
$60,445 40,357
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
</TABLE>
-20-
<PAGE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------
NORTH ORLANDO SPORTS PROMOTIONS, INC.
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
Statements of Operations
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
Years ended December 31, 1998 and 1997
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
1998 1997
- -------------------------------------------------------------------------------------------------------
<S> <C> <C>
- -------------------------------------------------------------------------------------------------------
Revenues:
- -------------------------------------------------------------------------------------------------------
Sales $ 399,392 212,379
- -------------------------------------------------------------------------------------------------------
Commission income 10,031 9,780
- -------------------------------------------------------------------------------------------------------
409,423 222,159
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
Cost of sales 290,511 166,555
- -------------------------------------------------------------------------------------------------------
Gross profit 118,912 55,604
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
Expenses:
- -------------------------------------------------------------------------------------------------------
Selling, general and administrative 112,934 31,505
- -------------------------------------------------------------------------------------------------------
Depreciation 7,067 5,795
- -------------------------------------------------------------------------------------------------------
Interest 3,167 1,332
- -------------------------------------------------------------------------------------------------------
Total expenses 123,168 38,632
- -------------------------------------------------------------------------------------------------------
Net (loss) income $ (4,256) 16,972
=========== ==========
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
See accompanying notes to financial statements.
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
</TABLE>
-21-
<PAGE>
- --------------------------------------------------------------------------------
NORTH ORLANDO SPORTS PROMOTIONS, INC.
- --------------------------------------------------------------------------------
Statements of Stockholders' Equity
- --------------------------------------------------------------------------------
Years ended December 31, 1998 and 1997
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Retained
Additional earnings Total
Common paid-in (accumulated stockholders'
stock capital deficit) equity
- --------------------------------------------------------------------------------
Balances at December 31, 1996 $ 500 7,500 (15,308) (7,308)
- --------------------------------------------------------------------------------
Net income -- -- 16,972 16,972
- --------------------------------------------------------------------------------
Balances at December 31, 1997 500 7,500 1,664 9,664
- --------------------------------------------------------------------------------
Net loss -- -- (4,256) (4,256)
- --------------------------------------------------------------------------------
Balances at December 31, 1998 $ 500 7,500 (2,592) 5,408
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
-22-
<PAGE>
<TABLE>
- ------------------------------------------------------------------------------------
NORTH ORLANDO SPORTS PROMOTIONS, INC.
- ------------------------------------------------------------------------------------
Statement of Cash Flows
- ------------------------------------------------------------------------------------
Years ended December 31, 1998 and 1997
- ------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------
<CAPTION>
- ------------------------------------------------------------------------------------
1998 1997
- ------------------------------------------------------------------------------------
<S> <C> <C>
- ------------------------------------------------------------------------------------
Cash flows used in operating activities:
- ------------------------------------------------------------------------------------
Net (loss) income $ (4,256) 16,972
- ------------------------------------------------------------------------------------
Adjustments to reconcile net (loss) income to net cash used
in operating activities:
- ------------------------------------------------------------------------------------
Depreciation 7,067 5,795
- ------------------------------------------------------------------------------------
Cash provided by (used in) changes in assets
and liabilities:
- ------------------------------------------------------------------------------------
Accounts receivable 2,341 (3,645)
- ------------------------------------------------------------------------------------
Inventory (15,680) (12,900)
- ------------------------------------------------------------------------------------
Accounts payable and accrued expenses 11,211 5,467
- ------------------------------------------------------------------------------------
Due to/from related parties (12,341) --
- ------------------------------------------------------------------------------------
Net cash (used in) provided by operating activities (11,658) 11,689
- ------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------
Cash flows used in investing activities:
- ------------------------------------------------------------------------------------
Capital expenditures (3,699) (5,288)
- ------------------------------------------------------------------------------------
Net cash used in investing activities (3,699) (5,288)
- ------------------------------------------------------------------------------------
Cash flows from financing activities:
- ------------------------------------------------------------------------------------
Proceeds from issuance of notes payable to related parties -- 4,538
- ------------------------------------------------------------------------------------
Proceeds from issuance of notes payable 65,500 --
- ------------------------------------------------------------------------------------
Principal payments on notes payable to related parties (22,455) --
- ------------------------------------------------------------------------------------
Principal payments on notes payable (25,779) (15,523)
- ------------------------------------------------------------------------------------
Net cash provided by (used in) financing activities 17,266 (15,523)
- ------------------------------------------------------------------------------------
Net increase (decrease) in cash and cash equivalents 1,909 (9,122)
- ------------------------------------------------------------------------------------
Cash and cash equivalents at beginning of year 1,597 6,181
- ------------------------------------------------------------------------------------
Cash and cash equivalents at end of year $ 3,506 (2,941)
- ------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------
See accompanying notes to financial statements.
- ------------------------------------------------------------------------------------
</TABLE>
-23-
<PAGE>
NORTH ORLANDO SPORTS PROMOTIONS, INC.
Notes to Financial Statements
December 31, 1998 and 1997
(1) Summary of Significant Accounting Policies
(a) Description of Business
North Orlando Sports Promotion, Inc. (the "Company") operates on-line
auctions specializing in sports memorabilia. The Company's primary
site for operations is www.SportsAuction.com., which focuses on the
----------------------
collectibles market. The Company generates revenue by procuring
specialty merchandise at the wholesale level and selling it at retail
in an on-line format. Examples of typical inventory would include
autographed memorabilia (photos, football jerseys, balls, hats, etc.),
sports cards, and other related collectibles. The Company also
generates commissions revenue through consignment sales of
memorabilia.
(b) Inventories
Inventories are stated at the lower of cost or market. Cost is
determined principally on the specific identification method.
Provisions for potentially obsolete or slow-moving inventory is made
based on management's analysis of inventory levels.
Consignment inventory is not recorded as inventory by the Company and
is not placed in an auction until the merchandise is received. If a
consignment item does not sell in an auction, the Company requests
that the consignor lower the minimum bid or withdraw the item from the
auction.
(c) Equipment
Equipment is stated at cost less accumulated depreciation.
Depreciation of equipment is computed using the straight-line method
over its estimated useful life of 3 years.
(d) Income Taxes
The Company is considered an S-corporation for federal income tax
purposes. As such, the Company is not subject to federal income taxes
directly. Income or loss of the Company passes through to the
individual stockholders.
(e) Revenue Recognition
The Company sells merchandise to customers under one of two types of
sales transactions. The Company either purchases merchandise and sells
it to customers or sells merchandise to customers under consignment
arrangements and earns a commission.
Revenue from sales of purchased merchandise is recognized and title
passes when the Company receives verification of the credit card
transaction or verification of the check clearing.
Commission income from consignment sales is calculated as a percentage
of the final sales value at the close of the auction and recognized
when the Company receives verification of the credit card transaction
or verification of the check. Commission is paid to the consignor
after the merchandise has been shipped.
(f) Merchandise Return Policy
The Company guarantees all items to be authentic, including
consignment items. Any item may be returned within seven days for a
full refund provided that the item has not been altered.
-24-
<PAGE>
(g) Use of Estimates
Management of the Company has made a number of estimates and
assumptions relating to the reporting of assets and liabilities and
the disclosure of contingent assets and liabilities to prepare these
financial statements in conformity with generally accepted accounting
principles. Actual results could differ from those estimates.
(2) Related Party Transactions
From January 1, 1997 to March 31, 1998, the Company's officers and
stockholders (the "Officers") provided administrative, purchasing and
engineering services to the Company without compensation. Also during 1998
and 1997, the Company did not incur rental expense as its operations were
conducted from the personal residences of one of the Company's Officers.
During 1998 and 1997, the Officers auctioned collectible merchandise
through the Company as consignors and did not pay the Company a commission
for this service.
At December 31, 1998 and 1997, notes payable bearing interest of 14% and
due August 31, 1999 in the amount of $34,304 and $5,353, respectively, was
due to related parties. Subsequent to December 31, 1998, the notes were
paid off.
(3) Year 2000 (Unaudited)
The Company is dependent on computer systems and system applications for
conducting its ongoing business functions. In 1998, the Company began its
process of identifying, evaluating and implementing changes to computer
programs necessary to address the year 2000 issue. This issue involves the
ability of computer systems that have time sensitive programs to recognize
properly the year 2000. The inability to do so could result in failures or
miscalculations, which could disrupt the Company's ability to meet its
customer and other obligations on a timely basis.
In addition, the Company is developing contingency plans to address
perceived risks associated with the Year 2000 effort. These include
business resumption plans to address the possibility of internal systems
failures and the possibility of failure of systems or processes outside the
Company's control. Preparations for the management of the date change will
continue through 1999.
(4) Subsequent Events
Subsequent to December 31, 1998, the Company acquired the assets of The
Information SuperHighway Corporation (TISH) in exchange for approximately
208 shares of the Company's common stock. The acquisition was accounted for
as purchase. On the date of acquisition, February 18, 1999, assets were
approximately $10,000.
Subsequent to December 31, 1998, AuctionAnything.com (previously Lawton -
York), acquired 100% of the Company in exchange for 85%, or 24,003,133
shares of the outstanding shares of AuctionAnything. In anticipation of the
acquisition, AuctionAnything.com completed a private offering of 1,000,000
units at an offering price of $.10 per unit. Each unit consisted of one
share of common stock and one stock purchase warrant. Each stock purchase
warrant entitled the holder to purchase three shares of common stock of
AuctionAnything.com for $.30 per share. A total of 4,000,000 shares of
common stock were issued and sold by AuctionAnything.com for net proceeds
of approximately $925,000. The proceeds of the offering will be used for
working capital and to fund the Company's expansion plans.
Subsequent to the acquisition of the Company by AuctionAnything.com, on
March 10, 1999, the assets and liabilities of AuctionAnything.com were
liquidated and the Company became a wholly-owned subsidiary of
AuctionAnything.com.
-25-
<PAGE>
Subsequent to December 31, 1998, the Company entered into an operating lease for
office space as well as assuming an operating lease in conjunction with the
purchase of the assets of TISH. The future minimum lease payments under these
non-cancelable operating leases are as follows:
Year ending December 31,
------------------------------
1999 $ 7,634
2000 10,904
2001 3,300
--------
Total minimum lease payments $ 21,838
========
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
AUCTIONANYTHING.COM, INC.
- --------------------------------------------------------------------------------
Balance Sheets
- --------------------------------------------------------------------------------
August 31, 1999 and 1998
- --------------------------------------------------------------------------------
(Unaudited)
- --------------------------------------------------------------------------------
1999 1998
- --------------------------------------------------------------------------------
<S> <C> <C>
- --------------------------------------------------------------------------------
Assets
- --------------------------------------------------------------------------------
Current assets:
- --------------------------------------------------------------------------------
Cash and cash equivalents $ 301,485 46,714
- --------------------------------------------------------------------------------
Accounts receivable 18,433 4,892
- --------------------------------------------------------------------------------
Inventory 278,236 21,663
- --------------------------------------------------------------------------------
Prepaid and other assets 51,094 --
- --------------------------------------------------------------------------------
Due from related parties -- 6,052
- --------------------------------------------------------------------------------
Total current assets 649,248 79,321
- --------------------------------------------------------------------------------
Equipment, less accumulated depreciation of $22,733 45,485 3,738
- --------------------------------------------------------------------------------
$ 694,733 83,059
- --------------------------------------------------------------------------------
Liabilities and Stockholders' Equity
- --------------------------------------------------------------------------------
Current liabilities:
- --------------------------------------------------------------------------------
Accounts payable and accrued expenses $ 34,837 10,968
- --------------------------------------------------------------------------------
Due to related parties -- 48,404
- --------------------------------------------------------------------------------
Total current liabilities 34,837 59,372
- --------------------------------------------------------------------------------
Stockholders' equity:
- --------------------------------------------------------------------------------
Common stock, par value $.001; 50,000,000 shares
authorized; 28,238,980 shares issued and
outstanding 28,239 500
- --------------------------------------------------------------------------------
Additional paid-in capital 915,053 7,500
- --------------------------------------------------------------------------------
Retained earnings (accumulated deficit) (283,396) 15,687
- --------------------------------------------------------------------------------
Total stockholders' equity 659,896 23,687
- --------------------------------------------------------------------------------
$ 694,733 83,059
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
</TABLE>
-26-
<PAGE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
AUCTIONANYTHING.COM
- --------------------------------------------------------------------------------
Statements of Operations
- --------------------------------------------------------------------------------
Eight months ended August 31, 1999 and 1998
- --------------------------------------------------------------------------------
(Unaudited)
- --------------------------------------------------------------------------------
1999 1998
- --------------------------------------------------------------------------------
<S> <C> <C>
- --------------------------------------------------------------------------------
Revenues:
- --------------------------------------------------------------------------------
Sales $ 400,198 250,720
- --------------------------------------------------------------------------------
Internet service revenue 43,615 --
- --------------------------------------------------------------------------------
Commissions income 4,015 7,393
- --------------------------------------------------------------------------------
447,828 258,113
- --------------------------------------------------------------------------------
Cost of sales 290,602 155,946
- --------------------------------------------------------------------------------
Gross profit 157,226 102,167
- --------------------------------------------------------------------------------
Expenses:
- --------------------------------------------------------------------------------
Selling, general and administrative expenses 429,904 84,339
- --------------------------------------------------------------------------------
Depreciation 6,665 5,209
- --------------------------------------------------------------------------------
Interest 1,461 1,167
- --------------------------------------------------------------------------------
Total expenses 438,030 90,715
- --------------------------------------------------------------------------------
Net (loss) income $(280,804) 11,452
- --------------------------------------------------------------------------------
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
</TABLE>
-27-
<PAGE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
AUCTIONANYTHING.COM, INC.
- --------------------------------------------------------------------------------
Statement of Stockholders' Equity
- --------------------------------------------------------------------------------
Eight months ended August 31, 1999
- --------------------------------------------------------------------------------
(Unaudited)
- --------------------------------------------------------------------------------
Retained
Additional earnings Total
Common paid-in (accumulated stockholders'
stock capital deficit) equity
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
- --------------------------------------------------------------------------------
Balances at December 31, 1998 $ 500 7,500 (2,592) 5,408
- --------------------------------------------------------------------------------
Common stock issued (note 4) 27,739 907,553 -- 935,292
- --------------------------------------------------------------------------------
Net loss -- -- (280,804) (280,804)
- --------------------------------------------------------------------------------
Balances at August 31, 1999 $28,239 915,053 (283,396) 659,896
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
</TABLE>
-28-
<PAGE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------
AUCTIONANYTHING.COM, INC.
- ----------------------------------------------------------------------------------------------
Statements of Cash Flows
- ----------------------------------------------------------------------------------------------
Eight months ended August 31, 1999 and 1998
- ----------------------------------------------------------------------------------------------
(Unaudited)
- ----------------------------------------------------------------------------------------------
1999 1998
- ----------------------------------------------------------------------------------------------
<S> <C> <C>
- ----------------------------------------------------------------------------------------------
Cash flows used in operating activities:
- ----------------------------------------------------------------------------------------------
Net (loss) income $(280,804) 16,526
- ----------------------------------------------------------------------------------------------
Adjustments to reconcile net (loss) income to net cash used
in operating activities:
- ----------------------------------------------------------------------------------------------
Depreciation 6,665 5,209
- ----------------------------------------------------------------------------------------------
Cash provided by (used in) changes in assets
and liabilities:
- ----------------------------------------------------------------------------------------------
Accounts receivable (16,450) (569)
- ----------------------------------------------------------------------------------------------
Prepaid and other assets (51,094) --
- ----------------------------------------------------------------------------------------------
Inventory (238,350) 1,324
- ----------------------------------------------------------------------------------------------
Accounts payable and accrued expenses 14,104 (3,113)
- ----------------------------------------------------------------------------------------------
Due to/from related parties 6,988 (8,612)
- ----------------------------------------------------------------------------------------------
Net cash used in operating activities (558,941) 10,765
- ----------------------------------------------------------------------------------------------
Cash flows used in investing activities:
- ----------------------------------------------------------------------------------------------
Capital expenditures (44,068) --
- ----------------------------------------------------------------------------------------------
Net cash used in investing activities (44,068) --
- ----------------------------------------------------------------------------------------------
Cash flows from financing activities:
- ----------------------------------------------------------------------------------------------
Proceeds from issuance of common stock 935,292 --
- ----------------------------------------------------------------------------------------------
Principal payments on notes payable to related parties (34,304)
- ----------------------------------------------------------------------------------------------
Proceeds from notes payable to related parties -- 34,352
----------------------------------------------------------------------------------------------
Net cash provided by financing activities 900,988 34,352
- ----------------------------------------------------------------------------------------------
Net increase in cash and cash equivalents 297,979 45,117
- ----------------------------------------------------------------------------------------------
Cash and cash equivalents at beginning of year 3,506 1,597
- ----------------------------------------------------------------------------------------------
Cash and cash equivalents at end of eight months $ 301,485 46,714
- ----------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to financial statements.
-29-
<PAGE>
AUCTIONANYTHING.COM
Notes to Financial Statements
August 31, 1999 and 1998
(Unaudited)
(1) Summary of Significant Accounting Policies
(b) Description of Business
AuctionAnything.com, Inc. (the "Company") operates on-line auctions
specializing in sports memorabilia. The Company's primary site for
operations is www.SportsAuction.com., which focuses on the
----------------------
collectibles market. The Company generates revenue by procuring
specialty merchandise at the wholesale level and selling it at retail
in an on-line format. Examples of typical inventory would include
autographed memorabilia (photos, football jerseys, balls, hats, etc.),
sports cards, and other collectibles such as Beanie Babies. The
Company also generates commissions revenue through consignment sales
of memorabilia.
(b) Inventories
Inventories are stated at the lower of cost or market. Cost is
determined principally on the specific identification method.
Provisions for potentially obsolete or slow-moving inventory is made
based on management's analysis of inventory levels.
Consignment inventory is not recorded as inventory by the Company and
is not placed in an auction until the merchandise is received. If a
consignment item does not sell in an auction, the Company requests
that the consignor lower the minimum bid or withdraw the item from the
auction.
(c) Equipment
Equipment is stated at cost less accumulated depreciation.
Depreciation of equipment is computed using the straight-line method
over its estimated useful life of 3 years. Depreciation expense was
$6,665 for the eight months ended August 31, 1999.
(d) Income Taxes
The Company was considered an S-corporation for federal income tax
purposes through March 9, 1999. As such, the Company was not subject
to federal income taxes directly. Income or loss of the Company passed
through to the individual stockholders. Effective March 10, 1999, the
Company is considered a C-corporation for federal income tax purposes.
Income taxes are accounted for under the asset and liability method.
Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial
statement carrying amounts of existing assets and liabilities and
their respective tax bases, and tax credit carryforwards. Deferred tax
assets and liabilities are measured using enacted tax rates expected
to apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled. The effect on
deferred tax assets and liabilities of a change in tax rates is
recognized in income in the period that includes the enactment date.
(e) Revenue Recognition
-30-
<PAGE>
The Company sells merchandise to customers under one of two types of
sales transactions. The Company either purchases merchandise and sells
it to customers or sells merchandise to customers under consignment
arrangements and earns a commission.
Revenue from sales of purchased merchandise is recognized and title
passes when the Company receives verification of the credit card
transaction or verification of the check clearing.
Commission income from consignment sales is calculated as a percentage
of the final sales value at the close of the auction and recognized
when the Company receives verification of the credit card transaction
or verification of the check. Commission is paid to the consignor
after the merchandise has been shipped.
(f) Merchandise Return Policy
The Company guarantees all items to be authentic, including
consignment items. Any item may be returned within seven days for a
full refund provided that the item has not been altered.
(g) Use of Estimates
Management of the Company has made a number of estimates and
assumptions relating to the reporting of assets and liabilities and
the disclosure of contingent assets and liabilities to prepare these
financial statements in conformity with generally accepted accounting
principles. Actual results could differ from those estimates.
(2) Related Party Transactions
During 1999, the Officers auctioned collectible merchandise through the
Company as consignors and did not pay the Company a commission for this
service.
Notes payable bearing interest of 14% with a balance of $34,304 were paid
in full to related parties on March 31, 1999.
(3) Year 2000 (Unaudited)
The Company is dependent on computer systems and system applications for
conducting its ongoing business functions. In 1998, the Company began its
process of identifying, evaluating and implementing changes to computer
programs necessary to address the year 2000 issue. This issue involves the
ability of computer systems that have time sensitive programs to recognize
properly the year 2000. The inability to do so could result in failures or
miscalculations, which could disrupt the Company's ability to meet its
customer and other obligations on a timely basis.
In addition, the Company is developing contingency plans to address
perceived risks associated with the Year 2000 effort. These include
business resumption plans to address the possibility of internal systems
failures and the possibility of failure of systems or processes outside the
Company's control. Preparations for the management of the date change will
continue through 1999.
(4) Acquisition
On March 10, 1999, the Company closed a transaction by which it acquired
100% of the outstanding capital stock of North Orlando Sports Promotions,
Inc., a privately held Florida Corporation ("NOSP") from the shareholders
of NOSP. As consideration for this acquisition, the Company issued
24,003,133 shares of its common stock, $.001 par value (the "Common
Stock"), which amounted to approximately 85% of the Company's outstanding
Common Stock, to the three former shareholders of NOSP. Also, prior to the
closing of the transaction, the Company sold substantially all of its pre-
acquisition assets to its majority pre-acquisition shareholder in exchange
for his assignment to the Company of 747,116 shares of common stock and his
assumption of all of the Company's pre-acquisition liabilities.
-31-
<PAGE>
In anticipation of the acquisition, the Company completed a private
offering of 1,000,000 units at an offering price of $.10 per unit. Each
unit consists of one share of common stock and one stock purchase warrant.
Each stock purchase warrant entitled the holder to purchase three shares of
common stock of the Company for $.30 per share. A total of 4,000,000 shares
of common stock were issued and sold by the Company for net proceeds of
approximately $925,000. The proceeds of the offering will be used for
working capital and to fund the Company's expansion plans.
(5) Leases
During 1999, the Company entered into an operating lease for office space.
The future minimum lease payments under these non-cancelable operating
leases are as follows:
<TABLE>
<CAPTION>
Operating
Year ending December 31, leases
--------------------------------- ----------
<S> <C>
1999 $ 3,414
2000 10,904
2001 3,300
----------
Total minimum lease payments $ 17,618
==========
</TABLE>
(6) Income Taxes
The following is a reconciliation between expected income tax benefit and
actual using the applicable statutory federal income tax rate of 34% and
applicable state of Florida income tax rate of 5.5% for the eight month
period ended August 31, 1999:
<TABLE>
<S> <C>
Expected tax benefit $ 110,918
Allowance (110,918)
-----------
$ --
===========
</TABLE>
The tax effect of temporary differences that give rise to deferred tax
assets as of August 31, 1999 are as follows:
<TABLE>
<S> <C>
Deferred tax asset:
Net operating loss $ 110,918
Less allowance (110,918)
-----------
Total $ --
===========
</TABLE>
In assessing the realizability of deferred tax assets, management considers
whether it is more likely than not that some portion or all of the deferred
tax assets will not be realized. The ultimate realization of deferred tax
assets is dependent upon the generation of future taxable income during the
periods in which those temporary differences become deductible. Management
considers the projected future taxable income and tax planning strategies,
as well as carryback opportunities, in making this assessment. Based upon
the level of historical taxable income, projections for future taxable
income over the periods in which the deferred tax assets are deductible,
management believes it is more likely than not the Company will not realize
the benefits of these deductible differences.
PART III
ITEM 1- INDEX TO EXHIBITS
-32-
<PAGE>
<TABLE>
<CAPTION>
Exhibit Page
Number Number Description
- ------ ------ -----------
<S> <C> <C>
2.1 - Certificate of Incorporation of the Company and
all Amendments thereto (filed herewith)
2.2 - Bylaws of the Company (filed herewith)
3.1 - Article Fourth of the Certificate of
Incorporation of the Company, as amended (filed
herewith as part of Exhibit 2.1)
3.2 - Articles II, V and VI of the Bylaws of the
Company (filed herewith as part of Exhibit 2.2)
6.1 - Office Lease dated May 10, 1999, between the
Company and Tradewinds Office Building (filed
herewith)
6.2 - Acquisition Agreement dated February 18, 1999,
among the Company, North Orlando Sports
Promotions, Inc., and the Shareholders of North
Orlando Sports Promotions, Inc. (filed herewith)
6.3 - Asset Purchase Agreement dated February 18,
1999, between North Orlando Sports Promotions,
Inc., and The Information SuperHighway
Corporation (filed herewith)
</TABLE>
ITEM 2- DESCRIPTION OF EXHIBITS
The documents listed in Item 1- Index to Exhibits, are attached to
this registration statement as exhibits and are incorporated herein by this
reference. Exhibit 2.1 consists of the Certificate of Incorporation of the
Company on file with the Secretary of State of Delaware, together with all
amendments thereto to date. Exhibit 2.2 is the current Bylaws of the Company.
Exhibits 3.1 and 3.2 are those portions of Exhibits 2.1 and 2.2 that describe
the rights of the Company's security holders. Exhibits 3.1 and 3.2 are not filed
herewith as separate exhibits, but they are referred to in the Index to Exhibits
in order to identify where such information may be found in Exhibits 2.1 and
2.2. Exhibit 6.1 is the Office Lease that is described in Item 3 of Part I of
this registration statement. Exhibit 6.2 is the Acquisition Agreement that is
first described in the Corporate History section of Item 1 of Part I of this
registration statement. Exhibit 6.3 is the Asset Purchase Agreement that is
first described in Item 7 of Part I of this registration statement.
-33-
<PAGE>
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of 1934, the
registrant caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized.
AUCTIONANYTHING.COM, INC.
Date: October 27, 1999 By: /s/ Raymond J. Hotaling III
----------------------------------------
Raymond J. Hotaling III, President
-34-
<PAGE>
EXHIBIT 2.1
CERTIFICATE OF INCORPORATION
----------------------------
OF
MEDIPLEX CORPORATION
--------------------
----------
The undersigned, a natural person, for the purpose of organizing a
corporation for conducting the business and promoting the purposes hereinafter
stated, under the provisions and subject to the requirements of the laws of the
State of Delaware (particularly Chapter 1, Title 8 of the Delaware Code and the
acts amendatory thereof and supplemental thereto, and known, identified and
referred to as the "General Corporation Law of the State of Delaware"), hereby
certifies that:
FIRST: The name or the corporation (hereinafter called the "corporation")
is
MEDIPLEX CORPORATION
SECOND: The address, including street, number, city, and county, of the
registered office of the corporation in the State of Delaware is 229 South State
Street, City of Dover, County of Kent; and the name of the registered agent of
the corporation in the State of Delaware at such address is The Prentice-Hall
Corporation System, Inc.
THIRD: The nature or the business and of the purposes to be conducted and
promoted by the corporation, which shall be in addition to the authority of the
corporation to conduct any lawful business, to promote any lawful purpose, and
to engage in any lawful act or activity for which corporations may be organized
under the General Corporation Law of the State of Delaware, is as follows:
To publish and distribute anywhere in the world, and in any language
or languages, magazines, periodicals, brochures, books, pamphlets and other
publications of every kind, nature and description, and to design, create,
prepare, make, edit, obtain, buy, sell, acquire, hold, sell, assign, and
transfer copyrights and rights of presentation in and for, obtain, receive,
hold, grant, transfer and assign options, rights, franchises, and royalties
in respect of, license the use of, market, distribute, syndicate, furnish,
and gen-
<PAGE>
erally deal in and with, as publisher, principal, agent, broker, general,
sales, and advertising representative, contractor, jobber, licensor,
licensee, distributor, and in any other lawful capacity, any and all kinds
of printed and reproduced matter, magazines, periodicals, brochures, books,
pamphlets and other publications of every kind, nature, and description,
and information, guidance, reviews, opinions, surveys, commentaries,
discussions, forecasts, suggestions, news, articles, features, stories,
columns, pages, advertisements, cartoons, photographs, reproductions of all
kinds, and other items of interest, and of use for newspapers, magazines,
periodicals, books, brochures, pamphlets, posters, or any other medium of
communication and to do everything necessary, useful, or convenient in
furtherance thereof.
To render to others marketing, advisory or consultant services with
respect to pharmaceutical and medical products and supplies, as well as any
other products, goods or services.
To purchase, receive, take by grant, gift, devise, bequest or
otherwise, lease, or otherwise acquire, own, hold, improve, employ, use and
otherwise deal in and with real or personal property, or any interest
therein, wherever situated, and to sell, convey, lease, exchange, transfer
or otherwise dispose of, or mortgage or pledge, all or any of its property
and assets, or any interest therein, wherever situated.
To carry on a general mercantile, industrial, investing, trading
and/or real estate business in all its branches; to devise, invent,
manufacture, fabricate, assemble, install, service, maintain, alter, buy,
sell, import, export, license as licensor or licensee, lease as lessor or
lessee, distribute, job, enter into, negotiate, execute, acquire, and
assign contracts in respect of, acquire, receive, grant, and assign
licensing arrangements, options, franchises, and other rights in respect
of, and generally deal in and with, at wholesale and retail, as principal,
and as sales, business, special, or general agent, representa-
-2-
<PAGE>
tive, broker, factor, merchant, distributor, jobber, advisor, and in any
other lawful capacity, goods, wares, merchandise, commodities, and
unimproved, improved, finished, processed, and other real, personal, and
mixed property of any and all kinds, together with the components,
resultants, and by-products thereof.
To apply for, register, obtain, purchase, lease, take licenses in
respect of or otherwise acquire, and to hold, own, use, operate, develop,
enjoy, turn to account, grant licenses and immunities in respect of,
manufacture under and to introduce, sell, assign, mortgage, pledge or
otherwise dispose of, and, in any manner deal with and contract with
reference to:
(a) inventions, devices, formulae, processes and any
improvements and modifications thereof;
(b) letters patent, patent rights, patented processes,
copyrights, designs, and similar rights, trademarks, trade names,
trade symbols and other indications of origin and ownership granted
by or recognized under the laws of the United States of America, the
District of Columbia, any state or subdivision thereof, and any
commonwealth, territory, possession, dependency, colony, possession,
agency or instrumentality of the United States of America and of any
foreign country, and all rights connected therewith or appertaining
thereunto;
(c) franchises, licenses, grants and concessions.
To guarantee, purchase, take, receive, subscribe for, and otherwise
acquire, own, hold, use, and otherwise employ, sell, lease, exchange,
transfer, and otherwise dispose of, mortgage, lend, pledge, and otherwise
deal in and with, securities (which term, for the purpose of this Article
THIRD, includes, without limitation of the generality thereof, any shares
of stock, bonds, de-
-3-
<PAGE>
bentures, notes, mortgages, other obligations and any certificates,
receipts or other instruments representing rights to receive, purchase or
subscribe for the same, or representing any other rights or interestes
therein or in any property or assets) of any persons, domestic and foreign
firms, associations, and corporations and by any government or agency or
instrumentality thereof; to make payment therefor in any lawful manner;
and, while owner of any such securities, to exercise any and all rights,
powers and privileges in respect thereof, including the right to vote.
To make, enter into, perform and carry out contracts of every kind
and description with any person, firm, association, corporation or
government or agency or instrumentality thereof.
To acquire by purchase, exchange or otherwise, all, or any part of,
or any interest in, the properties, assets, business and good will of any
one or more persons, firms, associations or corporations heretofore or
hereafter engaged in any business for which a corporation may now or
hereafter be organized under the laws of the State of Delaware; to pay for
the same in cash, property or its own or other securities; to hold,
operate, reorganize, liquidate, sell or in any manner dispose of the whole
or any part thereof; and in connection therewith, to assume or guarantee
performance of any liabilities, obligations or contracts of such persons,
firms, associations or corporations, and to conduct the whole or any part
or any business thus acquired.
To lend money in furtherance of its corporate purposes and to invest
and reinvest its funds from time to time to such extent, to such persons,
firms, associations, corporations, governments or agencies or
instrumentalities thereof, and on such terms and on such security, it any,
as the Board of Directors of the corporation may determine.
To make contracts of guaranty and suretyship of all, kinds and
endorse or guarantee the payment of principal, interest or dividends upon,
and to guarantee the performance of sink-
-4-
<PAGE>
ing fund or other obligations of, any securities, and to guarantee in any
way permitted by law the performance of any of the contracts or other
undertakings in which the corporation may otherwise be or become
interested, of any persons, firm, association, corporation, government or
agency or instrumentality thereof, or of any other combination,
organization or entity whatsoever.
To borrow money without limit as to amount and at such rates of
interest as it may determine, from time to time to issue and sell its own
securities, including its shares of stock, notes, bonds, debentures, and
other obligations, in such amounts, on such terms and conditions, for such
purposes and for such prices, now or hereafter permitted by the laws of the
State of Delaware and by this certificate of incorporation, as the Board of
Directors of the corporation may determine; and to secure any of its
obligations by mortgage, pledge or other encumbrance of all or any of its
property, franchises and income.
To be a promoter or manager of other corporations of any type or
kind; and to participate with others in any corporation, partnership,
limited partnership, joint venture, or other association of any kind, or in
any transaction, undertaking or arrangement which the corporation would
have power to conduct by itself, whether or not such participation involves
sharing or delegation of control with or to others.
To draw, make, accept, endorse, discount, execute, and issue
promissory notes, drafts, bills of exchange, warrants, bonds, debentures,
and other negotiable or transferable instruments and evidences of
indebtedness whether secured by mortgage or otherwise, as well as to secure
the same by mortgage or otherwise, so far as may be permitted by the laws
of the State of Delaware.
To purchase, receive, take, reacquire or otherwise acquire, own and
hold, sell, lend, exchange, reissue, transfer or otherwise dispose of,
-5-
<PAGE>
pledge, use, cancel, and otherwise deal in and with its own shares and its
other securities from time to time to such an extent and in such manner and
upon such terms as the Board of Directors of the corporation shall
determine; provided that the corporation shall not use its funds or
property for the purchase of its own shares of capital stock when its
capital is impaired or when such use would cause any impairment of its
capital, except to the extent permitted by law.
To organize, as an incorporator, or cause to be organized under the
laws of the State of Delaware, or of any other State of the United States
or America, or of the District of Columbia, or of any commonwealth,
territory, dependency, colony, possession, agency, or instrumentality of
the United States of America, or of any foreign country, a corporation or
corporations for the purpose of conducting and promoting any business or
purpose for which corporations may be organized, and to dissolve, wind up,
liquidate, merge or consolidate any such corporation or corporations or to
cause the same to be dissolved, wound up, liquidated, merged or
consolidated.
To conduct its business, promote its purposes, and carry on its
operations in any and all of its branches and maintain offices both within
and without the State of Delaware, in any and all States of the United
States of America, in the District of Columbia, and in any or all
commonwealths, territories, dependencies, colonies, possessions, agencies,
or instrumentalities of the United States of America and of foreign
governments.
To promote and exercise all or any part of the foregoing purposes and
powers in any and all parts of the world, and to conduct its business in
all or any of its branches as principal, agent, broker, factor, contractor,
and in any other lawful capacity either alone or through or in conjunction
with any corporations, associations, partnerships, firms, trustees,
syndicates, individuals, organizations, and other entities in any part of
the world, and, in conducting its business and promoting any of its
purposes, to maintain offices, branches and agencies in any part of the
world,
-6-
<PAGE>
to make and perform any contracts and to do any acts and things, and to
carry on any business, and to exercise any powers and privileges suitable,
convenient, or proper for the conduct, promotion, and attainment of any of
the business and purposes herein specified or which at any time may be
incidental thereto or may appear conducive to or expedient for the
accomplishment of any of such business and purposes and which might be
engaged in or carried on by a corporation incorporated or organized under
the General Corporation Law of the State of Delaware, and to have and
exercise all of the powers conferred by the laws of the State of Delaware
upon corporations incorporated or organized under the General Corporation
Law of the State of Delaware.
The foregoing provisions of this Article THIRD shall be construed both as
purposes and powers and each as an independent purpose and power. The foregoing
enumeration of specific purposes and powers shall not be held to limit or
restrict in any manner the purposes and powers of the corporation, and the
purposes and powers herein specified shall, except when otherwise provided in
this Article THIRD, be in no wise limited or restricted by reference to, or
inference from, the terms of any provision of this or any other Article of this
certificate of incorporation; provided, that the corporation shall not conduct
any business, promote any purpose, or exercise any power or privilege within or
without the State of Delaware which, under the laws thereof, the corporation may
not lawfully conduct, promote, or exercise.
FOURTH: The total number of shares of stock which the corporation shall
have authority to issue is One Million Five Hundred Thousand (1,500,000). The
par value of each of such shares is One Cent ($.01). All such shares are of one
class and are shares of Common Stock.
No holder of any of the shares of the stock of the corporation, whether now
or hereafter authorized and issued, shall, be entitled as of right to purchase
or subscribe for (1) any unissued stock of any class, or (2) any additional
shares of any class to be issued by reason of any increase of the authorized
capital stock of the corporation of any class, or (3) bonds, certificates of
indebtedness, debentures or other securities convertible into stock of the
corporation, or carrying any right to purchase stock of any class, but any such
unissued stock or such additional authorized
-7-
<PAGE>
issue of any stock or of other securities convertible into stock, or carrying
any right to purchase stock, may be issued and disposed of pursuant to
resolution of the Board of Directors to such persons, firms, corporations or
associations and upon such terms as may be deemed advisable by the Board of
Directors in the exercise of its discretion.
FIFTH: The name and the mailing address of the incorporator are as follows:
NAME MAILING ADDRESS
---- ---------------
R.G. Dickerson 229 South State Street
Dover, Delaware
SIXTH: The corporation is to have perpetual existence.
SEVENTH: For the management of the business and for the conduct of the
affairs of the corporation, and in further definition, limitation and regulation
of the powers of the corporation and of its directors and of its stockholders or
any class thereof, as the case may be, it is further provided:
1. The management of the business and the conduct of the affairs of
the corporation, including the election of the Chairman of the Board of
Directors, if any, the President, the Treasurer, the Secretary, and other
principal officers of the corporation, shall be vested in its Board of
Directors. The number of directors which shall constitute the whole Board
of Directors shall be fixed by, or in the manner provided in, the By-Laws.
The phrase "whole Board" and the phrase "total number of directors" shall
be deemed to have the same meaning, to wit, the total number of directors
which the corporation would have if there were no vacancies. No election of
directors need be by written ballot.
2. The original By-Laws of the corporation shall be adopted by the
incorporator unless the certificate of incorporation shall name the initial
Board of Directors therein. Thereafter, the power to make, alter, or repeal
the By-Laws, and to adopt any new By-Law, except a By-Law classifying
directors for election for staggered terms, shall be vested in the Board of
Directors.
-8-
<PAGE>
3. Whenever the corporation shall be authorized to issue only one
class of stock, each outstanding share shall entitle the holder thereof to
notice of, and the right to vote at, any meeting of stockholders. Whenever
the corporation shall be authorized to issue more than one class of stock,
no outstanding share of any class of stock which is denied voting power
under the provisions of the certificate of incorporation shall entitle the
holder thereof to notice of, and the right to vote, at any meeting of
stockholders except as the provisions of paragraph (d) (2) of section 242
of the General Corporation Law and of sections 251, 252, and 253 of the
General Corporation Law shall otherwise require; provided, that no share of
any such class which is otherwise denied voting power shall entitle the
holder thereof to vote upon the increase or decrease in the number of
authorized shares of said class.
4. In lieu of taking any permissive or requisite action by vote at a
meeting of stockholders, any such vote and any such meeting may be
dispensed with if either all of the stockholders entitled to vote upon the
action at any such meeting shall consent in writing to any such corporate
action being taken or if less than all of the stockholders entitled to vote
upon the action at any such meeting shall consent in writing to any such
corporate action being taken; provided, that any such action taken upon
less than the unanimous written consent of all stockholders entitled to
vote upon any such action shall be by the written consent of the
stockholders holding at least the minimum percentage of the votes required
to be cast to authorize any such action under the provisions of the General
Corporation Law or under the provisions of the certificate of incorporation
or the By-Laws as permitted by the provisions of the General Corporation
Law; and, provided, that prompt notice be given to all stockholders
entitled to vote on any such action of the taking of such action without a
meeting and by less than unanimous written consent.
-9-
<PAGE>
EIGHTH: No contract or transaction between the corporation and one or more
of its directors or officers, or between the corporation and any other
corporation, partnership, association, or other organization in which one or
more of its directors or officers are directors or officers, or have a financial
interest, shall be void or voidable solely for this reason, or solely because
the director or officer is present at or participates in the meeting of the
Board of Directors or a committee thereof which authorizes the contract or
transaction, or solely because his or their votes are counted for such purpose,
if:
(1) The material facts as to his interest and as to the contract or
transaction are disclosed or are known to the Board of Directors or the
committee, and the Board of Committee in good faith authorizes the contract
or transaction by a vote sufficient for such purpose without counting the
vote of the interested director or directors; or
(2) The material facts as to his interest and as to the contract or
transaction are disclosed or are known to the stockholders entitled to vote
thereon, and the contract or transactions specifically approved in good
faith by vote of the stockholders; or
(3) The contract or transaction is fair as to the corporation as of
the time it is authorized, approved or ratified, by the Board of Directors,
a committee thereof, or the stockholders.
(4) Common or interested directors may be counted in determining
the presence of a quorum at a meeting of the Board of Directors or of a
committee which authorizes the contract or transaction.
NINTH: The corporation shall, to the fullest extent permitted by Section
145 of the General Corporation Law of Delaware, indemnify any and all persons
whom it shall have power to indemnify under said section from and against any
and all of the expenses, liabilities or other matters referred to in or covered
by said section, and the indemnification provided for herein shall not be deemed
exclusive of any other rights to which those indemnified may be entitled under
any By-Law, agreement, vote of stockholders or disinterested directors or
otherwise, both as to action in their official capacities and as to action in
other capacities while holding such office, and shall continue as to a person
who has ceased to be a director, officer, employee or agent and shall inure to
the benefit of the heirs, executors and administrators of such a person.
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<PAGE>
TENTH: From time to time any of the provisions of this certificate of
incorporation may be amended, altered or repealed, and other provisions
authorized by the laws of the State of Delaware at the time in force may be
added or inserted in the manner and at the time prescribed by said laws, and all
rights at any time conferred upon the stockholders of the corporation by this
certificate of incorporation are granted subject to the provisions of this
Article TENTH.
Executed at Dover, Delaware, on February 13, 1969.
R.G. Dickerson
--------------------------
R.G. Dickerson
Incorporator
STATE OF DELAWARE )
) SS.:
COUNTY OF KENT )
BE IT REMEMBERED that, on February 13, 1969, before me, a Notary Public
duly authorized by law to take acknowledgment of deeds, personally came R.G.
Dickerson, the incorporator who duly executed the foregoing certificate of
incorporation before me and acknowledged the same to be his act and deed, and
that the facts therein stated are true.
GIVEN under my hand on February 13, 1969.
Nancy S. Truax
--------------------------
Nancy S. Truax
Notary Public
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<PAGE>
CERTIFICATE
FOR RENEWAL AND REVIVAL OF CERTIFICATE OF INCORPORATION
* * * *
MEDIPLEX CORPORATION, a corporation organized under the laws of Delaware,
The Certificate of Incorporation of which was filed in the office of the
Secretary of State on the 25th day of February, 1969, the Certificate of
Incorporation of which was forfeited pursuant to section 136 (c) of the General
Corporation Law of the State of Delaware, now desires to procure a restoration,
renewal and revival or its Certificate of Incorporation, and hereby certifies as
follows:
1. The name of the corporation is
MEDIPLEX CORPORATION
2. Its registered office in the State of Delaware is to be
located at 100 West Tenth Street, City of Wilmington, County of New Castle and
the name of its registered agent at such address is to be THE CORPORATION TRUST
COMPANY.
3. The date when the restoration, renewal, and revival of the
Certificate of Incorporation of this company is to commence is the 2nd day of
December 1973 the same being prior to the date of the expiration of the
Certificate of Incorporation. This renewal and revival of the Certificate of
Incorporation of this corporation is to be perpetual.
<PAGE>
4. This corporation was duly organized under the Laws of the State of
Delaware and carried on business authorized by its Certificate of Incorporation
until the 3rd day of December A.D. 1973, at which time its Certificate of
Incorporation became forfeited pursuant to Section 136 (c) of the General
Corporation Law of the State of Delaware and this certificate for renewal and
revival is filed by authority of the duly elected directors of the corporation
in accordance with the laws of the State of Delaware.
IN WITNESS WHEREOF, said MEDIPLEX CORPORATION, in compliance with section
312 of Title 8 of the Delaware Code has caused this Certificate to be agreed by
LOUIS KULEKOFSKY, its last and acting President, and attested by MICHAEL SICHEL,
its last and acting Secretary, this 31st day of March, 1974.
/s/ Louis Kulekofsky
-------------------------
Last and Acting President
ATTEST:
/s/ Michael Sichel
- -------------------------
Last and Acting Secretary
<PAGE>
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
MEDIPLEX CORPORATION, a corporation organized and existing under and by
virtue of the General Corporation Law of the State of Delaware, DOES HEREBY
CERTIFY:
FIRST: That at a meeting of the Board of Directors of MEDIPLEX CORPORATION
resolutions were duly adopted setting forth the proposed amendments to the
Certificate of Incorporation of said corporation, declaring said amendments to
be advisable and calling a meeting of the stockholders of said corporation for
consideration thereof. The resolution setting forth the proposed amendments is
as follows:
RESOLVED, that the Certificate of Incorporation of this
corporation be amended by changing the Articles thereof numbered
"FIRST and FOURTH" so that, as amended said Articles shall be and
read as follows:
"FIRST: The name of the corporation is THE LAWTON-YORK
CORPORATION."
"FOURTH: The total number of shares of stock which the
corporation shall have authority to issue is Seven Million Five
Hundred Thousand (7,500,000). The par value of each of such shares is
One Cent ($.01). All such shares are of one class and are shares of
Common Stock."
SECOND: That thereafter, pursuant to resolution of its Board of Directors,
a special meeting of the stockholders of said corporation was duly called and
held, upon notice in accordance with Section 222 of the General Corporation Law
of the State of Delaware at which meeting the necessary number of shares as
required by statute
<PAGE>
were voted in favor of the amendment.
THIRD: That said amendment was duly adopted in accordance with the
provisions of Section 242 of the General Corporation Law of the State of
Delaware.
IN WITNESS WHEREOF, said MEDIPLEX CORPORATION has caused this certificate
to be signed by LOUIS KULEKOFSKY, its President, and attested by MICHAEL SICHEL,
its Secretary, this 5th day of June, 1974.
MEDIPLEX CORPORATION
-------------------------
By /s/ Louis Kulekofsky
-------------------------
President
ATTEST:
By /s/ Michael Sichel
-------------------
Secretary
<PAGE>
CERTIFICATE OF OWNERSHIP AND MERGER
MERGING
THE LAWTON-YORK CORPORATION
(New York Domestic)
INTO
THE LAWTON-YORK CORPORATION
(Delaware Domestic)
* * * * *
THE LAWTON-YORK CORPORATION, a corporation organized and existing under the
laws of Delaware, DOES HEREBY CERTIFY:
FIRST: That this corporation was incorporated on the 25th day of February,
1969, pursuant to the General Corporation Law of the State of Delaware.
SECOND: That this corporation owns all of the outstanding shares of the
stock of THE LAWTON-YORK CORPORATION, a corporation incorporated on the 10th day
of February, 1966, pursuant to the Business Corporation Law of the State of New
York.
THIRD: That this corporation, by the following resolutions of its board of
directors, duly adopted at a meeting held on the 30th day of December, 1974,
determined to and did merge into itself said THE LAWTON-YORK CORPORATION (N.Y.):
<PAGE>
RESOLVED, that THE LAWTON-YORK CORPORATION (DEL.) merge, and it
hereby does merge into itself said THE LAWTON-YORK CORPORATION (N.Y.), and
assumes all of its obligations; and
FURTHER RESOLVED, that the merger shall become effective on January
31, 1975.
FURTHER RESOLVED, that the proper officers of this corporation be and
they hereby are directed to make and execute a Certificate of Ownership and
Merger setting forth a copy of the resolutions to merge said THE LAWTON-
YORK CORPORATION (N.Y.) and assume its liabilities and obligations, and the
date of adoption thereof, and to cause the same to be filed with the
Secretary of State and a certified copy recorded in the office of the
Recorder of Deeds of New Castle County and to do all acts and things
whatsoever, whether within or without the State or Delaware, which may be
in anywise necessary or proper to effect said merger.
FIFTH: Anything herein or elsewhere to the contrary notwithstanding this
merger may be terminated and abandoned by the board of directors of THE LAWTON-
YORK CORPORATION (DEL.) at any time prior to the date of filing the merger with
the Secretary of State.
IN WITNESS WHEREOF, said THE LAWTON-YORK CORPORATION (DEL.) has caused this
certificate to be signed by JOEL CAVALIER, its Chairman of the Board of
Directors, and attested by PHILIP J. McGRORY, its Secretary, this 22nd day of
January, 1975.
THE LAWTON-YORK CORPORATION (DEL.)
By JOEL CAVALIER
----------------------------------
Joel Cavalier,
Chairman of the Board of Directors
ATTEST:
By: PHILIP J. McGRORY
-------------------------
Philip McGrory,
Secretary
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<PAGE>
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
FOR
THE LAWTON-YORK CORPORATION
*******
THE LAWTON-YORK CORPORATION, a corporation organized and existing under and
by virtue of the General Corporation Law of the State of Delaware, DOES HEREBY
CERTIFY:
FIRST: That at a meeting of the Board of Directors of The Lawton-York
Corporation, resolutions were duly adopted setting forth a proposed
amendment to the Certificate of Incorporation of said corporation,
declaring said amendment to be advisable and calling a meeting of
stockholders of said corporation for consideration thereof. The resolution
setting forth the proposed amendment is a follows:
RESOLVED, That the Certificate of Incorporation of The Lawton-York
Corporation be amended by changing the First Amendment thereof so
that, as amended said Article shall be and read as follows:
"FIRST: The name of the Corporation (hereinafter called
"Corporation") shall become AuctionAnything.com, Inc."
SECOND: That thereafter, pursuant to resolution of its Board of Directors,
the majority of the shareholders of The Lawton-York Corporation consented
to act in lieu of a meeting, upon written waiver of notice signed by the
majority stockholder in accordance with Section 222 of the General
Corporation Law of the State of Delaware, in whose possession exist the
necessary number of shares as required by statue was voted in favor of the
amendment.
THIRD: That said amendment was duly adopted in accordance with the
provisions of Section 242 of the General Corporation Law of the State of
Delaware.
IN WITNESS WHEREOF, said Matthew J. Cavalier, Esq., Director has
caused this certificate to be signed by Nancy Scalia-Dunn, its Secretary-
Treasurer, this 17th day of February 1999.
/s/ Nancy Scalia-Dunn
- --------------------------------------
Nancy Scalia-Dunn, Secretary-Treasurer
<PAGE>
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
FOR
THE LAWTON-YORK CORPORATION
*******
THE LAWTON-YORK CORPORATION, a corporation organized and existing under and
by virtue of the General Corporation Law of the State of Delaware, DOES HEREBY
CERTIFY:
FIRST: That at a meeting of the Board of Directors of The Lawton-York
Corporation, resolutions were duly adopted setting forth a proposed
amendment to the Certificate of Incorporation of said corporation,
declaring said amendment to be advisable and calling a meeting of
stockholders of said corporation for consideration thereof. The resolution
setting forth the proposed amendment is a follows:
RESOLVED, That the Certificate of Incorporation of The Lawton-York
Corporation be amended by changing the Fourth Amendment thereof so
that, as amended said Article shall be and read as follows:
"FOURTH: The total number of shares of stock which the
corporation shall have authority to issue is Fifty Million
(50,000,000). The par value of each of such shares is One Tenth
of One Cent ($ .001). All such shares are of one class and are
shares of Common Stock."
SECOND: That thereafter, pursuant to resolution of its Board of Directors,
the majority of the shareholders of The Lawton-York Corporation consented
to act in lieu of a meeting, upon written waiver of notice signed by the
majority stockholder in accordance with Section 222 of the General
Corporation Law of the State of Delaware, in whose possession exist the
necessary number of shares as required by statue was voted in favor of the
amendment.
THIRD: That said amendment was duly adopted in accordance with the
provisions of Section 242 of the General Corporation Law of the State of
Delaware.
IN WITNESS WHEREOF, said Matthew J. Cavalier, Esq., Director has
caused this certificate to be signed by Nancy Scalia-Dunn, its Secretary-
Treasurer, this 17th day of February 1999.
/s/ Nancy Scalia-Dunn
- --------------------------------------
Nancy Scalia-Dunn, Secretary-Treasurer
<PAGE>
EXHIBIT 2.2
Bylaws of AuctionAnything.com, Inc.
Article I Offices
The principal office of the corporation shall be in the city of Orlando, county
of Orange, state of Florida. The corporation may also have offices at such other
places within or without the state of Florida as the board may from time to time
determine or the business of the corporation may require.
Article II Shareholders
1. Place of Meetings. Meetings of shareholders shall be held at the
principal office of the corporation or at such place within or without the state
of Florida as the board shall authorize.
2. Annual Meeting. The annual meeting of the shareholders shall be held on
the first Monday in April at 10 AM each year if not a legal holiday, and, if a
legal holiday, then on the next business day following at the same hour, when
the shareholders shall elect a board and transact such other business as may
properly come before the meeting.
3. Special Meetings. Special meetings of the shareholders may be called by
the board or by the president and shall be called by the president or the
secretary at the request in writing if a majority of the board or at the request
in writing by shareholders owning a majority of the shared issues and
outstanding. Such request shall state the purpose or purposes of the proposed
meeting. Business transacted at a special meeting shall be confined to the
purposes stated in the notice.
4. Fixing Record Date. For the purpose of determining the shareholders
entitled to notice of or vote at any meeting of shareholders or any adjournment
thereof, or to express consent or dissent from any proposal without a meeting,
or for the purpose of determining shareholders entitled to receive payment of
any dividend or the allotment of any rights, or for the purpose of any other
action, the board shall fix, in advance, a date as the record date for any such
determination of shareholders. Such date shall be not more than fifty nor less
than ten days before the date of such meeting, nor more than fifty days prior to
any other action. If no record date is fixed, it shall be determined in
accordance with the provisions of law.
5. Notice of Meetings of Shareholders. Written notice of each meeting of
shareholders shall state the purpose or purposes for which the meeting is
called, the place, date, and hour of the meeting, and unless it is the annual
meeting, shall indicate that it is being issued by or at the direction of the
person or persons calling the meeting. Notice shall be given either personally
or by mail to each shareholder entitled to vote at such meeting, not less than
ten nor more than fifty days before the date of the meeting. If action is
proposed to be taken that might entitle shareholders to payment of their shares,
the notice shall include a statement of that purpose and to that effect. If
mailed, the notice is given when deposited in the United States mail, with
postage thereon prepaid, directed to the shareholder at his or her address as it
appears on the record of shareholders, or, if he or she shall have filed with
the secretary a written request that notices to him or her to be mailed to some
other address, then directed to him or her at such other address.
<PAGE>
6. Waivers. Notice of meeting need not be given to any shareholder who
signs a waiver of notice, in person or by proxy, whether before or after the
meeting. The attendance of any shareholder at a meeting, in person or by proxy,
without protesting prior to the conclusion of the meeting the lack of notice of
such meeting, shall constitute a waiver of notice by him/her.
7. Quorum of Shareholders. Unless the certificate of incorporation
provides otherwise, the holders of a majority (defined as 1 share over 50%) of
the shares entitled to vote there at shall constitute a quorum at a meeting of
shareholders for the transaction of any business, provided that when a specified
item of business is required to be voted on by a class or classes, the holders
of a majority of the shares of such class or classes shall constitute a quorum
for the transaction of such specified item or business.
When a quorum is once present to organize a meeting, it is not broken by
the subsequent withdrawal of any shareholders.
The shareholders present may adjourn the meeting despite the absence of a
quorum.
8. Proxies. Each shareholder entitled to vote at a meeting of shareholders
or to express content or dissent without a meeting may authorize another person
or persons to act for him or her by proxy.
Every proxy must be signed by the shareholder or his or her attorney-in-
fact. No proxy shall be valid after expiration of eleven months from the date
thereof unless otherwise provided in the proxy. Every proxy shall be revocable
at the pleasure of the shareholder executing it, except as otherwise provided by
law.
9. Qualification of Voters. Every shareholder of record shall be entitled
at every meeting of the shareholders to one vote for every share standing in his
or her name on the record of shareholders, unless otherwise provided in the
Certificate of Incorporation.
10. Vote of Shareholders. Except as otherwise required by statute or by
the Certificate of Incorporation:
a. Directors shall be elected by a majority (defined as 1 share over 50%)
of the votes cast at a meeting of shareholders by the holders of shares entitled
to vote in the election.
b. All other corporate action shall be authorized by a majority (defined
as 1 share over 50%) of the votes cast.
11. Written consent of Shareholders. Any action that may be taken by vote
may be taken without a meeting on written consent, setting forth the action so
taken, signed by the shareholders of all the outstanding shares entitled to vote
thereon or signed by such lesser number of holders as may be provided for in the
Certificate of Incorporation.
Article III Directors
1. Board of Directors. Subject to any provision on the Certificate of
Incorporation, the business of the corporation shall be managed by its board of
directors, each of whom shall be at least 18 years of age, and at least a
majority (defined as 1 member over 50%) be shareholders.
<PAGE>
2. Number of Directors. The number of directors shall be no less than 3
and no more than 9. When all of the shares are owned by less than 3
shareholders, the number of directors may be less than three but not less than
the number of shareholders. The number of directors may be increased by action
of the existing directors or by a vote of the shareholders at an annual meeting.
3. Election and Term of Directors. At each annual meeting of shareholders,
the shareholders shall elect directors to hold office until the next annual
meeting. Each director shall hold office until the expiration of the term for
which he or she is elected and until his or her successor has been elected and
qualified, or until his or her prior resignation or removal.
4. Newly Created Directorships and Vacancies. Newly created directorships
resulting from an increase in the number of directors and vacancies occurring in
the board for any reason except the removal of directors without cause may be
filled by a majority of the directors then in office, although less than a
quorum exists, unless otherwise provided in the Certificate of Incorporation.
Vacancies occurring by reason of the removal of directors without cause shall be
filled by a vote of the shareholders unless otherwise provided in the
Certificate of Incorporation. A director elected to fill a vacancy caused by the
resignation, death, or removal shall be elected to hold office for the unexpired
term of his or her predecessor.
5. Removal of Directors. Any or all of the directors may be removed for
cause by vote of the shareholders or by action of the board. Directors may be
removed without cause only by vote of the shareholders.
6. Resignation. A director may resign at any time by giving written notice
to the board, the president, or the secretary of the corporation. Unless
otherwise specified in the notice, the resignation shall take effect upon
receipt thereof by the board or such officer, and the acceptance of the
resignation shall not be necessary to make it effective.
7. Quorum of Directors. Unless otherwise provided in the Certificate of
Incorporation, a majority (defined as 1 member over 50%) of the entire board
shall constitute a quorum for the transaction of business or of any specified
item of business.
8. Action of The Board. Unless otherwise required by law, the vote of a
majority (defined as 1 member over 50%) of directors present at the time of the
vote, if a quorum is present at such time, shall be the act of the board. Each
director present shall have one vote regardless of the number of shares, if any,
which he or she may hold.
9. Place and Time of Board Meetings. The board may hold its meetings at
the office of the corporation or at such other places, whether within or without
the state of Florida, as it may from time to time determine.
10. Regular Annual Meeting A regular annual meeting of the board shall be
held immediately following the annual meeting of shareholders at the place of
such annual meeting of shareholders.
11. Notices of Meetings of the Board, Adjournment.
a. Regular meetings of the board may be held without notice at such time
and place as it shall from time to time determine. Special meetings of the board
shall be held upon notice to the directors and may be called by the president
upon three
<PAGE>
days' notice to each director either personally or by mail or by wire; special
meetings shall be called by the president or by the secretary in a like manner
on written requests of two directors. Notice of a meeting need not be given to
any director who submits a Waiver of Notice whether before or after the meeting
or who attends the meeting without protesting prior thereto or at its
commencement, the lack of notice to him or her.
b. A majority of the directors present, whether or not a quorum is present,
may adjourn any meeting to another time or place. Notice of the adjournment
shall be given all directors who were absent at the time of the adjournment and,
unless such time and place are announced at the meeting, to the other directors.
12. Chairman. The president, or in his absence, a chairman chosen by the
board, shall preside at all meetings of the board.
13. Executive and Other Committees. By resolution adopted by a majority of
the entire board, the board may designate from among its members an executive
committee and other committees, each consisting of one or more directors. Each
such committee shall serve at the pleasure of the board.
14. Compensation. No compensation, as such, shall be paid to directors for
their services, but by resolution of the board, a fixed sum and expenses for
actual attendance at each regular meeting of the board may be authorized.
Nothing herein contained shall be construed to preclude any director from
serving the corporation in any other capacity and receiving compensation
therefore.
15. Insurance for Corporate Agents. Except as may be otherwise provided
under provisions of law, the Board of Directors may adopt a resolution
authorizing the purchase and maintenance of insurance on behalf of any agent of
the corporation (including director, officer, employee or other agent of the
corporation) against liabilities asserted against or incurred by the agent in
such capacity or arising out of the agent's status as such, whether or not the
corporation would have the power to indemnify the agent against such liability
under the Articles of Incorporation, these bylaws or provisions of law.
Article IV Officers
1. Offices, Election, Term.
a. Unless otherwise provided for in the Certificate of Incorporation, the
board may elect or appoint one or more Chief Executive Officers, a president,
one or more vice-presidents, a secretary and a treasurer, and such other
officers as it may determine, who shall have such duties, powers and functions
as hereinafter provided.
b. All officers shall be elected or appointed to hold office until the
meeting of the board following the annual meeting of shareholders.
c. Each officer shall hold office for the term for which he or she is
elected or appointed and until his or her successor has been elected or
appointed and qualified.
2. Removal, Resignation, Salary, Etc.
a. any officer elected or appointed by the board may be removed by the
board with or without cause.
b. In the event of death, resignation, or removal of an officer, the board
in its
<PAGE>
discretion may elect or appoint a successor to fill the unexpired term.
c. Unless there is only one shareholder, any two or more offices may be
held by the same person, except the offices of president and secretary. If there
is only one shareholder, all offices may be held by the same person.
d. The salaries of all officers shall be fixed by the board.
e. The directors may require any officer to give security for the faithful
performance of his or her duties.
3. Chief Executive Officer. He or she shall preside at all meetings of the
shareholders and of the board. If there are more than one CEO, the CEO of
operations shall preside.
4. President. He or she shall have the management of the business of the
corporation and shall see that all orders and resolutions of the board are
affected.
5. Vice-Presidents. During the absence or disability of the President, the
vice-president, or, if there are more than one, the executive vice president,
shall have all the powers and functions of the president. Each vice-president
shall perform such other duties as the board shall prescribe.
6. Secretary. The secretary shall:
a. Attend all meetings of the board and the shareholders;
b. Record all votes and minutes of all proceedings in a book to be kept
for that purpose;
c. Give or cause to be given notice of all meetings of shareholders and of
special meetings of the board;
d. Keep in safe custody the seal of the corporation and affix it to any
instrument when authorized by the board;
e. When required, prepare or cause to be prepared and available at each
meeting of shareholders a certified list in alphabetical order of the names of
shareholders entitled to vote thereat, indicating the number of share of each
respective class held be each;
f. Keep all the documents and records of the corporation as required by
law or otherwise in a proper and safe manner;
g. Perform such other duties as may be prescribed by the board.
7. Assistant Secretaries. During the absence or disability of the
secretary, the assistant secretary, or, if there are more than one, the one so
designated by the secretary or the board, shall have all the powers and
functions of the secretary.
8. Treasurer. The treasurer shall:
a. Have the custody of the corporate funds and securities;
b. Keep full and accurate accounts of receipts and disbursements in the
corporate books;
c. Deposit all money and other valuables in the name and to the credit of
the corporation in such depositories as may be designated by the board;
d. Disburse the funds of the corporation as may be ordered or authorized
by the board and preserve proper vouchers for such disbursements;
e. Render to the president and the board at the regular meetings of the
board, or whenever they require it, an account of all of his or her transactions
as treasurer and of the financial condition of the corporation;
f. Render a full financial report at the annual meeting of the shareholders
if so
<PAGE>
requested;
g. Be furnished by all corporate officers and agents, at his or her
request, with such reports and statements as he or she may require as to all the
financial transactions of the corporation;
h. Perform such other duties as are given to him or her by these bylaws or
as from time to time are assigned to him or her by the board or the president.
9. Assistant Treasurer. During the absence of the treasurer, the assistant
treasurer, or, if there are more than one, the one so designated by the
secretary or by the board, shall have the powers and functions of the treasurer.
10. Sureties and Bonds. In the case the board shall so require, any officer
or agent of the corporation shall execute to the corporation a bond in such sum
and with such surety or sureties as the board may direct, conditioned upon the
faithful performance of his or her duties to the corporation and including
responsibility for negligence and for the accounting for all property, funds, or
securities of the corporation which may come into his or her hands.
11. Non-Liability of Directors, Officers, Employees & Other Agents. Neither
the Directors, Officers, Employees nor Other Agents of the corporation shall be
personally liable for the debts, liabilities, or other obligations of the
corporation.
12. Indemnification by Corporation of Directors, Officers, Employees And
Other Agents.
a. To the extent that a person who is, or was, a director, officer,
employee or other agent of this corporation has been successful on the merits in
defense of any civil, criminal, administrative or investigative proceeding
brought to procure a judgment against such person by reason of the fact that he
or she is, or was, an agent of the corporation, or has been successful in
defense of any claim, issue or matter, therein, such person shall be indemnified
against expense actually and reasonably incurred by the person in connection
with such proceeding.
b. If such person either settles any such claim or sustains a judgment
against him or her, then indemnification against expenses, judgments, fines,
settlements and other amounts reasonably incurred in connection with such
proceedings shall be provided by this corporation but only to the extent allowed
by, and in accordance with the requirements of the laws of the state of
Delaware.
Article V Certificates for Shares
1. Certificates. The shares of the corporation shall be represented by
certificates. They shall be numbered and entered into the books of the
corporation as they are issued. They shall exhibit the holder's name and the
number of shares and shall be signed by a CEO, or president or a vice-president
and the treasurer or the secretary and shall bear the corporate seal.
2. Lost or Destroyed Certificates. The board may direct a new certificate
or certificates to be issued in place of any other certificate or certificates
theretofore issued by the corporation, alleged to have been lost or destroyed,
upon the making of an affidavit of that fact by the person claiming the
certificate(s) to be lost or
<PAGE>
destroyed. When authorizing such issue of a new certificate or certificates, the
board may, in its discretion and as a condition precedent to the issuance
thereof, require the owner of such lost or destroyed certificate or
certificates, or his or her legal representative, to advertise the same in such
manner as it shall require and/or to give the corporation a bond in such sum and
with such surety or sureties as it may direct as indemnity against any claim
that may be made against the corporation with respect to the certificate(s)
alleged to have been lost or destroyed.
3. Transfers of Shares.
a. Upon Surrender to the corporation or the transfer agent of the
corporation of a certificate for shares duly endorsed or accompanied by proper
evidence of succession, assignment, or authority to transfer, it shall be the
duty of the corporation to issue a new certificate to the person entitled
thereto and to cancel the old certificate; every such transfer shall be entered
in the transfer book of the corporation, which shall be kept at its principal
office. No transfer shall be made within ten days next preceding the annual
meeting of shareholders.
b. The corporation shall be entitled to treat the holder of record of any
share as the holder in fact thereof and, accordingly, shall not be bound to
recognize any equitable or other claim to or interest in such share on the part
of any other person whether or not it shall have express or other notice
thereof, except as expressly provided by the laws of the state of Florida.
4. Closing Transfer Books. The board shall have the power to close the
share transfer books of the corporation for a period of not more than ten days
during the thirty day period immediately preceding (1) any shareholders'
meeting, or (2) any date upon which shareholders shall be called upon to or have
a right to take action without a meeting, or (3) any date fixed for the payment
of a dividend or any other form of distribution, and only those shareholders of
record at the time the transfer books are closed shall be recognized as such for
the purpose of (1) receiving notice of or voting at such meeting, or (2)
allowing them to take appropriate action, or (3) entitling them to receive any
dividend or any other form of distribution.
Article VI Dividends
Subject to the provisions of the Certificate of Incorporation and to applicable
law, the dividends on the outstanding shares of the corporation may be declared
in such amounts and at such time or times as the board may determine. Before
payment of any dividend, there may be set aside out of the net profits of the
corporation available for dividends such sum or sums as the board from time to
time in its absolute discretion deems proper as a reserve fund to meet
contingencies, or for equalizing dividends, or for repairing any property of the
corporation, or for such other purpose as the board shall think conducive to the
interests of the corporation, and the board may modify or abolish any such
reserve.
<PAGE>
Article VII Corporate Seal
The seal of the corporation shall be circular in form and bear the words
Corporate Seal, Delaware. The seal may be used by causing it to be impressed
directly on the instrument or writing to be sealed, or upon adhesive substance
affixed thereto. The seal on the certificates for shares or on any corporate
obligation for the payment of money may be a facsimile, engraved, or printed.
Article VIII Execution of Instruments
AR corporate instruments and documents shall be signed or countersigned,
executed, verified, or acknowledged by such officer or officers or other person
or persons as the board may from time to time designate.
Article IX Fiscal Year
The fiscal year shall begin the first day of January in each year.
Article X References to Certificate of Incorporation
References to the Certificate of Incorporation in these bylaws shall include all
amendments thereto or changes thereof unless specifically excepted.
Article XI Bylaw Changes
Amendment, Repeal, Adoption, Election of Directors
a. Except as otherwise provided in the Certificates of Incorporation, the
bylaws may be amended, or adopted by vote of the holders of the shares at the
time entitled to vote in the election of any directors. Bylaws may also be
amended, repealed, or adopted by the board, but any bylaws adopted by the board
may be amended by the shareholders entitled to vote thereon as hereinabove
provided.
b. If any bylaw regulating an impending election of directors is adopted,
amended, or repealed by the board, there shall be set forth in the notice of the
next meeting of the shareholders for the election of directors the bylaw so
adopted, amended or repealed, together with a concise statement of the changes
made.
<PAGE>
EXHIBIT 6.1
BUSINESS LEASE
--------------
THIS LEASE AGREEMENT, made and entered into as of the 10th day of May,
1999, by and between LESLIE TRICKEL SCOTT, AS AGENT FOR, TRADEWINDS OFFICE
BUILDING, 4715 Hall Rd., Orlando, Florida 32817 (hereafter designated "Lessor"),
and AUCTION ANYTHING.COM (hereafter designated "Lessee"):
W I T N E S S E T H :
---------------------
That for and in consideration of the mutual covenants, agreements and
conditions on the part of Lessor and Lessee to be kept and performed, it is
mutually agreed as follows:
1. LOCATION: Lessor grants, demises, leases and lets, and lessee rents and
hires of the Lessor, the following described premises, Suite 211, 35 West Pine
Street, Orlando, Florida 32801, consisting of approximately 566 square feet, and
Suite 226, consisting of approximately 305 square feet.
2. LENGTH OF LEASE: The term of this lease shall be for a period of two (2)
years, beginning May 10, 1999, and ending May 9, 2001. At six (6) months, Lessee
and Lessor has the option to break this lease with 60 days notice. At anytime
after the first six months Lessee has the option to break the lease with 60 days
notice.
3. RENT: Lessee covenants to pay Lessor rent on the leased premises as
follows:
A. Commencing May 10, 1999 and ending at the end of the six (6)
month period, November 9, 1999, at the rate of $653.25 per month, (including
utilities), plus sales tax of 6% in the amount of $39.19, for a total of
$692.44. Commencing November 10, 1999, and ending May 9, 2001, at the rate of
$10.00 per square foot which would make a monthly payment of $725.83 plus sales
tax of 6% in the amount of $43.54 for a total monthly payment of $769.37.
<PAGE>
B. Rent shall be payable in full for the first six months in the
amount of $4154.64, to Lessor at 4715 Hall Rd., Orlando, Florida, 32817. After
the first six months, rent shall be payable on the tenth day of, each month and
a late fee of $25.00 will be charged to any payments received after the 20th day
of the month.
4. USE OF PREMISES: Lessee shall not use or permit the leased premises or
any part thereof to be used for any purpose or purposes other than Professional
Offices for Lessee and related activities. No other use shall be made of the
leased premises without the expressed, written consent of Lessor. No use shall
be made or permitted to be made of the leased premises, nor acts done, which
will increase the existing rate of insurance upon the leased premises or the
building in which it is located or cause cancellation of any insurance policy
covering said building or any part thereof. Lessee covenants and agrees that
they will comply with all Federal, State, City and County or other laws,
ordinances, regulations and requirements governing the use of property,
including but not limited to Departments and Bureaus as subdivisions of
foregoing governmental agencies, for purposes which includes but are not limited
to zoning regulations. Lessee further covenants and agrees during the term of
this lease to keep the premises in a clean and sanitary condition and in a
manner which will not be detrimental to the surrounding property and not to make
any unlawful use of the property, or to conduct any illegal or immoral business
thereon, or to cause or allow conduct tantamount to a nuisance or interference
with neighboring tenants or property owners. Lessor warrants that property is
zoned to accommodate the above stated purpose.
5. INSPECTION: It is understood and agreed that Lessee has inspected
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<PAGE>
the demised premises and is accepting the property in the condition it now
exists.
6. OWNERSHIP OF IMPROVEMENTS: Any equipment or personal property of
whatsoever nature, whether or not attached to any building or placed in the
building, shall not become a part of said building and shall be removed by
Lessee upon vacating the premises. Lessee agrees that upon the termination of
its tenancy, in removing said equipment or personal property, Lessee will make
any repairs necessary, or pay to Lessor an amount sufficient to pay for, any
damages caused to the premises by Lessee's removal of the aforementioned
equipment and personal property.
7. CONDITION OF PREMISES: Lessee covenants and agrees to return to the
Lessor, the property covered by this Lease at the end of the term hereof, in
good and clean condition, at least to the same condition as they were as of
initial date of this lease reasonable wear and tear on said premises expected.
Lessor shall have the right to enter the leased premises at all reasonable times
to inspect same, and to make repair or improvements thereon, and Lessee shall
make no claim against Lessor for obstruction to ingress and egress to the leased
premises caused by any such repairs or improvements.
8. DESTRUCTION OF PREMISES: In the event the premises shall be partially
damaged by fire or other casualty, but not rendered untenantable, the same shall
be repaired with due diligence by the Lessor at its expense; if the damage shall
be so extensive as to render the premises untenantable, the rent shall be
proportionately paid up to the time of such damage and shall thenceforth cease
until such time as the premises shall be put in tenantable condition. If the
Lessor shall elect, within thirty (30) days after untenantable damage, not to
rebuild or restore such premises to
3
<PAGE>
tenantable condition, then this Lease shall forthwith terminate. In the event of
total destruction of the premises by fire or other casualty, this Lease shall
cease and come to an end and the Lessees shall be liable for rent only up to the
time of such destruction. Lessees shall be entitled to receive a pro rata refund
of any advance rent paid by it for the rent period during which the leased
premises were wholly or partially destroyed to such extent as to be
untenantable.
9. EMINENT DOMAIN: In the event any portion of the leased property is taken
under the exercise of EMINENT DOMAIN, making the property unusable, then and in
that event, Lessee shall have the option of terminating this Lease or continuing
the Lease in full force and effect to the remainder of the term as to the
property not taken at a monthly rental, which shall abate in proportion to the
area of leased property rendered untenantable. Lessees claims in EMINENT DOMAIN
shall be subordinated to those of Lessor.
10. QUIET POSSESSION AND EMERGENCIES: Lessor warrants that Lessees, upon
paying the rent and performing the covenants hereof, shall have quiet and
peaceful possession and use of the premises covered by the Lease during the term
hereof, and that said possession and use shall be exclusive as to the leased
premises; provided, however, that Lessees shall grant Lessor access to the
premises for inspection purposes during business hours, and at all times for
emergencies. Prior to occupancy, Lessee shall present to Lessor a 3" X 5" card
legibly showing names, addresses, and telephone numbers of persons to be
contacted in case of emergency.
11. OWNERSHIP OF PREMISES: The Lessor warrants that he has authority to
lease the demised premises.
12. BINDING ON HEIRS: This Lease and its terms shall inure to the
4
<PAGE>
benefit of and be binding upon themselves and their heirs, administrators,
executors, successors and assigns.
13. DEFAULT: If any installment of rent required to be paid under this
Lease shall not be paid when due, or if Lessee shall be in default of any term
or provision of this Lease, Lessor shall have the option to, upon giving the
Lessee notice of default and upon the allowance of fifteen (15) days in which to
cure such default other than payment of rent:
(A) TERMINATE LEASE: Terminate this Lease, resume possession of the
property for its own account and recover immediately from Lessee the difference
between the rent specified in the Lease and the fair rental value of the
property for the remainder of the term reduced to present worth; or
(B) ACCELERATION OF RENT: If any of the monthly installments for
rent and sales tax are not promptly and fully paid when due, the said aggregate
sum mentioned in this Lease then remaining unpaid, shall become due and payable
forthwith or, thereafter at the option of the Lessor, as fully and completely as
if the said aggregate sum plus applicable sales tax, plus any increases or other
sums agreed to be paid Lessor by Lessee pursuant to this Lease, was originally
stipulated to be paid on such day.
(C) REMEDIES CUMULATIVE: In any event, the remedy shall be deemed
cumulative to any and all other remedies provided by law and the Lessor shall
also recover all expenses incurred by reason of the Breach, including reasonable
attorney's fees.
14. NOTICE: Any notice furnished pursuant to the Lease shall be in writing
and forwarded by certified mail. If the notice is to the Lessor, it shall be
forwarded to Lessor's address set out in the opening paragraph on Page 1. If
notice is to Lessee, it shall be forwarded to the address set out
5
<PAGE>
in the opening paragraph on Page 1 hereof.
15. ACCESS TO PREMISES: In addition to Lessor's right of access set out in
Paragraph 8 above, Lessor shall have access to the premises at any reasonable
time upon reasonable notice for the purpose of exhibiting the premises, for sale
or lease purpose, and Lessee consents for Lessor to place "For Rent" and similar
signs in windows and other prominent places about the leased premises beginning
sixty (60) days prior to the expiration of this Lease, provided that lessor
shall not molest nor disrupt the peaceful possession of Lessee.
16. NO SUBLEASE OR ASSIGNMENT: Lessee may not assign this Lease nor sublet
any portion thereof without prior written consent of Lessor, except to a solely
owned subsidiary or affiliated company of Lessee. This includes use of the
leased premises pursuant to any Franchise, License or similar agreement, a copy
of which shall be presented to Lessor prior to occupancy by Lessee if
applicable. Neither occupancy nor use of the leased premises, nor payment of any
monies to Lessor or on behalf of Lessor due under this Lease, by anyone other
than Lessee, shall be deemed compliance with this Paragraph
17. Unless otherwise specifically provided in any writing whereby Lessor
consents to any sublease or assignment of this Lease, Lessee shall not be
relieved of their obligation to pay rent to Lessor under this Lease, or to
perform all other covenants and terms of this Lease, including but not limited
to payment of any other monies provided for herein.
18. TIME: Time is of the essence of this Lease and all of its provisions.
19. ATTORNEY FEES: If any action at law or in equity shall be brought by
either party to recover any rent under this Lease or for or on account of
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<PAGE>
any breach of or to enforce or interpret any of the covenants, terms or
conditions of this Lease, prevailing party shall be entitled to recover costs,
and reasonable attorney's fees including attorney's fees on appeal, the amount
of which shall be fixed by the court and shall be made a part of any judgment or
decree rendered.
20. ALTERATION OF PREMISES: Lessee shall not make, or permit to be made,
any renovation, alteration, addition, or deletion to the leased premises without
the prior written consent of Lessor. Alterations, additions or improvements to
the leased premises which are not accepted by Lessor in writing, at Lessor's
option shall be removed or replaced at Lessee's expenses upon surrendering the
leased premises at the end of the Lease term or termination of this Lease.
Lessor may, at its option, require a security deposit to be paid by Lessee in an
amount sufficient to be used by Lessor to pay the cost of removal or replacement
of all alterations, additions or improvements. This security deposit shall be
paid fifteen (15) days prior to commencement of any such alterations or
additions and returnable to Lessee without interest after restoration of the
premises to their original state. All alterations, additions or improvements
made by Lessee shall become the property of Lessor.
21. LANDLORD'S LIEN: Lessee hereby pledges and assigns to the Lessor and
grants unto Lessor a Landlord's lien on all furniture, fixtures, goods and
chattels of Lessee which shall or may be brought or kept on the leased premises
as security for performance of all terms, provisions and covenants of this Lease
by Lessee; and Lessee agrees that Lessor's Landlord's lien may be enforced by
distress proceedings, foreclosure of otherwise at the election of Lessor.
7
<PAGE>
22. LESSOR TO APPROVE SIGNS: Lessee shall not place any signs or
designation of any nature on the doors, windows, or store front of the demised
premises without the prior written consent of Lessor as to location, method of
installation, and graphic design. Lessee shall pay at its own expense the cost
of any sign and its installation and said signs will comply in all material
respects to any zoning laws or building codes applicable thereto.
23. BANKRUPTCY OR INSOLVENCY: To more effectually secure Lessor against
failure of Lessee to perform under this Lease and loss of the rent and other
payments herein provided to be made by Lessee, it is agreed as a further
condition of this lease that the filing of any petition of bankruptcy, any
assignment for the benefit of creditors, insolvency or other debtor's
proceedings by or against lessor, including but not limited to receivership, or
the adjudication in bankruptcy of Lessee or the appointment of a Receiver for
lessee by any Court shall be deemed or constitute a breach of this Lease, and
thereupon, without entry or other action by Lessor, this lease shall, in the
event there is existing any other breach of the terms and conditions of this
Lease, become and be terminated; notwithstanding any other provisions of this
Lease, lessor shall forthwith upon such termination be entitled to recover the
rent reserved in this Lease for the residue of the term hereof less the fair
value of the premises for the residue of said term. It is specifically agreed
and understood that this is not intended, nor to be construed, as forfeiture
against Lessees, but is to avoid a forfeiture against Lessor.
24. OPTION TO RENEW: Lessor covenants and agrees that if the Lessee shall
not be in default in the performance of any of the covenants,
8
<PAGE>
conditions, and agreements of this Lease, Lessee shall have the right and
privilege at its election to continue and renew the term of this Lease for one
(1) additional term of one (3) years, exercisable in the following manner: Not
later than two (2) months prior to the termination of the original term of this
Lease, Lessee shall notify the Lessor of its intention to continue this Lease
for the next succeeding term.
25. SPECIAL CLAUSES: (A) Tenant, agents, employees, and guests of tenant,
agents, and employees, shall not smoke cigarettes or other tobacco products,
such as pipes or cigars anywhere in the leased premises building. Smoking
permitted only in designated areas outside the building. (B) Lessee agrees to
pay its pro rata share based on percentage of building occupancy, all real
estate taxes, personal property taxes and reasonable assessments assessed
against its leased property during the term of the Lease.
26. ENTIRE AGREEMENT: This Lease contains the entire Agreement between the
parties and any modification of or amendment to this Lease Agreement must be set
forth in writing signed by all parties in order to be binding.
9
<PAGE>
Signed, Sealed and Delivered in the
presence of:
LESSOR:
TRADEWINDS OFFICE BUILDING
/s/ Kent H. Trickel BY: /s/ Leslie Trickel Scott
- ---------------------------------- ----------------------------------
LESLIE TRICKEL SCOTT,
AS AGENT FOR
- ----------------------------------
As to Lessor
LESSEE:
AUCTION ANYTHING.COM
/s/ Kent H. Trickel BY: /s/ Martin M. Meads
- ---------------------------------- ----------------------------------
MARTIN MEADS, VICE PRESIDENT
- ----------------------------------
As to Lessee
10
<PAGE>
Exhibit 6.2
ACQUISITION AGREEMENT
---------------------
THIS ACQUISITION AGREEMENT (the "Agreement"), dated as of February 18,
1999, by and among THE LAWTON-YORK CORPORATION, a Delaware corporation
(hereinafter called the "Company"); NORTH ORLANDO SPORTS PROMOTIONS, INC., a
Florida corporation (hereinafter called "NOSP"); and the shareholders of NOSP
(hereinafter called the "Shareholders").
RECITALS
--------
WHEREAS, the Shareholders own or control in their respective capacity
the right to sell, transfer and exchange all of the issued and outstanding
shares of the capital stock of NOSP;
WHEREAS, the Company wishes to acquire all of the issued and
outstanding capital stock of NOSP (hereinafter collectively referred to as the
"NOSP Stock") in exchange for 24,003,133 shares of common stock of the Company,
par value $0.001, or such greater number of shares of the capital stock of the
Company as are necessary to equal, in the aggregate, 85% of the resulting issued
and outstanding capital stock of the Company (hereinafter collectively referred
to as the "L-Y Common Stock");
WHEREAS, the Shareholders wish to exchange their interest in NOSP for
L-Y Common Stock and it is in the best interest of NOSP for such exchange to
occur;
NOW, THEREFORE, in consideration of the premises herein contained, the
mutual covenants hereinafter set forth, and other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
parties hereto covenant and agree as follows:
TERMS
-----
1. Exchange of Securities. Subject to the terms and conditions
----------------------
hereinafter set forth, at the time of the closing referred to in Section 7
hereof (hereinafter called the "Closing Date"), the Company will issue and
deliver, or cause to be issued and delivered, to the Shareholders the L-Y Common
Stock (which, in the aggregate, shall equal 85% of the resulting issued and
outstanding capital stock of the Company) in exchange for which the Shareholders
will deliver, or cause to be delivered to the Company, all of the issued and
outstanding capital stock of NOSP (hereinafter the "Exchange").
2. Representations and Warranties by NOSP. NOSP represents and
--------------------------------------
warrants to the Company, all of which representation and warranties shall be
true at the time of the Closing Date and shall survive the Closing Date for a
period of two (2) years therefrom, that:
a. NOSP is duly organized, validly existing and in good
standing under the laws of the State of Florida and has authorized capital stock
consisting of 1,000 shares of common stock, with a par value of $1.00 per share,
of which 708.33 shares of common stock are presently issued and outstanding.
<PAGE>
b. From the date hereof until the Closing Date, no dividends or
distributions of capital, surplus, or profits shall be paid or declared by NOSP
(in redemption of its outstanding shares or otherwise), nor shall any additional
shares been issued by NOSP.
c. As of the date hereof and through the Closing Date, NOSP has
not experienced any material adverse changes with respect to its business
condition (financial or otherwise), results of operations, assets, contracts,
liabilities or property.
d. NOSP has complied, in all material respects, with the terms
and provisions of all agreements to which it is a party and all laws, rules,
regulations and orders to which it or its assets are subject.
e. NOSP has not violated any law, rule, regulation or order,
and is not involved in any pending or threatened litigation, which would
materially adversely affect its financial condition, which has not been
disclosed to the Company.
f. NOSP shall not, from the date hereof through the Closing
Date, engage in any transaction other than transactions in the normal course of
the operation of its business, except as specifically authorized by the Company
in writing.
g. NOSP does not have, nor will it have on the Closing Date,
any pension plan, profit sharing plan, or stock purchase plan for any of its
employees.
h. NOSP does not have, nor will it have on the Closing Date,
any obligation to issue any additional shares of its capital stock.
3. Representations and Warranties by the Shareholders. Each
--------------------------------------------------
Shareholder represents and warrants to the Company, all of which representation
and warranties shall be true at the time of the Closing Date and shall survive
the Closing Date for a period of two (2) years therefrom, that:
a. Such Shareholder has, and will have at the Closing Date,
good and marketable title to all of the shares of NOSP Stock held by such
Shareholder, free and clear of any and all liens or encumbrances.
b. Such Shareholder has the full power to exchange his shares
of the capital stock of NOSP upon the terms provided for in this Agreement.
c. Such Shareholder understands that (i) the Company is relying
upon an exemption from registration under the Securities Act of 1933, as amended
(the "Securities Act"), as set forth in Section 4 thereof, which relate to
"transactions by an issuer not involving any public offering," and applicable
regulations promulgated by the Securities and Exchange Commission ("SEC")
thereunder; and (ii) the Company is also relying upon the securities laws of any
state on the basis that the Exchange is a transaction exempt from the
registration requirements of such laws.
d. That the Company has made available to such Shareholder and
his representative, if any, the opportunity to ask questions of and receive
answers from the Company concerning the terms and conditions of the Exchange and
to obtain any additional information desired by the Shareholder concerning the
Company.
e. That the investment by such Shareholder in the L-Y Common
Stock is a suitable investment for the Shareholder, given the investment goals
and objectives of the Shareholder.
-2-
<PAGE>
f. Such Shareholder, either individually or together with his
purchaser representative, if one has been retained, has such knowledge and
experience in financial and business matters that he is capable of evaluating
the merits and risks of an investment in the L-Y Common Stock. The Shareholder
understands the effect of accepting the Exchange and the differing rights,
restrictions and obligations of a holder of L-Y Common Stock.
g. Such Shareholder is purchasing the L-Y Common Stock for his
own account, for investment purposes only, and not with a view to the sale,
pledge, hypothecation, or other distribution or disposition thereof or of any
interest therein.
h. Such Shareholder understands that resale or transfer of the
L-Y Common Stock will be prohibited indefinitely unless either (i) the Company
causes the L-Y Common Stock to be registered under the Securities Act or, (ii)
an exemption from such registration is available and such resale or transfer
will not otherwise violate federal or state securities laws. Such Shareholder
further understands that a legend will be affixed to the certificates
representing the L-Y Common Stock setting forth the forgoing limitations.
4. Representation and Warranties by the Company. The Company
--------------------------------------------
represents, warrants and covenants to the Shareholders, all of which
representations and warranties shall be true as of the date of this Agreement
and at the time of the Closing Date and shall survive the Closing Date for a
period of two (2) years therefrom, that:
a. The Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware, is
qualified to conduct business in the State of New York and in any other
locations where the nature of its activities require such qualification, and has
the corporate power to own its properties and carry on its business as now being
conducted. As of the date of this Agreement, the Company has authorized capital
stock consisting of 7,500,000 shares of common stock, with a par value of $0.01,
of which 982,963 shares of common stock are presently issued and outstanding to
approximately 149 holders (such number does not include those beneficial owners
whose securities are held in street name) and no shares of preferred stock have
been issued. On or prior to the Closing Date, the Company will authorize
additional shares of common stock in order to permit the Company to issue the L-
Y Common Stock to the Shareholders on the Closing Date. On or prior to the
Closing Date, but prior to the closing of this Agreement, the Company shall have
authorized capital stock consisting of 50,000,000 shares of common stock, with a
par value of $0.001, of which 4,235,847 shares of common stock (other than the
L-Y Common Stock) shall be issued and outstanding to approximately 149 holders
(such number does not include those beneficial owners whose securities are held
in street name) and no shares of preferred stock shall have been issued. No
other securities of the Company, other than the above described shares, are or
will be issued, outstanding or agreed to be issued as of the date hereof and on
the Closing Date.
b. The Company has all of the necessary corporate power and
authority to execute, deliver and perform this Agreement and to issue and
deliver the L-Y Common Stock and any other shares of the Company's common stock
required to be delivered hereunder.
c. The financial statements of the Company prepared by Company
for the twelve months ended January 31, 1999, attached hereto as Schedule 4.c,
constitute true and correct statements as of such date of the financial
condition of the Company and of its assets, liabilities and income, prepared in
accordance with generally accepted accounting principles consistently applied
and that from such date and until the Closing Date, no dividends or
distributions of capital, surplus, or profits has been, or will be, paid or
declared by the Company (in redemption of its outstanding shares or otherwise)
and no additional shares have been, or will be, issued by the Company.
-3-
<PAGE>
d. Since January 31, 1999, the Company has not experienced any
material adverse changes with respect to its business condition (financial or
otherwise), results of operations, assets, contracts, liabilities or property.
e. The Company has complied, in all material respects, with the
terms and provisions of all agreements to which it is a party and all laws,
rules, regulations and orders or to which it or its assets are subject.
f. The Company has not violated any law, rule, regulation or
order, and is not involved in any pending or threatened litigation, which would
materially adversely affect its financial condition as shown by its balance
sheet dated January 31, 1999 (Schedule 4.c hereto), which has not been provided
for on such balance sheet, referred to in such balance sheet or disclosed, in
writing, to NOSP.
g. The Company shall not, from the date hereof through the
Closing Date, engage in any transaction other than transactions in the normal
course of the operation of its business, except as specifically authorized by
NOSP in writing.
h. The Company does not have, nor will it have on the Closing
Date any pension plan, profit sharing plan, or stock purchase plan for any of
its employees.
i. Neither the execution or delivery of this Agreement, nor the
issuance of the L-Y Common Stock or other shares to be issued hereunder, nor the
performance, observance or compliance with the terms and provisions of this
Agreement, will violate any provision of law, any order of any court or other
governmental agency, the Certificate of Incorporation or By-laws of the Company
or any indenture, agreement or other instrument to which the Company is a party,
or which the Company is bound or by which any of its property is bound.
j. The L-Y Common Stock deliverable hereunder will, upon their
delivery in accordance with the terms hereof, be duly authorized, validly
issued, fully paid and non-assessable.
k. All of the outstanding shares of common stock of the Company
are duly authorized, validly issued, fully paid and non-assessable. In 1969, the
Company made an initial public offering of 2,500,000 shares of common stock,
pursuant to which it issued 1,440,000 shares of common stock which were
registered under the Securities Act and the Securities Exchange Act of 1934, as
amended (the "Exchange Act"). The Company's stock is presently and will, as of
the Closing Date, be trading on the OTC Bulletin Board under the symbol "LWTN".
l. The Company and its subsidiaries, if any, have complied with
all applicable federal and state laws, rules and regulations, including, without
limitation, the requirements of the Exchange Act and the Securities Act.
m. [RESERVED]
n. As of the Closing Date, the Company will have paid all
outstanding obligations of the Company relating to sales tax, use tax, Social
Security Tax, Federal Income Withholding Tax, all Federal and State income tax,
workmen's compensation and unemployment compensation taxes of the Company.
o. The Company hereby acknowledges that the shares of NOSP to
be exchanged for the L-Y Common Stock are not registered under the Securities
Act or the laws of any other
-4-
<PAGE>
jurisdiction and are subject to restrictions on their transfer and resale under
applicable federal and state law.
p. The Company understands that (i) in agreeing to transfer
their NOSP Stock to the Company in the Exchange, the Shareholders are relying
upon an exemption from registration under the Securities Act, as set forth in
Section 4 thereof, which relate to private resales of restricted securities; and
(ii) the Shareholders are also relying upon the securities laws of any state on
the basis that the Exchange is an isolated transaction exempt from the
registration requirements of such laws.
q. That NOSP has made available to the Company the opportunity
to ask questions of and receive answers from NOSP concerning the terms and
conditions of the Exchange and to obtain any additional information from NOSP or
the Shareholders desired by the Company concerning NOSP or the Shareholders.
r. That the investment by the Company in the NOSP Stock is a
suitable investment for the Company, given the investment goals and objectives
of the Company.
s. The Company has such knowledge and experience in financial
and business matters that it is capable of evaluating the merits and risks of an
investment in the NOSP Stock. The Company understands the effect of accepting
the Exchange and the differing rights, restrictions and obligations of a holder
of NOSP Stock.
t. The Company has had access to and has thoroughly reviewed
all documents and instruments, including but not limited to the Certificate of
Incorporation, as amended, and the Bylaws of NOSP, and have been able to obtain
such information, and has had the opportunity to ask all questions of, and
receive answers from NOSP and the Shareholders, which it deems necessary or
relevant to an investment in the NOSP Stock and has utilized such opportunity to
the extent deemed necessary by the Company to allow it to make a fully informed
decision to purchase the NOSP Stock described herein. The Company acknowledges
that information previously provided to it by NOSP and/or the Shareholders
includes projections which have been utilized by NOSP and its Board for internal
planning and strategic purposes and such projections have not been prepared for
purposes of offering or selling securities to the Company or to others, that
actual operating results of NOSP will likely vary (possibly substantially) from
those reflected in any such projections, and that the Company has not relied
upon any such projections in making its decision to enter into this Agreement.
u. The Company is purchasing the NOSP Stock for its own
account, for investment purposes only, and not with a view to the sale, pledge,
hypothecation, or other distribution or disposition thereof or of any interest
therein.
v. The Company understands that resale or transfer of the NOSP
Stock will be prohibited indefinitely unless the NOSP Stock is registered under
the Act or an exemption from such registration is available and such resale or
transfer will not otherwise violate federal or state securities laws. The
Company further understands that a legend will be affixed to the certificates
representing the NOSP Stock setting forth the forgoing limitations.
w. The Company is domiciled and has its principle headquarters
in the State of New York.
x. The Company has relied solely upon written materials and
investigations made by the Company in making the decision to acquire the NOSP
Stock, and has not relied upon undocumented representations of NOSP or the
Shareholders.
-5-
<PAGE>
y. Certified copies of the Articles of Incorporation and the
By-Laws for the Company have heretofore been furnished by the Company to the
Shareholders and such documents are true and correct copies of the Articles of
Incorporation and the By-Laws of the Company and include all amendments thereto
through the date hereof.
5. Conditions to the Obligations of the Company. The obligations of
--------------------------------------------
the Company hereunder are subject to the following conditions:
a. The Company shall not have discovered any material error or
misstatement in any of the representations and warranties made by the
Shareholders or NOSP and all of the terms and conditions of this Agreement to be
performed and complied with prior to the Closing Date have been performed and
complied with on or prior to the Closing Date.
b. There have been no substantial adverse change in the
condition (financial, business or otherwise) of NOSP from the date hereof to the
Closing Date, except for changes resulting from operations in the usual and
ordinary course of business.
6. Conditions to the Obligations of the Shareholders and NOSP. The
----------------------------------------------------------
obligations of the Shareholders and NOSP hereunder are subject to the following
conditions:
a. The Shareholders or NOSP shall not have discovered any
material error or misstatement in any of the representations, warranties or
covenants made by the Company herein and all the terms and conditions of the
Agreement to be performed and complied with by the Company herein to the Closing
Date have been performed and complied with on or prior to the Closing Date.
b. There have been no substantial adverse changes in the
conditions (financial, business or otherwise) of the Company from January 31,
1999, to the Closing Date, except for (i) changes resulting from operations in
the usual and ordinary course of business and (ii) the sale of its business
assets in accordance with the terms of the Asset Purchase Agreement attached
hereto as Exhibit 6.b. by and between the Company and Joel Cavalier.
c. The Shareholders shall have received the opinion of G. David
Gordon & Associates, P.C., counsel for the Company, to the effect and in the
form described in Schedule 6.c hereto.
d. The responses of the Company to the Due Diligence Checklist,
in the form attached hereto as Exhibit 8.a.(7), and all exhibits, attachments
and disclosures thereto, shall have been received by the Shareholders and NOSP
and shall be satisfactory to the Shareholders and NOSP, in their sole and
absolute discretion.
e. The Company shall have properly taken such corporate action
as is required to amend its Certificate of Incorporation to change its name from
"The Lawton-York Corporation" to "AuctionAnything.com, Inc.", to increase its
authorized capital stock to 50,000,000 shares of common stock, and to reduce the
par value of such common stock to $0.001 per share; and the Company shall have
properly filed with the State of Delaware a Certificate of Amendment to its
Certificate of Incorporation to effect the foregoing amendments.
f. The Company shall have properly, and in accordance with all
applicable federal and state laws, statutes, rules, regulations and orders,
concluded its pending offering of securities under Rule 504 of Regulation D,
promulgated under the Securities Act.
-6-
<PAGE>
7. Closing Date. The closing shall take place on, or prior to,
------------
March 9, 1999 (the "Closing Date"), at the offices of Baker & Hostetler LLP, or
at such other time and place as the parties hereto shall mutually agree.
8. Actions at Closing. At closing, the Company and the Shareholders
------------------
will each deliver, or cause to be delivered to the other, the securities to be
exchanged in accordance with Section 1 of this Agreement, and each party shall
pay any and all taxes required to be paid in connection with the issuance and
delivery of its own securities. All share certificates shall be in the name of
the party to which the same are deliverable except the Shareholders' shares,
which shall be accompanied by a stock power executed in blank.
In addition, the following shall occur at Closing:
a. the Company will deliver to the Shareholders:
--------------------------------------------
(1) Duly certified copies of all corporate resolutions and
other corporate proceedings taken by the Company to authorize the execution,
delivery and performance of this Agreement.
(2) The opinion of G. David Gordon & Associates, P.C.,
counsel for the Company, as provided for in Section 6.c hereof.
(3) A Certificate executed by a principal officer and each
director of the Company attesting that all of the representations and warranties
of the Company are true and correct as of the Closing Date, and that all of the
conditions to the obligations for the Shareholders to be performed by the
Company have been performed as of the Closing Date.
(4) A Certificate of Incumbency and signatures of the
officers of the Company dated as of the date of this Agreement.
(5) The written resignations of all directors and such
officers and auditors of the Company as are required by the Shareholders, which
resignations will contain an acknowledgment from each of them that they have no
claims against the Company for loss of office, unpaid compensation, or
otherwise.
(6) All registration certificates, statutory books, minute
books and common seal of the Company, all accounts books and all documents and
papers in connection with the affairs of the Company and all documents of title
relating to the Company's assets (unless already in the possession of the
Shareholders) as are required by the Shareholders.
(7) The Due Diligence Checklist, the form of which is
attached hereto as Exhibit 8.a(7), executed by a principal officer and each
director of the Company attesting that all of the information, documents,
instruments, representations and disclosures are true, accurate, correct and
complete in all material respects as of the Closing Date.
(8) Duly certified copies of the Certificate of Amendment
of the Certificate of Incorporation of the Company, properly filed with the
State of Delaware, evidencing the change of its name from "The Lawton-York
Corporation" to "AuctionAnything.com, Inc.", the increase to its authorized
capital stock to 50,000,000 shares of common stock, and the reduction to the par
value of such common stock to $0.001 per share.
-7-
<PAGE>
b. The Shareholders will deliver to the Company:
--------------------------------------------
A Certificate of the Shareholders signed by each Shareholder
that each of the representations and warranties of the Shareholders are true and
correct as of the Closing Date and that all of the conditions to the obligations
of the Company to be performed by the Shareholders have been performed as of the
Closing Date.
c. NOSP will deliver to the Company:
--------------------------------
A Certificate executed by a principal officer of NOSP
attesting that all of the representations and warranties of NOSP are true and
correct as of the Closing Date, and that all the conditions to the obligations
for the Company to be performed by NOSP have been performed as of the Closing
Date.
9. Confidential Information; Delivery; Return; Non-Disclosure.
----------------------------------------------------------
a. Delivery of Information. Until the earlier of the Closing
-----------------------
Date or the termination of this Agreement (such date hereinafter the
"Termination Date"), pursuant to the terms of this Agreement:
(1) NOSP has provided and will provide the Company and its
officers, directors, employees, agents, counsel, accountants, financial
advisors, consultants and other representatives (together "Company
Representatives") with full access, upon reasonable prior notice, to all
officers, employees and accountants of NOSP and its subsidiaries and to their
assets, properties, contracts, books, records and all such other information and
data concerning the business and operations of NOSP as the Company
Representatives reasonably may request in connection with such investigation,
but only to the extent that such access does not unreasonably interfere with the
business and operations of NOSP.
(2) the Company has provided and will provide the
Shareholders and NOSP and its officers, directors, employees, agents, counsel,
accountants, financial advisors, consultants and other representatives (together
"NOSP Representatives") with full access, upon reasonable prior notice, to all
officers, employees and accountants of the Company and its subsidiaries and to
their assets, properties, contracts, books, records and all such other
information and data concerning the business and operations of the Company and
its subsidiaries as the NOSP Representatives reasonably may request in
connection with such investigation.
b. Acknowledgments; definitions:
----------------------------
(1) The Company has been and, pursuant to the terms of this
Section, shall continue to be privy to certain proprietary and confidential
information of NOSP and/or the Shareholders (the "NOSP Confidential
Information"). As used herein, the term "NOSP Confidential Information" shall
include, but not be limited to, any and all information or documentation
whatsoever which has been disclosed or made available to the Company by NOSP or
the Shareholders, regarding their products, services, techniques, manufacturing
or other processes, activities, businesses, properties, operations, clients,
customers, prospective clients, price lists, suppliers, business associates,
equipment, Trade Secrets (as defined herein), computer software, scientific
discoveries, experiments, data, equipment designs, training, devices, charts,
manuals, payroll, financial statements and improvements thereto and any other
information or materials disclosed or delivered to the Company which the
disclosing party may from time to time designate and treat as confidential,
proprietary or as a trade secret, including all information relating (directly
or indirectly) to the material set forth in the NOSP business plan delivered
-8-
<PAGE>
or to be delivered to the Company and all other information defined as "high
technology" by applicable Florida law.
(2) NOSP and/or the Shareholders have been and, pursuant
to the terms of this Section, shall continue to be privy to certain proprietary
and confidential information of the Company (the "Company Confidential
Information") As used herein, the term "Company Confidential Information" shall
include, but not be limited to, any and all information or documentation
whatsoever which has been disclosed or made available to NOSP and/or the
Shareholders regarding its products, services, techniques, manufacturing or
other processes, activities, businesses, properties, operations, clients,
customers, prospective clients, price lists, suppliers, business associates,
equipment, Trade Secrets (as defined herein), computer software, scientific
discoveries, experiments, data, equipment designs, training, devices, charts,
manuals, payroll, financial statements and improvements thereto and any other
information or materials disclosed or delivered to NOSP and/or the Shareholders
which the disclosing party may from time to time designate and treat as
confidential, proprietary or as a trade secret.
(3) Reference to "Confidential Information" herein shall
include and relate to both NOSP Confidential Information and the Company
Confidential Information.
(4) As used herein, the term "Trade Secret" shall mean the
whole or any portion of any formula, pattern, device, combination of devices, or
compilation of information which is for use, or is used in the operation of the
other party's businesses and which provides such party's business an advantage,
or an opportunity to obtain an advantage, over those who do not know or use it.
For purposes of interpretation hereunder the following shall apply:
Irrespective of novelty, invention, patentability, the state
of the prior art, and the level of skill in the business,
art or field to which the subject matter pertains, when the
owner thereof takes measures to prevent it from becoming
available to persons other than those selected by the owner
to have access thereto for limited purposes, a trade secret
is considered to be secret, of value, for use or in use by
the business, and of advantage to the business, or providing
an opportunity to obtain an advantage, over those who do not
know or use it.
In addition, a "Trade Secret" shall include
information (not readily compiled from publicly available sources) which has
been made available by NOSP and/or the Shareholders to the Company or by the
Company to NOSP and/or the Shareholders, as the case may be, during the course
of their involvement with each other, including but not limited to the names,
addresses, telephone numbers, qualifications, education, accomplishments,
experience and resumes of all persons who have applied or been recruited for
employment, for either or both permanent and temporary jobs, job order
specifications and the particular characteristics and requirements of persons
generally hired by the disclosing party, as well as specific job listings from
companies with whom the disclosing party does, or attempts to do, business, as
well as mailing lists, computer runoffs, financial or other information not
generally available to others.
c. Non-Disclosure; the Company:
---------------------------
(1) The Company, for itself, its officers, employees,
directors, agents, affiliates, subsidiaries, independent contractors, and
related parties (all of whom are to be deemed included in any reference herein
to the Company) agrees that it will not at any time during or after the
termination or expiration of this Agreement, except as authorized or directed
herein or in writing by NOSP and/or the Shareholders, use for the Company's own
benefit, copy, reveal, sell, exchange or give
-9-
<PAGE>
away, disclose, divulge or make known or available in any manner to any person,
firm, corporation or other entity (whether or not the Company receives any
benefit therefrom), any NOSP Confidential Information.
(2) The Company will take all actions necessary to ensure
that the NOSP Confidential Information is maintained as secret and confidential
and its disclosure shall only be made, to the extent necessary, to a limited
group of the Company's employees, officers and/or directors who are actually
engaged in the evaluation of the NOSP Confidential Information; provided,
--------
however, the Company acknowledges and agrees that it shall be responsible and
- -------
held liable for the actions or inactions of such employees, officers and
directors (regardless whether or not such actions or inactions are within their
scope of employment) with respect to the maintenance of the secrecy and
confidentiality of the NOSP Confidential Information.
(3) The Company understands that if it discloses to
others, use for its own benefit (other than as part of an agreement with NOSP
and the Shareholders, which contemplates such use) or for the benefit of any
person or entity other than NOSP and/or the Shareholders, copies or makes notes
of any such NOSP Confidential Information, such conduct will constitute a breach
of the confidence and trust bestowed upon the Company by NOSP and the
Shareholders and will constitute a breach of this Agreement and render the
Company responsible for any and all damages suffered by NOSP and/or the
Shareholders as a result thereof.
(4) Provided, however, notwithstanding the foregoing, the
-------- -------
terms of this subsection (c) shall not be applicable to any information which
the Company is compelled to disclose by judicial or administrative process or by
other requirements of law (including, without limitation, in connection with
obtaining the necessary approvals of the Exchange of governmental or regulatory
authorities).
d. Non-Disclosure; NOSP and the Shareholders:
-----------------------------------------
(1) NOSP and the Shareholders, for themselves, their
officers, employees, directors, agents, affiliates, subsidiaries, independent
contractors, and related parties (all of whom are to be deemed included in any
reference herein to NOSP and the Shareholders) agree that they will not at any
time during or after the termination or expiration of any agreement or
negotiations for an agreement with the Company, except as authorized or directed
herein or in writing by the Company, use for NOSP and the Shareholders' own
benefit, copy, reveal, sell, exchange or give away, disclose, divulge or make
known or available in any manner to any person, firm, corporation or other
entity (whether or not NOSP and the Shareholders receive any benefit therefrom),
any Company Confidential Information.
(2) NOSP and the Shareholders will take all actions
necessary to ensure that the Company Confidential Information is maintained as
secret and confidential and its disclosure shall only be made, to the extent
necessary, to a limited group of NOSP and/or the Shareholders' own employees,
officers and/or directors who are actually engaged in the evaluation of the
Company Confidential Information; provided, however, NOSP and the Shareholders
-------- -------
acknowledge and agree that they shall be responsible and held liable for the
actions or inactions of such employees, officers and directors (regardless
whether or not such actions or inactions are within their scope of employment)
with respect to the maintenance of the secrecy and confidentiality of the
Company Confidential Information.
(3) NOSP and the Shareholders understand that if they
disclose to others, uses for their own benefit (other than as part of an
agreement with the Company, which contemplates such use) or for the benefit of
any person or entity other than the Company, copies or makes
-10-
<PAGE>
notes of any such Company Confidential Information, such conduct will constitute
a breach of the confidence and trust bestowed upon NOSP and the Shareholders by
the Company and will constitute a breach of this Agreement and render NOSP and
the Shareholders severally responsible for any and all damages suffered by the
Company as a result thereof.
(4) Provided, however, notwithstanding the foregoing, the
-------- -------
terms of this subsection (d) shall not be applicable to any information which
the NOSP and /or the Shareholders are compelled to disclose by judicial or
administrative process or by other requirements of law (including, without
limitation, in connection with obtaining the necessary approvals of the Exchange
of governmental or regulatory authorities).
e. Return of Information:
---------------------
(1) At any time after the Termination Date, upon request
of NOSP or any Shareholder, the Company will, and will cause the Company
Representatives to, promptly (and in no event later than five days after such
request) redeliver or cause to be redelivered to NOSP all NOSP Confidential
Information and destroy or cause to be destroyed all notes, memoranda,
summaries, analyses, compilations and other writings relating thereto or based
thereon prepared by the Company or any Company Representative. An authorized
officer supervising such destruction shall certify such destruction in writing
to NOSP.
(2) At any time after the Termination Date, upon request
of the Company, the Shareholders and/or NOSP will, and will cause the NOSP
Representatives to, promptly (and in no event later than five days after such
request) redeliver or cause to be redelivered to the Company all Company
Confidential Information and destroy or cause to be destroyed all notes,
memoranda, summaries, analyses, compilations and other writings relating thereto
or based thereon prepared by a Shareholder, NOSP or NOSP Representatives. An
authorized officer supervising such destruction shall certify such destruction
in writing to the Company.
10. Equitable Relief. The Company and the Shareholders agree that
----------------
money damages would not be a sufficient remedy for any breach of any provision
set forth in Section 9 by the other, and that, in addition to all other remedies
which any party hereto may have, each party will be entitled to specific
performance and injunctive or other equitable relief as a remedy for any such
breach. No failure or delay by any party hereto in exercising any right, power
or privilege hereunder will operate as a waiver thereof, nor will any single or
partial exercise thereof preclude any other or further exercise thereof or the
exercise of any right, power or privilege hereunder.
11. Conduct and Business.
--------------------
a. Between the date hereof and the Closing Date, NOSP shall
conduct its business in the same manner in which it has heretofore been
conducted, and the Shareholders will not permit NOSP to (1) enter into any
contract, agreement, arraignment, etc., other than in the ordinary course of
business, or (2) declare or make any distribution of any kind to the
shareholders of NOSP without first obtaining the written consent of the Company.
b. Between the date hereof and the Closing Date, the Company
shall conduct its business in the same manner in which it has heretofore been
conducted, and the Company will not (1) enter into any contract, agreement,
arraignment, etc., other than in the ordinary course of business, or (2) declare
or make any distribution of any kind to the shareholders of the Company without
first obtaining the written consent of NOSP. Further, also during such time
period, the Company hereby agrees that neither the Company nor any of its
affiliates or associates (as such terms are defined in Rule 12b-2
-11-
<PAGE>
under the Exchange Act) will, and the Company and they will not assist or
encourage others to, directly or indirectly, (1) sell or dispose of or agree,
offer, seek or propose to sell or dispose of (or request permission to do so
from any person) ownership (including, but not limited to, beneficial ownership
as defined in Rule 13d-3 under the Exchange Act) of (x) any of the assets or
business of the Company, (y) any securities of the Company (whether outstanding
or to be issued) or (z) any rights or options to acquire such ownership
(including to or from a person other than the Company), or (2) enter into any
discussions, negotiations, arrangements or understandings with any person or
entity with respect to any of the foregoing. The restrictions contained in the
forgoing sentence shall not be applicable to ordinary brokerage or trading
transactions by a securities broker or dealer or purchases by an institutional
investor solely for investment purposes aggregating less than 5% of the
Company's outstanding voting securities.
12. No Public Disclosure.
--------------------
a. NOSP and the Shareholders hereby acknowledge that they
are aware (and that the NOSP Representatives who have been apprised of this
Agreement and the Shareholders' consideration of the Exchange have been, or upon
becoming so apprised will be, advised) of the restrictions imposed by federal
and state securities laws on a person possessing material nonpublic information
about a company with a class of securities registered under the Exchange Act. In
this regard, each such Shareholder agrees that while it is in possession of
material nonpublic information with respect to the Company and its subsidiaries,
the Shareholder will not purchase or sell any securities of the Company, or
communicate such information to any third party, in violation of any such laws.
b. Without the prior written consent of the other,
neither the Shareholders or NOSP, on the one hand, nor the Company, on the
other, will, and will each cause their respective representatives not to, make
any release to the press or other public disclosure with respect to either the
fact that discussions or negotiations are taking place concerning the Exchange,
the existence or contents of this Agreement or any prior correspondence relating
to this transaction, except for such public disclosure as may be necessary, in
the written opinion of outside counsel (reasonably satisfactory to the other
party) for the party proposing to make the disclosure not to be in violation of
or default under any applicable law, regulation or governmental order. If either
party proposes to make any disclosure based upon such an opinion, that party
will deliver a copy of such opinion to the other party, together with the text
of the proposed disclosure, as far in advance of its disclosure as is
practicable, and will in good faith consult with and consider the suggestions of
the other party concerning the nature and scope of the information it proposes
to disclose.
13. Brokerage Fee. Each party hereto represents that no brokers
-------------
have been employed in this transaction for which the other party could or will
become liable.
14. Agreement to Indemnify. Subject to the terms and conditions
----------------------
of this Section, the Company hereby agrees to indemnify, defend and hold NOSP
and the Shareholders harmless from and against all demands, claims, actions or
causes of action, assessments, losses, damages, liabilities, costs and expenses,
including without limitation, interest, penalties, court costs and reasonable
attorneys fees (including paralegal and law clerk fees and other legal expenses
and costs) and expenses, asserted against, relating to, imposed upon or incurred
by NOSP or the Shareholders by reason of or resulting from a breach of (i) any
representation or warranty given by the Company contained in or made pursuant to
this Agreement, or (ii) any provision set forth in this Agreement by the
Company.
Subject to the terms and conditions of this Section, NOSP
hereby agrees to indemnify, defend and hold the Company harmless from and
against all demands, claims, actions or causes of action, assessments, losses,
damages, liabilities, costs and expenses, including without limitation,
interest, penalties, court costs and reasonable attorneys' fees (including
paralegal and law clerk
-12-
<PAGE>
fees and other legal expenses and costs) and expenses, asserted against,
relating to, imposed upon or incurred by the Company by reason of or resulting
from a breach of (i) any representation or warranty given by NOSP contained in
or made pursuant to this Agreement, or (ii) any provision set forth in this
Agreement by the Shareholders or NOSP.
All of the foregoing are hereinafter collectively referred to as
"Claims" and singularly as a "Claim."
a. Conditions of Indemnification. The obligations and
-----------------------------
liabilities of NOSP and the Company with respect to Claims resulting from the
assertion of liability by third parties shall be subject to the following terms
and conditions:
(1) The party hereto seeking indemnification (the
"Indemnitee") will give the other party hereto (the "Indemnitor") notice of any
such Claim reasonably promptly after the Indemnitee receives notice thereof, and
the Indemnitor will undertake the defense thereof by representatives of its own
choosing.
(2) In the event that the Indemnitor, within ten (10)
business days after notice of any such Claim, fails to defend such Claim, the
Indemnitee will (upon giving written notice to the Indemnitor) have the right,
but not the obligation, to undertake the defense, compromise or settlement of
such Claim on behalf of and for the account and risk of the Indemnitor, subject
to the right of the Indemnitor to assume the defense of such Claim at any time
prior to settlement, compromise or final determination thereof.
(3) Anything in this Section to the contrary
notwithstanding, if there is a reasonable probability that a Claim may
materially and adversely affect the Indemnitee other than as a result of money
damages or other money payments, the Indemnitee shall have the right to defend,
compromise or settle such Claim, in good faith, on behalf of and for the account
and risk of the Indemnitor. However, the Indemnitee shall not, without the
Indemnitor's written consent, settle or compromise any Claim or consent to entry
of any judgment which does not include an unconditional release from all
liability in respect of such Claim, other than liability specified in the
settlement, from the claimant or plaintiff to the Indemnitor and the Indemnitee.
To the greatest extent reasonably possible, the parties shall attempt to obtain
general releases from such plaintiff or claimant.
15. Cost and Expenses. Each party hereto shall pay its own costs and
-----------------
expenses incident to the negotiation and preparation of this Agreement and to
the consummation of the transaction contemplated herein.
16. Miscellaneous.
-------------
a. Waiver; Strict Construction. No change or modification of
---------------------------
this Agreement shall be valid unless the same is in writing and signed by all
the parties hereto. No waiver of any provision of this Agreement shall be valid
unless in writing and signed by the person against whom sought to be enforced.
The failure of any party at any time to insist upon strict performance of any
condition, promise, agreement or understanding set forth herein shall not be
construed as a waiver of relinquishment of the right to insist upon strict
performance of the same condition, promise, agreement or understanding at a
future time.
b. Entire Agreement. This Agreement, together with all
----------------
schedules and exhibits, sets forth all of the promises, agreements, conditions,
understandings, warranties and representations among the parties hereto, and
there are no promises, agreements, conditions,
-13-
<PAGE>
understandings, warranties or representations, oral or written, express or
implied, among them other than as set forth herein. This Agreement is, and is
intended by the parties to be, an integration of any and all prior agreements or
understandings, oral or written, between the Company and NOSP.
c. Headings. The headings in this Agreement are inserted for
--------
convenience of reference only and are not to be used in construing or
interpreting the provisions of this Agreement.
d. Counterparts. This Agreement may be executed in two or more
------------
identical counterparts, each of which will be deemed an original and all of
which will constitute one instrument.
e. Construction. Unless the context clearly otherwise requires
------------
the use of the singular will include the plural and the use of the plural will
include the singular, and the use of any gender will include the other two
genders.
f. Severability. If a covenant or provision provided in this
------------
Agreement is deemed to be contrary to law, that covenant or provision will be
deemed separable from the remaining covenants and provisions of this Agreement,
and will not affect the validity, interpretation, or effect of the other
provisions of either this Agreement or any agreement executed pursuant to it or
the application of that covenant or provision to other circumstances not
contrary to law.
g. Computation of Time. Whenever the last day for the exercise
-------------------
of any privilege or the discharge of any duty hereunder falls upon Saturday,
Sunday, or any public or legal holiday, whether Florida or federal, the party
having the privilege or duty will have until 5:00 p.m. Eastern Standard Time on
the next succeeding regular business day to exercise the privilege or discharge
the duty.
h. Interpretation. No provision of this Agreement will be
--------------
construed against or interpreted to the disadvantage of any party by any court
or other governmental or judicial authority by reason of such party having or
being deemed to have structured or dictated such provision.
i. Governing Law. This Agreement and the obligations of the
-------------
parties hereunder will be interpreted, construed, and enforced in accordance
with the Laws of the State of Florida, and the parties hereto specifically
consent to the jurisdiction and venue of the courts in Orange County, Florida.
j. Attorneys' Fees. In the event a lawsuit is brought by either
---------------
party to enforce or interpret the terms hereof, or for any dispute arising out
of this transaction, the party prevailing in any such lawsuit shall be entitled
to recover from the non-prevailing party its costs and expenses thereof,
including its legal fees in reasonable amount and prejudgment and post-judgment
interest at the highest rate allowable under Florida law.
k. Assignment. This Agreement shall not be assignable by either
----------
party without the prior written consent of the other.
l. Notices. All notices, requests, instructions or other
-------
documents to be given hereunder shall be in writing and sent by registered mail:
If to the
Shareholders then: To the names and addresses set out on the
signature page under the heading "Shareholders."
-14-
<PAGE>
If to NOSP, then: North Orlando Sports Promotions, Inc.
550 Devonshire Boulevard
Longwood, Florida 32750
Attn: President
with copies to: Baker & Hostetler LLP
200 S. Orange Ave., Suite 2300
Orlando, Florida 32801
Attn: Kenneth C. Wright, Esq.
If to the Company, then: The Lawton-York Corporation
65-55 Woodhaven Boulevard
Flushing, New York 11374-5097
Attn: President
with copies to: Matthew J. Cavalier, Esq.
65-55 Woodhaven Boulevard
Flushing, New York 11374-5097
m. Benefit and Burden. This Agreement shall inure to the
------------------
benefit of, and shall be binding upon, the parties hereto and their legatees,
distributees, estates, executors or administrators, successors and assigns, and
personal and legal representatives.
[THIS SPACE INTENTIONALLY LEFT BLANK]
-15-
<PAGE>
IN WITNESS WHEREOF, on the date first written above, the parties
hereto have duly executed this Agreement and the Company and NOSP have caused
their corporate seal to be affixed hereto as of the date and year first above
written.
"COMPANY"
THE LAWTON-YORK CORPORATION,
a Delaware corporation
By: /s/ Joel E. Cavalier
--------------------------------
Joel E. Cavalier, President
ATTEST:
/s/ Nancy Scalia-Dunn
- ----------------------------------
Nancy Scalia-Dunn, Secretary
"NOSP"
NORTH ORLANDO SPORTS PROMOTIONS,
INC., a Florida corporation
By: /s/ Raymond J. Hotaling
--------------------------------
Raymond J. Hotaling, President
ATTEST:
/s/ Dennis A. Kurir
- ----------------------------------
CEO
"SHAREHOLDERS"
/s/ Raymond J. Hotaling
------------------------------------
Raymond J. Hotaling, Shareholder
/s/ Dennis A. Kurir
------------------------------------
Denny Kurir, Shareholder
/s/ Martin M. Meads
------------------------------------
Martin Meads, Shareholder
-16-
<PAGE>
SCHEDULE 6.c
March 9, 1999
North Orlando Sports Promotions, Inc.
Raymond J. Hotaling
Denny Kurir
Martin M. Meads
550 Devonshire Boulevard
Longwood, FL 32750
Re: Acquisition Agreement, dated February 18, 1999 (the "Agreement"),
among The Lawton-York Corporation (now known as AuctionAnything.com,
Inc.), a Delaware corporation (the "Company"), North Orlando Sports
Promotions, Inc., a Florida corporation ("NOSP"), and Raymond J.
Hotaling, Denny Kurir, and Martin M. Meads, the shareholders of NOSP
(the "Shareholders").
Gentlemen:
I have acted as counsel to the Company in connection with the (i) execution
and delivery of the Agreement and (ii) consummation of the transactions
contemplated thereby. All capitalized terms used herein which are defined in
the Agreement and are not otherwise defined herein shall have the respective
meanings ascribed to them in the Agreement. As used herein, "Shares" shall mean
the shares of common stock of the Company issued to the Shareholders at the
Closing, as contemplated by the Agreement.
As a basis for rendering the opinions contained herein, I advise you that I
have examined (i) the Agreement (and the attachments thereto), (ii) the
documents referenced in the Agreement (together with the Agreement, the
"Documents"), (iii) the Due Diligence Checklist prepared by the Company (and the
exhibits and attachments thereto), (iv) originals or copies certified to my
satisfaction of the Certificate of Incorporation and all amendments thereto (as
amended, the "Certificate") and the by-laws of the Company (as amended, the "By-
Laws"), and (v) other corporate records, documents and instruments of the
Company and certificates of public officials and officers of the Company, as I
have deemed necessary for purposes of rendering my opinions.
I also have assumed the due execution and delivery by, and enforceability
against, NOSP and the Shareholders of all of the instruments executed and
delivered by them under the Agreement.
<PAGE>
North Orlando Sports Promotions, Inc.
Raymond J. Hotaling
Denny Kurir
Martin M. Meads
March 9, 1999
Page 2
- -------------------------------------
Based upon the foregoing and in reliance thereon, and subject in all
respects to the qualifications and limitations set forth herein, I am of the
opinion that:
1. The Company is duly organized, validly existing and in good
standing under the laws of Delaware, has full power and authority (corporate and
otherwise) to own, lease and operate its properties and conduct its business,
and is duly qualified as a foreign corporation for the transaction of business
and is in good standing in the State of New York and in each other jurisdiction
where the conduct of its business makes such qualification necessary.
2. The Company has full right, power and authority to enter into the
Agreement and to perform all of its obligations thereunder or contemplated
thereby.
3. The authorized capital stock of the Company (after giving effect
to the transactions contemplated by the Agreement) consists of 50,000,000 shares
of common stock with a par value of $0.001 ("Common Stock"). Each Share has
been duly and validly issued and is fully paid and nonassessable. There exist
no liens, charges, claims, encumbrances, or restrictions (other than those
required by applicable securities laws) with respect to the Shares. The Company
has paid all transfer taxes, if any, in respect of the issuance of the Shares.
No holder of any of the Shares will be subject to personal liability by reason
of being such a holder. None of the Shares are subject to preemptive or any
other similar rights of the shareholders of the Company. Other than those which
have been disclosed in writing to the Shareholders, there are no outstanding
warrants, options, agreements, convertible securities, preemptive rights or
other commitments pursuant to which the Company is, or may become, obligated to
issue any shares of its Common Stock or other capital stock or other securities
of the Company.
4. The Agreement has been duly authorized, executed and delivered by
the Company and is the valid and legally binding obligation of the Company and
is enforceable in accordance with its terms, except as enforceability may be
limited by bankruptcy, insolvency, reorganization or other similar laws
affecting the enforcement of creditors' rights generally, general principles of
equity and the valid exercise of police power.
5. Neither the (i) execution and delivery of the Documents, (ii)
compliance with the terms thereof, nor (iii) consummation of the transactions
contemplated thereby conflicts with, results in a breach of or constitutes a
default under the Certificate or the By-Laws of the Company or any other
agreement to which the Company is a party or any order, judgement, instrument,
or decree applicable to it or under which it or its properties are bound.
6. The Company is not in violation or breach of: (i) the Certificate
or the By-Laws; (ii) any indenture, mortgage, deed of trust, note or other
agreement or instrument to which the Company is a party or by which it is or may
be bound or to which any of its assets, properties
<PAGE>
North Orlando Sports Promotions, Inc.
Raymond J. Hotaling
Denny Kurir
Martin M. Meads
March 9, 1999
Page 3
- -------------------------------------
or businesses may be subject; (iii) any statute, rule, regulation or ordinance;
or (iv) any judgment, decree, or order applicable to the Company. There are no
legal or regulatory, administrative or governmental charges, actions, suits,
proceedings, claims, hearings or any investigations, before or by any court,
governmental authority, or instrumentality (or any state of facts which would
give rise to thereto) pending or threatened against the Company, or involving
its assets or properties or any of its officers or directors.
7. The disclosures provided to the Shareholders and NOSP in the
Company's responses to the Due Diligence Checklist and in other documents
provided by the Company (the "Responses") are accurate in all material respects,
and such Responses fairly present in all material respects the information
required to be disclosed. There are no contracts or other documents of a
character required to be described or referred to in the Responses other than
those described or referred to therein. No default exists in the due
performance or observance of any term, covenant or condition of the contracts,
agreements or documents referred to in the Responses to which the Company is
party or by which the Company is bound or to which any of its assets, properties
or businesses is subject. I am familiar with all contracts and other documents
referred to in the Responses and have participated in the preparation of the
Responses and conferences of the Company, and nothing has come to my attention
to cause me to have reason to believe that the Responses contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein not misleading.
For the purposes of this opinion, I have assumed the following:
1. All parties other than the Company have the power (corporate or
otherwise) to enter into and perform all obligations under the Documents
executed, completed and delivered by them.
2. Due authorization by all requisite action, corporate or otherwise,
of the execution and delivery of the Documents and due and proper execution,
delivery, validity and binding effect thereof, in each case by and against all
parties other than the Company.
3. All parties other than the Company are duly organized, validly in
existence and in good standing in their respective jurisdictions of
incorporation or formation.
4. The due execution of all Documents, the genuineness of all
signatures, the legal capacity of natural persons, the authenticity of all
documents submitted to me as originals, the conformity with the original
documents of all documents submitted to us as and represented to be certified,
photostatic, reproduced or conformed copies of valid existing agreements or
other documents, and the authenticity of all such documents.
<PAGE>
North Orlando Sports Promotions, Inc.
Raymond J. Hotaling
Denny Kurir
Martin M. Meads
March 9, 1999
Page 4
- -------------------------------------
The opinions expressed herein are made as of the date hereof and I
undertake no obligation to inform you of any changes, legal or factual, which
occur or which may come to my attention after the date hereof and which might
impact the opinions herein set forth.
In rendering this opinion, I am not expressing any opinion with respect to
(i) any statute, law, ordinance, rule or regulation, or (ii) any notice to,
filing with, or permit, authorization or approval of, any court, agency or body,
in each case other than those of the United States of America and the States of
Delaware and New York. I assume no responsibility with respect to the
application to the transaction described herein, or the effect thereon, of the
statutes, laws, ordinances, rules and regulations of any other jurisdiction.
This opinion is rendered only to you and is solely for your benefit in
connection with the above-referenced transaction. This opinion may not be
relied upon by you for any other purpose or furnished to or relied upon by any
other person, firm or corporation for any purpose without my prior written
consent.
Very truly yours,
Matthew J. Cavalier, Esq.
<PAGE>
EXHIBIT 8.(a)7
DUE DILIGENCE CHECKLIST
ACQUISITION OF
THE LAWTON-YORK CORPORATION (the "COMPANY")
Set forth below is a schedule of information, documents, instruments,
representations and disclosures required from THE LAWTON-YORK CORPORATION for
our due diligence investigation relating to the potential merger of THE LAWTON-
YORK CORPORATION with NORTH ORLANDO SPORTS PROMOTIONS, INC. Please provide all
such information requested as an attachment to this checklist by referring to
each related paragraph, section and subsection, as indicated below. If any item
set forth below is not applicable to The Lawton-York Corporation, please mark
"N/A" on your response letter after the corresponding section and subsection
numbers. If a response is "none," please so state.
I. CORPORATE ORGANIZATION
----------------------
1. Certificate of Good Standing for the Company.
2. Certified copy of the Company's Articles of Incorporation
(including all amendments).
3. Copy of the Company's Bylaws.
4. Copy of the corporate record books of the Company including copies
of minutes of all meetings of Directors, Shareholders, and Committees
of the Board of Directors.
5. Certificates of Qualification from all states in which the Company
conducts business.
6. Copies of records of any related or affiliated entities.
7. Copies of any reports prepared by management of the Company for
presentation to the Board of Directors since January of 1994.
8. Names under which the business is and has been conducted.
9. Resumes of the officers, directors, key personnel and five percent
shareholders (principal shareholders), with a minimum of five years of
background for each.
10. Descriptions of all mergers, acquisitions, or other transactions
in which other existing businesses were acquired.
11. Descriptions of all transactions in which any subsidiaries,
divisions, or substantial assets and equipment were sold or otherwise
transferred.
12. All specific and/or general plans or agreements for future
acquisitions or dispositions.
-1-
<PAGE>
II. THE COMPANY
-----------
1. A schedule of information for the Company, including a brief
business description, major products or services of the Company, a
list of the jurisdictions where the Company is qualified to do
business, and the jurisdictions where the Company owns or leases
properties or maintains an office.
2. A copy of any existing business plan.
3. Copies of any studies, reports, or analyses of the Company, its
services, products, business strategies, acquisitions or prospectus
prepared by the Company, management consultants, financial concerns,
or others within the past three (3) years.
4. List of all customers which, during the most recent three (3)
fiscal years, accounted for five percent (5%) or more of the Company's
revenues, and the amount and percentage of revenues to each on an
annual basis.
5. List of all suppliers which, during the most recent three (3)
fiscal years, accounted for five percent (5%) or more of the Company's
purchase of products, supplies, equipment or parts, showing how much
is purchased annually from each supplier and the total amount
purchased by the Company for the last three (3) fiscal years.
6. Catalogues, advertising and other product/service literature.
7. Copies of press releases disseminated by the Company for the last
three (3) years.
8. A complete description of present and projected research and
development activities.
9. Copies of all patents, technical information, trade marks, trade
names, franchises, copyrights, trade secrets, technology and licenses
used by the Company or owned by it or any of its principals or
subsidiaries.
10. Copies of all major contracts entered into by the Company.
11. Description of the nature of the Company's business or businesses.
12. Description of proposed changes and emphasis in direction of
business.
13. Description of all geographical areas served by the Company.
14. Description and disclosure of intentions to enlarge present area
of distribution and/or service and manner in which such expansion is
to be conducted.
15. Disclosure of the method of distribution, service and sales of the
Company.
16. Copies of all written agreements relating to the Company's
distribution, service and sales, including any distributorship
agreements, licensing arrangements and contracts with sales persons,
franchisees and/or representatives.
-2-
<PAGE>
17. Disclosure of the likelihood that any product of any supplier
could no longer be readily procurable from such supplier and the
effect on the Company.
18. Disclosure of any current or foreseen dependency upon a single
source of product, raw material or service.
19. Disclosure of whether or not the services of subcontractors or
processors are utilized for the Company's products or sub-assembly
components and the availability of substitutes.
20. Disclosure of whether or not there are any long-term contracts
with any third parties.
21. A list of competitors and their principal products or services
and a description of the nature of the competition.
22. The Company's approximate rank, if any, in the industry for any
total revenues, and whether the Company is a significant factor in
these industries.
23. Disclosure of the extent to which competitors are currently or
foreseen to be better established, better known or possess greater
financial and technical resources.
24. Disclosure of the ease, or difficulty, of entry into the
Company's principal fields of business.
III. SECURITIES AND PUBLIC REPORTS
-----------------------------
1. Stock transfer ledger.
2. Federal and state securities registrations and filings, including
but not limited to registration statements, Form 10-KSB's, Form 10-
QSB's, Form 8-K's, Form 3's, Form 4's, Form 5's, Schedule 13D's, and
Schedule 13G's.
3. A summary of all outstanding securities, including any stock
options and warrants, together with copies of documentation and
agreements evidencing same. In addition to the foregoing, please
indicate the number of authorized and outstanding securities; the
total number of holders; a list of holders; the names, resident
addresses, and holdings of the 10 largest holders; and the total
amount of shares reserved for the exercise of warrants, options, or
for the conversion of any security.
4. Copies of any shareholder agreements, voting trust agreements,
registration rights agreement or similar arrangements.
5. Specimen copies of all outstanding and authorized equity and debt
securities, including any warrants or options.
6. A description of any and all private placements, public sales or
other offerings or sales of the Company's securities. Please include
in such description copies of all relevant documents, the names and
occupations of the purchasers or offerees, as the case
-3-
<PAGE>
may be, the related dates of such transactions and all other material
and information related there to.
7. Disclosure of any private placements or public offerings
contemplated for the future.
IV. FINANCIAL, ACCOUNTING MATTERS AND REPORTS
-----------------------------------------
1. Copies of the Company's federal income tax returns for the past
three (3) fiscal years.
2. Copies of the Company's audited and unaudited financial statements
(balance sheets, profit and loss statements, related statements of
stockholders' equity and cash flow, etc.) for the last three (3)
years, including interim statements prepared by the Company or
management for review by the Board of Directors.
3. A schedule of contingent liabilities and obligations of the
Company not appearing on the current balance sheet, including
unasserted and/or threatened claims, leases, letters of credit, etc.
4. Copies of any IRS or other tax rulings relating to the Company,
its products, services, properties, acquisitions, or other similar
transactions or reorganizations.
5. An aging of accounts receivable and payable, including any loans
made to, or by, the Company during the past three (3) years, together
with all relevant documentation.
6. Depreciation Schedule.
7. Responses of counsel to auditors' inquiries.
8. Copies of management letters for the three (3) most recent fiscal
years.
9. Description of any long-term or short-term debt of the Company and
disclosure of whether or not any such debt has been guaranteed. If
guaranteed, describe by whom and the relationship of the guarantors to
the Company.
10. Disclosure of whether or not the Company is a guarantor of any
obligation. If so, description of the related debtors and creditors
and the circumstances relating to the guaranty.
11. An explanation of any abnormal, non-recurring, or unusual items
in the Company's financial statements.
12. Information regarding any contingent or possible liabilities not
shown on the balance sheet.
13. A schedule of inventory.
14. A detailed statement regarding the source and application of
funds.
15. Disclosure of whether or not the Company auditors are
independent.
-4-
<PAGE>
16. Disclosure of any change in accounting methods or treatment in
the past three (3) years.
17. Detailed schedule for a two (2) year breakdown of the sales, the
cost of sales, and the income or loss of each major division,
department, and product or service category of the Company.
18. Disclosure of all projected sales and earnings for the next three
(3) years, together with explanations or any anticipated increases or
decreases.
19. A statement of cash flow, if materially different from the
statement of net earnings.
20. Disclosure of any policies regarding depreciation, depletion,
amortization, items capitalized, items expensed and whether there are
any differed right-offs.
21. Disclosure of the status of any federal, state and/or local tax
examinations and the date of the most recent tax audit, the years
covered and any open questions relating thereto.
22. Disclosure of any change of, or disagreement with, any auditors
in the past three (3) years, and if so, why.
V. ASSETS AND PROPERTIES
---------------------
1. List of all material assets of the Company, whether tangible or
intangible, including, without limitation, all real property,
equipment, supplies, and inventories.
2. Copies of the lease, if any, relating to the Company's current
location and leases for any other properties occupied by the Company.
3. Copies of all leases which relate to properties or other assets
leased by the Company to third parties.
4. If the Company owns its properties, copies of the closing
documents obtained in connection therewith (i.e., title policy, deed,
closing statement, appraisal, survey, etc.).
5. Copies of any leases of equipment, computers, or other personal
property.
6. Copies of environmental filings, reports and audits.
7. List of all bank accounts.
8. Schedule of all assets owned by the Company.
9. Schedule and description of any real estate or other property that
may have been acquired from, or leased by, or to, any officer,
director, or principal shareholder, and complete information about any
material transactions between the Company and any officer, director,
or principal shareholder of the Company.
-5-
<PAGE>
10. Other than bank accounts, information concerning all banking
relationships and credit lines, including factoring.
VI. INSURANCE POLICIES
------------------
1. Copies of all insurance policies (specifying the insured, insurer,
beneficiary of the policy, type and amount of coverage, deductible
amounts and policy number) maintained by the Company in respect of its
business operations or involving any of its assets and evidence of the
payment of all premiums currently due.
2. Copies of any officers' and directors' liability insurance
policies or indemnification policies and any "key-man" life insurance
policies.
VII. LICENSES AND PERMITS
--------------------
1. List of all permits, licenses or other governmental approvals
issued to the Company which are currently used in the operation of its
business in connection with or involving any of its assets.
VIII. CONTRACTS
---------
1. Copies of all other agreements or understandings to which the
Company is a party involving payments of $1,000 or more per year, or
which extend more than one year, including all joint venture and
partnership agreements involving the Company.
2. Copies of any acquisition agreements or development agreements
during the past three (3) years and any written statements of current
policies regarding acquisitions, development of new products, or
expansion.
3. Copies of any agreement relating to the disposition of any major
assets during the past three (3) years.
4. Copies of all agreements relating to borrowing of the Company
including debt instruments, loan agreements, security agreements,
mortgages, and guaranties.
5. Copies of any contracts between the Company and any other
affiliated entities (other than agreements already provided).
6. Copies of any agreements between the Company and any entity
affiliated with any director, nominee for election as a director, or
officer.
7. Schedule describing all transactions between the Company and any
affiliates, on the one hand, and any directors, nominees for election
as directors, officers or any of their associates or affiliates.
8. A copy of the listing agreement or any other agreement between the
Company and the NASD relating to the Company's listing in the pink
sheets, OTC Bulletin Board or the NASDAQ Stock Market.
-6-
<PAGE>
IX. INTELLECTUAL PROPERTY
---------------------
1. Descriptions of all patents, patents pending, copyrights,
trademarks, trade names and service marks, and all documents,
registrations and applications therefor owned or held by the Company.
X. MISCELLANEOUS
-------------
1. UCC lien search and judgment searches.
2. Disclosure of whether or not the Company or any of its officers,
directors, or principal shareholders have consulted on behalf of the
Company with any financial or investment advisor, broker, underwriter,
or investment banker, finder, or any similar person or firm. If so,
disclosure of whether or not the Company, its officers, directors, or
principal shareholders entered into any agreement, together with
copies of all such agreements.
3. Disclosure of whether or not there is a finder who expects
compensation relating to the proposed transaction or other
transactions entered into by the Company, together with the amount of
such compensation.
4. Copies of any letters of intent or other correspondence between
the Company and any venture capital firm, investment banking firm, or
finder.
XI. PERSONNEL AND EMPLOYMENT MATTERS
--------------------------------
1. Copies of all employment or consulting contracts.
2. List of all employees of the Company, their respective annual
compensation, a description of each employee's position with the
Company, whether each employee is full or part-time, and the date and
amount of each such employee's last increase in income from the
Company.
3. List of all directors and officers together with their age,
education, title, functions, responsibilities, length of service,
prior positions with the Company, compensation, outstanding
compensation (if any), past business associations, education and any
other material information relating thereto. Please include all bonus
or incentive plans provided to officers and/or directors.
4. With respect to officer, director, or principal shareholder please
disclose any suits, complaints or other involvement of any nature with
the Securities Exchange Commission, the National Association of
Securities Dealers, or any state securities commission or agency; any
arrest, indictments or convictions for any felony; any personal
bankruptcy, or the bankruptcy of a corporation in which such person
was an officer, director, or principal shareholder; or any current
criminal indictment or investigation for the violation of any state or
federal law.
-7-
<PAGE>
5. A disclosure and description of any stock option or other stock
purchase plan, bonus or profit sharing plan, pension or deferred
compensation plan, or agreement, insurance plan or program, or any
other written or informal arrangement for a director, officer or
employee benefits.
6. Copies of all employee, director or officer pension benefit or
welfare plans, as defined in the Employee Retirement Income Security
Act of 1974, and all other plans, arrangements or commitments, whether
oral or written, formal or informal, relating to executive benefits,
severance, sick pay, vacation, bonus, retirement, pension, profit
sharing, stock option, deferred compensation, life, medical or dental
insurance, or other benefits covering any employee, director or
officer, or former employee, director or officer of the Company or
which the Company maintains, contributes to, sponsors or participates
in.
7. Copies of collective bargaining agreements with any trade union
currently in effect.
8. Disclosure of all transactions of any nature whatsoever by the
Company in the past two (2) years (or planned in the future) with any
officers, directors, principal shareholders, or any of their relatives
or affiliates, including a copy of any written plan or agreement
relating thereto.
9. Disclosure of any litigation arising out of the relationship
between the Company and any of its officers or directors.
10. Description of all unions or other collecting bargaining
organizations that represent the employees of the Company and the
number of employees who belong to each such union.
11. Copies of all union contracts.
12. Description of the relations with the labor force of the Company,
including (i) disclosure of whether or not the relations are good,
fair or turbulent; (ii) disclosure of any difficulties in obtaining
qualified personnel; and (iii) description of any anticipated problems
or personnel availability or turnover.
13. Description of any arrangements or agreements, formal or
informal, with any outside consultants, advisors, agents or other
third parties.
XII. LITIGATION
----------
1. List of all pending or threatened litigation or governmental or
private proceedings.
2. Description of any existing facts or circumstances which could
ripen into or result in the initiation of any litigation.
3. List of all outstanding or unsatisfied judgments, decrees,
citations, orders, injunctions, awards and settlement agreements.
-8-
<PAGE>
4. List of all notices of default, cancellations or terminations
under leases and material contracts, and of all events which with the
passage of time or notice or both, could become defaults or the basis
for termination or cancellation.
5. Copies of all material correspondence from outside counsel
regarding pending or threatened litigation.
WE, HEREBY CERTIFY AND ATTEST that the above and the attached
information in response to the above provisions is true, accurate and complete
in every respect.
THE LAWTON-YORK CORPORATION
______________________________ By: _________________________
Witness
Name: ________________________
______________________________ Title: _______________________
Witness
______________________________ By: _________________________
Witness
Name: ________________________
______________________________ Title: _______________________
Witness
______________________________ By: _________________________
Witness
Name: ________________________
______________________________ Title: _______________________
Witness
______________________________ By: _________________________
Witness
Name: ________________________
______________________________ Title: _______________________
Witness
-9-
<PAGE>
SCHEDULE 4-C
THE LAWTON-YORK CORPORATION
BALANCE SHEET
As Of 1/31/99
ASSETS
CURRENT ASSETS
CHASE CHECKING $ 20,289
SMITH BARNEY $ 2,037
INVESTMENTS $ 45,818
ACCOUNTS RECEIVABLE $491,550
DUE FROM EMPLOYEES $ 4,162
PREPAID EXPENSES $ 58,890
INVENTORY $ 6,415
--------
TOTAL CURRENT ASSETS $629,161
--------
LONG TERM ASSETS
FIXED ASSETS NET OF $ 28,847
DEPRECIATION
SECURITY DEPOSITS $ 2,291
--------
TOTAL LONG TERM ASSETS $ 31,138
--------
--------
TOTAL ASSETS $660,299
========
LIABILITIES & STOCKHOLDERS EQUITY
CURRENT LIABILITIES
EXCHANGE $ 1,933
ACCOUNTS PAYABLE $325,592
SALES TAX PAYABLE $ 3,599
PAYROLL TAX PAYABLE $ 10,161
401K PAYABLE $ 3,269
COMMISSIONS PAYABLE $ 56,074
CORPORATION TAX PAYABLE $ 102
RENT SECURITY DEPOSIT $ 3,000
--------
TOTAL LIABILITIES $403,730
--------
STOCKHOLDERS EQUITY
COMMON STOCK $ 20,087
TREASURY STOCK $(10,281)
CAPITAL SURPLUS $ 2,148
RETAINED EARNINGS $253,333
CURRENT INCOME(LOSS) $ (8,718)
--------
TOTAL STOCKHOLDERS EQUITY $256,569
--------
--------
TOTAL LIABILITIES & STOCKHOLDERS EQUITY $660,299
========
30
<PAGE>
EXHIBIT 6.3
ASSET PURCHASE AGREEMENT
------------------------
THIS ASSET PURCHASE AGREEMENT ("Agreement") is made and entered into
---------
this 18/th/ day of February, 1999 (the "Effective Date"), by and between North
--------------
Orlando Sports Promotions, Inc., a Florida corporation (the "Purchaser"), and
---------
The Information SuperHighway Corporation, a Florida corporation (the "Seller").
------
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, Seller is engaged in the business of providing internet
services, including internet access, e-mail and web hosting, and web application
development (the "Business"); and
--------
WHEREAS, Seller desires to sell to Purchaser, and Purchaser desires to
acquire from Seller, substantially all of the assets of Seller relating to the
Business, all on the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the mutual covenants contained
herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, each of the parties, on the basis
of, and in reliance upon, the representations, warranties, covenants,
obligations and agreements set forth herein, and upon the terms and subject to
the conditions contained herein, agrees as follows:
ARTICLE I - ACQUISITION OF ASSETS; CLOSING
------------------------------------------
1.1 Purchase of Assets. On the terms and subject to the conditions
------------------
set forth in this Agreement, on the Effective Date, Seller agrees to sell,
transfer, assign, convey and deliver to Purchaser, and Purchaser agrees to
purchase, acquire and accept from Seller, all of Seller's right, title and
interest in and to all of the assets, rights and properties of Seller owner or
used by Seller solely in the conduct of the Business, as and to the extent
existing on the Effective Date (the "Assets"), including, without limitation,
------
those identified under the heading "Assets" on Schedule 1.1 to this Agreement,
free and clear of any lien, claim, pledge, security interest or encumbrance (the
"Assets"). Any provision of this Agreement notwithstanding, Purchaser shall not
------
acquire and there shall be excluded from the Assets the assets identified under
the heading "Excluded Assets" on Schedule 1.1 (the "Excluded Assets").
---------------
1.2 Assumption of Liabilities. Subject to the terms and conditions
-------------------------
set forth in this Agreement, except as set forth in the second sentence of this
Section 1.2, Purchaser agrees that, on the Effective Date, Purchaser shall
assume and thereafter pay, perform and discharge when due all of the debts,
obligations and liabilities of Seller with respect to the Business (the "Assumed
-------
Liabilities"), whether such debts, obligations or liabilities become due and
- -----------
payable prior to, on or subsequent to the Effective Date, which Assumed
Liabilities include, but are not limited to, those identified under the heading
"Assumed Liabilities" on Schedule 1.2 of this Agreement. Any provision of this
Agreement notwithstanding, Purchaser shall not assume, take subject to, pay,
discharge or in any manner be responsible for, and there shall be excluded from
the Assumed Liabilities, any debts, liabilities or obligations of Seller or the
Business to Seller, any director, officer or shareholder of Seller, or any
spouse or relative not more than one degree removed from any such person (the
"Excluded Liabilities"). Seller, to the extent applicable, shall pay and
--------------------
discharge when due all Excluded Liabilities of Seller.
1.3 Consideration; Closing Conditions.
---------------------------------
<PAGE>
(a) The aggregate purchase price (the "Consideration") to be
-------------
paid by Purchaser for the Assets is (i) Two Hundred Eight and 33/100 Shares of
the common stock of Purchaser (the "NOSP Stock"), and (ii) the assumption by the
----------
Purchaser of the Assumed Liabilities, in each case payable in the manner set
forth herein. Payment of the Consideration shall be made by delivery by the
Purchaser to the Seller at the Closing (as defined below) of the share
certificates representing the NOSP Stock that constitutes the Consideration.
Purchaser shall pay all documentary stamp and other taxes due on the issuance of
the NOSP Stock constituting the Consideration.
(b) On the Closing date, Seller shall deliver to the Purchaser:
(i) certified copies of the resolutions of the shareholder and director of
Seller authorizing and approving the execution and delivery of this Agreement
and the transactions contemplated hereby, and (ii) such good and sufficient
instruments of sale, assignment, conveyance and transfer, as shall be required
to fully and effectively vest in Purchaser all right, title and interest in and
to the Assets, free and clear of any and all mortgages, security interests,
liens, charges or encumbrances of any kind.
1.4 Closing Date. The closing of the sale of Assets contemplated by
------------
this Agreement (the "Closing") shall take place concurrently with the execution
-------
of this Agreement at the offices of Baker & Hostetler LLP, 2300 SunTrust Center,
200 South Orange Avenue, Orlando, Florida 32801. Purchaser is tendering
herewith the NOSP Stock constituting the Consideration, with all requisite
documentary stamps attached. Simultaneously, Seller hereby sells, conveys,
assigns and transfers to Purchaser good and valid title in and to the Assets,
free and clear of all liens, security interests, pledges or encumbrances of any
kind.
1.5 Nonassignable Assets and Liabilities. To the extent that
------------------------------------
assignment hereunder by Seller to Purchaser of any lease or contract is not
permitted or is not permitted without the consent of a third party, this
Agreement shall not be deemed to constitute an undertaking to assign the same if
such consent is not given or if such an undertaking otherwise would constitute a
breach of or cause a loss of benefits thereunder. Seller will use commercially
reasonable efforts to obtain any and all such third party consents; provided,
however, that Seller shall not be required to pay or incur any cost or expense
to obtain any third party consent which Seller is not otherwise required to pay
or incur in accordance with the terms of the applicable lease or contract. If
any such third party consent is not obtained before the Closing, Seller will
cooperate with Purchaser in any reasonable arrangement designed to provide
Purchaser after the Closing the benefits under the applicable contract or lease.
ARTICLE II - REPRESENTATIONS AND WARRANTIES
-------------------------------------------
2.1 Representations and Warranties of Sellers. Seller represents and
-----------------------------------------
warrants to Purchaser as follows:
(a) Corporate Organization. Seller is a corporation, duly
----------------------
organized, validly existing and in good standing under the laws of the State of
Florida, and has the power and authority to carry on its business as presently
conducted.
(b) Validity and Execution of Agreement. Seller has all
-----------------------------------
necessary power and authority, corporate and otherwise, to enter into, execute
and deliver this Agreement and to fully perform its obligations hereunder. The
execution and delivery of this Agreement and the consummation of the
transactions contemplated herein have been duly authorized by all necessary
action, corporate or otherwise, on the part of Seller, and this Agreement
constitutes the valid and legally binding agreement of Seller, enforceable in
accordance with the terms hereof.
- --------------------------------------------------------------------------------
Page 2
<PAGE>
(c) Litigation and Government Proceedings. Except as disclosed
-------------------------------------
to Purchaser, there is no pending or, to the Seller's best knowledge, threatened
suit, claim, action or litigation or administrative, arbitration or other
proceeding or governmental investigation or inquiry (collectively, "Litigation")
----------
against Seller to which its assets are subject and which would have a material
adverse effect upon the Assets. Seller is not now subject to any judgment,
order, injunction or decree directed specifically to Seller of any court,
administrative agency or other governmental authority which would materially,
adversely affect any of the Assets.
(d) Conflicts; Defaults. Neither the execution and delivery of
-------------------
this Agreement by Seller, nor the performance of its obligations hereunder, will
violate, conflict with or constitute a default under, or result in the
acceleration of any obligation under, any contract, lien, permit, deed, lease,
instrument, order, judgment or decree to which Seller is a party, or by which
Seller or the Assets are bound, and will not constitute an event which, after
notice or lapse of time or both, will result in such violation, conflict,
default or acceleration. The execution and delivery of this Agreement by
Seller, and the performance by it of the transactions contemplated hereby, will
not, except as specifically authorized herein, result in the creation or
imposition of any liens, charges or encumbrances of any kind or other rights,
whether legal or equitable, in any third person or entity upon or against any of
the Assets, and will not violate any judgment, decree or order or, to the best
knowledge of the Seller, any law, rule or regulation of any governmental
authority applicable to the Seller or the Assets.
(e) Title; Liens; No Undisclosed Liabilities. Seller has good
----------------------------------------
and marketable title to the applicable Assets, and the Seller owns outright all
of the Assets, free and clear from any mortgages, security interests, liens,
charges or encumbrances of any kind. Other than those obligations and
liabilities set forth on Schedule 1.2, there are no obligations or liabilities
of the Seller relating to the Assets or the Business.
(f) Governmental Approvals and Filings. No consent, approval or
----------------------------------
action of, filing with or notice to any court, tribunal, arbitrator, authority,
agency, commission, official or other instrumentality of the United States, any
foreign country, or any domestic or foreign state, county, city or other
political subdivision on the part of Seller or the Company is required in
connection with the execution, delivery and performance of this Agreement or the
consummation of the transactions contemplated hereby, except (i) such consents,
approvals, actions, filings or notices as have been obtained, made or given, or
(ii) where the failure to obtain any such consent, approval or action, to make
any such filing or to give any such notice could not reasonably be expected to
materially adversely affect the validity or enforceability of this Agreement.
(g) Restricted Securities. Seller understands and acknowledges
---------------------
that the NOSP Stock being issued to Seller hereby have not been registered under
the Securities Act of 1933, as amended (the "Securities Act"), or any state
--------------
securities laws, and are being offered and sold pursuant to exemptions from
registration provided for by such securities laws and the rules and regulations
promulgated thereunder. Accordingly, Seller understands and agrees that the
NOSP Stock cannot be offered, sold or otherwise disposed of unless they are
subsequently registered under the Securities Act and any applicable state
securities laws, or sold in a transaction exempt from such registration
requirements. Seller represents and warrants to Purchaser that Seller (i) is
acquiring the NOSP Stock solely for Seller's own account, for investment only,
and is not purchasing such NOSP Stock with a view to, or for the resale,
distribution, subdivision or fractionalization thereof, (ii) has no contract,
understanding, undertaking, agreement or arrangement, formal or informal, with
any person to sell, transfer or pledge the NOSP Stock to any person, and (iii)
has no present plans to enter into any such contract, undertaking, agreement or
arrangement. Seller understands the legal consequences of the foregoing
representations and warranties to mean that Seller must bear the economic risk
of the investment in the NOSP Stock for an indefinite period of time because the
NOSP Stock has not been registered under the Securities Act or
- --------------------------------------------------------------------------------
Page 3
<PAGE>
any applicable state securities laws and, therefore, cannot be sold unless they
are subsequently registered under applicable securities laws or an exemption
from such registration is available.
(h) Informed Decision to Purchase. Seller acknowledges that
-----------------------------
Purchaser, prior to the execution of this Agreement and prior to the sale of the
NOSP Stock, has made available to the Seller an adequate opportunity to ask
questions of and receive answers from any person authorized to act on behalf of
Purchaser, its operations, business, financial condition and prospects, and that
all documents, records, books and other information pertaining to the Purchaser
and the value of its capital stock requested by Seller have been made available
to Seller to the extent Purchaser possesses such documents, records, books and
other information or can acquire them without unreasonable effort or expense.
Seller acknowledges that the price for the NOSP Stock constituting the
Consideration has been determined arbitrarily in the sense that it was not based
on an independent valuation of the past or projected earnings or asset value of
the Purchaser, nor does it necessarily reflect the current market value of the
NOSP Stock or the net book value per share of the Purchaser's capital stock.
2.2 Representations and Warranties of Purchaser. Purchaser represents
-------------------------------------------
and warrants to Seller as follows:
(a) Organization and Standing of Purchaser. Purchaser is a
--------------------------------------
corporation duly organized and existing in good standing under the laws of the
State of Florida, and has all necessary power to own its property and to carry
on its business as presently conducted.
(b) Validity and Execution of Agreement. Purchaser has all
-----------------------------------
necessary power and authority, corporate and otherwise, to enter into, execute
and deliver this Agreement and to fully perform its obligations hereunder. The
execution and delivery of this Agreement and the consummation of the
transactions contemplated herein have been duly authorized by all necessary
action, corporate or otherwise, on the part of Purchaser, and this Agreement
constitutes the valid and legally binding agreement of each such person, as
applicable, enforceable in accordance with the terms hereof.
(c) Capital Stock. Immediately prior to the Closing, the
-------------
authorized capital stock of the Purchaser consists solely of 1,000 shares of
common stock, par value $1.00 per share, of which 500 shares are issued and
outstanding, which shares are issued as follows:
Dennis Kurir: 250 shares of NOSP Stock
Raymond J. Hotaling: 250 shares of NOSP Stock.
The NOSP Stock to be delivered to the Seller in accordance with this Agreement
shall be duly authorized and validly issued, fully paid and nonassessable. All
of the NOSP Stock to be issued to the Seller in accordance herewith will be
offered, issued and delivered by Purchaser in compliance with federal securities
laws and the applicable state securities laws and none of such shares will be
issued in violation of any preemptive rights of any shareholder of the
Purchaser.
(d) No Conflicts. The execution and delivery by the Purchaser
------------
of this Agreement do not, and the performance by the Purchaser of its
obligations under this Agreement and the consummation of the transactions
contemplated hereby will not conflict with or result in a violation, default or
breach, as applicable, of any law, rule, regulation, order, writ, judgment,
injunction, decree, determination or award applicable to the Purchaser or any of
its assets and properties (other than such conflicts, violations or breaches
which could not in the aggregate reasonably be expected to materially adversely
affect the validity or enforceability of this Agreement).
- --------------------------------------------------------------------------------
Page 4
<PAGE>
(e) Governmental Approvals and Filings. No consent, approval or
----------------------------------
action of, filing with or notice to any court, tribunal, arbitrator, authority,
agency, commission, official or other instrumentality of the United States, any
foreign country, or any domestic or foreign state, county, city or other
political subdivision on the part of the Purchaser is required in connection
with the execution, delivery and performance of this Agreement or the
consummation of the transactions contemplated hereby, except (i) such consents,
approvals, actions, filings or notices as have been obtained, made or given, or
(ii) where the failure to obtain any such consent, approval or action, to make
any such filing or to give any such notice could not reasonably be expected to
materially adversely affect the validity or enforceability of this Agreement.
ARTICLE III - CERTAIN COVENANTS
-------------------------------
3.1 Examination and Investigation. Prior to the Closing, Purchaser
-----------------------------
shall be entitled to make such investigations of the assets, properties,
business and operations of the Seller in connection with the Assets as Purchaser
may wish, which investigation shall be at reasonable times and under reasonable
circumstances. The Seller shall furnish Purchaser with such information and
documents concerning the Assets as Purchaser may reasonably requests, and Seller
shall cooperate fully in connection with any such investigation or examination.
3.2 Preservation of Business. From the date hereof through the
------------------------
Closing, the Seller shall use commercially reasonable efforts to (a) conduct the
Business in the ordinary course consistent with past practice in all material
respects, and (b) preserve the Assets.
3.3 Third Party Consents. Seller and Purchaser agree to use
--------------------
commercially reasonable efforts to take, or cause to be taken, all actions and
to do, or cause to be done, all things necessary, proper or advisable to
consummate and make effective as promptly as practicable the transactions
contemplated by this Agreement, including, without limitation, the obtaining of
all necessary waivers, consents and approvals.
ARTICLE IV - SURVIVAL OF REPRESENTATIONS
AND WARRANTIES AND INDEMNIFICATION
---------------------------------------
4.1 Survival of Representations and Warranties. All representations
------------------------------------------
and warranties made or given by the parties in this Agreement shall survive the
Closing and the consummation of all transactions contemplated herein for the
applicable limitations period.
4.2 Indemnification by Sellers. Seller shall indemnify, defend and
--------------------------
hold harmless and reimburse Purchaser, its directors, officers, and shareholders
(the "Purchaser Indemnified Parties") against, from and for, any and all claims,
-----------------------------
loss, damages, costs and expenses, including, without limitation, reasonable
attorneys' fees incurred by Purchaser Indemnified Parties and which arise out
of, in connection with or related to: (i) any breach by Seller of any
representation or warranty made by Seller contained in this Agreement; or (ii)
any failure by Seller to pay, perform and discharge any debt, obligation or
liability of Seller which is not being assumed by Purchaser in connection with
the transactions contemplated hereby or related hereto.
4.3 Indemnification by Purchaser. Purchaser shall indemnify, defend
----------------------------
and hold harmless and reimburse Seller, its directors, officers, and
shareholders (the "Seller Indemnified Parties") against, from and for, any and
--------------------------
all claims, loss, damages, costs and expenses, including, without limitation,
reasonable attorneys' fees incurred by Seller Indemnified Parties and which
arise out of, in connection with or related to: (i) any breach by a Purchaser
of any representation or warranty made by Purchaser
- --------------------------------------------------------------------------------
Page 5
<PAGE>
contained in this Agreement; (ii) any Assumed Liability; or (iii) any claims,
loss, damages, costs and expenses incurred by Purchaser resulting from the
operation of the Business on and after the Closing.
4.3 Indemnification Procedures. In case of any claim or proceeding
--------------------------
affecting a Purchaser Indemnified Party or Seller Indemnified Party (the
"Indemnified Party"), such Indemnified Party shall promptly notify the party
-----------------
required to provide indemnification (the "Indemnifying Party") in writing, and
------------------
the Indemnifying Party, within ten (10) days after notification shall retain
counsel reasonably satisfactory to the Indemnified Party to represent the
Indemnified Party and any others the Indemnifying Party may designate in such
proceeding, and shall pay the fees and disbursements of such counsel related to
such proceeding. Any Indemnified Party shall have the right to retain its own
counsel, but at its own expense, unless (i) the Indemnifying Party have failed
to retain counsel; or, (ii) counsel retained by the Indemnifying Party is
inappropriate due to actual potential differing interests between such an
Indemnified Party and any other person.
ARTICLE V - MISCELLANEOUS
-------------------------
5.1 Assignment. This Agreement shall not be assignable by any party
----------
without the prior written consent of the other party. Nothing in this
Agreement, expressed or implied, is intended to confer upon any person, other
than the parties hereto and their successors and permitted assigns, any rights
or remedies under or by reason of this Agreement.
5.2 Further Assistance. Seller agrees that it will, upon request of
------------------
Purchaser, do such further acts, assignments, transfers, agreements, powers of
attorney and assurances as may be reasonably required for the better assigning,
transferring, granting, assuring and confirming to Purchaser or to its
successors and assigns, or for aiding and assisting in collecting and reducing
to possession, the Assets by Purchaser and the performance of any or all
obligations of Seller hereunder. Purchaser agrees that it will cooperate with
Seller in providing the accounting records it has and any information related to
the collection of the accounts receivable assigned to Seller.
5.3 Notices. Any notice, request, instruction or other document to
-------
be given hereunder by any party shall be in writing and delivered personally or
sent by registered or certified mail, postage prepaid or by overnight delivery
service, to:
If to the Purchaser, to: NORTH ORLANDO SPORTS PROMOTIONS, INC.
550 Devonshire Boulevard
Longwood, Florida 32750
Facsimile No.: _________________
If to the Seller, to: THE INFORMATION SUPERHIGHWAY CORPORATION
9136 Lake Burkett Drive
Orlando, Florida 32817
Attention: Martin M. Meads
Facsimile No.: (407) 673-9997
All such notices, requests and other communications will (i) if delivered
personally to the address as provided in this Section, be deemed given upon
delivery, (ii) if delivered by facsimile transmission to the facsimile number as
provided in this Section, be deemed given upon receipt, and (iii) if delivered
by mail in the manner described above to the address as provided in this
Section, be deemed given upon receipt (in each case regardless of whether such
notice is received by any other Person to whom a copy of such notice, request or
other communication is to be delivered pursuant to this Section). Any party
from time
- --------------------------------------------------------------------------------
Page 6
<PAGE>
to time may change its address, facsimile number or other information for the
purpose of notices to that party by giving notice specifying such change to the
other party hereto.
5.4 Expenses. Each of the parties shall bear its own costs and
--------
expenses (including, without limitation, legal and accounting fees and expenses)
incurred in connection with this Agreement and the transactions contemplated
hereby.
5.5 Governing Law, Jurisdiction and Venue. This Agreement shall be
-------------------------------------
governed by and construed in accordance with the Laws of the State of Florida
applicable to an agreement executed and performed in such State without giving
effect to the conflicts of laws principles thereof; and the courts of such State
in the Ninth Judicial Circuit and the United States District Court for the
Middle District of Florida (Orlando Division) shall be the exclusive courts of
jurisdiction and venue for any litigation, special proceeding or other
proceeding as between the parties that may be brought, or arise out of, in
connection with, or by reason of this Agreement. Purchaser and Seller hereby
consent to the jurisdiction of such courts.
5.6 Modification; Waiver. This Agreement shall not be modified
--------------------
except by an instrument in writing duly signed on behalf of the party against
whom enforcement of such modification is sought. No waiver of any provision of
this Agreement shall be effective unless in writing and similarly signed, nor
shall any failure of any party to enforce any right or remedy hereunder be
deemed a waiver of such right or remedy for the future in the same or any
situation.
5.7 Headings. Captions have been inserted in this Agreement for
--------
reference only and shall not limit or otherwise affect any of its terms and
provisions.
5.8 Counterparts. This Agreement may be executed concurrently in
------------
one or more counterparts, each of which shall be deemed an original and all of
which together shall constitute one and the same instrument.
5.9 Severability. Each section, subsection and lesser section of
------------
this Agreement constitutes a separate and distinct undertaking, covenant or
provision hereof. In the event that any provision of this Agreement shall be
determined to be invalid or unenforceable, such provision shall be deemed
limited by construction in scope and effect to the minimum extent necessary to
render the same valid and enforceable, and, in the event such a limiting
construction is impossible, such invalid or unenforceable provision shall be
deemed severed from this Agreement, but every other provision of this Agreement
shall remain in full force and effect.
5.10 Entire Agreement. This Agreement (as amended in writing from
----------------
time to time), the exhibits and the schedules delivered pursuant hereto contain
the entire agreement between the parties with respect to the transactions
contemplated hereby and all prior agreements, understandings and negotiations
are superseded hereby. No representation, warranty or agreement, express or
implied, has been made other than as contained herein.
- --------------------------------------------------------------------------------
Page 7
<PAGE>
IN WITNESS WHEREOF, this Agreement has been duly executed and delivered by
the duly authorized officer of each party hereto as of the date first above
written.
"Purchaser":
NORTH ORLANDO SPORTS PROMOTIONS, INC.
By: /s/ Dennis A. Kurir
--------------------------------
Name: Dennis A. Kurir
Title: CEO
"Seller":
THE INFORMATION SUPERHIGHWAY CORPORATION
By: /s/ Martin M. Meads
--------------------------------
Martin M. Meads, President
- --------------------------------------------------------------------------------
Page 8
<PAGE>
[THIS PAGE LEFT INTENTIONALLY BLANK]
- --------------------------------------------------------------------------------
Page 9
<PAGE>
Schedule 1.2
------------
Assumed Liabilities
-------------------
Seller's lease for space at Tradewinds Office Building for 3 year term, starting
September 1997, at $209/month.
AT&T Universal Business Card (VISA) credit card liabilities, which are generally
paid off monthly. As of February 26, 1999, outstanding debt is estimated to be
less than $750.00.
- --------------------------------------------------------------------------------
Page 10
<PAGE>
Exhibit A
---------
BILL OF SALE
------------
THIS BILL OF SALE dated as of February 18, 1999, by The Information SuperHighway
Corporation, a Florida corporation (the "Seller") to North Orlando Sports
------
Promotions, Inc., a Florida corporation (the "Purchaser").
---------
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Asset Purchase Agreement, dated as of February 18, 1999
(the "Purchase Agreement"), by and between the Purchaser and the Seller provides
------------------
for, among other things, the transfer and sale to the Purchaser of certain
assets of the Seller, all as more fully described in the Purchase Agreement, for
consideration in the amount and upon the terms provided in the Purchase
Agreement; and
WHEREAS, by this instrument the Seller is vesting in the Purchaser all
of the properties, assets, and rights of the Seller hereinafter described.
NOW, THEREFORE, in consideration of the premises and of other valuable
consideration to the Seller in hand paid by the Purchaser, at or before the
execution and delivery hereof, the receipt and sufficiency of which by the
Seller is hereby acknowledged, the Seller has conveyed, granted, bargained,
sold, transferred, set over, assigned, aliened, remised, released, delivered and
confirmed, and by this Bill of Sale does convey, grant, bargain, sell, transfer
set over, assign, alien, remise, release, deliver and confirm unto the
Purchaser, its successors and assigns forever, all of the Seller's right, title
and interest in the Assets (as defined in Section 1.1 of the Purchase Agreement)
of every nature and description, whether tangible or intangible, whether real,
personal, or mixed, whether accrued, contingent or otherwise, wherever located.
TO HAVE AND TO HOLD all of the Assets unto the Purchaser, its
successors and assigns to its and their own use forever.
The Seller hereby constitutes and appoints the Purchaser, its
successors and assigns, the Seller's true and lawful attorney, with full power
of substitution, in the Seller's name and stead, but on behalf and for the
benefit of the Purchaser, its successors and assigns, to demand and receive any
and all of the Assets, and to give receipts and releases for and in respect of
the same, and any part thereof, and from time to time to institute and prosecute
in the Seller's name, or otherwise, for the benefit of the Purchaser, its
successors and assigns, any and all proceedings at law, in equity or otherwise,
which the Purchaser, its successors and assigns, may deem proper for the
collection or reduction to possession of any of the Assets or for the collection
and enforcement of any claim or right of any kind hereby sold, conveyed,
transferred and assigned, or intended so to be, and to do all acts and things in
relation to the Assets which the Purchaser, its successors and assigns shall
deem desirable, the Seller hereby declaring that the foregoing powers are
coupled with an interest and are and shall be irrevocable by the Seller or by
their death or dissolution or in any manner or for any reason whatsoever.
The Seller hereby covenants that, from time to time after the delivery
of this instrument, at the Purchaser's request and without further
consideration, the Seller will do, execute, acknowledge, and deliver, or will
cause to be done, executed, acknowledged and delivered, all and every such
further acts, deeds, conveyances, transfers, assignments, powers of attorney and
assurances as reasonably may be
- --------------------------------------------------------------------------------
Page 11
<PAGE>
required more effectively to convey, transfer to and vest in the Purchaser, and
to put the Purchaser in possession of, any of the Assets.
Nothing in this instrument, express or implied, is intended or shall
be construed to confer upon, or give to, any person, firm or corporation other
than the Purchaser and its successors and assigns any remedy or claim under or
by reason of this instrument or any terms, covenants or condition hereof, and
all the terms, covenants and conditions, promises and agreements in this
instrument contained shall be for the sole and exclusive benefit of the
Purchaser and its successors and assigns.
This instrument is executed by, and shall be binding upon, the Seller,
its successors and assigns, for the uses and purposes above set forth and
referred to, effective immediately upon its delivery to the Purchaser. This
instrument shall be governed by and construed in accordance with the laws of the
State of Florida applicable to an agreement executed and performed in such State
without giving effect to the conflicts of laws principles thereof; and the
courts of such State in the Ninth Judicial Circuit and the United States
District Court for the Middle District of Florida (Orlando Division) shall be
the exclusive courts of jurisdiction and venue for any litigation, special
proceeding or other proceeding as between the parties that may be brought, or
arise out of, in connection with, or by reason of this instrument. Purchaser
and Seller hereby consent to the jurisdiction of such courts.
IN WITNESS WHEREOF, the Seller has executed this Bill of Sale or have
caused this Bill of Sale to be executed on their behalf by their duly authorized
officers as of the date first above written.
Attest: THE INFORMATION SUPERHIGHWAY
CORPORATION
_______________________________ By:____________________________
Secretary Martin M. Meads, President
Receipt of the foregoing instrument acknowledged:
Attest: NORTH ORLANDO SPORTS PROMOTIONS,
INC.
_______________________________ By:____________________________
Secretary Name:
Title:
- --------------------------------------------------------------------------------
Page 12
<PAGE>
Exhibit B
ASSIGNMENT AND ASSUMPTION AGREEMENT
-----------------------------------
THIS ASSIGNMENT AND ASSUMPTION AGREEMENT (the "Agreement"), dated as
of February 18, 1999, by and between North Orlando Sports Promotions, Inc., a
Florida corporation (the "Purchaser"), and The Information SuperHighway
---------
Corporation, a Florida corporation (the "Seller").
------
WHEREAS, by an Asset Purchase Agreement dated as of February 18, 1999
(the "Purchase Agreement"), among the Purchaser and the Seller, the Seller has
------------------
agreed to sell and assign the Assets to Purchaser; and
WHEREAS, as part of the Consideration for the Assets, the Purchaser
has agreed to assume the Assumed Liabilities; and
WHEREAS, the parties hereto desire to execute this Agreement to
further evidence the assignment by Seller and the assumption by Purchaser;
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein contained, the parties hereto agree as follows:
1. Definitions. Except as otherwise provided herein, all capitalized
-----------
terms contained and not defined herein (including the recitals hereto) shall
have herein the respective meanings ascribed to them in the Purchase Agreement.
2. Assignment. Seller hereby sells, transfers, conveys, assigns and
----------
sets over to Purchaser, its successors and assigns, all of the Assets,
including, without limitation, the leases, contracts, commitments and
undertakings which constitute a portion of the Assets (such leases, contracts,
commitments and undertakings, the "Assigned Agreements").
-------------------
3. Assumption of Assumed Liabilities. Purchaser hereby assumes and
---------------------------------
undertakes to pay, perform and discharge the Assumed Liabilities.
4. Assignability of Assigned Agreements. To the extent that any of
------------------------------------
the Assigned Agreements are not assignable without the consent of another party
and such consent has not been obtained on or prior to the Effective Date, this
Agreement shall not constitute an assignment or attempted assignment if such
assignment would constitute a breach thereof. Any obligation of the Seller
under the Purchase Agreement to effect the transfer of any Assigned Agreement to
Purchaser shall not be terminated or abridged by this provision.
5. Third Party Consents and Waivers. The Seller agrees and
--------------------------------
undertakes to secure those consents and waivers required by the Purchase
Agreement, and the Seller agrees to cooperate with Purchaser in obtaining any
consents or waivers of third parties necessary to transfer to Purchaser all
property, rights and benefits in and under the Assigned Agreements.
6. Further Assurances. At any time and from time to time after the
------------------
date hereof, at the request of Purchaser, and without further consideration, the
Seller shall execute and deliver such other instruments of sale, transfer,
conveyance, assignment and confirmation and take such other action as Purchaser
may reasonably request as necessary or desirable in order to more effectively
transfer, convey and assign to Purchaser the Assets.
- --------------------------------------------------------------------------------
Page 13
<PAGE>
7. Governing Law; Jurisdiction and Venue. This Agreement shall be
-------------------------------------
governed by and construed in accordance with the Laws of the State of Florida
applicable to an agreement executed and performed in such State without giving
effect to the conflicts of laws principles thereof; and the courts of such State
in the Ninth Judicial Circuit and the United States District Court for the
Middle District of Florida (Orlando Division) shall be the exclusive courts of
jurisdiction and venue for any litigation, special proceeding or other
proceeding as between the parties that may be brought, or arise out of, in
connection with, or by reason of this Agreement. Purchaser and Seller hereby
consent to the jurisdiction of such courts.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
Attest: NORTH ORLANDO SPORTS PROMOTIONS,
INC.
_______________________________ By:____________________________
Secretary Name:
Title:
Attest: THE INFORMATION SUPERHIGHWAY
CORPORATION
_______________________________ By:____________________________
Secretary Martin M. Meads, President
- --------------------------------------------------------------------------------
Page 14
<PAGE>
Schedule 1.1
------------
Assets
------
Description of Asset Acquisition Date Original Value Condition
- --------------------------------------------------------------------------------
Gateway P-120 Computer 4/94 $ 2,541.98 Good
Livingston PM2-ER Router 4/96 2,786.53 Good
4 Motorola Modems 4/96 1,157.22 Good
Adtran TSU 1/96 900.00 Good
Gateway P-133 Computer 7/96 2,680.48 Good
2 Motorola Modems 11/96 298.88 Good
Livingston 5-BRI Card 10/96 1,490.00 Good
Livingston OR-HS, Adtran TSU 12/96 1,940.65 Good
Acer P-66 Computer 1/97 1,109.82 Good
2 hard Drives 10/96 540.00 Good
Ethernet Hub 5/96 80.00 Good
UPS 8/96 110.00 Good
Equipment Rack 8/96 40.00 Good
Silicon Graphics Indy Computer 3/98 1,000.00 Good
Livingston OR-HS, Adtran TSU 3/98 900.00 Good
Livingston PM-3 Router
w/20 digital modems 7/98 7,616.63 Good
---------
Total: 25,192.00
=========
Also included: all Internet-related receivables dated March 1, 1999 or later.
Excluded Assets
---------------
Any and all assets not explicitly described under "Assets" above.
15
<PAGE>
Schedule 1.2
------------
Assumed Liabilities
-------------------
Seller's lease for space at Tradewinds Office Building for 3 year term, starting
September 1997, at $209/month.
AT&T Universal Business Card (VISA) credit card liabilities, which are generally
paid off monthly. As of February 26, 1999, outstanding debt is estimated to be
less than $750.00.
16
