UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): March 14, 2000
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WAMEX Holdings, Inc.
(Exact name of registrant as specified in its charter)
New York
(State or other jurisdiction of incorporation)
0-28241 65-0789306
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(Commission File Number) (IRS Employer Identification No.)
3040 Nostrand Avenue, Marine Park, New York 11229
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(Address of principal executive offices) (Zip Code)
(718) 677-4111
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Registrant's telephone number, including area code:
Conchology, Inc.
610 Newport Center Drive, Suite 800
Newport Beach, CA 92660
(949) 719-1977
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(Former name, address and telephone number)
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ITEM 1. Changes in Control of Registrant
a) Pursuant to a Stock Exchange Agreement (the "Exchange Agreement")
dated as of February 9, 2000 between the controlling shareholders (the
"Shareholders") of Conchology, Inc. ("Conchology"), a Nevada corporation, and
WAMEX Holdings, Inc., a New York corporation ("WAMEX" or the "Company"), 570,000
of the 600,000 outstanding shares of common stock of Conchology were exchanged
for 47,500 shares of common stock of WAMEX in a transaction in which WAMEX
became the parent corporation of Conchology. WAMEX has agreed to issue up to
2,500 additional shares of WAMEX to Conchology shareholders who request an
exchange of their Conchology shares for WAMEX shares at a rate of one (1) WAMEX
share for every twelve (12) Conchology shares.
The Exchange Agreement was adopted by the unanimous consent of the Boards
of Directors of WAMEX and Conchology on February 4, 2000. No approval of
the shareholders of Conchology or WAMEX is required under applicable state
corporate law.
Prior to the merger, Conchology had 600,000 shares of common stock
outstanding which, assuming all Conchology shareholders exercise their rights of
exchange, will be exchanged for 50,000 shares of common stock of WAMEX. By
virtue of the exchange, WAMEX acquired 95% of the issued and outstanding common
stock of Conchology, and assuming that all Conchology shareholders exercise
their exchange rights, will have acquired 100% of the issued and outstanding
common stock of Conchology. Certain consultants were issued an additional
100,000 shares pursuant to a Consulting Agreement.
Prior to the effectiveness of the Exchange Agreement, WAMEX had an
aggregate of 26,175,666 shares of common stock, par value $.012, issued and
outstanding.
Upon effectiveness of the acquisition, and assuming the issuance of
50,000 shares of WAMEX common stock per the Exchange Agreement and 100,000
shares of common stock per the Consulting Agreement, WAMEX had an aggregate of
26,325,666 shares of common stock outstanding.
The officers of WAMEX continue as officers of WAMEX subsequent to the
Exchange Agreement. See "Management" below. The officers, directors, and
by-laws of WAMEX will continue without change.
A copy of the Exchange Agreement is attached hereto as an exhibit. The
foregoing description is modified by such reference.
(b) The following table sets forth certain information regarding
beneficial ownership of the common stock of WAMEX as of February 10, 2000 (prior
to the issuance of 150,000 shares pursuant to the Exchange Agreement and the
Consulting Agreement) by:
-each person or entity known to own beneficially more than 5% of the common
stock or 5% of the preferred stock;
-each of WAMEX's directors;
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-each of WAMEX's named executive officers; and
-all executive officers and directors of WAMEX as a group.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Name and Address of Amount and Nature of Percent of
Title of Class Beneficial Owner Beneficial Ownership Class
- ------------------------------ ----------------------- --------------------- -----------
Common Stock Mitchell H. Cushing
3040 Nostrand Avenue
Marine Park, NY 11229 1,099,098 4.18%
Common Stock Russell Chimenti
3040 Nostrand Avenue
Marine Park, NY 11229 1,099,098 4.18%
Common Stock Sascha Mundstein
3040 Nostrand Avenue
Marine Park, NY 11229 1,099,098 4.18%
Common Stock Hans-Michael Schoebinger
3040 Nostrand Avenue
Marine Park, NY 11229 1,099,098 4.18%
Common Stock LACAR Partners
550 Old Country Road
Hicksville, NY 11801 1,099,098 4.18%
Common Stock The World Auction Market &
Exchange, PLC (1)
c/o Castle Trust Management
P.O. Box 777
Eruoport 932, Gibraltar 6,427,476 24.46%
All Officers and
Directors as a
Group (1)
(4 Persons) 10,823,868 41.35%
============ ========
</TABLE>
(1) The Directors, as a group, have voting control, and majority beneficial
ownership, of the shares held of record by The World Auction Market & Exchange,
PLC.
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
(a) The consideration exchanged pursuant to the Exchange Agreement was
negotiated between the Shareholders and WAMEX.
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In evaluating WAMEX as a candidate for the proposed acquisition, the
Shareholders used criteria such as the value of the assets of WAMEX, its present
stock price as set forth on the over-the-counter bulletin board, its current
business operations and anticipated operations, and WAMEX's business name and
reputation. The Shareholders determined that the consideration for the exchange
was reasonable.
(b) WAMEX intends to continue its historical businesses and proposed
businesses as set forth more fully immediately below.
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BUSINESS
CORPORATE HISTORY
WAMEX Holdings, Inc., a developmental stage company (hereinafter referred
to as "WHI" or "the Company") was organized as The World Auction Market and
Exchange (Holdings), Inc., under the laws of the State of Delaware, February 9,
1998. At the time of incorporation, the Company simultaneously incorporated in
the State of Delaware three (3) subsidiary corporations which were, The World
Auction Market and Exchange Services, Inc., WAMEX 3D, Inc. and INSTOX, Inc.
WAMEX Holdings, Inc. (WHI) was originally conceptualized in October, 1996.
The principle architects of that organization were Mitchell H. Cushing, Sascha
Mundstein, Russell Chimenti and Hans-Michael Schoebinger.
The Treasure Cache, Inc. (TCI) was incorporated in the State of New York in
April, 1992. TCI's business model and strategies centered around it's ability
to retail and profit from the distribution of unique arts and crafts merchandise
via Kiosks located in high traffic malls in the U.S. In early December, 1998,
TCI approached WAMEX Holdings, Inc. (WHI) to perform a feasibility study for TCI
as it related to the possible distribution of TCI's products via the Internet.
At that time it was decided that both entities should pursue discussions of a
merger.
On November 18, 1999, the Company changed its name in the State of Delaware
to WAMEX, Holdings, Inc. and changed the name of one (1) subsidiary, namely The
World Auction Market and Exchange Services, Inc., to WAMEX, Inc. The Company
changed its name and the name of one (1) subsidiary for the purposes of easier
identification and because the Company owns the registered domain name of
wamex.com. The Company's Website is presently under construction, however, with
the exception of the final graphic implementation and some relevant content the
Website can be viewed at the URL address of www.wamex.com. Some information on
the site is password protected due to proprietary information the Company deems
necessary to protect at this time.
On November 19, 1999, the Company consummated a merger with a New York
corporation named "The Treasure Cache, Inc". The surviving entity was The
Treasure Cache, Inc., a New York corporation. Subsequent to the terms of the
merger, the surviving entity changed it's name to WAMEX Holdings, Inc., which is
now registered as a New York corporation. The three (3) subsidiaries remain
registered and incorporated in the State of Delaware.
THE ORGANIZATIONAL STRUCTURE
WHI was formed along with its subsidiaries to develop, grow and maintain an
Alternative Trading System (ATS) (as defined under Regulation ATS promulgated by
the SEC). An ATS provides alternative pools of liquidity for its members as
well as allowing them the ability to trade directly with each other with the
possibility of price enhancement which is presently not available to individual
investors in today's present market structure.
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As the parent, WHI, manages and oversees the activities of its subsidiaries
that perform the following activities:
- - WAMEX 3D, Inc. (W3D), is presently inactive. WHI plans to initiate
activities for W3D in June of 2000. Once activated, W3D will be tasked to
provide the Technological Infrastructure of WHI and the ATS. As a wholly owned
subsidiary, W3D's core mission and business activities encompass
conceptualizing, designing and implementing all of the software programming and
hardware construction necessary to operate an ATS. This would include but would
not be limited to research and development, functionality, capacity and security
features of our technology as it pertains to the ATS. After activation, W3D may
also have the resources available to perform consulting in the Financial and
Database software arenas.
In the initial stages, W3D will be primarily occupied with the further
development and perfection of the WAMEX ATS, as well as integrating this system
with in-house administration and accounting networks. However, the basic
structure of the ATS software is such that a number of applications can be
developed and used in the financial industry from the base platform or design.
3D technicians have developed the proprietary W3D ATS Software Program Version
1.0 trading software program that allow centralization or routing of individual
and institutional order flow. The 3D software has been designed to provide the
base platform user or ATS member with advanced trading applications and
professional users with customized service applications that are real time and
dynamic. 3D trading software is an easy to use order entry and management
program. The Database Management System (DMS) has been designed to provide the
matching of order parameters and the administration of order flow, client
portfolio and audit trail information. The main features of the program and the
DMS are as follows: Modular design for rapid increases in system capacity,
redundancy system design features for continuous operation during service or
malfunction, security designs to prevent unauthorized entry into the DMS. It
also provides for the processing of all administration, record keeping and order
flow functions in one system and allows integration of affiliate order execution
and routing.
Management has conceptualized that W3D will offer as its core business the
development, production and distribution of financial trading software, systems
hardware design and technical service and support for financial institutions and
their traders. At present the company's technicians work inside the parent
corporation WHI developing and installing trading software applications, designs
and services for the Database Management Systems (DMS) designed for the WAMEX
ATS activities and brokerage functions.
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W3D plans to offer solutions for secure system functions by creating DMS designs
for institutions that consolidate client order flow or interact in a
decentralized trading environment. W3D will provide all necessary design,
development, and construction tasks that the prospective client needs. W3D will
also provide system testing for capacity and security and all associated
technical service and support.
W3D plans to provide integrated client management systems that allow broker
dealers to provide their financial advisors with the most functional,
easy-to-use and affordable order integration and client information management
solutions in the industry. W3D plans to be located and operate in Southern
Florida.
- - WAMEX, Inc. (WAMEX) is presently inactive. WHI plans to initiate
activities for WAMEX in June of 2000. Once activated, WAMEX will be tasked to
provide the Operational Features of the ATS. As a wholly owned subsidiary,
WAMEX's core mission and business activities encompass conceptualizing,
developing and implementing the ATS business strategy via the Internet as well
as overseeing ATS administrative operations. This would include but would not
be limited to analyzing and implementing marketing strategies, developing and
supervising the administration and customer service divisions and identifying
possible strategic acquisitions.
As a peripheral mission, WAMEX will be tasked by WHI to provide the Regulatory
Agencies (SEC and NASD) with assistance in forming a Standardized Internet Trade
Report (SITREP). WAMEX was one of the first announced ATS platforms (as defined
under Regulation ATS) and has, through its No-Action approval process, attempted
to provide the SEC's Division of Enforcement with advanced ATS Reporting
Techniques via its proprietary DMS design. It is an issue that WHI feels is
necessary in order to establish integrity within and for the ATS community as
the market for ATS trading grows.
In and of itself, WAMEX has no core proprietary product or service nor has it
conducted any business operations to date. WAMEX plans to be located and
operate in New York.
- - INSTOX, Inc. (INSTOX) is presently inactive. WHI plans to initiate
activities for INSTOX in June of 2001. Once activated, INSTOX will be tasked to
provide an Alternative Listing Facility (ALF) (Exchange or Market) via the
Internet for companies that elect to list on alternative forums (Exchanges or
Markets).
The INSTOX stock exchange operation is currently in its conceptual stage.
INSTOX plans to offer as its core business an Internet Stock Exchange for
companies that elect to list their shares for public trading. INSTOX will
provide a source of capital for companies that are at the level of development
and meet the listing requirements of the exchange.
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There are thousands of companies that have applied to regulatory authorities
seeking approval for the issuance of private placement memorandums and Offerings
through the Internet. A majority of these companies do not meet the listing
standards of the traditional exchanges for various reasons. The main factor is
their inability to find and afford capital procurance through traditional means
of investment banking. Finding a lead underwriter, syndicate partners, selected
dealer agents, market maker support and exchange approval are all cumbersome,
costly and inefficient with respect to the needs and strategies of young
companies. Through the vision of the regulatory agencies, these companies have
seen the availability of alternative means of raising capital through the
Internet. At the present time, there are too few Internet Investment Banking
enterprises to satisfy demands for processing of registration, distribution and
support that these companies need in order to accelerate their corporate
objectives.
There are companies that are prepared to operate as publicly traded companies on
alternative exchanges, where liquidity is determined by the accessibility and
direct participation of the investing public. As this segment of the investment
banking industry grows very rapidly, the number of publicly traded companies is
expected to multiply in the coming years. Furthermore, companies both foreign
and domestic understand the advantages of co-listing their securities on as many
exchanges as possible in order to create the maximum exposure to global
liquidity.
INSTOX, by establishing listing requirements that are more easily obtainable and
still ensure the quality of the companies publicly traded, will create a new
avenue of opportunity for companies in need of capital. The creation of this
market further satisfies the needs of investors that are searching for unnoticed
values and equity stakes in companies at an early development stage. Management
understands that INSTOX will need regulatory approval as well as possibly
obtaining Self Regulatory Organization (SRO) status in order to operate and
realize its corporate and strategic objectives. WHI is currently exploring a
strategy to implement operations within the next 18-24 months. To date, INSTOX
has not conducted any business operations nor does it have any services,
products, assets or proprietary intellectual property. The planned location of
operations is in New York.
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MANAGEMENTS DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
OPERATIONS TO DATE
Since its inception the Company has maintained 2 locations for principal
business operations. An International office located in Vienna, Austria and a
U.S. office located in New York. The Vienna office manned by Mr. Mundstein has
served as the base of operations for the Company's European introduction and
funding operations. The U.S. office manned by Mr. Cushing, Mr. Chimenti and Mr.
Schoebinger has served as the base of operations for the technological and
business development of the Company.
The primary core business operations of WHI since its inception has been
the formulation and development of its strategies as it relates to operating an
ATS through its subsidiaries and corporate partners. The Company has relied
heavily on its key personnel, Mitchell H. Cushing, Russell Chimenti, Sascha
Mundstein and Hans-Michael Schoebinger to provide all of the key strategic,
developmental and funding functions of the Company.
The Company's management strategized a three prong approach towards
achieving its objective in launching and maintaining the WAMEX ATS: Technology,
Securities/Regulation, and Funding/Administration.
TECHNOLOGY
Mr. Schoebinger has been designated as the Chief Technology Officer (CTO)
of WHI. He was tasked in 1997 to theoretically design a platform of software
and hardware that would support the functions of investors trading directly with
each other via the Internet. In 1998, Mr. Schoebinger hired two (2) DMS
programmers to assist in building the base software platform (W3D ATS Software
Program ) and the customized trading application (IOMS).
The work on the base application was completed in April 1999. The software
was most recently reviewed by ORACLE in October 1999 for functionality and
theoretical design. That review concluded that the base application is sound
and will function as needed based on the design of the architecture of the DMS.
ORACLE has suggested some additions and changes to the program to increase
efficiency and system integrity which the Company has already implemented in the
program. As a result of that review, the Company has met with ORACLE and is
presently engaged in negotiations with them to assist in the implementation of
the software program and the web architecture for the ATS. The only remaining
features that need to be implemented are the necessary linking parameters to the
Clearing and Executing Broker Dealers. These features will be established once
the Company selects the entities to perform these functions (see
Securities/Regulation).
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The hardware which consists of Sun Microsystems servers has been designed
to incorporate the proposed functions of the ATS and its members using ORACLE 8
serverware and WAMEX ATS Software. Contracts were negotiated in 1998 with Sun
to provide the equipment. Since 1998, the base design of the server has changed
twice because of the rapid advancement in functionality of the hardware, making
recent designs much more efficient and less expensive. Management originally
discussed the possibility of buying the equipment , however, through discussions
with ORACLE, Sun Microsystems and UUnet, management is presently considering
leasing the equipment. The leasing option affords the Company the luxury of
decreased initial cash investment into the DMS and the option to change server
equipment within 2-3 years as technology outpaces present hardware
functionality. The Company can have the hardware delivered, built, tested and
functional within 60 days.
Server location is also a primary concern for management. The location
must provide for the efficient operation, contingency power supplies and
security of the DMS hardware. As such, in 1998, the Company entered into a
preliminary agreement with Telehouse of New York to host the server upon the
initiation of ATS operations. Since 1998, the Company has identified several
other less expensive yet highly reliable locations to host the hardware. Among
them are NetLinks and AboveNet located in Florida and Washington, D.C.,
respectively. Management has entered into discussions with these companies to
bid for the hosting of the server. Management has concluded that all three
locations and companies would be compliant with the NASD's and SEC's requirement
in functionality, catastrophic contingency and redundant back-up power supplies.
The Company can have the location secured within 30 days.
Management also contemplates using one of the three hosting entities as a
site for its back-up server. As all three meet stringent regulatory
requirements and are located in different States in the U.S., management feels
this would represent the best possible scenario for implementation and
contingency planning
The wamex.com website was initially constructed by Trimoto Design of
Austria in 1998. Since then the Company has changed the design of the site
twice in order to make the website easier to navigate through and to present a
more updated approach to the market in terms of what the Internet users would
like to see and use. The website is presently hosted in Canada and the Company
plans to have the website hosted in the U.S. within the next 30 days. The site
presently is not password protected so that the public may view the content.
The website does not, at this time, contain the actual ATS content and trading
capability planned to be deployed by the Company in June of 2000. The Company
has engaged NYD2 through contract to design the front-end interface of the
website as well as assisting the Company in its branding, marketing, and
advertising strategies.
SECURITIES/REGULATION
Management has focused on completing two objectives in this arena. The
regulatory approval to operate an ATS as defined under Regulation ATS and the
support mechanism of the Sponsoring and Clearing Broker Dealers.
In 1997 the Company retained the legal services of Kogan and Taubman, LLC
of New York in order to format/submit an application and apply for a No-Action
approval from the SEC in order to operate a completely revolutionary ATS. At
the time, the SEC was contemplating through comments and introduction, a
regulation that encompassed the growing ATS market. The Company initiated
discussions with the SEC's Division of Enforcement (DOE) in June 1997. The
response was favorable and an application for No-Action approval was submitted
to the DOE in August 1997.
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The Company worked closely with the DOE over the next year in responding to
comments that the DOE responded with, submitting three separate responses to
questions asked. When it appeared that the Company was close to receiving its
approval (based on the ability to operate the ATS) the SEC formally announced in
October 1998 that there would be no further No-Action approvals pertaining to
any ATS. The SEC had expedited its approval process for Regulation ATS and
announced the implementation of the regulation for January 1999. The Company
then reviewed the regulation and applied for approval to operate according to
the guidelines of Regulation ATS to the NASD in April of 1999. The Company
received comments from the NASD which incorporated the following concerns:
Written Supervisory Procedures, Clearing and Sponsoring Broker Dealers and
System Capacity. In June 1999, the Company formally withdrew its request for
approval so that it could form the necessary infrastructure that would pass
muster with the NASD and Regulation ATS.
In June 1999, Mr. Cushing and Mr. Chimenti began discussions with iCap,
Inc., a licensed Broker Dealer located in Virginia. These discussions centered
around an acquisition, whereby iCap would become the property of Mr. Cushing and
Mr. Chimenti and would subsequently be the Sponsoring Broker Dealer for the
WAMEX ATS activities. Those discussions are being concluded favorably and should
result in the purchase or acquisition of the Broker Dealer which will in turn
sponsor the activities of the ATS.
Since its inception, the Company has been exploring opportunities with
possible Clearing Broker Dealers. To date management has been unsuccessful in
obtaining a Clearing arrangement in large part because there was no sponsoring
Broker Dealer for the ATS clients or its activities. Other main concerns or
obstacles to agreements were: Lack of capital sufficient to operate an ATS, lack
of understanding of the ATS concept, competition, lack of sufficient profit for
the Clearing Agent, lack of technical expertise (Clearing side) to implement,
lack of motivation to change established clearing arrangements and lack of a
Sponsoring Broker. The Company received the most favorable responses from some
of the largest organizations of the financial industry such as DLJ and Merrill
Lynch, however, these organizations elected not to participate because the
business model of the ATS was diametrically opposed to their established
profitable business models and revenue streams.
In September 1999, the Company began to solicit certain other Clearing
Brokers on behalf of the Company. The Company has agreed to retain iCap as the
Sponsoring Broker Dealer. As such, the Company has identified no less than three
Clearing Brokers that are willing to employ Clearing arrangements with the
Company. All three are technologically advanced and sufficiently well structured
as to alleviate a vast majority of the concerns outlined above. The focus of the
discussions with these entities has centered around their profitability as
Clearing Brokers. Although proprietary in nature, management believes that it
has answered those concerns by adjusting pricing models that are favorable to
the Clearing Broker and the ATS member. The Company is presently engaged in
selecting the most favorable situation for the prospective ATS members.
Management is confident that it has solved in large part all of the concerns of
these Clearing Brokers and will have a Clearing arrangement for the ATS no later
than May 2000.
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It is significant to mention that the final completion of the software
program is in large part dependant on whom the Sponsoring and Clearing Brokers
are because of the necessity to link all three organizations. The ATS, the
Sponsoring Broker and the Clearing Broker must be linked through dedicated
lines, and protocols must be shared in order for the ATS to become seamless.
Management is highly confident that although this is an integral step in
accomplishing the continuity of the ATS, it is rather easily accomplished from a
technical standpoint. Once all of the participants in this venture have been
identified, management estimates no more than 45 days of programming to be
required for the linking phase.
FUNDING/ADMINISTRATION
Since its inception, management has been working diligently on procuring
the necessary investment capital to build, grow and maintain the ATS and its
operations. In 1997 the Company was successful in structuring a convertible debt
instrument with a foreign company that provided approximately $1,800,000 in
funding. This funding was used amongst other things to develop the ATS software
program, procure computers and other programming software, procure the services
of web designers and other programmers and to establish offices in Vienna and
the U.S. This note was subsequently converted into equity and management was
able to bring the Company from the seed and developmental stages (in terms of
strategy) to its present stage of go-to-market.
Managements primary concern as it relates to funding was twofold: Operating
Capital and Implementation Funding. As such in January 1998, management
initiated a strategy to find investment principal through Venture Capital (VC),
Investment Banking (IB) and Private Investments (PI). Although the Company
received many positive responses to the concept, it was unsuccessful in
acquiring the necessary funding through exposure to IB and PI capital for the
first 18 months.
Managements experience in the financial industry lead to the initiation of
a strategy in late 1998, that the Company could best obtain funding through
venture capital (VC) exposure. As such, the Company aggressively pursued avenues
of venture capital. In November 1999, the Company structured and was successful
in placing a $1,000,000 offering under Rule 504 of Regulation D to private
investors. Management believes that the successful closing and availability of
funds are more than sufficient to operate WHI as the holding Company,
administratively for the next 18 months.
As a result of the merger and subsequent listing on the NASDAQ OTC-BB and
the successful placement of the offering, the Company has experienced an
increased exposure and awareness within the investment community. As such, the
Company is presently entertaining several relevant funding offers from both
public and private entities. Management is in the process of determining the
most favorable offers employing the following concerns: Size of investment,
shareholder value, cost of investment, ability to participate in ATS operations,
future funding capabilities, administrative and technical support, and corporate
partnerships. Management is confident that these negotiations will result in the
Company closing on one or more of the offers presently available which will
result in sufficient capital for the Company to fully implement the goals and
strategies of the business plan. Management expects to finalize one or more of
these negotiations no later than April 1, 2000.
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To date, management has been the Administration of the Company with Mr.
Cushing as Chief Executive Officer (CEO), Mr. Chimenti as Chief Administrative
Officer (CAO), Mr. Mundstein as Chief Operating Officer (COO) and Mr.
Schoebinger as Chief Technology Officer (CTO). The Company has relied heavily on
the commitment, skills and work of these four principals to accomplish all of
the corporate strategies.
Management has assigned appropriate responsibilities to the senior
principals identified above during the Company's implementation phase.
Management is presently in discussions with two real estate agencies in the New
York area to procure space for its corporate activities. It is contemplated that
this space will house WHI, WAMEX ATS administration and iCap, Inc. It is also
contemplated that there may be an agreement with iNYC, Inc., of New York to
co-locate on the same premises as the companies intend to finalize an agreement
to provide WAMEX ATS members with free high speed Digital Subscriber Line (DSL)
Internet connection upon ATS activation.
Once the location for the Company has been procured, management plans to
initiate hiring of necessary employees as well as procuring the necessary
technological infrastructure. With the appropriate funding, management is
confident that it has the ability, experience and knowledge to accomplish these
tasks no later than July 2000. Management contemplates out-sourcing its customer
service activities (with the exception of Broker Orders and technical service
and support) and is presently seeking an established organization to assume that
responsibility.
RESEARCH AND DEVELOPMENT
As stated, the Company has completed its base platform software version
with the exception of its linking protocols to the Clearing Broker and the SEC
and NASD for purposes of reporting ATS activities.
In terms of its Research and Development (RD), the Company is presently
engaged in the production of its highly advanced Intelligent Order Management
System (IOMS). The ATS base platform and its DMS are proprietary and can only
be used when entering through the WAMEX ATS system and its protocols, whereas
IOMS is a separate software program that can be employed with any financial
software program from any financial order execution Website (any e-brokerage).
IOMS is a highly sophisticated order execution software program (by design)
that management considers to be extremely confidential. Management elects not
to discuss any details of its development, features, uses or applications at
this time except that the Company is presently in discussions with one or more
companies in the database management industry to assist in its development.
Management also elects not to discuss the cost of the development of this
software except to say that it will not have a substantive impact on the Company
budget.
MATERIAL ACQUISITION
Management does not contemplate any material equipment acquisition other
than the DMS (which may be leased) and what is described in the Implementation
Plan.
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Management notes that it is presently in discussions with certain
organizations in the financial industry that the Company has identified as being
possible acquisition or merger candidates. As part of the strategy of
development, management intends to identify certain Internet and non-Internet
companies that have synergistic or common operations and strategies and discuss
possibly acquiring these entities. This would depend largely on the following
dynamics: Impact on present and future business operations, shareholder value,
available funding, need, necessity, competition and willingness to cooperate.
There can be no assurance that the Company will be successful in identifying
qualified merger or acquisition candidates, or if it does, that the Company will
be successful in completing a transaction with them.
Management is presently negotiating the acquisition of an on-line entity
that has the regulatory approval to operate an ATS as well as approval to
distribute offerings via the Internet to accredited and qualified participants.
This relationship would have a direct positive impact on the services that the
ATS would be able to offer its members and may have an accelerated impact as to
the accelerated initiation of INSTOX operations.
MATERIAL CHANGES
The Company does not contemplate any material changes in it's business
operations or staffing other than what is described in the Implementation Plan.
Management acknowledges that the Company may have to hire the appropriate Human
Resource personnel to administer the WHI and WAMEX workforce if operations of
the business exceed the contemplated goals.
Mr. Schobinger intends to move from the position of WHI CTO to the position
of W3D CEO when those operations are contemplated to begin in June 2000. This
would only affect the direct day-to-day management of the WHI technological
structure which at that time will have little if any effect on WHI operations.
As W3D will be responsible for the technological development and maintenance of
the WAMEX ATS and it's DMS, management feels that Mr. Schoebinger's talents and
time will be properly placed in W3D. The Company plans to hire sufficient
personnel to administer the day-to-day technology of WHI's infrastructure.
INDUSTRY OVERVIEW
Orders for the purchase or sale of stock on the New York Stock Exchange
(NYSE), the American Stock Exchange (AMEX) and the National Association of
Securities Dealers Automated Quotations (NASDAQ) are initiated at the broker
level whether the order is solicited or unsolicited. There are several
intermediaries that account for the steps involved when the execution of a
specific order is desired. Each one of these intermediaries, regardless of the
Exchange or Association, of course, gets a piece of the transaction as his
benefit for helping to provide a link in the chain of events that provide
so-called liquidity in a so-called free and transparent market.
The dedicated specialist who owns a seat on the NYSE has certain
obligations, such as "maintaining a market" for the security by providing
liquidity. His monopoly on a certain stock during trading hours gains him a
constant stream of revenue, a fraction of a dollar per share at a time. However,
access standards, transparency, order execution, price, criminal activity,
language barriers, market operating hours and enormous amounts of intermediaries
and commissions has made these markets and their methods inefficient and
unappealing.
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A new breed of investor (self empowered Internet user) has been the fastest
growing segment of the investment population in the world over the last seven
years and has literally changed the way the markets and the industry views its
methodology and services today. The self empowered investor is concerned about
the key issues of trading and investing such as market transparency and
inclusion at the price display level as well as low cost transaction costs, 24
hour trade capability and rapid order execution. In short, a cheap efficient and
reliable marketplace.
This scenario does not and cannot exist under the present structure,
because there has to be a certain degree of proprietary trading against all
market participants in order for the chain of event custodians and participants
such as Market Makers and Specialists to be paid well enough for the inherent
risk of providing liquidity. The fact of the matter remains that the investing
public is disenchanted with the lack of inclusion associated with markets in
general and the unfair access that Institutional clients have to the markets and
exchanges .
ATS's are nothing new. They've been around for quite some time. In the
1960's, technological advances in computer networking lead to the creation of
Nasdaq, where Market Makers compete for orders by providing a firm quote for a
specific stock, i.e. the buy and sell price for a given quantity of
certificates. Additionally, investors may be aware of Instinet and the Arizona
Stock Exchange as other ATS's.
The problem is that there is not now and has never been an ATS for the
investing public. They have been restricted to market participants and
institutional clients. New developments challenge these niches of privilege.
So-called "Electronic Control Networks" (ECN's) exploit recent legislation from
the SEC that force market makers to immediately display all received orders that
are better than their own. Even more powerful computer networks allow instant
trading in between the Nasdaq spreads from dedicated terminals. Fifty percent of
Nasdaq volume is executed in this way today. As technology enables more and more
people to directly participate in the market, speed increases, spreads become
smaller; the market becomes more efficient.
MARKET
The trading of financial instruments is one of the largest and most active
industries in the world. Traditionally, established institutions such as
Exchanges (NYSE) and Associations of Quotation Markets (Nasdaq), set the
standards for access, execution prices and fees. However, a community of
self-empowered investors has emerged that is currently the fastest growing
segment of the investing population. This community is presenting the industry
with challenging demands that are proving to radically transform the industry.
Moreover, staggering developments in technologies such as the Internet have
allowed these investors to trade in a new and improved playing field, which
enables them to transact more quickly and at a much lower cost.
However, there are demands that have still not been met. Namely, the desire
on the part of the investor to gain direct access to the transaction, thus
eliminating inefficiencies such as the middle persons (brokers and traders) and
obtaining the ultimate state of self-empowerment, as well as securing the lowest
possible cost by direct trading within the open market spreads. This simple yet
basic concept would provide the individual investor with the ability to Price
Enhance similar to Institutions and Registered Broker Dealers.
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Online Trading has proven, in the growth of customer base and its volume,
to be the long-awaited killer application for the retail financial services
industry online. Because the online medium empowers users with timely
information previously available only to brokers and institutional investors,
consumers are able to make better investment decisions on their own. As such,
the Web and online services have rapidly become a viable channel for investment
research and retail trading activity. Online investing is on a path to eclipse
online retail banking in market penetration, reaching 15 million accounts in
2002. By becoming a dominant consumer access channel in the near future, online
brokerage services will succeed where online banking services have faltered.
The online investors of today - active and self-directed - are bringing
volume to online-only brokerages, but the fact remains that the demographics of
online users will skew toward those of the mass market in the next five years.
According to Jupiter Communications, although a full 68% of online households
(14.8 million) are investing households, only 15.6 percent of online households
(3.4 million) trade online presenting the opportunity for 11.4 million investing
households to be converted to online trading. Online brokerage customers have a
more active trading behavior than traditional customers that rely on a FA
(Financial Advisor) do. More than a third of total US investing households (10
million) are online, which corresponds with their familiarity with investing and
technology:
THE PRODUCT
The WAMEX ATSJ (a Database Management System) when constructed and
operational will allow both individual investors and institutions to trade
securities directly with each other over the Internet, eliminating the
intervention of brokers or traders.
When using the WAMEX Alternative Trading System, investors simply enter
their desired order parameters into the system and are matched with other
investors. There are no other intermediaries, procedural steps, executing broker
dealers, sale of order flow or proprietary trading against investors. Should the
member not be able to find satisfactory order parameters that match, he may
elect to modify, cancel or route the order through to the company's open market
trading affiliate directly to the floor of the exchange. The system will offer
accessibility, ease of use and virtually instantaneous reporting, settlement,
confirmation and clearing along with secure trades.
Management contemplates the main unique advantages of the WAMEX Alternative
Trading System to be proprietary in nature that have been discussed with the SEC
and NASD and will conform to Regulation ATS and industry standards. An
alternative to interacting with the Web site through a standard browser is a W3D
Customized Trading Software package called IOMS (The Intelligent Order
Management System), which will be made available for downloading. The customized
software application has been designed to provide the member with advanced
screen trading applications and formatting.
WHI has developed a workable prototype of the ATS. This prototype is hosted
on a WHI server that is equipped with the W3D ATS Software Version 1.0. System
capacity allows for a limited number of users to trade on the system with all of
the functionality of a larger scale version.
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STRATEGY
The Chairman of the SEC and its entire organization have worked tirelessly
to transform the markets into a more individual investor focused atmosphere.
Following this mandate, management feels that the opportunity to provide
individual investors with the greatest possibility of market transparency and
price enhancement in the future will be provided through Alternative Trading
Systems (ATS's).
The company will leverage top management's industry expertise, as well as
in-house proprietary technology in implementing its strategic goals. Management
intends to target both individual and institutional investors, providing them
with value, service, and security. Marketing efforts will include both an online
and offline strategy. Management will first adopt the focus approach and target
individual online investors.
According to Jupiter's Consumer Brand Strategies report, all marketers must
employ a brand action marketing strategy: a communication with the consumer that
exploits interactivity to both build the brand and drive action. Most marketers
are presently failing to do this, taking instead either a branding or
direct-marketing approach, and underutilizing the online medium's unique
interactivity, which makes linking these activities not only possible, but also
essential.
Management intends to employ this dual approach of focusing on consumer
incentives without neglecting brand-building messages. The uniqueness of the ATS
will always be stressed, and ad campaigns will focus on the details of the
services offered, including performance, products and cost advantage over
traditional brokers and discount brokers.
WAMEX will basically offer the same trading scenario to individuals and
institutions, even if the approach to the trading system will be different by
these two customer segments. Institutions will trade on behalf of their
customers and for the advantage of their firm, while individuals will trade for
themselves. However, the procedure is the same. By putting individuals and
institutions into the same trading systems, both sides can profit. Institutions
will be able to capitalize from more liquidity and exposure, individuals from
access to each other.
CUSTOMERS
The Company presently has no customers. Management has identified the
future client base as follows:
Most WAMEX clients will be computer-literate, well educated and aware of
the Internet and the investment community, belonging to the information-hungry
and transaction-hungry categories described above. The average client would have
a yearly income of between $50,000 and $120,000, and have speculative investment
principal of between $30,000 and $500,000. A majority should be self-guided
decision-makers with semi-analytical sophistication, white-collar, in a middle
management position.
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WAMEX clients buy based on some type of research and analysis. They conduct
transactions based on cost satisfaction, and therefore appreciate low fees and
transaction costs. However, loyalty and habit play an important role in their
decision with whom they want to conduct their business. They appreciate
convenient one-stop-shopping and interactive interfaces, that both facilitates
making investment decisions confidently, and delivers a certain degree of
entertainment value. In this context, a significant portion of potential clients
will appreciate a service-oriented intermediary.
The Internet gives access to a global customer base. WAMEX is going to
cater also to the non-US client who will appreciate the multi-language interface
for enhanced confidence and less psychic distance. Institutional WAMEX clients
can range from small to mid-size Broker Dealer operations, Mutual Funds,
Electronic Control Networks (ECN's), portfolio and equity managers and
professional traders. This profile does not preclude recruitment of divisions or
individuals working for larger firms in the investment banking business.
Small institutional investors are defined as brokerage firms with less than
$50MM of client capital under management. Many of these firms survive with a
mixed strategy of aggressive marketing ("cold calling") and so-called
proprietary products, i.e. securities that represent small-cap firms with which
the brokerage has a relationship of mutual benefit. These brokerages often have
a market liquidity problem, because even small transactions could influence the
price of the stock significantly and thus alarm all investors that have bought
stock of these companies. Such brokerages will need a place to liquidate their
holdings without running the risk of depressing the price of the securities they
want to sell.
Institutional clients generally work for investors and are thus forced to
be result-oriented, profit-driven entities. This seems to be the only criterion
in their purchasing behavior. They are generally less concerned with services
offered than with functionality and the bottom line. The products and services
would fit the characteristics of institutional purchasing behavior, should the
WAMEX client base begin to reach relevant proportions.
PATENTS, TRADEMARKS AND LICENSES
The Company owns no patents. The Company has explored the possibility of
patenting the ATS application as well as its software designs. Management has
presently elected not to seek patent protection.
The Company has trademarked its logo and name and that of its subsidiaries.
The Company owns several Web domain names: wamex.com. wamx.com and wamexny.com.
The Company is responsible to renew these domain registrations BI-annually with
Network Solutions, Inc.
SEASONAL EFFECTS
Management does not foresee any seasonal effect in its business model that
is not normal for the financial industry.
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INVENTORY OF SECURITIES
Management acknowledges that there is a need for an inventory of tradable
securities in order to provide potential buyers with a market in which to
participate. Management had several issues in mind when devising this strategy.
Firstly, inclusivity is the only way to avoid antagonizing any market
participant. Secondly, to generate a market with a sufficient inventory of
known, deposited, largely liquid securities. This concern can be compared to the
grand opening of a consumer goods super-store, where on opening day thousand of
people rush into the store finding nothing but empty shelves without products.
Participants or members are at no risk, with a fully insured depository for
stock certificates carried by a Clearing Broker.
With a confidential pricing strategy, management believes that this will
motivate equity holders to deposit their certificates into the WAMEX trading
system, thus creating what management believes to not only be a viable inventory
solution, but also, in the long term, result in a large inventory of tradeable
equity.
GOVERNMENT APPROVAL
Management acknowledges that it needs regulatory approval in order to
operate the ATS. The Company has elected to seek regulatory approval in the
United States with the SEC because it believes that the U.S. regulatory
atmosphere would bring integrity in the International community. As pointed out
in previous discussion, the Company has worked closely with the SEC in the past
to seek approval and will continue to do so. Regulation ATS specifies the
necessary procedures that the Company will have to maintain in order to be
approved and maintain that approval. Management is confident that the Company
will be able to receive such approval and maintain the same.
The Company will have a licensed and registered Sponsoring and Clearing
Broker Dealers that are regulated by the SEC and the NASD and foresees no
problem with theses organizations not fulfilling their regulatory or fiduciary
responsibilities.
COMPETITION
The rapid growth of the retail financial services sector on the Web has
brought with it intense competition. Because the online investing industry is
riddled with price wars and threatened by increasing customer-acquisition costs,
only the strong will survive. This means larger institutions B brokerages,
retail banks, and other financial entities B are likely to acquire or partner
with smaller players, as evidenced by Dean Witter's acquisition of Lombard
Brokerage (now Discover Brokerage Direct), BancOne's partnership with E*Trade,
Ameritrade and Datek and most recently Merrill Lynch's interest in on-line
trading with their own site. WAMEX will compete or supplement services on two
fronts: Providing an Alternative Exchange that management believes will be a
significant resource for the buying, selling, and future listing of listed and
non-listed securities and providing traditional Brokerage services.
Although the major exchanges would appear to be the competition, they in
fact are not. These exchanges compete with each other for listings of publicly
traded companies. WAMEX has no intention of competing directly, in fact, we
could never become the primary liquidity providers for all the securities that
are listed on these exchanges. There is a need for the exchanges to set prices
for the securities that are listed so that the general investment community can
draw rational conclusions as to the stock values that can be traded on these
exchanges.
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The other front is of course on-line trading and the services that
compliment these activities such as investment information and on-line banking.
There are multitudes of information providers that WAMEX has identified that
give all the necessary investment information needed. As for trade execution,
WAMEX will require a short period of time to structure it's technical execution
system, however management believes it would be difficult for other
organizations in the industry to compete with the cost of execution (in total),
as WAMEX will not trade proprietarily and therefore pass on savings to its
clients.
At present, there are full service and discount brokerage services
available to every investor in the world. A multitude of these operates through
the Internet, providing low cost and rapid executions for individual investors.
However, it should be understood that these systems trade proprietarily. In
addition, at least five major third-market trading systems are known to the
company, that have tailored their activities to cater to institutional investors
and proprietary traders only. To the company's knowledge there is no system in
operation that provides direct public investment interaction.
Potential competitors could try to emulate the WAMEX trading concept.
However, entry costs are high, not only because of the complexity of producing
such powerful software, but also because of the opportunity costs that would
have to be given up by companies that profit from proprietary trading.
Furthermore, the nature of an Alternative Market dictates that only sufficient
liquidity attracts more investors, so that a later entrant would have problems
reaching the critical growth rate.
Management's strategy to respond to challenges from the competition will be
to stay ahead of them: more speed, reliability, flexibility, better design,
marketing and customer service, state of the art technology and creative
innovation will make the Company difficult to challenge. The Company intends to
maintain its low pricing standards to attempt to remain one of the cheapest
alternatives for trading financial instruments. Moreover, potential competitors
are all focused on the US securities market, blatantly ignoring growth in
Europe, where individual stock trading is in its infant stages, and post-crisis
Asia, well known for its readiness to embrace new technologies and lifestyles.
The company will pursue strategic partnerships and acquisitions. The
majority of firms dealing in securities have an interest in increasing volume
and liquidity. Mutually beneficial cooperation is easily achievable, because of
the open architecture of the WAMEX Alternative Trading System, which can be
linked to stock markets, other alternative trading systems, third markets,
discount brokerages etc.
Competitors (among others)
- ----------------------------
Bear Stearns
Fidelity Investments
Painewebber
Prudential Securities
Smith Barney
Sutro & Co
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These companies are traditional full commission brokerages of formidable
size. They use the web primarily to let customer's track their investments
rather than execute trades at a discount. Customers are mostly of the
advice-hungry type. They use their own customer base as the main customer
acquisition channel. As momentum builds on the alternative trading system, these
companies might be interested in using WAMEX as an alternative marketplace for
execution, rather than competing against WAMEX, because emulating the
alternative trading system would cannibalize their own business.
Charles Schwab
Merrill Lynch & Co
Quick & Reilly
Schwab and Quick & Reilly are traditional discount brokerages that have
only recently entered the online market. According to Jupiter, Schwab, which has
been tremendously successful after the 1995 launch of online services, has more
than 1 million active accounts that are also online, approximately 22% of total
accounts. All accounts generate about 111,300 average daily trades, of which
40,000 average daily trades online. Quick & Reilly has about 1 million clients,
of which 10% online, generating app. 10,000 average daily trades.
Important Competitors
- ----------------------
Ameritrade
DlJdirect
Datek Securities Corp
Discover Brokerage
E*Trade Securities
Suretrade
WebStreet Securities
These are the most important competitors for market share. Suretrade and
WebStreet Securities are smaller companies, but they have customer profiles that
fit the typical transaction-hungry WAMEX customer. They are not mentioned in the
Jupiter report, but WebStreet is the first online broker offering free trades.
Third-Market Trading Systems (among others)
- -----------------------------------------------
Instinet
Island
Bloomberg Tradebook
Arizona Stock Exchange
Market XT
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These entities are closest to the WAMEX ATS core operation, but they cater
largely to institutions and are cost prohibitive for the individual investor.
Synergies by hooking these markets up to each other and making order flow
accessible by reciprocity are a possibility at a later stage of development.
While direct competition with WAMEX is also possible; management feels these
entities lack the consumer-oriented focus because they deal exclusively on an
institutional level. Market XT would appear to have the closest look to WAMEX
however, management feels that its after hours trading model is built primarily
on "Unexecuted Day Orders" and is therefore different enough to draw a rational
distinction for market share.
Conceptually Similar Companies (Direct Competitors):
- --------------------------------------------------------
Wit Capital
Grenex
Zoom Trade
Wit Capital has been operating a brokerage service through the Internet
since 1996. It is the only company that wants to encourage communication between
its clients, even with the purpose of letting them trade with each other.
However, the main profit-generating business is proprietary trading, as
explained above, and Internet Initial Public Offerings. Wit Capital's legal
background has enabled it to get early approval from the SEC. The purpose for
their internal trading system is merely to have investors in IPO's trade this
non-listed stock among themselves. Management feels their system is very crude
and primitive, and lacks all essential features of the WAMEX trading system,
including live feedback, clearing arrangements for international securities,
large database capacity for a variety of securities, etc. Grenex has folded.
Zoom Trade is in its conceptual stage and relying heavily on unsecured
Japanese capital. There is no indication that it will be operational within the
next three years.
Relatively similar operations, such as existing discount brokerages, all
conduct proprietary trading and have little motivation to enter the alternative
trading system market. Management believes that while these entities possess the
resources to compete with WAMEX, they will not do so, as it is inconsistent with
their business structures designed to gain profit elsewhere. Specifically,
entering the ATS market would cannibalize their current business, as well as put
at risk current industry relationships needed to conduct business.
PERSONS EMPLOYED
At present the Company employees four senior executives and two
programmers.
RISK TO FOREIGN OPERATIONS
The Company presently operates a European marketing office in Vienna,
Austria. This is a shared office space with a Company called WAMEX DATA SERVICE,
GmbH. an Austrian company wholly owned by Mr. Mundstein. The Company pays no
rent and has approximately $4,000 in computer equipment on premises. This
equipment is under the supervision of and is used by Mr. Mundstein for the WHI
business activities.
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DESCRIPTION OF PROPERTY
The Company's principal business operations are conducted at 3040 Nostrand
Ave., Marine Park, N.Y. 11229. It shares a 1,250 sq. ft. facility with iNYC (an
Internet Service Provider (ISP)). The Company also has minor contact offices for
the purposes of client meetings located at 117 E. 57 St., N.Y., N.Y. and in
Vienna, Austria. Both facilities are smaller than 200 sq. ft and are shared
office spaces with WAMEX DATA SERVICE. The Company has no material assets other
than computer equipment and software programs located at these facilities. These
computers and programs are valued at less that $60,000, are fully insured and
are free and clear of any liens or encumbrances.
These facilities have been invaluable to the Company during it's operation
in the past, however, they will not be appropriate for the Company's planned
business activities in the future. The Company is presently seeking between
6-8000 sq. ft. of corporate space in the downtown Manhattan area in New York.
The Company contemplates a long term lease. The planned location will allow a
consolidation of all U.S. and International activities as it relates to WHI,
WAMEX and INSTOX as well as iCap. The Company expects to have the facility
available no later than April 2000.
As previously noted, the Company is negotiating with several hosting
entities to house the servers of the WAMEX ATS. The Company is presently
negotiating for W3D corporate space in the Southeast Florida region. This space
is contemplated to be no more than 1000 sq. ft. and will encompass all of the
W3D corporate personnel and functions.
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MARKET FOR WAMEX'S SECURITIES
WAMEX has been a non-reporting publicly traded company with certain of
its securities exempt from registration under the Securities Act of 1933
pursuant to Rules 504 of Regulation D and Rule 144 of the General Rules and
Regulations of the Securities and Exchange Commission. WAMEX's common stock is
traded on the OTC Bulletin Board operated by Nasdaq under the symbol WAMX.
WAMEX has not become or otherwise been a reporting company under the Securities
Exchange Act of 1934. The Nasdaq Stock Market has implemented a change in its
rules requiring all companies trading securities on the OTC Bulletin Board to
become reporting companies under the Securities Exchange Act of 1934. WAMEX is
required to become a reporting company by the close of business on May 17, 2000
or no longer be listed on the OTC Bulletin Board. WAMEX effected the stock
exchange transaction with Conchology on March 1, 2000 and became a successor
issuer thereto in order to comply with the reporting company requirements
implemented by the over-the-counter bulletin board.
The following table sets forth the high and low prices for shares of our
common stock for the periods noted, as reported by the National Daily Quotation
Service and the OTC bulletin board maintained by Nasdaq. Quotations reflect
inter-dealer prices, without retail mark-up, mark-down or commission and may not
represent actual transactions. Our stock began trading on November 2, 1999
under the symbol WAMX.
BID PRICES
YEAR PERIOD HIGH LOW
----- ------ ------ -----
2000 First Quarter 22.88** 2.50**
(through March 10, 2000)
1999 Fourth Quarter 4.88* 0.375*
* Reflects the prices of the stock during this period with very little, if
any, trading volume or transactions. The Company is not aware of any market
maker or broker-dealer activity that would encompass Mark-ups, Mark-downs or
Commissions as it relates to the trading or non-trading of the stock. The
Company assumes that these prices reflect the market for the stock.
** Reflects the prices of the stock during this period. As the awareness of
the Company has become greater, there has been a significant amount of increased
activity in the trading of the stock. The Company is not aware of any market
maker or broker-dealer activity that would encompass Mark-ups, Mark-downs or
Commissions as it relates to the trading or non-trading of the stock. The
Company assumes that these prices reflect the market for the stock.
The Company made a public announcement of a merger with The Treasure Cache,
Inc. on December 9, 1999. Prior to that announcement, the stock had a market
price and range of 3/8 to 1 3/8.
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The number of beneficial holders of record of the common stock of WAMEX as
of the close of business on February 25, 2000 was approximately 400. Many of
the shares are held in street name and consequently reflect numerous additional
beneficial owners.
DIVIDEND POLICY
We have never paid any cash dividends on our common stock and do not
anticipate paying any cash dividends on our common stock in the future.
Instead, we intend to retain future earnings, if any, to fund the development
and growth of our business.
The Company declared a stock dividend in the form of a 4 for 1 forward
stock split to its shareholders on February 24, 2000. The Record Date for the
dividend is March 17, 2000, and the Payable Date is April 6, 2000.
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MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth the names and ages of the current directors
and executive officers of WAMEX who will remain so with the combined entity,
their principal offices and positions and the date each such person became a
director or executive officer. Our executive officers are elected annually by
the Board of Directors. Our directors serve one year terms until their
successors are elected. The executive officers serve terms of one year or until
their death, resignation or removal by the Board of Directors. There are no
family relationships between any of the directors and executive officers. In
addition, there was no arrangement or understanding between any executive
officer and any other person pursuant to which any person was selected as an
executive officer.
The directors and executive officers of WAMEX are as follows:
Name Age Positions
- ---- --- ---------
Mitchell H. Cushing 37 Chairman of the Board and Chief Executive
Officer
Sascha Mundstein 32 Chief Operating Officer and Director
Russell Chimenti 29 Chief Administrative Officer and Director
Hans Michael Schobinger 30 Chief Technology Officer and Director
Dr. Joseph Monaco 44 Chairman of Advisory Board
MITCHELL H. CUSHING: CHAIRMAN AND CHIEF EXECUTIVE OFFICER
Mr. Cushing conceptualized and founded WAMEX Inc. in 1996 and 1998
respectively. As the CEO he has been responsible for overseeing every aspect of
the company's structure and growth. Mr. Cushing's vast experience in the
investment banking industry and trading environments, as well as his numerous
accomplishments in early stage businesses commend him for the role of CEO in
this critical phase of the company's establishment.
Since 1994 he has been serving as the CEO of J.J. Braik Inc., a consulting
corporation. He has served in the capacity of Corporate Strategist to provide
advice in corporate expansion, security and acquisitions, International
Portfolios Manager, Financial Advisor, and Analyst for several U.S. and European
Investment Firms. He has had extensive experience in Investment Banking in New
York, Budapest, Berlin, Prague, Switzerland and Vienna.
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From 1996 to 1998, Mr. Cushing had been responsible for the growth and
development of portfolios in Europe that grew from under $10 million to over $40
million under management in under 2 years. As a Corporate Strategist, he was
responsible for the expansion of licensed Broker Dealers in 6 European
countries, which was the largest non-institutional expansion in Europe in the
1990's. From 1994 to 1996 he served in the Investment Banking industry in New
York as a Broker for small-cap firms. In this period he participated in raising
over 100 million USD on Public Offerings for privately held corporations.
From 1992 to 1994 Mr. Cushing served as the President and Chairman of the
Board of West Howston Investors N.Y. with the responsibility of corporate
organization and overall Portfolio Management.
From 1989 to 1992 Mr. Cushing was retained as Corporate Inspector General
of Inta-Boro Inc., the premier Transportation Company in New York where he was
responsible for reviewing all facets of the company's budget and expenditures.
During this period, the company had its most profitable 4-year period in its
20-year history. In 1991 he was given the additional responsibility of managing
the company's retirement accounts.
SASCHA MUNDSTEIN: CHIEF OPERATING OFFICER AND DIRECTOR
Mr. Mundstein has played a key role in developing all aspects of the WAMEX
system's organizational, technical as well as financial structure. Mr. Mundstein
has been tasked by WAMEX to serve as COO whose responsibilities extend to all
non-US WAMEX operations, including coordination with international stock
exchanges, managing multi-lingual customer service and coordinating WAMEX
activities with international securities regulators. His proven strategic
vision, international experiences and accomplished educational and business
backgrounds make him uniquely qualified for this position.
From 1996 to 1998, he worked in the European securities industry as a
Broker, Financial Consultant and Portfolio Manager of a European Investment
Advisory group with an extensive European network. Prior to entering the
securities industry, he had held a key position at an institution affiliated
with the Austrian Ministry of Foreign Affairs. Foreign Affairs duties have given
him access to critical familiarity with cultural and financial conditions in
Europe and Asia.
Before entering the securities industry, Mr. Mundstein has been a lecturer
at Harvard University and a computer consultant for the Austrian Foreign Service
School Diplomatische Akademie in Vienna. He has played a key role in modernizing
the entire technological infrastructure of that institution, including its
Internet presence.
In 1995 he conceptualized and planned Zhonghua Zai Xian, a commercial
online system for mainland China, which proved highly attractive to the Chinese
government due to its educational use and independent platform that is capable
of screening undesired content from the Internet. It was sold to a Chinese
consortium of entrepreneurs for an undisclosed sum.
From 1993 to 1995 Mr. Mundstein worked as a representative for various
European industrial firms exporting to China and Southeast Asia, including AV
Technology, OMV, and Thyssen, facilitating sales in the order of 350 million
USD.
27
<PAGE>
From 1988 to 1990 Mr. Mundstein was based in Southern Thailand, where he
founded a successful business school (The Trang International Languages and
Business School), building a student body of above 350, and where he bought and
ran a rubber plantation, increasing productivity by 260% within two years
through reengineering of work and production processes. In this period, he
established the Trang Holiday Resort Company, Ltd., which planned, financed,
built, managed and marketed innovative holiday resorts in Southern Thailand for
families with high educational background, generating more than 4.5 million USD
in commission based consulting fees. He sold his businesses to attend his
studies for a master's degree at Harvard University.
Mr. Mundstein is fluent in spoken and written German, English, Italian,
French, Thai, and Mandarin Chinese, and has an extensive knowledge of Spanish,
Russian, Arabic and Japanese. He won two piano competitions with his Chopin and
Debussy interpretations and led a Volleyball team achieving the vice
Jugendmeister title in Vienna.
RUSSELL CHIMENTI: CHIEF ADMINISTRATIVE OFFICER AND DIRECTOR
Mr. Chimenti joined WAMEX Inc. in 1997. He has been responsible for
coordinating all aspects of the company's Broker Dealer strategies; all company
capital raises and has conceptually developed the core design of the Alternative
Trading System, its proprietary software and its marketing strategy. His strong
drive for sales and his marketing expertise have enabled the company to
accomplish its essential milestones to date.
Since 1996 he has been serving as the Vice-president of J.J. Braik Inc., a
consulting corporation. He has served for several U.S. and European Investment
Firms as a specialist in the area of corporate finance and provides financial
advisory services and general business advice to a wide range of private and
public sector clients. He has had extensive experience in Investment Banking in
the Middle East, New York, Budapest, Prague, Switzerland and Vienna.
From 1997 to 1998, Mr. Chimenti was responsible for the design and
implementation of Order Routing Systems for European Investment Banking and
Advisory Firms. He was credited with establishing the first non-institutional
order routing system between Europe, the Middle East and the U.S. He was
credited with a 2000% increase in automated order flow in Europe and a 500%
increase in the Middle East. He was further credited with the strategy and Phase
1 development of advanced integration systems in the Internet arena for the
Dubai Chamber of Commerce and Stock Exchange.
From 1996 to 1997, Mr. Chimenti was responsible for the growth and
development of portfolios in the Middle East theatre that grew from under 4
million USD to over 14 million USD under management in 1 year. As a Corporate
Finance specialist, he was responsible for the establishment of relationships
with the government of the United Arab Emirates and the Chamber of Commerce of
Dubai. He was further personally credited with the successful placement of 4
Private Placements and was directly involved in the Syndicate Management of four
Initial Public Offerings all of which in sum exceeded 30 million USD.
28
<PAGE>
From 1994 to 1996 served in the Investment Banking industry in New York as
a Broker for small-cap firms. In this period he participated in raising over 65
million USD on Public Offerings for privately held corporations and was tasked
to assist in the recruiting and training of new Brokers.
From 1990 to 1993 Mr. Chimenti served as an Industrial Real Estate Agent
for Tricia Realty and was the leading sales representative in both 1992 and
1993.
Mr. Chimenti competes in golf, swimming and softball. He speaks English and
has a working knowledge of Spanish and German.
HANS MICHAEL SCH EBINGER: CHIEF TECHNOLOGY OFFICER AND DIRECTOR
Mr. Schoebinger joined WAMEX in 1997 and has designed the Database Kernel.
His responsibilities at WAMEX include database design, hardware procurement,
strategic backup deployment, user friendly interface, client portfolio
integration as well as internal and external security and the database interface
design for the communication links with WAMEX affiliates. His programming
wizardry and proven skills in negotiating with IT giants make him an invaluable
asset to the company.
From 1995 to 1997 he served as the President of SPW Inc., a software
consulting and database design corporation in Austria. Mr. Schoebinger has 16
years of computer programming experience and his database designs and interface
implementations as well as Press Information Systems that download
high-resolution photographs and client management systems are widely known
throughout Central Europe. During this period, Mr. Schoebinger was responsible
for the design, implementation and growth of information systems design and web
sites for SPW. During this period he was credited with the development of the
database management system for Picus Verlag, one of the largest publishers in
Central Europe. Additionally, he is credited with the design of high-resolution
download information systems for Viennareport, the largest Press Agency in
Austria.
Mr. Schoebinger is credited with the first designs of Archive System, a
database retrieval system for over 10 million color slides, the Online Access
and First Class Link that integrates whole archive systems and Web sites. He
developed the Database management system for the Austrian Film Commission and
created the first dynamic link to the Movie Database in London. His Web site
integration work was presented at the Berlin Film Festival in 1997 and the
Cannes Film Festival in 1998. His work for the Salzburger Festspiele is on the
official CD-ROM and has been sold worldwide.
From 1990 to 1994 Mr. Schoebinger served as a Database Designer for ORACLE.
He was responsible for the system integration of corporate database management
systems in Eastern Europe. Prior to 1990, Mr. Schoebinger designed Database
Systems for Internet companies.
Mr. Schoebinger has been a Visiting Lecturer at the University of Vienna
concerning his theoretical database designs since 1992. He is an accomplished
horseback rider and is an amateur astronomer. He speaks fluent German and
English and some Chinese.
29
<PAGE>
DR. JOSEPH MONACO: CHAIRMAN, ADVISORY BOARD
Dr. Monaco joined WAMEX in 1998 as the Chairman of the Board of Advisors.
He is the founder of the Derivatives Research Group, which performs mathematical
modeling of financial strategies and conducts trading based on these strategies.
Dr. Monaco presently holds the positions of Senior Research Scientist and
Director of Operations for Industrial Polymer Research and Engineering in N.Y.
and is the Head of Mathematics and Adelphi Academy as well as Science
Instruction for The Center for Scholastic Advancement in N.Y. and serves with
the United States Congressional Scientific Advisory Board.
Dr. Monaco is the Author of twenty-three classified papers, co-author and
developer of the Monaco-Wang Operator used in applied physics, the holder of two
patents involving computerized servo-functions for hybrid-electric propulsion
systems and is the co-recipient of the Hughes Aircraft "Excellence in
Engineering Award".
Dr. Monaco served as a Major in the United States Army 11th Special Forces
(Green Berets), Special Consultant to the Department of Defense and was
instrumental in the development of advanced radio image technology for the CIA
and Long Range Doppler Radar Systems for the U.S Army. He is an active member of
APS, ACS, AMS, NYAS, AAAS, NSF, AAS, IEEE and is a member of Who's Who in
America and Who's Who in Global Business.
Dr. Monaco holds PhD's in Applied Mathematics and Theoretical Physics
(Columbia), Post PhD's in Astrophysics (M.I.T. and Cambridge), MS degrees in
Electrical Engineering and Physical Chemistry (Columbia) and BS degrees in
Mathematics and Computer Science (Columbia and City University at BC).
EXECUTIVE COMPENSATION
Summary Compensation Table
The Summary Compensation Table shows selected compensation information for
services rendered in all capacities for the fiscal years ended December 31, 1999
and 1998. Other than as set forth, no executive officer's salary and bonus
exceeded $100,000 in any of the applicable years. The following information
includes the dollar value of base salaries, bonus awards, the number of stock
options granted and selected other compensation, if any, whether paid or
deferred.
30
<PAGE>
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Annual Compensation Long Term Compensation
-------------------- ------------------------------
Awards Payouts
------------------ -------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
RESTRICTED SECURITIES
OTHER ANNUAL STOCK UNDERLYING LTIP ALL OTHER
NAME AND PRINCIPAL SALARY BONUS COMPENSATION AWARDS OPTIONS PAYOUTS COMPENSATION
POSITION YEAR ($) ($) ($) ($) SARS (#) ($) ($)
Mitchell H. Cushing 1999 60,000 -0- -0- -0- -0- -0- -0-
1998 11,000 -0- -0- -0- -0- -0- -0-
Sascha Mundstein(1) 1999 60,000 -0- -0- -0- -0- -0- -0-
1998 11,000 -0- -0- -0- -0- -0- -0-
Russell Chimenti 1999 60,000 -0- -0- -0- -0- -0- -0-
1998 11,000 -0- -0- -0- -0- -0- -0-
Hans Michael 1999 60,000 -0- -0- -0- -0- -0- -0-
Schobinger
1998 11,000 -0- -0- -0- -0- -0- -0-
Christoph Wessely(2)1999 60,000 -0- -0- -0- -0- -0- -0-
1998 11,000 -0- -0- -0- -0- -0- -0-
Michael Greene(3) 1999 84,000 -0- -0- -0- -0- -0- -0-
</TABLE>
(1) Mr. Mundstein was not paid during the period of June 1999 through
September 1999 (representing an amount of $20,000) due to a lack of working
capital. Mr. Mundstein is owed this amount in back salary and has decided to
allow the Company to pay this debt through accelerated salary this fiscal year
or through other arrangements. The Executive Compensation Committee is
reviewing proposals.
(2) Mr. Wessely was the Company's Chief of Information Technology during the
periods of October 1998 through September 1999. Mr. Wessely resigned in
September 1999 due to personal hardship and therefore did not receive $30,000 of
his planned salary.
(3) Mr. Green was hired in August 1999 as a Senior Database Programmer. He
resigned in January 2000 to pursue other business opportunities. In lieu of the
back salary of $29,000 due to Mr. Green, the Company is presently negotiating
the issuance of some amount of restricted stock.
<TABLE>
<CAPTION>
OPTION/SAR GRANTS IN LAST FISCAL YEAR
(INDIVIDUAL GRANTS)
-------------------
<S> <C> <C> <C> <C>
NUMBER OF SECURITIES PERCENT OF TOTAL
UNDERLYING OPTIONS/SAR'S
OPTIONS/SAR'S GRANTED TO EMPLOYEES EXERCISE OF BASE PRICE
NAME GRANTED (#) IN FISCAL YEAR ($/SH) EXPIRATION DATE
- ----------------- --------------------- -------------------- ----------------------- ---------------
Mitchell H. Cushing -0- -0- N/A N/A
Sascha Mundstein -0- -0- N/A N/A
Russell Chimenti -0- -0- N/A N/A
Hans Michael -0- -0- N/A N/A
Schobinger
Christoph Wessely -0- -0- N/A N/A
Michael Greene -0- -0- N/A N/A
</TABLE>
31
<PAGE>
Employment Agreements
At the present time, the Company has no employment agreements or executive
compensation package for any employee. The Board of Directors (BOD) voted in
December 1999 to authorize an Executive Compensation package for those senior
officers of the Company that are essential to the success of the Company. It
tasked the Executive Committee (Compensation Committee as defined for the
purposes of this registration) to explore the avenues that best represent
compensation for those executives who have directly contributed to the success
of the Company to date and in the future. The Executive Committee expects to
present it's initial findings to the BOD no later than May 2000.
Compensation Committee Interlocks and Insider Participation
The Company has formed an Executive Committee that carry out among other
duties relevant to the corporation such as contracts, hiring and significant
corporate decisions, the task of exploring and presenting to the BOD Executive
Compensation. The BOD has assigned Mr. Cushing (CEO), Mr. Chimenti (CAO), and
Dr. Monaco (Chairman Advisory Board) as the members of the Executive Committee.
To the best knowledge of the Company none of these committee members serve
on any other corporate Compensation Committee or Board.
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<PAGE>
Compensation of Directors
The directors have not received any compensation other than reimbursement
of expenses for serving in such capacity, and we do not currently contemplate
compensating our directors in the future for serving in such capacity.
33
<PAGE>
CERTAIN TRANSACTIONS
The Company presently retain the Services of Randolph Management in New
York to consult on corporate and business strategies. Mr. DeTrano is the
principal director of that company and simultaneously serves on the Advisory
Board of the Company. The terms of the arrangement are that Randolph Management
receives $750 per month for as long as the Company engages them and pays nominal
transportation cost up to a total of $100 (unless plane fare is involved) and
accommodations cost of $150 per night if asked by the Company to relocate. The
Company does not see this as a material conflict of interest.
The Company is presently seeking approval to operate an ATS. As such, the
Company needs a Sponsoring Broker Dealer. The Company has been unsuccessful in
acquiring the services of a Registered Broker Dealer in large part because the
ATS represents a direct threat to the established proprietary business of
established NASD Member Brokers. As a result of this obstacle, Mr. Cushing and
Mr. Chimenti entered into discussions in June 1999, with the principal owners of
iCap a Registered Broker Dealer and Member NASD firm. Although this purchase is
not yet consummated, management feels it is important to mention in light of the
importance of the transaction as it relates to possible conflicts of interest.
Management is satisfied that the acquisition and subsequent sponsorship
activities of a Broker Dealer for the ATS that is owned by Mr. Cushing and Mr.
Chimenti does not present a material conflict of interest.
To the best of the Company's knowledge, there are no other conflicts of
interest.
34
<PAGE>
RISK FACTORS
RISKS RELATED TO OUR INTERNET AND TECHNOLOGY BUSINESS
YOU MAY BE UNABLE TO EFFECTIVELY EVALUATE OUR COMPANY FOR INVESTMENT PURPOSES
BECAUSE OUR INTERNET TECHNOLOGY BUSINESS HAS EXISTED FOR ONLY A SHORT PERIOD OF
TIME. We began in the Internet and technology business in early 1999. As a
result, we have only a limited operating history upon which you may evaluate our
business and prospects. In addition, you must consider our prospects in light
of the risks and uncertainties encountered by companies in an early stage of
development in new and rapidly evolving markets.
YOUR INVESTMENT MAY NOT INCREASE IN VALUE UNLESS WE ARE ABLE TO BECOME
PROFITABLE. We have incurred losses in our business operation since inception.
We expect to continue to lose money for the foreseeable future, and we cannot be
certain when we will become profitable, if at all. Failure to achieve and
maintain profitability may adversely affect the market price of our common
stock.
WE ARE PRESENTLY IN UNSOUND FINANCIAL CONDITION WHICH MAKES INVESTMENT IN
OUR SECURITIES HIGHLY RISKY. Our financial statements include an auditor's
report containing a modification regarding an uncertainty about our ability to
continue as a going concern. Our financial statements also include an
accumulated deficit of $591,758 as of December 31, 1999 and other indications of
weakness in our present financial position. We have been operating primarily
through the issuance of common stock for services by entities, including
affiliates, that we could not afford to pay in cash. We are consequently deemed
by state securities regulators to presently be in unsound financial condition.
OUR BUSINESS DEPENDS ON A FEW KEY INDIVIDUALS AND MAY BE NEGATIVELY
AFFECTED IF WE ARE UNABLE TO KEEP OUR KEY PERSONNEL. Our future success depends
in large part on the skills, experience and efforts of our key marketing and
management personnel. The loss of the continued services of any of these
individuals could have a very significant negative effect on our business. In
particular, we rely upon the experience of Mitchell H. Cushing, our chief
executive officer. We do not currently maintain a policy of key man life
insurance on any of our employees or management team.
OUR BUSINESS PLAN REQUIRES ADDITIONAL PERSONNEL AND MAY BE NEGATIVELY
AFFECTED IF WE ARE UNABLE TO HIRE AND RETAIN NEW SKILLED PERSONNEL. Qualified
personnel are in great demand throughout the software and Internet start-up
industries. Our success depends in large part upon our ability to attract,
train, motivate and retain highly skilled sales and marketing personnel, web
designers, software engineers and other senior personnel. Our failure to
attract and retain the highly trained technical personnel that are integral to
our direct sales, product development, service and support teams may limit the
rate at which we can generate sales and develop new products and services or
product and service enhancements. This could hurt our business, operating
results and financial condition.
35
<PAGE>
OUR TECHNOLOGY BUSINESSES OWN PROPRIETARY TECHNOLOGY AND OUR SUCCESS
DEPENDS ON OUR ABILITY TO PROTECT THAT TECHNOLOGY. The unauthorized
reproduction or other misappropriation of our proprietary technology could
enable third parties to benefit from our technology without paying us for it.
This could have a material adverse effect on our business, operating results and
financial condition. We have relied primarily on the use of trade secrets to
protect our proprietary technology, which may be inadequate. We do not know
whether we will be able to defend our proprietary rights because the validity,
enforceability and scope of protection of proprietary rights in Internet-related
industries are uncertain and still evolving. Moreover, the laws of some foreign
countries are uncertain and may not protect intellectual property rights to the
same extent as the laws of the United States. If we resort to legal proceedings
to enforce our intellectual property rights, the proceedings could be burdensome
and expensive and could involve a high degree of risk.
WE WILL INCUR SIGNIFICANT EXPENSES IF OTHER COMPANIES CLAIM WE HAVE
INFRINGED ON THEIR PROPRIETARY RIGHTS. Although we attempt to avoid infringing
known proprietary rights of third parties, we are subject to the risk of claims
alleging infringement of third party proprietary rights. If we were to discover
that any of our products violated third party proprietary rights, there can be
no assurance that we would be able to obtain licenses on commercially reasonable
terms to continue offering the product without substantial reengineering or that
any effort to undertake such reengineering would be successful. We do not
conduct comprehensive searches to determine whether the technology used in our
products infringes patents, trademarks, tradenames or other protections held by
third parties. In addition, product development is inherently uncertain in a
rapidly evolving technological environment in which there may be numerous patent
applications pending, many of which are confidential when filed, with regard to
similar technologies. Any claim of infringement could cause us to incur
substantial costs defending against the claim, even if the claim is invalid, and
could distract our management from our business. Furthermore, a party making
such a claim could secure a judgment that requires us to pay substantial
damages. A judgment could also include an injunction or other court order that
could prevent us from selling our products. Any of these events could have a
material adverse effect on our business, operating results and financial
condition.
IF WE ARE UNABLE TO RAISE SUFFICIENT CAPITAL IN THE FUTURE, WE MAY NOT BE
ABLE TO STAY IN BUSINESS. Currently, our capital is insufficient to conduct our
business and if we are unable to obtain needed financing, we will be unable to
promote our products and services, engage in and exploit potential business
opportunities and otherwise maintain our competitive position. Since we intend
to grow our business rapidly, it is certain that we will require additional
capital. We have not thoroughly investigated whether this capital would be
available, who would provide it, and on what terms. If we are unable to raise
the capital required to fund our growth, on acceptable terms, our business may
be seriously harmed or even terminated.
36
<PAGE>
WE COULD LOSE REVENUE AND INCUR SIGNIFICANT COSTS IF OUR COMPUTER SYSTEMS
OR THE COMPUTER SYSTEMS OF THIRD-PARTIES ARE NOT YEAR 2000 COMPLIANT. Many
currently installed computer systems and software products accept only two
digits to identify the year in any date. Thus, the year 2000 will appear as
"00," which a system or software might consider to be the year 1900 rather than
the year 2000. This error could result in system failures, delays or
miscalculations that disrupt our operations. The failure of our internal
systems, or any material third-party systems, to be year 2000 compliant could
result in significant liabilities and could seriously harm our business. We
have conducted a review of our business systems, including our computer systems.
We have taken steps to remedy potential problems, but have not yet developed a
comprehensive year 2000 contingency plan. There can be no assurance that we
will identify all year 2000 problems in our computer systems before they occur
or that we will be able to remedy any problems that are discovered. We have
also queried many of our customers, vendors and resellers as to their progress
in identifying and addressing problems that their computer systems may face in
correctly interrelating and processing date information as the year 2000
approaches and is reached. We have received responses from several of these
parties, but there can be no assurance that we will identify all such year 2000
problems in the computer systems of our customers, vendors or resellers before
they occur or that we will be able to remedy any problems that are discovered.
Our efforts to identify and address year 2000 problems, and the expenses we may
incur as a result of such problems, could have a material adverse effect on our
business, financial condition and results of operations. In addition, the
revenue stream and financial stability of existing customers may be adversely
impacted by year 2000 problems, which could cause fluctuations in our revenue.
If we fail to identify and remedy year 2000 problems, we could also be at a
competitive disadvantage relative to companies that have corrected such
problems. Any of these outcomes could have significant adverse effects on our
business, financial condition and results of operations.
WE MAY NOT HAVE SUFFICIENT INTEREST IN OUR INTERNET BUSINESS TO MAKE MONEY.
If the market for our services do not grow at a significant rate, our business,
operating results and financial condition will be negatively affected. Our
Internet-related services are a relatively new concept. Future demand for
recently introduced technologies is highly uncertain, and therefore we cannot
guaranty that our business will grow as we expect.
OUR INTERNET BUSINESS IS IN A HIGHLY COMPETITIVE INDUSTRIES, AND THUS THERE
MAY NOT BE ENOUGH DEMAND FOR OUR PRODUCTS OR SERVICES FOR US TO MAKE MONEY.
There are numerous competitors offering the same services as ours. Many of our
current and potential competitors have longer operating histories, larger
customer bases, greater brand recognition and significantly greater financial,
marketing and other resources than we do and may enter into strategic or
commercial relationships with larger, more established and well-financed
companies. Some of our competitors may be able to enter into such strategic or
commercial relationships on more favorable terms. In addition, new technologies
and the expansion of existing technologies may increase competitive pressures on
us. Increased competition may result in reduced operating margins and loss of
market share.
REVENUES FROM OUR INTERNET BUSINESS WILL BE LESS LIKELY TO DEVELOP IF THE
INTERNET DOES NOT REMAIN A VIABLE COMMERCIAL MARKETPLACE. Our ability to
generate revenues is substantially dependent upon continued growth in the use of
the Internet and the infrastructure for providing Internet access and carrying
Internet traffic. We don't know if the necessary infrastructure or
complementary products will be developed or that the Internet will prove to be a
viable commercial marketplace. To the extent that the Internet continues to
experience significant growth in the level of use and the number of users, we
cannot guaranty that the infrastructure will continue to be able to support the
demands placed upon it by such potential growth. In addition, delays in the
development or adoption of new standards or protocols required to handle levels
of Internet activity, or increased governmental regulation may restrict the
growth of the Internet. If the necessary infrastructure or complementary
products and services are not developed or if the Internet does not become a
viable commercial marketplace, our business, operating results and financial
condition would be negatively affected.
37
<PAGE>
WE MAY INCUR A LOSS OF REVENUES AND SIGNIFICANT COSTS IF WE CANNOT MAINTAIN
THE SECURITY OF OUR INTERNET PRODUCTS AND SERVICES. Internet companies rely on
encryption and authentication technology to provide the security and
authentication necessary to effect secure transmission of confidential
information. There can be no assurance that advances in computer capabilities,
new discoveries in the field of cryptography or other developments will not
result in a compromise or breach of the algorithms used by companies to protect
consumer's transaction data. If any such compromise of this security were to
occur, it could have a material adverse effect on our potential clients,
business, prospects, financial condition and results of operations. A party who
is able to circumvent security measures could misappropriate proprietary
information or cause interruptions in operations. We may be required to expend
significant capital and other resources to protect against such security
breaches or to alleviate problems caused by such breaches. Concerns over the
security of transactions conducted on the Internet and the privacy of users may
also hinder the growth of online services generally. To the extent that our
activities or third-party contractors involve the storage and transmission of
proprietary information, such as credit card numbers, or personal data
information, security breaches could damage our reputation and expose us to a
risk of loss or litigation and possible liability. We cannot be sure that our
security measures will not prevent security breaches or that failure to prevent
such security breaches will not have a material adverse effect on our business.
RISKS RELATED TO OWNERSHIP OF OUR STOCK.
OUR BOARD OF DIRECTORS CAN ISSUE PREFERRED STOCK WITHOUT SHAREHOLDER
CONSENT AND DILUTE OR OTHERWISE SIGNIFICANTLY AFFECT THE RIGHTS OF EXISTING
SHAREHOLDERS. Our articles of incorporation provide that preferred stock may be
issued from time to time in one or more series. Our board of directors is
authorized to determine the rights, preferences, privileges and restrictions
granted to and imposed upon any wholly unissued series of preferred stock and
the designation of any such shares, without any vote or action by our
shareholders. The board of directors may authorize and issue preferred stock
with voting power or other rights that could adversely affect the voting power
or other rights of the holders of common stock. In addition, the issuance of
preferred stock could have the effect of delaying, deferring or preventing a
change in control, because the terms of preferred stock that might be issued
could potentially prohibit the consummation of any merger, reorganization, sale
of substantially all of its assets, liquidation or other extraordinary corporate
transaction without the approval of the holders of the outstanding shares of the
preferred stock. We will not offer preferred stock to promoters except on the
same terms as it is offered to all other existing shareholders or to new
shareholder or unless the issuance is approved by a majority of our independent
directors who do not have an interest in the transactions and who have access,
at our expense, to our legal counsel or independent legal counsel.
THE MARKET FOR OUR COMMON STOCK IS VERY VOLATILE. Our stock is presently
trading on the OTC bulletin board maintained by Nasdaq under the symbol WAMX.
Nevertheless, there has been limited volume in trading in the public market for
the common stock, and there can be no assurance that a more active trading
market will develop or be sustained. The market price of the shares of common
stock is likely to be highly volatile and may be significantly affected by
factors such as fluctuations in our operating results, announcements of
technological innovations or new products and/or services by us or our
competitors, governmental regulatory action, developments with respect to
patents or proprietary rights and general market conditions.
38
<PAGE>
WE MAY BE DE-LISTED FROM THE OTC BULLETIN BOARD. NASD Eligibility Rule
6530 issued on January 4, 1999, states that issuers who do not make current
filings pursuant to Sections 13 and 15(d) of the Securities Act of 1934 are
ineligible for listing on the OTC bulletin board. Issuers who are not current
with such filings are subject to delisting according to a phase-in schedule
depending on each issuer's trading symbol as reported on January 4, 1999. Our
trading symbol on January 4, 1999 was WAMX. Therefore, under the phase-in
schedule, our common stock is subject to de-listing on May 17, 2000. One month
prior to our potential delisting date, our common stock may have its trading
symbol changed to WAMXE.
WE ARE SUBJECT TO THE PENNY-STOCK RULES. The Securities Enforcement and
Penny Stock Reform Act of 1990 requires additional disclosure relating to the
market for penny stocks in connection with trades in any stock defined as a
penny stock. The Commission has adopted regulations that generally define a
penny stock to be any equity security that has a market price of less than $5.00
per share, subject to a few exceptions. Such exceptions include any equity
security listed on Nasdaq and any equity security issued by an issuer that has
- - net tangible assets of at least $2,000,000, if such issuer has been in
continuous operation for three years,
- - net tangible assets of at least $5,000,000, if such issuer has been in
continuous operation for less than three years, or
- - average annual revenue of at least $6,000,000, if such issuer has been in
continuous operation for less than three years.
Unless an exception is available, the regulations require the delivery, prior to
any transaction involving a penny stock, of a disclosure schedule explaining the
penny stock market and the risks associated therewith.
ITEM 3. BANKRUPTCY OR RECEIVERSHIP
Not applicable
ITEM 4. CHANGES IN REGISTRANT'S CERTIFYING ACCOUNTANT
Not applicable.
ITEM 5. OTHER EVENTS
Successor Issuer Election.
Upon execution of the Exchange Agreement and delivery of the WAMEX shares
to the shareholders of Conchology, pursuant to Rule 12g-3(a) of the General
Rules and Regulations of the Securities and Exchange Commission, WAMEX became
the successor issuer to Conchology for reporting purposes under the Securities
Exchange Act of 1934 and elected to report under the Act effective March 14,
2000.
39
<PAGE>
ITEM 6. RESIGNATIONS OF DIRECTORS AND EXECUTIVE OFFICERS
Not applicable.
ITEM 7. FINANCIAL STATEMENTS
The financial statements of WAMEX for the fiscal years ending December
31, 1999 and 1998 are included herein.
WAMEX Holdings, Inc.
(A Development Stage Company)
TABLE OF CONTENTS
PAGE NO.
---------
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS' REPORT 1
FINANCIAL STATEMENTS
Balance Sheet 2
Statement of Operations 3
Statement of Cash Flows 4
Statement of Changes in Stockholders' Equity 5
Notes to the Financial Statements 6-7
40
<PAGE>
CHARLES R. EISENSTEIN
Certified Public Accountant
4750 Bedford Avenue
Brooklyn, NY 11235
To the Board of Directors
WAMEX Holdings, Inc.
I have audited the accompanying balance sheets of WAMEX Holdings, Inc. (a
development stage company) as of December 31, 1999 and 1998 and the related
statements of operations, changes in stockholders' equity, and cash flows for
the two years then ended. These financial statements are the responsibility of
the Company's management. My responsibility is to express an opinion on these
financial statements based on our audit.
I conducted my audit in accordance with generally accepted auditing standards.
Those standards require that I plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
I believe that my audit provides a reasonable basis for my opinion.
In my opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of WAMEX Holdings, Inc. as of December
31, 1999 and 1998, and the results of its operations and cash flows for the two
years then ended in conformity with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in the Note "Going
Concern" to the financial statements, the Company has a working capital deficit
of $167,205 at December 31, 1999, experienced a $591,758 net loss for the year
1999 and has no substantial or continuing revenue stream. These conditions
raise substantial doubt about its ability to continue as a going concern.
Management's plans regarding these matters are also described in the Note "Going
Concern". The financial statements do not include any adjustments that might
result from the outcome of this uncertainty.
/s/ Charles R. Eisenstein
February 22, 2000
41
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
WAMEX HOLDINGS, INC.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEETS AT DECEMBER 31,
1999 1998
------------ ------------
ASSETS
CURRENT ASSETS
CASH $ 1,000 $ 55,824
TOTAL CURRENT ASSETS 1,000 55,824
------------ ------------
OFFICE FIXTURES & COMPUTER EQUIPMENT 112,980 104,980
LESS ACCUMULATED DEPRECATION (57,551) (44,549)
ORGANIZATION COSTS LESS ACCUMULATED
AMORTIZATION OF $11,200 & $5,000 19,800 20,000
TRADING SYSTEM (ATS) 1,509,931 1,382,980
OTHER ASSETS - 2,750
TOTAL ASSETS 1,586,160 1,521,985
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
ACCOUNTS PAYABLE & ACCRUED EXPENSES 112,315 291,293
LOAN FROM STOCKHOLDERS 55,890 -
OTHER CURRENT LIABILITIES - 645
TOTAL CURRENT LIABILITIES 168,205 291,938
------------ ------------
STOCKHOLDERS' EQUITY
COMMON STOCK , PAR VALUE $0.0012,
100,000,000 SHARES AUTHORIZED,
11,154,749 SHARES & 7,142,749 SHARES
ISSUED & OUTSTANDING AT DECEMBER 31,1999 13,385 8,571
AND 1998 RESPECTIVELY,
ADDITIONAL PAID-IN CAPITAL 3,564,646 2,789,794
RETAINED (DEFICIT) DURING THE DEVELOPMENT STAGE (2,160,076) (1,568,318)
------------ ------------
TOTAL STOCKHOLDERS' EQUITY 1,417,955 1,230,047
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 1,586,160 $ 1,521,985
============ ============
</TABLE>
42
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
WAMEX HOLDINGS, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31,
1999 1998
---------- -----------
REVENUES - $ 219,400
- 219,400
---------- -----------
COSTS AND EXPENSES
COMPENSATION OF OFFICERS - 55,000
COMPENSATION OF EMPLOYEES 150,000 232,000
OFFICE MAINTENANCE 33,850 33,850
RENTS 27,452 36,952
TAXES AND LICENSES 675 15,690
PROMOTIONS 12,806 240,000
DEPRECIATION 12,912 13,823
ADVERTISING - 24,000
AMORTIZATION 6,200 5,000
TRAVEL 2,456 3,286
WEBSITE DESIGN 20,000 15,000
TELEPHONE 26,669 37,899
CONSULTANTS 136,444 161,822
SOFTWARE 1,500 8,000
ISP 8,810 8,810
INSURANCE - 19,850
PROFESSIONAL FEES 137,680 83,220
BANK CHARGES 234 500
FREIGHT - 4,467
RELOCATION EXPENSESD 8,070 72,226
CONTRACTS 6,000 -
SUPPLIES - 5,670
TOTAL COSTS AND EXPENSES 591,758 1,077,065
---------- -----------
NET (LOSS) ($591,758) ($857,665)
========== ===========
(LOSS) PER COMMON SHARE ($0.08) ($0.12)
========== ===========
</TABLE>
43
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
WAMEX HOLDINGS, INC
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31,
1999 1998
--------- -----------
CASH FLOWS FROM OPERATING ACTIVITIES
NET (LOSS) (591,758) (857,665)
ADJUSTMENTS TO RECONCILE NET (LOSS)
TO NET CASH PROVIDED BY OPERATING ACTIVITIES
DEPRECIATION AND AMORTIZATION 19,202 18,733
INCREASE(DECREASE) IN:
ACCOUNTS PAYABLE AND OTHER LIABILITIES (178,978) 283,658
OTHER ASSETS 2,750 -
CASH FLOWS USED BY OPERATING ACTIVITIES (748,784) (555,274)
--------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
ORGANIZATION COSTS (6,000) (25,000)
PURCHASES COMPUTER EQUIPMENT (8,000) (68,000)
INCREASE IN TRADING SYSTEM (ATS) (126,952) (1,382,980)
CASH FLOWS USED BY INVESTING ACTIVITIES (140,952) (1,475,980)
--------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES
REPAYMENT OF LOAN (645) (13,964)
LOANS FROM STOCKHOLDERS 55,890 -
ISSUANCE OF COMMON STOCK 779,667 2,084,632
CASH FLOWS FROM FINANCING ACTIVITIES 834,912 2,070,668
--------- -----------
CASH AT THE BEGINNING OF THE YEAR 55,824 16,410
CASH AT THE END OF THE YEAR 1,000 55,824
--------- -----------
(DECREASE) INCREASE IN CASH (54,824) 39,414
========= ===========
</TABLE>
44
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
WAMEX HOLDINGS, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CHANGES IN
STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31,
SHARES OF TOTAL DOLLAR VALUE OF ADDITONAL PAID- RETAINED
COMMON STOCK VALUE COMMON STOCK IN-CAPITAL (DEFICIT)
------------ ------------- ------------- ---------------- -------------
BALANCE, DECEMBER 31, 1997 715,273 - $ 858 $ 684,108 -$710,653
------------ ------------- ------------- ---------------- -------------
1998 ACTIVITIES:
NET (LOSS) - - - - ($857,665)
ISSUE STOCK AS OF:
JANUARY 1, 1998 TO MAJORITY
STOCKHOLDERS PRIMARILY
FOR TRADING SYSTEM (ATS) AND
OPERATING EXPENSES 6,427,476 $ 2,084,632 $ 7,713 2,076,919 -
CONVERT DEBT TO EQUITY - $ 28,767 - 28,767 -
------------ ============= ------------- ---------------- -------------
BALANCE DECEMBER 31, 1998 7,142,749 - $ 8,571 $ 2,789,794 -$1,568,318
------------ ------------- ---------------- -------------
1999 ACTIVITIES;
NET (LOSS) - - - - (591,758)
ISSUE STOCK FOR SERVICES 12,000 12,000 14 11,986 -
ISSUE STOCK IN
PRIVATE PLACEMENT 4,000,000 200,000 4,800 195,200 -
MAJORITY SHAREHOLDER
CONTRIBUTES ADDITIONAL
CAPITAL - - - 567,666 -
------------ ============= ------------- ---------------- -------------
BALANCE DECEMBER 31, 1999 11,154,749 - $ 13,385 $ 3,564,646.00 $ 2,160,076
============ ============= ================ =============
<S> <C>
WAMEX HOLDINGS, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CHANGES IN
STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31,
TOTAL STOCKHOLDERS
EQUITY
--------------------
BALANCE, DECEMBER 31, 1997 -$25,687
--------------------
1998 ACTIVITIES:
NET (LOSS) ($857,665)
ISSUE STOCK AS OF:
JANUARY 1, 1998 TO MAJORITY
STOCKHOLDERS PRIMARILY
FOR TRADING SYSTEM (ATS) AND
OPERATING EXPENSES $ 2,084,632
CONVERT DEBT TO EQUITY $ 28,767
--------------------
BALANCE DECEMBER 31, 1998 $ 1,230,047
--------------------
1999 ACTIVITIES;
NET (LOSS) (591,758)
ISSUE STOCK FOR SERVICES 12,000
ISSUE STOCK IN
PRIVATE PLACEMENT 200,000
MAJORITY SHAREHOLDER
CONTRIBUTES ADDITIONAL
CAPITAL 567,666
--------------------
BALANCE DECEMBER 31, 1999 $ 1,417,955.00
====================
</TABLE>
45
<PAGE>
WAMEX Holdings, Inc.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
December 31, 1999 and 1998
1. ORGANIZATION AND NATURE OF BUSINESS
WAMEX Holdings, Inc. (Company) was formed in February 1998 in Delaware as World
Auction Market and Exchange, Inc. The Company amended its original certificate
of incorporation in May 1998 to change its name. From inception, the Company
has been financed by its parent (WAMEX Gibraltar, PLC) (Gibraltar) in the
development of the WAMEX Alternative Trading System (ATS), which will allow
investors to trade securities directly with each other using the Internet. In
November 1999, the Company merged into Treasure Cache, Inc. (Treasure), a
publicly traded company, with Treasure the surviving entity. Treasure was
incorporated in New York in 1992 and was operating a gift business from that
time to 1998 when it discontinued substantial operations. The transaction has
been accounted for as a recapitalization, effective January 1, 1998, with
Gibraltar owning 95% (subsequently diluted).
The Company is in the development stage and has no revenues and no operations.
Further, WAMEX Holdings, Inc. is heavily dependent on outside sources for
financings to provide sufficient capital to complete its planned ATS and to
begin operations.
2. SIGNIFICANT ACCOUNTING POLICIES
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those estimates.
TRADING SYSTEM (ATS)
The Company has spent $1,509,931 through December 31, 1999 on the development of
its ATS. The Company capitalizes, primarily, the cost of consulting fees for
engineers, programmers, etc., and salaries, wages and related payroll taxes
incurred to the development of the application and to bring it through its
testing phase. The Company does not anticipate significant additional
capitalized expenditures in the future and will review the capitalized balance
annually for any diminution of value.
46
<PAGE>
WAMEX Holdings, Inc.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
December 31, 1999 and 998, Continued
TRADING SYSTEM (ATS), CONTINUED
Intellectual Property will be amortized over its expected useful life of 8
years. Ongoing maintenance will be charged to expense when incurred.
STOCKHOLDERS' EQUITY
The Company issued 12,000 shares to various individuals for services valued at
$1 per share of $12,000 in total in 1999. The Company also issued 4,000,000
shares, raising $200,000, as part of a Private Placement of 19,500,000 shares at
$.05 per share. The Private Placements is not registered under the Securities
Act of 1933, as amended, or any state securities laws, and is made in reliance
on the exemption from registration provided by Rule 504 of Regulation D of the
Securities Act.
INCOME TAXES
The Company has net operating loss carry forwards of approximately $2,160,000,
which give rise to a deferred tax asset, which has been completely offset by a
valuation allowance because realization is in doubt.
(LOSS) PER COMMON SHARE
(Loss) per common share has been calculated by dividing the annual loss by the
weighted average common shares outstanding during 1999 and 1998, respectively.
The weighted average common shares outstanding in 1999 and 1998 were 7,182,571
shares and 7,142,749 shares, respectively.
3. GOING CONCERN
The Company has experienced significant losses, has a working capital deficit,
has no revenues or operations, and is heavily dependent on outside sources for
capital. These conditions raise substantial doubt about the Company's ability
to continue as a going concern.
Management's plan is to complete the Private Placement referred to above,
raising an additional $775,000 to provide money to begin intended operations.
Additional funds will be necessary in the foreseeable future, although
management has not developed those sources at this time. There can be no
assurance that management will be successful in raising any additional funds or
that any funds raised will be sufficient to maintain the Company on the road to
its intended operations.
47
<PAGE>
ITEM 8. CHANGE IN FISCAL YEAR
WAMEX as the successor issuer has a fiscal year end of December 31 which
is the same as Conchology's fiscal year.
EXHIBITS
1.1. Exchange Agreement between WAMEX Holdings, Inc. and certain Conchology
shareholders dated as of February 9, 2000.
1.2 Consulting Agreement
1.3 Put Option Agreement
1.4 Escrow Agreement
3.1 Certificate of Incorporation of The World Auction Market and Exchange
(Holdings), Inc.
3.2 Certificate of Amendment of Certificate of Incorporation of The Worls
Auction Market and Exchange (Holdings), Inc.
3.3 Certificate of Incorporation of The Treasure Cache, Inc.
3.4 Certificate of Amendment to the Certificate of Incorporation of The
Treasure Cache, Inc.
3.5 Certificate of Amendment to the Certificate of Incorporation of The
Treasure Cache, Inc.
3.6 Certificate of Merger of WAMEX Holdings, Inc. and The Treasure Cache,
Inc. into The Treasure Cache, Inc.
3.7 Bylaws
23.1 Consent of Charles R. Eisenstein, Certified Public Accountant.
48
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
WAMEX HOLDINGS, INC.
/s/ Mitchell H. Cushing
------------------------------
Chief Executive Officer
Date: March 14, 2000
STOCK EXCHANGE AGREEMENT
Agreement dated as of February 9, 2000 between WAMEX Holdings, Inc., a New
York corporation, ("WAMEX"), on the one hand, and M. Richard Cutler ("Cutler"),
Brian A. Lebrecht ("Lebrecht") and Vi Bui ("Bui") on the other hand. Each of
Cutler, Lebrecht, and Bui shall be referred to as a "Shareholder" and
collectively as the "Shareholders."
1. THE ACQUISITION.
1.1_ Purchase and Sale Subject to the Terms and Conditions of this
Agreement. At the Closing to be held as provided in Section 2, WAMEX shall sell
the WAMEX Shares (defined below) to the Shareholders and the Shareholders shall
purchase the WAMEX Shares from WAMEX, free and clear of all Encumbrances other
than restrictions imposed by Federal and State securities laws.
1.2 Purchase Price. WAMEX will exchange 47,500 shares of its
restricted common stock (the "WAMEX Shares") for 570,000 shares of the Common
Stock of Conchology, Inc. ("Conchology"), representing 95% of the outstanding
common shares of Conchology (the "Conchology Shares"). The WAMEX Shares shall
be issued and delivered to the Shareholders as set forth in Exhibit "A" hereto.
2. THE CLOSING.
2.1 Place and Time. The closing of the sale and exchange of the WAMEX
Shares for the Conchology Shares (the "Closing") shall take place at the offices
of the Cutler Law Group, 610 Newport Center Drive, Suite 800, Newport Beach, CA
92660 no later than the close of business (Orange County California time) on
Thursday, February 10, 2000 or at such other place, date and time as the parties
may agree in writing.
2.2 Deliveries by the Shareholders. At the Closing, the Shareholders
shall deliver the following to WAMEX:
1. Certificates representing the Conchology Shares, duly endorsed for
transfer to WAMEX and accompanied by appropriate stock powers; the Shareholders
shall immediately change those certificates for, and to deliver to WAMEX at the
Closing, a certificate representing the Conchology Shares registered in the name
of WAMEX (without any legend or other reference to any Encumbrance other than
appropriate federal securities law limitations).
2. The documents contemplated by Section 3.
3. All other documents, instruments and writings required by this Agreement
to be delivered by the Shareholders at the Closing and any other documents or
records relating to Conchology's business reasonably requested by WAMEX in
connection with this Agreement.
<PAGE>
2.3 Deliveries by WAMEX. At the Closing, WAMEX shall deliver the
following to the Shareholders:
a. The WAMEX Shares for further delivery to the Shareholders as contemplated
by section 1.
2. The documents contemplated by Section 4.
3. All other documents, instruments and writings required by this Agreement
to be delivered by WAMEX at the Closing.
3. CONDITIONS TO WAMEX'S OBLIGATIONS.
The obligations of WAMEX to effect the Closing shall be subject to the
satisfaction at or prior to the Closing of the following conditions, any one or
more of which may be waived by WAMEX:
3.1 No Injunction. There shall not be in effect any injunction, order
or decree of a court of competent jurisdiction that prevents the consummation of
the transactions contemplated by this Agreement, that prohibits WAMEX's
acquisition of the Conchology Shares or the WAMEX Shares or that will require
any divestiture as a result of WAMEX's acquisition of the Conchology Shares or
that will require all or any part of the business of WAMEX to be held separate
and no litigation or proceedings seeking the issuance of such an injunction,
order or decree or seeking to impose substantial penalties on WAMEX or
Conchology if this Agreement is consummated shall be pending.
3.2 Representations, Warranties and Agreements. (a) The
representations and warranties of the Shareholders set forth in this Agreement
shall be true and complete in all material respects as of the Closing Date as
though made at such time, and (b) the Shareholders shall have performed and
complied in all material respects with the agreements contained in this
Agreement required to be performed and complied with by it at or prior to the
Closing.
3.3 Regulatory Approvals. All licenses, authorizations, consents,
orders and regulatory approvals of Governmental Bodies necessary for the
consummation of WAMEX's acquisition of the Conchology Shares shall have been
obtained and shall be in full force and effect.
3.4 Resignations of Director. Effective on the Closing Date, the
Shareholders, and each of them, shall have resigned as an officer, director and
employee of Conchology.
4. CONDITIONS TO THE SHAREHOLDER'S OBLIGATIONS.
The obligations of the Shareholders to effect the Closing shall be subject
to the satisfaction at or prior to the Closing of the following conditions, any
one or more of which may be waived by the Shareholders:
<PAGE>
4.1 No Injunction. There shall not be in effect any injunction, order
or decree of a court of competent jurisdiction that prevents the consummation of
the transactions contemplated by this Agreement, that prohibits WAMEX's
acquisition of the Conchology Shares or the Shareholder's acquisition of the
WAMEX Shares or that will require any divestiture as a result of WAMEX's
acquisition of the Shares or the Shareholder's acquisition of the WAMEX Shares
or that will require all or any part of the business of WAMEX or Conchology to
be held separate and no litigation or proceedings seeking the issuance of such
an injunction, order or decree or seeking to impose substantial penalties on
WAMEX or Conchology if this Agreement is consummated shall be pending.
4.2 Representations, Warranties and Agreements. (a) The
representations and warranties of WAMEX set forth in this Agreement shall be
true and complete in all material respects as of the Closing Date as though made
at such time, and (b) WAMEX shall have performed and complied in all material
respects with the agreements contained in this Agreement required to be
performed and complied with by it at or prior to the Closing.
4.3 Regulatory Approvals. All licenses, authorizations, consents,
orders and regulatory approvals of Governmental Bodies necessary for the
consummation of WAMEX's acquisition of the Conchology Shares and the
Shareholder's acquisition of the WAMEX Shares shall have been obtained and shall
be in full force and effect.
4.4 Exchange of shares held by Conchology shareholders. WAMEX hereby
agrees, represents, and warrants that, upon the receipt of a request from any
shareholder of Conchology, WAMEX will exchange that shareholder's shares of
Conchology for restricted shares of WAMEX at the rate of one (1) WAMEX share for
every twelve (12) Conchology shares, resulting in the issuance of an aggregate
of 2,500 WAMEX restricted shares. A list of shareholders is attached at Exhibit
A.
5. REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS.
The Shareholders represent and warrant to WAMEX that, to the Knowledge of
the Shareholders (which limitation shall not apply to Section 5.3), and except
as set forth in a Conchology Disclosure Letter:
5.1 Organization of Conchology; Authorization. Conchology is a
corporation duly organized, validly existing and in good standing under the laws
of the state of Nevada. This Agreement constitutes a valid and binding
obligation of the Shareholders, enforceable against them in accordance with its
terms.
<PAGE>
5.2 Capitalization. The authorized capital stock of Conchology
consists of 22,000,000 authorized shares, consisting of 20,000,000 common
shares, par value $0.001, and 2,000,000 preferred shares, par value $0.001, of
which 600,000 common shares and no preferred shares are presently issued and
outstanding. No shares have been registered under state or federal securities
laws. As of the Closing Date, all of the issued and outstanding shares of
common stock of Conchology are validly issued, fully paid and non-assessable.
As of the Closing Date there will not be outstanding any warrants, options or
other agreements on the part of Conchology obligating Conchology to issue any
additional shares of common or preferred stock or any of its securities of any
kind. Except as otherwise set forth herein, Conchology will not issue any
shares of capital stock from the date of this Agreement through the Closing
Date.
5.3 No Conflict as to Conchology. Neither the execution and delivery of
this Agreement nor the consummation of the sale of the Conchology Shares to
WAMEX will (a) violate any provision of the certificate of incorporation or
by-laws of Conchology or (b) violate, be in conflict with, or constitute a
default (or an event which, with notice or lapse of time or both, would
constitute a default) under any agreement to which Conchology is a party or (c)
violate any statute or law or any judgment, decree, order, regulation or rule of
any court or other Governmental Body applicable to Conchology.
5.4 Ownership of Conchology Shares. The delivery of certificates to
WAMEX provided in Section 2.2 will result in WAMEX's immediate acquisition of
record and beneficial ownership of the Conchology Shares, free and clear of all
Encumbrances subject to applicable State and Federal securities laws. There are
no outstanding options, rights, conversion rights, agreements or commitments of
any kind relating to the issuance, sale or transfer of any Equity Securities or
other securities of Conchology.
5.5 No Conflict as to Conchology and Subsidiaries. Neither the
execution and delivery of this Agreement nor the consummation of the sale of the
Conchology Shares to WAMEX will (a) violate any provision of the certificate of
incorporation or by-laws (or other governing instrument) of Conchology or any
of its Subsidiaries or (b) violate, or be in conflict with, or constitute a
default (or an event which, with notice or lapse of time or both, would
constitute a default) under, or result in the termination of, or accelerate the
performance required by, or excuse performance by any Person of any of its
obligations under, or cause the acceleration of the maturity of any debt or
obligation pursuant to, or result in the creation or imposition of any
Encumbrance upon any property or assets of Conchology or any of its
Subsidiaries under, any material agreement or commitment to which Conchology or
any of its Subsidiaries is a party or by which any of their respective property
or assets is bound, or to which any of the property or assets of Conchology or
any of its Subsidiaries is subject, or (c) violate any statute or law or any
judgment, decree, order, regulation or rule of any court or other Governmental
Body applicable to Conchology or any of its Subsidiaries except, in the case of
violations, conflicts, defaults, terminations, accelerations or Encumbrances
described in clause (b) of this Section 5.5, for such matters which are not
likely to have a material adverse effect on the business or financial condition
of Conchology and its Subsidiaries, taken as a whole.
<PAGE>
5.6 Consents and Approvals of Governmental Authorities. Except with
respect to applicable State and Federal securities laws, no consent, approval or
authorization of, or declaration, filing or registration with, any Governmental
Body is required to be made or obtained by Conchology or WAMEX or any of its
Subsidiaries in connection with the execution, delivery and performance of this
Agreement by Conchology or the consummation of the sale of the Conchology Shares
to WAMEX.
5.7 Other Consents. No consent of any Person is required to be obtained
by Conchology or WAMEX to the execution, delivery and performance of this
Agreement or the consummation of the sale of the Conchology Shares to WAMEX,
including, but not limited to, consents from parties to leases or other
agreements or commitments, except for any consent which the failure to obtain
would not be likely to have a material adverse effect on the business and
financial condition of Conchology or WAMEX.
5.8 Financial Statements. Conchology has delivered to WAMEX
consolidated balance sheets of Conchology and its Subsidiaries as at September
30, 1999, and statements of income and changes in financial position for the
period from inception to the period then ended, together with the report thereon
of Conchology's independent accountant (the "Conchology Financial Statements").
5.9 Title to Properties. Either Conchology or one of its Subsidiaries
owns all the material properties and assets that they purport to own (real,
personal and mixed, tangible and intangible), including, without limitation, all
the material properties and assets reflected in the Conchology Financial
Statements, and all the material properties and assets purchased or otherwise
acquired by Conchology or any of its Subsidiaries since the date of the
Conchology Financial Statements. All properties and assets reflected in the
Conchology Financial Statements are free and clear of all material Encumbrances
and are not, in the case of real property, subject to any material rights of
way, building use restrictions, exceptions, variances, reservations or
limitations of any nature whatsoever except, with respect to all such properties
and assets, (a) mortgages or security interests shown on the Conchology
Financial Statements as securing specified liabilities or obligations, with
respect to which no default (or event which, with notice or lapse of time or
both, would constitute a default) exists, and all of which are listed in the
Conchology Disclosure Letter, (b) mortgages or security interests incurred in
connection with the purchase of property or assets after the date of the
Conchology Financial Statements (such mortgages and security interests being
limited to the property or assets so acquired), with respect to which no default
(or event which, with notice or lapse of time or both, would constitute a
default) exists, (c) as to real property, (i) imperfections of title, if any,
none of which materially detracts from the value or impairs the use of the
property subject thereto, or impairs the operations of Conchology or any of its
Subsidiaries and (ii) zoning laws that do not impair the present or anticipated
use of the property subject thereto, and (d) liens for current taxes not yet
due. The properties and assets of Conchology and its Subsidiaries include all
rights, properties and other assets necessary to permit Conchology and its
Subsidiaries to conduct Conchology's business in all material respects in the
same manner as it is conducted on the date of this Agreement.
<PAGE>
5.10 No Condemnation or Expropriation. Neither the whole nor any portion of
the property or leaseholds owned or held by Conchology or any of its
Subsidiaries is subject to any governmental decree or order to be sold or is
being condemned, expropriated or otherwise taken by any Governmental Body or
other Person with or without payment of compensation therefor, which action is
likely to have a material adverse effect on the business or financial condition
of WAMEX and its Subsidiaries, taken as a whole.
5.11 Litigation. There is no action, suit, inquiry, proceeding or
investigation by or before any court or Governmental Body pending or threatened
in writing against or involving Conchology or any of its Subsidiaries which is
likely to have a material adverse effect on the business or financial condition
of Conchology, WAMEX and any of their Subsidiaries, taken as whole, or which
would require a payment by Conchology or its subsidiaries in excess of $2,000
in the aggregate or which questions or challenges the validity of this
Agreement. Neither Conchology nor any or its Subsidiaries is subject to any
judgment, order or decree that is likely to have a material adverse effect on
the business or financial condition of Conchology, WAMEX or any of their
Subsidiaries, taken as a whole, or which would require a payment by Conchology
or its subsidiaries in excess of $2,000 in the aggregate.
5.12 Absence of Certain Changes. Since the date of the Conchology Financial
Statements, neither Conchology nor any of its Subsidiaries has:
1. suffered the damage or destruction of any of its properties or assets
(whether or not covered by insurance) which is materially adverse to the
business or financial condition of Conchology and its Subsidiaries, taken as a
whole, or made any disposition of any of its material properties or assets other
than in the ordinary course of business;
2. made any change or amendment in its certificate of incorporation or
by-laws, or other governing instruments;
3. issued or sold any Equity Securities or other securities, acquired,
directly or indirectly, by redemption or otherwise, any such Equity Securities,
reclassified, split-up or otherwise changed any such Equity Security, or granted
or entered into any options, warrants, calls or commitments of any kind with
respect thereto;
4. organized any new Subsidiary or acquired any Equity Securities of any
Person or any equity or ownership interest in any business;
5. borrowed any funds or incurred, or assumed or become subject to, whether
directly or by way of guarantee or otherwise, any obligation or liability with
respect to any such indebtedness for borrowed money;
6. paid, discharged or satisfied any material claim, liability or obligation
(absolute, accrued, contingent or otherwise), other than in the ordinary course
of business;
<PAGE>
7. prepaid any material obligation having a maturity of more than 90 days
from the date such obligation was issued or incurred;
8. canceled any material debts or waived any material claims or rights,
except in the ordinary course of business;
9. disposed of or permitted to lapse any rights to the use of any material
patent or registered trademark or copyright or other intellectual property owned
or used by it;
10. granted any general increase in the compensation of officers or
employees (including any such increase pursuant to any employee benefit plan);
11. purchased or entered into any contract or commitment to purchase any
material quantity of raw materials or supplies, or sold or entered into any
contract or commitment to sell any material quantity of property or assets,
except (i) normal contracts or commitments for the purchase of, and normal
purchases of, raw materials or supplies, made in the ordinary course business,
(ii) normal contracts or commitments for the sale of, and normal sales of,
inventory in the ordinary course of business, and (iii) other contracts,
commitments, purchases or sales in the ordinary course of business;
12. made any capital expenditures or additions to property, plant or
equipment or acquired any other property or assets (other than raw materials and
supplies) at a cost in excess of $2,000 in the aggregate;
13. written off or been required to write off any notes or accounts
receivable in an aggregate amount in excess of $2,000;
14. written down or been required to write down any inventory in an
aggregate amount in excess of $ 2,000;
15. entered into any collective bargaining or union contract or agreement;
or
16. other than the ordinary course of business, incurred any liability
required by generally accepted accounting principles to be reflected on a
balance sheet and material to the business or financial condition of Conchology
and its subsidiaries taken as a whole.
5.13 No Material Adverse Change. Since the date of the Conchology Financial
Statements, there has not been any material adverse change in the business or
financial condition of Conchology and its Subsidiaries taken as a whole.
5.14 Contracts and Commitments. Neither Conchology nor any of its
Subsidiaries is a party to any:
<PAGE>
1. Contract or agreement (other than purchase or sales orders entered into
in the ordinary course of business) involving any liability on the part of
Conchology or one of its Subsidiaries of more than $2,000 and not cancelable by
Conchology or the relevant Subsidiary (without liability to Conchology or such
Subsidiary) within 60 days;
2. Except with respect to the lease on its business location, lease of
personal property involving annual rental payments in excess of $2,000 and not
cancelable by Conchology or the relevant Subsidiary (without liability to
Conchology or such Subsidiary) within 90 days;
3. Except with respect to the options referenced above, Employee bonus,
stock option or stock purchase, performance unit, profit-sharing, pension,
savings, retirement, health, deferred or incentive compensation, insurance or
other material employee benefit plan (as defined in Section 2(3) of ERISA) or
program for any of the employees, former employees or retired employees of
Conchology or any of its Subsidiaries;
4. Commitment, contract or agreement that is currently expected by the
management of Conchology to result in any material loss upon completion or
performance thereof;
5. Contract, agreement or commitment that is material to the business of
Conchology and its Subsidiaries, taken as a whole, with any officer, employee,
agent, consultant, advisor, salesman, sales representative, value added
reseller, distributor or dealer; or
6. Employment agreement or other similar agreement that contains any
severance or termination pay, liabilities or obligations.
All such contracts and agreements are in full force and effect. Neither
Conchology nor any or its Subsidiaries is in breach of, in violation of or in
default under, any agreement, instrument, indenture, deed of trust, commitment,
contract or other obligation of any type to which Conchology or any of its
Subsidiaries is a party or is or may be bound that relates to the business of
Conchology or any of its Subsidiaries or to which any of the assets or
properties of Conchology or any of its Subsidiaries is subject, the effect of
which breach, violation or default is likely to materially and adversely affect
the business or financial condition of Conchology and its Subsidiaries, taken as
a whole. WAMEX has not guaranteed or assumed and specifically does not guarantee
or assume any obligations of Conchology or any of its Subsidiaries.
<PAGE>
5.15 Labor Relations. Neither Conchology nor any of its Subsidiaries is a
party to any collective bargaining agreement. Except for any matter which is not
likely to have a material adverse effect on the business or financial condition
of Conchology and its Subsidiaries, taken as a whole, (a) Conchology and each of
its Subsidiaries is in compliance with all applicable laws respecting employment
and employment practices, terms and conditions of employment and wages and
hours, and is not engaged in any unfair labor practice, (b) there is no unfair
labor practice complaint against Conchology or any of its Subsidiaries pending
before the National Labor Relations Board, (c) there is no labor strike,
dispute, slowdown or stoppage actually pending or threatened against Conchology
or any of its Subsidiaries, (d) no representation question exists respecting the
employees of Conchology or any of its Subsidiaries, (e) neither Conchology nor
any of its Subsidiaries has experienced any strike, work stoppage or other labor
difficulty, and (f) no collective bargaining agreement relating to employees of
Conchology or any of its Subsidiaries is currently being negotiated.
5.16 Employee Benefit Plans. No material employee pension and welfare
benefit plans covering employees of Conchology is (1) a multi-employer plan as
defined in Section 3(37) of ERISA, or (2) a defined benefit plan as defined in
Section 3(35) of ERISA, any listed individual account pension plan is duly
qualified as tax exempt under the applicable sections of the Code, each listed
benefit plan and related funding arrangement, if any, has been maintained in all
material respects in compliance with its terms and the provisions of ERISA and
the Code.
5.17 Compliance with Law. The operations of Conchology and its Subsidiaries
have been conducted in accordance with all applicable laws and regulations of
all Governmental Bodies having jurisdiction over them, except for violations
thereof which are not likely to have a material adverse effect on the business
or financial condition of Conchology and its Subsidiaries, taken as a whole, or
which would not require a payment by Conchology or its Subsidiaries in excess
of $2,000 in the aggregate, or which have been cured. Neither Conchology nor
any of its Subsidiaries has received any notification of any asserted present or
past failure by it to comply with any such applicable laws or regulations.
Conchology and its Subsidiaries have all material licenses, permits, orders or
approvals from the Governmental Bodies required for the conduct of their
businesses, and are not in material violation of any such licenses, permits,
orders and approvals. All such licenses, permits, orders and approvals are in
full force and effect, and no suspension or cancellation of any thereof has been
threatened.
5.18 Tax Matters.
<PAGE>
1. Conchology and each of its Subsidiaries (1) has filed all nonconsolidated
and noncombined Tax Returns and all consolidated or combined Tax Returns that
include only Conchology and/or its Subsidiaries and not Seller or its other
Affiliates (for the purposes of this Section 5.19, such tax Returns shall be
considered nonconsolidated and noncombined Tax Returns) required to be filed
through the date hereof and has paid any Tax due through the date hereof with
respect to the time periods covered by such nonconsolidated and noncombined Tax
Returns and shall timely pay any such Taxes required to be paid by it after the
date hereof with respect to such Tax Returns and (2) shall prepare and timely
file all such nonconsolidated and noncombined Tax Returns required to be filed
after the date hereof and through the Closing Date and pay all Taxes required to
be paid by it with respect to the periods covered by such Tax Returns; (B) all
such Tax Returns filed pursuant to clause (A) after the date hereof shall, in
each case, be prepared and filed in a manner consistent in all material respects
(including elections and accounting methods and conventions) with such Tax
Return most recently filed in the relevant jurisdiction prior to the date
hereof, except as otherwise required by law or regulation. Any such Tax Return
filed or required to be filed after the date hereof shall not reflect any new
elections or the adoption of any new accounting methods or conventions or other
similar items, except to the extent such particular reflection or adoption is
required to comply with any law or regulation.
2. All consolidated or combined Tax Returns (except those described in
subparagraph (a) above) required to be filed by any person through the date
hereof that are required or permitted to include the income, or reflect the
activities, operations and transactions, of Conchology or any of its
Subsidiaries for any taxable period have been timely filed, and the income,
activities, operations and transactions of Conchology and Subsidiaries have
been properly included and reflected thereon. Conchology shall prepare and file,
or cause to be prepared and filed, all such consolidated or combined Tax Returns
that are required or permitted to include the income, or reflect the activities,
operations and transactions, of Conchology or any Subsidiary, with respect to
any taxable year or the portion thereof ending on or prior to the Closing Date,
including, without limitation, Conchology's consolidated federal income tax
return for such taxable years. Conchology will timely file a consolidated
federal income tax return for the taxable year ended December 31, 1999 and such
return shall include and reflect the income, activities, operations and
transactions of Conchology and Subsidiaries for the taxable period then ended,
and hereby expressly covenants and agrees to file a consolidated federal income
tax return, and to include and reflect thereon the income, activities,
operations and transactions of Conchology and Subsidiaries for the taxable
period through the Closing Date. All Tax Returns filed pursuant to this
subparagraph (b) after the date hereof shall, in each case, to the extent that
such Tax Returns specifically relate to Conchology or any of its Subsidiaries
and do not generally relate to matters affecting other members of Conchology's
consolidated group, be prepared and filed in a manner consistent in all material
respects (including elections and accounting methods and conventions) with the
Tax Return most recently filed in the relevant jurisdictions prior to the date
hereof, except as otherwise required by law or regulation. Conchology has paid
or will pay all Taxes that may now or hereafter be due with respect to the
taxable periods covered by such consolidated or combined Tax Returns.
3. Neither Conchology nor any of its Subsidiaries has agreed, or is
required, to make any adjustment (x) under Section 481(a) of the Code by reason
of a change in accounting method or otherwise or (y) pursuant to any provision
of the Tax Reform Act of 1986, the Revenue Act of 1987 or the Technical and
Miscellaneous Revenue Act of 1988.
<PAGE>
4. Neither Conchology nor any of its Subsidiaries or any predecessor or
Affiliate of the foregoing has, at any time, filed a consent under Section
341(f)(1) of the Code, or agreed under Section 341(f)(3) of the Code, to have
the provisions of Section 341(f)(2) of the Code apply to any sale of its stock.
5. There is no (nor has there been any request for an) agreement, waiver or
consent providing for an extension of time with respect to the assessment of any
Taxes attributable to Conchology or its Subsidiaries, or their assets or
operations and no power of attorney granted by Conchology or any of its
Subsidiaries with respect to any Tax matter is currently in force.
6. There is no action, suit, proceeding, investigation, audit, claim,
demand, deficiency or additional assessment in progress, pending or threatened
against or with respect to any Tax attributable to Conchology, its Subsidiaries
or their assets or operations.
7. All amounts required to be withheld as of the Closing Date for Taxes or
otherwise have been withheld and paid when due to the appropriate agency or
authority.
8. No property of Conchology is "tax-exempt use property " within the
meaning of Section 168(h) of the Code nor property that Conchology and/or its
Subsidiaries will be required to treat as being owned by another person pursuant
to Section 168(f)(8) of the Internal Revenue Code of 1954, as amended and in
effect immediately prior to the enactment of the Tax Reform Act of 1986.
9. There have been delivered or made available to WAMEX true and complete
copies of all income Tax Returns (or with respect to consolidated or combined
returns, the portion thereof) and any other Tax Returns requested by WAMEX as
may be relevant to Conchology, its Subsidiaries, or their assets or operations
for any and all periods ending after December 31, 1998, or for any Tax years
which are subject to audit or investigation by any taxing authority or entity.
10. There is no contract, agreement, plan or arrangement, including but not
limited to the provisions of this Agreement, covering any employee or former
employee of Conchology or its Subsidiaries that, individually or collectively,
could give rise to the payment of any amount that would not be deductible
pursuant to Section 280G or 162 of the Code.
5.19 Environmental Matters.
1. At all times prior to the date hereof, Conchology and its Subsidiaries
have complied in all material respects with applicable environmental laws,
orders, regulations, rules and ordinances relating to the Properties (as
hereinafter defined), the violation of which would have a material adverse
effect on the business or financial condition of Conchology and its
Subsidiaries, taken as a whole, or which would require a payment by Conchology
or its Subsidiaries in excess of $2,000 in the aggregate, and which have been
duly adopted, imposed or promulgated by any legislative, executive,
administrative or judicial body or officer of any Governmental Body.
<PAGE>
2. The environmental licenses, permits and authorizations that are material
to the operations of Conchology and its Subsidiaries, taken as a whole, are in
full force and effect.
3. Neither Conchology nor any of its Subsidiaries has released or caused to
be released on or about the properties currently owned or leased by Conchology
or any of its Subsidiaries (the "Properties") any (i) pollutants, (ii)
contaminants, (iii) "Hazardous Substances," as that term is defined in Section
101(14) of the Comprehensive Environmental Response Act, as amended or (iv)
"Regulated Substances," as that term in defined in Section 9001 of the Resource
Conservation and Recovery Act, 42 U.S.C. Section 6901, et seq., as amended,
which would be required to be remediated by any governmental agency with
jurisdiction over the Properties under the authority of laws, regulations and
ordinances as in effect and currently interpreted on the date hereof, which
remediation would have a material adverse effect on the business or financial
condition of Conchology and its Subsidiaries, taken as a whole.
5.20 Brokers or Finders. Conchology and the Shareholders have not employed
any broker or finder or incurred any liability for any brokerage or finder's
fees or commissions or similar payments in connection with the sale of the
Conchology Shares to WAMEX.
5.21 Absence of Certain Commercial Practices. Neither Conchology nor any of
its Subsidiaries has, directly or indirectly, paid or delivered any fee,
commission or other sum of money or item of property, however characterized, to
any finder, agent, government official or other party, in the United States or
any other country, which is in any manner related to the business or operations
of Conchology or its Subsidiaries, which Conchology or one of its Subsidiaries
knows or has reason to believe to have been illegal under any federal, state or
local laws of the United States or any other country having jurisdiction; and
neither Conchology nor any of its Subsidiaries has participated, directly or
indirectly, in any boycotts or other similar practices affecting any of its
actual or potential customers in violation of any applicable law or regulation.
5.22 Transactions with Directors and Officers. Conchology and its
Subsidiaries do not engage in business with any Person in which any of
Conchology's directors or officers has a material equity interest. No director
or officer of Conchology owns any property, asset or right which is material to
the business of Conchology and its Subsidiaries, taken as a whole.
5.23 Borrowing and Guarantees. Conchology and its Subsidiaries (a) do not
have any indebtedness for borrowed money, (b) are not lending or committed to
lend any money (except for advances to employees in the ordinary course of
business), and (c) are not guarantors or sureties with respect to the
obligations of any Person.
6. REPRESENTATIONS AND WARRANTIES OF WAMEX.
<PAGE>
WAMEX represents and warrants to the Shareholders that, to the Knowledge of
WAMEX (which limitation shall not apply to Section 6.3), and except as set forth
in a WAMEX Disclosure Letter:
6.1 Organization of WAMEX; Authorization. WAMEX is a corporation duly
organized, validly existing and in good standing under the laws of Delaware with
full corporate power and authority to execute and deliver this Agreement and to
perform its obligations hereunder. The execution, delivery and performance of
this Agreement have been duly authorized by all necessary corporate action of
WAMEX and this Agreement constitutes a valid and binding obligation of WAMEX;
enforceable against it in accordance with its terms.
6.2 Capitalization. The authorized capital stock of WAMEX consists of
100,000,000 shares of common stock, par value $0.012 per share. As of January
31, 2000, WAMEX had approximately 28,000,000 shares of common stock issued and
outstanding. As of the Closing Date, all of the issued and outstanding shares
of common stock of WAMEX are validly issued, fully paid and non-assessable. The
Common Stock of WAMEX is presently listed and trading on the Nasdaq
Over-the-Counter Bulletin Board under the symbol "WAMX."
6.3 Ownership of WAMEX Shares. The delivery of certificates to
Conchology provided in Section 2.3 will result in the Shareholders immediate
acquisition of record and beneficial ownership of the WAMEX Shares, free and
clear of all Encumbrances other than as required by Federal and State securities
laws.
6.4 No Conflict as to WAMEX and Subsidiaries. Neither the execution
and delivery of this Agreement nor the consummation of the sale of the WAMEX
Shares to the Shareholders will (a) violate any provision of the certificate of
incorporation or by-laws (or other governing instrument) of WAMEX or any of its
Subsidiaries or (b) violate, or be in conflict with, or constitute a default (or
an event which, with notice or lapse of time or both, would constitute a
default) under, or result in the termination of, or accelerate the performance
required by, or excuse performance by any Person of any of its obligations
under, or cause the acceleration of the maturity of any debt or obligation
pursuant to, or result in the creation or imposition of any Encumbrance upon any
property or assets of WAMEX or any of its Subsidiaries under, any material
agreement or commitment to which WAMEX or any of its Subsidiaries is a party or
by which any of their respective property or assets is bound, or to which any of
the property or assets of WAMEX or any of its Subsidiaries is subject, or (c)
violate any statute or law or any judgment, decree, order, regulation or rule of
any court or other Governmental Body applicable to WAMEX or any of its
Subsidiaries except, in the case of violations, conflicts, defaults,
terminations, accelerations or Encumbrances described in clause (b) of this
Section 6.4, for such matters which are not likely to have a material adverse
effect on the business or financial condition of WAMEX and its Subsidiaries,
taken as a whole.
<PAGE>
6.5 Consents and Approvals of Governmental Authorities. No consent,
approval or authorization of, or declaration, filing or registration with, any
Governmental Body is required to be made or obtained by WAMEX or Conchology or
any of either of their Subsidiaries in connection with the execution, delivery
and performance of this Agreement by WAMEX or the consummation of the sale of
the WAMEX Shares to the Shareholders.
6.6 Other Consents. No consent of any Person is required to be obtained
by Conchology or WAMEX to the execution, delivery and performance of this
Agreement or the consummation of the sale of the WAMEX Shares to the
Shareholders, including, but not limited to, consents from parties to leases or
other agreements or commitments, except for any consent which the failure to
obtain would not be likely to have a material adverse effect on the business and
financial condition of Conchology or WAMEX.
6.7 Financial Statements. WAMEX has delivered to the Shareholders
consolidated balance sheets of WAMEX and its Subsidiaries as at December 31,
1999 and 1998, and statements of income and changes in financial position for
each of the years in the two-year period then ended, together with the report
thereon of WAMEX's independent accountant (the "WAMEX Financial Statements").
Such WAMEX Financial Statements and notes fairly present the consolidated
financial condition and results of operations of WAMEX and its Subsidiaries as
at the respective dates thereof and for the periods therein referred to, all in
accordance with generally accepted United States accounting principles
consistently applied throughout the periods involved, except as set forth in the
notes thereto, and shall be utilizable in any SEC filing in compliance with Rule
310 of Regulation S-B promulgated under the Securities Act.
6.8 Brokers or Finders. Other than M. Richard Cutler, Brian A.
Lebrecht, and Vi Bui, WAMEX has not employed any broker or finder or incurred
any liability for any brokerage or finder's fees or commissions or similar
payments in connection with the sale of the WAMEX Shares to the Shareholders.
6.9 Purchase for Investment. WAMEX is purchasing the Conchology Shares
solely for its own account for the purpose of investment and not with a view to,
or for sale in connection with, any distribution of any portion thereof in
violation of any applicable securities law.
7. Access and Reporting; Filings With Governmental Authorities; Other
Covenants.
<PAGE>
7.1 Access Between the date of this Agreement and the Closing Date.
Each of the Shareholders and WAMEX shall (a) give to the other and its
authorized representatives reasonable access to all plants, offices, warehouse
and other facilities and properties of Conchology or WAMEX, as the case may be,
and to its books and records, (b) permit the other to make inspections thereof,
and (c) cause its officers and its advisors to furnish the other with such
financial and operating data and other information with respect to the business
and properties of such party and its Subsidiaries and to discuss with such and
its authorized representatives its affairs and those of its Subsidiaries, all as
the other may from time to time reasonably request.
7.3 Exclusivity. From the date hereof until the earlier of the Closing
or the termination of this Agreement, the Shareholders shall not solicit or
negotiate or enter into any agreement with any other Person with respect to or
in furtherance of any proposal for a merger or business combination involving,
or acquisition of any interest in, or (except in the ordinary course of
business) sale of assets by, Conchology, except for the exchange of the WAMEX
Shares for the Conchology Shares from the Shareholders.
7.4 Regulatory Matters. The Shareholders and WAMEX shall (a) file with
applicable regulatory authorities any applications and related documents
required to be filed by them in order to consummate the contemplated transaction
and (b) cooperate with each other as they may reasonably request in connection
with the foregoing.
8. CONDUCT OF CONCHOLOGY'S BUSINESS PRIOR TO THE CLOSING. The Shareholder
shall use their best efforts to ensure the following:
8.1 Operation in Ordinary Course. Between the date of this Agreement
and the Closing Date, Conchology shall cause conduct its businesses in all
material respects in the ordinary course.
8.2 Business Organization. Between the date of this Agreement and the
Closing Date, Conchology shall (a) preserve substantially intact the business
organization of Conchology; and (b) preserve in all material respects the
present business relationships and good will of Conchology and each of its
Subsidiaries.
8.3 Corporate Organization. Between the date of this Agreement and the
Closing Date, Conchology shall not cause or permit any amendment of its
certificate of incorporation or by-laws (or other governing instrument) and
shall not:
1. issue, sell or otherwise dispose of any of its Equity Securities, or
create, sell or otherwise dispose of any options, rights, conversion rights or
other agreements or commitments of any kind relating to the issuance, sale or
disposition of any of its Equity Securities;
2. create or suffer to be created any Encumbrance thereon, or create, sell
or otherwise dispose of any options, rights, conversion rights or other
agreements or commitments of any kind relating to the sale or disposition of any
Equity Securities;
3. reclassify, split up or otherwise change any of its Equity Securities;
d. be party to any merger, consolidation or other business combination;\
4. sell, lease, license or otherwise dispose of any of its properties or
assets (including, but not limited to rights with respect to patents and
registered trademarks and copyrights or other proprietary rights), in an amount
which is material to the business or financial condition of Conchology and its
Subsidiaries, taken as a whole, except in the ordinary course of business; or
<PAGE>
5. organize any new Subsidiary or acquire any Equity Securities of any
Person or any equity or ownership interest in any business.
8.4 Other Restrictions. Between the date of this Agreement and the
Closing Date, Conchology shall not:
1. borrow any funds or otherwise become subject to, whether directly or by
way of guarantee or otherwise, any indebtedness for borrowed money;
2. create any material Encumbrance on any of its material properties or
assets;
3. increase in any manner the compensation of any director or officer or
increase in any manner the compensation of any class of employees;
4. create or materially modify any material bonus, deferred compensation,
pension, profit sharing, retirement, insurance, stock purchase, stock option, or
other fringe benefit plan, arrangement or practice or any other employee benefit
plan (as defined in section 3(3) of ERISA);
5. make any capital expenditure or acquire any property or assets;
6. enter into any agreement that materially restricts WAMEX, Conchology or
any of their Subsidiaries from carrying on business;
7. pay, discharge or satisfy any material claim, liability or obligation,
absolute, accrued, contingent or otherwise, other than the payment, discharge or
satisfaction in the ordinary course of business of liabilities or obligations
reflected in the Conchology Financial Statements or incurred in the ordinary
course of business and consistent with past practice since the date of the
Conchology Financial Statements; or
8. cancel any material debts or waive any material claims or rights.
9. DEFINITIONS.
As used in this Agreement, the following terms have the meanings specified
or referred to in this Section 9.
9.1 "Business Day" C Any day that is not a Saturday or Sunday or a day
on which banks located in the City of New York are authorized or required to be
closed.
9.2 "Code" C The Internal Revenue Code of 1986, as amended.
9.3 "Encumbrances" C Any security interest, mortgage, lien, charge,
adverse claim or restriction of any kind, including, but not limited to, any
restriction on the use, voting, transfer, receipt of income or other exercise of
any attributes of ownership, other than a restriction on transfer arising under
Federal or state securities laws.
9.4 "Equity Securities" C See Rule 3aB11B1 under the Securities
Exchange Act of 1934.
9.5 "ERISA" C The Employee Retirement Income Security Act of 1974, as
amended.
9.6 "Governmental Body" C Any domestic or foreign national, state or
municipal or other local government or multi-national body (including, but not
limited to, the European Economic Community), any subdivision, agency,
commission or authority thereof.
9.7 "Knowledge" C Actual knowledge, after reasonable investigation.
9.8 "Person" C Any individual, corporation, partnership, joint venture,
trust, association, unincorporated organization, other entity, or Governmental
Body.
<PAGE>
9.9 "Subsidiary" C With respect to any Person, any corporation of which
securities having the power to elect a majority of that corporation's Board of
Directors (other than securities having that power only upon the happening of a
contingency that has not occurred) are held by such Person or one or more of its
Subsidiaries.
10. TERMINATION.
10.1 Termination. This Agreement may be terminated before the Closing
occurs only as follows:
1. By written agreement of the Shareholders and WAMEX at any time.
2. By WAMEX, by notice to the Shareholders at any time, if one or more of
the conditions specified in Section 4 is not satisfied at the time at which the
Closing (as it may be deferred pursuant to Section 2.1) would otherwise occur or
if satisfaction of such a condition is or becomes impossible.
3. By the Shareholders, by notice to WAMEX at any time, if one or more of
the conditions specified in Section 3 is not satisfied at the time at which the
Closing (as it may be deferred pursuant to Section 2.1), would otherwise occur
of if satisfaction of such a condition is or becomes impossible.
10.2 Effect of Termination. If this Agreement is terminated pursuant to
Section 10.1, this Agreement shall terminate without any liability or further
obligation of any party to another.
13. NOTICES. All notices, consents, assignments and other communications
under this Agreement shall be in writing and shall be deemed to have been duly
given when (a) delivered by hand, (b) sent by telex or facsimile (with receipt
confirmed), provided that a copy is mailed by registered mail, return receipt
requested, or (c) received by the delivery service (receipt requested), in each
case to the appropriate addresses, telex numbers and facsimile numbers set forth
below (or to such other addresses, telex numbers and facsimile numbers as a
party may designate as to itself by notice to the other parties).
(a) If to WAMEX:
3040 Nostrand Avenue
Marine Park, NY 11229
Attn: Mitchell H. Cushing, CEO
Facsimile (_____) ____________________
(b) If to the Shareholders:
c/o Cutler Law Group
610 Newport Center Drive, Suite 800
Newport Beach, CA 92660
Facsimile No.: (949) 719-1988
Attention: M. Richard Cutler, Esq.
<PAGE>
14. MISCELLANEOUS.
14.2 Expenses. Each party shall bear its own expenses incident to the
preparation, negotiation, execution and delivery of this Agreement and the
performance of its obligations hereunder.
14.3 Captions. The captions in this Agreement are for convenience of
reference only and shall not be given any effect in the interpretation of this
agreement.
14.4 No Waiver. The failure of a party to insist upon strict adherence to
any term of this Agreement on any occasion shall not be considered a waiver or
deprive that party of the right thereafter to insist upon strict adherence to
that term or any other term of this Agreement. Any waiver must be in writing.
14.5 Exclusive Agreement; Amendment. This Agreement supersedes all prior
agreements among the parties with respect to its subject matter with respect
thereto and cannot be changed or terminated orally.
14.6 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be considered an original, but all of which
together shall constitute the same instrument.
14.7 Governing Law, Venue. This Agreement and (unless otherwise provided)
all amendments hereof and waivers and consents hereunder shall be governed by
the internal law of the State of California, without regard to the conflicts of
law principles thereof. Venue for any cause of action brought to enforce any
part of this Agreement shall be in Orange County, California.
14.8 Binding Effect. This Agreement shall inure to the benefit of and be
binding upon the parties hereto and their respective successors and assigns,
provided that neither party may assign its rights hereunder without the consent
of the other, provided that, after the Closing, no consent of Conchology shall
be needed in connection with any merger or consolidation of WAMEX with or into
another entity.
<PAGE>
IN WITNESS WHEREOF, the corporate parties hereto have caused this Agreement
to be executed by their respective officers, hereunto duly authorized, and
entered into as of the date first above written.
WAMEX Holdings, Inc.
/s/ Mitchell H. Cushing
___________________________________
By: Mitchell H. Cushing
Its: Chief Executive Officer
/s/ M. Richard Cutler /s/ Brian A. Lebrecht
___________________________________ ___________________________________
M. Richard Cutler Brian A. Lebrecht
/s/ Vi Bui
___________________________________
Vi Bui
<PAGE>
EXHIBIT A
CONCHOLOGY SHAREHOLDERS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
CONCHOLOGY, INC. WAMEX HOLDINGS, INC.
NO. NAME SHARES PERCENT SHARES
- --- ----------------- -------------------- -------- ------
1 M. Richard Cutler 438,000 73.00% 36,500
2 Brian A. Lebrecht 99,000 16.50% 8,250
3 Vi Bui 33,000 5.50% 2,750
4 Albert Aimers 6,000 1.00% 500
5 Jeff Willmann 6,000 1.00% 500
6 James Stubler 6,000 1.00% 500
7 Andre Pechong 4,000 0.60% 333
8 Urban Smedeby 4,000 0.60% 333
9 Jack Thompsen 4,000 0.60% 334
Total 600,000 50,000
</TABLE>
CONSULTING AGREEMENT
--------------------
CONSULTING AGREEMENT dated as of February 9, 2000 between WAMEX HOLDINGS,
INC., a New York corporation, ("WAMEX"), on the one hand, and M. RICHARD CUTLER
("Cutler"), BRIAN A. LEBRECHT ("Lebrecht"), and VI BUI ("Bui"), on the other
hand. Each of Cutler, Lebrecht, and Bui shall be referred to as a "Consultant"
and collectively as the "Consultants").
WHEREAS:
A. Consultants have agreed to render consulting services with regard to
the negotiation and completion of a stock exchange between WAMEX and the
shareholders of Conchology, Inc., a Nevada corporation (the "Conchology
Shareholders").
B. In the event WAMEX is able to complete the Stock Exchange with the
Conchology Shareholders, WAMEX wishes to compensate Consultants for their
consulting services.
NOW THEREFORE, it is agreed:
1. Stock Compensation. WAMEX shall pay and cause to be issued to
-------------------
Consultants, or their assigns, a consulting fee of 100,000 shares of the common
stock of WAMEX (the "Shares") immediately upon the execution of a stock exchange
agreement with the Conchology Shareholders. The parties hereto agree that the
value of such Shares shall be 50% of the average closing bid price for the 5
business days preceding this Agreement. The Shares shall be issued in the
following manner: 72,000 shares to Cutler; 21,000 shares to Lebrecht; and 7,000
shares to Bui. Such shares shall be subject to registration by WAMEX on Form
S-8, at WAMEX's sole expense, within 5 days of closing on the Stock Exchange.
2. Miscellaneous. This Agreement (i) shall be governed by the laws of
-------------
the State of California; (ii) may be executed in counterparts each of which
shall constitute an original; (iii) shall be binding upon the successors,
representatives, agents, officers and directors of the parties; and (iv) may not
be modified or changed except in a writing signed by all parties.
<PAGE>
This Consulting Agreement has been executed as of the date first above
written.
WAMEX Holdings, Inc.
/s/ Mitchell H. Cushing
___________________________________
By: Mitchell H. Cushing
Its: Chief Executive Officer
/s/ M. Richard Cutler /s/ Brian A. Lebrecht
___________________________________ ___________________________________
M. Richard Cutler Brian A. Lebrecht
/s/ Vi Bui
___________________________________
Vi Bui
PUT OPTION AGREEMENT
This PUT OPTION AGREEMENT ("Agreement") is dated as of February 9, 2000
(the "Effective Date"), by and between WAMEX Holdings, Inc., a New York
corporation, (the "Company"), and M. Richard Cutler ("Cutler"), Brian A.
Lebrecht ("Lebrecht"), and Vi Bui ("Bui"). Each of Cutler, Lebrecht, and Bui
shall be referred to as a "Holder" and collectively as the "Holders."
RECITALS
--------
WHEREAS, pursuant to a Consulting Agreement of even date herewith between
the Company and Holders, the Holders were issued an aggregate of 100,000 shares
of common stock of the Company (the "Shares").
WHEREAS, the Company proposes to issue to Holders an option to put back to
the Company the Shares in accordance with the terms hereof.
NOW, THEREFORE, in consideration of the promises and the mutual agreements
herein set forth, the parties hereto agree as follows:
AGREEMENT
---------
SECTION 1. Issuance of Option; Term. As of the date hereof, the
---------------------------
Company hereby issues to Holders an option (the "Option") to put the Shares back
to the Company at a price equal to $6.50 per Share (the "Option Price"), payable
via cashiers check or wire transfer within five (5) days of the exercise of
Holder's Option hereunder. This Option and the Holder's rights hereunder are
secured by a pledge of 70,000 shares of common stock of the Company delivered to
and held by the Escrow Agent pursuant to an Escrow Agreement of even date
herewith. The Option and Holder's rights hereunder shall terminate 120 days
after the filing of a Form S-8 with the Securities and Exchange Commission to
register the Shares.
SECTION 2. Exercise Fee and Expenses. The Holders right to exercise the
---------------------------
Option shall not be subject to a fee of any sort, and the Company agrees to
incur and pay any expenses related to the exercise of the Option and the payment
of the Option Price, including but not limited to transfer and legal fees.
SECTION 3 Vesting of the Option. The Holders right to exercise the
------------------------
Option shall vest immediately upon execution of this Agreement (the "Effective
Date").
SECTION 4 Exercise of the Option. Following the Effective Date,
-------------------------
Holders shall have the right to exercise the Options in the following manner:
4.1 Holders shall deliver written notice to the Company as set forth
herein.
<PAGE>
4.2 Holders shall, within five (5) days of giving notice to the Company,
deliver the Shares and fully executed and medallion guaranteed stock powers to
Edward Burnbaum, Esq., of Burnbaum, Novack and Crystal, LLP, 300 East 42nd
Street, 10th Floor, New York, NY 10017.
4.3 The Company shall, within five (5) business days of receiving notice,
deliver the Option Price to Edward Burnbaum, Esq. at the address set forth
herein.
4.4 Upon the receipt of the Shares (along with stock powers) and the Option
Price by Edward Burnbaum, Burnbaum shall deliver the Option Price to the
Holders. In the event the Option Price is not delivered to the Holders within
five (5) days of the Holders' delivery of the Shares to Mr. Burnbaum, then the
Company shall be deemed to be in default hereunder, and the Shares shall
immediately be returned to the Holders. Nothing herein shall limit the remedies
available to the Holders for breach of this Agreement.
SECTION 5. Mutilated or Missing Option Certificates. In case the
--------------------------------------------
original of this Agreement shall be mutilated, lost, stolen or destroyed, the
Company shall issue and deliver, in exchange and substitution for and upon
cancellation of this Agreement, a new Option of like tenor and representing an
equivalent right or interest.
SECTION 6. Reservation of Option Price. The Company will, at all
------------------------------
times, maintain, reserve and keep available an amount of cash or other liquid
securities for the purpose of enabling it to satisfy its obligation to pay the
Option Price upon exercise of the Option.
SECTION 7. Non-Assignable Option Rights. Holder's Option granted under
----------------------------
this Agreement is non-assignable by Holders or the Company.
SECTION 8. Consolidation, Merger or Sale of the Company. If the
--------------------------------------------------
Company is a party to a consolidation, merger or transfer of assets which
reclassifies or changes its outstanding Common Stock, the successor corporation
(or corporation controlling the successor corporation or the Company, as the
case may be) shall by operation of law assume the Company's obligations under
this Agreement. In case at any time or from time to time after the Effective
Date the holders of the Common Stock of the Company shall have received, or, on
or after the record date fixed for the determination of eligible stockholders,
shall have become entitled to receive, without payment therefore, other or
additional stock or other securities or property (including cash) by way of
stock split, spinoff, reclassification, combination of shares or similar
corporate rearrangement (exclusive of any stock dividend of its or any
subsidiary's capital stock), then the Option Price shall be adjusted
proportionally.
<PAGE>
SECTION 9. Notices to Company and Holder. All notices provided for in this
-----------------------------
Agreement shall be in writing signed by the party giving such notice, and
delivered personally or sent by overnight courier or messenger or sent by
registered or certified mail (air mail if overseas), return receipt requested,
or by telex, facsimile transmission, telegram or similar means of communication.
Notices shall be deemed to have been received on the date of personal delivery,
telex, facsimile transmission, telegram or similar means of communication, or if
sent by overnight courier or messenger, shall be deemed to have been received on
the next delivery day after deposit with the courier or messenger, or if sent by
certified or registered mail, return receipt requested, shall be deemed to have
been received on the third business day after the date of mailing. Notices
shall be sent to the addresses set forth below:
If to the Company: WAMEX Holdings, Inc.
3040 Nostrand Avenue
Marine Park, NY 11229
Facsimile (____) __________________
Attn: Mitchell H. Cushing, CEO
If to the Holders: c/o Cutler Law Group
610 Newport Center Drive, Suite 800
Newport Beach, CA 92660
Facsimile (949) 719-1988
Attn: M. Richard Cutler
SECTION 10. Supplements and Amendments. This Agreement may only be
----------------------------
amended with the express written consent of Holders and the Company.
SECTION 11. Successors. All the covenants and provisions of this
----------
Agreement by or for the benefit of the Company or Holders shall bind and inure
to the benefit of their respective successor and assigns hereunder.
SECTION 12. Counterparts. This Agreement may be executed in one or more
------------
counter parts, such that when integrated together they will form a binding
Agreement.
SECTION 13. Choice of Law and Venue. This Agreement and the rights
------------------------
of the parties hereunder shall be governed by and construed in accordance with
the laws of the State of California including all matters of construction,
validity, performance, and enforcement and without giving effect to the
principles of conflict of laws. Any action brought by any party hereto shall be
brought within the State of California, County of Orange.
SECTION 14. Jurisdiction. The parties submit to the jurisdiction of
------------
the Courts of the State of California or a Federal Court empaneled in the State
of California for the resolution of all legal disputes arising under the terms
of this Agreement, including, but not limited to, enforcement of any arbitration
award.
SECTION 15. Attorneys' Fees. Except as otherwise provided herein, if a
---------------
dispute should arise between the parties including, but not limited to
arbitration, the prevailing party shall be reimbursed by the nonprevailing party
for all reasonable expenses incurred in resolving such dispute, including
reasonable attorneys' fees exclusive of such amount of attorneys' fees as shall
be a premium for result or for risk of loss under a contingency fee arrangement.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed, as of the date and year first above written.
WAMEX Holdings, Inc.
/s/ Mitchell H. Cushing
______________________________
By: Mitchell H. Cushing
Its: Chief Executive Officer
/s/ M. Richard Cutler /s/ Brian A. Lebrecht
______________________________ ______________________________
M. Richard Cutler Brian A. Lebrecht
/s/ Vi Bui
______________________________
Vi Bui
Executed only to acknowledge the agreement of the Parties and the obligations
set forth in Section 4 hereof:
/s/ Edward Burnbaum
_______________________________
Edward Burnbaum
ESCROW AGREEMENT
This ESCROW AGREEMENT (the "Escrow Agreement") is entered into as of
February 9, 2000 by and between WAMEX HOLDINGS, INC., a New York corporation
("WAMEX"), M. RICHARD CUTLER, an individual ("Cutler"), BRIAN A. LEBRECHT, an
individual ("Lebrecht"), VI BUI, an individual ("Bui"), and MRC LEGAL SERVICES
CORPORATION, a California corporation doing business as Cutler Law Group, as
escrow agent ("Escrow Agent"). Each of WAMEX, Cutler, Lebrecht, and Bui may be
referred to as a "Party" and collectively as the "Parties".
R E C I T A L S
A. WAMEX, Cutler, Lebrecht, and Bui have entered into a Stock Exchange
Agreement of even date herewith (the "Stock Exchange Agreement") wherein WAMEX
agreed to issue an aggregate of 47,500 shares of "restricted" stock to Cutler,
Lebrecht and Bui (the "Restricted Shares") as follows: Cutler, 36,500 shares
(the "Cutler Restricted Shares"); Lebrecht, 8,250 shares (the "Lebrecht
Restricted Shares"), and Bui, 2,750 shares (the "Bui Restricted Shares").
B. WAMEX has also agreed, as part of the Stock Exchange Agreement, to
issue up to an aggregate of 2,500 shares of "restricted" common stock (the
"Conchology Shareholders Shares") to the six shareholders of Conchology, Inc.
(other than Cutler, Lebrecht, and Bui) (the "Conchology Shareholders") upon
presentment by the Conchology Shareholders of their stock certificates
representing ownership of Conchology common stock at the rate of one share of
WAMEX common stock for each twelve shares of Conchology common stock.
C. WAMEX, Cutler, Lebrecht, and Bui have entered into a Consulting
Agreement of even date herewith (the "Consulting Agreement") wherein WAMEX
agreed to issue an aggregate of 100,000 shares of common stock as follows:
Cutler, 72,000 shares (the "Cutler Consulting Shares"); Lebrecht, 21,000 shares
(the "Lebrecht Consulting Shares"); and Bui, 7,000 shares (the "Bui Consulting
Shares"). As part of the Consulting Agreement, WAMEX has agreed to register the
Cutler Consulting Shares, Lebrecht Consulting Shares, and Bui Consulting Shares
on Form S-8 within five days of execution of the Stock Exchange Agreement.
D. WAMEX, Cutler, Lebrecht, and Bui have entered into a Put Option
Agreement of even date herewith (the "Put Agreement") wherein Cutler, Lebrecht,
and Bui have the option to put the Cutler Consulting Shares, Lebrecht Consulting
Shares, and Bui Consulting Shares back to WAMEX at a price of $6.50 per share.
WAMEX has agreed to issue an additional 70,000 shares of common stock (the
"Security Shares"), to be registered on Form S-8, and deliver them to the Escrow
Agent to be distributed in accordance with the terms of this Escrow Agreement.
E. The Parties hereto have agreed to deposit the Cutler Restricted
Shares, Lebrecht Restricted Shares, Bui Restricted Shares, Conchology
Shareholders Shares, Cutler Consulting Shares, Lebrecht Consulting Shares, Bui
Consulting Shares, and the Security Shares (all of which shall be referred to
herein as the "Escrow Shares") with the Escrow Agent to be distributed in
accordance herewith.
<PAGE>
F. Escrow Agent has agreed to act as the escrow agent hereunder, in
accordance with the terms and conditions set forth in this Escrow Agreement.
NOW THEREFORE, for and in consideration of the foregoing and of the mutual
covenants and agreements hereinafter set forth, the parties hereto hereby agree
as follows:
1. APPOINTMENT OF ESCROW AGENT. The Parties hereby mutually appoint
and designate the Escrow Agent to receive, hold and release, as escrow agent,
the Escrow Shares and the Escrow Agent hereby accepts such appointment and
designation.
2. ESCROW DELIVERY. No later than February 14, 2000, WAMEX shall
deliver the Escrow Shares to the Escrow Agent to be held by the Escrow Agent and
released in accordance with the terms of this Escrow Agreement.
3. CONDITIONS OF ESCROW.
3.1 The Escrow Deposit. Escrow Agent shall hold and release the Escrow
------------------
Shares as follows:
a. Release of the Cutler Restricted Shares, Lebrecht Restricted Shares, Bui
-------------------------------------------------------------------------
Restricted Shares, Cutler Consulting Shares, Lebrecht Consulting Shares, and Bui
- --------------------------------------------------------------------------------
Consulting Shares.
- ------------------
i. The Escrow Agent shall release and distribute the Cutler Restricted
Shares, Lebrecht Restricted Shares, Bui Restricted Shares, Cutler Consulting
Shares, Lebrecht Consulting Shares, and Bui Consulting Shares to the respective
holder thereof, or their assigns, immediately upon the filing of a Form 8-K with
the Securities and Exchange Commission describing the transaction contemplated
by the Stock Exchange Agreement, and the receipt of verbal notice by the Escrow
Agent and WAMEX from the NASD that WAMEX is in compliance with Rule 6530.
ii. The Escrow Agent shall release and distribute the Cutler Restricted
Shares, Lebrecht Restricted Shares, Bui Restricted Shares, Cutler Consulting
Shares, Lebrecht Consulting Shares, and Bui Consulting Shares to WAMEX in the
event the condition precedent set forth in section 3.1(a)(i) is not satisfied by
March 15, 2000.
<PAGE>
b. Release of Conchology Shareholders Shares. The Escrow Agent shall
---------------------------------------------
release and distribute the Conchology Shareholders Shares to each of the
Conchology Shareholders upon the receipt, by the Escrow Agent, of written notice
from a Conchology Shareholder, accompanied by their Conchology stock
certificate, of their desire to exchange their Conchology common stock for
WAMEX common stock.
c. Release of Security Shares. The Escrow Agent shall release and
-----------------------------
distribute the Security Shares as follows:
i. In the event that Cutler, Lebrecht, and Bui have exercised their rights
under the Put Agreement, and WAMEX has breached their obligations thereunder,
then the Escrow Agent shall sell that number of the Security Shares necessary so
that the gross receipts (excluding brokerage commissions, taxes, and other
similar fees) received as a result of the sale of the Cutler Consulting Shares,
Lebrecht Consulting Shares, Bui Consulting Shares, and Security Shares, is equal
to $650,000.
ii. The Escrow Agent shall release and distribute the Security Shares to
WAMEX in the event the condition precedent set forth in section 3.1(a)(i) is not
satisfied by March 15, 2000.
iii. to WAMEX, Lebrecht, Cutler, and Bui, as the case may be, pursuant to
(a) written instructions executed by WAMEX, Cutler, Lebrecht and Bui, or (b) any
"final order" of a court of competent jurisdiction, any such order being deemed
to be "final" if (i) such order has not been reserved, stayed, enjoined, set
aside, annulled or suspended, (ii) no request for a stay, suspension or an
injunction, petition for reconsideration or appeal, or sua sponte action with
--- ------
comparable effect is pending with respect to the order, and (iii) the time for
filing any such request, petition or appeal or further taking of any such sua
---
sponte action has expired.
----
<PAGE>
3.2 Conflicting Instructions. If a controversy arises between the Parties
-------------------------
concerning the release of the Escrow Assets hereunder, they shall notify the
Escrow Agent. In that event (or, in the absence of such notification, if in the
good faith judgment of the Escrow Agent such controversy exists), the Escrow
Agent shall not be required to resolve such controversy or take an action but
shall be entitled to await resolution of the controversy by joint instructions
from the Parties. The Escrow Agent may institute an interpleader action in
state or federal court in the State of California to resolve such controversy.
If a suit is commenced against the Escrow Agent, it may answer by way of
interpleader and name the Parties as additional parties to such action, and the
Escrow Agent may tender the Escrow Assets into such court for determination of
the respective rights, titles and interests of the Parties. Upon such tender,
the Escrow Agent shall be entitled to receive from the Parties its reasonable
attorneys' fees and expenses incurred in connection with said interpleader
action or in any related action or suit. As between the Parties, such fees,
expenses and other sums shall be paid by the party which fails to prevail in the
proceedings brought to determine the appropriate distribution of the Escrow
Assets. If and when the Escrow Agent shall so interplead such Parties, or
either of them, and deliver the Escrow Assets to the clerk of such court, all of
its duties hereunder shall cease, and it shall have no further obligation in
this regard. Nothing herein shall prejudice any right or remedy of the Escrow
Agent.
4. CONCERNING ESCROW AGENT
4.1 Duties. Escrow Agent undertakes to perform all duties which are
------
expressly set forth herein; provided, however, that the Escrow Agent shall not
be required to make or be liable in any manner of its failure to make any
determination under the Agreement or any other agreement, including whether any
of the Parties is entitled to delivery of the Escrow Assets under the Stock
Exchange Agreement, Consulting Agreement, or Put Agreement.
4.2 Indemnification.
---------------
a. Escrow Agent may rely upon and shall be protected in acting or refraining
from acting upon any written notice, instructions or request furnished to it
hereunder and believed by it to be genuine and authorized.
b. Escrow Agent shall not be liable for any action taken by it in good faith
and without gross negligence or wilful misconduct, and believed by it to be
authorized or within the rights or powers conferred upon it by this Escrow
Agreement, and may consult with counsel of its own choice and shall have full
and complete authorization and protection for any action taken or suffered by it
hereunder in good faith and in accordance with the opinion of such counsel.
c. The Parties, and each of them, hereby agrees to indemnify the Escrow
Agent for, and hold the Escrow Agent harmless against, any loss, liability or
expense incurred without gross negligence or wilful misconduct or bad faith on
the part of the Escrow Agent, arising out of or in connection with the Escrow
Agent's entering into this Escrow Agreement and carrying out the Escrow Agent's
duties hereunder, including, without limitation, costs and expenses of defending
the Escrow Agent against any claim or liability with respect thereto.
d. Escrow Agent shall have no implied obligations or responsibilities
hereunder, nor shall it have any obligation or responsibility to collect funds
or seek the deposit of money or property, nor is the Escrow Agent a party to any
other agreement entered into among the Parties.
<PAGE>
4.3 Other Matters. Escrow Agent (and any successor escrow agent or
--------------
agents) reserves the right to resign as the Escrow Agent at any time, provided
fifteen (15) days' prior written notice is given to the other parties hereto,
and provided further that a mutually acceptable successor Escrow Agent(s) within
such fifteen (15) day period, the Escrow Agent may petition any court in the
State of California having jurisdiction to designate a successor Escrow Agent.
The resignation of the Escrow Agent (and any successor escrow agent or agents)
shall be effective only upon delivery of the Escrow Assets to the successor
escrow agent(s). The Parties reserve the right to jointly remove the Escrow
Agent at any time, provided fifteen (15) days' prior written notice is given to
the Escrow Agent. In the event of litigation or dispute by the Parties in which
the performance of the duties of the Escrow Agent is at issue, the Escrow Agent
shall take no action until such action is agreed in writing by the Parties, or
until receipt of any order pursuant to 3.1(c)iii or 3.1(d)iii above directing
the Escrow Agent with respect to the action which is the subject of such
litigation or dispute.
5. TERMINATION. This Escrow Agreement shall be terminated upon the
release of the Escrow Assets in accordance with the terms and conditions of
Section 3 hereof, or otherwise by written mutual consent signed by all parties
hereto.
6. NOTICE. All notices, demands, requests, or other communications
which may be or are required to be given, served or sent by any party to any
other party pursuant to this Escrow Agreement shall be in writing and shall be
hand delivered (including delivery by courier), sent by facsimile, or mailed by
first-class, registered or certified mail, return receipt requested, postage
prepaid, addressed as follows:
If to WAMEX: 3040 Nostrand Avenue
Marine Park, NY 11229
Attn: Mitchell H. Cushing, CEO
Facsimile (_____) ____________________
If to the Cutler, Lebrecht c/o Cutler Law Group
or Bui: 610 Newport Center Drive, Suite 800
Newport Beach, CA 92660
Facsimile No.: (949) 719-1988
Attention: M. Richard Cutler, Esq.
If to Escrow Agent: MRC Legal Services Corporation
610 Newport Center Drive, Suite 800
Newport Beach, CA 92660
Attn: M. Richard Cutler, President
Facsimile (949) 719-1988
or such other address as the addressee may indicate by written notice to the
other parties. Each notice, demand, request or communication which shall be
given or made in the manner described above shall be deemed sufficiently given
or made for all purposes at such time as it delivered to the addressee (with the
return receipt, the delivery receipt or the affidavit of messenger being deemed
conclusive but not exclusive evidence of such delivery) or at such time as
delivery is refused by the addressee upon presentation.
<PAGE>
7. BENEFIT AND ASSIGNMENT. This Escrow Agreement shall be binding upon
and shall inure to the benefit of the parties hereto and their respective
successors and assigns as permitted hereunder. No person or entity other than
the parties hereto is or shall be entitled to bring any action to enforce any
provision in this Escrow Agreement against any of the parties hereto, and the
covenants and agreements set forth in this Escrow Agreement shall be solely for
the benefit of, and shall be enforceable only by, the parties hereto or their
respective successors and assigns this Escrow Agreement or any rights hereunder
without the prior written consent of the parties hereto.
8. ENTIRE AGREEMENT; AMENDMENT. This Escrow Agreement, the Honeyman
Settlement, and the Wilson Settlement executed simultaneously herewith contain
the entire agreement among the parties with respect to the subject matter hereof
and supersedes all prior oral or written agreements, commitments or
understandings with respect to such matters. This Escrow Agreement may not be
changed orally, but only by an instrument in writing signed by the party against
whom enforcement of any waiver, change, modification, extension or discharge is
sought.
9. HEADINGS. The headings of the sections and subsections contained in
this Escrow Agreement are inserted for convenience only and do not form a part
or affect the meaning, construction or scope thereof.
10. GOVERNING LAW; VENUE. This Escrow Agreement shall be governed and
constructed under and in accordance with the laws of the State of California
(but not including the conflicts of laws and rules thereof). For purposes of
any action or proceeding involving this Escrow Agreement each of the parties to
this Escrow Agreement expressly submits to the jurisdiction of the federal and
state courts located in the State of California and consents to the service of
any process or paper by registered mail or by personal service within or without
the State of California in accordance with applicable law, provided a reasonable
time for appearance is allowed.
11. SIGNATURE IN COUNTERPARTS. This Escrow Agreement may be executed
in separate counterparts, none of which need contain the signature of all
parties, each of which shall be deemed to be an original and all of which taken
together constitute one and the same instrument. It shall not be necessary in
making proof of this Escrow Agreement to produce or account for more than the
number of counterparts containing the respective signatures of, or on behalf of,
all of the parties hereto.
12. ATTORNEY'S FEES. Should any action be commenced between the
parties to this Agreement concerning the matters set forth in this Agreement or
the right and duties of either in relation thereto, the prevailing party in such
action shall be entitled, in addition to such other relief as may be granted, to
a reasonable sum as and for its Attorney's Fees and Costs.
<PAGE>
IN WITNESS WHEREOF, each of the parties has caused this Escrow Agreement to
be duly executed and delivered in its name and on its behalf, all as of the date
and year first above written.
WAMEX Holdings, Inc.
/s/ Mitchell H. Cushing
___________________________________
By: Mitchell H. Cushing
Its: Chief Executive Officer
/s/ M. Richard Cutler /s/ Brian A. Lebrecht
___________________________________ ___________________________________
M. Richard Cutler Brian A. Lebrecht
/s/ Vi Bui
___________________________________
Vi Bui
MRC LEGAL SERVICES CORPORATION
/s/ M. Richard Cutler
____________________________________
By: M. Richard Cutler
Its: President
State of Delaware
Secretary of State
Division of Corporations
Filed 09:00 AM 02/06/1998
981048583 - 2855739
CERTIFICATE OF INCORPORATION
OF
The World Auction Market and Exchange (Holdings), Inc.
A CLOSE CORPORATION
FIRST: The name of this corporation is The World Auction Market and Exchange
(Holdings), INc.
SECOND: Its registered office in the State of Delaware is to be located at 1313
N. Market St., Wilmington, DE 19801-1151, County of New Castle. The registered
agent in charge thereof is The Company Corporation, address "same as above".
THIRD: The nature of the business and the objects and purposes proposed to be
transacted, promoted and carried on, are to engage in any lawful act or activity
for which corporations may be organized under the General Corporation Law of
Delaware.
FOURTH: The amount of total authorized shares of stock of this corporation is
1,500 shares of .001 par value.
FIFTH: The name and mailing address of the incorporator is:
Regina Cephas, 1313 N. Market St., Wilmington, DE 19801-1151.
SIXTH: All of the corporation's issued stock, exclusive of treasury shares,
shall be represented by certificates and shall be held of record by not more
than thirty (30) persons.
SEVENTH: All of the issued stock of all classes shall be subject to one or more
of the restrictions on transfer permitted by Section 202 of the General
Corporation Law.
EIGHTH: The corporation shall make no offering of any of its stock of any class
which would constitute a "public offering" within the meaning of the United
States Securities Act of 1933 as it may be amended from time to time.
NINTH: Directors of the corporation shall not be liable to either the
corporation or its stockholders for monetary damages for a breach of fiduciary
duties unless the breach involves: (1) a director's duty of loyalty to the
corporation or its stockholders; (2) acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law; (3)
liability for unlawful payments of dividends or unlawful stock purchases or
redemption by the corporation; or (4) a transaction from which the director
derived an improper personal benefit.
I, THE UNDERSIGNED, for the purpose of forming a corporation under the laws of
the State of Delaware, do make, file and record this Certificate and do certify
that the facts herein are true, and I have accordingly hereunto set my hand.
DATED: FEBRUARY 16, 1998 /s/ Regina Cephas
Regina Cephas
STATE OF DELAWARE
CERTIFICATE OF AMENDMENT
OF CERTIFICATE OF INCORPORATION
The World Auction Market and Exchange (Holdings), Inc., 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 World Auction Market
and Exchange (Holdings), Inc., resolutions were duly adopted setting forth a
proposed amendment of the Certificate of Incorporation of said corporation,
declaring said amendment to be advisable and calling a meeting of the
stockholders of said corporation for consideration thereof. The resolution
setting forth the proposed amendment is as follows:
RESOLVED, that the Certificate of Incorporation of this corporation be amended
by changing the Article thereof numbers "One" so that, as amended, said Article
shall be and read as follows:
The name of this corporation is WAMEX (Holdings), Inc.
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 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.
FOURTH: That the capital of said corporation shall not be reduced under or by
reason of said amendment.
IN WITNESS WHEREOF, said The World Auction Market and Exchange (Holdings), Inc.
had caused this certificate to be signed by
Mitchell Cushing, an Authorized Officer, this 26th day of May, 1998.
By: /s/ Mitchell Cushing
Name: Mitchell Cushing
Title: President
CERTIFICATE OF INCORPORATION
THE TREASURE CACHE, INC.
Under Section 402 of the Business Corporation Law.
The undersigned, for the purpose of forming a corporation pursuant to
Section 402 of the Business Corporation Law of the State of New York, does
hereby certify and set forth:
FIRST: The name of the corporation is THE TREASURE CACHET, INC.
SECOND: The purposes for which the corporation is formed are:
To engage in any lawful act or activity for which corporations may be
organized under the business corporation law, provided that the corporation is
not formed to engage in any act or activity which requires the act or approval
of any state official, department, board, agency or other body without such
approval or consent first being obtained.
To carry on a general mercantile, industrial, investing and trading
business in all its branches; to devise, invent, manufacture, fabricate,
assemble, install, service, maintain, alter, buy, sell, import, export, license
as licensor or licenses, 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,
representative, broker, factor, merchant, distributor, jobber, advisor, or 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 create, manufacture, contract for, buy, sell, import, export,
distribute, job and generally deal in and with, whether at wholesale or retain,
and as principal, agent, broker, factor, commission merchant, licensor, licensee
or otherwise, any and all kinds of goods, wares, and merchandise, and in
connection therewith or independent thereof, to establish and maintain, by any
manner or means, buying offices, distribution centers, specialty and other
shops, stores, mail-order establishments, concessions, leased departments, and
any and all other departments, site and locations necessary, convenient or
useful in the furtherance of any business of the corporation.
To develop, experiment with, manufacture, fabricate, produce, assemble,
buy, lease or otherwise acquire, hold, own, operative, use, install, equip,
maintain, service, process, possess, repossess, remodel, recondition, transport,
import, export, sell, lease or otherwise dispose of any generally to deal in and
with any and all kinds of raw materials, products, manufactured articles and
products, equipment, machinery, devises, systems, parts, tools and implements,
apparatus, and goods, wares, merchandise and tangible property of every kind,
used or capable of being used for any purpose whatsoever, and wheresoever
located.
To acquire by purchase, subscription, underwriting or otherwise, and to
own, hold for investment, or otherwise, and to use, sell, assign, transfer,
mortgage, pledge, exchange or otherwise dispose of real and personal property of
every sort and description and wheresoever situated, including shares of stock,
bonds, debentures, notes, scrip, securities, evidences of indebtedness,
contracts or obligations of any corporation or association, whether domestic or
foreign, or of any firm or individual or of the United States or any foreign
country, or any municipality or local authority within or without the United
States, and also to issue in exchange therefor, stocks, bonds or other
securities or evidences of indebtedness of this corporation and, while the owner
or holder of any such property, to receive, collect and dispose of the interest,
dividends, and income on or from such property and to possess and exercise in
respect thereto all of the rights, powers and privileges of ownership, including
all voting powers thereon.
To construct, build, purchase, lease or otherwise acquire, equip, hold,
own, improve, develop, manage, maintain, control, operate, lease, mortgage,
create liens upon, sell, convey, or otherwise dispose of and turn to account,
any and all plants, machinery, works, implements and things or property, real
and personal, of every kind and description, incidental to, connected with, or
suitable, necessary or convenient for any of the purposes enumerated herein,
including all or any part or parts of the properties, assets, business and
goodwill of any persons, firms, associations or corporations.
The powers, rights and privileges provided in this certificate are not to
be deemed to be in limitation of similar, other or additional powers, rights and
privileges granted or permitted to a corporation by the Business Corporation
Law, it being intended that this corporation shall have all rights, powers and
privileges granted or permitted to a corporation by such statute.
THIRD: The office of the corporation is to be located in the County of
Suffolk, State of New York
FOURTH: The aggregate number of shares which the corporation shall have
the authority to issue is Two Hundred (200), all of which shall be without par
value.
FIFTH: The Secretary of State is designated as the agent of the
corporation upon whom process against it may be served. The post office address
to which the Secretary of State shall mail a copy of any process against the
corporation served on him is:
44-F Jefryn Boulevard West
Deer Park, New York 11729
SIXTH: The personal liability of directors to the corporation or its
shareholders for damages for any breach of duty in such capacity is hereby
eliminated except that such personal liability shall not be eliminated if a
judgment or other final adjudication adverse to such director establishes that
his acts or omissions were in bad faith or involved intentional misconduct or a
knowing violation of law or that he personally gained in fact a financial profit
or other advantage to which he was not legally entitled or that his acts
violated Section 719 of the Business Corporation Law.
IN WITNESS WHEREOF, this certificate has been subscribed to this 13th day
of April, 1992 by the undersigned who affirms that the statements made herein
are true under the penalties of perjury.
/s/ Gerald Weinberg
Gerald Weinberg
90
State Street
Albany, New York
Certificate of Amendment of the Certificate of Incorporation of
THE TREASURE CACHE, INC.
under Section 805 of the Business Corporation Law
IT IS HEREBY CERTIFIED THAT:
(1) The Name of the corporation is: THE TREASURE CACHE, INC.
(2) The certificate of incorporation was filed by the department of state on
the 14th day of April, 1992.
(3) The certificate of incorporation of this corporation is hereby amended to
effect the following change:
As to the aggregate number of shares which the corporation shall have the
authority to issue, paragraph FOURTH is amended to read as follows:
FOURTH: The Aggregate number of shares which the corporation shall have the
authority to issue is Ten Million (10,000,000) with a par value of $.0012,
immediately following a One (1) for Twelve (12) reverse stock split which was
effected on September 30, 1999, reducing the number of issued and outstanding
shares from Eight Million Five Hundred Eighty Three Thousand Three Hundred Two
(8,583,302) to Seven Hundred Fifteen Thousand Two Hundred Seventy Five
(715,275).
(4) The amendment to the certificate of incorporation was authorized:
first, by the vote of the board of directors.
and then at a meeting of shareholders by vote of a majority of all the
outstanding shares entitled to vote thereon.
IN WITNESS WHEREOF, this certificate has been subscribed this 9th day of August
1994 by the undersigned who affirm(s) that the statements made herein are true
under the penalties of perjury.
RICHARD A. SIMEONE PRESIDENT, SHAREHOLDER /s/ Richard A. Simeone
RANDY G. ROMANO SECRETARY, SHAREHOLDER /s/ Randy G. Romano
Certificate of Amendment to
Certificate of Incorporation of
Treasure Cache, Inc.
(In accordance with Section 805 of the New York Business Corporation Law)
The undersigned, being the President and Secretary of Treasure Cache, Inc., does
hereby certify and set forth:
1. The name of the corporation is Treasure Cache, Inc.
2. The certificate of incorporation of Treasure Cache, Inc. was filed by the
Department of State on April 14, 1992.
3. Paragraph Four of the certificate of incorporation of Treasure Cache, Inc.,
which sets forth the number of shares of common stock the corporation shall be
authorized to issue as 1,666,667 shares of common stock at $.001, is hereby
amended to read as follows:
The corporation shall be authorized to issue the following
shares:
Class Number of Shares Par Value
Common 10,000,000 $.0012
4. This amendment provides for the following change of shares:
Issued Shares: The amendment provides for no change in the
715,275 issued common stock shares at $.0012.
5. This amendment provides for an increase in the number of authorized common
stock shares in the amount of 8,333,333 shares at the par value of $.0012 per
share.
6. This amendment to the certificate of incorporation of Treasure Cache, Inc.
was authorized by the Board of Directors of Treasure Cache, Inc. on _____, 1999,
followed by a vote of the majority of all outstanding shares entitled to vote
thereon at a meeting of the shareholders.
IN WITNESS WHEREOF, the undersigned have signed this certificate and caused
it to be verified.
Dated, as of ______, 1999
/s/ Richard Simeone
Richard Simeone, President
/s/ Randy Romano
Randy Romano, Secretary
F991129000 626
U.N.I. - 37
CERTIFICATE OF MERGER
OF
WAMEX HOLDINGS, INC.
AND
THE TREASURE CACHE, INC.
INTO
THE TREASURE CACHE, INC.
Under Section 804 of the
Business Corporation Law
The undersigned, Richard Simeone and Randy Romano, being, respectively, the
President and Secretary of The Treasure Cache, Inc., a corporation duly
organized and existing under and by virtue of the laws of the State of New York,
and existing under and by virtue of the laws of the State of New York, and
Mitchell H. Cushing and Russell Chimenti, being, respectively, the President and
Secretary of Wamex Holdings, Inc., a foreign corporation duly organized and
existing under and by virtue of the laws of the State of Delaware, do hereby
certify and set forth:
FIRST: The name of each constituent corporation is as follows:
The Treasure Cache, Inc.
Wamex Holdings, Inc.
SECOND: The name of the surviving corporation is The Treasure Cache, Inc.,
a New York corporation.
THIRD: The designation, number and voting rights of the outstanding shares
of each class and series of the constituent corporations are as follows:
THE TREASURE CACHE, INC.
Class Series Number
-----------------------------------------------------------
Common $.0001 par 8,583,302
WAMEX HOLDINGS, INC.
Class Series Number
----------------------------------------------------------
Common $.001 par 1,500
<PAGE>
FOURTH: The amendments or changes to be made in the certificate of
incorporation of The Treasure Cache, Inc. are as follows:
(a) Paragraph First relating to the name of the Corporation is hereby
amended to read: "FIRST: The name of this corporation is WAMEX HOLDINGS, INC."
(b) Paragraph Fourth relating to the number of authorized shares is
hereby amended to reach:
"FOURTH" The aggregate number of shares which the Corporation shall
have the authority to issue is Ten Million (10,000,000) with a par value of
$.0012, immediately following a one (1) for twelve (12) reverse stock split
which was effected on November 2, 1999, reducing the number of issues and
outstanding shares from Eight Million Five Hundred Eighty Three Thousand Three
Hundred Two (8,583,302) to Seven Hundred Fifteen Thousand Two Hundred
Seventy-Five (715,275)".
FIFTH: The effective date of the merger is the date of filing of the
certificate of merger by the Department of State.
SIXTH: The date when the certificate of incorporation of Treasure Cache,
Inc. was filed by the department of State is the 14th day of April, 1992.
SEVENTH: The jurisdiction of incorporation of Wamex Holdings, Inc. is the
State of Delaware, and the date of its incorporation is the 6th day of February,
1998.
EIGHTH: Said foreign corporation has not filed an Application for
Authority to do business in the State of New York.
NINTH: The manner in which the merger was authorized with respect to each
constituent domestic corporation was a vote of the holders of two thirds of all
outstanding shares entitled to vote thereon at a meeting of shareholders.
TENTH: The merger is permitted by the laws of the jurisdiction of each
constituent foreign corporation and is in compliance therewith.
<PAGE>
IN WITNESS WHEREOF, we hereunto sign our name and affirm that the
statements made herein are true under penalty of perjury, this 19th day of
November, 1999.
THE TREASURE CACHE, INC.
(Name of Surviving Corporation)
/s/ Richard Simeone
Richard Simeone, President
/s/ Randy Romano
Randy Romano, Secretary
WAMEX HOLDINGS, INC.
(Name of Non-Surviving Corporation)
/s/ Mitchell H. Cushing
Mitchell H. Cushing, President
/s/ Russell Chimenti
Russell Chimenti, Secretary
BYLAWS
OF
THE WORLD AUCTION MARKET AND EXCHANGE (HOLDINGS), INC.
ARTICLE I
SHAREHOLDERS
1. ANNUAL MEETING
- -------------------
A meeting of the shareholders shall be held annually for the election of
directors and the
transaction of other business on such date in each year as may be determined by
the Board of Directors, but in no event later than 100 days after the
anniversary of the date of incorporation of the Corporation.
2. SPECIAL MEETINGS
---------------------
Special meetings of the shareholders may be called by the Board of Directors,
Chairman of the
Board or President and shall be called by the Board upon the written request of
the holders of record of a majority of the outstanding shares of the Corporation
entitled to vote at the meeting requested to be called. Such request shall state
the purpose or purposes of the proposed meeting. At such special meetings the
only business which may be transacted is that relating to the purpose or
purposes set forth in the notice thereof.
3. PLACE OF MEETINGS
---------------------
Meetings of the shareholders shall be held at such place within or outside of
the State of Delaware
as may be fixed by the Board of Directors. If no place is so fixed, such
meetings shall be held at tile principal office of the Corporation.
4. NOTICE OF MEETINGS
---------------------
Notice of each meeting of the shareholders shall be given in writing and shall
state the place, date
and hour of the meeting and the purpose or purposes for which the meeting is
called. Notice of a special meeting shall indicate that it is being issued by or
at the direction of the person or persons calling or requesting the meeting.
If, at any meeting, action is proposed to be taken which, if taken, would
entitle objecting
shareholders to receive payment for their shares, the notice shall include a
statement of that purpose and to that effect.
<PAGE>
A copy of the notice of each meeting shall be given, personally or by first
class mail, not less than
tens nor more than fifty days before the date of the meeting, to each
shareholder entitled to vote at such meeting, If mailed, such notice shall be
deemed to have been given when deposited in the United States mail, with postage
thereon prepaid, directed to the shareholder at his address as it appears on the
record of the shareholders, or, if he shall have filed with, the Secretary of
the Corporation a written request that notices to him or her be mailed to some
other address, then directed to him at such other address.
When a meeting is adjourned to another time or place, it shall not be necessary
to give any notice
of the adjourned meeting if the time and place to which the meeting is adjourned
are announced at the meeting at which the adjournment is taken. At the adjourned
meeting any business may be transacted that might have been transacted on the
original date of the meeting. However, if after the adjournment the Board of
Directors fixes a new record date for the adjourned meeting, a notice of the
adjourned meeting shall be given to each. shareholder of record on the new
record date entitled to notice under this Section 4.
5. WAIVER OF NOTICE
-------------------
Notice of a meeting need not be given to any shareholder who submits a
signed 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 of her.
6. INSPECTORS OF ELECTION
- ----------------------------
The Board of Directors, in. advance of any shareholders' meeting, may appoint
one or more
inspectors to act at the meeting or any adjournment thereof. If inspectors are
not so appointed, the person presiding at a shareholders' meeting may, and on
the request of any shareholder entitled to vote thereat shall, appoint two
inspectors. In case any person appointed fails to appear or act, the vacancy may
be filled by appointment in advance of the meeting by the Board of at the
meeting by the person presiding thereat. Each inspector, before entering upon
the discharge of his duties, shall take and sign an oath faithfully to execute
the duties of such inspector at such meeting with strict impartiality and
according to the best of his ability.
The inspectors shall determine the number of shares outstanding and the voting
power of each, the
shares represented at the meeting, the existence of a quorum, and the validity
and effect of proxies, and shall receive votes, ballots or consents, hear and
determine all challenges and questions arising in connection with the right to
vote at the meeting, count and tabulate all votes, ballots or consents,
determine the result thereof, and do such acts as are proper to conduct the
election or vote with fairness to all shareholders. On request of the person
presiding at the meeting, or of any shareholder entitled to vote thereat, the
inspectors shall make a report in writing of any challenge, question or matter
determined by them and shall execute a
<PAGE>
certificate of any fact found by themAny report or certificate made by them
shall be prima facie evidence of the facts stated and of any vote certified by
them
7. LIST OF SHAREHOLDERS AT MEETINGS
- ----------------------------------------
A list of the shareholders as of the record date, certified by the Secretary or
any Assistant Secretary
or by a transfer agent, shall be produced at any meeting of the shareholders
upon the request thereat or prior thereto of any shareholder. If the right to
vote at any meeting is challenged, the inspectors of election, or the person
presiding thereat, shall require such list of the shareholders to be produced as
evidence of the right of the persons challenged to vote at such meeting, and all
persons who appear from such list to be shareholders entitled to vote thereat
may vote at such meeting.
8. QUALIFICATION OF VOTERS
- -----------------------------
Unless otherwise provided in the Certificate of Incorporation, every
shareholder of record shall be entitled at every meeting of the shareholders to
one vote for every share standing in its name on the record of the shareholders.
Treasury shares as of the record date arid shares held as of the record
date by another domestic or foreign corporation of any kind, if a majority of
the shares entitled. to vote in the election of directors of such other
corporation is held as of the record date by the Corporation, shall not be
shares entitled to vote or to be counted in determining the total number of
outstanding shares.
Shares held by an administrator, executor, guardian, conservator, committee or
other fiduciary, other
than a trustee, may be voted by such fiduciary, either in person or by proxy,
without the transfer of such shares into the name of such fiduciary. Shares held
by a trustee may be voted by him or her, either in person or by proxy, only
after the shares have been transferred into his name as trustee or into the name
of his nominee.
Shares standing in the name of another domestic or foreign corporation of any
type or kind may be
voted by such officer, agent or proxy as the bylaws of such corporation may
provide, or, in the absence of such provision, as the board of directors of such
corporation may determine.
No shareholder shall sell his vote, or issue a proxy to vote, to any person for
any sum of money or
anything of value except as permitted by law.
9.QUALIFICATION OF SHAREHOLDERS
-------------------------------
The holders of a majority of the shares of the Corporation issued and
outstanding and entitled to vote
<PAGE>
at any meeting of the shareholders shall constitute a quorum at such meeting for
the transaction of any business, provided that when a specified item of business
is required to be voted on by a class or series, voting as a class, the holders
of a majority of the shares of such class or series shall constitute a quorum.
for the transaction of such specified item of business.
When a quorum is once present to organize a meeting, it is not broken by the
subsequent withdrawal
of any shareholders.
The shareholders who are present in person or by proxy and who are entitled to
vote may, by a
majority of votes cast, adjourn the meeting despite the absence of a quorum.
10. PROXIES
-----------
Every shareholder entitled to vote at a meeting of the shareholders, or to
express consent or dissent
without a meeting, may authorize another person or persons to act for him by
proxy.
Every proxy must be signed by the shareholder or its attorney. No proxy shall be
valid after the
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.
The authority of the holder of a proxy to act shall not be revoked by the
incompetence or death of
the shareholder who executed the proxy, unless before the authority is exercised
written notice of an adjudication of such incompetence or of such death is
received by the Secretary or any Assistant Secretary.
11. VOTE OR CONSENT OF SHAREHOLDERS
-----------------------------------
Directors, except as otherwise required by law, shall be elected by a plurality
of the votes cast at a
meeting of shareholders by the holders of shares entitled to vote in the
election.
Whenever any corporate action, other than the election of directors, is to be
taken by vote of the
shareholders, it shall, except as otherwise required by law, be authorized by a
majority of the votes cast at a meeting of shareholders by the holders of shares
entitled to vote thereon.
Whenever shareholders are required or permitted to take any action by vote, such
action may he
taken without a meeting on written consent, setting forth the action so taken,
<PAGE>
signed by the holders of all outstanding shares entitled to vote thereonWritten
consent thus given by the holders of all outstanding shares entitled to vote
shall have the same effect as an unanimous vote of shareholders.
12. FIXING THE RECORD DATE
- ------------------------------
For the purpose of determining the shareholders entitled to notice of or to vote
at any meeting of
shareholders or any adjournment thereof, or to express consent to 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 of Directors may fix,
in advance, a date as the record date for any such determination of
shareholders. Such date shall not be less than ten nor more than fifty days
before the date of such meeting, nor more than fifty days prior to any other
action.
When a determination of shareholders of record entitled to notice of or to vote
at any meeting of
shareholders has been made as provided in this Section., such determination
shall apply to any adjournment thereof, unless the Board of Directors fixes a
new record date for the adjourned meeting.
ARTICLE II
BOARD OF DIRECTORS
--------------------
1. POWER OF BOARD AND QUALIFICATION OF DIRECTORS
-------------------------------------------------------
The business of the Corporation shall be managed by the Board of Directors. Each
director shall be
at least eighteen years of age.
2. NUMBER OF DIRECTORS
The number of directors constituting the entire Board of Directors shall be the
number, not less than
three nor more than ten, fixed from time to time by a majority of the total
number of directors which the Corporation would have, prior to any increase or
decrease, if there were no vacancies, provided, however, that no decrease shall
shorten the term. of an incumbent director, and provided further that if all of
the shares of the Corporation are owned beneficially and of record by less than
three shareholders, the number of directors may be less than three but not less
than the number of shareholders. Until otherwise fixed by the directors, the
number of directors constituting the entire Board shall be three.
<PAGE>
3. ELECTION AND TERM OF DIRECTORS
- --------------------------------------
At each annual Meeting of shareholders, directors shall be elected to hold
office until the next
annual meeting and until their successors have been elected and qualified or
until their death, resignation or removal in the manner hereinafter provided.
4. QUORUM OFDIRECTORSAND ACTION BY THE BOARD
--------------------------------------------
A majority of the entire Board of Directors shall constitute a quorum for the
transaction of business,
and, except where otherwise provided herein the vote of a majority of the
directors present at a meeting at the time of such vote, if a quorum is then
present, shall be the act of the Board.
Any action required or permitted to be taken by the Board of Directors or any
committee thereof
may be taken without a meeting if all members of the Board or the committee
consent in writing to the adoption of a resolution. authorizing the action. The
resolution and the written consent thereto by the members of the Board or
committee shall be filed with the minutes of the proceedings of the Board or
committee.
5. MEETINGS OF THE YARD
-----------------------
An annual meeting of the Board of Directors shall be held in each year directly
after the annual
meeting of shareholders. Regular meetings of the Board shall be held at such
times as may be fixed by the Board. Special meetings of the Board may be held at
any time upon the call of the President or any two director.
Meetings of the Board of Directors shall be held at such places as may be fixed
by the Board for
annual and regular meetings and in the notice of meeting for special meetings.
If no place is so fixed, meetings of the Board shall be held at the principal
office of the Corporation. Any one or more members of the Board of Directors may
participate in meetings by means of a conference telephone or similar
communications equipment.
No notice need be given of annual or regular meetings of the Board of Directors.
Notice of each
special meeting of the Board shall be given to each director either by mail not
later than noon, Delaware time, on the third day prior to the meeting or by
telegram., written message or orally not later than noon, Delaware time, on the
day prior to the meeting. Notices are deemed to have been properly given if
given: by mail, when deposited in the United States mail; by telegram at the
time of filing; or by messenger at the time of delivery. Notices by mail,
telegram or messenger shall be sent to each director at the address designated
by him for that purpose, or, if none has been so designated, at his last known
residence or business address.
Notice of a meeting of the Board of Directors need not be given to any director
who submits a
signed 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 any director.
A notice, or waiver of notice, need not specify the purpose of any meeting of
the Board of
Directors.
<PAGE>
A majority of the directors present, whether or not a quorum is present, may
adjourn any meeting
to another time any place. Notice of any adjournment of a meeting to another
time or place shall be given, in the manner described above, to the directors
who were not present at the time of the adjournment and, unless such time and
place are announced at the meeting, to the other directors.
6. RESIGNATIONS
---------------
Any director of the Corporation may resign at any time by giving written notice
to the Board of
Directors or to the President or to the Secretary of the Corporation. Such
resignation shall take effect at the time specified therein; and unless
otherwise specified therein the acceptance of such resignation shall not be
necessary to male it effective.
7.REMOVAL OF DIRECTORS
----------------------
Any one or more of the directors may be removed for cause by action of the Board
of Directors. Any
or all of the directors may be removed with or without cause by vote of the
shareholders.
8. NEWLV CREATED DIRECTORSHIPS AND VACANCIES
- -------------------------------------------------
Newly created directorships resulting from an increase in the number of
directors and vacancies
occurring in the Board of Directors for any reason except the removal of
directors by shareholders may be filled by vote of a majority of the directors
then in office, although less than a quorum exists. Vacancies occurring as a
result of the removal of directors by shareholders shall be filled by the
shareholder. A director elected to fill a vacancy shall be elected to hold
office for the unexpired term of his predecessor
9. EXECUTIVE AND OTHER COMMITTEES OF DIRECTORS
- ----------------------------------------------------
The Board of Directors, by resolution adopted by a majority of the entire Board,
may designate from
among its members are executive committee and other committees each consisting
of three or more directors and each of which, to the extent provided in the
resolution, shall have all the authority of the Board, except that no such
committee shall have authority as to the following matters: (a) the submission
to shareholders of any action. that needs shareholders'
<PAGE>
approval; (b) the filling of vacancies in the Board or in any committee; 8 the
fixing of compensation of the directors for serving on the Board or on any
committee; (d) the amendment or repeal of the bylaws, or the adoption of new
bylaws; (e) the amendment or repeal, of arty resolution of the Board which, by
its term, shall not be so amendable or repealable; or (f) the removal or
indemnification of directors.
The Board of Directors may designate one or more directors as alternate members
of any such
committee, who may replace any absent member or members at any meeting of such
committee.
Unless a greater proportion is required by the resolution designating a
committee, a majority of the
entire authorized number of members of such committee shall constitute a quorum
for the transaction of business, and the vote of a majority of the members
present at a meeting at the time of such vote, if a quorum is then present,
shall be the act of such committee.
Each such committee shall serve at the pleasure of the Board of Directors,
10.COMPENSATION OF DIRECTORS
----------------------------
The Board of Directors shall have authority to fix the compensation of directors
for services in
any capacity.
11.INTEREST OF DIRECTORS IN A TRANSACTION
-----------------------------------------
Unless show, to be unfair and unreasonable as to the Corporation, no contract or
other transaction
between the Corporation and one or more of its directors, or between the
Corporation and any other corporation, firm association. or other entity in
which one or more of the directors are directors or officers, or are financially
interested, shall be either void or voidable, irrespective of whether such
interested director or directors are present at a meeting of the Board of
Directors, or of a committee thereof; which authorizes such, contract or
transaction and irrespective of whether his or their votes are counted for such
purpose. In the absence of fraud any such contract and transaction. conclusively
may be authorized or approved as fair and reasonable by: (a) the Board of
Directors or a duly empowered committee thereof, by a vote sufficient for such
purpose without counting the vote or votes of such interested director or
directors (although such interested director or directors :may be counted in
determining the presence of a quorum at the meeting which authorizes such
contract or transaction), if the fact of such common directorship, officership
or financial interest is disclosed or known to the Board or committee, as the
case may be; or (b) the shareholders entitled to vote for the election of
directors, if such common directorship, officership or financial interest is
disclosed or know to such shareholders.
Notwithstanding the foregoing, no loan, except advances in connection with
indemnification, shall
be made by the Corporation to any director unless it is authorized by vote
of the shareholders without counting any shares of the director who would be the
borrower or unless the director who would be the borrower is the sole
shareholder of the Corporation.
<PAGE>
ARTICLE III
OFFICES
-------
1. ELECTION OF OFFICERS
-----------------------
The Board of Directors, as soon as may be practicable after the annual election
of directors, shall
elect a President, a Secretary, and a Treasurer, and from time to time may elect
or appoint such other officers as it may determine. Any two or more offices may
be held by the same person, except that the same person may not hold the offices
of President and Secretary unless the person is the sole shareholder of the
Corporation and holding of said offices of President and Secretary by such
person is permitted under applicable law. The Board of Directors may also elect
one or more Vice Presidents, Assistant Secretaries and Assistant Treasurers.
2. OTHER OFFICERS
- -------------------
The Board of Directors may appoint such other officers and agents as it shall
deem necessary who
shall hold their offices for such terms and shall exercise such powers and
perform such duties as shall be determined from time to time by the Board.
3. COMPENSATION
- ----------------
The salaries of all officers and agents of the Corporation shall be fixed by the
Board of Directors.
<PAGE>
4. TERM OF OFFICE AND REMOVAL
-----------------------------
Each officer shall hold office for the term for which he is elected or
appointed, and until his
successor has been elected or appointed and qualified. Unless otherwise provided
in the resolution of the Board of Directors electing or appointing an officer,
his term of office shall extend to and expire at the meeting of the Board
following the next annual meeting of shareholders. Any officer may be removed by
the Board with or without cause, at any time. Removal of an officer without
cause shall be without prejudice to his contract rights, if any, and the
election or appointment of an officer shall not of itself create contract
rights.
5. PRESIDENT
------------
The President shall be the chief executive officer of the Corporation, shall
have general and active
management of the business of the Corporation and shall see that all orders and
resolutions of the Board of Directors are carried into effect. The President
shall also preside at all meetings of the shareholders and the Board of
Directors.
The President shall execute bonds, ,mortgages and other contracts requiring. a
seal, under the seal
of the Corporation., except where required or permitted by law to be otherwise
signed and executed and except where the signing and execution thereof shall be
expressly delegated by the Board of Directors to some other officer or agent of
the Corporation.
6. VICE PRESIDENTS
- --------------------
The Vice Presidents, in the order designated by the Board of Directors, or in
the absence of any
designation, then in the order of their election, during the absence or
disability of or refusal to act by the president, shall perform. the duties and
exercise the powers of the President and shall perform such other duties as the
Board of Directors shall prescribe.
7. SECRETARY AND ASSISTANT SECRETARIES
- ------------------------------------------
The Secretary shall attend all meetings of the Board of Directors and all
meetings of the
shareholdersand record all the proceedings of the meetings of the Corporation
and of the board of Directors in a book to be kept for that purpose, and shall
perform like duties for the standing committees when required. The Secretary
shall give or cause to be given , notice of all meetings of the shareholders and
special meetings of the Board of Directors, and shall perform such duties as may
be prescribed by the Board of Directors or President, under whose supervision
the Secretary shall be. The Secretary shall have custody of the corporate seal
of the Corporation and the Secretary, or
an Assistant Secretary, shall have authority to affix the same to any instrument
requiring it and
when so affixed, it may be attested by the Secretary's signature or by the
signature of such Assistant Secretary. The Board of Directors may give general
authority to any other officer to affix the seal of the Corporation and to
attest the fixing by his signature.
<PAGE>
The Assistant Secretary, or if there be more than one, the Assistant Secretaries
in the order
designated by the Board of Directors, or in the absence of such designation then
in the order of their election, in the absence of the Secretary or in the event,
of the Secretary's inability or refusal to act, shall perform the duties and
exercise the powers of the Secretary arid shall perform. such other duties and
have such other powers as the Board of Directors may from time to time
prescribe.
8. TREASURER AND ASSISTANT TREASURERS
- -----------------------------------------
The Treasurer shall have the custody of the corporate funds and securities;
shall keep full and
accurate accounts of receipts and disbursements in books belonging to the
Corporation; and shall deposit all moneys and other valuable effects in the name
and to the credit of the Corporation in such depositories as may be designated
bar the Board of Directors.
The Treasurer shall disburse the funds as may be ordered by the Board of
Directors, taking proper
vouchers for such disbursements, and shall render to the President and the Board
of Directors, at its regular meetings, or when the Board of Directors so
requires, an account of all his transactions as Treasurer and of the financial
condition of the Corporation.
If required by the Board of Directors, the Treasurer shall give the Corporation
a bond in such sum
and with such surety pr sureties as shall be satisfactory to the Board of
Directors for the faithful performance of the duties of the office of Treasurer,
and for the restoration to the Corporation, in the case of the Treasurer's
death, resignation, retirement or removal from office, of all books, papers,
vouchers, money and other property of whatever kind in the possession or under
the control of the Treasurer belonging to the Corporation.
The Assistant Treasurer, or if there shall be more than one, the Assistant
Treasurers in the order
designated by the Board o f Directors, or in the absence of such designation,
then in the order of their election, in the absence of the Treasurer or in the
event of the Treasurer's inability or refusal to act, shall perform the duties
and exercise the powers of the Treasurer and shall perform such duties and have
such other powers as the Board of Directors may from time to time prescribe.
9. BOOKS AND RECORDS
- -----------------------
The Corporation. shall keep: (a) correct and complete books and records of
account; (b) minutes of
the proceedings of the shareholders, Board of Directors and any committees of
directors; and 8 a current list of the directors and officers arid their
residence addresses. The Corporation, shall also keep at its office in the State
of Delaware or at the office of its transfer agent or registrar in the State of
Delaware, if any, a record containing the names and addresses of all
shareholders, the number and class of shares held by each and the dates when
they respectively became the owners of record thereof
The Board of Directors may determine whether and to what extent and at what
times and places and
under what conditions and regulations any accounts, books, records or other
documents of the Corporation shall be open to inspection, and no creditor,
security holder or other person shall have any right to inspect any accounts,
books, records pr other documents of the Corporation except as conferred by
statute or as so authorized by the Board.
<PAGE>
10. CHECKS, NOTES, ETC.
- --------------------------
All checks and drafts on, and withdrawals from the Corporation's accounts with
banks or other
financial institutions, and all bills of exchange, notes and other instruments
for the payment of money, drawn, made, endorsed, or accepted by the Corporation,
shall be signed on; its behalf by the person. or persons thereunto authorized
by, or pursuant to resolution of, the Board of Directors.
ARTICLE IV
CERTIFICATES AND TRANSFERS OF SHARES
------------------------------------
1. FORMS OF SHARE CERTIFICATES
------------------------------
The share of the Corporation shall be represented by certificates, cares, in
such forms as the Board
of Directors may prescribe, signed by the President or a Vice President and the
Secretary or an Assistant Secretary or the Treasurer or an Assistant Treasurer.
The shares may be sealed with the seal of the Corporation or a facsimile
thereof. The signatures of the officers upon a certificate may be facsimiles if
the certificate is countersigned by a transfer agent or registered by a
registrar other than the Corporation or its employee. In case any officer who
has signed or whose facsimile signature has been placed upon a certificate shall
have ceased to be such officer before such. certificate is issued, it may be
issued by the Corporation with the same effect as if he were such officer at the
date of issue.
<PAGE>
ARTICLE V
OTHER MATTERS
-------------
1. CORPORATE SEAL
-----------------
The Board of Directors may adopt a corporate seal, alter such seal at pleasure,
and authorize it to
be used by causing it or a facsimile to be affixed or impressed or reproduced in
any other manner.
2. FISCAL YEAR
--------------
The fiscal year of the Corporation shall be the twelve months ending December
31st, or such other
period as may be fixed by the Board of Directors.
3. AMENDMENTS
------------
Bylaws of the Corporation may be adopted, amended or repealed by vote of the
holders of the
shares at the time entitled to vote in the election of any directors. Bylaws may
also be adopted, amended or repealed by the Board of Directors, but any bylaws
adopted by the Board may be amended or repealed by the shareholders entitled to
vote thereon as hereinabove provided.
If any bylaw regulating an impending election of directors is adopted, amended
or repealed by the
Board of Directors, there shall be set forth in the notice of the next meeting
of shareholders for the election of directors the bylaw so adopted, amended or
repealed, together with a, concise statement of the changes made.
4. INDEMNIFICATION OF DIRECTORS AND OFFICERS
--------------------------------------------
Each director and officer of the Corporation now or hereafter serving as
such, shall be indemnified by the Corporation against any and all claims and
liabilities to which he or she has or shall become subject by reason of serving
or having served as such director or officer, or by reason of any action alleged
to have been taken, omitted, or neglected by him or her as such director or
officer; and the Corporation shall reimburse each such person for all legal
expenses reasonably incurred by him or her in connection,
with any such claim or liability, provided, however, that no such person shall
be indemnified against, or be reimbursed for any expense incurred in connection
with, any claim or liability arising out of his or her own willful misconduct or
gross negligence.
The amount paid to any officer or director by way of indemnification shall not
exceed his of her
actual, reasonable, and necessary expenses incurred in connection
<PAGE>
with the matter involved, and such additional amount as may be fixed by a
committee of
not less than three nor more than seven persons selected by the Board of
Directors, who shall be shareholders of the Corporation, but not officers or
directors. Any determination so made shall be prima facie evidence of the
reasonableness of the amount fixed and binding on the indemnified officer or
director.
The right of indemnification hereinabove provided for shall not be exclusive of
any rights to which
any director or officer of the corporation may otherwise be entitled by law.
The foregoing Bylaws were duly adopted and approved by the Board of Directors on
February 9th , 1998, and approved by the shareholders of the Corporation
effective February 9th , 1998.
The World Auction Market And Exchange (Holdings), Inc.
By: /s/ Russell Chimenti
----------------------
Russell Chimenti,
Secretary
CHARLES R. EISENSTEIN
Certified Public Accountant
4750 Bedford Avenue
Brooklyn, NY 11235
To the Board of Directors
WAMEX Holdings, Inc.
I hereby consent to the use in this Form 8-K of my report dated
February 22, 2000 relating to the financial statements of
WAMEX Holdings, Inc.
/s/ Charles R. Eisenstein
March 14, 2000
