UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-------------------------
FORM 10-SB
GENERAL FORM FOR REGISTRATION OF
SECURITIES OF SMALL BUSINESS ISSUERS
Under Section 12(b) or (g) of the Securities Exchange Act of 1934
WHOODOO.COM, INC.
--------------------------------------------------------------
(Name of Small Business Issuer in its Charter)
DELAWARE 51-0392750
----------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
1660 Trade Center Way
Naples, FL 34109
---------------------------------
(Address of principal executive offices)
Issuer's telephone number: (941) 594-2700
----------------------------
Securities to be registered under Section 12(b) of the Act:
Name of Each Exchange on Which
Title of Each Class to be so Registered Each Class is to be Registered
- ------------------------------------------- ----------------------------------
None None
Securities to be registered under Section 12(g) of the Act:
COMMON STOCK
(Title of Class)
<PAGE>
ITEM 1. DESCRIPTION OF BUSINESS
BRIEF OVERVIEW
We are a development stage company and have not yet generated any
revenues. We have developed and are refining our network of regional search
engine Internet portals to provide our users access to more localized, relevant,
and interest-specific information then they presently can obtain from the more
established, large Internet search engine portals and to provide local
businesses an opportunity to target these local users. We intend to officially
launch our regional search engine portals on or about the last week of February
2000.
OUR HISTORY
Our business became publicly-owned on August 4, 1999, when our
predecessor, BGS Southwest Florida, Inc. sold substantially all of it assets to
whOOdoo.com (FL), Inc., a wholly-owned subsidiary of Greystone Credit,
Inc., an inactive public shell corporation organized in Florida in June 1997. At
the same time, our management obtained control of the public shell in a share
exchange; then the shell changed its name to whOOdoo.com, Inc. and
reincorporated in Delaware.
Our predecessor, BGS, a Florida corporation organized on February 1,
1997, conducted business as WhOOdoo Studios and is controlled by our president
and chief executive officer, Mr. Paulo Mylla, and his wife. Based in Naples,
Florida, BGS provided Internet solutions including website design and
programming, website hosting and Internet consulting. BGS, through Whoodoo
Studios, developed our initial search engine and the regional website concept.
As part of the transaction on August 4, 1999, BGS sold substantially all of its
assets to us, including all intellectual property regarding the search engines
and regional websites.
At the time of the transaction, we entered into a three-year management
service contract with BGS. BGS has discontinued all other lines of business
except for managing our operations. The purpose of entering into this agreement
with BGS was to expedite Paulo Mylla's petition as an alien worker with the
Immigration & Naturalization Service of the United States Department of Justice.
Mr. Mylla is a Brazilian citizen and, at the time of the transaction, had a
pending immigration petition based upon his employment with BGS. If Mr. Mylla
changes employers, he has to withdraw his pending petition and file a new
petition. This would substantially delay the approval process and adversely
affect Mr. Mylla's ability to continue to work in the United States.
INDUSTRY OVERVIEW
On January 18, 2000, Inktomi, Inc. and the NEC Research Institute
completed a study that claims the Internet contains more than one billion unique
web pages. Yet Inktomi, the search engine responsible for a reported 40% of all
searches performed on
2
<PAGE>
the major search sites, is reported to exclude over 90% of the web pages on the
Internet from its searchable index. To our knowledge, the largest reported
indexing of web pages on the Internet is by the search engine "Fast" which
claims to index 30% of the Internet's web pages. We believe that the percentages
of web pages indexed will continue to decline as growth of web pages on the
Internet exceeds the ability of search engines to find and index the new web
pages and update the indices to older pages.
MARKET OPPORTUNITY
We believe there is an increasing need for smaller, more narrowly
focused search engine portals that concentrate on specific content that can
provide deeper, faster search results. We believe this need will grow rapidly as
users seeking relevant information are faced with exploding amounts of content
and an erosion in the percentage of coverage that is found through more
traditional means.
Our mission is to create specialty vertical portals designed to exploit
niche opportunities that exist in today's Internet marketplace. Our vertical
portals will provide a platform for delivering web searches, information and
services and e-commerce opportunities targeted at users based upon their
interests and other geographic and/or topic-related demographics.
Unlike the major search engines, our whOOdoo.com network will provide
deep regional content. Our goal is to provide users with access to regional and
local information as comprehensive as a phone directory but containing far
richer information. To achieve this objective, we have developed a proprietary
database focused on local and regional content. Our database includes regional
and local business websites which are sought by consumers yet conspicuously
absent in the search results of the large search engines. The whOOdoo database
is constantly growing and is continually updated through the use of automated
processes, our staff, and visitors to our websites.
To compliment our database growth, we have incorporated language
sensitivity into our search engine to maximize the functionality and convenience
of our vertical portals. While our current portals fill niche opportunities that
exist today, our proprietary database will allow us to develop specialized
portals to meet user needs and market demands as they may arise in the future.
OUR BUSINESS MODEL
We plan to generate revenues on our search engine portals through; (i)
sales of priority placement on keyword search results, (ii) sales of banner
advertising, (iii) listing fees and commissions from our regional auction sites,
and (iv) other e-commerce opportunities which we may develop. Each of our
whOOdoo.com portals will be organized around narrowly focused regional and local
content. Our content is comprised of original material developed by us or
through a network of freelance writers from whom we purchase content on a per
article basis and from other websites to which we provide links.
3
<PAGE>
SALES OF KEY WORD SEARCH RESULTS
We created and will operate a network of regional portals which shall
act as an online marketplace introducing consumers and advertisers. Consumers
will conduct keyword searches using the whOOdoo.com search engine service at any
of our regional websites. Other websites, including advertisers, e-commerce
websites, or other persons and entities that want to attract consumers to their
websites, will bid in an ongoing auction for priority placement in the keyword
search results of our regional search engines, with the highest bidder's site
appearing first in the results. Each participating website will pay us the
amount of its bid whenever a consumer clicks on its listing in our search
results. A participating website will only pay us for those users who actively
indicate their interest by clicking on the participating website listing. In
addition, since participating websites will choose how much they pay for each
consumer click-through, our service will enable each website to choose the bid
amount that is optimal for its business. Because the participating websites will
pay us for each click-through to their website, they select and bid only on
keywords most relevant to their offerings. Further, our search result pages will
contain only a limited number of banner advertisements, which will allow these
pages to load more quickly. Consequently, we believe our search engine will
improve a consumer's ability to quickly and easily find relevant websites
providing information, products and services.
REGIONAL AUCTIONS
Our auction site, postoffer.com, will be operated by our wholly-owned
subsidiary, PostOffer.com, Inc., and will be organized regionally. Revenue will
be generated by charging fees to list items for sale on our regional auction
sites and by commissions generated when sales are effected. By organizing our
auctions regionally, we provide a method for our users to connect with buyers
and sellers located near them. For sellers, selecting a specific region or
regions to sell an item will better target the exposure they get for their
listing. For buyers, shopping locally provides a way to easily find items
located nearby. An additional feature of regional auctions is it becomes
possible to buy and sell items that normally would not have been sold on
electronic auction websites including cars, hard to ship items like pianos or
refrigerators, or fragile items like a glass chandelier or a grandfather clock.
When listing an item for sale, sellers will have the option to select
the region where the item is to be listed. Not only will an item appear in our
site-wide search results and listings pages, but it will also appear in regional
search results. The advantage of having an item appear in regional search
results is that the buyers shopping there are looking for items located near
them, so the buyer is getting a more targeted market for his items. This
provides the opportunity to shop for bigger and hard to ship items. Also, since
shipping charges are lower, the seller can either charge more for the same item
or the buyer can pay less, or both.
We intend to promote the postoffer.com regional auction websites
through a network of independent contractors. These independent contractors will
promote
4
<PAGE>
awareness of our auction websites, obtain listings, and sell banner
advertisements and will be compensated by revenue sharing on a basis which has
not yet been determined.
We recently purchased the software necessary to operate our regional
auction sites but have not yet reached agreements with all independent
contractors who will assist us in marketing and promoting the service. We plan
to launch our PostOffer.com regional websites along with the launch of our
regional search engine portals sometime in late February 2000.
BANNER ADVERTISEMENTS
Our sales of banner advertisements will be directed toward regional and
local advertisers. To date we have not generated any revenue from the sale of
banner advertisements. By organizing our vertical portals regionally and by
topics of interest to our users, we expect to attract localized Internet traffic
and hope to command a premium advertising rate from the sale of banner
advertising to those advertisers desiring the specific geographic and/or topic-
or interest-related demographics of our users.
MARKETING
We will focus a large part of our marketing efforts and budget toward
driving visitors to our websites. Our immediate plans include utilization of
search engine optimization techniques, paid and bartered banner advertisements,
networking and marketing alliances, targeted email programs, and self-promotion
of our websites, as more fully described below.
SEARCH ENGINE OPTIMIZATION
According to industry experts, 80 percent of all Internet sessions
begin at a search engine. Most search engines derive a large part of their
advertising revenue from the sale of banner advertisements which are presented
based upon the key word searches of users. These key-words are sold to a
particular advertiser and trigger that advertiser's banner ad when a user
searches using that key word. Normally, however, the banner ad that is displayed
does not influence the listing of sites on the results page.
It has been reported that Internet surfers, either pressed for time or
overwhelmed by the volume of selection, usually click on the first 10 or so
sites returned from a search. After that, traffic falls off more than 75
percent. We believe that if a website does not appear high in the results when a
search is performed and the user is not presented with the opportunity to click
through to the website, the operator has missed an important opportunity and may
have lost that potential customer forever. Our plan is to utilize all methods
and services available which will cause our websites to appear high in the
search results of certain key words, phrases and concepts performed by the major
search engines. As opposed to paying a major search engine to display our banner
advertisement every time a user searches for a key word, phrase or concept we
pay to have associated with our websites, we intend to employ methods and
services that we believe will provide greater traffic flow for every dollar
spent.
5
<PAGE>
We believe search engine optimization will be the most cost-effective
method of driving users to our websites. We currently use the services of
did-it.com, Inc. for our search engine optimization. Did-it.com, Inc. claims to
have developed methods to obtain a higher ranking for a given key word or phrase
and is capable of optimizing rankings on all the major search engines including
Alta Vista, Excite, HotBot, Infoseek, Opentext, Lycos, Northernlight and
Webcrawler.
In addition to the did-it.com service, we intend to optimize our
ranking on the GoTo.com service, which is reported by to be one of the top six
search engines on the Internet, with over 100 million searches monthly, and one
of the 26 most visited sites. GoTo.com uses a "pay for performance" model where
websites bid for placement on a list of GoTo.com's search results. We plan to
constantly monitor the performance of the click-throughs we receive on the
GoTo.com search service and adjust the amount we bid for search result placement
to obtain the maximum cost-benefit return.
BANNER ADVERTISEMENTS
We are developing and plan to implement, along with the launch of our
regional search engine portals in February 2000, a banner advertising program to
create Web visibility, build brand awareness and provide click-through access to
our websites. Our program will be carefully targeted, evaluated and refined to
maximize the quality of visitors directed to our websites and will consist of
both paid and bartered banner advertisements.
NETWORKING AND MARKETING ALLIANCES
We have devloped and plan to continue developing networking marketing
alliances with various individuals and businesses across the country. Our
alliances are focused on developing useful content, creating brand awareness,
selling advertising, and developing e-commerce opportunities. We plan to utilize
these marketing alliances to increase our online exposure.
We have developed a network of approximately 50 independent writers
that supply interest-specific content to us on a fee per article basis. We will
continue to utilize the services of these independent writers and will add
additional writers as necessary.
CLASSIFIED ADS AND BULLETIN BOARD POSTINGS
Our marketing department will be constantly working with the classified
ads and bulletin board posting areas of high traffic websites in order to create
awareness of all our services.
6
<PAGE>
ADDITIONAL SERVICES OFFERED TO USERS OF OUR WEBSITES
We are developing a mail service which will be named "whOOmail."
WhOOmail will be a free web-based email service that will allow a user to send
and receive email from any computer connected to the Internet anywhere in the
world. A user will be able to send and receive email from whOOmail simply by
entering www.whoomail.com and entering their user name and pass-code. We also
plan to add a free day-planner and calendar service to complement the whOOmail
service. We plan to have our whOOmail service operational at the time we launch
our regional search engine portals in late February 2000.
Weather information will be used as primary means of encouraging a flow
of users across our websites and in doing so it will serve to strengthen
awareness of our regional offerings. Weather information is some of the most
widely sought information on the Internet according to many studies and will be
a prominent feature offered on all our regional search pages. It is sought
throughout the day and it is also sought for destination planning whenever
travel is considered. Users planning travel will be able to simply select a
destination and after arriving at our regional website, will be able to see the
weather picture around the region. With a "click" they will also have access to
complete five-day weather forecasts for key areas around that region.
Our source of weather information will be AccuWeather. They have
designed a special graphic representation of all states and provinces with
weather icons strategically located around the region. These custom graphics
will appear on every regional homepage and will give our users a quick look at
the regional weather situation. Our planned personalization features will allow
registered users to automatically view a graphic of their state or province and
will be accompanied by a five-day graphical forecast for the user's home area.
We are also developing a promotional program named "The whOOdoo Best
of...Award" which will be used to leverage our advertising dollars. The award
will be presented to the best companies within certain industries found
throughout all regions. The businesses we choose for awards must use extensive
radio advertising as a way of reaching consumers. We will promote the award both
online and off-line and develop its stature. The objective is to use the award
as a tool for asserting whOOdoo's regional expertise and as a means of
increasing brand awareness through the promotional efforts of the award
recipients.
We also offer and will design free websites for community and
non-profit organizations as a method of creating awareness of the whOOdoo.com
brand. These sites will expose us to the large circles of people reached by
these community and non-profit organizations groups. All free websites will link
to us through the display of a whOOdoo banner ad.
7
<PAGE>
OUR OPERATIONS
We currently operate out of leased offices located at 1660 Trade Center
Way, Naples, Florida and employ 12 full-time employees. Five of our employees
hold management positions, four hold technical positions, and three are in sales
related positions.
Our network and servers are located at our Naples, Florida offices. In
addition, we have recently entered in an agreement with the Impact Group to
manage our co-hosting servers and network equipment at the Exodus
Communications, Inc. Internet Data Center located in Waltham, Massachusetts.
Exodus operates world-class facilities designed to host mission-critical
Internet operations. We chose their Waltham, Massachusetts location because of
its strategic location to high bandwidth Internet backbone providers. Their
Internet Data Center will provide the physical environment necessary to keep our
network operational 24 hours a day, 7 days a week, and offers the following
benefits:
o Physical security features, including state-of-the-art smoke
detection and fire suppression systems, motion sensors, and 24
x 7 secured access, as well as video camera surveillance and
security breach alarms;
o HVAC temperature control systems and seismically braced racks;
o DataVault (TM) Service which provides a dedicated system for
safeguarding mission-critical data including:
o prompt recovery options in the event of down-time;
o daily, weekly and monthly reporting of backup and
restore processes available via a password protected
website;
o enhanced capabilities for backing up large volumes of
data;
o scalable storage solutions to match growth
requirements;
o quality of service guarantees; and
o access to burstable bandwidth.
In addition, Exodus will assist us in monitoring usage trends and
assist us in allocating network resources more efficiently by providing daily
and month-to-date Internet based bandwidth reports and their ReadyCache Content
Distribution Service (TM) which will provide us an efficient way to deliver more
content to our end-users without the costly investment in additional server
infrastructures.
FORWARD-LOOKING STATEMENTS
This registration statement contains forward-looking statements that
relate to future events or our future financial performance. In some cases, you
can identify
8
<PAGE>
forward-looking statements by terminology such as "may," "will," "should,"
"expect," "plan," "anticipate," "believe," "estimate," "predict," "intend,"
"potential" or "continue" or the negative of these terms or other comparable
terminology. These statements are only predictions. We cannot guarantee future
results, levels of activity, performance or achievements. We undertake no
obligation to publicly update or revise any forward-looking statements, whether
as a result of new information, future events or otherwise. Our actual results
could differ materially from those anticipated in these forward-looking
statements as a result of various factors, including the risks outlined under
"Risk Factors" and elsewhere in this registration statement.
RISK FACTORS
You should carefully consider the risks described below before buying
shares in this offering.
RISKS RELATED TO OUR BUSINESS
WE HAVE A LIMITED OPERATING HISTORY AND OUR BUSINESS MODEL IS UNPROVEN
We were founded in February 1997 and have a limited operating history.
Our revenue and income potential is unproven and our business model is still
evolving. We expect to incur net losses for the foreseeable future and may never
become profitable. An investor in our common stock must consider the risks and
difficulties frequently encountered by early stage companies in new and rapidly
evolving markets. In order to overcome these risks and difficulties, we must,
among other things:
o attract a large audience to our regional search engine portals
and regional auctions;
o create awareness of our brand;
o create user loyalty;
o offer compelling content;
o maintain our current, and develop new, strategic
relationships;
o attract a large number of advertisers and sponsors from a
variety of industries;
o respond effectively to competitive pressures;
o continue to develop and upgrade our technology; and
o attract, retain and motivate qualified personnel.
9
<PAGE>
If we fail to achieve these objectives, we may not realize sufficient
revenues or net income to continue operations or ultimately succeed.
WE LACK WORKING CAPITAL AND NEED TO RAISE ADDITIONAL CAPITAL TO REMAIN IN
BUSINESS.
We currently have limited working capital. Our ultimate success depends
upon our ability to raise additional capital. Except for a possible $796,875 we
may receive from the exercise of 1,062,500 of our warrants, which we cannot
assure will be exercised, we have not secured commitments for additional
capital. There are no assurances that funds will be available from any source
or, if available, that they can be obtained on terms acceptable to us. There can
be no assurances that we will be able to raise the capital necessary to continue
our operations and, if we cannot we may not be able to remain in business and
you may lose your entire investment.
If we are able to raise additional capital through the issuance of
equity, equity-related or debt securities, these securities may have rights,
preferences or privileges senior to those of the rights of our common stock and,
as a result, the price of our common stock may decline.
OUR QUARTERLY FINANCIAL RESULTS MAY BE SUBJECT TO SIGNIFICANT FLUCTUATIONS
BECAUSE OF MANY FACTORS, AND ANY OF THESE COULD ADVERSELY AFFECT OUR STOCK
PRICE.
We believe that quarter-to-quarter comparisons of our operating results
will not be a good indication of our future performance. It is likely that in
some future quarter our operating results may be below the expectations of
public market analysts and investors and, as a result of these or other factors,
the price of our common stock may fall. Our operating results have varied widely
in the past, and we expect that they will continue to vary significantly from
quarter-to-quarter due to a number of factors, including:
o demand for our online services by advertisers and consumers,
including the number of searches performed by consumers and
the rate at which they click-through to paid search listing
advertisements;
o prices paid by advertisers on our paid keyword search service,
which are not determined by us;
o our costs of attracting consumers to our websites, including
costs of receiving exposure on third-party websites and
advertising costs;
o costs related to our obtaining content for our websites;
o the mix of paying vs. non-paying search results on our
service;
10
<PAGE>
o our ability to significantly increase our strategic
relationships and marketing alliances;
o the amount and timing of operating costs and capital
expenditures relating to expansion of our operations;
o costs and delays in introducing new services and improvements
to existing services;
o changes in the growth rate of Internet usage and acceptance by
consumers of e-commerce;
o technical difficulties, system failures or Internet downtime;
o government regulations related to the Internet;
o our ability to upgrade and develop our information technology
systems and infrastructure;
o costs related to acquisitions of technologies or businesses;
and
o general economic conditions, as well as those specific to the
Internet and related industries.
WE ARE DEPENDENT ON THE SALE OF BID-FOR-PLACEMENT SEARCH SERVICES AND ONLINE
ADVERTISING FOR OUR SUCCESS
Our revenues are directly related to our ability to generate
transactions on our bid-for-placement service, the amount bid by our advertisers
on the bid-for-placement services and our sales of online advertising. These
potential sources of revenue on which we will depend have achieved only limited
market acceptance to date. Internet advertising in general is at an early stage
of development. Most potential advertisers have only limited experience
advertising on the Internet and have not devoted a significant portion of their
advertising expenditures to Internet advertising. If Internet advertisers
perceive the Internet in general, or our regional search engine portals in
particular, to be a limited or an ineffective advertising medium, they may be
reluctant to advertise online or on our websites. There is significant
competition for those advertisers that do use the Internet for advertising. We
will compete for a share of the Internet advertising budget of those
advertisers. To the extent that Internet advertising does not continue to
increase and that we are not successful in competing for that portion of an
advertiser's Internet advertising budget, our business will suffer.
Advertising through priority placement on search service results has
been introduced only recently, and we cannot predict the level of its acceptance
as an advertising medium. Our service may not achieve significant acceptance by
consumers. Among other things, because our service prioritizes search results
based on advertising bids associated with keywords rather than on algorithmic or
other traditional search and
11
<PAGE>
retrieval technologies, consumers may perceive our results to be less objective
than those provided by traditional search methods. If a sufficient number of
users do not click-through on the results of our keyword search results or if a
sufficient number of those that do click-through do not purchase the goods or
services or otherwise do not meet the expectations of those persons or entities
purchasing priority placement on our search service to justify their continuing
to use our search service, we may not produce sufficient revenue to justify the
cost of this service or operate our business and you may lose your investment.
WE ARE INEXPERIENCED IN OPERATING AUCTION SITES AND OUR PLANNED REGIONAL AUCTION
WEBSITES MAY NOT GENERATE REVENUES SUFFICIENT TO JUSTIFY THEIR COST OF
DEVELOPMENT AND IMPLEMENTATION OR CONTINUED OPERATION.
We are inexperienced in operating auction sites and will face fierce
competition for listings on our regional auction sites from larger, more
established, auction sites that have significantly greater financial resources
and have already developed brand recognition and a loyal base of buyers and
sellers. In addition, our auction model requires a listing fee while some of the
competing auction sites do not. We may never achieve the critical mass of buyers
and sellers utilizing our regional auction sites to justify the cost or
continued operation. To the extent that we are unsuccessful in competing with
other auction sites and the revenues generated from our regional auctions are
less than the cost of developing, implementing and operating our auction sites,
our business will suffer.
WE RELY ON SEARCH-OPTIMIZATION TECHNIQUES OF THIRD-PARTIES AND A LIMITED NUMBER
OF OTHER SOURCES TO DIRECT CONSUMERS TO OUR WEBSITES
We rely on the search-optimization techniques of third-parties as a
primary method of attracting users to our websites by attempting to increase the
ranking of certain keywords associated with our regional websites on the search
results of the major search engines. These search-optimization techniques may
become obsolete quickly, not remain effective, and/or become more expensive to
subscribe to. They also are viewed by some of the major search engine portals as
infringements on their editorial integrity and at odds with the consumer trust
they have developed. Moreover, at least one major search engine that we are
aware of has publicly stated that their engineers are working full-time to
prevent search-optimization techniques from affecting their rankings. To the
extent that these techniques become obsolete or not remain effective, search
engine portals are successful in preventing the techniques from being
successful, or we are unable to continue our subscriptions on commercially
reasonable terms, the number of visitors to our websites and our revenues will
decrease and our business will suffer.
We also depend on a limited number of other websites to direct
customers to our regional portals and auction sites. These websites contain
click-through banner advertisements that we either pay for or obtain in a barter
arrangement and/or marketing alliance. We have also developed promotional
websites for non-profit and community
12
<PAGE>
organizations free of charge in exchange for their display of our banner
advertisements to their membership groups. To the extent that we cannot generate
the capital necessary to continue paying for banner advertisements or our banner
advertisement barter and promotional programs are ineffective, the number of
visitors to our websites and our revenues will decrease and our business will
suffer.
OUR FUTURE SUCCESS DEPENDS UPON DEVELOPING AND ENHANCING OUR MARKETING NETWORK
AND RETAINING AND FORMING NEW MARKETING ALLIANCES
We believe that our future success in penetrating our target markets,
developing brand recognition and loyalty and generating revenues depends, in
part, on our ability to develop and maintain alliances with our marketing
affiliates and expand our marketing network. Our marketing affiliates display a
click-through banner advertisement to our websites and/or otherwise encourage
people to visit our website. We believe these relationships are important in
order to create awareness and acceptance of our regional search engines, build
brand recognition and loyalty, and enhance our sales. Our future ability to
attract visitors to our regional websites is dependent, in part, upon the
establishment of additional marketing alliances and development and growth of
our marketing network. If we are unable to successfully develop and maintain
relationships with marketing alliances, usage of our websites may not grow or
may decline and our business will suffer.
OUR CONTRACTS WITH OUR MARKETING AFFILIATES ARE GENERALLY TERMINABLE AT ANY TIME
Our agreements with our marketing affiliates are generally terminable
at will by either party. The loss of these agreements could harm our business.
OUR INDUSTRY IS HIGHLY COMPETITIVE, AND WE CANNOT ASSURE YOU THAT WE WILL BE
ABLE TO COMPETE EFFECTIVELY
The market for Internet products, services and advertising is new,
rapidly evolving and intensely competitive. We will compete with many other
providers of services on the Internet and for the advertising expenditures of
advertisers. We expect competition in both these areas to intensify in the
future. Barriers to entry may not be significant, and current and new
competitors may be able to launch new websites at a relatively low cost. Many of
these competitors, as well as potential entrants into our market, have longer
operating histories, larger customer or user bases, greater brand recognition
and significantly greater financial, marketing and other resources than we do.
Many of these current and potential competitors can devote substantially greater
resources to promotion and website and systems development than we can. In
addition, large, established and popular search engines are organizing their
websites regionally. Accordingly, we believe that our success will depend
heavily upon our ability to provide better, more relevant local information and
achieve significant market acceptance and penetration before our competitors and
potential competitors introduce services that can
13
<PAGE>
effectively compete with us on a local level. To the extent we cannot generate
sufficient revenue from the sale of advertisements or other direct marketing
opportunities to cover our expenses or expand our business, it will have a
material adverse affect on our business, operating results, and financial
condition.
OUR GROWTH IS DEPENDENT ON OUR ABILITY TO DEVELOP OUR BRAND NAME
We believe that developing our brand name will be critical to achieving
widespread acceptance of our regional search engine portals and auction sites.
Promoting and positioning our whOOdoo.com brand name will depend largely on the
success of our marketing efforts and our ability to provide high quality
services. In order to promote our brand name, we will need to allocate a portion
of our marketing budget to creating and maintaining brand loyalty among our
users. Brand name promotion activities may not yield increased revenues, and
even if they do, any increased revenues may not offset the expenses we incur in
building our brand name. If we fail to promote and maintain our brand name or we
incur substantial expenses in an unsuccessful attempt to promote and maintain
our brand name, our business results of operations and financial condition will
be adversely affected.
WE ARE DEPENDENT ON KEY PERSONNEL AND OUR INABILITY TO ATTRACT ADDITIONAL
PERSONNEL COULD HAVE A MATERIAL ADVERSE EFFECT ON OUR BUSINESS
We are dependent on our management agreement with BGS and on our key
personnel, particularly, Paulo Mylla, our chief executive officer, Brian Leith,
our vice-president and chief operating officer, Debbie Briscoe, our secretary,
treasurer and communications director, and Kevin Casey, our director of
information technologies. Messrs. Mylla, Leith and Casey are employed by BGS and
have entered into three-year employment agreements with BGS, the same time
period as our management contract with BGS, which provide for assignment to us
at anytime. We have also entered into one year employment agreements with, Ms.
Debbie Briscoe, Mr. James Marks, Jr., Ms. Leslie Sawyer and Mr. Frank Tung. If
we were to lose the services of one or more of our key personnel, our ability to
operate our business may be impaired and our business may suffer.
WE MAY NOT BE ABLE TO HIRE OR RETAIN QUALIFIED STAFF
If we are able to continue operations and expand in the future, for
which no assurances can be given, we will need to attract and retain highly
experienced executives and employees. The market for such individuals is highly
competitive. There can be no assurances that we will be successful in attracting
and retaining such individuals or managing our future growth, if any. If we
cannot attract and retain enough qualified and skilled staff, the growth of our
business may be limited. Our ability to provide services to our users and grow
our business depends, in part, on our ability to attract and retain qualified
staff, many of whom should have college and graduate degrees, as well as
professional experiences that are relevant for all the functions we perform.
Competition
14
<PAGE>
for personnel with these skill sets is intense. Some technical job categories
are under conditions of severe shortage in the United States. In addition,
restrictive immigration quotas could prevent us from recruiting skilled staff
from outside the United States. We may not be able to recruit or retain the
caliber of staff required to carry out essential functions at the pace necessary
to sustain or grow our business.
FAILURE TO MANAGE OUR GROWTH COULD REDUCE OUR REVENUES
We may enter periods of significant growth. If we do, such growth will
place a significant strain on our management, operational, and financial
resources. Our future success will depend, in part, on our ability to manage our
anticipated growth and to enhance our operational and financial controls. We
will need to continue to improve our operational and financial systems and our
managerial controls and procedures. If we are unable to accomplish any of these
objectives, our business, operating results and financial condition could be
materially adversely affected.
THE CAPACITY CONSTRAINTS OF OUR PERSONNEL AND TECHNOLOGY RESOURCES MAY LIMIT OUR
GROWTH
If we are unable to undertake new business due to a shortage of staff
or technology resources, our growth will be impaired. As we develop additional
vertically integrated regional portals, it will be necessary to build up a
significant database of new information. This, too, often requires a substantial
amount of time from our technical and marketing staffs. If our staff does not
have the time to find and assimilate this new information, we may not be able to
extend our services by adding vertically integrated regional portals in a timely
manner. Therefore, there may be times when our opportunities for revenue growth
may be limited by the capacity of our internal resources rather than by the
absence of market demand.
IF WE FAIL TO CONTINUALLY IMPROVE OUR SYSTEMS AND TECHNOLOGY, WE MAY LOSE
CUSTOMERS AND REVENUE AND HARM OUR BRAND IMAGE
Our services are characterized by rapidly changing technologies and
frequent new product and service introductions. We may fail to introduce an
improved search engine or online auction technology on a timely basis or at all.
If we fail to introduce new technology, improve our existing technology, or
provide new features or functionality in response to industry developments, we
could experience frustration from our customers that could lead to a loss of
revenue. We may be unable to effectively upgrade and expand our systems in a
timely manner or to integrate smoothly any newly developed, licensed or
purchased technologies with our existing systems. These difficulties could harm
or limit our ability to expand our business and system failures could adversely
affect our business, results of operations and financial condition.
15
<PAGE>
WE ARE DEPENDENT UPON MAINTAINING AND IMPROVING OUR COMPUTER AND OUR BACK-OFFICE
AND COMMUNICATIONS SYSTEMS
Our failure to maintain and continually improve our databases, indexing
processes, transaction processing systems and network infrastructure will
adversely affect our business and results of operations. Our success, in
particular our ability to provide high quality customer service, largely depends
on the efficient and uninterrupted operation of our database and computer and
communications systems in order to accommodate the consumers and advertisers
using our service. Our success also depends upon our ability to rapidly expand
our transaction-processing systems and network infrastructure without any
systems interruptions in order to accommodate any significant increases in use
of our service. We believe that our current transaction-processing systems and
network infrastructure are sufficient to support our near-term future growth but
may need to be expanded to meet future growth. In addition, many of our software
systems are custom-developed and we rely on our employees and certain
third-party contractors to develop and maintain these systems. If any of these
employees or contractors become unavailable to us, we may experience difficulty
in maintaining and improving these systems. Furthermore, we must manage multiple
relationships with various software and equipment vendors whose technologies may
not be compatible, as well as relationships with other third parties to maintain
and enhance our technology infrastructure. To the extent we are unsuccessful in
maintaining or improving our systems or managing our relationships with
third-parties on whom we rely, our business operating results and financial
condition will be adversely affected.
WE FACE THE RISK OF SYSTEM FAILURES FROM EVENTS BEYOND OUR CONTROL OR FROM
INTENTIONAL MISCONDUCT
Our future success will largely depend on the efficient and
uninterrupted operation of our computer and communications hardware and software
systems. These systems and operations are vulnerable to damage or interruption
from hurricanes, floods, fires, power loss, telecommunication failures and
similar events. They are also subject to break-ins, sabotage, intentional acts
of vandalism and similar misconduct. All servers are vulnerable to computer
viruses, physical or electronic break-ins and similar disruptions, which could
lead to interruptions, delays, loss of data or the inability to transact
business. In addition, unauthorized persons may improperly access our data.
Although we have recently entered into a co-hosting agreement with The Impact
Group to manage our co-hosting equipment at the Exodus Communications, Inc.
Internet Data Center in Waltham, Massachusetts, our co-hosting equipment is not
yet operational and, therefore, we do not have fully redundant systems. We have
not developed a formal disaster recovery plan and we do not carry sufficient
business interruption insurance to compensate us for losses that may occur.
Despite any precautions we may take, the occurrence of a natural disaster or
other unanticipated problems could result in interruptions to our services. Such
interruptions may reduce our revenues and our future revenues may be harmed if
our users believe that our systems are unreliable. To the extent that system
failures reduce our revenues or our users believe our systems are unreliable,
our business, results of operation and financial condition will be materially
adversely affected.
16
<PAGE>
RISKS ASSOCIATED WITH INTERNATIONAL OPERATIONS
To become successful, we plan to expand into international markets. We
have limited experience in localizing our service to conform to overseas
cultures, standards and policies. We will have to compete with local companies
who understand the local market better than we do. We may not be successful in
expanding into international markets or in generating revenues from foreign
operations. If we attempt to expand internationally, we will be subject to risks
of doing business internationally, including, but not limited to, the following:
o regulatory requirements that may limit or prevent the offering
of our services in local jurisdictions;
o legal uncertainty regarding liability for the listings of our
users, including less Internet friendly basic law and unique
local laws;
o government-imposed limitations on the public's access to the
Internet;
o difficulties in staffing and managing foreign operations;
o longer payment cycles, different accounting practices and
problems in collecting accounts receivable;
o cultural non-acceptance of online transactions;
o political instability;
o Year 2000 risks of which we are unaware and which may present
themselves at some time in the future;
o seasonal reductions in business activity;
o potentially adverse tax consequences; and
o administrative burdens in collecting local taxes, including
value-added taxes.
When we establish international operations and, to the extent part of
our revenues are paid in foreign currencies, we also could become subject to
increased difficulties in collecting accounts receivable and risks relating to
foreign currency exchange rate fluctuations.
OUR TRADE SECRETS ARE UNPROTECTED AND WE ARE RELIANT UPON THE INTELLECTUAL
PROPERTY OF THIRD PARTIES
Our ability to compete effectively with other companies will be
materially dependent upon the proprietary nature of our technologies and
marketing strategies. We will rely on trade secrets, know-how and continuing
technological advancement to create and maintain our competitive position. We
have entered into confidentiality agreements with Mr. Paulo Mylla, our president
and chief executive officer, Mr. Brian Leith, our vice president and chief
operating officer, and Mr. Kevin Casey, our director of information
technologies, all of whom are currently employed by BGS. All of our other
employees have confidentiality provisions in their employment contracts. No
assurances, however, can be given that such obligations of confidentiality will
be honored or that we can effectively protect our rights to our unpatented trade
secrets. Moreover, no assurances can be given that others will not independently
develop substantially equivalent proprietary information and techniques or
otherwise gain access to our trade secrets.
17
<PAGE>
OTHERS MAY REFUSE TO LICENSE IMPORTANT TECHNOLOGY TO US OR MAY INCREASE THE FEES
THEY CHARGE US FOR THIS TECHNOLOGY
We rely on third parties to provide us with some software and hardware, for
which we pay fees. This software has been readily available, and to date we have
paid fees we believe are commercially reasonable. These third parties may
increase their fees significantly or refuse to license their software to us on
commercially reasonable terms. While other vendors may provide the same or
similar technology, we cannot be certain that we can obtain the required
technology on favorable terms, if at all. If we are unable to obtain required
technology at a reasonable cost, our growth prospects and operating results may
be harmed through impairment of our ability to conduct business or through
increased costs.
We may be required to obtain licenses to patents or other proprietary
rights from third parties. For example, a patent has been issued relating to
linking to other websites and we may have to pay royalties in the future to
continue linking to and from our websites. No assurance can be given that any
licenses required under any patents or proprietary rights would be made
available on terms acceptable to us, if at all. If we do not obtain required
licenses, it could encounter delays in product development while we attempt to
design around the patents, or it could find that the development, manufacture or
sale of products requiring such licenses could be foreclosed.
WE RELY ON THIRD PARTIES FOR THE HOUSING AND MANAGEMENT OF OUR CO-HOSTING
EQUIPMENT.
We rely on the Exodus Communications, Inc. Internet Data Center as the
co-hosting location of our computers and network equipment. We also rely on The
Impact Group for the implementation and maintenance of our equipment at the
Exodus facilities. Because we cannot directly control these parties, our
reputation, brand and business in general may be harmed if our systems located
at and managed by these parties experience service difficulties.
WE FACE RISKS OF CLAIMS FROM THIRD PARTIES FOR INTELLECTUAL PROPERTY
INFRINGEMENT AND OTHER MATTERS THAT COULD ADVERSELY AFFECT OUR BUSINESS
Our services operate in part by making Internet services and content
available to our users. This creates the potential for claims to be made against
us, either directly or through contractual indemnification provisions with third
parties. These claims might, for example, be made for defamation, negligence,
copyright, trademark or patent infringement, personal injury, invasion of
privacy or other legal theories. We do not believe that we infringe on the
proprietary rights of others, and to date, no third parties have notified us of
infringement, but we may be subject to infringement claims in the future. The
defense of any claims of infringement or otherwise made against us by third
parties could involve significant legal costs and require our management to
divert time from our business operations. Either of these consequences of an
infringement or other claim could adversely affect our business. If we are
unsuccessful in defending any
18
<PAGE>
infringement claims, we may be forced to obtain licenses or to pay royalties to
continue to use our technology. We may not be able to obtain any necessary
licenses on commercially reasonable terms or at all. If we fail to obtain
necessary licenses or other rights, or if these licenses are too costly, our
operating results may suffer either from reductions in revenues through our
inability to serve clients or from increases in costs to license third-party
technology.
WE ARE EXPOSED TO RISKS ASSOCIATED WITH CREDIT CARD FRAUD
We may to suffer losses as a result of orders placed with fraudulent
credit card data, even though the associated financial institution approved
payment of the orders. Under current credit card practices, a merchant is liable
for fraudulent credit card transactions when, as is the case with the
transactions we process, that merchant does not obtain a cardholder's signature.
A failure to adequately control fraudulent credit card transactions could result
in substantial expenses.
RISKS RELATED TO YEAR 2000 COMPUTER PROBLEMS
We depend on the integrity and stability of the Internet to provide our
services. Thus, the system necessary to support our operations consists of a
network of computers and telecommunications systems located throughout the world
and operated by numerous unrelated entities and individuals, none of which has
the ability to control or manage the potential year 2000 issues that may impact
the entire system. Our ability to assess the reliability of this system is
limited and relies on generally available news reports, surveys and industry
data. Based on these sources, we believe most entities and individuals that rely
significantly on the Internet have reviewed and attempted to remediate issues
relating to year 2000 compliance, but it is not possible to predict whether
these efforts will be successful in reducing or eliminating the potential
negative impact of year 2000 issues. A failure of our software, computer systems
or networking equipment or the software, computer systems or networking
equipment of third parties with which our systems and equipment interact due to
Year 2000 or other problems could seriously harm our business.
RISKS RELATED TO THE INTERNET
WE ARE DEPENDENT ON THE CONTINUED ADOPTION OF THE INTERNET AS A METHOD OF
CONDUCTING BUSINESS FOR OUR FUTURE GROWTH
The ability to transact commerce over the Internet is a recent
phenomenon. Growth in the use of the Internet for conducting business may not
continue. Our future revenues and profits will be substantially dependent upon
the widespread acceptance of the Internet as a medium for commerce by consumers
and businesses. In order to develop our user base, we must appeal to and acquire
consumers and businesses that historically have used traditional means of
commerce to purchase goods and services. The failure of
19
<PAGE>
the Internet to continue to develop as a commercial and business medium would
adversely affect our business.
FAILURE TO EXPAND THE INTERNET INFRASTRUCTURE COULD LIMIT OUR FUTURE GROWTH
The success our service will depend largely on the development and
maintenance of the Internet. This includes maintenance of a reliable network
backbone with the necessary speed, data capacity and security, as well as timely
development of complementary products; such as high speed modems, for providing
reliable Internet access and services. The Internet has experienced, and is
likely to continue to experience, significant growth in the numbers of users and
bandwidth requirements. As the Internet continues to experience increased
numbers of users, increased frequency of use and increased bandwidth
requirements, the Internet infrastructure may be unable to support the demands
placed on it. The recent growth in Internet traffic has caused frequent periods
of decreased performance, and if Internet usage continues to grow rapidly, the
Internet's infrastructure may not be able to support these demands and its
performance and reliability may decline. If outages or delays on the Internet
occur frequently or increase in frequency, overall Internet usage, including
usage of our regional websites in particular, could grow more slowly or decline.
Any factor which reduces the usage of the Internet may have a material adverse
effect on our business.
RISKS ASSOCIATED WITH INFORMATION DISSEMINATED THROUGH THE COMPANY'S SERVICE
The law relating to the liability of businesses for information carried
on or disseminated through their services on the Internet is currently
unsettled. Claims could be made against Internet companies under both United
States and foreign law for defamation, libel, invasion of privacy, negligence,
copyright or trademark infringement, or other theories based on the nature and
content of the materials disseminated through their services. In addition,
federal, state and foreign legislation has been proposed that imposes liability
for or prohibits the transmission over the Internet of certain types of
information. If we became liable for information provided by our users and
carried on our services, we could be directly harmed and we may be forced to
implement new measures to reduce our exposure to this liability.
WE MAY INCUR LIABILITIES FOR THE ACTIVITIES OF USERS OF OUR SERVICE
The law relating to the liability of providers of online services for
activities of their users is currently unsettled and could harm our business. We
do not carry insurance that will indemnify us for liability for activities of
our users. Certain of our advertisers' websites and/or products listed on our
regional auction sites by our users, may offer or contain information about
alcohol, tobacco, firearms, adult material and other products, services and
information that may be subject to regulation by local, state or federal
authorities. In addition, our advertisers' websites may contain text, images or
information that could infringe third-party copyrights, trademarks or other
intellectual property rights.
20
<PAGE>
We cannot assure you that we will successfully avoid liability for unlawful
activities carried out by users of our service. The imposition of potential
liability for unlawful activities of users of our service could require us to
implement measures to reduce our exposure to such liability, which may require
us, among other things, to spend substantial resources or to discontinue certain
service offerings. Any costs incurred as a result of such liability or asserted
liability could damage our business.
INCREASED SECURITY RISKS OF ONLINE COMMERCE MAY DETER FUTURE USE OF OUR SERVICES
Concerns over the security of transactions conducted on the Internet
and the privacy of consumers may also inhibit the growth of the Internet and
other online services generally, and online commerce in particular. Our failure
to prevent security breaches could significantly harm our business and results
of operations. We cannot be certain 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 we use to protect our transaction
data. Anyone who is able to circumvent our security measures could
misappropriate proprietary information, cause interruptions in our operations or
damage our brand and reputation and/or subject us to risk of loss, litigation
and other possible liability. We do not believe that it is possible to insure
that our data repositories, financial systems and other technology resources are
totally secure from security breaches or sabotage. We may be required to incur
significant costs to protect against security breaches or to alleviate problems
caused by breaches. Any well-publicized compromise of security could deter
people from using the Internet to conduct transactions that involve transmitting
confidential information or downloading sensitive materials, which would
adversely affect our business.
In the past, computer viruses have been distributed and have rapidly spread
over the Internet. Computer viruses could be introduced into our systems or
those of our customers or marketing affiliates, which could disrupt our network
of regional search engines and regional auction technology or make our services
otherwise inaccessible to our users and customers. We may be required to expend
significant capital and other resources to protect against the threat of, or to
alleviate problems caused by, security breaches and the introduction of computer
viruses. Our security measures may be inadequate to prevent security breaches or
combat the introduction of computer viruses, either of which may result in loss
of data, increased operating costs, litigation and possible liability.
GOVERNMENT REGULATION AND LEGAL UNCERTAINTIES MAY DAMAGE OUR BUSINESS
The laws and regulations applicable to the Internet and our services
are evolving and still unclear and could damage our business. There are
currently few laws or regulations of which we are aware that are directly
applicable to access to, or commerce on, the Internet. However, the Internet has
rapidly emerged as a commerce medium, and governmental agencies have not yet
been able to adapt all existing regulations to the Internet environment. Laws
and regulations may be introduced and court decisions
21
<PAGE>
reached that affect the Internet or other online services, covering issues such
as user pricing, user privacy, freedom of expression, access charges, content
and quality of products and services, advertising, intellectual property rights
and information security. Any future regulation may have a negative impact on
our business by restricting our method of operation or imposing additional
costs.
As an Internet company, it is unclear in which jurisdictions we are
actually conducting business. Our failure to qualify to do business in a
jurisdiction that requires us to do so could subject us to fines or penalties
and could result in our inability to enforce contracts in that jurisdiction. We
currently operate our regional auctions only in the United States and Canada.
Numerous jurisdictions have laws and regulations regarding the conduct of
auctions and the liability of auctioneers. We do not believe that these laws and
regulations, which were enacted for consumer protection many years ago, apply to
our online auction services. However, one or more jurisdictions may attempt to
impose these laws and regulations on our operations in the future
Any new legislation or regulation in the United States or abroad or the
application of existing laws and regulations to the Internet could harm our
business and cause the price of our common stock to decline.
Due to the global nature of the Internet, it is possible that the
governments of other states and foreign countries might attempt to regulate
transmissions or prosecute us for violations of their laws. We might
unintentionally violate such laws. Such laws may be modified, or new laws may be
enacted, in the future. Any such development could harm our business and cause
the price of our common stock to decline.
RISK OF THE COMPANY'S BUSINESS BEING SUBJECT TO SALES AND OTHER TAXES
We do not collect sales or other similar taxes on our services sold on
the Internet or on the goods sold on our regional auction sites. One or more
states may seek to impose sales tax collection obligations on companies, such as
us, that engage in or facilitate e-commerce. Several proposals have been made at
the state and local level that would impose additional taxes on the sale of
goods and services through the Internet. These or similar proposals, if adopted,
could substantially impair the growth of e-commerce, and could diminish our
opportunity to derive financial benefit from our activities and could harm our
business.
RISKS RELATING TO OUR STOCK
CONTROL BY MANAGEMENT
Paulo Mylla, our founder and chief executive officer, controls the
voting power of 44.7% of our outstanding common stock and Brian Leith, our vice
president and chief operating officer, controls the voting power of 13.1% of our
outstanding common stock. Together, Messrs. Mylla and Leith control the election
of directors and appointment of officers and thereby control the policies and
operations of the Company. They may also block a takeover of the Company even if
it is in the interests of our stockholders.
22
<PAGE>
FUTURE SALES OF OUR COMMON STOCK MAY DEPRESS OUR STOCK PRICE
As of January 19, 2000, there were 19,241,998 shares of common stock
outstanding of which 15,583,651 shares are restricted. If our stockholders sell
substantial amounts of this restricted stock once it becomes eligible for
resale, including shares issued upon the exercise of outstanding options and
warrants, the market price of our common stock could fall. The 15,583,651 shares
of restricted shares common stock outstanding as of January 19, 2000 will be
available for sale in the public market under Rule 144 of the Securities Act of
1933 on August 4, 2000.
SINCE WE ARE AN INTERNET-RELATED COMPANY, THE MARKET PRICE OF OUR COMMON STOCK
MAY EXPERIENCE EXTREME PRICE AND VOLUME FLUCTUATIONS WHICH WOULD INCREASE THE
LIKELIHOOD OF US BECOMING SUBJECT TO SECURITIES LITIGATION
The stock market has, from time to time, experienced extreme price and
volume fluctuations. The market prices of the securities of Internet-related
companies have been especially volatile, and these fluctuations are often
unrelated to the operating performance of the affected companies. Broad market
fluctuations of this type may adversely affect the market price of our common
stock, which could be subject to a variety of factors, including:
o public announcements concerning us, our competitors, or the
Internet industry;
o fluctuations in our operating results;
o the introduction of new products or services by us or our
competitors;
o changes in analysts' earnings estimates;
o announcements of technological innovations;
o changes in the manner in which we are perceived by the market;
o changes in market valuations of Internet companies generally;
and
o sales of common stock by insiders.
Many of these factors are beyond our control and may materially depress
the market price of our common stock. In the past, companies that have
experienced volatility in the market price of their stock have been the target
of securities class action litigation. If we were sued in a securities class
action, we could incur substantial costs and suffer from a diversion of our
management's attention and resources, regardless of the ultimate outcome of the
litigation.
OUR STOCK IS SUBJECT TO SPECIAL REGULATION AS A PENNY STOCK BECAUSE OF ITS
TRADING PRICE
Our common stock is a "penny stock" under the Securities and Exchange
Commission rules that imposes special sales practice requirements upon
broker-dealers. These rules generally restrict the liquidity of a penny stock
and prevent brokers-dealers
23
<PAGE>
from soliciting purchases except to accredited investors and existing customers
who agree in writing to purchase penny stocks. For purposes of the rule, the
phrase "accredited investors" means, in general terms, institutions with assets
in excess of $5,000,000, or individuals having a net worth in excess of
$1,000,000 or having an annual income that exceeds $200,000 (or that, when
combined with a spouse's income, exceeds $300,000). For transactions covered by
the rule, the broker-dealer must make a special suitability determination for
the purchaser and receive the purchaser's written agreement to the transaction
prior to the sale.
In addition, the Securities and Exchange Commission has adopted a
number of rules to regulate "penny stocks." The rules may further affect the
ability of owners of shares to sell the securities of the Company in any market
that might develop for them. Under the Securities Enforcement Remedies and Penny
Stock Reform Act of 1990, broker-dealers which engage in transactions in penny
stocks have additional disclosure requirements, including the requirement to
deliver a standardized risk disclosure document that provides information about
penny stocks and the risks in the penny stock market. Broker-dealers must also
provide customers with current bid and offer quotations for the penny stock, the
compensation of the broker-dealer and its salesperson in the transaction, and
monthly statements showing the market value of each penny stock held in the
customer's account.
Shareholders should be aware that, according to Securities and Exchange
Commission Release No. 34-29093, the market for penny stocks has suffered in
recent years from patterns of fraud and abuse. Such patterns include (i) control
of the market for the security by one or a few broker-dealers that are often
related to the promoter or issuer; (ii) manipulation of prices through
prearranged matching of purchases and sales and false and misleading press
releases; (iii) "boiler room" practices involving high-pressure sales tactics
and unrealistic price projections by inexperienced sales persons; (iv) excessive
and undisclosed bid-ask differentials and markups by selling broker-dealers; and
(v) the wholesale dumping of the same securities by promoters and broker-dealers
after prices have been manipulated to a desired level, along with the resulting
inevitable collapse of those prices and with consequent investor losses. Our
management is aware of the abuses that have occurred historically in the penny
stock market. Although we do not expect to be in a position to dictate the
behavior of the market or of broker-dealers who participate in the market, we
will strive within the confines of practical limitations to prevent the
described patterns from being established with respect to our securities.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND PLAN OF
OPERATION.
The following analysis relates our results of operations and cash flows
from inception and the results of operations of our predecessor, BGS Southwest,
Inc. The results of operations and cash flows of WhOOdoo Florida prior to its
acquisition by us are also included as part of our results of operations and
statements of cash flows.
24
<PAGE>
RESULTS OF OPERATIONS
Neither the Company nor WhOOdoo Florida have generated any revenue
since WhOOdoo Florida's inception on April 9, 1999. From the inception of
WhOOdoo Florida on April 9, 1999 through June 30, 1999, its expenses totaled
$117,985 consisting of $74,455 in selling, general administrative expenses and
$43,530 for research and development expenses.
For the quarter ended September 30, 1999, we combined sustained a loss
of $1,780,951. Selling, general and administrative expenses were $80,846 which
were in line with the prior period, except the prior period was less than three
months. Research and development costs of $111,695 were substantially more than
for the period ended June 30, 1999. The primary expense consisted of non-cash
compensation expenses of $1,588,410 resulting from the sale by WhOOdoo Florida
of 1,590,000 shares of its common stock at the par value of $.001 per share on
July 21, 1999, or a time when the fair market value was $1.00 per share.
Because the financial statements of our predecessor include lines of
business that were not purchased by us, a comparison of our operating results
with those of the predecessor are not meaningful. The predecessor had ceased
these revenue generating activities prior to August 4, 1999.
LIQUIDITY AND CAPITAL RESOURCES
Since our inception, we have relied almost exclusively upon the sale of
securities to finance our operations. The only exception is a small loan which
we have since paid. We have not yet generated any revenues. Net cash flows used
in operations from inception have amounted to $227,928. Net cash used in
investing activities since inception through September 30, 1999 was $125,084
including $106,170 used in the quarter ended September 30, 1999. The primary
item was the purchase of assets from BGS, our predecessor for $100,000 on August
4, 1999. Net cash provided by financing activities from inception has been
$1,105,373, of which $878,173 was received during the quarter ended September
30, 1999.
As of January 31, 2000, we had $81,790.44 in working capital. We are
depending upon receipt of proceeds from our outstanding 1,062,500 warrants which
are exercisable at $.80 a share or obtaining some other type of financing.
Although, we have received oral assurances from an associate of the
warrantholders that if we file this registration statement on Form 10-SB the
warrants will be exercised, we cannot be certain that the warrantholders in fact
will exercise the warrants. The warrants expire June 3, 2000. We estimate that
we need approximately $1,400,000 of financing within the next 12 months in order
to remain operational. We have had a series of discussions with third parties
unrelated to the warrantholders concerning a private placement of securities.
The terms are preliminary and vary. We have not received any financing
commitments, although we believe we can complete a private placement on a timely
basis. If we are able to obtain any necessary financing beyond the exercise of
the warrants, we expect that the cost may be very expensive and dilutive to our
current stockholders. If we are unable to obtain the necessary financing, we
will be forced to cease operations.
25
<PAGE>
YEAR 2000 COMPLIANCE
Many existing computer programs use only two digits to identify a year.
These programs were designed and developed without addressing the impact of the
change in the century. If not corrected, many computer software applications
could fail or create erroneous results by, at or beyond the year 2000.
We use software, computer technology and other services internally
developed and provided by third-party vendors that may fail at some point due to
the year 2000 phenomenon. Because we are a comparatively new enterprise, the
majority of software and hardware we use to manage our business has all been
recently purchased or developed by us. While this does not completely protect us
against year 2000 exposure, we believe our exposure is limited because the
technology we use to manage our business is not based upon legacy hardware and
software systems. To date, our systems have not been significantly affected by
Year 2000 problems.
We have reviewed the year 2000 compliance of both internally developed
and third-party systems. Internally developed systems include the software used
to provide our websites' searches, customer interaction, transaction-processing
and monitoring capabilities. Our third-party systems include software and
hardware, and computer technology, back-up, hosting, accounting, database and
security systems. To ensure that both our internally developed and third-party
systems are year 2000 compliant, we continually assess, analyze and, where
necessary, correct potential non-compliance issues.
Based on our assessment to date and our planned activities, we believe
that our internally developed and third-party systems are year 2000 compliant.
As of December 31, 1999, we had incurred immaterial costs in connection with
identifying, evaluating and addressing year 2000 compliance issues. We
anticipate that any future costs will also be immaterial. Most of these expenses
are expected to relate to operating costs associated with time spent by our
employees in the evaluation process. There may be some charges related to
remediation if any issues are identified during our assessment process. If these
expenses are higher than anticipated, our business could suffer.
ITEM 3. PROPERTY
OFFICE LEASES
We lease approximately 4,000 square feet of offices located at 1660
Trade Center Way, Naples, Florida. We assumed a lease as part of our purchase of
substantially all of the assets of BGS Southwest Florida, Inc. on August 4,
1999. This lease expires on September 30, 2000. We also signed an additional
office lease on September 1, 1999 which expires November 9, 2000.
26
<PAGE>
EQUIPMENT LEASES
On December 3, 1999, we entered into an electronic equipment lease
agreement for four Compaq network servers and 17 Compaq workstations as well as
other networking equipment. The equipment will be hosted at our Florida offices
and at our Massachusetts co-hosting location.
The term of the lease is 24 months. We made an initial payment of
$98,050 and are obligated to make monthly payments of $7,402 during the term of
the lease.
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table provides certain information as of December 31,
1999 concerning the beneficial ownership of the Company's common stock held by
each director; each person known by us to be the beneficial owner of at least 5%
of the Company's voting stock; and all executive officers and directors as a
group.
<TABLE>
<CAPTION>
- ----------------------- ---------------------------------------- ---------------------------- ---------------------
AMOUNT AND NATURE OF PERCENT OF
NAME AND ADDRESS BENEFICIAL OWNERSHIP (1) SHARES OUTSTANDING
TITLE OF CLASS OF BENEFICIAL OWNER
- ----------------------- ---------------------------------------- ---------------------------- ---------------------
<S> <C> <C> <C>
Common Stock Paulo Mylla
2015 Imperial Golf Cse. Blvd. 8,595,000 44.7%
Naples, FL 34110
- ----------------------- ---------------------------------------- ---------------------------- ---------------------
Common Stock Brian Leith
79 Emerald Woods Drive #J1 2,530,000 13.1%
Naples, FL 34108
- ----------------------- ---------------------------------------- ---------------------------- ---------------------
Common Stock William P. Dickie
21 HilltopRoad 100,000 *
Toronto, Ontario
M5H 2GP
- ---------------------------------------------------------------- ---------------------------- ---------------------
All directors and executive officers of the Company
as a group (4 persons) 11,255,000 58.3%
* Represents less than 1% of
voting power
- ---------------------------------------------------------------- ---------------------------- ---------------------
</TABLE>
(1) Beneficial ownership exists when a person has either the power to vote
or sell our Common Stock. Unless otherwise indicated, we believe that
all persons named in the table have sole voting and investment power
with respect to all securities beneficially owned by them. A person is
deemed to be the beneficial owner of
27
<PAGE>
securities that can be acquired by such person within 60 days from the
date whether upon the exercise of options or otherwise
ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
Directors and Executive Officers
The following table provides important information concerning our
directors, executive officers, and key employees.
NAME AGE POSITION
Paulo Mylla 41 President, chief executive officer and director
Brian Leith 45 Vice president, chief operating officer and director
Debbie Briscoe 33 Secretary, treasurer, and director of communications
Kevin Casey 30 Director of information technologies
William P. Dickie 57 Director
John W. Turner 57 Director
Mr. Mylla has been our president, chief executive officer, and a
director of our company since its formation. Paulo Mylla founded our
predecessor, BGS Southwest Florida, Inc., in January 1997 and is currently a
vice president of BGS. From April 1995 to December 1996, Mr. Mylla researched,
planned and developed the scalable search engine software which is the basis for
our regional search engine portals today. For the 10 year period ending in March
1995, Mr. Mylla was vice president of Ventura Ranch, S.A. in Bauru, Brazil. Mr.
Mylla held senior management positions in corporate design, information
technology, finance, marketing and international logistics.
Brian Leith is our vice-president, chief operating officer and a
director of our company. He joined our predecessor in April 1997 and developed
the strategic plan for the whOOdoo.com brand and e-commerce sales strategy. From
June 1992 through October 1995, Mr. Leith was president of Catamount Marketing
of Toronto, Ontario, a retail business consultancy firm.
Kevin Casey joined us in May 1999 as director of information
technologies. Mr. Casey has also been president and lead programmer for
Nanologic, Inc. of Naples, Florida since December 1997. Mr. Casey no longer is
responsible for the day-to-day activities of Nanologic. From September 1996
through October 1997, Mr. Casey was director of information technologies for
Robert W. Myers, a bankruptcy trustee in
28
<PAGE>
Portland, Oregon. Through September 1996, Mr. Casey was a database
programmer/technical recruiter for Technical Solutions, Inc. of Portland,
Oregon.
William P. Dickey joined our board of directors in August 1999. Since
1983, Mr. Dickey has been vice president of Mid-North Engineering Services,
Ltd., a company which provides administrative and consulting services to public
and private companies ranging from accounting, corporate secretarial and office
accommodations to financing, proposals and restructuring.
Colonel John W. Turner joined our board of directors in January 2000.
Colonel Turner is presently President of JTEC, Global, an economics and finance
consulting and public speaking business focused on issues of global trade,
economics, and finance. Since 1998, Colonel Turner has been the Director of
Economics and the Denver PFI Program, Defense Finance and Accounting Service,
Department of Defense, Denver, Colorado.
Debbie Briscoe joined us in November 1999 as secretary, treasurer and
communication director. From December 1996 through November 1999, Ms. Briscoe
was provider relations manager for Southwest Florida Physician Hospital
Organization. From August 1994 through December 1996, Ms. Briscoe was a provider
relations representative for Humana Healthcare Plan, Fort Meyers, Florida.
ITEM 6. EXECUTIVE COMPENSATION
Provided is information with respect to compensation paid by us in 1999
to our chief executive officer and other officers whose compensation exceeded
$100,000.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
ANNUAL COMPENSATION
- ------------------------------------ --------------- ----------------------- -----------------------------------------
<S> <C> <C> <C>
(a) (b) (c) (e)
other annual
Year Salary compensation
NAME AND PRINCIPAL POSITION ($) ($)
- ------------------------------------ --------------- ----------------------- -----------------------------------------
Mr. Paulo Mylla, 1999 0 (1) $2,445 (2)
President and chief executive
officer
- ------------------------------------ --------------- ----------------------- -----------------------------------------
</TABLE>
(1) Mr. Mylla does not receive a salary from us but receives compensation from
BGS, Southwest Florida, Inc. as described below in Item 7.
(2) Represents lease payments on a Jeep Cherokee of $489.00 for the months of
August through December.
29
<PAGE>
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
Unless otherwise clear from the context, all references to the number
of shares of our subsidiary, whoodoo.com (FL), Inc., a Florida corporation,
give effect to a 44,500-for-one stock split on July 16, 1999.
On April 9, 1999, as its initial capitalization, whoodoo.com (FL), Inc.
sold a total of 11,125,000 shares of common stock to our founders, Mr. Paulo
Mylla and Mr. Brian Leith, at par value of $.001 per share or for a total of
$500. On July 21, 1999, whoodoo.com (FL), Inc. sold 1,590,000 shares of its
common stock for par value of $.001 per share. These shares include 100,000
shares issued to Mr. William P. Dickie, a director, as a finder's fee relating
to the May 5, 1999 sale of 428,500 share of whoodoo.com (FL) Inc.'s common stock
for $.35 per share.
At the time of the reorganization, on August 4, 1999, we assumed BGS's
line of credit with a bank which is personally guaranteed by Mr. Mylla and his
wife. The balance on the line of credit as of June 30, 1999 was $9,805. We also
assumed a note payable to Mr. Mylla in the amount of $8,000.
As part of the reorganization we also entered into a management
agreement with BGS, Southwest Florida, Inc., our predecessor. At the time of the
reorganization, BGS discontinued all business activities other than the
management of our operations. The management agreement provides that BGS will
manage our operations, exclusively, for a period of 36 months for the monthly
sum of $49,200. In addition to the monthly fee, BGS is entitled to an
achievement bonus based upon the number of impressions to the whOOdoo.com
websites received in any calendar month. The achievement bonus is calculated as
follows:
IMPRESSIONS PER MONTH ACHIEVEMENT BONUS
Between 1,000,000 and 1,999,999 $4,200
Between 2,000,000 and 2,999,999 an additional $3,806
Between 3,000,000 and 3,999,999 an additional $2,562
Between 4,000,000 and above an additional $2,230
BGS has entered into employment agreements with Paulo Mylla, our chief
executive officer, Brian Leith, our vice president and chief operating officer,
Kevin Casey, our director of technology, Sharon Snew, our manager of design, and
Stephanie Pera, our manager of content. Mr. Paulo Mylla and his wife control
BGS. Mr. and Mrs. Mylla have agreed that at the time Mr. Mylla receives his
green card and becomes an American citizen, BGS will terminate the management
agreement with us and will assign all of the employment agreements to us.
BGS entered into a three-year employment agreement with Mr. Paulo Mylla
on August 4, 1999. Mr. Mylla receives a $75,000 base salary plus a cost of
living increase not to exceed 3% of his prior year's salary and an expense
allowance for all reasonable travel, entertainment and miscellaneous expenses
incurred in connection with the performance of his duties as chief executive
officer. Mr. Mylla also receives an incentive bonus based upon the number of
impressions per calendar month on the whOOdoo.com websites calculated as
follows:
IMPRESSIONS PER MONTH ACHIEVEMENT BONUS
Between 1,000,000 and 1,999,999 $1,875 per month
Between 2,000,000 and 2,999,999 $1,625 per month
Between 3,000,000 and 3,999,999 $975 per month
Between 4,000,000 and above $1,072 per month
30
<PAGE>
BGS makes lease payments of $489 per month on a Jeep Cherokee for Mr.
Mylla. At the end of the lease, Mr. Mylla shall receive an automobile allowance
of up to $700 per month plus the cost of insurance. BGS also pays the premiums
on a life insurance policy for Mr. Mylla in the amount of three times his yearly
salary. Mr. Mylla's employment agreement contains non-competition,
non-disclosure, and confidentiality provisions and provides that BGS may assign
his employment agreement to us.
BGS entered into a three-year employment agreement with Mr. Brian Leith
on August 4, 1999. Under his contract Mr. Leith receives a $55,000 base salary
plus a cost of living increase not to exceed 3% of his prior year's salary. Mr.
Leith also receives an incentive bonus based upon the number of impressions per
calendar month on the whOOdoo.com websites calculated as follows:
IMPRESSIONS PER MONTH ACHIEVEMENT BONUS
Between 1,000,000 and 1,999,999 $1,625 per month
Between 2,000,000 and 2,999,999 $1,408 per month
Between 3,000,000 and 3,999,999 $845 per month
Between 4,000,000 and above $929 per month
BGS pays the premiums on a life insurance policy for Mr. Leith in the
amount of three times his yearly salary. Mr. Leith's employment agreement
contains non-competition, non-disclosure, and confidentiality provisions and
provides that BGS may assign his employment agreement to us.
BGS has entered into a one-year employment contract with Mr. Kevin
Casey, the director of information technologies. Mr. Casey's annual salary is
$85,000. The Company has also agreed to pay the premiums on a $100,000 term life
insurance policy for the benefit of Mr. Casey. Mr. Casey's employment agreement
contains non-competition, non-disclosure, and confidentiality provisions and
provides that BGS may assign his employment agreement to us.
ITEM 8. DESCRIPTION OF SECURITIES
Our authorized capital stock is 50,000,000 shares of Common Stock, par
value $.001 per share, of which 19,241,998 shares are outstanding.
Holders of our common stock have one vote per share on each matter
submitted to a vote of the shareholders and a ratable right to our net assets
upon liquidation. Holders of our common stock do not have preemptive rights to
purchase additional shares of common stock or other subscription rights. The
common stock carries no conversion rights and is not subject to redemption or to
any sinking fund provisions. All shares of common stock are entitled to share
equally in the dividends from legally available sources as determined by the
board of directors. Upon our dissolution or liquidation, whether voluntary or
involuntary, holders of our common stock are entitled to receive our assets
available for distribution to the shareholders. All outstanding shares of common
stock are fully paid and non-assessable.
31
<PAGE>
PART II
ITEM 1. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
MARKET PRICES OF SECURITIES
Our common stock was approved for trading on the "pink sheets" on
December 3, 1999 under the symbol WHOO. The following table sets forth the
prices as reported to us by National Capital, a market maker of our common
stock. Such quotations reflect inter-dealer prices, without retail mark-up,
mark-down or commission and may not necessarily represent actual transactions.
WHOO HIGH LOW
---- ---- ---
1999 Fourth Quarter $1.00 $1.00
As of January 28, 2000 there were approximately 529 beneficial holders
of our common stock.
The Company did not pay dividends on its common stock in 1998 or 1999
and it does not anticipate paying any dividends thereon in the foreseeable
future.
ITEM 2. LEGAL PROCEEDINGS
Not Applicable.
ITEM 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
Not Applicable
ITEM 4. RECENT SALES OF UNREGISTERED SECURITIES
During the past three years, the following persons and entities
acquired shares of stock and other securities from us as set forth in the table
below.
<TABLE>
<CAPTION>
- ---------------------------- ---------------- ------------------ ---------------------------- ----------------------------
CLASS OF Amount of
SHAREHOLDER SECURITIES DATE SOLD SECURITIES SOLD CONSIDERATION RECEIVED
- ---------------------------- ---------------- ------------------ ---------------------------- ----------------------------
<S> <C> <C> <C> <C>
Paulo Mylla Common Stock 04/09/99 8,595,000 shares of $313
whOOdoo.com (FL), Inc.
- ---------------------------- ---------------- ------------------ ---------------------------- ----------------------------
</TABLE>
32
<PAGE>
<TABLE>
<CAPTION>
- ---------------------------- ---------------- ------------------ ---------------------------- ----------------------------
CLASS OF Amount of
SHAREHOLDER SECURITIES DATE SOLD SECURITIES SOLD CONSIDERATION RECEIVED
- ---------------------------- ---------------- ------------------ ---------------------------- ----------------------------
<S> <C> <C> <C> <C>
Brian Leith Common Stock 04/09/99 2,530,000 shares of $187
whOOdoo.com (FL), Inc.
- ---------------------------- ---------------- ------------------ ---------------------------- ----------------------------
Aberdeen Holdings, Ltd. Common Stock 05/05/99 87,500 shares of $30,625
whOOdoo.com (FL), Inc.
- ---------------------------- ---------------- ------------------ ---------------------------- ----------------------------
Clyde Resources Ltd. Common Stock 05/05/99 87,500 shares of $30,625
whOOdoo.com (FL), Inc.
- ---------------------------- ---------------- ------------------ ---------------------------- ----------------------------
Gateway Research Common Stock 05/05/99 87,500 shares of $30,625
Management Group, Ltd. whOOdoo.com (FL), Inc.
- ---------------------------- ---------------- ------------------ ---------------------------- ----------------------------
Iguana Investments, Ltd. Common Stock 05/05/99 87,500 shares of $30,625
whOOdoo.com (FL), Inc.
- ---------------------------- ---------------- ------------------ ---------------------------- ----------------------------
Laiy Limited Common Stock 05/05/99 87,500 shares of $30,625
whOOdoo.com (FL), Inc.
- ---------------------------- ---------------- ------------------ ---------------------------- ----------------------------
Kevin Casey Common Stock 07/21/99 100,000 shares of $100
whOOdoo.com (FL), Inc.
- ---------------------------- ---------------- ------------------ ---------------------------- ----------------------------
Patrick Belcher Common Stock 07/21/99 30,000 shares of $30
whOOdoo.com (FL), Inc.
- ---------------------------- ---------------- ------------------ ---------------------------- ----------------------------
Sharon Snew Common Stock 07/21/99 30,000 shares of $30
whOOdoo.com (FL), Inc.
- ---------------------------- ---------------- ------------------ ---------------------------- ----------------------------
Stephanie Pera Common Stock 07/21/99 10,000 shares of $10
whOOdoo.com (FL), Inc.
- ---------------------------- ---------------- ------------------ ---------------------------- ----------------------------
Ernest Sittenfeld Common Stock 07/21/99 200,000 shares of $200
whOOdoo.com (FL), Inc.
- ---------------------------- ---------------- ------------------ ---------------------------- ----------------------------
Brian Allossery Common Stock 07/21/99 200,000 shares of Finder's Fee
whOOdoo.com (FL), Inc.
- ---------------------------- ---------------- ------------------ ---------------------------- ----------------------------
William P. Dickie Common Stock 07/21/99 100,000 shares of Finder's Fee
whOOdoo.com (FL), Inc.
- ---------------------------- ---------------- ------------------ ---------------------------- ----------------------------
Latitude 32 Holdings, Ltd. Common Stock 07/21/99 920,000 shares of Finder's Fee
whOOdoo.com (FL), Inc.
- ---------------------------- ---------------- ------------------ ---------------------------- ----------------------------
</TABLE>
33
<PAGE>
<TABLE>
<CAPTION>
- ---------------------------- ---------------- ------------------ ---------------------------- ----------------------------
CLASS OF Amount of
SHAREHOLDER SECURITIES DATE SOLD SECURITIES SOLD CONSIDERATION RECEIVED
- ---------------------------- ---------------- ------------------ ---------------------------- ----------------------------
<S> <C> <C> <C> <C>
- ---------------------------- ---------------- ------------------ ---------------------------- ----------------------------
Paulo Mylla Common Stock 08/04/99 8,595,000 shares of 8,595,000 shares of
whOOdoo.com, Inc., a whOOdoo.com (FL), Inc., a
Delaware corporation Florida corporation
- ---------------------------- ---------------- ------------------ ---------------------------- ----------------------------
Brian Leith Common Stock 08/04/99 2,530,000 shares of 2,530,000 shares of
whOOdoo.com, Inc., a whOOdoo.com (FL), Inc., a
Delaware corporation Florida corporation
- ---------------------------- ---------------- ------------------ ---------------------------- ----------------------------
Kevin Casey Common Stock 08/04/99 100,000 shares of 100,000 shares of
whOOdoo.com, Inc., a whOOdoo.com (FL), Inc., a
Delaware corporation Florida corporation
- ---------------------------- ---------------- ------------------ ---------------------------- ----------------------------
Patrick Belcher Common Stock 08/04/99 30,000 shares of 30,000 shares of
whOOdoo.com, Inc., a whOOdoo.com (FL), Inc., a
Delaware corporation Florida corporation
- ---------------------------- ---------------- ------------------ ---------------------------- ----------------------------
Sharon Snew Common Stock 08/04/99 30,000 shares of 30,000 shares of
whOOdoo.com, Inc., a whOOdoo.com (FL), Inc., a
Delaware corporation Florida corporation
- ---------------------------- ---------------- ------------------ ---------------------------- ----------------------------
Stephanie Pera Common Stock 08/04/99 10,000 shares of 10,000 shares of
whOOdoo.com, Inc., a whOOdoo.com (FL), Inc., a
Delaware corporation Florida corporation
- ---------------------------- ---------------- ------------------ ---------------------------- ----------------------------
Ernest Sittenfeld Common Stock 08/04/99 200,000 shares of 200,000 shares of
whOOdoo.com, Inc., a whOOdoo.com (FL), Inc., a
Delaware corporation Florida corporation
- ---------------------------- ---------------- ------------------ ---------------------------- ----------------------------
Brian Allossery Common Stock 08/04/99 200,000 shares of 200,000 shares of
whOOdoo.com, Inc., a whOOdoo.com (FL), Inc., a
Delaware corporation Florida corporation
- ---------------------------- ---------------- ------------------ ---------------------------- ----------------------------
William P. Dickie Common Stock 08/04/99 100,000 shares of 100,000 shares of
whOOdoo.com, Inc., a whOOdoo.com (FL), Inc., a
Delaware corporation Florida corporation
- ---------------------------- ---------------- ------------------ ---------------------------- ----------------------------
Latitude 32 Holdings, Ltd. Common Stock 08/04/99 920,000 shares of 920,000 shares of
whOOdoo.com, Inc., a whOOdoo.com (FL), Inc., a
Delaware corporation Florida corporation
- ---------------------------- ---------------- ------------------ ---------------------------- ----------------------------
Aberdeen Holdings, Ltd. Common Stock 08/04/99 87,500 shares of 87,500 shares of
whOOdoo.com, Inc., a whOOdoo.com (FL), Inc., a
Delaware corporation Florida corporation
- ---------------------------- ---------------- ------------------ ---------------------------- ----------------------------
</TABLE>
34
<PAGE>
<TABLE>
<CAPTION>
- ---------------------------- ---------------- ------------------ ---------------------------- ----------------------------
CLASS OF Amount of
SHAREHOLDER SECURITIES DATE SOLD SECURITIES SOLD CONSIDERATION RECEIVED
- ---------------------------- ---------------- ------------------ ---------------------------- ----------------------------
<S> <C> <C> <C> <C>
Clyde Resources Ltd. Common Stock 08/04/99 87,500 shares of 87,500 shares of
whOOdoo.com, Inc., a whOOdoo.com (FL), Inc., a
Delaware corporation Florida corporation
- ---------------------------- ---------------- ------------------ ---------------------------- ----------------------------
Gateway Research Common Stock 08/04/99 87,500 shares of 87,500 shares of
Management Group, Ltd. whOOdoo.com, Inc., a whOOdoo.com (FL), Inc., a
Delaware corporation Florida corporation
- ---------------------------- ---------------- ------------------ ---------------------------- ----------------------------
Iguana Investments, Ltd. Common Stock 08/04/99 87,500 shares of 87,500 shares of
whOOdoo.com, Inc., a whOOdoo.com (FL), Inc., a
Delaware corporation Florida corporation
- ---------------------------- ---------------- ------------------ ---------------------------- ----------------------------
Laiy Limited Common Stock 08/04/99 87,500 shares of 87,500 shares of
whOOdoo.com, Inc., a whOOdoo.com (FL), Inc., a
Delaware corporation Florida corporation
- ---------------------------- ---------------- ------------------ ---------------------------- ----------------------------
- ---------------------------- ---------------- ------------------ ---------------------------- ----------------------------
Laiy Limited Common Stock 08/04/99 500,000 Finder's Fee
- ---------------------------- ---------------- ------------------ ---------------------------- ----------------------------
Gene Landrum Common Stock 10/01/99 6,000 Interest on a $25,000
promissory note
- ---------------------------- ---------------- ------------------ ---------------------------- ----------------------------
Joseph Padullo Common Stock 10/06/99 10,000 $10,000
- ---------------------------- ---------------- ------------------ ---------------------------- ----------------------------
William Dowell Jr. Common Stock 10/06/99 10,500 $10,500
- ---------------------------- ---------------- ------------------ ---------------------------- ----------------------------
William Dowell Sr. Common Stock 10/06/99 9,500 $9,500
- ---------------------------- ---------------- ------------------ ---------------------------- ----------------------------
- ---------------------------- ---------------- ------------------ ---------------------------- ----------------------------
Aberdeen Holdings, Ltd. Common Stock 10/21/99 212,500 $170,000
- ---------------------------- ---------------- ------------------ ---------------------------- ----------------------------
Clyde Resources Ltd. Common Stock 10/21/99 212,500 $170,000
- ---------------------------- ---------------- ------------------ ---------------------------- ----------------------------
Gateway Research Common Stock 10/21/99 212,500 $170,000
Management Group, Ltd.
- ---------------------------- ---------------- ------------------ ---------------------------- ----------------------------
Iguana Investments, Ltd. Common Stock 10/21/99 212,500 $170,000
- ---------------------------- ---------------- ------------------ ---------------------------- ----------------------------
Laiy Limited Common Stock 10/21/99 212,500 $170,000
- ---------------------------- ---------------- ------------------ ---------------------------- ----------------------------
- ---------------------------- ---------------- ------------------ ---------------------------- ----------------------------
</TABLE>
35
<PAGE>
<TABLE>
<CAPTION>
- ---------------------------- ---------------- ------------------ ---------------------------- ----------------------------
CLASS OF Amount of
SHAREHOLDER SECURITIES DATE SOLD SECURITIES SOLD CONSIDERATION RECEIVED
- ---------------------------- ---------------- ------------------ ---------------------------- ----------------------------
<S> <C> <C> <C> <C>
Data Sales Co., Inc. Warrants 12/3/99 34,000 Entering into an
exercisable at Equipment lease.
$ 1.00 per
share
- ---------------------------- ---------------- ------------------ ---------------------------- ----------------------------
- ---------------------------- ---------------- ------------------ ---------------------------- ----------------------------
Richard Holman Options 3/12/1999 10,000 Financial consulting
exercisable at services rendered
$ 1.00 per
share
- ---------------------------- ---------------- ------------------ ---------------------------- ----------------------------
- ---------------------------- ---------------- ------------------ ---------------------------- ----------------------------
Michael Baybak and Options 9/11/99 350,000 Public relations services
Company, Inc. exercisable at rendered
$ 1.00 per
share
- ---------------------------- ---------------- ------------------ ---------------------------- ----------------------------
</TABLE>
PART III
ITEM 1. INDEX OF EXHIBITS
2.1 Form of Certificate Incorporation of whOOdoo.com, Inc.
2.2 Form of Reorganization Agreement
2.3 Form of Asset Purchase Agreement*
4.1 Form of Warrants issued to investors
4.2 Form of Warrants issued to equipment leasing company
4.3 From of Common Stock certificate
10.1 Form of BGS Management Agreement with addendum
10.2 Form of Equipment Management and Co-hosting Agreement
10.3 Form of Public Relations Consulting Agreement
10.4 Form of BGS Employment Agreement (Paulo Mylla)
10.5 Form of BGS Employment Agreement (Brian Leith)
10.6 Form of BGS Employment Agreement (Debbie Briscoe)
10.7 Form of BGS Employment Agreement (Kevin Casey)
* Certain schedules to exhibit 2.3 are not included with this registration
statement. We have requested an exemption from the Securities and Exchange
Commission from filing these schedules via Edgar pursuant to Regulation
232.203. If our exemption request is granted, we will file the schedules with
the Commission in paper format pursuant to Regulation 232.311.
36
<PAGE>
11. Statement of computation of per share earnings
21 Subsidiaries
27. Financial Data Schedule
99 1999 Stock Option Plan
SIGNATURE
In accordance with Section 12 of the Securities Exchange Act of 1934,
the registrant caused this registration statement to be signed on its behalf by
the undersigned, thereunto duly authorized.
February 11, 2000 whOOdoo.com, Inc.
By: /s/ Paulo Mylla
------------------------------------
Paulo Mylla, President
37
<PAGE>
WHOODOO.COM, INC.
FORMERLY GREYSTONE CREDIT, INC.
(A DEVELOPMENT STAGE COMPANY)
FINANCIAL STATEMENTS
FOR THE PERIOD FROM APRIL 9, 1999 (INCEPTION) TO JUNE 30, 1999 AND FOR
THE THREE MONTHS ENDING SEPTEMBER 30, 1999 AND 1998 (UNAUDITED)
AND FOR THE PERIOD FROM APRIL 9, 1999 (INCEPTION)
TO SEPTEMBER 30, 1999 (UNAUDITED)
TABLE OF CONTENTS
PAGE
----
Report of Independent Certified Public Accountants F-1
Balance Sheets F-2
Statements of Operations F-3
Statement of Changes to Stockholders' equity F-4
Statements of Cash Flows F-5
Notes to Financial Statements F-6
BGS SOUTHWEST, INC.
FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997
AND
FOR THE SIX MONTHS ENDED JUNE 30, 1999 (UNAUDITED)
PAGE
----
Report of Independent Certified Public Accountants F-13
Balance Sheets F-14
Statements of Operations and Accumulated Deficit F-15
Statements of Cash Flows F-16
Notes to Financial Statements F-17
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Board of Directors and
Stockholders
whOOdoo.com, inc.,
formerly Greystone Credit, Inc.
We have audited the accompanying balance sheet of whOOdoo.com, inc., formerly
Greystone Credit Inc., (a development stage company) as of June 30, 1999, and
the related statements of operations, stockholders' equity and cash flows for
the period from April 9, 1999 (inception) to June 30, 1999. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of whOOdoo.com, inc., formerly
Greystone Credit, Inc., (a development stage company) as of June 30, 1999, and
the results of its operations and cash flows for the period from April 9, 1999
(inception) to June 30, 1999, 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 Note 3 to the
financial statements, the Company has suffered losses during the development
stage that raise substantial doubt about its ability to continue as a going
concern. Management's plans in regard to these matters are also described in
Note 3. The financial statements do not include any adjustments that might
result from the outcome of this uncertainty.
Sweeney, Gates & Co.
Fort Lauderdale, Florida
November 5, 1999
F-1
<PAGE>
WHOODOO.COM, INC.,
FORMERLY GREYSTONE CREDIT, INC.,
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEETS
<TABLE>
<CAPTION>
SEPTEMBER
30, 1999 JUNE 30, 1999
------------ -------------
(unaudited)
<S> <C> <C>
ASSETS
Current assets:
Cash $ 662,361 $ 2,208
----------- -----------
Total current assets 662,361 2,208
Property and equipment, net 84,460 17,007
Other assets 3,474 --
----------- -----------
$ 750,295 $ 19,215
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Line of credit $ 9,942 $ --
Accounts payable and accrued expenses 27,505 --
Note payable to stockholder 8,000 --
----------- -----------
Total current liabilities 45,447 --
----------- -----------
Stockholders' equity:
Common stock, $.001 par value, 50,000,000 shares
authorized; 19,236,498 and 11,553,500 shares issued
and outstanding, respectively 19,236 11,554
Additional paid-in capital 2,585,768 125,646
Deficit accumulated during the development stage (1,898,936) (117,985)
Subscriptions receivable (1,220) --
----------- -----------
Stockholders' equity 704,848 19,215
----------- -----------
$ 750,295 $ 19,215
=========== ===========
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
F-2
<PAGE>
WHOODOO.COM, INC.,
FORMERLY GREYSTONE CREDIT, INC.,
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
PREDECESSOR COMPANY
--------------- -------------------------------------------------------
APRIL 9, 1999
THREE MONTHS THREE MONTHS APRIL 9, 1999 (INCEPTION)
ENDED SEPTEMBER ENDED SEPTEMBER (INCEPTION) TO TO SEPTEMBER
30, 1998 30, 1999 JUNE 30, 1999 30, 1999
--------------- --------------- -------------- -------------
(unaudited) (unaudited) (unaudited)
<S> <C> <C> <C> <C>
Revenues $ -- $ -- $ -- $ --
------------ ------------ ------------ ------------
Expenses:
Selling, general and administrative 69,552 80,846 74,455 155,301
Research and development 18,252 111,695 43,530 155,225
Compensation for stock issued for services -- 1,588,410 -- 1,588,410
------------ ------------ ------------ ------------
Total expenses (87,804) 1,780,951 117,985 1,898,936
------------ ------------ ------------ ------------
Net loss $ (87,804) $ (1,780,951) $ (117,985) $ 1,898,936)
============ ============ ============ ============
Loss per share, basic and diluted $ (0.10) $ (0.01) $ (0.13)
============ ============ ============
Weighted average shares outstanding 17,081,189 11,414,108 14,349,645
============ ============ ============
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
F-3
<PAGE>
WHOODOO.COM, INC.
FORMERLY GREYSTONE CREDIT, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CHANGES TO STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
DEFICIT
ACCUMULATED
COMMON STOCK ADDITIONAL DURING THE
------------------------- PAID-IN DEVELOPMENT SUBSCRIPTIONS
SHARES AMOUNT CAPITAL STAGE RECEIVABLE TOTAL
----------- ----------- ----------- ----------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C>
Issuance of founders' stock,
April 9, 1999 11,125,000 $ 11,125 $ (10,625) $ -- $ -- $ 500
Sale of stock 428,500 429 136,271 -- -- 136,700
Net loss -- -- -- (117,985) -- (117,985)
----------- ----------- ----------- ----------- ----------- -----------
Balances, June 30, 1999 11,553,500 11,554 125,646 (117,985) -- 19,215
Issuance of stock for
services and cash 1,590,000 1,590 1,588,410 -- (1,220) 1,588,780
Sale of stock 10,000 10 9,990 -- -- 10,000
Recapitalization 6,062,498 6,062 841,242 -- -- 847,304
Sale of stock 20,500 20 20,480 -- -- 20,500
Net loss -- -- -- (1,780,951) -- (1,780,951)
----------- ----------- ----------- ----------- ----------- -----------
Balances, September 30, 1999
(unaudited) 19,236,498 $ 19,236 $ 2,585,768 $(1,898,936) $ (1,220) $ 704,848
=========== =========== =========== =========== =========== ===========
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
F-4
<PAGE>
WHOODOO.COM, INC.
FORMERLY GREYSTONE CREDIT, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
PREDECESSOR COMPANY
----------------------------------------------------------------------
THREE MONTHS THREE MONTHS APRIL 9, 1999 APRIL 9, 1999
ENDED ENDED (INCEPTION) TO (INCEPTION) TO
SEPTEMBER 30, SEPTEMBER 30, JUNE 30, SEPTEMBER 30,
1998 1999 1999 1999
------------- ------------- -------------- --------------
(unaudited) (unaudited) (unaudited)
<S> <C> <C> <C> <C>
Cash flows from operating activities:
Net loss $ (87,804) $(1,780,951) $ (117,985) $(1,898,936)
Adjustments to reconcile net loss to
net cash used in operating activities:
Depreciation 4,431 5,605 1,907 7,512
Write off of acquired development costs -- 59,838 -- 59,838
Compensation for stock issued for services -- 1,588,410 -- 1,588,410
Changes in operating assets and liabilities
net of effects of acquisition:
Accrued expenses 30,788 16,066 -- 16,066
Other assets -- (818) -- (818)
----------- ----------- ----------- -----------
Net cash used in operating activities (52,585) (111,850) (116,078) (227,928)
----------- ----------- ----------- -----------
Cash flows from investing activities:
Purchase of equipment -- (6,170) (18,914) (25,084)
Purchase of assets from BGS -- (100,000) -- (100,000)
----------- ----------- ----------- -----------
Net cash used in investing activities -- (106,170) (18,914) (125,084)
----------- ----------- ----------- -----------
</TABLE>
THE ACCOMPANYING FINANCIAL STATEMENTS ARE AN
INTEGRAL PART OF THESE FINANCIAL STATEMENTS
F-5
<PAGE>
WHOODOO.COM, INC.
FORMERLY GREYSTONE CREDIT, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
PREDECESSOR COMPANY
----------------------------------------------------------------------
THREE MONTHS THREE MONTHS APRIL 9, 1999 APRIL 9, 1999
ENDED ENDED (INCEPTION) TO (INCEPTION) TO
SEPTEMBER 30, SEPTEMBER 30, JUNE 30, SEPTEMBER 30,
1998 1999 1999 1999
------------- ------------- -------------- --------------
(unaudited) (unaudited) (unaudited)
<S> <C> <C> <C> <C>
Cash flows from financing activities:
Recapitalization and sale of stock $ -- $ 878,173 $ 137,200 $ 1,015,373
Proceeds from note payable to stockholder 42,000 -- -- --
----------- ----------- ----------- -----------
Net cash provided by financing
activities 42,000 878,173 137,200 1,015,373
----------- ----------- ----------- -----------
Net increase (decrease) in cash (10,585) 660,153 2,208 662,361
Cash, beginning of period 16,323 2,208 -- --
----------- ----------- ----------- -----------
Cash, end of period $ 5,738 $ 662,361 $ 2,208 $ 662,361
=========== =========== =========== ===========
Supplemental information:
Cash paid for interest $ -- $ -- $ -- $ --
=========== =========== =========== ===========
Cash paid for income taxes $ -- $ -- $ -- $ --
=========== =========== =========== ===========
</TABLE>
THE ACCOMPANYING FINANCIAL STATEMENTS ARE AN INTEGRAL PART OF
THESE FINANCIAL STATEMENTS.
F-6
<PAGE>
WHOODOO.COM, INC.
FORMERLY GREYSTONE CREDIT, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
1. BUSINESS AND BASIS OF PRESENTATION
Greystone Credit, Inc., (the "Company"), was incorporated in the state of
Florida on June 17, 1997. On August 4, 1999, the Company acquired whOOdoo.com,
inc. ("whOOdoo Florida"), a Florida corporation, incorporated on April 9, 1999.
At the same time, the Company changed its state of incorporation to Delaware and
its name to whOOdoo.com, inc. At the time of the acquisition of whOOdoo Florida,
the Company had no operations or liabilities. The merger and recapitalization
was accounted for as a reverse merger. As a result, the financial statements of
the Company are those of whOOdoo Florida.
On August 4, 1999, the Company purchased all of the operating assets and assumed
certain liabilities of BGS Southwest, Inc. (the "Predecessor"), a related party,
wholly owned by the President of the Company. Due to the fact the Predecessor is
a related party and the operations of the Predecessor and the Company
overlapped, the Predecessor has been treated as the predecessor of the Company.
For accounting purposes, the Company effectively took over the operations of the
Predecessor, except its consulting business, on July 1, 1999.
The Company has been in the development stage since inception and its efforts
through September 30, 1999, have been principally devoted to organizational
activities, raising capital and the development of its search engine. The
primary business of the Company will be the utilization of its search engine to
enable the gathering of specific information based upon geographic and
topic-related demographics relating to Internet consumers in North, Central and
South American markets. The Company envisions advertisers and consumer goods
manufacturers using the information, and intends to index a large portion of the
65-70% of web sites not found through searches conducted on the large, global
search engines. The Company is undergoing expansion and, therefore, is
continually investing in equipment and technology. Management anticipates
incurring substantial additional losses as it pursues its research and
development efforts.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
CASH AND CASH EQUIVALENTS - The Company considers those investments, which are
highly liquid in nature and have an original maturity of three months or less at
the date of purchase to be cash equivalents.
PROPERTY AND EQUIPMENT - Property and equipment are stated at cost. Major
renewals and improvements are capitalized, while maintenance and repairs are
expensed when incurred. The cost and accumulated depreciation for property and
equipment sold, retired, or otherwise disposed of are relieved from the
accounts, and resulting gains or losses are reflected in income. Depreciation is
computed over the estimated useful lives of depreciable assets using the
straight-line method.
F-7
<PAGE>
WHOODOO.COM, INC.,
FORMERLY GREYSTONE CREDIT, INC.,
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
IMPAIRMENT OF LONG-LIVED ASSETS - The Company evaluates the recoverability of
its property and equipment, and other assets in accordance with Statement of
Financial Accounting Standards Board ("SFAS") No.121, "Accounting for the
Impairment of Long-Lived Assets to be Disposed of ("SFAS 121"). SFAS 121
requires recognition of the impairment of long-lived assets in the event the net
book value of such assets exceeds the estimated future undiscounted cash flows
attributable to such assets or the business to which intangible assets relate.
No impairments were recognized during the periods ended September 30, 1999 and
June 30, 1999.
ADVERTISING COSTS - Advertising costs amounted to $1,705 for the three months
ended September 30, 1999, and no advertising costs were incurred for the period
from April 4, 1999 to June 30, 1999. The costs were charged to operations as
incurred.
DEVELOPMENT COSTS - All costs relating to start up and development of its
Internet search engine and related web sites were expensed as incurred.
INCOME TAX - Income tax assets and liabilities are computed annually for
temporary differences between the financial statement and tax bases of assets
and liabilities that will result in taxable or deductible amounts in the future,
based upon enacted tax laws and rates applicable to the periods in which the
differences are expected to affect taxable income. Valuation allowances are
established when necessary to reduce deferred tax assets to the amount expected
to be realized. Income tax expense is the tax payable or refundable for the
period, plus or minus the change during the period in deferred tax assets and
liabilities.
USE OF ESTIMATES - The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosures of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
INCOME (LOSS) PER SHARE - The Company accounts for earnings per share according
to SFAS No. 128, "Earnings per Share" ("SFAS 128"). SFAS 128 requires
presentation of basic and diluted earnings or loss per share. Earnings or loss
per share is computed by dividing net income or loss by the weighted average
number of shares outstanding during the period. For the period ended September
30, 1999, warrants were excluded from the computation of net loss per share
because inclusion would be anti-dilutive due to the Company's net operating
losses.
UNAUDITED INTERIM FINANCIAL STATEMENTS - The accompanying financial statements
of the Company for the three months ended September 30, 1999, and for the period
from April 9,1999 (inception) to September 30, 1999 are unaudited but, in the
opinion of management, reflect the adjustments, all of which are of a normal
recurring nature, necessary for a fair presentation of such financial statements
in accordance with generally accepted accounting principles. The results of
operations for an interim period are not necessarily indicative of the results
for a full year.
F-8
<PAGE>
WHOODOO.COM, INC.,
FORMERLY GREYSTONE CREDIT, INC.,
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
RECENT ACCOUNTING PRONOUNCEMENT - In April 1998, the Accounting Standards
Executive Committee of the AICPA issued Statement of Position 98-5, "Reporting
on the Costs of Start-up Activities" ("SOP 98-5"). SOP 98-5 requires all costs
associated with pre-opening, pre-operating and organization activities to be
expensed as incurred. The Company adopted SOP 98-5 and expensed all start-up
costs.
3. GOING CONCERN
As shown in the accompanying financial statements, the Company is in the
development stage and incurred a net loss of $117,985 during the period April 9,
1999 (inception) to June 30, 1999. The Company's continued existence is
dependent upon its ability to complete the development of its search engine, and
related web sites, and to commence sales of its services and to generate
sufficient revenues to become profitable.
Management's plan to alleviate the going concern issue is to commence operations
of its search engine in early 2000. However, there is no assurance that the
Company will be able to generate positive cash flow. The Company also completed
its acquisition of Greystone in order to obtain immediate capital. In addition,
the Company has outstanding warrants, which if exercised, would provide the
Company with an additional $850,000 infusion of capital. There is no assurance
that these warrants will be exercised. The financial statements do not include
any adjustments that might result from the outcome of this uncertainty.
4. RELATED PARTY TRANSACTIONS
On August 4, 1999, the Company purchased all of the operating assets, prepaid
expenses and intangibles from the Predecessor for $100,000, plus the assumption
of liabilities of $29,382. Since this was a related party transaction, the fixed
assets purchased were recorded at the Predecessor's net book value of $66,888
and the excess of purchase price over assets acquired of $59,838 was written off
to development expense.
On August 4, 1999, the Company assumed an $8,000 note payable from a stockholder
as part of its acquisition of the Predecessor's assets. The note is due upon
demand, has no collateral and bears no interest. The note payable was part of
the $29,382 of liabilities assumed from the Predecessor.
From the Company's inception on April 4, 1999 to June 30, 1999, the Predecessor
paid expenses for the Company totaling $122,819 and was reimbursed in full.
In August 1999, the Company entered into an agreement wherein the Predecessor
provides management services to the Company. These services are for a term of 36
months for a monthly cost of $49,200, for up to 1,000,000 Internet impressions
per month. The agreement provides for additional achievement bonus payments, in
a sliding scale downward, ranging from $4,200 to $2,230 per month, for
additional Internet impressions per month.
F-9
<PAGE>
WHOODOO.COM, INC.,
FORMERLY GREYSTONE CREDIT, INC.,
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
5. PROPERTY AND EQUIPMENT
Property and equipment consisted of the following:
SEPTEMBER JUNE
30, 1999 30, 1999 USEFUL LIVES
----------- -------- ------------
(unaudited)
Furniture and fixtures $21,019 $ 1,672 7 years
Equipment 59,861 16,635 5 years
Software 11,092 607 5 years
------- --------
91,972 18,914
Less: accumulated depreciation (7,512) (1,907)
------- --------
$84,460 $ 17,007
======= ========
Depreciation expense for the three months ended September 30, 1999 was $5,605
and for the period April 9, 1999 to June 30, 1999 was $1,907.
6. DEBT
On August 4, 1999, the Company assumed a line of credit liability in connection
with the acquisition of the Predecessor's assets. The line of credit agreement
is in the amount of $10,000 with interest calculated at 4.5% above the Wall
Street Journal prime rate and is personally guaranteed by the President and his
wife. The balance on September 30, 1999 was $9,942, with interest at 12.75
percent. Subsequent to September 30, 1999, the loan was paid.
7. EQUITY
On April 9, 1999, whOOdoo Florida sold 11,125,000 (post-recapitalization) shares
of common stock to its founders for $500. On May 5, 1999, whOOdoo Florida sold
428,500 (post- recapitalization) shares of common stock at $.35 per share for a
total of $136,700.
On July 21, 1999, whOOdoo Florida issued to certain employees and consultants
1,590,000 (post- recapitalization) shares of common stock for $1,590. The
Company recorded compensation expense of $1,588,410 for the difference between
the fair market value of $1.00 and the $.001 par value. The Company received
$369 and recorded subscriptions receivable of $1,220 for amounts uncollected on
the shares issued. On July 21, 1999, an individual subscribed to 10,000 shares
of common stock and paid $1.00 per share. In August and September 1999, 20,500
shares were sold by the Company for $1.00 per share.
F-10
<PAGE>
WHOODOO.COM, INC.,
FORMERLY GREYSTONE CREDIT, INC.,
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
7. EQUITY (CONTINUED)
As part of the recapitalization, Greystone sold, pursuant to a private placement
offering, 1,062,500 shares of common stock at $.80 per share. The original
stockholders of Greystone retained 4,999,998 shares of common stock of the
Company. Therefore, in the recapitalization, the stockholders of Greystone
retained a total of 6,062,498 shares and the Company received $847,304, net of
offering costs.
On August 4, 1999, the Company granted 1,062,500 warrants at $.80 a share to
stockholders. The warrants are exercisable when the Company commences trading
electronically through the National Quotation Bureau, Inc., or commences trading
on another generally recognized trading market in the United States. The
warrants expire six months after becoming exercisable.
8. LEASE COMMITMENTS
As part of the Predecessor transaction, the Company assumed leases for an office
facility and a vehicle under terms ranging from 14 months to three years. The
Company also signed an additional office lease on September 1, 1999 for
additional space for a term of 14 months. Rental expense for the offices for the
period from April 9, 1999 to June 30, 1999 was $6,379. Rental expense for the
offices and the vehicle for the three months ended September 30, 1999 was $8,130
and $499, respectively.
The following are the future minimum lease obligations as of June 30, 1999
required under operating leases for the years ended June 30:
2000 $ 50,145
2001 16,249
----------
Total $ 66,394
==========
9. INCOME TAXES
The Company's operating loss carryforward generated prior to its reverse merger
on August 4, 1999, cannot be utilized due to the Internal Revenue Service's
change of business and ownership provisions. Operating losses since August 4,
1999, will be available as operating loss carryforwards and may be applied
against subsequent taxable income in years through 2020. Between August 4, 1999
and September 30, 1999, the Company had approximately $115,000 in operating
losses. The tax effect of the operating loss is approximately $43,000 and an
valuation allowance for the same amount has been provided.
F-11
<PAGE>
WHOODOO.COM, INC.,
FORMERLY GREYSTONE CREDIT, INC.,
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
10. OFF BALANCE SHEET RISK AND CONCENTRATION OF CREDIT RISK
The Company maintains cash balances in excess of the federally insured limits.
The funds are with major money center banks. Consequently, the Company does not
believe that there is a significant risk in having these balances exceed
$100,000.
11. SUBSEQUENT EVENTS
The warrants issued on August 4, 1999 (See Note 7), were replaced by warrants
dated October 21, 1999. The terms of the warrants remained the same.
F-12
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Board of Directors and
Stockholders
BGS Southwest, Inc.
We have audited the accompanying balance sheet of BGS Southwest, Inc. as of
December 31, 1998, and the related statements of operations and accumulated
deficit, and cash flows for the years ended December 31, 1998 and 1997. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of BGS Southwest, Inc. as of
December 31, 1998, and the results of its operations and cash flows for the
years ended December 31, 1998 and 1997, 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 Note 3 to the
financial statements, the Company has suffered losses during the development
stage that raise substantial doubt about its ability to continue as a going
concern. Management's plans in regard to these matters are also described in
Note 3. The financial statements do not include any adjustments that might
result from the outcome of this uncertainty.
Sweeney, Gates & Co.
Fort Lauderdale, Florida
November 5, 1999
F-13
<PAGE>
BGS SOUTHWEST, INC.
BALANCE SHEETS
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1999 1998
--------- ------------
(unaudited)
<S> <C> <C>
ASSETS
Current assets:
Cash $ 13,846 $ 11
Accounts receivable 21,907 3,392
--------- ---------
Total current assets 35,753 3,403
Property and equipment, net of accumulated
depreciation of $26,532 and $17,725 68,304 75,953
Other assets 2,656 2,656
--------- ---------
$ 106,713 $ 82,012
========= =========
LIABILITIES AND STOCKHOLDER'S DEFICIT
Current liabilities:
Line of credit $ 9,805 $ --
Accounts payable and accrued expenses 40,903 33,655
Notes payable to stockholder 308,000 300,000
Advances from stockholder 64,344 110,436
--------- ---------
Total current liabilities 423,052 444,091
--------- ---------
Stockholder's deficit:
Common stock, $1 par value, 1,000 shares authorized,
issued and outstanding 1,000 1,000
Accumulated deficit (317,339) (363,079)
--------- ---------
Stockholder's deficit (316,339) (362,079)
--------- ---------
$ 106,713 $ 82,012
========= =========
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
F-14
<PAGE>
BGS SOUTHWEST, INC.
STATEMENTS OF OPERATIONS AND ACCUMULATED DEFICIT
<TABLE>
<CAPTION>
JANUARY 1, 1999 JANUARY 1, 1998 JANUARY 30, 1997
TO TO (INCEPTION) TO
JUNE 30, 1999 DECEMBER 31, 1998 DECEMBER 31, 1997
--------------- ----------------- -----------------
(unaudited)
<S> <C> <C> <C>
Revenues $ 195,908 $ 71,238 $ 21,629
--------- --------- ---------
Expenses:
Research and development 36,533 73,008 38,514
Selling, general, and administrative 113,635 278,210 66,214
--------- --------- ---------
Total expenses 150,168 351,218 104,728
--------- --------- ---------
Net income (loss)
45,740 (279,980) (83,099)
Accumulated deficit, beginning of the period (363,079) (83,099) --
--------- --------- ---------
Accumulated deficit, end of the period $(317,339) $(363,079) $ (83,099)
========= ========= =========
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS
F-15
<PAGE>
BGS SOUTHWEST, INC.
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
January 1, 1999 January 1, 1998 January 30, 1997
to to (inception) to
June 30, December 31, 1998 December 31, 1997
1999
------------------- -------------------- ---------------------
(unaudited)
<S> <C> <C> <C>
Cash flows from operating activities:
Net income (loss) $ 45,739 $(279,980) $ (83,099)
Adjustments to reconcile net loss to net cash
provided by (used in) operating activities:
Depreciation 8,807 15,407 2,317
Changes in operating assets and liabilities
net of effects of acquisitions:
Accounts receivable (18,515) 8,025 (11,417)
Other assets -- (690) (1,966)
Accounts payable and accrued expenses 7,249 18,279 15,376
--------- --------- ---------
Net cash provided by (used in) operating
activities 43,280 (238,959) (78,789)
--------- --------- ---------
Cash flows from investing activities:
Purchase of equipment (1,158) (18,305) (75,372)
--------- --------- ---------
Net cash used in investing activities (1,158) (18,305) (75,372)
--------- --------- ---------
Cash flows from financing activities:
Proceeds from sale of stock to stockholder -- -- 1,000
Proceeds from line of credit 9,805 -- --
Proceeds from note to stockholder 8,000 -- --
Proceeds from notes payable to stockholder -- 128,892 171,108
Proceeds from advances from stockholder -- 110,436 --
Payment on advances from stockholder (46,092) -- --
--------- --------- ---------
Net cash provided by (used in) financing
activities (28,287) 239,328 172,108
--------- --------- ---------
Net increase (decrease) in cash 13,835 (17,936) 17,947
Cash, beginning of period 11 17,947
--------- ---------
Cash, end of period $ 13,846 $ 11 $ 17,947
========= ========= =========
Supplemental information:
Cash paid for interest $ -- $ -- $ --
========= ========= =========
Cash paid for income taxes $ -- $ -- $ --
========= ========= =========
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
F-16
<PAGE>
BGS SOUTHWEST, INC.
NOTES TO FINANCIAL STATEMENTS
1. BUSINESS AND BASIS OF PRESENTATION
BGS Southwest, Inc., (the "Company"), was incorporated in the state of Florida
on January 30, 1997. The Company was in the business of Internet consulting and
web site hosting and the design of search engines. On August 4, 1999, the
Company sold all of its operating assets, intangibles and related liabilities to
whOOdoo. Com. Inc. ("whOOdoo"), a related party entity, partially owned by the
President of the Company (See Note 9).
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
CASH AND CASH EQUIVALENTS - The Company considers those investments, which are
highly liquid in nature and have an original maturity of three months or less at
the date of purchase to be cash equivalents.
ACCOUNTS RECEIVABLE - The Company considers accounts receivable to be fully
collectible; accordingly, no allowance for doubtful accounts is required. If an
amount becomes uncollectable, an expense is charged to operations.
PROPERTY AND EQUIPMENT - Property and equipment are stated at cost. Major
renewals and improvements are capitalized, while maintenance and repairs are
expensed when incurred. The cost and accumulated depreciation for property and
equipment sold, retired, or otherwise disposed of are relieved from the
accounts, and resulting gains or losses are reflected in income. Depreciation is
computed over the estimated useful lives of depreciable assets using the
straight-line method.
UNAUDITED INTERIM FINANCIAL STATEMENTS - The accompanying consolidated financial
statements of the Company for the six months ended June 30, 1999 are unaudited,
but, in the opinion of management, reflect the adjustments all of which are of a
normal recurring nature, necessary for a fair presentation of such financial
statements in accordance with generally accepted accounting principles. The
results of operations for an interim period are not necessarily indicative of
results for a full year.
IMPAIRMENT OF LONG-LIVED ASSETS - The Company evaluates the recoverability of
its property and equipment, and other assets in accordance with Statement of
Financial Accounting Standards Board ("SFAS") No.121, "Accounting for the
Impairment of Long-Lived Assets to be Disposed of ("SFAS 121"). SFAS 121
requires recognition of the impairment of long-lived assets in the event the net
book value of such assets exceeds the estimated future undiscounted cash flows
attributable to such assets or the business to which intangible assets relate.
ADVERTISING - Advertising costs are expensed as incurred. Advertising expense
during the years ended December 31, 1998 and 1997 was $26,394 and $2,377,
respectively.
INCOME TAX - Income tax assets and liabilities are computed annually for
temporary differences between the financial statement and tax bases of assets
and liabilities that will result in taxable or deductible amounts in the future,
based upon enacted tax laws and rates applicable to the periods in which the
differences are expected to affect taxable income. Valuation allowances are
established when necessary to reduce deferred tax assets to the amount expected
to be realized. Income tax expense is the tax payable or refundable for the
period, plus or minus the change during the period in deferred tax assets and
liabilities.
F-17
<PAGE>
BGS SOUTHWEST, INC.,
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
DEVELOPMENT COSTS - All costs relating to start up and development of its
Internet search engine and related web sites are expensed as incurred.
USE OF ESTIMATES - The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosures of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
RECENT ACCOUNTING PRONOUNCEMENT - In April 1998, the Accounting Standards
Executive Committee of the AICPA issued Statement of Position 98-5, "Reporting
on the Costs of Start-up Activities" ("SOP 98-5"). SOP 98-5 requires all costs
associated with pre-opening, pre-operating and organization activities to be
expensed as incurred. The Company adopted SOP 98-5 and expensed all start-up
costs.
3. GOING CONCERN AND DEPENDENCY
The Company incurred a net loss of $363,079 during the period January 30, 1997
(inception) to December 31, 1998 and had a net capital deficiency of $440,688 at
December 31, 1998. The Company sold all its operating assets except for cash and
accounts receivable and entered into a management services agreement with
whOOdoo to provide management services for a monthly fee (See Note 9). The
Company's continued existence is dependent upon the collection of the management
fees from whOOdoo. There is no assurance that whOOdoo will be successful and the
fees will be paid and, the Company will continue in existence. The financial
statements do not include any adjustments that might result from the outcome of
this uncertainty.
4. PROPERTY AND EQUIPMENT
Property and equipment consisted of the following:
JUNE 30, DECEMBER 31,
1999 1998 USEFUL LIVES
-------- ----------- ------------
Furniture and fixtures $ 21,283 $ 21,283 7 years
Equipment 67,716 66,558 5 years
Software 4,888 4,888 5 years
Leasehold Improvements 949 949 3 years
-------- --------
94,836 93,678
Less: accumulated depreciation (26,532) (17,725)
-------- --------
$ 68,304 $ 75,953
======== ========
Depreciation expense for the periods ended June 30, 1999 and December 31, 1998
was $8,807 and $15,407, respectively.
F-18
<PAGE>
BGS SOUTHWEST, INC.,
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
5. DEBT
The Company has a line of credit with a bank in the amount of $10,000 with
interest calculated at 4.5% above the Wall Street Journal prime rate. The line
of credit is personally guaranteed by the President and his wife. The interest
rate at June 30, 1999 was 12.5 percent and the balance on the note as of June
30, 1999 was $9,805. The line of credit was assumed by whOOdoo on August 4,
1999.
6. RELATED PARTY TRANSACTIONS
On January 2, 1999, the Company borrowed $8,000 from its stockholder. The note
is due upon demand, has no collateral and bears no interest. The note was
assumed by whOOdoo on August 4, 1999.
The Company has borrowed $300,000 from its stockholder. The note is due on
demand and interest accrues at 8%. There have been other unsecured advances from
the stockholder, as needed, to fund operations. The advances totaled $64,344 and
$110,436 at June 30, 1999 and December 31, 1999, respectively. The Company and
its stockholder have no written agreements concerning these advances.
7. LEASE COMMITMENTS
The Company leases its office space. The lease is for a term of three years and
expires October 31, 2000 and provides for rental payments of $2,126 per month.
Rental expenses for the periods ended June 30, 1999, December 31, 1998 and 1997,
were $21,261, $25,513, and $4,252, respectively. The Company also leases a
vehicle for a term of 36 months that expires on May 22, 2001 at $499 per month.
Rental expense for the vehicle at June 30, 1999 and December 31, 1998 was $2,994
and $3,991, respectively.
The following are the future minimum lease obligations as of December 31, 1998
required under operating leases for the years ended:
1999 $ 28,507
2000 27,248
2001 1,996
----------
Total $ 55,751
==========
7. INCOME TAXES
The Company had available at December 31, 1998, operating loss carryforwards for
federal and state tax purposes, of approximately $363,000 that could be applied
against taxable income in subsequent years through 2020. The tax effect of the
net operating loss is approximately $137,000, and a full valuation allowance has
been recorded, since realization is uncertain. No tax provision has been
recorded at June 30, 1999 due to the loss carryforwards.
F-19
<PAGE>
BGS SOUTHWEST, INC.,
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
8. SUBSEQUENT EVENTS
On August 4, 1999, the Company sold all of its assets and intangibles to whOOdoo
for $100,000, and whOOdoo assumed certain liabilities relating to the assets
totaling $29,382.
In August 1999, the Company entered into an agreement to provide management
services to whOOdoo. These services are for a term of 36 months at a monthly
cost of $49,200, for up to 1,000,000 Internet impressions per month. The
agreement provides for additional achievement bonus payments, in a sliding scale
downward, ranging from $4,200 to $2,230 per month, for additional impressions
beyond 1,000,000 per month.
F-20
<PAGE>
EXHIBIT INDEX
EXHIBIT DESCRIPTION
------- -----------
2.1 Form of Certificate Incorporation of whOOdoo.com, Inc.
2.2 Form of Reorganization Agreement
2.3 Form of Asset Purchase Agreement*
4.1 Form of Warrants issued to investors
4.2 Form of Warrants issued to equipment leasing company
4.3 From of Common Stock certificate
10.1 Form of BGS Management Agreement with addendum
10.2 Form of Equipment Management and Co-hosting Agreement
10.3 Form of Public Relations Consulting Agreement
10.4 Form of BGS Employment Agreement (Paulo Mylla)
10.5 Form of BGS Employment Agreement (Brian Leith)
10.6 Form of BGS Employment Agreement (Debbie Briscoe)
10.7 Form of BGS Employment Agreement (Kevin Casey)
11. Statement of computation of per share earnings
21 Subsidiaries
27. Financial Data Schedule
99 1999 Stock Option Plan
* Certain schedules to exhibit 2.3 are not included with this registration
statement. We have requested an exemption from the Securities and Exchange
Commission from filing these schedules via Edgar pursuant to Regulation
232.203. If our exemption request is granted, we will file the schedules with
the Commission in paper format pursuant to Regulation 232.311.
EXHIBIT 2.1
CERTIFICATE OF INCORPORATION
OF
WHOODOO.COM, INC.
1. The name of the corporation is whOOdoo.com, inc. (the "Company").
2. The address of its registered office in the State of Delaware,
County of New Castle, is 1013 Centre Road, Wilmington, Delaware 19805-1297. The
name of its registered agent at such address is Corporation Service Company.
3. The nature of the business or purposes to be conducted or promoted
are to engage in any lawful act or activity for which corporations may be
organized under the Delaware General Corporation Law.
4. The total number of shares of capital stock the Company shall have
authority to issue is 50,000,000 shares of common stock, par value $0.001 per
share.
5. The name and mailing address of the incorporator is as follows:
Peter A. Savarese
1645 Palm Beach Lakes Blvd.
Suite 550
West Palm Beach, FL 33401
6. The name and mailing address of each person who is to serve as a
director until the first annual meeting of the stockholders or until a successor
is elected and qualified, is as follows:
NAME MAILING ADDRESS
---- ---------------
Paulo Mylla 1660 Trade Center Way, Naples, FL 34109
7. The Company is to have perpetual existence. In furtherance and not
in limitation of the powers conferred by statute, the board of directors is
expressly authorized to make, amend, alter or repeal the bylaws of the Company.
8. Elections of directors need not be by written ballot unless the
bylaws of the Company shall so provide.
Meetings of stockholders may be held within or without the State of
Delaware as the bylaws may provide. The books of the Company may be kept
(subject to any provision contained in the statutes) outside the State of
Delaware at such place or places as may be designated from time to time by the
board of directors or in the bylaws of the Company.
1
<PAGE>
9. The Company reserves the right to amend, alter, change or repeal any
provision contained in this certificate of incorporation, in the manner now or
hereafter prescribed by statute, and all rights conferred upon stockholders
herein are granted subject to this reservation.
10. No director of this Company shall be personally liable to the
Company or its stockholders for monetary damages for breach of fiduciary duty as
a director. Nothing in this paragraph shall serve to eliminate or limit the
liability of a director (a) for any breach of the director's duty of loyalty to
this Company or its stockholders, (b) for acts or omissions not in good faith or
which involves intentional misconduct or a knowing violation of law, (c) under
Section 174 of the Delaware General Corporation Law, or (d) for any transaction
from which the director derived an improper personal benefit. If the Delaware
General Corporation Law is amended after approval by the stockholders of this
article to authorize corporate action further eliminating or limiting the
personal liability of directors, then the liability of a director of the Company
shall be eliminated or limited to the fullest extent permitted by the Delaware
General Corporation Law, as so amended.
Any repeal or modification of the foregoing paragraph by the
stockholders of the Company shall not adversely affect any right or protection
of a director of the Company existing at the time of such repeal or
modification.
11. (a) Each person who was or is made a party or is threatened to be
made a party to or is otherwise involved in any action, suit or proceeding
(except as provided in Section 11 (f)) whether civil, criminal or
administrative, (a "Proceeding"), or is contacted by any governmental or
regulatory body in connection with any investigation or inquiry (an
"Investigation"), by reason of the fact that he or she is or was a director or
executive officer (as such term is utilized pursuant to interpretations under
Section 16 of the Securities Exchange Act of 1934) of the Company or is or was
serving at the request of the Company as a director, officer, employee or agent
of another corporation or of a partnership, joint venture, trust or other
enterprise, including service with respect to employee benefit plans (an
"Indemnitee"), whether the basis of such Proceeding or Investigation is alleged
action in an official capacity or in any other capacity as set forth above shall
be indemnified and held harmless by the Company to the fullest extent authorized
by the Delaware General Corporation Law, as the same exists or may hereafter be
amended (but, in the case of any such amendment, only to the extent that such
amendment permits the Company to provide broader indemnification rights than
such law permitted the Company to provide prior to such amendment), against all
expense, liability and loss (including attorneys' fees, judgments, fines, ERISA
excise taxes or penalties and amounts paid in settlement) reasonably incurred or
suffered by such Indemnitee in connection therewith and such indemnification
shall continue as to an Indemnitee who has ceased to be a director, officer,
employee or agent and shall inure to the benefit of the Indemnitee's heirs,
executors and administrators. The right to indemnification conferred in this
Section shall be a contract right and shall include the right to be paid by the
Company the expenses incurred in defending any such Proceeding in advance of its
final disposition (an "Advancement of Expenses"); provided, however, that an
Advancement of Expenses shall be made only upon delivery to the Company of an
undertaking, by or on behalf of such Indemnitee, to repay all amounts so
advanced if it shall ultimately be determined by final judicial decision from
which there is no further right to appeal that such Indemnitee is not entitled
to be indemnified for such expenses under this Section or otherwise (an
"Undertaking").
(b) If a claim under paragraph (a) of this Section is not paid in
full by the Company
2
<PAGE>
within 60 days after a written claim has been received by the Company, except in
the case of a claim for an Advancement of Expenses, in which case the applicable
period shall be 20 days, the Indemnitee may at any time thereafter bring suit
against the Company to recover the unpaid amount of the claim. If successful in
whole or in part in any such suit or in a suit brought by the Company to recover
an Advancement of Expenses pursuant to the terms of an Undertaking, the
Indemnitee shall be entitled to be paid also the expense of prosecuting or
defending such suit. In
(i) any suit brought by the Indemnitee to enforce a
right to indemnification hereunder (but not in a suit brought
by the Indemnitee to enforce a right to an Advancement of
Expenses) it shall be a defense that, and
(ii) any suit by the Company to recover an
Advancement of Expenses pursuant to the terms of an
Undertaking the Company shall be entitled to recover such
expenses upon a final adjudication that,
the Indemnitee has not met the applicable standard of conduct set forth in the
Delaware General Corporation Law. Neither the failure of the Company (including
its board of directors, independent legal counsel, or its stockholders) to have
made a determination prior to the commencement of such suit that indemnification
of the Indemnitee is proper in the circumstances because the Indemnitee has met
the applicable standard of conduct set forth in the Delaware General Corporation
Law, nor an actual determination by the Company (including its board of
directors, independent legal counsel, or its stockholders) that the Indemnitee
has not met such applicable standard of conduct or, in the case of such a suit
brought by the Indemnitee, be a defense to such suit. In any suit brought by the
Indemnitee to enforce a right hereunder, or by the Company to recover an
Advancement of Expenses pursuant to the terms of an undertaking, the burden of
proving that the Indemnitee is not entitled to be indemnified or to such
Advancement of Expenses under this Section or otherwise shall be on the Company.
(c) The rights to indemnification and to the Advancement of
Expenses conferred in this Section shall not be exclusive of any other right
which any person may have or hereafter acquire under any statute, this
certificate of incorporation, bylaw, agreement, vote of stockholders or
disinterested directors or otherwise.
(d) The Company may maintain insurance, at its expense, to
protect itself and any director, officer, employee or agent of the Company or
another corporation, partnership, joint venture, trust or other enterprise
against any expense, liability or loss, whether or not the Company would have
the power to indemnify such person against such expense, liability or loss under
the Delaware General Corporation Law.
(e) The Company may, to the extent authorized from time to
time by the board of directors, grant rights to indemnification and to the
Advancement of Expenses, to any employee or agent of the Company to the fullest
extent of the provisions of this Section with respect to the indemnification and
Advancement of Expenses of directors, and executive officers of the Company.
(f) Notwithstanding the indemnification provided for by this
Section 11, the Company's bylaws, or any written agreement, such indemnity shall
not include any expenses incurred by such Indemnitees relating to or arising
from any Proceeding in which the Company asserts a direct
3
<PAGE>
claim (as opposed to a stockholders' derivative action) against the Indemnitees
whether such claim by the Company is termed a complaint, counterclaim,
crossclaim, third-party complaint or otherwise.
I, THE UNDERSIGNED, being the incorporator hereinbefore named, for the
purpose of forming a corporation pursuant to the Delaware General Corporation
Law, do make this certificate, hereby declaring and certifying that this is my
act and deed and the facts herein stated are true, and accordingly have hereunto
set my hand this 1st day of July, 1999.
---------------------------------
Incorporator
4
EXHIBIT 2.2
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") entered
into as of this 3rd day of August, 1999, by and among whOOdoo.com, inc., a
Florida corporation ("WHOODOO"), Paulo Mylla, Brian Leith, Kevin Casey, Sharon
Snew, Patrick Belcher, Stephanie Pera, Ernest Sittenfeld, Brian Allossery,
William P. Dickey, Joseph Padulo, Latitude 32 Holdings, Ltd., Aberdeen Holdings
Limited, Clyde Resources Ltd., Gateway Research Management Group, Ltd., Iguana
Investments, Ltd., and Laiy Limited (collectively, the "SHAREHOLDERS" unless
otherwise referred to individually) Greystone Credit, Inc., a Florida
corporation (the "BUYER") and J. Paul Hines ("HINES"). WHOODOO, the
SHAREHOLDERS, the BUYER and HINES are referred to collectively herein as the
"PARTIES."
WHEREAS, the BUYER wishes to acquire 100% of the issued and outstanding
capital stock of WHOODOO in a tax-free reorganization pursuant to Section
368(a)(1)(B) of the Internal Revenue Code (the "Code");
WHEREAS, HINES is a party to this Agreement solely for the purpose of
verifying the representations and warranties contained in Section 3; and
WHEREAS, this Agreement provides for various rights and
responsibilities.
NOW, THEREFORE, in consideration of the mutual promises made herein,
and in consideration of the representations, warranties, and covenants contained
herein, the PARTIES agree as follows:
1. PURCHASE OF WHOODOO COMMON STOCK. On and subject to the terms and
conditions of this Agreement, the BUYER shall purchase all of the issued and
outstanding common stock of WHOODOO from the SHAREHOLDERS in exchange for the
greater of (a) 92% of the outstanding and issued shares of BUYER's common stock,
or (b) 18,500,000 shares of the BUYER's common stock. The number of shares of
the BUYER to be issued to each of the SHAREHOLDERS is reflected on SCHEDULE 1.
<PAGE>
2. THE CLOSING. The closing of the transactions contemplated by this
Agreement (the "Closing") shall take place at the offices of Michael Harris,
P.A., 1645 Palm Beach Lakes Boulevard, West Palm Beach, Florida 33401 at 9:30
a.m., local time, on the 3rd day of August, 1999, subject to the satisfaction or
waiver of all conditions to the obligation of the PARTIES to consummate the
transactions contemplated hereby (other than conditions with respect to actions,
the respective PARTIES will take at the Closing itself), or such other date as
the PARTIES may mutually determine (either the "Closing" or the "Closing Date").
At the Closing, the PARTIES shall deliver to each other the various stock
certificates with medallion guarantees, instruments and documents referred to in
this Agreement. At or prior to the Closing, the officers and directors of the
BUYER shall resign and appoint designees of the SHAREHOLDERS.
3. REPRESENTATIONS AND WARRANTIES OF THE BUYER. The BUYER and HINES
represent and warrant to WHOODOO and the SHAREHOLDERS that to their knowledge
the statements contained in this Section 3 are correct and complete as of the
date of this Agreement and shall be correct and complete as of the Closing Date.
(a) ORGANIZATION OF THE BUYER. The BUYER is a corporation duly
organized, validly existing, and in good standing under the laws of the
jurisdiction of its incorporation. The BUYER is duly authorized to
conduct business and is in good standing under the laws of each
jurisdiction where such qualification is required except where the
failure to so qualify would not have a material adverse effect upon the
BUYER. SCHEDULE 3(A) lists the directors and officers of the BUYER. The
BUYER has delivered to WHOODOO and the SHAREHOLDERS correct and
complete copies of the charter and bylaws of the BUYER. The minute
books (containing the records and meetings of the stockholders, the
board of directors, and any committees of the board of directors), the
stock certificate books and the stock record books of the BUYER are
correct and complete. The BUYER is not in default under or in violation
of any provision of its charter or bylaws.
(b) AUTHORIZATION OF TRANSACTION. The BUYER has the full power
and authority to execute and deliver this Agreement and to perform its
obligations hereunder. Subject to
2
<PAGE>
execution, delivery and authorization of WHOODOO and the SHAREHOLDERS
this Agreement constitutes the valid and legally binding obligation of
the BUYER and HINES, enforceable in accordance with its terms and
conditions. The BUYER and HINES need not give any notice to, make any
filing with, or obtain any authorization, consent, or approval of any
government or governmental agency in order to consummate the
transactions contemplated by this Agreement.
(c) CAPITALIZATION.
(i) The authorized capital stock of the BUYER
consists of 50,000,000 shares of common stock of which
22,500,000 shares are outstanding. All of the issued and
outstanding shares are validly issued and are fully paid,
non-assessable and free of preemptive rights.
(ii) There are (A) no outstanding subscriptions,
options, calls, contracts, commitments, understandings,
restrictions, arrangements, rights or warrants, including any
right of conversion or exchange under any outstanding
security, instrument or other agreement and also including any
rights plan or other anti-takeover agreement, obligating the
BUYER to issue, deliver or sell, or cause to be issued,
delivered or sold, additional shares of the capital stock of
the BUYER or obligating the BUYER to grant, extend or enter
into any agreement or commitment, and (B) no voting trusts,
proxies or other agreements or understandings to which the
BUYER is a party or is bound with respect to the voting of any
shares of capital stock of the BUYER. The shares issued to the
SHAREHOLDERS will be as of the Closing duly authorized,
validly issued, fully paid and non-assessable and free of
preemptive rights and liens or security interests.
(d) SUBSIDIARIES. The BUYER has no subsidiaries and does not
own any interest in any corporation, partnership, joint venture,
limited liability company, association, trust or entity.
3
<PAGE>
(e) NON-CONTRAVENTION. Neither the execution and the delivery
of this Agreement, nor the consummation of the transactions
contemplated hereby, will (i) violate any constitution, statute,
regulation, rule, injunction, judgment, order, decree, ruling, charge,
or other restriction of any government, governmental agency, or court
to which the BUYER is subject or, (ii) conflict with, result in a
breach of, constitute a default under, result in the acceleration of,
create in any party the right to accelerate, terminate, modify, or
cancel, or require any notice under, any agreement, contract, lease,
license, instrument, or other arrangement to which the BUYER is a party
or by which it is bound or to which any of its assets is subject.
(f) BROKERS' FEES. The BUYER and HINES have no liability or
obligation to pay any fees or commissions to any broker, finder, or
agent with respect to the transactions contemplated by this Agreement
for which WHOODOO or the SHAREHOLDERS could become liable or obligated.
(g) INVESTMENT. Each of the SHAREHOLDERS (i) understands that
the BUYER's common stock has not been, and will not be, registered
under the Securities Act of 1933 or under any state securities laws,
and is being offered and transferred in reliance upon federal and state
exemptions for transactions not involving any public offering, (ii) is
acquiring the common stock solely for his own account for investment
purposes, and not with a view to the distribution thereof, (iii) is a
sophisticated investor with knowledge and experience in business and
financial matters and has had the opportunity to obtain additional
information as desired in order to evaluate the merits and the risks
inherent in holding the common stock and (iv) is able to bear the
economic risk and lack of liquidity inherent in holding the common
stock.
(h) NO ASSETS OR LIABILITIES. The BUYER has no assets, either
owned or leased and has no liabilities.
(i) NO OPERATIONS. The BUYER has never in any way conducted
business or operations or incurred any liabilities.
(j) DISCLOSURE. The representations and warranties contained
in this Section 3 do
4
<PAGE>
not contain any untrue statement of a material fact or omit to state
any material fact necessary in order to make the statements and
information contained in this Section 3 not misleading.
4. REPRESENTATIONS AND WARRANTIES OF WHOODOO AND THE SHAREHOLDERS:
WHOODOO and the SHAREHOLDERS represent and warrant to the BUYER that the
statements contained in this Section 4 are to their knowledge correct and
complete as of the date of this Agreement and will be correct and complete as of
the Closing Date.
(a) ORGANIZATION OF WHOODOO. WHOODOO is a corporation duly
organized, validly existing, and in good standing under the laws of the
State of Florida. WHOODOO is duly authorized to conduct business and is
in good standing under the laws of each respective jurisdiction where
such qualification is required. WHOODOO has delivered to the BUYER
correct and complete copies of the charter and bylaws of WHOODOO (as
amended to date). WHOODOO is not in default under or in violation of
any provision of its charter or bylaws.
(b) AUTHORIZATION OF TRANSACTION. WHOODOO has the full power
and authority to execute and deliver this Agreement and to perform its
obligations hereunder. Subject to execution, delivery and authorization
of the BUYER and HINES, this Agreement constitutes the valid and
legally binding obligation of WHOODOO and the SHAREHOLDERS, enforceable
in accordance with its terms and conditions. WHOODOO and the
SHAREHOLDERS need not give any notice to, make any filing with, or
obtain any authorization, consent, or approval of any government or
governmental agency in order to consummate the transactions
contemplated by this Agreement.
(c) CAPITALIZATION.
(i) The authorized capital stock of WHOODOO consists
of 2,500 shares of common stock, $1.00 par value, of which
284.1715 shares are outstanding as of the date of this
Agreement. All of the issued and outstanding shares of common
stock are validly issued and are fully paid, non-assessable
and free of preemptive rights. The number of shares of WHOODOO
owned by each of the SHAREHOLDERS is
5
<PAGE>
reflected on SCHEDULE 4(C).
(ii) As of the date hereof, there are (A) no
outstanding subscriptions, options, calls, contracts,
commitments, understandings, restrictions, arrangements,
rights or warrants, including any right of conversion or
exchange under any outstanding security, instrument or other
agreement and also including any rights plan or other
anti-takeover agreement, obligating WHOODOO to issue, deliver
or sell, or cause to be issued, delivered or sold, additional
shares of common stock or obligating WHOODOO to grant, extend
or enter into any agreement or commitment and (B) no voting
trusts, proxies or other agreements or understandings to which
WHOODOO is a party or is bound with respect to the voting of
any shares of common stock. The shares of common stock to be
issued to the BUYER will be as of the Closing duly authorized,
validly issued, fully paid and non-assessable and free of
preemptive rights.
(d) NON-CONTRAVENTION. Neither the execution and the delivery
of this Agreement, nor the consummation of the transactions
contemplated hereby, will (i) violate any constitution, statute,
regulation, rule, injunction, judgment, order, decree, ruling, charge,
or other restriction of any government, governmental agency, or court
to which WHOODOO or the SHAREHOLDERS are subject or, (ii) conflict
with, result in a breach of, constitute a default under, result in the
acceleration of, create in any party the right to accelerate,
terminate, modify, or cancel, or require any notice under, any
agreement, contract, lease, license, instrument, or other arrangement
to which WHOODOO or the SHAREHOLDERS are a party or by which either is
bound or to which any of either's assets is subject.
(e) BROKERS' FEES. WHOODOO and the SHAREHOLDERS have no
liability or obligation to pay any fees or commissions to any broker,
finder, or agent with respect to the transactions contemplated by this
Agreement for which the BUYER could become liable or obligated.
(f) SUBSIDIARIES. WHOODOO has no subsidiaries and does not own
any interest in any corporation, partnership, joint venture, limited
liability company, association,
6
<PAGE>
trust or entity.
(g) ABSENCE OF UNDISCLOSED LIABILITIES. WHOODOO did not have
at June 30, 1999, and has not incurred since that date, any liabilities
or obligations (whether absolute, accrued, contingent or otherwise) of
any nature, except: (A) liabilities, obligations or contingencies which
were incurred after June 30, 1999 and were incurred in the ordinary
course of business and consistent with past practices; and (B)
liabilities, obligations or contingencies which (1) would not, in the
aggregate, have a material adverse effect on WHOODOO, or (2) have been
discharged or paid in full prior to the date hereof;
(h) DISCLOSURE. The representations and warranties contained
in this Section 4 do not contain any untrue statement of a material
fact or omit to state any material fact necessary in order to make the
statements and information contained in this Section 4 not misleading.
5. PRE-CLOSING COVENANTS. The PARTIES agree as follows with respect to
the period between the execution of this Agreement and the Closing:
(a) GENERAL. Each of the PARTIES will use his or its
reasonable best efforts to take all action and to do all things
necessary, proper, or advisable in order to consummate and make
effective the transactions contemplated by this Agreement (including
satisfaction, but not waiver, of the closing conditions set forth in
Section 7 below).
(b) NOTICES AND CONSENTS. Each of the PARTIES will give any
notices to, make any filings with, and use its reasonable best efforts
to obtain any authorizations, consents, and approvals of governments
and governmental agencies in connection with the matters referred to in
Section 3 and Section 4 above.
(c) NOTICE OF DEVELOPMENTS. Each Party will give prompt
written notice to the others of any material adverse development
causing a breach of any of his or its own representations and
warranties in Section 3 or 4 above. No disclosure by any Party pursuant
to
7
<PAGE>
this Section 5(c), however, shall be deemed to amend or supplement
any Schedule (except to the extent that this Agreement is specifically
amended) or to prevent or cure any misrepresentation, breach of
warranty, or breach of covenant.
6. POST-CLOSING COVENANTS. The PARTIES agree with respect to the period
following the Closing that in case at any time any further action is necessary
to carry out the purposes of this Agreement, each of the PARTIES will take such
further action (including the execution and delivery of such further instruments
and documents) as any other Party reasonably may request, all at the sole cost
and expense of the requesting Party (unless the requesting Party is entitled to
indemnification therefor under Section 8 below).
7. CONDITIONS TO OBLIGATION TO CLOSE.
(a) CONDITIONS TO OBLIGATION OF WHOODOO AND THE SHAREHOLDERS.
The obligation of WHOODOO and the SHAREHOLDERS to consummate the
transactions to be performed by each in connection with the Closing is
subject to satisfaction of the following conditions:
(i) the representations and warranties set forth in
Section 3 above shall be true and correct in all material
respects at and as of the Closing Date;
(ii) the BUYER and HINES shall have performed and
complied with all of their covenants hereunder in all material
respects through the Closing;
(iii) no action, suit, or proceeding shall be pending
or threatened before any court or quasi-judicial or
administrative agency of any federal, state, local, or foreign
jurisdiction or before any arbitrator wherein an unfavorable
injunction, judgment, order, decree, ruling, or charge would
(A) prevent consummation of any of the transactions
contemplated by this Agreement, (B) cause any of the
transactions contemplated by this Agreement to be rescinded
following consummation, (C) affect adversely the right of the
SHAREHOLDERS to own the BUYER's common stock and to control
the
8
<PAGE>
BUYER, or (D) affect adversely the right of the BUYER to own
its assets and to operate its business (and no such
injunction, judgment, order, decree, ruling, or charge shall
be in effect);
(iv) the BUYER shall have delivered to WHOODOO and
the SHAREHOLDERS those documents or items required to be
delivered as listed in SCHEDULE 7(A)(IV).
(v) the BUYER and HINES shall have delivered to
WHOODOO and the SHAREHOLDERS a certificate to the effect that
each of the conditions specified above in Section 7(a)(i)-(iv)
is satisfied in all respects;
(vi) WHOODOO and the SHAREHOLDERS shall have
completed such due diligence concerning the business,
financial condition, management and the future prospects of
the BUYER as they in their sole discretion deem advisable; and
(vii) all actions to be taken by the BUYER and HINES
in connection with consummation of the transactions
contemplated hereby and all certificates, opinions,
instruments, and other documents required to effect the
transactions contemplated hereby shall be satisfactory in form
and substance to WHOODOO and the SHAREHOLDERS.
WHOODOO and the SHAREHOLDERS may waive any condition specified in this
Section 7(a) if each executes a writing so stating at or prior to the Closing.
(b) CONDITIONS TO OBLIGATION OF THE BUYER. The obligation of
the BUYER to consummate the transactions to be performed by it in
connection with the Closing is subject to satisfaction of the following
conditions:
(i) the representations and warranties set forth in
Section 4 above shall be true and correct in all material
respects at and as of the Closing Date;
9
<PAGE>
(ii) WHOODOO and the SHAREHOLDERS shall have
performed and complied with all of their covenants hereunder
in all material respects through the Closing;
(iii) no action, suit, or proceeding shall be pending
or threatened before any court or quasi-judicial or
administrative agency of any federal, state, local, or foreign
jurisdiction or before any arbitrator wherein an unfavorable
injunction, judgment, order, decree, ruling, or charge would
(A) prevent consummation of any of the transactions
contemplated by this Agreement or (B) cause any of the
transactions contemplated by this Agreement to be rescinded
following consummation (and no such injunction, judgment,
order, decree, ruling, or charge shall be in effect);
(iv) WHOODOO and/or the SHAREHOLDERS have delivered
to BUYER and/or HINES those documents or items required to be
delivered.
(v) WHOODOO shall have delivered to the BUYER and
HINES a certificate to the effect that each of the conditions
specified above in Section 7(b)(i)-(iv) is satisfied in all
respects; and
(vi) all actions to be taken by WHOODOO and the
SHAREHOLDERS in connection with consummation of the
transactions contemplated hereby and all certificates,
opinions, instruments, and other documents required to effect
the transactions contemplated hereby shall be reasonably
satisfactory in form and substance to the BUYER.
The BUYER and HINES may waive any condition specified in this Section
7(b) if they each execute a writing so stating at or prior to the
Closing.
8. POST CLOSING COVENANTS.
If the Company's common stock has not commenced trading on the "pink
sheets" or
10
<PAGE>
its electronic trading facility within 30 days of the Closing, the Company shall
issue to Aberdeen Holdings Limited, Clyde Resources Ltd., Gateway Research
Management Group, Ltd., Iguana Investments, Ltd., and Laiy Limited
(collectivelly referred to as the "LOM Deginees") an aggregate of 160,714 shares
of the Company's common stock.
9. REMEDIES FOR BREACHES OF THIS AGREEMENT.
(a) SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All of the
representations and warranties of the PARTIES contained in this
Agreement shall survive the Closing hereunder and continue in full
force and effect for a period of two years (subject to any applicable
statutes of limitations).
(b) INDEMNIFICATION PROVISIONS FOR BENEFIT OF CERTAIN PARTIES.
In the event any of the PARTIES (the "Indemnifying Parties") breaches
(or in the event any third party alleges facts that, if true, would
mean any of the Indemnifying Parties has breached) any of their
representations, warranties, and covenants contained herein and
provided that the affected parties (the "Indemnified Parties") make a
written claim for indemnification against the Indemnifying Parties,
then the Indemnifying Parties agree to indemnify from and against the
entirety of any adverse consequences the Indemnified Parties may suffer
through and after the date of the claim for indemnification resulting
from, arising out of, relating to, in the nature of, or caused by the
breach (or the alleged breach).
(c) MATTERS INVOLVING THIRD PARTIES.
(i) If any third party shall notify any of the
Indemnified Parties with respect to any matter (a "Third Party
Claim") which may give rise to a claim for indemnification
against any Indemnified Party under this Section 9, then the
Indemnified Party shall promptly notify each Indemnifying
Party thereof in writing; provided, however, that no delay on
the part of the Indemnified Party in notifying any
Indemnifying Party shall relieve the Indemnifying Party from
any obligation hereunder unless (and then solely to the
extent) the Indemnified Party thereby is prejudiced.
11
<PAGE>
(ii) Any Indemnifying Party shall have the right to
defend the Indemnified Party against the Third Party Claim
with counsel of its choice satisfactory to the Indemnified
Party so long as (A) the Indemnifying Party notifies the
Indemnified Party in writing within 10 days after the
Indemnified Party has given notice of the Third Party Claim
that the Indemnifying Party shall indemnify the Indemnified
Party from and against the entirety of any adverse
consequences the Indemnified Party may suffer as provided in
Section 9(b)(i) or (ii), (B) the Indemnifying Party provides
the Indemnified Party with evidence acceptable to the
Indemnified Party that the Indemnifying Party shall have the
financial resources to defend against the Third Party Claim
and fulfill its indemnification obligations hereunder, (C) the
Third Party Claim involves only money damages and does not
seek an injunction or other equitable relief, (D) settlement
of, or an adverse judgment with respect to, the Third Party
Claim is not, in the good faith judgment of the Indemnified
Party, likely to establish a precedential custom or practice
materially adverse to the continuing business interests of the
Indemnified Party, and (E) the Indemnifying Party conducts the
defense of the Third Party Claim actively and diligently.
(iii) So long as the Indemnifying Party is conducting
the defense of the Third Party Claim in accordance with
Section 9(c)(ii) above, (A) the Indemnified Party may retain
separate co-counsel at its sole cost and expense and
participate in the defense of the Third Party Claim, (B) the
Indemnified Party shall not consent to the entry of any
judgment or enter into any settlement with respect to the
Third Party Claim without the prior written consent of the
Indemnifying Party (not to be withheld unreasonably), and (C)
the Indemnifying Party shall not consent to the entry of any
judgment or enter into any settlement with respect to the
Third Party Claim without the prior written consent of the
Indemnified Party (not to be withheld unreasonably).
(iv) In the event any of the conditions in Section
9(c)(ii) above is or becomes unsatisfied, however, (A) the
Indemnified Party may defend against, and consent to the entry
of any judgment or enter into any settlement with respect to,
the
12
<PAGE>
Third Party Claim in any manner it may deem appropriate (and
the Indemnified Parties need not consult with, or obtain any
consent from, any Indemnifying Parties in connection
therewith), (B) the Indemnifying Parties shall reimburse the
Indemnified Party promptly and periodically for the costs of
defending against the Third Party Claim (including reasonable
attorneys' fees and expenses), and (C) the Indemnifying
Parties shall remain responsible for any adverse consequences
the Indemnified Party may suffer resulting from, arising out
of, relating to, in the nature of, or caused by the Third
Party Claim to the fullest extent provided in this Section 9.
(d) DETERMINATION OF ADVERSE CONSEQUENCES. The PARTIES shall
take into account the time cost of money (using the Citibank N.A.
publicly announced prime rate as the discount rate) in determining
adverse consequences for purposes of this Section 9.
(e) OTHER INDEMNIFICATION PROVISIONS. The foregoing
indemnification provisions are in addition to, and not in derogation
of, any statutory, equitable, or common law remedy any Party may have
for breach of representation, warranty, or covenant.
10. TERMINATION.
(a) TERMINATION OF AGREEMENT. This Agreement shall terminate
at 5:00 p.m. Miami time on the 90th days following the Closing if the
Company's common stock has not commenced trading on the pink sheets or
its electronic trading facility. Upon termination pursuant to this
Section 10(a), the shares of the Company's common stock issued to the
LOM Designees pursuant to this Agreement shall be cancelled, and the
Company shall issue to Lines Overseas Management, Ltd., as agent for
the LOM Designees, a promissory note for $311,000 (the "Note"). Such
Note shall (i) be payable six months from the date of issuance, (ii)
accrue interest at the rate of 14% per annum until fully paid, and
(iii) be secured by the assets of the Company purchased pursuant to
that certain Asset Purchase Agreement between the Company and BGS
(Southwest Florida), Inc. executed on the Closing Date. The Company
shall deliver the Note in exchange for the shares of common stock
issued to the LOM Designees which are not held in escrow.
13
<PAGE>
(b) EFFECT OF TERMINATION. If any Party terminates this
Agreement pursuant to Section 10 above, all rights and obligations of
the PARTIES hereunder shall terminate without any liability of any
Party to any other Party (except for any liability of any Party then in
breach and except as provided in Section 10(a)).
11. MISCELLANEOUS.
(a) PRESS RELEASES AND PUBLIC ANNOUNCEMENTS. No Party shall
issue any press release, make any public announcement or otherwise
disclose any information relating to the subject matter of this
Agreement prior to the Closing without the prior written approval of
the other PARTIES. The PARTIES may also make disclosure to attorneys,
accountants and financial advisors acting on their respective behalf.
WHOODOO may also refer to this agreement in any disclosure document
that it gives to prospective investors.
(b) NO THIRD-PARTY BENEFICIARIES. This Agreement shall not
confer any rights or remedies upon any Person other than the PARTIES
and their respective successors and permitted assigns.
(c) EXPENSES. Each of the PARTIES to this transaction shall
bear his or its own costs and expenses (including legal fees and
expenses) incurred in connection with this Agreement and the
transactions contemplated hereby except to the extent this Agreement
provides otherwise.
(d) CONSTRUCTION. The PARTIES have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity
or question of intent or interpretation arises, this Agreement shall be
construed as if drafted jointly by the PARTIES and no presumption or
burden of proof shall arise favoring or disfavoring any Party by virtue
of the authorship of any of the provisions of this Agreement. Any
reference to any federal, state,
14
<PAGE>
local, or foreign statute or law shall be deemed also to refer to all
rules and regulations promulgated thereunder, unless the context
requires otherwise. The word "including" shall mean including without
limitation. The PARTIES intend that each representation, warranty, and
covenant contained herein shall have independent significance. If any
Party has breached any representation, warranty, or covenant contained
herein in any respect, the fact that there exists another
representation, warranty, or covenant relating to the same subject
matter (regardless of the relative levels of specificity) which the
Party has not breached shall not detract from or mitigate the fact that
the Party is in breach of the first representation, warranty, or
covenant.
(e) SPECIFIC PERFORMANCE. Each of the PARTIES acknowledges and
agrees that the other PARTIES would be damaged irreparably in the event
any of the provisions of this Agreement are not performed in accordance
with their specific terms or otherwise are breached. Accordingly, each
of the PARTIES agrees that the other PARTIES shall be entitled, without
the necessity of pleading or proving irreparable harm or lack of an
adequate remedy at law, to an injunction or injunctions to prevent
breaches of the provisions of this Agreement and to enforce
specifically this Agreement and the terms and provisions hereof in any
action instituted in any court of the United States or any state
thereof having jurisdiction over the PARTIES and the matter in addition
to any other remedy to which they may be entitled, at law or in equity.
(f) SEVERABILITY. In the event any parts of this Agreement are
found to be void, the remaining provisions of this Agreement shall
nevertheless be binding with the same effect as though the void parts
were deleted.
(g) COUNTERPARTS. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original but all of
which together shall constitute one and the same instrument. The
execution of this Agreement may be by actual or facsimile signature.
(h) BENEFIT. This Agreement shall be binding upon and inure to
the benefit of the PARTIES hereto and their legal representatives,
successors and assigns.
15
<PAGE>
(i) NOTICES AND ADDRESSES. All notices, offers, acceptance and
any other acts under this Agreement (except payment) shall be in
writing, and shall be sufficiently given if delivered to the addressees
in person, by Federal Express or similar receipted delivery, by
facsimile delivery or, if mailed, postage prepaid, by certified mail,
return receipt requested, as follows:
The BUYER and HINES: Mr. J. Paul Hines
Ship Island Investments
Suite 500
120 Eglinton Ave. E.
Toronto, Ontario M4P 1E2
Canada
WHOODOO: Mr. Paulo Mylla
1660 Trade Center Way
Naples, Florida 34109
With a copy to: Michael D. Harris, Esq.
Michael Harris, P.A.
1645 Palm Beach Lakes Boulevard, Suite 550
West Palm Beach, Florida 33401
Facsimile (561) 478-1817
or to such other address as any of them, by notice to the other may
designate from time to time. The transmission confirmation receipt from
the sender's facsimile machine shall be conclusive evidence of
successful facsimile delivery. Time shall be counted to, or from, as
the case may be, the delivery in person or by mailing.
(j) ATTORNEY'S FEES. In the event that there is any
controversy or claim arising out of or relating to this Agreement, or
to the interpretation, breach or enforcement thereof, and
16
<PAGE>
any action or proceeding including an arbitration proceeding is
commenced to enforce the provisions of this Agreement, the prevailing
parties shall be entitled to an award by the court or arbitrator, as
appropriate, of reasonable attorney's fees, costs and expenses.
(k) ORAL EVIDENCE. This Agreement constitutes the entire
Agreement between the parties and supersedes all prior oral and written
agreements between the parties hereto with respect to the subject
matter hereof. Neither this Agreement nor any provision hereof may be
changed, waived, discharged or terminated orally, except by a statement
in writing signed by the party or parties against which enforcement or
the change, waiver discharge or termination is sought.
(l) GOVERNING LAW. This Agreement and any dispute,
disagreement, or issue of construction or interpretation arising
hereunder whether relating to its execution, its validity, the
obligations provided herein or performance shall be governed or
interpreted according to the internal laws of the State of Florida
without regard to choice of law considerations.
The decision and award made by the arbitrator shall be final, binding
and conclusive on all parties hereto for all purposes, and judgment may
be entered thereon in any court having jurisdiction thereof.
(m) SECTION OR PARAGRAPH HEADINGS. Section headings herein
have been inserted for reference only and shall not be deemed to limit
or otherwise affect, in any matter, or be deemed to interpret in whole
or in part any of the terms or provisions of this Agreement.
IN WITNESS WHEREOF the parties hereto have set their hand and seals as
of the date first above written.
WITNESSES: GREYSTONE CREDIT, INC.
By:
--------------------------------------
J. Paul Hines, President
17
<PAGE>
By:
--------------------------------------
J. Paul Hines, Individually
WHOODOO.COM, INC.
By:
--------------------------------------
Paulo Mylla, President
SHAREHOLDERS
--------------------------------------
Paulo Mylla, individually
--------------------------------------
Brian Leith, individually
--------------------------------------
Kevin Casey, individually
--------------------------------------
Sharon Snew, individually
18
<PAGE>
--------------------------------------
Patrick Belcher, individually
--------------------------------------
Stephanie Pera, individually
--------------------------------------
Ernest Sittenfeld, individually
--------------------------------------
Brian Allossery, individually
--------------------------------------
William P. Dickie, individually
--------------------------------------
LATITUDE 32 HOLDINGS, LTD.
--------------------------------------
By: , President
19
<PAGE>
ABERDEEN HOLDINGS LIMITED, LTD.
--------------------------------------
By: Michael Heslop, Director
CLYDE RESOURCES LTD.
--------------------------------------
By: Graham Redford, Director
GATEWAY RESEARCH MANAGEMENT GROUP, LTD.
--------------------------------------
By: Kevin Winter, Director
IGUANA INVESTMENTS, LTD.
--------------------------------------
By: Kevin Gunther, Director
20
<PAGE>
LAIY LIMITED
--------------------------------------
By: Douglas Anfossi, Director
21
<PAGE>
SCHEDULE 1
TO THE
AGREEMENT AND PLAN OF REORGANIZATION
Each share of whOOdoo.com, a Florida corporation, will be converted to one
fully-paid and non-assessable share of Greystone Credit, Inc., a Florida
corporation
<TABLE>
<CAPTION>
NAME SHARES TO BE SURRENDERED SHARES TO BE RECEIVED IN
IN WHOODOO.COM, GREYSTONE CREDIT, INC.
A FLORIDA CORPORATION A FLORIDA CORPORATION
- --------------------------------------- ------------------------ ------------------------
<S> <C> <C>
Paulo Mylla 8,595,000 8,595,000
Brian Leith 2,530,000 2,530,000
Kevin Casey 100,000 100,000
Sharon Snew 30,000 30,000
Patrick Belcher 30,000 30,000
Stephanie Pera 10,000 10,000
Ernest Sittenfeld 200,000 200,000
Brian Allossery 200,000 200,000
William P. Dickey 100,000 100,000
Latitude 32 Holdings, Ltd. 920,000 920,000
Aberdeen Holdings Limited 87,500 87,500
Clyde Resources Ltd. 87,500 87,500
Gateway Research Management Group, Ltd. 87,500 87,500
Iguana Investments, Ltd. 87,500 87,500
Laiy Limited 87,500 87,500
</TABLE>
<PAGE>
SCHEDULE 3(A)
TO THE
AGREEMENT AND PLAN OF REORGANIZATION
Sole Director J. Paul Hines
President J. Paul Hines
Secretary J. Paul Hines
Treasurer J. Paul Hines
2
<PAGE>
SCHEDULE 4(C)
TO THE
AGREEMENT AND PLAN OF REORGANIZATION
NAME NUMBER OF SHARES
- ---- ----------------
Paulo Mylla 8,595,000
Brian Leith 2,530,000
Kevin Casey 100,000
Sharon Snew 30,000
Patrick Belcher 30,000
Stephanie Pera 10,000
Ernest Sittenfeld 200,000
Brian Allossery 200,000
William P. Dickey 100,000
Joseph Padulo 10,000
Latitude 32 Holdings, Ltd. 920,000
Aberdeen Holdings Limited 87,500
Clyde Resources Ltd. 87,500
Gateway Research Management Group, Ltd. 87,500
Iguana Investments, Ltd. 87,500
Laiy Limited 87,500
3
<PAGE>
SCHEDULE 7(A)(IV)
TO THE
AGREEMENT AND PLAN OF REORGANIZATION
Greystone Audited Financials
Greystone Certificate of Good Standing
Evidence of Receipt of Payment of $50,000 by J. Paul Hines
Stock Transfer Records Indicating Registered Shareholders of Greystone
Delivery of $1,500,000 Shares from ________ Harris to L.O.M. Designees
Option for $1,999,998 Shares of Greystone from Ship Island to L.O.M.
Designees
Greystone Board Consent to the Reorganization
Paul Hines Resignation from Greystone
Officers Certificate from Greystone Representing that all the conditions
in Sections 7(a)(i)-(iv) have been complied with
The same representation from Paul Hines Individually
4
EXHIBIT 2.3
ASSET PURCHASE AGREEMENT
Between
WHOODOO.COM, INC.
and
BGS (SOUTHWEST FLORIDA) INC.
Dated as of August 4, 1999
<PAGE>
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT is made and entered into this 4th day of
August, 1999 (the "Agreement") between whOOdoo.com, inc., a Florida corporation
(the "Buyer") and BGS (Southwest Florida) Inc., a Florida corporation (the
"Seller").
WHEREAS, the Seller owns and operates Whoodoo Studios (the "Business")
with facilities located at 1660 Trade Center Way, Naples, Florida.
WHEREAS, the Buyer wishes to purchase the Assets, as defined herein it
being the intention of the Buyer to employ such Assets as part of its own
business and not to continue the Seller's enterprise as such, it being
understood that the Buyer shall not be deemed to be a successor to, or a
continuation of the Seller; and
WHEREAS, subject to the foregoing, the Seller desires to sell and the
Buyer desires to purchase the Assets, in accordance with the terms, conditions,
and agreements hereinafter contained.
NOW THEREFORE, in consideration of the mutual premises and the
covenants and promises hereinafter contained, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto intending to be legally bound hereby agree as follows:
2
<PAGE>
Section 1. DEFINITIONS.
"ASSETS" shall have the same meaning as in Section 2.1
"ASSUMED LEASES" shall have the same meaning as in Section 2.1(c)
"ASSUMED OBLIGATIONS" shall have the same meaning as in Section 2.4
"BUYER INDEMNITEE(S)" Shall have the same meaning as in Section 8.2
"CLOSING DATE FINANCIAL STATEMENTS" shall have the same meaning as in
Section 4.1(v)
"CLOSING DATE or CLOSING" shall have the same meaning as in Section 2.6
"CONTRACTS" shall have the same meaning as in Section 2.1(d)
"EXCLUDED ASSETS" shall have the same meaning as in Section 2.2
"EXCLUDED OBLIGATIONS" shall have the same meaning as in Section 2.5
"FINANCIAL STATEMENTS" shall have the same meaning as in Section 4.1(v)
"INTANGIBLE ASSETS" shall have the same meaning as in Section 2.1(g)
"INTELLECTUAL PROPERTY" shall have the same meaning as in Section 2.1(f)
"Laws" shall have the same meaning as in Section 4.1(o)
"LEASE(S)" shall have the same meaning as in Section 4.1(i)
"LICENSES AND PERMITS" shall have the same meaning as in Section 4.1(l)
"LIENS" shall have the same meaning as in Section 2.3(b)
"LOSSES" shall have the same meaning as in Section 8.2
"PERSON" shall have the same meaning as in Section 2.5(b)
"PERSONAL PROPERTY" shall have the same meaning as in Section 2.1(b)
"PREPAID ITEMS" shall have the same meaning as in Section 2.4
"PURCHASE PRICE" shall have the same meaning as in Section 3.1
"REAL PROPERTY" shall have the same meaning as in Section 4.1(h)
"SELLER INDEMNITEE(S)" shall have the same meaning as in Section 8.3
"TAXES" shall have the same meaning as in Section 4.1(g)
3
<PAGE>
Section 2. SALE AND PURCHASE OF ASSETS.
2.1 SALE OF ASSETS. On the terms and subject to the conditions set
forth in this Agreement, at the Closing, the Seller will sell, convey, transfer
and assign to the Buyer, and the Buyer will purchase and accept from the Seller
all right, title and interest in and to all of the assets of the Seller used in
or related to the Business, including, without limitation, the assets described
in subsections (a) through (m) hereof, and excluding only the Excluded Assets
(collectively, the "Assets"), free and clear of all Liens.
(a) PREPAID ASSETS. All prepaid and deferred items or credits,
such as unbilled charges, deposits and other similar items reflected on Schedule
2.1(a).
(b) PERSONAL PROPERTY. All tangible personal property,
including, without limitation, all machinery, equipment, tools, dies, molds,
parts, furniture, furnishings, leasehold improvements, fixtures, computer
hardware and software, office equipment, vehicles and supplies including,
without limitation, those assets described on Schedule 2.1(b) (the "Personal
Property").
(c) LEASES. All rights of the Seller under the Leases set
forth on Schedule 2.1(c) (the "Assumed Leases").
(d) CONTRACTS. All rights and benefits of the Seller under all
contracts, agreements, license agreements, vendor agreements, purchase orders,
commitments, sales orders and supply agreements, including, without limitation,
those set forth on Schedule 2.1(d) (the "Contracts").
(e) LICENSES AND PERMITS. All right, title and interest in and
to all licenses, permits, approvals, and authorizations including, without
limitation, applications therefor, relating to the Seller's operation of the
Business which are held by or have been granted to, or have been applied for, by
the Seller, to the extent assignment or transfer is permitted by applicable Law.
4
<PAGE>
(f) INTELLECTUAL PROPERTY. All right, title and interest in
and to all URLs patents, licenses, copyrights, trademarks, trade names, service
marks (including the trademark and name of the Seller or any derivation
thereof), logos and slogans, and all of the goodwill associated therewith,
rights to software currently developed or being developed prior to this
acquisition or in the future and all registrations, applications and other
rights associated with the foregoing, if any, whether registered or
unregistered, now used or presently planned to be used by the Seller in
connection with the Business, including, without limitation, those set forth on
Schedule 2.1(f), including the right to sue for past infringement thereof
(collectively, the "Intellectual Property").
(g) INTANGIBLE ASSETS. All right, title and interest in and to
all know-how, technology, slogans, data, studies, confidential information,
restrictive covenants, computer software (including documentation and related
object and source codes), indemnity rights, and other intangible assets now used
or presently planned to be used by the Seller, and all of the goodwill
associated therewith, confidentiality obligations and similar obligations of
present and former shareholders, officers and employees of the Seller
(collectively, the "Intangible Assets").
(h) RECORDS AND DOCUMENTS. All books, records, files, papers,
technical and research analyses, engineering, sales, marketing and other
studies, data and plans, records and other data located at the Seller's
facilities in Naples, Florida or elsewhere in the Seller's custody or control,
or pertaining to the Business, including, without limitation, all supplier and
customer lists and other databases, licensee lists, distributor lists, bid
information, customer correspondence, quality assurance records, test reports,
invoices, job orders and technique sheets.
(i) TELEPHONE NUMBERS. The Seller's interest in and to all
telephone, e-mail and telex (if any) numbers and telephone and other directory
listings utilized in connection with the Business.
(j) WARRANTIES. All rights benefiting the Seller under any
warranty, express or implied, which relate to the Assets.
5
<PAGE>
(k) OTHER ASSETS. All tangible, intangible, real, personal and
mixed property, assets and rights which constitute part of the Business as an
ongoing business, wherever located, including, but not limited to, those assets
set forth on the Financial Statements, except as expressly set forth in Section
2.2, are to be conveyed to the Buyer as part of the Assets.
2.2 EXCLUDED ASSETS. Any provisions of this Agreement to the contrary
notwithstanding, there shall be excluded from the purchase and sale contemplated
hereunder those assets of the Seller described on Schedule 2.2 to this
Agreement, which assets shall not be considered or treated as Assets (the
"Excluded Assets").
2.3 METHOD OF CONVEYANCE.
(a) Upon payment of the Purchase Price described in Section 3,
the sale, transfer, conveyance, assignment and delivery by the Seller of the
Assets to the Buyer in accordance with Section 2.3(b) shall be effected on the
Closing Date by the Seller's execution and delivery of one or more bills of
sale, assignments, and other instruments of conveyance and transfer.
(b) At the Closing, the Seller shall sell, transfer, convey,
assign and deliver to the Buyer fee simple absolute title to and exclusive
possession of all of the Assets free and clear of
any and all liens, encumbrances, claims, charges, security interests, rights of
the Seller and any third party, rights of redemption, equities, and any other
restrictions of any kind or nature whatsoever, including any leases, escrows,
options, security or other deposits, rights of redemption, chattel mortgages,
conditional sales contracts, collateral security arrangements and other title or
interest retention arrangements (collectively, the "Liens") except as set forth
on Schedule 2.3(b).
(c) The Seller covenants and agrees that if either (i) any of
the Assets cannot be transferred or assigned by the Seller without the consent
of or notice to a third party and in respect of which any necessary consent or
notice has not been obtained or given as of the Closing Date, or (ii) any of the
Assets are non-assignable in their nature, the Seller will cause the beneficial
interest in and to the
6
<PAGE>
same, in any event, to pass to the Buyer; and the Seller covenants and agrees,
on and after the Closing Date, (1) to hold such Assets in trust for, and for the
benefit of, the Buyer; and (2) to use its best efforts to obtain and secure and
will have obtained and secured such consent within 30 days of the Closing Date
and to give such notice as may be required to effect valid transfer(s) or
assignment(s) of such Assets; and (3) to make or complete such transfer(s) or
assignment(s) as soon as possible.
2.4 ASSUMED OBLIGATIONS. At the Closing, the Buyer shall assume and
shall, subject to all rights of offset, defenses, causes of action,
counterclaims and claims of any nature against third parties that may be
available to the Buyer in respect of the Assumed Obligations, agree to satisfy
and discharge, as the same shall become due, (a) all of the Seller's obligations
under the contracts, agreements, commitments and Leases of the Seller which are
specifically identified in Schedule 2.4 and are assigned to the Buyer at
Closing, if and to the extent assignable, but only to the extent any such
obligations arise and accrue after the Closing and then only in respect of
events and time periods occurring after the Closing except with respect to the
prepaid and partially prepaid goods and services which arose prior to the
Closing (the "Prepaid Items"); and (b) all of the Seller's obligations under all
Licenses and Permits which are specifically identified in Schedule 2.4 and are
transferred to the Buyer at Closing, if and to the extent transferable, but only
to the extent any such liabilities and obligations accrue after the Closing and
then only in respect of events and time periods occurring after the Closing
(collectively, the "Assumed Obligations").
2.5 EXCLUDED OBLIGATIONS. The Buyer is not assuming, and the Seller
shall remain fully responsible for, all past, present and future indebtedness,
liabilities, obligations, contracts and commitments of the Seller and any
predecessors in interest of the Business, known or unknown, fixed or contingent,
whether arising out of or resulting from the Business or the assets thereof, or
otherwise, that are not Assumed Obligations (the "Excluded Obligations").
Without limiting the foregoing, the Excluded Obligations shall include, but not
limited to, any and all liabilities arising from or related to:
(a) the negligent acts or omissions of the Seller, whether in
tort or otherwise;
(b) product liability or similar claims for injury to any
person, corporation,
7
<PAGE>
association, partnership, limited liability company, joint venture,
organization, business, individual, government or any agency or political
subdivision thereof or any other entity (a "Person") or property with respect to
products purchased, manufactured or sold by the Seller prior to Closing;
(c) any suits, actions, or claims alleging infringement by the
Seller, prior to Closing, of patents, trademarks, trade names or other
intellectual property rights held by others;
(d) any liability for commitments made by the Seller relating
to the employment, relocation or termination (including, but not limited to,
severance pay) of any employee, officer or director of the Seller except as set
forth on Schedule 2.5(d);
(e) any liability or obligation of the Seller in respect of
any prior purchase and sale transactions;
(f) any other suits, actions or claims against the Seller;
(g) any liability or obligation relating to an Excluded Asset;
(h) any inter-company liabilities including liabilities
between the Seller and its subsidiaries, if any;
(i) any liability or obligation for prepaid and partially
prepaid goods and services in excess of the Prepaid Items set forth on Schedule
2.5(i);
All Excluded Obligations shall remain the sole responsibility of the
Seller, and the Seller agrees to pay, perform, discharge, and indemnify, in
accordance with Section 2.5 hereof, the Buyer from and against, any and all such
indebtedness, obligations and liabilities.
2.6 CLOSING DATE. The closing of the transactions contemplated by this
Agreement shall take place on August 4, 1999 at 10:00 a.m. (the "Closing" or
"Closing Date") at the offices of Michael
8
<PAGE>
Harris, P.A. or, at such other date, time and place as may be agreed upon by the
parties.
Section 3. PURCHASE PRICE.
3.1 PURCHASE PRICE. At the Closing, the Seller shall convey, transfer,
assign and deliver to the Buyer the Assets in exchange for (a) the Buyer's
assumption of the Assumed Obligations and (b) the Buyer's delivery to the Seller
of a cashier's or certified check in the amount of $100,000 U.S. dollars made
payable to the Seller (the "Purchase Price").
3.2 ALLOCATION. The Seller and the Buyer agree that the Purchase Price
shall be allocated among the Assets in accordance with Schedule 3.2. The Seller
further agrees to cooperate with the Buyer in completing and delivering to the
Buyer or the Internal Revenue Service such information concerning the
determination of the Purchase Price as may be required pursuant to the Internal
Revenue Code.
3.3 ADJUSTMENT TO PURCHASE PRICE. The Purchase Price shall be reduced
to reflect those adjustments to the Purchase Price as set forth on Schedule 3.3
as well as those adjustments to give effect to pro-rated items pursuant to
Section __.
Section 4. REPRESENTATIONS AND WARRANTIES.
4.1 THE SELLER'S REPRESENTATIONS AND WARRANTIES. The Seller hereby
represents and warrants to the Buyer, all of which representations and
warranties are true, complete, and correct in all respects as of the date hereof
and as of the Closing Date, as follows:
(a) ORGANIZATION AND QUALIFICATION. The Seller is a
corporation duly organized, validly existing and in good standing under the Laws
of the jurisdiction of its incorporation. The Seller has all requisite power and
authority to own those properties and conduct those businesses presently owned
or conducted by it, and is duly qualified to do business as it is now being
conducted and is in good standing as a foreign corporation in each other
jurisdiction where the property owned, leased or
9
<PAGE>
used by it or the conduct of its business makes such qualification necessary.
The copies of the Articles of Incorporation and bylaws of the Seller, which have
been delivered to the Buyer, are complete and correct and are in full force and
effect at the date hereof.
(b) AUTHORIZATION; NO RESTRICTIONS, CONSENTS OR APPROVALS. The
Seller has full power and authority to enter into and perform this Agreement and
all corporate action necessary to authorize the execution and delivery of this
Agreement and the performance its obligations hereunder has been duly taken.
This Agreement has been duly executed by the Seller and constitutes the legal,
valid, binding and enforceable obligation of the Seller, enforceable against the
Seller in accordance with its terms subject to the qualification that the
enforcement of certain rights and remedies contained in the Agreement may be
limited or affected by applicable bankruptcy, insolvency, reorganization, and
other federal and state laws relating to or affecting creditors or secured
parties' rights and remedies and to general principles of equity. The execution
and delivery of this Agreement, the sale of the Assets and the consummation by
the Seller of the transactions contemplated herein, do not and will not on the
Closing Date (i) conflict with or violate any of the terms of the Articles of
Incorporation and bylaws of the Seller or any applicable bylaws relating to the
Seller, (ii) conflict with, or result in a breach of any of the terms of, or
result in the acceleration of any indebtedness or obligations under, any
agreement, obligation or instrument by which the Seller is bound or to which any
property of the Seller is subject, or constitute a default thereunder, (iii)
result in the creation or imposition of any Lien on any of the Assets, (iv)
except as set forth in Schedule 4.1 (b), constitute an event permitting
termination of any agreement or instrument to which the Seller is a party or by
which any property or asset of the Seller is bound or affected, pursuant to the
terms of such agreement or instrument, or (v) conflict with, or result in or
constitute a default under or breach or violation of or grounds for termination
of, any license, permit or other governmental authorization to which the Seller
is a party or by which the Seller may be bound, or result in the violation by
the Seller or of any Laws to which the Seller or any assets of the Seller or may
be subject, which would materially adversely affect the transactions
contemplated herein. Except as set forth in Schedule 4.1(b) no authorization,
consent or approval of, notice to, or filing with, any public body or
governmental authority or any other person is necessary or required in
connection with the execution and delivery by the Seller and of this Agreement
or the performance by the Seller and of their respective obligations hereunder.
10
<PAGE>
(c) CAPITALIZATION. The authorized capital stock of the Seller
consists of 10,000 shares of common stock of which _____ shares are issued and
outstanding. The shareholders of the Seller have approved the transactions
contemplated by this Agreement including the sale of the Assets. All of the
issued and outstanding shares are validly issued and are fully paid,
non-assessable and free of preemptive rights.
(d) SUBSIDIARIES. Except as disclosed on Schedule 4(d), the
Seller has no Subsidiaries and does not own any interest in any corporation,
partnership, joint venture, limited liability company, association, trust or
entity.
(e) BROKERS' FEES. The Buyer has no Liability or obligation to
pay any fees or commissions to any broker, finder, or agent with respect to the
transactions contemplated by this Agreement for which the Seller could become
liable or obligated.
(f) ABSENCE OF CERTAIN CHANGES. Except to the extent set forth
on Schedule 4.1(f), since June 30, 1999, there has not been any material adverse
change or development involving a prospective material adverse change with
respect to the Business or the financial position or results of operations of
the Business taken as a whole, including without limitation, (i) any damage or
destruction or property loss whether or not covered by insurance, materially and
adversely affecting the properties or business of the Seller, (ii) any increase
in the compensation or bonus, incentive compensation, profit sharing,
retirement, insurance, medical reimbursement or other employee benefit plan or
arrangement payable or owed or to become payable or owed by the Seller, other
than increases made on the basis of historical practice and in the ordinary
course of business, compensation increases attendant to promotions and falling
within the normal range for the new position and scheduled increases under the
existing collective bargaining agreement, (iii) any sale or other disposition of
any capital asset other than sales or disposition of Excluded Assets or sales or
disposition of scrap made in the ordinary course of business, (iv) any entry by
the Seller into any material commitment or transaction (including, without
limitation, any borrowing, or capital expenditure), other than those commitments
and transactions entered into in the ordinary course of business, or those
contemplated by or within the limits permitted
11
<PAGE>
by this Agreement, (v) any release or waiver of any material right or claim of
the Seller with respect to any of the Contracts, the Leases, the Licenses and
Permits or the Intellectual Property, (vi) any Lien on any of the Assets, or
(vii) any material change by the Seller in accounting principles or methods.
(g) TAXES. Except as set forth on Schedule 4.1(g), the Seller
has timely filed (timely being understood to include all properly granted
extensions) all returns required to be filed by it with respect to all foreign,
federal, state and local and foreign income, payroll, employment, unemployment,
withholding, excise, sales, personal property, use, business and occupation,
franchise and occupancy, real estate, or other taxes (all of the foregoing taxes
including interest and penalties thereon and including estimated taxes, being
hereinafter collectively the "Taxes") and has paid or reserved all Taxes which
are shown to have become due pursuant to such returns and has paid or reserved
all other Taxes for which it has received a notice of assessment or demand for
payment or has otherwise been made aware of a deficiency. All such returns or
reports are true and correct in all material respects.
(h) TITLE TO ASSETS. The Seller has good and marketable title
to all of the Assets, free and clear of any Lien. The Seller has valid and
perfected security interests in all assets consigned to third parties. Schedule
4.1 (h) contains an accurate and complete list of all the real property owned,
leased or operated by the Seller, including without limitation, all structures,
improvements and fixtures thereon and all water lines, rights-of-way, other
rights, privileges, uses, licenses, easements, hereditaments and appurtenances
belonging or appertaining thereto (collectively, the "Real Property").
(i) LEASES. Schedule 4.1 (i) sets forth a complete and
accurate listing or description of all real and personal property leases,
subleases, concessions, licenses, occupancy agreements, conditional sales
agreements or other title retention agreements (collectively, the "Leases" and
individually a "Lease") to which the Seller is a party in connection with the
Business. Each of the Leases is valid, binding and enforceable in accordance
with its terms, subject to the qualification that the enforcement of certain
rights and remedies contained in the Leases may be limited or affected by
applicable bankruptcy, insolvency, reorganization, and other federal and state
laws relating to or
12
<PAGE>
affecting creditors or secured parties' rights and remedies and to general
principles of equity, and is in full force and effect; to the best of the
Seller's knowledge, there are no existing defaults on the part of the Seller or,
to the best of the Seller's knowledge, any other party, under any Lease, and no
event of default under any such Lease has occurred and is continuing which
(whether with or without the giving of notice, lapse of time or both, or the
happening of any other event) would constitute a default under such Lease; each
such Lease will, subject to obtaining any consent listed in Schedule 2.4,
continue to be in full force and effect on the same terms and conditions
immediately after the Closing without the need for any action on the part of the
Buyer; to the best of the Seller's knowledge, each such Lease reflects the
complete understanding among the parties thereto; and accurate and complete
copies of each such Lease including all amendments thereto, have been delivered
to the Buyer at or prior to the date hereof. The Seller's interest in each of
the Leases is free and clear of all Liens or other encumbrances (other than any
created by the Buyer) and are not, in the case of real property, except as set
forth in Schedule 4.1(h), subject to any rights of way, building use
restrictions, exceptions, variances, easements (recorded or unrecorded), rights
of redemption, reservations or limitations of any nature whatsoever of which the
Seller has knowledge which may materially interfere with the Buyer's use thereof
in a manner consistent with the Seller's use thereof prior to Closing.
(j) CONTRACTS AND OTHER DOCUMENTS. Except for those Contracts
which are listed on Schedule 4.1(j) and those Leases listed on Schedule 4.1(i),
or which have been entered into by the Seller in the ordinary course of business
and do not involve payment or receipt of more than $2,500, the Seller is not a
party to any Contract, Lease or similar document. Neither the Seller nor, to the
best of the Seller's knowledge, any other party is in default under any Contract
or other instrument to which the Seller is a party or by which it is bound. No
Contract continues for a period of more than three (3) months from the Closing
Date or is in excess of the normal, ordinary and usual requirements of the
Business.
(k) LABOR DIFFICULTIES. Except as set forth in Schedule
4.1(k), (i) the Seller is not a party with respect to the Business to a union
agreement or collective bargaining agreement and no attempt to organize any
employees of the Seller has been made, proposed or threatened; (ii) there is no
labor strike, formal labor dispute, formal labor grievance, labor arbitration
proceeding, general
13
<PAGE>
slowdown or stoppage, or charge of unfair labor practice pending before a court,
regulatory body or arbitration tribunal, or, to the best of the Seller's
knowledge, threatened against or affecting the Assets or the Business, and to
the best of the Seller's knowledge no event has occurred which would constitute
reasonable grounds for such a strike, dispute, grievance, proceeding or charge;
(iii) no union representation question exists respecting any employees of the
Seller; (iv) to the best of the Seller's knowledge, there are no charges or
complaints of discrimination pending before the United States Equal Employment
Opportunity Commission or any other federal, state, local or foreign agency or
tribunal against the Seller in connection with the Business; (v) to the best of
the Seller's knowledge, the Seller does not presently employ, and at no time
during the past year did it employ, any illegal alien; and (vi) the Seller is in
compliance in all material respects with all federal, state and local labor and
employment-related Laws applicable to the Business.
(l) LICENSES AND PERMITS. The Seller has obtained, has fully
paid for, and has in full force and effect all licenses, franchises, permits,
approvals, certificates, certifications and other authorizations from all
applicable governmental authorities which are necessary for the conduct of the
Business as currently conducted and the ownership, use, occupancy and operation
of the Assets (the "Licenses and Permits"). Schedule 4.1(l) sets forth a
complete and accurate list of all Licenses and Permits. The execution, delivery
and performance of this Agreement and the consummation of the transactions
contemplated hereby will not result in the revocation, cancellation, suspension,
modification, or limitation of any of the Licenses and Permits and will not give
to any Person any right to revoke, cancel, suspend, modify, or limit any of the
Licenses and Permits. Renewal of each of the Licenses and Permits has been, or
will be as of the Closing Date, timely applied for to the extent required under
all Laws, including but not limited to, all environmental laws and to the extent
appropriate to protect renewal rights thereunder. To the best of the Seller's
knowledge, there is no fact or event which is likely to prevent the renewal of
any of the Licenses and Permits under existing Law or which, with the passage of
time or the giving of notice or both, is likely to constitute a violation of the
terms of any of the Licenses and Permits or of any applications or agreements
made in connection therewith. No action or proceeding is pending or, to the best
of the Seller knowledge, threatened which could result in the revocation,
cancellation, suspension, modification, or limitation of any of the Licenses and
Permits. All Licenses and Permits are transferable to the Buyer. The Seller
14
<PAGE>
does not owe any monies for the Licenses and Permits which have been granted to
it.
(m) ACCOUNTS RECEIVABLE. Schedule 4.1(m) sets forth a complete
and accurate schedule including an aging schedule for all of the Seller's
Accounts Receivable as of five business days prior to the date hereof, all of
the Seller's Accounts Receivable arose from bona fide transactions in the
ordinary course of business of the Seller, have not been discounted, and no
counterclaim or right of set-off has been asserted with respect thereto.
(n) ABSENCE OF UNDISCLOSED LIABILITIES. Except as set forth in
Schedule 4.1(n), the Seller does not have any material liability or obligation
of any nature, whether contingent, accrued, absolute, unasserted or otherwise,
other than liabilities or obligations reflected in the Financial Statements or
the Closing Date Financial Statements.
(o) COMPLIANCE WITH LAW. Except as set forth in Schedule
4.1(o), the Seller has at all times operated in all respects and is presently in
compliance in all material respects with all applicable federal, state, local,
foreign or other laws, rules, regulations, guidelines, orders, injunctions,
building and other codes, ordinances, permits, licenses, authorizations,
judgments, decrees of federal, state, local, foreign or other authorities, and
all orders, writs, decrees and consents of any governmental or political
subdivision or agency thereof, or any court or similar Person established by any
such governmental or political subdivision or agency thereof (collectively, the
"Laws"), including but not limited to all applicable domestic and foreign Laws,
rules and regulations relating to the safe conduct of business, employment
discrimination, wages and hours, employment of illegal aliens, collective
bargaining, the payment of withholding and social security taxes, product
labeling, antitrust, consumer protection, occupational safety and health,
consumer product safety, the importation of goods, product liability, currency
exchange, securities and trading with the enemy matters, and to the best of the
Seller's knowledge no event has occurred which would constitute reasonable
grounds for a claim that non-compliance has occurred or is occurring and any
non-compliance will not materially and adversely affect the Assets.
(p) INTELLECTUAL PROPERTY AND INTANGIBLE ASSETS. The Seller
owns or possesses valid
15
<PAGE>
and binding licenses or other rights to use, whether or not registered, all
Intellectual Property and Intangible Assets. Schedule 4.1(p) sets forth a
complete and accurate list of all such Intellectual Property and Intangible
Assets (identifying those owned and those licensed), including all United
States, state and foreign registrations or applications for registration thereof
and all agreements (including, without limitation, agreements pursuant to which
the Seller has granted licenses to third parties to use any Intellectual
Property or Intangible Asset) relating thereto. All actions necessary to
maintain the registered Intellectual Property and Intangible Assets have been
taken by the Seller. The Seller is not required to pay any royalty, license fee
or similar compensation with respect to the Intellectual Property or Intangible
Assets in connection with the current or prior conduct of its business. The use
by the Seller of any of the Intellectual Property or Intangible Assets does not
violate the proprietary rights of any other Person and no claims have been
asserted by any Person with respect to the use of the Intellectual Property or
Intangible Assets by the Seller. To the best of the Seller's knowledge, no
Person is infringing upon the Intellectual Property or Intangible Assets. The
Seller has taken reasonable security measures to protect the secrecy,
confidentiality and value of the Intellectual Property. No Person, other than
the Seller, owns or has any proprietary, financial or other interest, direct or
indirect, in whole or in part, in any Intellectual Property or Intangible Asset.
Except as set forth in Schedule 4.1(p), the Seller is not a party to any
confidentiality, secrecy or similar agreements with third parties.
(q) PENDING LITIGATION. Except as set forth in Schedule 4(q),
the Seller is not (i) subject to any outstanding injunction, judgment, order,
decree, ruling, or charge, or (ii) a party or, to the Knowledge of the Seller
and the directors and officers (and employees with responsibility for litigation
matters) of the Seller, is threatened to be made a party to any action, suit,
proceeding, hearing, or Investigation of, in, or before any court or
quasi-judicial or administrative agency of any federal, state, local, or foreign
jurisdiction or before any arbitrator. None of the actions, suits, proceedings,
hearings, and Investigations set forth in Schedule 4.1(q) could result in any
material adverse change in the business, financial condition, operations,
results of operations, or future prospects of any of the Seller or which
otherwise could result in any Liability to the Seller. The Seller and its
directors and officers (and employees with responsibility for litigation
matters) of the Seller has any reason to believe that any such action, suit,
proceeding, hearing, or Investigation may be brought
16
<PAGE>
or threatened against any of the Seller.
(r) CUSTOMER LIST. Schedule 4.1(r) sets forth a complete and
accurate copy of the Seller's customer list as of the date first written above.
To the best of the Seller's knowledge, the Seller has not received any notice,
whether written or oral, indicating that any of these customers intend to cease
doing business with the Seller, or to materially alter the amount of business it
has previously done or is presently doing with the Seller.
(s) ASSETS; OWNERSHIP OF NECESSARY ASSETS AND RIGHTS. The
assets, properties and rights included in the Assets comprise all of the assets,
properties, and rights of every type and description, real, personal and mixed,
tangible and intangible, used by the Seller in, and necessary to, the conduct of
the Business as presently conducted. The Assets are in good condition and repair
and have received proper maintenance in the ordinary course of business. The
Assets on the Closing Date shall be free and clear of all Liens.
(t) SUBSIDIARIES AND OTHER INVESTMENTS. The Seller does not
own, directly or indirectly, any interest or investment (whether equity or debt)
in any corporation, partnership, limited liability company, joint venture
business, trust, or other entity.
(u) DISCLOSURE. No statement, representation or warranty by
the Seller in this Agreement, including the Schedules hereto, contains any
untrue statement of material fact, or omits to state a material fact, necessary
to make such statements, representations and warranties not misleading. There is
no fact known to the Seller which has specific application to the Business or,
so far as the Seller can reasonably foresee, materially threatens in the future,
the assets, business, prospects, financial condition or results of operations of
the Business which has not been set forth in this Agreement or the Schedules
hereto.
(v) FINANCIAL STATEMENTS. Schedule 4.1(v) sets forth the
unaudited financial statements as of _________, which include the balance sheet
of the Seller as at , statement of operations and retained earnings of the
Seller for the fiscal year ending
17
<PAGE>
____________________, and statements of cash flows and Shareholders' Equity of
the Seller for the fiscal year ending ____________________, together with the
related notes thereto (collectively, the "Financial Statements") in each case
certified by the Chief Financial Officer of the Seller. On the Closing Date, the
Seller shall deliver to the Buyer the unaudited balance sheet of the Seller as
at ________________, 1999, and an unaudited statement of operations and retained
earnings and an unaudited statements of cash flows and Shareholders' Equity of
the Seller for the twelve month period then ended (collectively, the "Closing
Date Financial Statements"). The Financial Statements and the Closing Date
Financial Statements are or will be complete and correct in all material
respects and fairly present the financial condition of the Seller as of the
dates thereof and the results of its operations for the fiscal years and periods
ended on such dates. The Financial Statements and Closing Date Financial
Statements have been prepared in accordance with generally accepted accounting
principles consistently applied.
(w) EVENTS SUBSEQUENT TO MOST RECENT FISCAL YEAR END. Except
as otherwise provided in Section ______ since June 30, 1999, there has not been
any material adverse change in the business, financial condition, operations,
results of operations or future prospects of the Seller. Without limiting the
generality of the foregoing, since that date:
(i) the Seller has not sold, leased, transferred, or
assigned any of its Assets, tangible or intangible, other than for a fair
consideration in the ordinary course of business;
(ii) except as otherwise disclosed in this Agreement,
the Seller has not entered into any agreement, contract, lease, or license (or
series of related agreements, contracts, leases, and licenses) involving (A)
more than $1,000, (B) a term of more than one year, or (C) outside the ordinary
course of business;
(iii) no party (including the Seller) has
accelerated, terminated, modified, or cancelled any agreement, contract, lease
or license (or series of related agreements, contracts, leases, and licenses) to
which the Seller is a party or by which it is bound involving (A) more than
$1,000; or (B) a term of more than one year;
18
<PAGE>
(iv) the Seller has not imposed any Security Interest
upon any of its Assets, tangible or intangible;
(v) the Seller has not made any capital expenditure
(or series of related capital expenditures) either involving more than $1,000 or
outside the ordinary course of business;
(vi) the Seller has have not made any capital
investment in, any loan to, or any acquisition of the securities or assets of,
any other Person (or series of related capital investments, loans, and
acquisitions) either involving (A) more than $1,000, (B) or outside the ordinary
course of business;
(vii) the Seller has not issued any note, debenture,
bond, or other debt security or created, incurred, assumed, or guaranteed any
indebtedness for borrowed money or capitalized lease obligation either involving
more than $1,000 singly or $5,000 in the aggregate;
(viii) the Seller has not delayed or postponed the
payment of accounts payable and other Liabilities outside the ordinary course of
business;
(ix) the Seller has not cancelled, compromised,
waived, or released any right or claim (or series of related rights and claims)
either involving (A) more than $1,000, or (B) outside the ordinary course of
business;
(x) the Seller has not granted any license or
sublicense of any rights under or with respect to any Intellectual Property;
(xi) the Seller has not declared, set aside, or paid
any dividend or made any distribution in cash or in kind or redeemed, purchased,
or otherwise acquired any shares of common stock;
19
<PAGE>
(xii) the Seller has not experienced any material
damage, destruction, or loss (whether or not covered by insurance) to its
property;
(xiii) the Seller has not made any loan to, or
entered into any other transaction with, any of its employees involving more
than $1,000 in the aggregate outside the Ordinary Course of Business
(xiv) the Seller has not entered into any employment
contract, written or oral, or modified the terms of any existing such contract
or agreement involving more than $1,000 in the aggregate or entered into any
collective bargaining agreement;
(xv) the Seller has not granted any increase in the
base compensation of any of its directors, officers or any of its family
members;
(xvi) the Seller has not granted adopted, amended,
modified, or terminated any bonus, profit-sharing, incentive, severance, or
other plan, contract, or commitment for the benefit of any of its directors,
officers, or family members (or taken any such action with respect to any other
Employee Benefit Plan);
(xvii) the Seller has not made any other change in
employment terms for any of its directors and officers;
(xviii) the Seller has not made or pledged to make
any charitable or other capital contribution in excess of $1,000 and outside the
ordinary course of business;
(xix) there has not been any other occurrence, event,
incident, action, failure to act, or transaction outside the ordinary course of
business involving the Seller;
(xx) the Seller has not terminated or amended any
insurance policies nor has any insurance company done so with regard to a policy
paid for by the Seller; and
20
<PAGE>
(xxi) the Seller has not committed to do any of the
foregoing.
(x) STOCKHOLDER APPROVAL. The stockholders of the
Seller have approved the sale of the Assets contemplated by this Agreement. No
dissenter's or appraisal rights exist. The approval of the stockholders by its
terms may not be revoked.
4.2 THE BUYER. The Buyer hereby represent and warrant to the Seller,
all of which representations and warranties are true, complete, and correct in
all respects as of the date hereof and as of the Closing Date, as follows:
(a) ORGANIZATION AND QUALIFICATION. The Buyer is a corporation
duly incorporated, validly existing and in good standing under the Laws of the
jurisdiction of its respective incorporation, and is duly qualified to do
business in each other jurisdiction where the property owned, leased or used by
it or the conduct of its business makes such qualification necessary.
(b) AUTHORIZATION; NO RESTRICTIONS, CONSENTS OR APPROVALS. The
Buyer has full power and authority to enter into and perform this Agreement, and
has taken all necessary corporate action to authorize the execution and delivery
of this Agreement and the performance by the Buyer of its obligations hereunder.
This Agreement has been duly executed by the Buyer and constitutes the legal,
valid, binding, and enforceable obligation of the Buyer, enforceable against the
Buyer in accordance with its terms. The execution and delivery of this Agreement
and the consummation by the Buyer of the transactions contemplated herein or
hereby, do not and will not on the Closing Date (i) conflict with or violate any
of the terms of the Buyer's Articles of Incorporation or Bylaws or any
applicable Law relating to the Buyer, (ii) conflict with, or result in a breach
of any of the terms of, or result in the acceleration of any indebtedness or
obligations under, any agreement, obligation, or instrument by which the Buyer
is bound or to which any property of the Buyer is subject, or constitute a
default thereunder, or (iii) result in the violation by the Buyer of any laws to
which the Buyer or any assets of the Buyer may be subject which would materially
adversely affect the transaction contemplated herein. Except as set forth in
Schedule 4.2(b), no authorization, consent, or approval of
21
<PAGE>
any governmental authority or any other person is necessary or required in
connection with the execution and delivery by the Buyer of this Agreement or the
performance by the Buyer of the Buyer's obligations hereunder.
Section 5. COVENANTS PRIOR TO CLOSING.
5.1 THE SELLER'S COVENANTS. The Seller covenants that, except as
otherwise consented to in writing by the Buyer, from and after the date hereof
until the Closing or the earlier termination of this Agreement:
(a) Except as set forth in Schedule 5.1(a), the Business will
be conducted only in the ordinary course and in the same manner as heretofore
conducted except as required by this Agreement; and the Seller will use
reasonable efforts consistent with past practice to preserve the organization of
the Business, the services of the present officers, employees, agents, and
representatives thereof and continuing business relationships with suppliers,
customers, clients and others having business relations with the Seller.
(b) Except with the prior written consent of the Buyer, which
consent will not be unreasonably withheld or delayed:
(i) No contract, lease, license, obligation,
indebtedness, commitment, purchase or sale will be entered into, assumed or made
by the Seller except in the ordinary course of business of the Business;
(ii) The Seller shall not enter into or assume any
mortgage, pledge, conditional sale or other title retention agreement, or permit
any Lien to be placed upon any of the Assets, whether now owned or hereafter
acquired (other than Liens arising by operation of law in the Ordinary Course of
Business); and
(iii) The Seller shall not make any commitment for
any capital expenditure
22
<PAGE>
whatsoever.
(c) All real property, machinery and equipment and other
operating properties used in the Business will be kept and maintained in good
repair and working order (ordinary wear and tear excepted) on a basis consistent
with past practices of the Business, and the Seller will duly observe and
conform to all material terms and conditions upon or under which any of such
properties are held.
(d) The Seller shall use its best efforts to maintain in full
force and effect in all material respects all insurance coverages for the
Business currently in effect and shall undertake to obtain equivalent
replacement coverage with respect to any policies hereafter canceled or
terminated.
5.2 ACCESS. From and after the date hereof and until the Closing or the
termination of this Agreement, the Seller shall, upon reasonable prior notice,
give to the Buyer and to the Buyer's counsel, accountants, consultants and other
representatives and designees, reasonable access during normal business hours to
the offices, properties, facilities, agreements, records, and executive or
management personnel of the Seller and will furnish to the Buyer copies of all
documents and all such information concerning the properties and affairs of the
Seller as the Buyer may reasonably request.
5.3 COOPERATION. The Buyer and the Seller agree (a) to cooperate with
each other in determining whether any filings are required to be made or
consents required to be obtained in any jurisdiction in connection with the
consummation of the transactions contemplated hereby and in making or causing to
be made any such filings promptly and in seeking to obtain in a timely manner
any such consents; and (b) to use all reasonable efforts to obtain promptly the
satisfaction of the conditions to the Closing of the transactions contemplated
herein. The Buyer and the Seller shall furnish to each other and to each other's
counsel all such information as may be reasonably required in order to
effectuate the foregoing.
Section 6. CLOSING.
6.1 CONDITIONS TO THE BUYER'S OBLIGATIONS. The obligations of the Buyer
under this
23
<PAGE>
Agreement, including, without limitation, the obligation to consummate and
effect the purchase of the Assets, shall be subject to satisfaction of the
following conditions, unless waived by the Buyer:
(a) The Seller shall have performed in all material respects
all agreements, and satisfied in all material respects all conditions on its
part to be performed or satisfied hereunder at or prior to the Closing Date.
(b) All representations and warranties of the Seller herein
shall have been true and correct in all material respects when made, shall have
continued to have been true and correct in all material respects at all times
subsequent thereto, and shall be true and correct in all material respects on
and as of the Closing Date as though made on, as of and with reference to such
date.
(c) All consents, approvals, certificates and authorizations
required to be obtained by the Seller, and/or the Buyer in connection with the
sale of the Assets, including without limitation, all approvals by and
clearances from all governmental authorities, lenders, and other third parties,
shall have been obtained and no such consent, approval or authorization shall be
subject to any condition which is unduly burdensome; and as of the Closing Date,
no legislation, rule or regulation shall have been enacted or deemed applicable
to the transactions contemplated by this Agreement which would materially
interfere with or restrict the use and operation of the Business after the
Closing or materially detract from the value of the Assets.
(d) The Seller shall have obtained written consents to the
assignment to the Buyer of each Lease and Contract listed on Schedule ____ with
respect to which a consent is required in connection with the consummation of
the transactions contemplated by this Agreement.
(e) There shall not have occurred, since _________________,
except as set forth in Schedule 6.1(e) any material adverse change with respect
to the Business, financial condition, results of operations, prospects, assets
or backlog of the Seller.
(f) The Seller shall have afforded the Buyer and its
representatives reasonable
24
<PAGE>
access to the facilities and Real Property, utilized by the Seller in the
conduct of the Business for the purpose of conducting facility surveys, and the
results of such surveys shall have been satisfactory in all respects to the
Buyer in its sole and absolute discretion.
(g) The Seller shall have executed and delivered to the Buyer
all documents necessary to convey title to the Assets to the Buyer as
contemplated by this Agreement.
(h) The Buyer shall have entered into a management agreement
with the Seller to provide management expertise to Buyer on a cost plus
percentage basis sufficient to generate a pre-tax profit of ___________________.
(i) The Buyer shall have entered into an employment agreement
with Mr. Paulo Mylla at an annual salary of $___________ for a period of no less
than three years.
(j) The Buyer shall have obtained written consents to
assignments of all Assumed Leases of real property, pursuant to which the Seller
is a lessee, executed by the lessors.
(k) The agreements between the Seller and certain related
parties set forth on Schedule 6.1(k) shall have been terminated, and the Seller
and the Buyer shall have been released from all liability or obligation
whatsoever therefor.
(l) The Seller shall have provided to the Buyer a complete and
accurate schedule including an aging schedule for all of the Seller's Accounts
Receivable as of not more than two business days prior to the Closing Date.
(m) The Buyer and the Seller shall have entered into
Assignment and Assumption Agreements with respect to all Assumed Leases of Real
Property.
6.2 CONDITIONS TO THE SELLER'S OBLIGATIONS. The obligations of the
Seller under this Agreement, including, without limitation, the obligation to
consummate and effect the sale of the
25
<PAGE>
Assets shall be subject to satisfaction of the following conditions, unless
waived by the Seller:
(a) The Buyer shall have performed in all material respects
all agreements, and satisfied in all material respects all conditions on its
part to be performed or satisfied hereunder at or prior to the Closing Date.
(b) All of the representations and warranties of the Buyer
herein shall have been true and correct in all material respects when made,
shall have continued to have been true and correct in all material respects at
all times subsequent thereto, and shall be true and correct in all material
respects on and as of the Closing Date as though made on, as of, and with
reference to such date.
(c) All consents, approvals and authorizations required to be
obtained by the Buyer and/or Seller in connection with the sale of the Assets,
including all approvals by and clearances from all governmental authorities,
have been obtained.
(d) The Buyer shall have entered into the management and
employment agreements referred to in Section 6.1(h) and (i), respectively.
(e) The Buyer and the Seller shall have entered into
Assignment and Assumption Agreements with respect to all Assumed Leases of Real
Property.
6.3 CONDITIONS TO THE SELLER'S AND THE BUYER'S OBLIGATIONS. The
obligations of the Seller and the Buyer to consummate and effect the sale of the
Assets pursuant to this Agreement shall be subject to the following additional
condition, unless waived by each party:
(a) No injunction or temporary restraining order shall have
been granted restraining or prohibiting the consummation of the transactions
contemplated by this Agreement, and no action, suit or other proceeding
instituted by any federal, state, or local governmental authority seeking such
an injunction or order shall be pending or threatened.
26
<PAGE>
(b) The Buyer shall have entered into the management and
employment agreements referred to in Sections 6.1(h) and (i), respectively.
(c) The Buyer has entered into a Business Combination
Agreement (defined as a Merger, Consolidation or Share Exchange under the laws
of Florida or a Amalgamation under the laws of Bermuda) which results in the
Buyer itself becoming, or the Buyer becoming a 100% held subsidiary of, a public
company with at least ______ shareholders, which public company has received
gross proceeds from the sales of its securities in the amount of at least
$1,725,000 U.S. dollars.
(d) The public company has outstanding capital of 12,000,000
shares of common stock and Paulo Mylla and/or his assigns are beneficial owners
of no less than 5,280,000 of such shares; provided, however, the number of
shares outstanding and beneficially held may be adjusted pro rata.
6.4 THE BUYER'S CLOSING DOCUMENTS. At the Closing, the BUYER will
deliver to the Seller, in form and substance reasonably satisfactory to the
Seller and consistent with this Agreement:
(a) An instrument of assumption by the Buyer assuming the
Assumed Obligations, which instrument shall have terms and conditions conforming
to this Agreement.
(b) Copies of consents of the board of directors of the Buyer
authorizing the execution and delivery of, and performance of their obligations
under this Agreement, certified by the Secretary or an Assistant Secretary of
the Parent and the Buyer.
(c) A Good Standing Certificate for the Buyer issued by the
Secretary of State of the jurisdiction of its incorporation and dated not more
than 20 business days prior to the Closing Date.
(d) A certificate of an officer of the BUYER certifying and
warranting that the representations, warranties and agreements of the BUYER
contained in this Agreement are true and accurate in all material respects as of
the Closing Date and that the Buyer has satisfied and performed
27
<PAGE>
all of its respective obligations hereunder.
6.5 THE SELLER'S CLOSING DOCUMENTS. At the Closing, the Seller shall
deliver to the Parent and the Buyer, in form and substance reasonably
satisfactory to the Parent and the Buyer, all consents required under the
Contracts, and appropriate documents to effect or evidence the sale, conveyance,
assignment and transfer to the Buyer of the Assets as contemplated hereby and
necessary to place the Buyer, its officers, agents and employees in full
possession and enjoyment of all Assets as contemplated hereby, including the
following:
(a) A Bill of Sale and Assignment, containing such covenants
and warranties of title as are consistent with the Seller's representations and
warranties under this Agreement and providing for full substitution and
subrogation of the Buyer in and to all covenants and warranties by others
theretofore given or made in respect of such assets, and such other instruments
of assignment or transfer as shall be necessary or reasonably desirable to vest
in the Buyer all of the Seller's right, title and interest in and to all
Contracts, Intellectual Property, Intangible Assets, Personal Property, Assumed
Leases and other intangible property of the Seller to be sold or transferred to
the Buyer under this Agreement.
(b) Copies of resolutions adopted by the board of directors of
the Seller authorizing the execution and delivery of, and performance of the
Seller's obligations under, this Agreement, certified by the Secretary or an
Assistant Secretary of the Seller.
(c) A Good Standing Certificate for the Seller issued by the
Secretary of State of the jurisdiction of their respective incorporation and
dated not more than 20 business days prior to the Closing Date.
(d) A certificate of the President of the Seller, certifying
and warranting that the representations, warranties and agreements of the Seller
contained in this Agreement are true and accurate in all material respects as of
the Closing Date and that Seller has satisfied and performed all of its
obligations hereunder.
28
<PAGE>
(e) Evidence of any authorization, consent, approval or filing
with any public body or governmental authority or any other Person necessary in
connection with this Agreement.
(f) Such other documents as the Buyer shall reasonably
request.
Section 7. ADDITIONAL COVENANTS. If Closing occurs hereunder, then from and
after the Closing Date, the parties hereto shall be bound by the following
covenants:
7.1 POST-CLOSING ACCESS. The Buyer shall, following the Closing, give
to the Seller and its respective authorized representatives such reasonable
access, at the Seller's cost and expense, during normal business hours and upon
prior notice, to books and records constituting part of the Assets (including
without limitation all such accounting books and tax records) as the Seller may
reasonably require in connection with the preparation and filing of tax returns,
collection by the Buyer of the Accounts Receivable, audits or any claim made by
any party with respect to a liability or obligation that is not an Assumed
Obligation.
7.2 COOPERATION IN THIRD-PARTY LITIGATION.
(a) After the Closing, the Seller shall provide such
cooperation as the Buyer or its counsel may reasonably request in connection
with (i) any proceedings related to the Business other than the Excluded Assets
or the Excluded Obligations; (ii) the Seller's conduct of the Business prior to
the Closing which are hereafter pending or threatened and to which the Buyer is
a party, (iii) any proceedings for which the Seller is entitled to
indemnification from the Buyer under Section __. Such cooperation shall include,
but not be limited to, making employees of the Seller available upon the
reasonable request and at the expense of the Buyer or its counsel to consult
with and assist the Buyer and its counsel in connection with any such
proceedings and to prepare for and testify in any such proceedings, including
depositions, trials and arbitration proceedings.
29
<PAGE>
(b) The Buyer agrees that after the Closing, the Buyer shall
provide such cooperation as the Seller or its counsel may reasonably request in
connection with (i) pending or threatened proceedings set forth in Schedule ___;
(ii) any proceedings relating to the Business which are hereafter pending or
threatened and to which the Seller is a party; and (iii) any proceedings for
which the Buyer is entitled to indemnification from the Seller under Section 8.3
hereof. Such cooperation shall include, but not be limited to, making employees
of the Buyer available upon the reasonable request and at the expense of the
Seller or its counsel to consult with and assist the Seller and its counsel
regarding any such proceedings and to prepare for and testify in connection with
any such proceedings, including depositions, trials and arbitration proceedings.
(c) The provisions of this Section 7.2 are not intended to
conflict with, and shall not override the provisions of Sections ___ hereof.
7.3 DISCHARGE OF BUSINESS OBLIGATIONS. From and after the Closing Date,
the Seller shall pay and discharge when due all obligations and liabilities of
the Seller incurred prior to the Closing Date (except for the Assumed
Obligations), and in furtherance of the foregoing shall discharge on a timely
basis all such liabilities or obligations to employees, trade creditors,
suppliers and customers.
7.4 FURTHER ASSURANCES. The Seller from time to time after the Closing,
at the Buyer's request, will execute, acknowledge and deliver to the Buyer such
other instruments of conveyance and transfer and will take such other actions
and execute and deliver such other documents, certifications and further
assurances as the Buyer may reasonably require in order to vest more effectively
in the Buyer, or to put the Buyer more fully in possession of, any of the
Assets. Each of the parties hereto will cooperate with the other and execute and
deliver to the other parties hereto such other instruments and documents and
take such other actions as may be reasonably requested from time to time by any
other party hereto as necessary to carry out, evidence and confirm the intended
purposes of this Agreement.
Section 8. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION.
30
<PAGE>
8.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES AND COVENANTS. The
representations, warranties, covenants, and obligations of the Buyer and the
Seller set forth in this Agreement and in any certificate, agreement, or
instrument delivered in connection with the transactions contemplated hereby,
shall survive the Closing for a period equal to the greater of (i) the
applicable statute of limitations or (ii) a period of three years.
8.2 INDEMNIFICATION BY THE SELLER. In addition to and not in limitation
of the Seller's indemnification obligations set forth elsewhere in this
Agreement, the Seller shall, defend, indemnify, and hold harmless the Parent and
the Buyer and their affiliates and their respective officers, directors,
shareholders, agents and employees (individually, a "Buyer Indemnitee" and
collectively the "Buyer Indemnitees"), from and against any and all claims,
losses, deficiencies, liabilities, obligations, damages, penalties, punitive
damages, costs, and expenses (including, without limitation, reasonable legal,
accounting and consulting fees), whether or not resulting from third party
claims (collectively, "Losses"), suffered by a Buyer Indemnitee, which arise out
of or result from:
(a) any inaccuracy or misrepresentation in or breach of any of
the representations, warranties, covenants or agreements made by the Seller in
this Agreement or in any document, certificate or affidavit delivered by the
Seller pursuant to the provisions of this Agreement;
(b) any obligation, liability, debt or commitment of the
Seller which is not an Assumed Obligation (or is an Excluded Obligation),
whether or not paid by the Buyer; and
(c) any claims by any Person arising out of or due to the
failure to comply with the bulk transfers laws, fraudulent conveyance or other
laws for the protection of creditors of the State of Florida including, without
limitation, any claims by any Person against all or any part of the Assets.
(d) any other matter related to the conduct of the Business by
the Seller or any predecessor or the use or ownership of the Assets prior to the
Closing (including, but not limited to, all acts, omissions and conditions
existing or occurring prior to the Closing for which any of the Buyer
Indemnitees is alleged to be liable pursuant to any successor or similar theory
of liability).
31
<PAGE>
8.3 INDEMNIFICATION BY THE BUYER. The Buyer shall defend, indemnify and
hold harmless, the Seller and the Seller's respective officers, directors,
agents and employees (individually, a "Seller Indemnitee" and collectively the
"Seller Indemnitees") from and against any and all Losses, suffered by a Seller
Indemnitee, which arise out of or result from (a) any inaccuracy or
misrepresentation in or breach of any of the representations, warranties,
covenants or agreements made by the Buyer in this Agreement or in any document,
certificate or affidavit delivered by the Buyer pursuant to the provisions of
this Agreement; (b) any Taxes arising from the operation by the Buyer after the
Closing Date of the Business purchased by the Buyer; or (c) any of the Assumed
Obligations.
8.4 INDEMNIFICATION PAYMENTS. All indemnity payments, whether by the
Buyer or the Seller, to be made under this Agreement shall be made in
immediately available funds.
8.5 PROCEDURE FOR THIRD PARTY CLAIMS.
(a) Notice to the indemnifying party shall be given promptly
after receipt by any Seller Indemnitee or Buyer Indemnitee of actual knowledge
of the commencement of any action or the assertion of any claim that will likely
result in a claim by it for indemnity pursuant to this Agreement. Such notice
shall set forth in reasonable detail the nature of such action or claim to the
extent known, and include copies of any written correspondence or pleadings from
the party asserting such claim or initiating such action. The indemnifying party
shall be entitled, at its own expense, to assume or participate in the defense
of such action or claim. In the event that the indemnifying party assumes the
defense of such action or claim, it shall be conducted by counsel chosen by such
party and approved by the party seeking indemnification, which approval shall
not be unreasonably withheld.
(b) With respect to actions as to which the indemnifying party
does not exercise its right to assume the defense, the party seeking
indemnification shall assume and control the defense of and contest such action
with counsel chosen by it and approved by the indemnifying party, which approval
shall not be unreasonably withheld. The indemnifying party shall be entitled to
participate in the defense of such action, the cost of such participation to be
at its own expense. The indemnifying
32
<PAGE>
party shall be obligated to pay the reasonable attorneys' fees and expenses of
the party seeking indemnification to the extent that such fees and expenses
related to claims as to which indemnification is payable under Sections __ or
__, as such expenses are incurred.
(c) Both the indemnifying party and the indemnified party
shall cooperate fully with one another in connection with the defense,
compromise, or settlement of any such claim or action, including, without
limitation, by making available to the other all pertinent information and
witnesses within its control.
8.6 REMEDIES CUMULATIVE. The remedies provided for herein shall be
cumulative and shall not preclude assertion by any party of any other rights or
the seeking of any other remedies against any other party. Nothing contained in
this Section 8.6 shall be construed in any way to limit, impair or modify any
provisions of this Agreement or to otherwise impose any additional liability or
obligation on the Buyer at any time for any liability or obligation of the
Seller other than the Buyer's obligation to indemnify the Seller hereunder.
8.7 SUCCESSORS. The merger, consolidation, liquidation, dissolution or
winding up of, or any similar transaction with respect to, the parties hereto
shall not affect in any manner the obligations of the parties pursuant to
Section 8.7 or any other term or provision of this Agreement, and the parties
covenant and agree to make adequate provision for their liabilities and
obligations hereunder in the event of any such transaction.
8.8 LIMITS ON INDEMNIFICATION. Notwithstanding the provisions of
Sections 8.2 and 8.3 above, neither the Buyer Indemnitees nor the Seller
Indemnitees shall be entitled to receive indemnification under this Agreement
for a claim relating to a breach of a representation or warranty contained
herein until the aggregate amount of indemnification claims they shall have
asserted hereunder shall exceed $10,000; provided that if the Buyer Indemnitees
or the Seller Indemnitees shall successfully assert claims for indemnification
hereunder in excess of $10,000 in the aggregate they shall be entitled to
receive indemnification for the full amount of the indemnity claims without
regard to the $10,000 "threshold".
33
<PAGE>
Section 9. BROKERAGE.
9.1 FINDERS AND BROKERS FEES. Each of the parties represents that it
has dealt with no broker or finder in connection with any of the transactions
contemplated by this Agreement, and, insofar as it knows, no broker or other
person is entitled to any compensation including, without limitation, a
commission or finder's fee, in connection with any of these transactions. The
parties each agree to indemnify and hold harmless one another against any loss,
liability, damage, cost, claim, or expense incurred by reason of any
compensation, including, without limitation, brokerage, commission, or finder's
fee, alleged to be payable because of any act, omission, or statement or the
indemnifying party.
Section 10. GENERAL PROVISIONS.
10.1 SALES AND TRANSFER TAXES. The Seller shall pay any and all taxes,
federal, state, or local, in the nature of income, sales, use, transfer gains,
conveyance, recording, ad valorem, stamp, transfer and any similar tax, fee or
duty required to be paid in respect of the conveyance, assignment, or transfer
to the Buyer of the Assets and the filing and recording thereof (collectively,
the "Transfer Taxes").
10.2 NO THIRD PARTY BENEFICIARIES. Nothing in this Agreement is
intended, nor shall it be construed, to confer any rights or benefits upon any
Person (including, but not limited to, any employee or former employee of the
Seller) other than the parties hereto, and solely to the extent provided in
Section 8, the other the Seller Indemnitees and the Buyer Indemnitees, and no
other Person shall have any rights or remedies hereunder.
10.3 EXPENSES OF THE PARTIES; CERTAIN LITIGATION. All expenses involved
in the preparation, authorization, and consummation of this Agreement, incurred
up to and including the Closing, including, without limitation, all fees and
expenses of agents, representatives, counsel, and accountants in connection
therewith, shall be borne solely by the party who shall have incurred the same,
and the
34
<PAGE>
other parties shall have no liability in respect thereof; provided, however,
that nothing herein shall be construed to release or impair any claim for
damages by any party.
10.4 AMENDMENT AND WAIVER. This Agreement may not be changed or
terminated orally. No waiver of compliance with any provision or condition
hereof, and no consent provided for herein shall be effective unless evidenced
by an instrument in writing duly executed by the party hereto sought to be
charged with such waiver or consent.
10.5 MISCELLANEOUS. The Section headings of this Agreement are for
convenience of reference only and do not form a part hereof and do not in any
way modify, interpret, or construe the intentions of the parties. This Agreement
may be executed in one or more counterparts and all such counterparts shall
constitute one and the same instrument. This Agreement shall be governed by and
construed in accordance with the Laws of the State of Florida; without giving
effect to the conflict of laws principles thereof.
10.6 BINDING EFFECT. This Agreement shall inure to the benefit of and
be binding upon the parties hereto and their respective administrators, legal
representatives, successors and permitted assigns.
10.7 PUBLICITY. No party hereto or its representatives will, without
the prior written consent of the other parties, disclose to any other person any
information that has been made available in connection with this Agreement
(other than information which has been published or made publicly available
other than by unauthorized disclosure of a party), make any public announcement
concerning the transactions contemplated hereby or disclose any of the terms,
conditions, or other facts with respect to this Agreement, except as required by
Law. If circumstances make it impossible to give such prior written notice, then
any disclosure made shall be no more extensive than is necessary to meet the
minimum requirement imposed on the party making such disclosure.
10.8 COMPLETE AGREEMENT. This Agreement and Schedules and other
documents referred to herein contain the entire agreement between the parties
hereto with respect to the transactions
35
<PAGE>
contemplated herein and supersede all previous negotiations, commitments, and
writings.
10.9 NOTICES. Any notice, report, demand, waiver, consent or other
communication given by a party under this Agreement (each a "notice") shall be
in writing, may be given by a party or its legal counsel, and shall deemed to be
duly given (i) when personally delivered, or (ii) upon delivery by United States
Express Mail or similar overnight courier service which provides evidence of
delivery, or (iii) when five days have elapsed after its transmittal by
registered or certified mail, postage prepaid, return receipt requested,
addressed to the party to whom directed at that party's address as it appears
below or another address of which that party has given notice, or (iv) when
transmitted by telex (or equivalent service), the sender having received the
answer back of the addressee, or (v) when delivered by facsimile transmission if
a copy thereof is also delivered in person or by overnight courier. Notices of
address change shall be effective only upon receipt notwithstanding the
provisions of the foregoing sentence.
Notice to the Seller shall be sufficient if given to:
BGS (SouthWest) Inc.
---------------------------------
ATTN: Mr.
------------------------
Fax:
-----------------------------
with a copy to:
Fax:
Notice to the Buyer shall be sufficient if given to:
36
<PAGE>
Whoodoo.com, Inc.
1660 Trade Center Way, Naples, Florida.
ATTN: Mr. Paulo Mylla
Fax: (941) 594-2700
with a copy to: Michael Harris, P.A.
1645 Palm Beach Lakes Boulevard
Suite 550
West Palm Beach, Florida 33401
ATTN: Michael D. Harris, Esq.
Fax: (561) 478-1817
10.10 SEVERABILITY. If any term or provision of this Agreement shall be
held to be invalid or unenforceable for any reason, such term or provision shall
be ineffective to the extent of such invalidity or unenforceability without
invalidating the remaining terms and provisions hereof, and this Agreement shall
be construed as if such invalid or unenforceable term or provisions had not been
contained herein.
10.11 EFFECT OF INVESTIGATION. Any inspection, preparation or
compilation of information or schedules, or audit of the inventories,
properties, financial condition or other matters relating to the Seller
conducted by or on behalf of the Buyer pursuant to this Agreement shall in no
way limit, affect or impair the ability of the Buyer to rely upon the
representations, warranties, covenants and agreements of the Seller set forth
herein.
10.12 TERMINATION.
(a) This Agreement may be terminated at any time prior to the
Closing by mutual written consent of the Seller and the Buyer.
37
<PAGE>
(b) If this Agreement is terminated as provided herein: (i)
each party will redeliver all documents, work papers and other material of the
other party or parties relating to the transactions contemplated hereby, whether
so obtained before or after the execution hereof, to the party furnishing the
same; (ii) no information received by any party hereto with respect to the
business of the other party or their affiliated companies (other than
information which is a matter of public knowledge or which has heretofore been
or is hereafter published in any publication for public distribution or filed or
available as public information with any governmental authority) shall at any
time be used for the advantage of, or disclosed to third parties, by such party
for any reason whatsoever; and (iii) no party shall have any liability or
further obligation to any other party to this Agreement except as provided by
this Section ___, except to the extent such claim or obligation has accrued
prior to such termination of this Agreement.
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be duly
executed under seal as of the date first above written.
Whoodoo.com, Inc.
- -----------------------------
By:
------------------------------------
Mr. Paulo Mylla, President
- -----------------------------
BGS (SouthWest) Inc.
- -----------------------------
By:
------------------------------------
, President
- ----------------------------- ------------------
38
<PAGE>
TABLE OF SCHEDULES
<TABLE>
<CAPTION>
<S> <C>
Schedule 2.1(a)......................................................................................Prepaid Assets
Schedule 2.1(b)...................................................................................Personal Property
Schedule 2.1(c)............................................................................................. Leases
Schedule 2.1(d)...........................................................................................Contracts
Schedule 2.1(f)...............................................................................Intellectual Property
Schedule 2.2........................................................................................Excluded Assets
Schedule 2.3(b)...............................................................................................Liens
Schedule 2.4....................................................................................Assumed Obligations
Schedule 2.5(d).........................Excluded Obligations - exception for certain employees, officers, directors
Schedule 2.5(i).......................................................................................Prepaid Items
Schedule 3.2...........................................................................Allocation of Purchase Price
Schedule 3.3........................................................................................Pro-rated Items
Schedule 4.1(b)...............................................Authorization: NO Restrictions, Consents or Approvals
Schedule 4.1(d)........................................................................................Subsidiaries
Schedule 4.1(f)............................................................................Material Adverse Changes
Schedule 4.1(g)........................................................................Tax Returns not timely filed
Schedule 4.1(h)...........................................................................Interest in Real Property
Schedule 4.1(i).............................................Leases (include whether consent to assign is necessary)
Schedule 4.1(j).........................................................................Contracts & Other Documents
Schedule 4.1(k)..................................................................................Labor Difficulties
Schedule 4.1(l)..................................................................................Licenses & Permits
Schedule 4.1(m)................................................................Accounts Receivable & Aging Schedule
</TABLE>
39
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Schedule 4.1(n).............................................................................Undisclosed Liabilities
Schedule 4.1(o).............................................................................Non-Compliance with Law
Schedule 4.1(p)...................................................................Intellectual Property, Intangible
Assets and Confidentiality, secrecy or similar agreements
Schedule 4.1(q)..................................................................................Pending Litigation
Schedule 4.1(r)...................................................................Customer List as of July __, 1999
Schedule 4.1(v)................................................................................Financial Statements
Schedule 4.2(b)..................................................................Authorization, Consent or Approval
Schedule 5.1(a).............................................Business Conduct not in the ordinary course of business
Schedule 6.1(e)..................................................................Material Adverse Changes of Seller
Schedule 6.1(k).........................................Termination of Agreements between Seller of Related Parties
</TABLE>
40
<PAGE>
SCHEDULE 2.1(A)
TO THE ASSET PURCHASE AGREEMENT BETWEEN
WHOODOO.COM, INC. AND BGS (SOUTHWEST FLORIDA) INC.
PREPAID ASSETS
N/A
41
<PAGE>
SCHEDULE 2.1(B)
TO THE ASSET PURCHASE AGREEMENT BETWEEN
WHOODOO.COM, INC. AND BGS (SOUTHWEST FLORIDA) INC.
Personal Property
A. Furniture and fixtures
1. ADMINISTRATION $
- ---------------------------------------------
DESK AND CREDENZA 1,054.81
LATERAL FILE 506.57
Chair 246.70
Guest Chair 163.13
Shelf 306.23
Picture 59.35
Picture 69.95
2. CONFERENCE ROOM $
- ---------------------------------------------
TABLE 437.89
8 Chairs 1,762.99
Picture 54.05
Picture 59.35
Picture 65.65
3. PRESIDENT $
- ---------------------------------------------
DESK AND CREDENZA 1,993.54
Chair 495.13
2 Guest Chairs 746.41
Book Case 706.91
Picture 289.00
Picture 75.25
Blinds 404.17
4. MANAGER $
- ---------------------------------------------
DESK AND CREDENZA 1,224.94
Shelf 306.23
Chair 220.37
42
<PAGE>
2 Guest Chairs 326.27
5. DESIGNERS $
- ---------------------------------------------
4 WORK SURFACES 1,396.88
4 Chairs 941.03
Picture 43.45
Picture 48.75
Picture 43.45
Picture 43.45
6. SALES $
- ---------------------------------------------
4 Chairs 661.69
4 Desks (modules) 1,674.37
4 Fabric Panels 1,735.39
4 Boxfiles 1,204.03
Working area 932.80
2 Storage Cabinets 211.98
3 Lateral Files 635.97
Picture 287.25
Picture 75.25
Picture 266.05
Picture 80.55
7. SERVER $
- ---------------------------------------------
DESK 211.99
8. KITCHEN $
- ---------------------------------------------
Refridgerator 7-14CF Model SYO SR952W 317.99
B. OFFICE EQUIPMENT $
- ---------------------------------------------
XEROX COPIER 5016 1,500.00
FAX PANASONIC KXF1150 300.00
TELEVISION SET QUASAR SP3219 499.98
VIDEO CASSETTE QUASAR VHQ730 129.99
43
<PAGE>
C. TELEPHONE SYSTEM $
- ---------------------------------------------
SAMSUNG DCS COMPACT COMMUNICATIUON SYSTEM 5,941.30
Consisting of:
- - 1 Samsung DCS Compact Unit (Equip 8X16)
- - 1 Samsung Basic Software
- - 1 Samsung Ram 1 Card
- - 2 Samsung 2X4 Expansion Card
- - 2 Samsung 24-Button Display Phones
- - 10 Samsung 12-Button Display Phones
- - 1 Panamax AC & 8CO Surge Protect Unit
- - 1 Battery Back-up Unit
- - 18 Inside Cable Runs
- - 18 CAT-5 Computer Cable Runs W/24 Port Patch Panel
- - 12 CAT-5
- - Upgrade 24 Port to 48 Port
- - Plywood back board
D. Alarm System $
Alarm System consisting of: 975.00
- - 1 Control Panel Ademco 4110XM
- - 1 Digital Keypad 6128
- - 1 Inside Speaker Siren 747
- - 2 Passage doors contacted 1125T
- - 2 Glass Break Sensors 5820
- - 1 Passive Infrared detector 998
E. COMPUTER EQUIPMENT $
- ---------------------------------------------
COMPUTER EQUIPMENT CONSISTING OF: 34,705.72
- - 2 Dell Dimesion XPS 300MHz Pentium II MiniTower Base
with MMX Technology and 512K Cache
- - 2 Microsoft PS2 Intellimouse, shipped with system
- - 2 WIN95 Spacesaver Quiet Key, 104 Key Keyboard, Factory Installed
- - 2 128MB, SDRAM, DIMM, ECC, Factory installed
- - 2 Altec ACS90 Speakers shipped with system
- - 2 Creative Labs AWE64 ISA Sound Card, Factory installed
- - 2 12/24x EIDE CD ROM, Factory installed
- - 2 Dell 1200HS, Model #D1226H, with 17.9" Viewable Image Size, Color monitor
- - 2 STB, Nitro, 4MB, Virge GX, SPS PCI, Video Board, Factory Installed
44
<PAGE>
- - 2 3.5, 1.44MB Floppy Drive, Factory installed
- - 2 4.3GB EIDE Ultra ATA Hard Drive, Factory installed
- - 2 Iomega Zip Drive for Windows 95 factory installed
- - 2 Windows '95 CD ROM Factory installed
- - 2 3 Com, 3C905-TX, Ethernet, Network Card, Windows 95 Factory installed
- - 2 MS OFFICE 97 Small Business Edition, CD, Factory Installed US English
- - 2 Ms Bookshelf 96 on CD, W95, NT4.0, US English, Factory installed.
- - 1 Dell Dimension XPS 300MHz Pentium II Mini Tower Base with MMX Technology and
512K cache
- - 1 MICROSOFT PS2 Intellimouse, shipped with system
- - 1 WIN95 Spacesaver Quiet Key Keyboard, factory installed
- - 1 128MB, SDRAM, DIMM, ECC, factory installed
- - 1 Altec ACS90 speakers shipped with system
- - 1 Creative labs AWE64 ISA Sound Card, factory installed
- - 1 12/24x EIDE CD ROM Factory installed
- - 1 Ultrascan 1000TX, Color Monitor, Model #D1025HTX,15.9"Vis, Factory installed
Dimension
- - 1 STB, Nitro, 4MB, Virge GX, SPS PCI, Video Board, Factory installed
- - 1 3.5, 1.44 Floppy Drive, factory installed
- - 1 4.3 EIDE ultra ATA hard Drive, factory installed
- - 1 Iomega ZIP Drive for Windows 95 factory installed
- - 1 3 Com, 3C905-TX, Ethernet, Network Card, Windows 95 factory installed
- - 1 MS OFFICE 97 Professional with Bookshelf Basics on CD factory installed, US,
English
- - 1 Dell PowerEdge 220 Base, 266 MHz Processor with 512K Cache
- - 1 Logitec System Mouse, with disks not factory installed
- - 1 Performance 104 key keyboard for Windows 95 factory installed
- - 1 Dell PowerEdge 4200, Processor Terminator Card, Factory installed
- - 1 8x SCSI CD-ROM Drive, factory installed
- - 1 Ultrascan 800 HS (13.7"VIS) Trinitron Model # D825HT with 13.7" Viewable
Image Size for Dell Optiplex, factory installed
- - 1 9GB SCSI Hard Drive, factory installed
- - 1 Hard Drive Configuration for Dell PowerEdge 2100 factory installed
- - 1 1.4 MB Floppy Drive for Dell PowerEdge 2200 factory installed
- - 1 12/24 GB Tape Backup, for Dell PowerEdge 2200 factory installed
- - 1 ReadyWare Installation Fee per system
- - 1 Intel EtherExpress PRO 100/B PCI Ethernet Adapter factory installed
- - 1 Microsoft NTS 4.0 on CD, 10 Client Access Licenses OEM Packaging, US Version
non factory installed - 1 128 MB RAM (64MB Free) Upgrade, 1 DIMM, for Dell
PowerEdge 2200 factory installed.
- - 1 SMART-UPS 1000VA Net Bundle w/
- - 1 Superstack II Hub 100TX 12 POR
- - 3 Dell Dimesion 166 MHz Minitower Base with MMX Technology, 512K Cache and
2 MB Video
- - 3 Microsoft PS2 Intellimouse, factory installed
45
<PAGE>
- - 3 WIN 95 Spacesaver Quiet Key Keyboard, factory installed
- - 3 64 MB RAM, 2 DIMMS, SDRAM, factory installed
- - 3 Vibra 16C Sound Card for Windows 95, factory installed
- - 3 Altec ACS90 speakers shipped with system
- - 3 12/24 xEIDE CD ROM Factory installed
- - 3 Ultrascan 800 HS Trinitron with 13.7" Viewable Image Size, Model # D825HT,
for Dell Dimesion Factory
installed
- - 3 3.2 GB EIDE Hard Drive, Factory installed
- - 3 3.5", 1.44 MB Boot Floppy Drive, Factory installed
- - 3 Iomega, removable Storage Zip EIDE, for Windows 95 factory installed
- - 3 Windows '95 CD ROM Factory installed
- - 3 3C905-TX ENET 10/100 Network Card factory installed
- - 3 MS Office 97 Small Business edition, CD, factory installed US English
- - 3 Ms Bookshelf 96 on CD, W95, NT4.0 US English
- - 2 IBM PAR PNTR CENT DB25 MALE/36
- - 1 HP Deskjet 890CXI EXTL
- - 1 HP Scanjet 5P 24BIT CLR &8BIT
- - 1 HP Jetdirect EX Hi-performance
- - 1 Databurst ISDN 128K NTI V
- - 1 CD-R 2006/Plus 2X INT Recorder
- - 1 Digital Mavica still Camera
- - 1 Adaptec Fast SCSI-2 32 Bit PCI Adapter
- - 4 Back-ups 400 from APC
- - 4 APC Back-ups 280 SBY 280VA/180W
- - 4 APC Personal Surge Protection (7 outlet)
- - APC Personal Surge Protection (7 outlet + Telephone)
- - 1 NET3T Network SurgeArrest (3 Outlet + Modem/fax) from APC
- - 14 3" CAT5 Patch Cable
- - 3 14" CAT5 Patch Cable
- - 3 25" CAT5 Patch Cable
- - 4 3 Com Fast Ether Link XL/100Mbps PCI RJ 45 Network adapter
- - 1 NetPort Express PRO/100 FastEthernet 2 Port Ext Multi OS Print Server by
Intel
- - 1 Etherlink III Ethernet PCCARD RJ45 NIC Type II PCMCIA
- - 1 19" 4Unit Rack Mount 9.3"x12"
- - 1 Smart -ups 1000 from APC (6 outlet)
- - 1 Microsoft Proxy server v2.0 for Windows NT CD
46
<PAGE>
Description Serial # Current Book Depreciated Replacement
Value Cost
Adobe ABW80OC71
Illustrator 06961-806
Adobe MBW500B71
Premiere 5.0 07938-480
Adobe PWW401R7
Photoshop 4 121584-597
Adobe PWW401R7
Photoshop 5 121584-597
1 HP Scanning C6297-
Software 15500
HP Scanjet C5112-
Scanner 15501
HP Scanjet C5112-
Scanner 15501
HP Surestore C4380-
CD Writer Plus 12000
Easy Cd
Creator
Smart & 495148-00
Friendly
Pc Anywhere 07-83-00157
Version 8.0
Meta Info News 761lGl-74
Channel
Net Objects CM-W-
Fusion 10006-01
Corel OVW32<288
Web Designer >25OWDSN
E11078
HP LaserJet
6P&6MP
HP LaserJet
6P&6MP
Adobe Type On 039717874/9
Call 6
Macromedia FLD200-
Flash 2 09365-
37071-93686
Macromedia FLD200-
Flash 2 02060-
47071-83617
Macromedia FLW300055 Listed item 22
Flash 3 69-57032-
2503
Kurzweil Voice KURZ2520-
Pro 11011928
Smart Business 42-63009-01
Card Reader
WebTrends 87585119
CorelDraw7 DR7-
8264C58514
Seagate #ST031001
Backup-Exec 220-201
#SBE-
CWWD-
001ST
Microsoft KRP8T-
Windows 98 B49XX-
83JDB-
89KRQ-
47
<PAGE>
9FYW8
Microsoft HP-PC
Windows 98 DWPRQ-
XKGTY-
RFKQF-
BJCHM-
K4BWD
Microsoft 8078-
FrontPage97 3604645
Microsoft 3123-
FrontPage98 0623897
Microsoft 3123-
FrontPage98 0128494
Microsoft Office 8145-
97 Professional 2232667
edition with
Bookshelf
Basics
10 licenses
Microsoft 3256-
Publisher 98 2678642
Microsoft LIBRARY
Visual X03-86016
Studio6.0 LIBRARY
X03-73112
J++ 325-
1604253
VISUAL
STUDIO
814-8157151
Microsoft X03-46849
[ ]
Internet
Explorer
[ ]
Microsoft 814-7185167
[ ]
BackOffice
[ ]
Server
[ ]
1 license
[ ]
10 client
[ ]
license
[ ]
Microsoft 8145-
[ ]
Outlook 0703056
Microsoft 814-8497034
BackOffice
Small Business
Server
1 server license
2 client
licences
Microsoft 20097-OEM-
Windows NT 0024294-
Server 87919
Microsoft 815-3910726
48
<PAGE>
Windows NT
Workstation
Microsoft Site 814-8376972
Server
Microsoft Proxy 810-1670752
Server
Microsoft 23097-OEM-
Bookshelf 96 0024276
Microsoft 23097-
Bookshelf 96 OEM002427
6-92526
Microsoft 23097-OEM-
Bookshelf 96 0024276-
58864
Microsoft Office 25297-OEM-
Small Business 00245555-
Version 76452
Microsoft Office 25297-OEM-
Small Business 0024564-
Version 02490
Microsoft Office 25297-OEM-
Small Business 0024555-
Version 77481
Intel 687439-001
NetportExpress
Print Server
Microsoft 25297-OEM-
Windows 95 0024555-
39362
Microsoft 12697-OEM-
Windows 95 0022343-
77777
Microsoft 26197-OEM-
Windows 95 0024796
Microsoft 05197-OEM-
Windows 95 0020903-
86476
Microsoft 25297-OEM-
Windows 95 0024555-
32071
Microsoft 26197-OEM-
Windows 95 0024796-
76665
Microsoft 26197-OEM-
Windows 95 0024796-
76687
Microsoft 19996-OEM-
Windows 95 0013604-
45959
Microsoft 05197-OEM-
Plus 1.O 0020937-
Money 5.0 57237
Encarta 97
3D Movie
maker
Bookshelf
Works
LaserJet 5021-0370
Internet
Publishing Kit
LaserJet 5021-0370
Internet
49
<PAGE>
Publishing Kit
WillowwTalk
FileMaker 1-1014-
Pro4.0 0877-9606-
4362
Real Server 5.0 5e6lOzc862
Real Server 5.0 507930a5e3
3154030064
0702f000790
0021061054
1af7767d559
007702
Real Server 5.0 6c610zf1d2f
Upgrade 0793db59f35
7eO20011O7
0260007b00
0020043014
12cl65f8590
0740a
Real Server G2 P/N
Upgrade 23001008
Real Publisher 51002
Real Publisher 51002
Miro PPN CD-
VideoDC30 0007-3.0
Plus
TitleDeko PPN CD-
0010-1.OA
Peach Tree 10604990
Complete
Accounting
QuickCam 1073-800-
002
PowerChute 991-2000
Plus
US Robotics 1.031.002-00
Software PVC-
Library Sony 130/150
Vaio
QuickCad 110-5734014
50
<PAGE>
SCHEDULE 2.1(C)
TO THE ASSET PURCHASE AGREEMENT BETWEEN
WHOODOO.COM, INC. AND BGS (SOUTHWEST FLORIDA) INC.
LEASES
Filed Pursuant to Regulation 232.202 of the Securities and Exchange Commission
51
<PAGE>
SCHEDULE 2.1(D)
TO THE ASSET PURCHASE AGREEMENT BETWEEN
WHOODOO.COM, INC. AND BGS (SOUTHWEST FLORIDA) INC.
CONTRACTS
N/A
52
<PAGE>
SCHEDULE 2.1(F)
TO THE ASSET PURCHASE AGREEMENT BETWEEN
WHOODOO.COM, INC. AND BGS (SOUTHWEST FLORIDA) INC.
INTELLECTUAL PROPERTY
N/A
53
<PAGE>
SCHEDULE 2.2
TO THE ASSET PURCHASE AGREEMENT BETWEEN
WHOODOO.COM, INC. AND BGS (SOUTHWEST FLORIDA) INC.
EXCLUDED ASSETS
N/A
54
<PAGE>
SCHEDULE 2.3(B)
TO THE ASSET PURCHASE AGREEMENT BETWEEN
WHOODOO.COM, INC. AND BGS (SOUTHWEST FLORIDA) INC.
LIENS
N/A
55
<PAGE>
SCHEDULE 2.4
TO THE ASSET PURCHASE AGREEMENT BETWEEN
WHOODOO.COM, INC. AND BGS (SOUTHWEST FLORIDA) INC.
ASSUMED OBLIGATIONS
<TABLE>
<CAPTION>
<S> <C>
1. Current Liabilities at June 30, 1999
Federal Payroll Taxes Payable $10,089.24
FUTA Tax Payable 112.03
SUTA Tax Payable 477.23
Other Current Liabilities
Nanologic Invoices, Inc. Invoices #23, 25, and 46 (K. Casey, 4,460.00
Programmer)
Girardin, Baldwin & Associates (Accountant tax return) 2,500.00
American Express Corporate includes Domain Name Registrations 1,750.00
Gas Expenses, hardware (memory expansion/Dell) 4,320.34
Stanley Rose, attorney: 2.25 hours (placement of shares, immigration 650.00
issue) +1 hour (Phone call - B. Dickie)
Network Solutions: Domain Name Registrations - 630.00
Sprint (Toll free) 23.32
Sprint (Internet Access) 901.15
Did-it.com 73.12
Gold Key Lease (Jeep lease) 489.92
Spring (Local Calls) 352.64
Federal Express 65.00
Accuweather 81.15
Crystal Springs 14.54
Oswald Trippe (Crime-simplified insurance) 170.10
Florida Power & Light 189.06
Tell Office Pro-Lease Office 2,173.34
Network Solutions 630
Bankers Insurance 397
Long-Term Liabilities
Credit Line - Pelican N. Bank 9,805.00
Notes Payable
Ixora Loan 8,000.00
WQVF Radio 5,939.96
2. Liabilities incurred in the ordinary course of business subsequent to June
30, 1999.
----------------------
----------------------
----------------------
</TABLE>
56
<PAGE>
SCHEDULE 2.5(D)
TO THE ASSET PURCHASE AGREEMENT BETWEEN
WHOODOO.COM, INC. AND BGS (SOUTHWEST FLORIDA) INC.
EXCLUDED OBLIGATIONS - EXCEPTION FOR CERTAIN EMLOYEES, OFFICERS, DIRECTORS
N/A
57
<PAGE>
SCHEDULE 2.5(I)
TO THE ASSET PURCHASE AGREEMENT BETWEEN
WHOODOO.COM, INC. AND BGS (SOUTHWEST FLORIDA) INC.
PREPAID ITEMS
N/A
58
<PAGE>
SCHEDULE 3.2
TO THE ASSET PURCHASE AGREEMENT BETWEEN
WHOODOO.COM, INC. AND BGS (SOUTHWEST FLORIDA) INC.
ALLOCATION OF PURCHASE PRICE
N/A
59
<PAGE>
SCHEDULE 3.3
TO THE ASSET PURCHASE AGREEMENT BETWEEN
WHOODOO.COM, INC. AND BGS (SOUTHWEST FLORIDA) INC.
PRO-RATED ITEMS
N/A
60
<PAGE>
SCHEDULE 4.1(B)
TO THE ASSET PURCHASE AGREEMENT BETWEEN
WHOODOO.COM, INC. AND BGS (SOUTHWEST FLORIDA) INC.
AUTHORIZATION: NO RESTRICTIONS, CONSENTS OR APPROVALS
N/A
61
<PAGE>
SCHEDULE 4.1(D)
TO THE ASSET PURCHASE AGREEMENT BETWEEN
WHOODOO.COM, INC. AND BGS (SOUTHWEST FLORIDA) INC.
SUBSIDIARIES
N/A
62
<PAGE>
SCHEDULE 4.1(F)
TO THE ASSET PURCHASE AGREEMENT BETWEEN
WHOODOO.COM, INC. AND BGS (SOUTHWEST FLORIDA) INC.
MATERIAL ADVERSE CHANGES
N/A
63
<PAGE>
SCHEDULE 4.1(G)
TO THE ASSET PURCHASE AGREEMENT BETWEEN
WHOODOO.COM, INC. AND BGS (SOUTHWEST FLORIDA) INC.
TAX RETURNS NOT TIMELY FILED
N/A
64
<PAGE>
SCHEDULE 4.1(H)
TO THE ASSET PURCHASE AGREEMENT BETWEEN
WHOODOO.COM, INC. AND BGS (SOUTHWEST FLORIDA) INC.
INTEREST IN REAL PROPERTY
N/A
65
<PAGE>
SCHEDULE 4.1(I)
TO THE ASSET PURCHASE AGREEMENT BETWEEN
WHOODOO.COM, INC. AND BGS (SOUTHWEST FLORIDA) INC.
LEASES (INCLUDE WHETHER CONSENT TO ASSIGN IS NECESSARY)
66
<PAGE>
SCHEDULE 4.1(J)
TO THE ASSET PURCHASE AGREEMENT BETWEEN
WHOODOO.COM, INC. AND BGS (SOUTHWEST FLORIDA) INC.
CONTRACTS & OTHER DOCUMENTS
N/A
67
<PAGE>
SCHEDULE 4.1(K)
TO THE ASSET PURCHASE AGREEMENT BETWEEN
WHOODOO.COM, INC. AND BGS (SOUTHWEST FLORIDA) INC.
LABOR DIFFICULTIES
N/A
68
<PAGE>
SCHEDULE 4.1(L)
TO THE ASSET PURCHASE AGREEMENT BETWEEN
WHOODOO.COM, INC. AND BGS (SOUTHWEST FLORIDA) INC.
LICENSES & PERMITS
FILED PURSUANT TO REGULATION 232.202 OF THE SECURITIES AND EXCHANGE COMMISSION
69
<PAGE>
SCHEDULE 4.1(M)
TO THE ASSET PURCHASE AGREEMENT BETWEEN
WHOODOO.COM, INC. AND BGS (SOUTHWEST FLORIDA) INC.
ACCOUNTS RECEIVABLE & AGING SCHEDULE
FILED PURSUANT TO REGULATION 232.202 OF THE SECURITIES AND EXCHANGE COMMISSION
70
<PAGE>
SCHEDULE 4.1(N)
TO THE ASSET PURCHASE AGREEMENT BETWEEN
WHOODOO.COM, INC. AND BGS (SOUTHWEST FLORIDA) INC.
UNDISCLOSED LIABILITIES
N/A
71
<PAGE>
SCHEDULE 4.1(O)
TO THE ASSET PURCHASE AGREEMENT BETWEEN
WHOODOO.COM, INC. AND BGS (SOUTHWEST FLORIDA) INC.
NON-COMPLIANCE WITH LAW
N/A
72
<PAGE>
SCHEDULE 4.1(P)
TO THE ASSET PURCHASE AGREEMENT BETWEEN
WHOODOO.COM, INC. AND BGS (SOUTHWEST FLORIDA) INC.
INTELLECTUAL PROPERTY, INTANGIBLE ASSETS AND CONFIDENTIALITY, SECRECY OR
SIMILAR AGREEMENTS
N/A
73
<PAGE>
SCHEDULE 4.1(Q)
TO THE ASSET PURCHASE AGREEMENT BETWEEN
WHOODOO.COM, INC. AND BGS (SOUTHWEST FLORIDA) INC.
PENDING LITIGATION
N/A
74
<PAGE>
SCHEDULE 4.1(R)
TO THE ASSET PURCHASE AGREEMENT BETWEEN
WHOODOO.COM, INC. AND BGS (SOUTHWEST FLORIDA) INC.
CUSTOMER LIST AS OF AUGUST 4, 1999
FILED PURSUANT TO REGULATION 232.202 OF THE SECURITIES AND EXCHANGE COMMISSION
75
<PAGE>
SCHEDULE 4.1(V)
TO THE ASSET PURCHASE AGREEMENT BETWEEN
WHOODOO.COM, INC. AND BGS (SOUTHWEST FLORIDA) INC.
FINANCIAL STATEMENTS
N/A
76
<PAGE>
SCHEDULE 4.2(B)
TO THE ASSET PURCHASE AGREEMENT BETWEEN
WHOODOO.COM, INC. AND BGS (SOUTHWEST FLORIDA) INC.
AUTHORIZATION, CONSENT OR APPROVAL
N/A
77
<PAGE>
SCHEDULE 5.1(A)
TO THE ASSET PURCHASE AGREEMENT BETWEEN
WHOODOO.COM, INC. AND BGS (SOUTHWEST FLORIDA) INC.
BUSINESS CONDUCT NOT IN THE ORDINARY COURSE OF BUSINESS
N/A
78
<PAGE>
SCHEDULE 6.1(E)
TO THE ASSET PURCHASE AGREEMENT BETWEEN
WHOODOO.COM, INC. AND BGS (SOUTHWEST FLORIDA) INC.
MATERIAL ADVERSE CHANGES OF SELLER
N/A
79
<PAGE>
SCHEDULE 6.1(K)
TO THE ASSET PURCHASE AGREEMENT BETWEEN
WHOODOO.COM, INC. AND BGS (SOUTHWEST FLORIDA) INC.
TERMINATION OF AGREEMENTS BETWEEN SELLER OF RELATED PARTIES
N/A
80
EXHIBIT 4.1
THE SECURITIES REPRESENTED BY THIS CERTIFICATE AND ISSUABLE UPON
EXERCISE HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), OR UNDER THE PROVISIONS OF ANY
APPLICABLE STATE SECURITIES LAWS, BUT HAVE BEEN ACQUIRED BY THE
REGISTERED HOLDER HEREOF FOR PURPOSES OF INVESTMENT AND IN RELIANCE ON
STATUTORY EXEMPTIONS UNDER THE SECURITIES ACT, AND UNDER ANY APPLICABLE
STATE SECURITIES LAW. THESE SECURITIES AND THE SECURITIES ISSUED UPON
EXERCISE HEREOF MAY NOT BE SOLD, PLEDGED, TRANSFERRED OR ASSIGNED, NOR
MAY THIS WARRANT BE EXERCISED, EXCEPT IN ACCORDANCE WITH TERMS SET
FORTH IN THIS CERTIFICATE OR IN A TRANSACTION WHICH IS EXEMPT UNDER
PROVISIONS OF THE SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES
LAWS OR PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT; AND IN THE
CASE OF AN EXEMPTION, ONLY IF THE COMPANY HAS RECEIVED AN OPINION OF
COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH TRANSACTION DOES NOT
REQUIRE REGISTRATION OF ANY SUCH SECURITIES.
WARRANT NO. W-1
whOOdoo.com, inc.
COMMON STOCK PURCHASE WARRANT
TO PURCHASE 212,500 SHARES OF COMMON STOCK
whOOdoo.com, inc., a Delaware corporation (the "Company"), hereby
certifies that, for value received, __________________ is entitled, subject to
the terms set forth below, to purchase from the Company for a period of time as
provided in Section 19 (or such earlier date as provided in Section 14 hereof),
two hundred and twelve thousand five hundred (212,500) fully paid and
non-assessable shares of Common Stock of the Company, at the price per share
(the "Purchase Price") of $0.80. The number and character of such shares of
Common Stock and the Purchase Price are subject to adjustment as provided
herein.
As used herein the following terms, unless the context otherwise
requires, have the following respective meanings:
(a) The term "Company" includes any corporation which shall
succeed to or assume the obligations of the Company hereunder.
(b) The term "Common Stock" means the Common Stock, par value
$.001 per share, of the Company, together with all stock of any class
or classes (however designated) of the Company, authorized upon the
Original Issue Date or thereafter, the holders of which shall have the
right, without limitation as to amount, either to all or to a share of
the balance of current dividends and liquidating dividends after the
payment of dividends and distributions on
<PAGE>
any shares entitled to preference, and the holders of which shall
ordinarily, in the absence of contingencies, be entitled to vote for
the election of a majority of directors of the Company (even though the
right so to vote has been suspended by the happening of such a
contingency.
(c) The term "Other Securities" refers to any stock (other
than Common Stock) and other securities of the Company or any other
person (corporate or otherwise) which the holders of the Warrants at
any time shall be entitled to receive, or shall have received, upon the
exercise of the Warrants, in lieu of or in addition to Common Stock, or
which at any time shall be issuable or shall have been issued in
exchange for or in replacement of Common Stock or Other Securities
pursuant to Section 5 or otherwise.
(d) The term "Securities Act" means the Securities Act of 1933
as the same shall be in effect at the time.
(e) The term "Purchase Price per share" shall be the then
applicable purchase price for one Common Share as adjusted pursuant to
Sections 5 and 6 hereof.
(f) The term "Market Value" means, as of a particular date,
(i) the average of the high and low bid prices for the Company's Common
Stock, as reported by the National Quotation Bureau, Incorporated, or,
if the Company's Common Stock is listed on Nasdaq, the closing bid
price for such shares, or, (ii) if the closing sale price for the
Company's Common Stock is reported in either of the foregoing
quotations systems or if the principal trading market is a national
securities exchange, the closing sale price or, (iii) if neither (i) or
(ii) is available with regard to the Common Stock, such fair value as
shall be determined in a reasonable manner by the Board of Directors of
the Company.
1. SALE OR EXERCISE WITHOUT REGISTRATION. If, at the time of any
exercise, permitted transfer or surrender for exchange of a Warrant or of Common
Stock or Other Securities previously issued upon the exercise of Warrants, such
Warrant or Common Stock (or Other Securities) shall not be registered under the
Securities Act, the Company may require, as a condition of allowing such
exercise, transfer or exchange, that the holder or transferee of such Warrants,
Common Stock or Other Securities, as the case may be, furnish to the Company an
opinion of counsel reasonably satisfactory to the Company to the effect that
such exercise, transfer or exchange may be made without registration under the
Securities Act, provided that the disposition thereof shall at all times be
within the control of such holder or transferee, as the case may be. The holder
of the Warrants represents to the Company that it is acquiring the Warrants for
investment and not with a view to the distribution thereof.
2. EXERCISE OF WARRANT; PARTIAL EXERCISE.
2.1 EXERCISE IN FULL. Subject to the provisions of Section 1,
this Warrant may be exercised in full by the holder hereof by surrender of this
Warrant, with the form of subscription attached hereto duly executed by such
holder, to the Company's stock transfer agent, accompanied by payment, in cash
or by certified or official bank check payable to the order of the Company, in
the amount obtained by multiplying the number of Common Stock called for on the
face of this Warrant (without giving effect to any adjustment therein) by the
Purchase Price.
2.2 PARTIAL EXERCISE. Subject to the provisions hereof, this
Warrant may be
<PAGE>
exercised in part by surrender of this Warrant in the manner and at the place
provided in Section 2.1 hereof, except that the amount payable by the holder
upon any partial exercise shall be the amount obtained by multiplying (a) the
number of Common Stock (without giving effect to any adjustment therein)
designated by the holder in the subscription attached hereto by (b) the Purchase
Price. Upon any such partial exercise, the Company at its expense will forthwith
issue and deliver to or upon the order of the holder hereof a new Warrant or
Warrants of like tenor, in the name of the holder hereof or as such holder (upon
payment by such holder of any applicable transfer taxes) may request, calling,
in the aggregate on the face or faces thereof, for the number of Common Stock
equal (without giving effect to any adjustments required under the terms of this
Warrant) to the number of such shares called for on the face of this Warrant
minus the number of such shares designated by the holder in the form of
subscription attached hereto.
2.3 COMPANY TO REAFFIRM OBLIGATIONS. The Company will, at the
time of any exercise of this Warrant, upon the request of the holder hereof,
acknowledge in writing its continuing obligation to afford to such holder any
rights to which such holder shall continue to be entitled after such exercise in
accordance with the provisions of this Warrant, PROVIDED that if the holder of
this Warrant shall fail to make any such request, such failure shall not affect
the continuing obligation of the Company to afford such holder any such rights.
3. DELIVERY OF STOCK CERTIFICATES, ETC., ON EXERCISE. As soon as
practicable after the exercise of this Warrant in full or in part, and in any
event within three days thereafter, the Company at its expense (including the
payment by it of any applicable issue taxes) will cause to be issued in the name
of and delivered to the holder hereof (upon payment by such holder of any
applicable transfer taxes) a certificate or certificates for the number of fully
paid and non-assessable Common Stock or Other Securities to which such holder
shall be entitled upon such exercise, plus, in lieu of any fractional share to
which such holder would otherwise be entitled, cash equal to such fraction
multiplied by the then current Market Value of one full share, together with any
other stock or other securities and property (including cash, where applicable)
to which such holder is entitled upon such exercise pursuant to Section 4 hereof
or otherwise.
4. ADJUSTMENT FOR DIVIDENDS IN OTHER STOCK OR PROPERTY, ETC.;
RECLASSIFICATION, ETC. In case at any time or from time to time after the
Original Issue Date the holders of Common Stock (or Other Securities) shall have
received, or (on or after the record date fixed for the determination of
stockholders eligible to receive) shall have become entitled to receive, without
payment therefor
(a) other or additional stock or other securities or property
(other than cash) by way of dividend; or
(b) any cash paid or payable (including, without limitation,
by way of dividend), except out of earned surplus of the Company; or
(c) other or additional (or less) stock or other securities or
property (including cash) by way of spin-off, split-up,
reclassification, recapitalization, combination of shares or similar
corporate rearrangement;
then, and in each such case the holder of this Warrant, upon the exercise hereof
as provided in Section 2 hereof, shall be entitled to receive the amount of
stock and other securities and property (including cash in the cases referred to
in subdivisions (b) and (c) of this Section 4 which such holder would hold
<PAGE>
on the date of such exercise if on the Original Issue Date he had been the
holder of record of the number of Common Stock called for on the face of this
Warrant and had thereafter, during the period from the Original Issue Date to
and including the date of such exercise, retained such shares and all such other
or additional (or less) stock and other securities and property (including cash,
in the cases referred to in subdivisions (b) and (c) of this Section 4
receivable by him as aforesaid during such period, giving effect to all
adjustments during such period required by Section 5 hereof.
5. REORGANIZATION, CONSOLIDATION, MERGER, ETC. In case the Company
after the Original Issue Date shall (a) effect a reorganization, (b) consolidate
with or merge with or into any other person, or (c) transfer all or
substantially all of its properties or assets to any other person under any plan
or arrangement contemplating the dissolution of the Company, then, in each such
case, the holder this Warrant, upon the exercise thereof as provided in Section
2 hereof at any time after the consummation of such reorganization,
consolidation or merger or the effective date of such dissolution, as the case
may be, shall be entitled to receive (and the Company shall be entitled to
deliver), in lieu of the Common Stock (or Other Securities) issuable upon such
exercise prior to such consummation or such effective date, the stock and other
securities and property (including cash) to which such holder would have been
entitled upon such consummation or in connection with such dissolution, as the
case may be, if such holder had so exercised this Warrant immediately prior
thereto, all subject to further adjustment thereafter as provided in Section 4
hereof.
6. FURTHER ASSURANCES. The Company will take all such action as may be
necessary or appropriate in order that the Company may validly and legally issue
fully paid and non-assessable Common Stock upon the exercise of all Warrants
from time to time outstanding.
7. OFFICER'S CERTIFICATE AS TO ADJUSTMENTS. In each case of any
adjustment or readjustment in the Common Stock (or Other Securities) issuable
upon the exercise of the Warrants, the Company at its expense will promptly
compute such adjustment or readjustment in accordance with the terms of the
Warrants and prepare a certificate, executed by its chief financial or
accounting officer, setting forth such adjustment or readjustment and showing in
detail the facts upon which such adjustment or readjustment is based, and the
number of Common Stock outstanding or deemed to be outstanding. The Company will
forthwith mail a copy of each such certificate to each holder of a Warrant.
8. NOTICES OF RECORD DATE, ETC. In the event of
(a) any taking by the Company of a record of the holders of
any class of securities for the purpose of determining the holders
thereof who are entitled to receive any dividend (other than a cash
dividend payable out of earned surplus of the Company) or other
distribution, or any right to subscribe for, purchase or otherwise
acquire any shares of stock of any class or any other securities or
property, or to receive any other right; or
(b) any capital reorganization of the Company, any
reclassification or recapitalization of the capital stock of the
Company or any transfer of all or substantially all the assets of the
Company to or consolidation or merger of the Company with or into any
other person; or
(c) any voluntary or involuntary dissolution, liquidation or
winding-up of the Company;
<PAGE>
then and in each such event the Company will mail or cause to be mailed to each
holder of a Warrant a notice specifying (i) the date on which any such record is
to be taken for the purpose of such dividend, distribution or right, and stating
the amount and character of such dividend, distribution or right; and (ii) the
date on which any such reorganization, reclassification, recapitalization,
transfer, consolidation, merger, dissolution, liquidation or winding-up is to
take place, and the time, if any, as of which the holders of record of Common
Stock (or Other Securities) shall be entitled to exchange their shares of Common
Stock (or Other Securities) for securities or other property deliverable upon
such reorganization, reclassification, recapitalization, transfer,
consolidation, merger, dissolution, liquidation or winding-up. Such notice shall
be mailed at least 15 days prior to the date therein specified.
9. RESERVATION OF COMMON STOCK, ETC., ISSUABLE ON EXERCISE OF WARRANTS.
The Company will at all times reserve and keep available, solely for issuance
and delivery upon the exercise of the Warrants, all Common Stock (or Other
Securities) from time to time issuable upon the exercise of the Warrants.
10. LISTING ON SECURITIES EXCHANGES; REGISTRATION. If the Company at
any time shall list any Common Stock on any national securities exchange, the
Company will, at its expense, simultaneously list on such exchange, upon
official notice of issuance upon exercise of the Warrants, and maintain such
listing of, all Common Stock from time to time issuable upon the exercise of the
Warrants; and the Company will so list on any national securities exchange, will
so register and will maintain such listing of, any Other Securities if and at
the time that any securities of like class or similar type shall be listed on
such national securities exchange by the Company.
11. EXCHANGE OF WARRANTS. Subject to the provisions of Section 1
hereof, upon surrender for exchange of any Warrant, property endorsed to the
Company, the Company at its own expense will issue and deliver to the holder
thereof a new Warrant or Warrants of like tenor, in the name of such holder
(upon payment by such holder of any applicable transfer taxes) calling in the
aggregate on the face or faces thereof for the number of Common Stock called for
on the face or faces of the Warrant or Warrants so surrendered.
12. REPLACEMENT OF WARRANTS. Upon receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or mutilation of any
Warrant and, in the case of any such loss, theft or destruction, upon delivery
of an indemnity agreement reasonably satisfactory in form and amount to the
Company or, in the case of any such mutilation, upon surrender and cancellation
of such Warrant, the Company at its expense will execute and deliver, in lieu
thereof, a new Warrant of like tenor.
13. WARRANT AGENT. The Company may, by written notice to each holder of
a Warrant, appoint an agent for the purpose of issuing Common Stock (or Other
Securities) upon the exercise of the Warrants pursuant to Section 2 hereof,
exchanging Warrants pursuant to Section 11 hereof, and replacing Warrants
pursuant to Section 11 hereof, and replacing Warrants pursuant to Section 12
hereof, or any of the foregoing, and thereafter any such issuance, exchange or
replacement, as the case may be, shall be made at such office by such agent.
14. LIMITED TRANSFERABILITY OF WARRANT; ACCELERATED EXPIRATION DATE.
The holder agrees that this Warrant may not be sold, transferred, pledged,
hypothecated, or otherwise disposed of except in compliance with the Securities
Act and applicable state securities laws as set forth on the cover page hereof
("Permitted Transfer"). Further, in the event of a Permitted Transfer, the right
to exercise this
<PAGE>
Warrant shall expire at 5:00 p.m., West Palm Beach, Florida time on the 10th
business day after the date the Permitted Transfer is effected.
15. LEGEND. Upon exercise of any of the Warrants and the issuance of
any of the Common Stock, or Other Securities pursuant thereto all certificates
representing Common Stock or Other Securities shall bear on the face thereof
substantially the following legend, insofar as is consistent with Florida laws:
The securities represented by this certificate have not been
registered under the Securities Act of 1933, as amended, and
may not be sold, offered for sale, assigned, transferred or
otherwise disposed of, unless registered pursuant to the
provisions of that Act or unless a written opinion of counsel
is delivered to the Company stating that such disposition is
in compliance with an available exemption from such
registration, which opinion and counsel shall be reasonably
acceptable to the Company.
16. REMEDIES. The Company stipulates that the remedies at law of the
holder of this Warrant in the event of any default or threatened default by the
Company in the performance of or compliance with any of the terms of this
Warrant are not and will not be adequate, and that such terms may be
specifically enforced by a decree for the specific performance of any agreement
contained herein or by an injunction against a violation of any of the terms
hereof or otherwise.
17. NOTICES, ETC. All notices and other communications from the Company
to the holder of this Warrant shall be mailed by first class registered or
certified mail, postage prepaid, at such address as may have been furnished to
the Company in writing by such holder.
18. MISCELLANEOUS. This Warrant and any term hereof may be changed,
waived, discharged or terminated only by an instrument in writing signed by the
party against which enforcement of such change, waiver, discharge or termination
is sought. This Warrant shall be construed and enforced in accordance with and
governed by the laws of Florida. The headings in this Warrant are for purposes
of reference only, and shall not limit or otherwise affect any of the terms
hereof.
19. WARRANT EXPIRATION DATE. This Warrant may be exercisable at any
time until 6:00 p.m., West Palm Beach, Florida time on the six month anniversary
on the date that the Company's Common Stock (i) is first quoted on the National
Quotation Bureau, Inc.'s "pink sheets, or (ii) commences trading on another
generally recognized trading market in the United States.
20. REPLACEMENT WARRANT. This Warrant is issued in replacement of a
Warrant dated August 5, 1999 exercisable for the same number of shares of Common
Stock at the same price.
Dated: August 4, 1999 whOOdoo.com, inc.
---------------------------------------
By: Paulo Mylla, President
Attest:
----------------------------------------------
<PAGE>
ASSIGNMENT FORM
(To be executed only upon the
assignment of Warrant)
FOR VALUE RECEIVED the undersigned registered holder of the within
Warrant hereby sells, assigns and transfers unto ______________, whose address
is ____________________________ all of the rights of the undersigned under the
within Warrant, with respect to ______________ Common Stock of ______________
and, if such Common Stock do not include all the Common Stock issuable as
provided in the Warrant, that a new Warrant of like tenor for the number of
Common Stock not being transferred hereunder be issued in the name of and
delivered to the undersigned, and does hereby irrevocably constitute and appoint
______________ Attorney to register such transfer on the books of ______________
maintained for the purpose, with full power of substitution in the premises.
Dated: ______________, 199____.
---------------------------------------
(Signature must conform in all respects
to name of holder as specified on the
face of the Warrant)
- ---------------
Signature Guaranteed
-------------------------------------
-------------------------------------
(Address)
<PAGE>
FORM OF SUBSCRIPTION
(To be signed only upon exercise of Warrant)
To: ______________
The undersigned, the holder of the within Warrant, hereby irrevocably
elects to exercise the purchase right represented by such Warrant for, and to
purchase thereunder, ______________ Common Stock of ______________, and herewith
makes payment of $______________ therefor, and requests that the certificates
for such shares be issued in the name of, and delivered to, , whose address is .
If the Common Stock being purchased hereby do not include all the Common Stock
issuable as provided in the Warrant, that a new Warrant for the number of Common
Stock not being purchased hereunder be issued in the name of and delivered to
the undersigned.
Dated: ______________, 199____.
---------------------------------------
(Signature must conform in all respects
to name of holder as specified on the
face of the Warrant)
- ---------------
Signature Guaranteed
-------------------------------------
-------------------------------------
(Address)
EXHIBIT 4.2
TO COME
EXHIBIT 4.3
NOT INCLUDED IN ORIGINALS
EXHIBIT 10.1
[GRAPHIC OMITTED]
BGS (Southwest Florida), Inc.
1660 Trade Center Way
Naples, Florida 34109
Dear Mr. Mylla:
This letter confirms our understanding regarding the management
services that BGS (Soutwest Florida) Inc. ("BGS") has agreed to provide to
whOOdoo.com, inc. ("whOOdoo"). BGS agrees to manage the operations of whOOdoo
and WhOOdoo agrees to pay to BGS $49,200 per month (the "Base Fee") for a term
of 12 months. The Base Fee shall be adjusted to include an additional fee (the
"Acievement Bonus") based upon the number of impressions to the whOOdoo.com
websites in any calendar month ("Impressions Per Month"). Once an Impressions
Per Month threshold is achieved, the Achievement Bonus shall be added to the
Base Fee whether or not that same threshold is again achieved in any following
month. In order to receive an additional Achievement Bonus, the next higher
Impressions Per Month threshold must be achieved. The Achievement Bonus is
calculated as follows:
IMPRESSIONS PER MONTH ACHIEVEMENT BONUS
Between 1,000,000 and 1,999,999 $4,200
Between 2,000,000 and 2,999,999 an additional $3,806
Between 3,000,000 and 3,999,999 an additional $2,562
Between 4,000,000 and above an additional $2,230
This letter agreement represents to complete and total understanding
between the parties. Any other contracts or understandings whether express,
implies, written or oral are hereby superceded and merged into this agreement.
Please confirm your agreement to the above terms by signing in the
place indicated below.
Respectfully,
Brian Leith, Vice President
August __, 1999 BGS (Southwest Florida) Inc.
By:
--------------------------------------------------
Paulo Mylla, President
1
EXHIBIT 10.2
THE IMPACT GROUP
CONTRACT AGREEMENT
This Contract Agreement (the "Agreement") is made between The Impact Group and
WhOOdoo.com, Inc. ("Client"). The effective date of this Agreement is December ,
1999.
1. DESCRIPTION OF SERVICES
Subject to the terms and conditions set forth herein, The Impact Group
shall provide, either directly or in conjunction with such
subcontractors as it may select, the products and services in the
Statement of Work attached hereto as Exhibit A, including all necessary
labor, materials, and services (hereinafter the "Work").
2. FEES AND BILLING
2.1 FEES. In consideration of the Work performed to this
Agreement, Client shall pay The Impact Group all fees due as
set forth in the Statement of Work.
2.2 BILLING AND PAYMENT TERMS. Client will be billed at the time
of shipment of equipment or software, in advance of any
installation fees, and monthly in advance of the provision of
recurring monthly service fees. Payment of such fees will be
due within thirty (30) days of the date of each IM Group
invoice for all labor and materials, and before the first of
the month for monthly service charges. Late payments hereunder
will accrue interest at a rate of one and one-half percent (1
1/2%) per month, or the highest rate allowed by applicable
law, whichever is lower. The Impact Group may discontinue
performance under this Agreement in the event any payment is
not received within thirty days (30) days of the date on which
it is due.
2.3 TAXES. All payments required by this Agreement are exclusive
of all national, state, municipal or other governmental
excise, sales, value-added, use, personal property, and
occupational taxes, excises, withholding taxes and obligations
and other levies now in force or enacted in the future, all of
which Client will be responsible for and will pay in full.
3. CHANGES TO THE STATEMENT OF WORK
Client shall have the right from time to time by written notice to
propose changes in or additions to the Work under the Agreement
("Change Order"), and The Impact Group shall comply, to the extent
feasible, with such Change Order. If The Impact Group determines that
such changes cause an increase in the cost of or time required for
performance of the Work, The Impact Group shall advise Client thereof
and such adjustments shall be reflected in a written Change Order.
<PAGE>
In performing the Work, should The Impact Group encounter any concealed
or unknown condition not expressly set forth in this Agreement, which
condition affects the price or schedule for performance of the Work,
the price and the schedule shall be equitably adjusted by the Change
Order to cover all labor, materials and services necessary to carry out
the change. No Change Order shall become effective as a part of this
Agreement, and no changes in the Work shall be initiated, until the
Change Order for additional work shall refer to this Agreement and be
subject to the terms and conditions of this Agreement, and terms and
conditions on Client's purchase order or documents that are
inconsistent or in addition to this Agreement will be void. The Impact
Group may also propose changes in or additions to the Work, and may
proceed with them upon execution by Client and The Impact Group of a
written Change Order.
4. PRODUCT AND SERVICES ACQUIRED ON CLIENT BEHALF
The Impact Group has the right, without Client's written approval, to
acquire and charge Client for reasonable quantities of supplies and
miscellaneous materials to support or accomplish the Work provided
under this Agreement.
5. CONFIDENTIAL INFORMATION; INTELLECTUAL PROPERTY OWNERSHIP; LICENSE
GRANTS
5.1 CONFIDENTIAL INFORMATION.
(a) NONDISCLOSURE OF CONFIDENTIAL INFORMATION. Each party
acknowledges that it will have access to certain confidential
information of the other party's business, plans, Clients,
technology, and products, and other information held in
confidence by the other party ("CONFIDENTIAL INFORMATION").
Confidential Information will include all information in
tangible or intangible form that is marked or designated as
confidential or that, under the circumstances of its
disclosure, should be considered confidential. Confidential
Information will also include, but not be limited to, The
Impact Group Technology ("The Impact Group Technology" means
The Impact Group proprietary, technology. Including The Impact
Group software tools, hardware designs, algorithms, software
(in source and object forms), user interface designs,
architecture, class libraries, objects and documentation (both
printed and electronic), network designs, know-how, trade
secrets and any related intellectual property rights
throughout the world (whether owned by The Impact Group or
licensed to The Impact Group from a third party) and also
including any derivatives, improvements, enhancements or
extensions of The Impact Group Technology conceived, reduced
to practice or developed during the term of this Agreement by
either party that are not uniquely applicable to Client or
that have general applicability in the art.), Client
Technology ("Client Technology" means Client's proprietary
technology, including Client's Internet Operations design,
content, software tools, hardware designs algorithms, software
(in source and object forms), user interface designs,
<PAGE>
architecture, class libraries, objects and documentation (both
printed and electronic), know-how, trade secrets and any
related intellectual property rights throughout the world
(whether owned by Client or licensed to Client from a third
party) and also including any derivatives, improvements,
enhancements or extensions of Client Technology conceived,
reduced to practice, or developed during the term of this
Agreement by Client, and the terms and conditions of this
Agreement. Each party agrees that it will not use in any way,
for its own account or the account of any third party, except
as expressly permitted by, or required to achieve the purposes
of, this Agreement, nor disclose to any third party (except as
required by law or to that party's attorneys, accountants and
other advisors as reasonably necessary), any of the other
party's Confidential Information and will take reasonable
precautions to protect the confidentiality of such
information, at least as stringent as it takes to protect its
own Confidential Information.
(b) EXCEPTIONS. Information will not be deemed Confidential
Information hereunder if such information: (i) is known to the
receiving party prior to receipt from the disclosing party
directly or indirectly from a source other than one having an
obligation of confidentiality to the disclosing party; (ii)
becomes known (independently of disclosure by the disclosing
party) to the receiving party directly or indirectly from a
source other than one having an obligation of confidentiality
to the disclosing party; (iii) becomes publicly known or
otherwise ceases to be secret or confidential, except through
a breach of this Agreement by the receiving party; or (iv) is
independently developed by the receiving party. The receiving
party may disclose Confidential Information pursuant to the
requirements of a governmental agency or by operation of law,
provided that it gives the disclosing party reasonable prior
written notice sufficient to permit the disclosing party to
contest such disclosure.
5.2 INTELLECTUAL PROPERTY.
(a) OWNERSHIP. Except for the rights expressly granted herein and
the assignment expressly made in paragraph 5.3(a), this
Agreement does not transfer from The Impact Group to Client
any IM Group Technology, and all right, title and interest in
and to The Impact Group Technology will remain solely with The
Impact Group. Except for the rights expressly granted herein,
this Agreement does not transfer from Client to The Impact
Group any Client Technology, and all right, title and interest
in and to Client Technology will remain solely with Client.
The Impact Group and Client each agrees that it will not,
directly or indirectly, reverse engineer, decompile,
disassemble or otherwise attempt to derive source code or
other trade secrets from the other party.
<PAGE>
(b) GENERAL SKILLS AND KNOWLEDGE. Notwithstanding anything to the
contrary in this Agreement, The Impact Group will not be
prohibited or enjoined at any time by Client from utilizing
any skills or knowledge of a general nature acquired during
the course of providing the Services, including, without
limitation, information publicly known or available or that
could reasonably be acquired in similar work performed for
another Client of The Impact Group.
6. WARRANTY AND DISCLAIMER
6.1 PERFORMANCE. The Impact Group warrants that it will perform
the Work in a manner consistent with industry standards
reasonably applicable to the performance thereof. Client will
be deemed to have accepted Work on delivery unless rejected,
in writing, within ten (10) days of delivery.
6.2 NO OTHER WARRANTY. EXCEPT FOR THE EXPRESS WARRANTY SET OUT IN
SECTION 6.1 ABOVE, THE WORK IS PROVIDED ON AN "AS IS" BASIS,
AND CLIENT'S USE OF THE WORK IS AT ITS OWN RISK. THE IMPACT
GROUP DOES NOT MAKE, AND HEREBY DISCLAIMS, ANY AND ALL OTHER
EXPRESS AND/OR IMPLIED WARRANTIES, INCLUDING, BUT NOT LIMITED
TO, WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR
PURPOSE, NONINFRINGEMENT AND TITLE, AND ANY WARRANTIES ARISING
FROM A COURSE OF DEALING, USAGE, OR TRADE PRACTICE.
7. LIMITATION OF LIABILITY/EXCLUSIVE REMEDY
7.1 IN NO EVENT WILL THE IMPACT GROUP BE LIABLE FOR ANY SPECIAL,
INDIRECT, INCIDENTAL, OR CONSEQUENTIAL DAMAGES, INCLUDING BUT
NOT LIMITED TO DAMAGES CAUSED BY CLIENT'S FAILURE TO PERFORM
ANY OF ITS RESPONSIBILITIES, OR FOR ANY LOSS OF BUSINESS OR
PROSPECTIVE BUSINESS OPPORTUNITIES, PROFITS, SAVINGS,
INFORMATION, USE OR OTHER COMMERCIAL OR ECONOMIC LOSS, EVEN IF
THE IMPACT GROUP HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH
DAMAGES.
8. INDEMNIFICATION
8.1 CLIENT'S INDEMNIFICATION OF THE IMPACT GROUP. Client will
indemnify, defend and hold The Impact Group, its affiliates
and Clients harmless from and against any and all Losses
resulting from or arising out of any Action brought by or
against The Impact Group alleging, with respect to the Work or
Client's use thereof, infringement or misappropriation of any
intellectual property
<PAGE>
rights of any third parties relating to Client Pre-existing
Technology or Client Confidential Information.
9. TERM AND TERMINATION
9.1 TERM. This Agreement and the rights granted hereunder shall
continue until terminated as set forth below.
9.2 TERMINATION. Either party may terminate this Agreement, in
whole or in part, at any time without cause upon thirty (30)
days written notice. If the Agreement is terminated by Client
pursuant to this Section 10.2, The Impact Group shall have no
further responsibility under this Agreement, and Client shall
promptly pay The Impact Group for (I) all Work performed, and
incidental expenses incurred, up to the date of termination,
(ii) any remaining minimum payment commitments through the end
of the Term specified in the Scope of Work, and (iii) any
additional direct costs which The Impact Group incurs as a
result of such termination, including but not limited to the
costs of terminating purchase orders and other contractual
obligations made by The Impact Group to meet its obligations
under this Agreement.
9.3 SURVIVAL. The following provisions will survive any expiration
or termination of this Agreement: Sections 2, 5, 6.2, 7.1, 8,
9.3 and 10.
9.4 MATERIAL BREACH OR DEFAULT. In the event either party shall be
in breach or default of any of the material terms or
conditions of this Agreement (including but not limited to
such party becoming bankrupt or insolvent, suffering a
receiver to be appointed, or making an assignment for the
benefit of creditors) and the defaulting party has not taken
steps to cure such breach or default within ten (10) days
after the receipt of written notice from the non-defaulting
party, then in addition to all other rights and remedies at
law, in equity or otherwise, the non-defaulting party, then in
addition to all other rights and remedies at law, in equity or
otherwise, the non-defaulting party shall have the right to
terminate this Agreement without further charge, obligation or
liability whatsoever to the non-defaulting party; provided,
however, that if Client terminates the Agreement pursuant to
this Section 10.3, Client shall promptly pay The Impact Group
for all Work performed, and incidental expenses incurred, up
to the date of termination, plus any third party services that
Client continues to receive.
10. MISCELLANEOUS PROVISIONS
10.1 FORCE MAJEURE. Except for the obligation to pay money, neither
party will be liable for any failure or delay in its
performance under this Agreement due to any cause beyond its
reasonable control, including act of war, acts of God,
earthquake, flood, embargo, riot, sabotage, labor shortage or
dispute, governmental act, failure of equipment, or failure of
the Internet, provided that
<PAGE>
the delayed party: (a) gives the other party prompt notice of
such cause, and (b) uses its reasonable commercial efforts to
correct promptly such failure or delay in performance.
10.2 NON-SOLICITATION. During the term of this Agreement and for
the period ending one (1) year following termination or
expiration of this Agreement in accordance with its terms,
Client agrees that it will not, and will ensure that its
affiliates do not, directly or indirectly, solicit or attempt
to solicit for employment any persons employed by or
contracting with The Impact Group during such period. Client
acknowledges that breach of this provision will adversely
affect The Impact Group and its business and that as a
consequence of such breach Client will pay liquidated damages
to The Impact Group in a sum equal to one hundred percent
(100) of the solicited employees' annual compensation as
offered by Client to such employee.
10.3 GOVERNING LAW; DISPUTE RESOLUTION, SEVERABILITY. This
Agreement is made under and will be governed by and construed
in accordance with the laws of the State of Massachusetts
(except that body of law controlling conflicts of law). Any
dispute relating to the terms, interpretation or performance
of this Agreement (other than claims for preliminary
injunctive relief or other pre-judgment remedies) will be
resolved at the request of either party through binding
arbitration.
10.4 ASSIGNMENT; NOTICES. Client may not assign its rights or
delegate its duties under this Agreement either in whole or in
part without the prior written consent of The Impact Group,
except that Client may assign this Agreement in whole as part
of a corporate reorganization, consolidation, merger, or sale
of substantially all of its assets. Any attempted assignment
or delegation without such consent will be void. The Impact
Group may assign this Agreement in whole or part. This
Agreement will bind and inure to the benefit of each party's
successors and permitted assigns. Any notice or communication
required or permitted to be given hereunder may be delivered
by hand, deposited with an overnight courier, sent by
confirmed facsimile, or mailed by registered or certified
mail, return receipt requested, postage prepaid, in each case
to the address of the receiving party indicated in this
subsection, or at such other address as may hereafter be
furnished in writing by either party hereto to the other. Such
notice will be deemed to have been given as of the date it is
delivered, mailed or sent, whichever is earlier.
Attn: Paulo Mylla Attn: Richard F. O'Leary
WhOOdoo.com The Impact Group
1660 Trade Center Way P.O. Box 355
Naples, FL 34109 Chelmsford, MA 01824
<PAGE>
10.5 RELATIONSHIP OF PARTIES. The Impact Group and the Client are
independent companies and this Agreement will not establish
any relationship of partnership, joint venture, employment,
franchise or agency between The Impact Group and Client.
Neither The Impact Group nor Client will have the power to
bind the other or incur obligations on the other's behalf
without the other's prior written consent, except as otherwise
expressly provided herein.
10.6 MODIFICATIONS; WAIVER. All modifications to this Agreement or
exhibits shall be in writing and signed by a duly authorized
representative of each party. If either party hereto waives or
modifies any term or condition of this Agreement, such action
will not void, waive or change any other term or condition,
nor will the waiver by one party of any default hereunder by
the other constitute the present or future waiver of any other
default hereunder. If any part of this Agreement, for any
reason, is declared to be invalid, it shall be deemed omitted,
and the remainder of this Agreement shall continue in effect
as if the Agreement had been entered into without the invalid
provision.
10.7 ENTIRE AGREEMENT; COUNTERPARTS. This Agreement, including all
documents incorporated herein by reference, constitutes the
complete and exclusive agreement between the parties with
respect to the subject matter hereof, and supersedes and
replaces any and all prior or contemporaneous discussions,
negotiations, understandings and agreements, written and oral,
regarding such subject matter. This Agreement may be executed
in two or more counterparts, each of which will be deemed an
original, but all of which together shall constitute one and
the same instrument. The parties further agree that a signed
facsimile of this Agreement will be deemed an original.
IN WITNESS WHEREOF, the parties have signed this Agreement as of the Effective
Date first set out above.
The Impact Group CLIENT:___________________
By:_________________________ By:________________________
Name:______________________ Name:______________________
Title:_______________________ Title:_____________________
EXHIBIT 10.3
Consulting Agreement (the "Agreement") entered into this 9th day of
November 1999 by and between WHOODOO.COM (Delaware). ("Company"), a Florida
corporation with principal offices at 1660 Trade Center Way, Naples, FL 34109,
and Michael Baybak and Company, Inc., ("Consultant"), a California corporation
with principal offices at 4515 Ocean View Blvd., Suite 305, La Canada, CA 91011.
RECITALS
WHEREAS, the Consultant is engaged in providing financial and media
services (the "Services") to emerging Internet companies; and
WHEREAS, the Company desires to retain Consultant to provide financial
and media services upon the terms and conditions described herein; and
WHEREAS, the Consultant desires to provide such services to the Company
as an independent contractor upon such terms and conditions.
NOW THEREFORE, in consideration of the foregoing and other good and
valuable consideration, the parties hereby agree as follows:
1. Consultant shall provide the Company with the Services, which shall
include increasing the awareness of money managers, newsletter publishers and
media interested or otherwise covering emerging Internet companies, of the
Company and communicate the Company's product profiles with prospective
investors and money managers and promote the Company as a highly focussed
developer of specialized vertical portals and operator of the whOOdoo.com
network of regional portals. Communications should highlight the market niche
the Company is exploiting and the many strengths and benefits inherent in
servicing this niche. The Services shall include the development of specialized
financial marketing programs through marketing/newsletter publications that
Company may elect to undertake.
2. Company shall provide Consultant with various materials and
documents ("Company Information"), however, before Consultant disseminates such
Company Information, the Consultant must receive the Company's prior written
consent.
3. The term (the "Term") of this Agreement shall commence the day and
year first above written and terminate on November 9, 2000 unless terminated
earlier pursuant to paragraph 11. Company shall have the option to renew this
Agreement for an additional year (the "Extended Term") upon similar terms and
conditions by providing prior notice to Consultant no later than August 31,
2000.
4. Company shall pay Consultant $3,500.00 per month for the Services
and Company's initial $3,500.00 payment shall be paid to Consultant upon
execution of this Agreement. Subsequent monthly payments will be billed by
Consultant on the first of each
<PAGE>
subsequent month and Company will pay them within 30 days.
5. In addition to Consultant's compensation under Paragraph 4 above,
the Company shall issue to the Consultant 350,000 options (the "Options") to
purchase the Company's common stock, par value $.001 per share, subject to the
following provisions: (i) one-half, or 175,000 Options shall vest on February 9,
1999 and one-half, or 175,00 Options, on May 9, 1999, (ii) such vesting shall
occur only if the Consultant has not been terminated pursuant to paragraph 11
hereof at the time such Options vest pursuant to paragraph 5(i); and (iii) the
Options may be exercised at $1.00 per share for a period of five years from the
date of this Agreement.
6. During the Term, Consultant shall provide the Services to Company
using Consultant's employees Michael Baybak and George Duggan, who shall provide
the Services in a timely manner.
7. Consultant shall be reimbursed for its reasonable expenses on
Company's behalf, properly incurred in connection with Consultant's duties, such
expenses include all direct costs of communication on behalf of the Company,
including phone, fax, postage, deliveries, etc.; provided, however that any of
Consultant's expenses in excess of $500.00 per month shall not be incurred
without Company's prior consent. In that regard, during each month of the Term,
Consultant shall furnish Company with appropriate evidence of such expenses,
including receipts and vouchers.
8. At no time may Consultant disclose Company's affairs, or any Company
trade or other secrets to any person for its or their own personal benefit or
purposes, whether or not such disclosure injures Company. Consultant shall not
use any Company Information for Consultant's benefit, or purposes, or for any
purpose other than for the Company's benefit as described herein. Consultant
acknowledges that any breach of this Agreement may result in damages to Company
that are difficult to measure monetarily, and, therefore, Consultant hereby
waives any defense to any application made by the Company for injunctive relief,
in addition to any other legal remedies available to it.
9. Company shall indemnify and hold Consultant harmless against any
loss, costs or expenses incurred as a result of or arising out of the
Consultant's publication or dissemination of Company Information or other
relevant information approved in writing by Company hereunder if it is
established by a court of competent jurisdiction that the said information
contain material misrepresentations, or false or misleading information, or
omits to state a material fact necessary to prevent a statement that is made
from being false or misleading.
10. Consultant shall devote a reasonable amount of the time and best
efforts of the Employees to promote Company's interests.
11. This Agreement may be terminated by Company at any time without
prior
<PAGE>
notice if:
(i) Consultant shall breach of provisions of this
Agreement; or
(ii) Consultant is negligent in the performance of its
duties hereunder; or
(iii) Consultant files a bankruptcy petition in any court
of competent jurisdiction, or makes an assignment for
the benefit of creditors; or
(iv) Michael Baybak shall become of unsound mind, or be
declared incompetent to handle his personal or
business affairs; or
(v) upon 30 days prior notice by the Company if the
Company is not satisfied with the Consultants
performance under this Agreement.
12. Company acknowledges that Consultant has and will continue to have
business relationships with others that will require a certain portion of
Consultant's time. Company acknowledges that Consultant may continue to devote
time to such persons, PROVIDED THAT such relationships do not conflict with, in
any way, Company's time and best efforts to provide services to Company
hereunder.
13. Company acknowledges that Consultant's services hereunder are
personal in character, and neither this Consulting Agreement, nor any rights or
benefits arising thereunder may be assigned by the Consultant, without Company's
prior consent.
14. All notices, offers, acceptance and any other acts under this
Agreement (except payment) shall be in writing, and shall be sufficiently given
if delivered to the addressees in person, by Federal Express or similar
receipted delivery, by facsimile delivery or, if mailed, postage prepaid, by
certified mail, return receipt requested, to the addresses listed above or to
such other address as either of them, by notice to the other may designate from
time to time. The transmission confirmation receipt from the sender's facsimile
machine shall be conclusive evidence of successful facsimile delivery. Time
shall be counted to, or from, as the case may be, the delivery in person or by
mailing.
15. The provisions of this Consulting Agreement shall inure to the
benefit of and be binding upon the parties, their successors and permitted
assigns. For this purpose, the terms "successors" and "assigns" shall include
any entity which at any time, whether by merger, purchase or otherwise, shall
acquire substantially all of Company's assets or operations.
16. Each provision herein is intended to be severable and if any such
provision is deemed to be illegal, or invalid for any reason, such illegality or
invalidity shall not affect the remainder of this Agreement.
<PAGE>
17. This Agreement shall primarily be performed in the State of
California, and it shall be construed and enforced in accordance with, and the
rights of the parties shall be governed by, the laws of that state applicable to
contracts made and to be performed in that state. This Agreement may not be
changed, except by an instrument in writing signed by the party against whom or
which enforcement of any waiver, change, modification or discharge is sought.
<PAGE>
IN WITNESS WHEREOF, this Agreement has been executed as of the day,
month and year first above written.
THE COMMON SEAL of )
WHOODOO.COM (DELAWARE) ) c/s
hereto affixed in the presence of: )
)
)
____________________________________) per: ____________________________
Witness ) Paolo Mylla
) WHOODOO.COM (Delaware)
____________________________________)
Witness
The Common Seal of )
MICHAEL BAYBAK AND )
COMPANY, INC. hereto affixed )
in the presence of ) MICHAEL BAYBAK AND
) AND COMPANY, INC.
)
)
____________________________________) per: ____________________________
Witness ) Michael Baybak
)
____________________________________) _________________________________
Witness ) President
EXHIBIT 10.4
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") entered into as of this 4th
day of August 1999, between BGS (Southwest Florida), Inc. (the "Company") and
Paulo Mylla (the "Executive").
WHEREAS, the Company desires to employ the Executive and to ensure the
continued availability to the Company of the Executive's services, and the
Executive is willing to accept such employment and render such services, all
upon and subject to the terms and conditions contained in this Agreement;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants set forth in this Agreement, and intending to be legally bound, the
Company and the Executive agree as follows:
1. TERM OF EMPLOYMENT.
(a) TERM. The Company hereby employs the Executive, and the
Executive hereby accepts employment with the Company for a period
commencing on the date of this Agreement and ending three years from
the date of this Agreement.
(b) CONTINUING EFFECT. Notwithstanding any termination of this
Agreement except for termination under Section 5(c), at the end of the
Term or otherwise, the provisions of Sections 6 and 7 shall remain in
full force and effect and the provisions of Section 7 shall be binding
upon the legal representatives, successors and assigns of the
Executive.
2. DUTIES.
(a) GENERAL DUTIES. The Executive shall serve as the chief
executive officer and
1
<PAGE>
president of the Company, with duties and responsibilities that are
customary for such executives. The Executive will also perform services
for such subsidiaries as may be necessary. The Executive will use his
best efforts to perform his duties and discharge his responsibilities
pursuant to this Agreement competently, carefully and faithfully. In
determining whether or not the Executive has used his best efforts
hereunder, the Executive's and the Company's delegation of authority
and all surrounding circumstances shall be taken into account and the
best efforts of the Executive shall not be judged solely on the
Company's earnings or other results of the Executive's performance.
(b) DEVOTION OF TIME. Subject to the last sentence of this
Section 2(b), the Executive shall devote all of his time, attention and
energies during normal business hours (exclusive of periods of sickness
and disability and of such normal holiday and vacation periods as have
been established by the Company) to the affairs of the Company.
(c) LOCATION OF OFFICE: Except for usual and customary
business travel, the Executive's principal business office shall be in
Naples, Florida. In no event shall the Company relocate its principal
offices to any area outside a 15 mile radius of its current location
without the Executive's express written consent.
3. COMPENSATION AND EXPENSES.
(a) SALARY. For the services of the Executive to be rendered
under this Agreement, the Company shall pay the Executive an annual
salary of $75,000 (the "Base Salary"). The Base Salary shall also be
increased each year by an amount equal to the greater of (i) 3% in
excess of the prior year's Base Salary, or (ii) the cost of living
increase based upon the Consumer Price Index calculated upon the
commencement of each year of the Agreement
2
<PAGE>
using the prior month as the measuring month published by the Bureau of
Labor Statistics (or similar successor index). The Consumer Price Index
increase calculation shall be calculated as follows:
Commencing with the one year anniversary of the commencement
of the term and the beginning of each year thereafter during
the term of this Agreement, the Executive's annual salary
shall be adjusted in accordance with the Consumer Price Index,
all Urban Consumers issued by the Bureau of Labor Statistics
of the U.S. Department of Labor using the years 1982-84 as a
base of 100 (the "Index"). At the commencement of the second
year, and of each year thereafter, the Executive's adjusted
Base Salary shall be multiplied each year by a fraction, the
numerator of which shall be the published Index number for the
month preceding the commencement of the new year, I.E. July
2000, and the denominator of which shall be the published
Index number for the month of July 1999. The resulting
increase to the Executive's Base Salary shall be added to the
prior year's Base Salary and become a part thereof for the
current year. In the event that the Index herein referred to
ceases to be published during the term of this Agreement, or
if a substantial change is made in the method of establishing
such Index, then the determination of the adjustment in the
Executive's compensation shall be made with the use of such
conversion factor, formula or table as may be published by the
Bureau of Labor Statistics, or if none is available, the
parties shall accept comparable statistics on the cost of
living in the United States as shall then be computed and
published by an
3
<PAGE>
agency of the United States, or if not by a respected financial
periodical selected by the Company.
(b) EXPENSES. In addition to any compensation received
pursuant to Section 3(a) and (c), the Company will (i) pay legal and
traveling expenses of the Executive and the Executive's family in
connection with immigration into the United States not exceeding
$10,000 per year, and (ii) reimburse or advance funds to the Executive
for all reasonable travel, entertainment and miscellaneous expenses
incurred in connection with the performance of his duties under this
Agreement, provided that the Executive properly accounts for such
expenses to the Company in accordance with the Company's practices.
Such reimbursement or advances will be made in accordance with policies
and procedures of the Company in effect from time to time relating to
reimbursement of or advances to executive officers.
(c) INCENTIVE BONUS. The Executive shall be receive an
incentive bonus based upon the number of impressions per calendar month
on the whOOdoo.com websites calculated as follows:
NUMBER OF IMPRESSIONS PER MONTH AMOUNT OF BONUS
At 1,000,000 an additional $1,875/Month
At 2,000,000 an additional $1,625/Month
At 3,000,000 an additional $975/Month
At 4,000,000 and above an additional $1072/Month
(d) DISCRETIONARY BONUS. The Executive shall be eligible to
receive an
4
<PAGE>
annual bonus in an amount to be determined by a majority of the
Compensation Committee based on any criteria or factors the
Compensation Committee deems appropriate.
4. BENEFITS.
(a) VACATION. For each 12-month period during the Term, the
Executive will be entitled to four weeks of vacation without loss of
compensation or other benefits to which he is entitled under this
Agreement, to be taken at such times as the Executive may select and
the affairs of the Company may permit.
(b) EMPLOYEE BENEFIT PROGRAMS. The Executive is entitled to
participate in any pension, 401(k), insurance or other employee benefit
plan that is maintained by the Company for its executive officers,
including programs of life and medical insurance and reimbursement of
membership fees in civic, social and professional organizations.
(c) AUTOMOBILE. The Company shall pay for the current or
equivalent automobile lease and insurance payments and reimburse the
Executive for all related business expenses upon receipt of written
documentation thereof. At the end of the Executive's current automobile
lease, the Executive shall receive reimbursement of (i) an automobile
lease or payment of up to $700 per month, and (ii) the cost of
insurance for such automobile.
(d) INSURANCE. The Company shall obtain a life insurance
policy on Executive in the amount of 3 times the Base Salary and pay
all premiums on such policy. The Executive or his assigns shall be the
beneficiaries of such policy.
5. TERMINATION.
5
<PAGE>
(a) TERMINATION FOR CAUSE. The Company may terminate the
Executive's employment pursuant to the terms of this Agreement at any
time for cause by giving written notice of termination. Such
termination will become effective upon the giving of such notice. Upon
any such termination for cause, the Executive shall have no right to
compensation, bonus or reimbursement under Section 3, or to participate
in any employee benefit programs under Section 4, except as provided by
law, for any period subsequent to the effective date of termination.
For purposes of this Section 5(a), "cause" shall mean: (i) the
Executive is convicted of a felony which is related to the Executive's
employment or the business of the Company; (ii) the Executive, in
carrying out his duties hereunder, has been found in a civil action to
have committed gross negligence or intentional misconduct resulting in
either case in material harm to the Company; or (iii) the Executive has
been found in a civil action to have materially breached any provision
of Section 6 or Section 7 and to have caused material harm to the
Company. The term "found in a civil action" shall not apply until all
appeals permissible under the applicable rules of procedure or statutes
have been determined and no further appeals are permissible.
(b) SPECIAL TERMINATION. In the event that (i) the Executive,
with or without change in title or formal corporate action, shall no
longer exercise all of the duties and responsibilities and shall no
longer possess substantially all the authority set forth in Section 2;
or (ii) the Company materially breaches this Agreement or the
performance of its duties and obligations hereunder; or (iii) any
entity or person not now an executive officer or director (or spouse)
of the Company or owner of more than 5% of its outstanding stock
becomes either
6
<PAGE>
individually or as part of a group the beneficial owner of 30% or more
of the Company's common stock, in any such event the Executive, by
written notice to the Company, may elect to deem the Executive's
employment hereunder to have been terminated by the Company without
cause, in which event the Executive shall be entitled at the time of
termination to compensation equal to an amount of three years Base
Salary under this Agreement and benefits payable pursuant to Section 4
herein for such three year period and all of Executive's remaining
unvested options, if any, shall vest immediately upon such termination.
In such event, the Executive, by written notice to the Company, may
elect to refuse all further obligations of the Company under Sections 3
and 4 and to release the Company with respect thereto, in which event
the Company shall release the Executive from the provisions of Section
6.
6. NON-COMPETITION AGREEMENT.
(a) COMPETITION WITH THE COMPANY. Until termination of his
employment and for a period of 12 months commencing on the date of
termination, the Executive, directly or indirectly, in association with
or as a stockholder, director, officer, consultant, employee, partner,
joint venturer, member or otherwise of or through any person, firm,
corporation, partnership, association or other entity, will not compete
with the Company or any of its affiliates in the offer, sale or
marketing of products or services that are competitive with the
products or services offered by the Company, within any metropolitan
area in the United States or elsewhere in which the Company is then
engaged in the offer and sale of competitive products or services;
provided, however, the foregoing shall not prevent Executive from
accepting employment with an enterprise engaged in two or more lines of
business, one of
7
<PAGE>
which is the same or similar to the Company's business (the "Prohibited
Business") if Executive's employment is totally unrelated to the
Prohibited Business; provided, further, the foregoing shall not
prohibit Executive from owning up to 5% of the securities of any
publicly-traded enterprise provided Executive is not an employee,
director, officer, consultant to such enterprise or otherwise
reimbursed for services rendered to such enterprise.
(b) SOLICITATION OF CUSTOMERS. During the periods in which the
provisions of Section 6(a) shall be in effect, the Executive, directly
or indirectly, will not seek Prohibited Business from any Customer (as
defined below) on behalf of any enterprise or business other than the
Company, refer Prohibited Business from any Customer to any enterprise
or business other than the Company or receive commissions based on
sales or otherwise relating to the Prohibited Business from any
Customer, or any enterprise or business other than the Company. For
purposes of this Section 6(b), the term "Customer" means any person,
firm, corporation, partnership, association or other entity to which
the Company or any of its affiliates sold or provided goods or services
during the 24-month period prior to the time at which any determination
is required to be made as to whether any such person, firm,
corporation, partnership, association or other entity is a Customer.
Notwithstanding the above a Customer shall not include those
individuals and entities listed on Schedule 6(b) with whom the
Executive had a relationship with prior to entering into this
agreement.
(c) NO PAYMENT. The Executive acknowledges and agrees that no
separate or additional payment will be required to be made to him in
consideration of his undertakings in this Section 6.
7. NON-DISCLOSURE OF CONFIDENTIAL INFORMATION.
8
<PAGE>
(a) CONFIDENTIAL INFORMATION. Confidential Information
includes, but is not limited to, trade secrets as defined by the common
law and statute in Florida or any future Florida statute, processes,
policies, procedures, techniques, designs, drawings, know-how,
show-how, technical information, specifications, computer software and
source code, information and data relating to the development,
research, testing, manufacturing, costs, marketing and uses of the
Products (as defined herein), the Company's budgets and strategic
plans, and the identity and special needs of customers for the
Products, databases, data, all technology relating to the Company's
businesses, systems, methods of operation, customer lists, customer
information, solicitation leads, marketing and advertising materials,
methods and manuals and forms, all of which pertain to the activities
or operations of the Company, names, home addresses and all telephone
numbers and e-mail addresses of the Company's employees and former
employees. Confidential Information also includes, without limitation,
Confidential Information received from the Company's subsidiaries and
affiliates. For purposes of this Agreement, the following will not
constitute Confidential Information (i) information which is or
subsequently becomes generally available to the public through no act
of the Executive, (ii) information set forth in the written records of
the Executive prior to disclosure to the Executive by or on behalf of
the Company, and (iii) information which is lawfully obtained by the
Executive in writing from a third party (excluding any affiliates of
the Executive) who did not acquire such confidential information or
trade secret, directly or indirectly, from Executive or the Company. As
used herein, the term "Products" shall include all Internet search
engines marketed by it, together with all services provided by the
Company during the term of Executive's employment.
(b) LEGITIMATE BUSINESS INTERESTS. The Executive recognizes
that the Company has
9
<PAGE>
legitimate business interests to protect and as a consequence, the
Executive agrees to the restrictions contained in this Agreement
because they further the Company's legitimate business interests. These
legitimate business interests include, but are not limited to (i) trade
secrets as defined in Section 7(b), (ii) valuable confidential business
or professional information that otherwise does not qualify as trade
secrets including all Confidential Information; (iii) substantial
relationships with specific prospective or existing customers or
clients; (iv) customer or client goodwill associated with the Company's
business; and (v) specialized training relating to the Company's
technology, methods and procedures.
(c) CONFIDENTIALITY. For a period of three years following
termination of the Executive's employment, the Confidential Information
shall be held by the Executive in the strictest confidence and shall
not, without the prior written consent of the Company, be disclosed to
any person other than in connection with Executive's employment by the
Company. The Executive further acknowledges that such Confidential
Information as is acquired and used by the Company or its affiliates is
a special, valuable and unique asset. The Executive shall exercise all
due and diligent precautions to protect the integrity of the Company's
Confidential Information and to keep it confidential whether it is in
written form, on electronic media or oral. The Executive shall not copy
any Confidential Information except to the extent necessary to his
employment nor remove any Confidential Information or copies thereof
from the Company's premises except to the extent necessary to his
employment and then only with the authorization of an officer of the
Company. All records, files, materials and other Confidential
Information obtained by the Executive in the course of his employment
with the Company are confidential and proprietary and shall remain the
exclusive property of the
10
<PAGE>
Company or its customers, as the case may be. The Executive shall not,
except in connection with and as required by his performance of his
duties under this Agreement, for any reason use for his own benefit or
the benefit of any person or entity with which he may be associated or
disclose any such Confidential Information to any person, firm,
corporation, association or other entity for any reason or purpose
whatsoever without the prior written consent of or an officer of the
Company (excluding the Executive, if applicable).
8. EQUITABLE RELIEF.
(a) The Company and the Executive recognize that the services
to be rendered under this Agreement by the Executive are special,
unique and of extraordinary character, and that in the event of the
breach by the Executive of the terms and conditions of this Agreement
or if the Executive, without the prior consent of the board of
directors of the Company, shall leave his employment for any reason and
take any action in violation of Section 6 or Section 7, the Company
will be entitled to institute and prosecute proceedings in any court of
competent jurisdiction referred to in Section 8(b) below, to enjoin the
Executive from breaching the provisions of Section 6 or Section 7. In
such action, the Company will not be required to plead or prove
irreparable harm or lack of an adequate remedy at law. Nothing
contained in this Section 8 shall be construed to prevent the Company
from seeking such other remedy in arbitration in case of any breach of
this Agreement by the Executive, as the Company may elect.
(b) Any proceeding or action must be commenced in Collier
County, Florida. The Executive and the Company irrevocably and
unconditionally submit to the exclusive jurisdiction of such courts and
agree to take any and all future action necessary to submit to the
11
<PAGE>
jurisdiction of such courts. The Executive and the Company irrevocably
waive any objection that they now have or hereafter irrevocably waive
any objection that they now have or hereafter may have to the laying of
venue of any suit, action or proceeding brought in any such court and
further irrevocably waive any claim that any such suit, action or
proceeding brought in any such court has been brought in an
inconvenient forum. Final judgment against the Executive or the Company
in any such suit shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment, a certified or true copy of
which shall be conclusive evidence of the fact and the amount of any
liability of the Executive or the Company therein described, or by
appropriate proceedings under any applicable treaty or otherwise.
9. ASSIGNABILITY. The rights and obligations of the Company under
this Agreement shall inure to the benefit of and be binding upon the successors
and assigns of the Company, provided that such successor or assign shall acquire
all or substantially all of the securities or assets and business of the
Company. The Executive's obligations hereunder may not be assigned or alienated
and any attempt to do so by the Executive will be void.
10. SEVERABILITY.
(a) The Executive expressly agrees that the character,
duration and geographical scope of the non-competition provisions set
forth in this Agreement are reasonable in light of the circumstances as
they exist on the date hereof. Should a decision, however, be made at a
later date by a court of competent jurisdiction that the character,
duration or geographical scope of such provisions is unreasonable, then
it is the intention and the agreement of the Executive and the Company
that this Agreement shall be construed by the court in such a manner as
to impose only those restrictions on the Executive's conduct that are
reasonable in
12
<PAGE>
the light of the circumstances and as are necessary to assure to the
Company the benefits of this Agreement. If, in any judicial proceeding,
a court shall refuse to enforce all of the separate covenants deemed
included herein because taken together they are more extensive than
necessary to assure to the Company the intended benefits of this
Agreement, it is expressly understood and agreed by the parties hereto
that the provisions of this Agreement that, if eliminated, would permit
the remaining separate provisions to be enforced in such proceeding
shall be deemed eliminated, for the purposes of such proceeding, from
this Agreement.
(b) If any provision of this Agreement otherwise is deemed to
be invalid or unenforceable or is prohibited by the laws of the state
or jurisdiction where it is to be performed, this Agreement shall be
considered divisible as to such provision and such provision shall be
inoperative in such state or jurisdiction and shall not be part of the
consideration moving from either of the parties to the other. The
remaining provisions of this Agreement shall be valid and binding and
of like effect as though such provision were not included.
11. NOTICES AND ADDRESSES. All notices, offers, acceptance and any
other acts under this Agreement (except payment) shall be in writing, and shall
be sufficiently given if delivered to the addressees in person, by Federal
Express or similar receipted delivery, by facsimile delivery or, if mailed,
postage prepaid, by certified mail, return receipt requested, as follows:
To the Company: whOOdoo.com, inc.
1660 Trade Center Way
Naples, Florida 34109
Facsimile: (941) 594-2701
With a Copy to: Michael D. Harris, Esq.
Michael Harris, P.A.
1645 Palm Beach Lakes Blvd., Suite 550
West Palm Beach, FL 33401
Facsimile: (561) 478-1817
13
<PAGE>
To the Executive: Mr. Paulo Mylla
1660 Trade Center Way
Naples, Florida 34109
Facsimile: (941) 594-2701
or to such other address as either of them, by notice to the other may designate
from time to time. The transmission confirmation receipt from the sender's
facsimile machine shall be conclusive evidence of successful facsimile delivery.
Time shall be counted to, or from, as the case may be, the delivery in person or
by mailing.
12. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument. The execution of this
Agreement may be by actual or facsimile signature.
13. ARBITRATION. Except for a claim for equitable relief, any
controversy, dispute or claim arising out of or relating to this Agreement, or
its interpretation, application, implementation, breach or enforcement which the
parties are unable to resolve by mutual agreement, shall be settled by
submission by either party of the controversy, claim or dispute to binding
arbitration in Collier County, Florida the parties agree in writing to a
different location), before the arbitrators in accordance with the rules of the
American Arbitration Association then in effect. In any such arbitration
proceeding the parties agree to provide all discovery deemed necessary by the
arbitrators. The decision and award made by the arbitrators shall be final,
binding and conclusive on all parties hereto for all purposes, and judgment may
be entered thereon in any court having jurisdiction thereof.
14. ATTORNEY'S FEES. In the event that there is any controversy or
claim arising out of or relating to this Agreement, or to the interpretation,
breach or enforcement thereof, and any action or proceeding is commenced to
enforce the provisions of this Agreement, the prevailing party shall be
14
<PAGE>
entitled to a reasonable attorney's fee, costs and expenses.
15. GOVERNING LAW. This Agreement and any dispute, disagreement,
or issue of construction or interpretation arising hereunder whether relating to
its execution, its validity, the obligations provided therein or performance
shall be governed or interpreted according to the internal laws of the State of
Florida without regard to choice of law considerations.
16. ENTIRE AGREEMENT. This Agreement constitutes the entire
Agreement between the parties and supersedes all prior oral and written
agreements between the parties hereto with respect to the subject matter hereof.
Neither this Agreement nor any provision hereof may be changed, waived,
discharged or terminated orally, except by a statement in writing signed by the
party or parties against which enforcement or the change, waiver discharge or
termination is sought.
17. ADDITIONAL DOCUMENTS. The parties hereto shall execute such
additional instruments as may be reasonably required by their counsel in order
to carry out the purpose and intent of this Agreement and to fulfill the
obligations of the parties hereunder.
18. SECTION AND PARAGRAPH HEADINGS. The section and paragraph
headings in this Agreement are for reference purposes only and shall not affect
the meaning or interpretation of this Agreement.
IN WITNESS WHEREOF, the Company and the Executive have executed this
Agreement as of the date and year first above written.
Witnesses whOOdoo.com, inc., a Delaware corporation
By:
------------------------------------------
Brian Leith, Vice President
------------------------------------------
Paulo Mylla
15
EXHIBIT 10.5
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") entered into as of this 4th
day of August 1999, between BGS (Southwest Florida), Inc. (the "Company") and
Brian Leith (the "Executive").
WHEREAS, the Company desires to employ the Executive and to ensure the
continued availability to the Company of the Executive's services, and the
Executive is willing to accept such employment and render such services, all
upon and subject to the terms and conditions contained in this Agreement;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants set forth in this Agreement, and intending to be legally bound, the
Company and the Executive agree as follows:
1. TERM OF EMPLOYMENT.
(a) TERM. The Company hereby employs the Executive, and the
Executive hereby accepts employment with the Company for a period
commencing on the date of this Agreement and ending three years from
the date of this Agreement.
(b) CONTINUING EFFECT. Notwithstanding any termination of this
Agreement except for termination under Section 5(c), at the end of the
Term or otherwise, the provisions of Sections 6 and 7 shall remain in
full force and effect and the provisions of Section 7 shall be binding
upon the legal representatives, successors and assigns of the
Executive.
2. DUTIES.
(a) GENERAL DUTIES. The Executive shall serve as the Chief
Operations officer and Vice-president of the Company, with duties and
responsibilities that are customary for such
1
<PAGE>
executives. The Executive will also perform services for such
subsidiaries as may be necessary. The Executive will use his best
efforts to perform his duties and discharge his responsibilities
pursuant to this Agreement competently, carefully and faithfully. In
determining whether or not the Executive has used his best efforts
hereunder, the Executive's and the Company's delegation of authority
and all surrounding circumstances shall be taken into account and the
best efforts of the Executive shall not be judged solely on the
Company's earnings or other results of the Executive's performance.
(b) DEVOTION OF TIME. Subject to the last sentence of this
Section 2(b), the Executive shall devote all of his time, attention and
energies during normal business hours (exclusive of periods of sickness
and disability and of such normal holiday and vacation periods as have
been established by the Company) to the affairs of the Company. (c)
LOCATION OF OFFICE: Except for usual and customary business travel, the
Executive's principal business office shall be in Naples, Florida. In
no event shall the Company relocate its principal offices to any area
outside a 15 mile radius of its current location without the
Executive's express written consent.
3. COMPENSATION AND EXPENSES.
(a) SALARY. For the services of the Executive to be rendered
under this Agreement, the Company shall pay the Executive an annual
salary of $55,000 (the "Base Salary"). The Base Salary shall also be
increased each year by an amount equal to the greater of (i) 3% in
excess of the prior year's Base Salary, or (ii) the cost of living
increase based upon the Consumer Price Index calculated upon the
commencement of each year of the Agreement using the prior month as the
measuring month published by the Bureau of Labor Statistics (or similar
successor index). The Consumer Price Index increase calculation shall
be calculated as
2
<PAGE>
follows:
Commencing with the one year anniversary of the commencement of the
term and the beginning of each year thereafter during the term of this
Agreement, the Executive's annual salary shall be adjusted in
accordance with the Consumer Price Index, all Urban Consumers issued by
the Bureau of Labor Statistics of the U.S. Department of Labor using
the years 1982-84 as a base of 100 (the "Index"). At the commencement
of the second year, and of each year thereafter, the Executive's
adjusted Base Salary shall be multiplied each year by a fraction, the
numerator of which shall be the published Index number for the month
preceding the commencement of the new year, I.E. July 2000, and the
denominator of which shall be the published Index number for the month
of July 1999. The resulting increase to the Executive's Base Salary
shall be added to the prior year's Base Salary and become a part
thereof for the current year. In the event that the Index herein
referred to ceases to be published during the term of this Agreement,
or if a substantial change is made in the method of establishing such
Index, then the determination of the adjustment in the Executive's
compensation shall be made with the use of such conversion factor,
formula or table as may be published by the Bureau of Labor Statistics,
or if none is available, the parties shall accept comparable statistics
on the cost of living in the United States as shall then be computed
and published by an agency of the United States, or if not by a
respected financial periodical selected by the Company.
(c) INCENTIVE BONUS. The Executive shall be receive an
incentive bonus
3
<PAGE>
based upon the number of impressions per calendar month on the
whOOdoo.com websites calculated as follows:
NUMBER OF IMPRESSIONS PER MONTH AMOUNT OF BONUS
At 1,000,000 an additional $1,625/Month
At 2,000,000 an additional $1,408/Month
At 3,000,000 an additional $845/Month
At 4,000,000 and above an additional $929/Month
(d) DISCRETIONARY BONUS. The Executive shall be eligible to
receive an annual bonus in an amount to be determined by a majority of
the Compensation Committee based on any criteria or factors the
Compensation Committee deems appropriate.
4. BENEFITS.
(a) VACATION. For each 12-month period during the Term, the
Executive will be entitled to four weeks of vacation without loss of
compensation or other benefits to which he is entitled under this
Agreement, to be taken at such times as the Executive may select and
the affairs of the Company may permit.
(b) EMPLOYEE BENEFIT PROGRAMS. The Executive is entitled to
participate in any pension, 401(k), insurance or other employee benefit
plan that is maintained by the Company for its executive officers,
including programs of life and medical insurance and reimbursement of
membership fees in civic, social and professional organizations.
(c) AUTOMOBILE. The Company shall pay for the current or
equivalent automobile lease and insurance payments and reimburse the
Executive for all related business expenses
4
<PAGE>
upon receipt of written documentation thereof. At the end of the
Executive's current automobile lease, the Executive shall receive
reimbursement of (i) an automobile lease or payment of up to $700 per
month, and (ii) the cost of insurance for such automobile.
(d) INSURANCE. The Company shall obtain a life insurance
policy on Executive in the amount of 3 times the Base Salary and pay
all premiums on such policy. The Executive or his assigns shall be the
beneficiaries of such policy.
5. TERMINATION.
(a) TERMINATION FOR CAUSE. The Company may terminate the
Executive's employment pursuant to the terms of this Agreement at any
time for cause by giving written notice of termination. Such
termination will become effective upon the giving of such notice. Upon
any such termination for cause, the Executive shall have no right to
compensation, bonus or reimbursement under Section 3, or to participate
in any employee benefit programs under Section 4, except as provided by
law, for any period subsequent to the effective date of termination.
For purposes of this Section 5(a), "cause" shall mean: (i) the
Executive is convicted of a felony which is related to the Executive's
employment or the business of the Company; (ii) the Executive, in
carrying out his duties hereunder, has been found in a civil action to
have committed gross negligence or intentional misconduct resulting in
either case in material harm to the Company; or (iii) the Executive has
been found in a civil action to have materially breached any provision
of Section 6 or Section 7 and to have caused material harm to the
Company. The term "found in a civil action" shall not apply until all
appeals permissible under the applicable rules of procedure or statutes
have been determined and no further appeals are permissible.
5
<PAGE>
(b) SPECIAL TERMINATION. In the event that (i) the Executive,
with or without change in title or formal corporate action, shall no
longer exercise all of the duties and responsibilities and shall no
longer possess substantially all the authority set forth in Section 2;
or (ii) the Company materially breaches this Agreement or the
performance of its duties and obligations hereunder; or (iii) any
entity or person not now an executive officer or director (or spouse)
of the Company or owner of more than 5% of its outstanding stock
becomes either individually or as part of a group the beneficial owner
of 30% or more of the Company's common stock, in any such event the
Executive, by written notice to the Company, may elect to deem the
Executive's employment hereunder to have been terminated by the Company
without cause, in which event the Executive shall be entitled at the
time of termination to compensation equal to an amount of three years
Base Salary under this Agreement and benefits payable pursuant to
Section 4 herein for such three year period and all of Executive's
remaining unvested options, if any, shall vest immediately upon such
termination. In such event, the Executive, by written notice to the
Company, may elect to refuse all further obligations of the Company
under Sections 3 and 4 and to release the Company with respect thereto,
in which event the Company shall release the Executive from the
provisions of Section 6.
6. NON-COMPETITION AGREEMENT.
(a) COMPETITION WITH THE COMPANY. Until termination of his
employment and for a period of 12 months commencing on the date of
termination, the Executive, directly or indirectly, in association with
or as a stockholder, director, officer, consultant, employee, partner,
joint venturer, member or otherwise of or through any person, firm,
corporation,
6
<PAGE>
partnership, association or other entity, will not compete with the
Company or any of its affiliates in the offer, sale or marketing of
products or services that are competitive with the products or services
offered by the Company, within any metropolitan area in the United
States or elsewhere in which the Company is then engaged in the offer
and sale of competitive products or services; provided, however, the
foregoing shall not prevent Executive from accepting employment with an
enterprise engaged in two or more lines of business, one of which is
the same or similar to the Company's business (the "Prohibited
Business") if Executive's employment is totally unrelated to the
Prohibited Business; provided, further, the foregoing shall not
prohibit Executive from owning up to 5% of the securities of any
publicly-traded enterprise provided Executive is not an employee,
director, officer, consultant to such enterprise or otherwise
reimbursed for services rendered to such enterprise.
(b) SOLICITATION OF CUSTOMERS. During the periods in which the
provisions of Section 6(a) shall be in effect, the Executive, directly
or indirectly, will not seek Prohibited Business from any Customer (as
defined below) on behalf of any enterprise or business other than the
Company, refer Prohibited Business from any Customer to any enterprise
or business other than the Company or receive commissions based on
sales or otherwise relating to the Prohibited Business from any
Customer, or any enterprise or business other than the Company. For
purposes of this Section 6(b), the term "Customer" means any person,
firm, corporation, partnership, association or other entity to which
the Company or any of its affiliates sold or provided goods or services
during the 24-month period prior to the time at which any determination
is required to be made as to whether any such person, firm,
corporation, partnership, association or other entity is a Customer.
Notwithstanding the above a Customer shall not include those
individuals and entities listed on Schedule 6(b) with whom the
Executive
7
<PAGE>
had a relationship with prior to entering into this agreement.
(c) NO PAYMENT. The Executive acknowledges and agrees that no
separate or additional payment will be required to be made to him in
consideration of his undertakings in this Section 6.
7. NON-DISCLOSURE OF CONFIDENTIAL INFORMATION.
(a) CONFIDENTIAL INFORMATION. Confidential Information
includes, but is not limited to, trade secrets as defined by the common
law and statute in Florida or any future Florida statute, processes,
policies, procedures, techniques, designs, drawings, know-how,
show-how, technical information, specifications, computer software and
source code, information and data relating to the development,
research, testing, manufacturing, costs, marketing and uses of the
Products (as defined herein), the Company's budgets and strategic
plans, and the identity and special needs of customers for the
Products, databases, data, all technology relating to the Company's
businesses, systems, methods of operation, customer lists, customer
information, solicitation leads, marketing and advertising materials,
methods and manuals and forms, all of which pertain to the activities
or operations of the Company, names, home addresses and all telephone
numbers and e-mail addresses of the Company's employees and former
employees. Confidential Information also includes, without limitation,
Confidential Information received from the Company's subsidiaries and
affiliates. For purposes of this Agreement, the following will not
constitute Confidential Information (i) information which is or
subsequently becomes generally available to the public through no act
of the Executive, (ii) information set forth in the written records of
the Executive prior to disclosure to the Executive by or on behalf of
the Company, and (iii) information which is lawfully obtained by the
Executive in writing from a third party (excluding any affiliates of
the Executive) who did not acquire such confidential
8
<PAGE>
information or trade secret, directly or indirectly, from Executive or
the Company. As used herein, the term "Products" shall include all
Internet search engines marketed by it, together with all services
provided by the Company during the term of Executive's employment.
(b) LEGITIMATE BUSINESS INTERESTS. The Executive recognizes
that the Company has legitimate business interests to protect and as a
consequence, the Executive agrees to the restrictions contained in this
Agreement because they further the Company's legitimate business
interests. These legitimate business interests include, but are not
limited to (i) trade secrets as defined in Section 7(b), (ii) valuable
confidential business or professional information that otherwise does
not qualify as trade secrets including all Confidential Information;
(iii) substantial relationships with specific prospective or existing
customers or clients; (iv) customer or client goodwill associated with
the Company's business; and (v) specialized training relating to the
Company's technology, methods and procedures.
(c) CONFIDENTIALITY. For a period of three years following
termination of the Executive's employment, the Confidential Information
shall be held by the Executive in the strictest confidence and shall
not, without the prior written consent of the Company, be disclosed to
any person other than in connection with Executive's employment by the
Company. The Executive further acknowledges that such Confidential
Information as is acquired and used by the Company or its affiliates is
a special, valuable and unique asset. The Executive shall exercise all
due and diligent precautions to protect the integrity of the Company's
Confidential Information and to keep it confidential whether it is in
written form, on electronic media or oral. The Executive shall not copy
any Confidential Information except to the extent necessary to his
employment nor remove any Confidential Information or copies thereof
from the Company's premises except to the extent necessary to his
employment and
9
<PAGE>
then only with the authorization of an officer of the Company. All
records, files, materials and other Confidential Information obtained
by the Executive in the course of his employment with the Company are
confidential and proprietary and shall remain the exclusive property of
the Company or its customers, as the case may be. The Executive shall
not, except in connection with and as required by his performance of
his duties under this Agreement, for any reason use for his own benefit
or the benefit of any person or entity with which he may be associated
or disclose any such Confidential Information to any person, firm,
corporation, association or other entity for any reason or purpose
whatsoever without the prior written consent of or an officer of the
Company (excluding the Executive, if applicable).
8. EQUITABLE RELIEF.
(a) The Company and the Executive recognize that the services
to be rendered under this Agreement by the Executive are special,
unique and of extraordinary character, and that in the event of the
breach by the Executive of the terms and conditions of this Agreement
or if the Executive, without the prior consent of the board of
directors of the Company, shall leave his employment for any reason and
take any action in violation of Section 6 or Section 7, the Company
will be entitled to institute and prosecute proceedings in any court of
competent jurisdiction referred to in Section 8(b) below, to enjoin the
Executive from breaching the provisions of Section 6 or Section 7. In
such action, the Company will not be required to plead or prove
irreparable harm or lack of an adequate remedy at law. Nothing
contained in this Section 8 shall be construed to prevent the Company
from seeking such other remedy in arbitration in case of any breach of
this Agreement by the Executive, as the Company may elect.
(b) Any proceeding or action must be commenced in Collier
County, Florida. The
10
<PAGE>
Executive and the Company irrevocably and unconditionally submit to the
exclusive jurisdiction of such courts and agree to take any and all
future action necessary to submit to the jurisdiction of such courts.
The Executive and the Company irrevocably waive any objection that they
now have or hereafter irrevocably waive any objection that they now
have or hereafter may have to the laying of venue of any suit, action
or proceeding brought in any such court and further irrevocably waive
any claim that any such suit, action or proceeding brought in any such
court has been brought in an inconvenient forum. Final judgment against
the Executive or the Company in any such suit shall be conclusive and
may be enforced in other jurisdictions by suit on the judgment, a
certified or true copy of which shall be conclusive evidence of the
fact and the amount of any liability of the Executive or the Company
therein described, or by appropriate proceedings under any applicable
treaty or otherwise.
9. ASSIGNABILITY. The rights and obligations of the Company under this
Agreement shall inure to the benefit of and be binding upon the successors and
assigns of the Company, provided that such successor or assign shall acquire all
or substantially all of the securities or assets and business of the Company.
The Executive's obligations hereunder may not be assigned or alienated and any
attempt to do so by the Executive will be void.
10. SEVERABILITY.
(a) The Executive expressly agrees that the character,
duration and geographical scope of the non-competition provisions set
forth in this Agreement are reasonable in light of the circumstances as
they exist on the date hereof. Should a decision, however, be made at a
later date by a court of competent jurisdiction that the character,
duration or geographical scope of such provisions is unreasonable, then
it is the intention and the agreement of the Executive and the Company
that this Agreement shall be construed by the court in such a
11
<PAGE>
manner as to impose only those restrictions on the Executive's conduct
that are reasonable in the light of the circumstances and as are
necessary to assure to the Company the benefits of this Agreement. If,
in any judicial proceeding, a court shall refuse to enforce all of the
separate covenants deemed included herein because taken together they
are more extensive than necessary to assure to the Company the intended
benefits of this Agreement, it is expressly understood and agreed by
the parties hereto that the provisions of this Agreement that, if
eliminated, would permit the remaining separate provisions to be
enforced in such proceeding shall be deemed eliminated, for the
purposes of such proceeding, from this Agreement.
(b) If any provision of this Agreement otherwise is deemed to
be invalid or unenforceable or is prohibited by the laws of the state
or jurisdiction where it is to be performed, this Agreement shall be
considered divisible as to such provision and such provision shall be
inoperative in such state or jurisdiction and shall not be part of the
consideration moving from either of the parties to the other. The
remaining provisions of this Agreement shall be valid and binding and
of like effect as though such provision were not included.
11. NOTICES AND ADDRESSES. All notices, offers, acceptance and any
other acts under this Agreement (except payment) shall be in writing, and shall
be sufficiently given if delivered to the addressees in person, by Federal
Express or similar receipted delivery, by facsimile delivery or, if mailed,
postage prepaid, by certified mail, return receipt requested, as follows:
To the Company: whOOdoo.com, inc.
1660 Trade Center Way
Naples, Florida 34109
Facsimile: (941) 594-2701
With a Copy to: Michael D. Harris, Esq.
Michael Harris, P.A.
1645 Palm Beach Lakes Blvd., Suite 550
West Palm Beach, FL 33401
Facsimile: (561) 478-1817
12
<PAGE>
To the Executive: Mr. Paulo Mylla
1660 Trade Center Way
Naples, Florida 34109
Facsimile: (941) 594-2701
or to such other address as either of them, by notice to the other may designate
from time to time. The transmission confirmation receipt from the sender's
facsimile machine shall be conclusive evidence of successful facsimile delivery.
Time shall be counted to, or from, as the case may be, the delivery in person or
by mailing.
12. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument. The execution of this
Agreement may be by actual or facsimile signature.
13. ARBITRATION. Except for a claim for equitable relief, any
controversy, dispute or claim arising out of or relating to this Agreement, or
its interpretation, application, implementation, breach or enforcement which the
parties are unable to resolve by mutual agreement, shall be settled by
submission by either party of the controversy, claim or dispute to binding
arbitration in Collier County, Florida the parties agree in writing to a
different location), before the arbitrators in accordance with the rules of the
American Arbitration Association then in effect. In any such arbitration
proceeding the parties agree to provide all discovery deemed necessary by the
arbitrators. The decision and award made by the arbitrators shall be final,
binding and conclusive on all parties hereto for all purposes, and judgment may
be entered thereon in any court having jurisdiction thereof.
14. ATTORNEY'S FEES. In the event that there is any controversy or
claim arising out of or relating to this Agreement, or to the interpretation,
breach or enforcement thereof, and any action or proceeding is commenced to
enforce the provisions of this Agreement, the prevailing party shall be
13
<PAGE>
entitled to a reasonable attorney's fee, costs and expenses.
15. GOVERNING LAW. This Agreement and any dispute, disagreement,
or issue of construction or interpretation arising hereunder whether relating to
its execution, its validity, the obligations provided therein or performance
shall be governed or interpreted according to the internal laws of the State of
Florida without regard to choice of law considerations.
16. ENTIRE AGREEMENT. This Agreement constitutes the entire
Agreement between the parties and supersedes all prior oral and written
agreements between the parties hereto with respect to the subject matter hereof.
Neither this Agreement nor any provision hereof may be changed, waived,
discharged or terminated orally, except by a statement in writing signed by the
party or parties against which enforcement or the change, waiver discharge or
termination is sought.
17. ADDITIONAL DOCUMENTS. The parties hereto shall execute such
additional instruments as may be reasonably required by their counsel in order
to carry out the purpose and intent of this Agreement and to fulfill the
obligations of the parties hereunder.
18. SECTION AND PARAGRAPH HEADINGS. The section and paragraph
headings in this Agreement are for reference purposes only and shall not affect
the meaning or interpretation of this Agreement.
IN WITNESS WHEREOF, the Company and the Executive have executed this
Agreement as of the date and year first above written.
Witnesses whOOdoo.com, inc., a Delaware corporation
By:
----------------------------------------------
Paulo Mylla, President
----------------------------------------------
Brian Leith
14
EXHIBIT 10.6
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") entered into as of this 22ND DAY OF
NOVEMBER 1999, between whOOdoo.com Inc. (the "Company") and DEBBIE BRISCOE (the
"Executive").
WHEREAS, the Company desires to employ the Executive and to ensure the continued
availability to the Company of the Executive's services, and the Executive is
willing to accept such employment and render such services, all upon and subject
to the terms and conditions contained in this Agreement;
NOW, THEREFORE, in consideration of the premises and the mutual covenants set
forth in this Agreement, and intending to be legally bound, the Company and the
Executive agree as follows:
1. TERM OF EMPLOYMENT
(a) TERM. The Company hereby employs the Executive, and the
Executive hereby accepts employment with the Company for a
period commencing on the date of this Agreement and ending one
year from the date of this Agreement. This contract is in
effect for one year and is renewable only upon renegotiation
by the parties involved.
(b) CONTINUING EFFECT. Notwithstanding any termination of this
agreement at the end of the Term or otherwise, the provisions
of Sections 6 and 7 shall remain in full force and effect and
the provisions of Section 7 shall be binding upon the legal
representatives, successors and assigns of the Executive.
2. DUTIES
(a) GENERAL DUTIES. Communications Director This position is
responsible for Investor Relations, Marketing, Public and
Media Relations, and will be the primary contact for the
company. Some of the duties will include: Working across the
organization to develop the company's top-level messages.
Developing and managing relationships with the press and
industry analyst communities, as well as assisting in the
design and implementation of the advertising plan. Some
additional duties include: HR functions, seminars,
sponsorships and speaking opportunities.
(b) DEVOTION OF TIME. The Executive shall conscientiously devote
his/her time, attention and energies to the affairs of the
Company.
<PAGE>
(c) LOCATION OF OFFICE. In no event shall the Company relocate its
principal offices to any area outside a 15- mile radius of its
current location without the Executive's express written
consent.
3. COMPENSATION.
(a) SALARY. For the services of the Executive to be rendered under
this agreement, the Company shall pay the Executive an annual
salary of $42,000 (the "Base Salary").
4. BENEFITS
(a) VACATION. During the Term, the Executive will be entitled to
10 unpaid personal days, and 20 business days of vacation/sick
leave without loss of compensation or other benefits to which
he is entitled under this Agreement, to be taken at such times
as the Executive may select and the affairs of the Company may
permit.
(b) EMPLOYEE BENEFIT PROGRAMS. The Executive is entitled to
participate in any pension, 401(k), insurance or any other
employee benefit plan that is maintained by the Company for
its executive officers, including programs of life, medical,
dental and vision insurance and stock options or other
profit-sharing plans.
(c) MEDICAL/DENTAL/VISION INSURANCE: The Company shall provide the
Executive 100% company-paid health insurance.
(d) LIFE INSURANCE. The Company shall maintain a life insurance
policy on Executive in the amount of 1 x Executive's salary
and pay all premiums on such policy. The Executive or his/her
assigns shall be the beneficiaries of such policy.
(e) STOCK OPTIONS/PROFIT-SHARING. The Company will provide stock
options as follows:
70,000 shares of stock at $1.00/share,
25% investiture every 12 months,
with 100% investiture in 3 years.
5. TERMINATION
(a) TERMINATION FOR CAUSE. The Company may terminate the
Executive's employment pursuant to the terms of this Agreement
at any time for cause by giving written notice of termination.
Such termination will become effective
<PAGE>
upon the giving of such notice. Upon any such termination for
cause, the Executive shall have no right to compensation or
reimbursement under Section 3, or to participate in any
employee benefit programs under section 4, except as provided
by law, for any period subsequent to the effective date of
termination. For purposes of this Section 5(a), "cause" shall
mean: (i) the Executive is convicted of a felony which is
related to the Executive's employment or the business of the
company, (ii) the Executive, in carrying out his/her duties
hereunder, has been found in a civil action to have committed
gross negligence or intentional misconduct resulting in either
case in material harm to the Company; or (iii) the Executive
has been found in a civil action to have materially breached
any provision of Section 6 or Section 7 and to have caused
material harm to the company. The term "found in a civil
action" shall not apply until all appeals permissible under
the applicable rules of procedure or statutes have been
determined and no further appeals are permissible.
6. NON-COMPETITION AGREEMENT
(a) COMPETITION WITH THE COMPANY. Until termination of his/her
employment and for a period of 12 months commencing on the
date of termination, the Executive, directly or indirectly, in
association with or as a stockholder, director, officer,
consultant, employee, partner, joint venturer, member or
otherwise of or through any person, firm, corporation,
partnership, association or other entity, will not compete
with the Company or any of its affiliates in the offer, sale,
or marketing of products or services that are competitive with
the search engine portal technology products and service
offered by the company("Prohibited Business"), within any
metropolitan area in the United States or elsewhere in which
the Company is then engaged. The foregoing shall not prevent
Executive from accepting employment with an enterprise engaged
in two or more lines of business, one of which is a Prohibited
Business if Executive's employment is totally unrelated to the
Prohibited Business. Further, the foregoing shall not prohibit
Executive from owning up to 5% of the securities of any
publicly-traded enterprise provided Executive is not an
employee, director, officer, consultant to such enterprise or
otherwise reimbursed for services rendered to such enterprise.
(b) SOLICITATION OF CUSTOMERS. During the periods in which the
provisions of section 6(a) shall be in effect, the Executive,
directly or indirectly, will not seek Prohibited Business from
any Customer (as defined below) on behalf of any enterprise or
business other than the Company or receive commissions based
on sales or otherwise relating to the Prohibited Business from
any Customer, or any enterprise or business other than the
Company. For purposes of this Section 6(b), the term
"Customer" means any person, firm, corporation, partnership,
association or other entity to which the Company or any of its
affiliates sold or provided goods or
<PAGE>
services from the initial date of this Agreement to the time
at which any determination is required to be made as to
whether any such person, firm, corporation, partnership,
association or other entity is a Customer. Notwithstanding the
above, a Customer shall not include those individuals and
entities listed on Schedule 6(b) with whom the Executive had a
relationship with prior to entering into this agreement.
(c) NO PAYMENT. The Executive acknowledges and agrees that no
separate or additional payment will be required to be made to
him in consideration of his/her undertakings in this Section
6.
7. NON-DISCLOSURE OF CONFIDENTIAL INFORMATION.
(a) CONFIDENTIAL INFORMATION. Confidential Information includes,
but is not limited to, trade secrets as defined by the common
law and statute in Florida or any future Florida statute,
processes, policies, procedures, techniques, designs,
drawings, know-how, technical information, specifications,
computer software and source code, information and data
relating to the development, research, testing, manufacturing
costs, marketing and uses of the Products (as defined herein),
the Company's budgets and strategic plans, and the identity
and special needs of customers for the Products, databases,
data, and all technology relating to the Company's businesses,
systems, methods of operations, customer lists, customer
information, solicitation leads, marketing and advertising
materials, methods and manuals and forms, all of which pertain
to the activities or operations of the Company, names, home
addresses and all telephone numbers and e-mail addresses of
the Company's employees and former employees. Confidential
Information also includes, without limitation, Confidential
Information received from the Company's subsidiaries and
affiliates. For purposes of this Agreement, the following will
not constitute Confidential Information (i) information which
is or subsequently becomes generally available to the public
through no act of the Executive, (ii) information set forth in
the written records of the Executive prior to disclosure to
the Executive by or on behalf of the Company, (iii)
information which is lawfully obtained by the Executive in
writing from a third party (excluding any affiliates of the
Executive) who did not acquire such confidential information
or trade secret, directly or indirectly, from Executive or the
Company and (iv) any information required to be disclosed in
the normal course of performing the Executive's duties. As
used herein, the term "Products" shall include all Internet
search engines marketed by it, together with all services
provided by the Company during the term of the Executive's
Employment.
(b) LEGITIMATE BUSINESS INTERESTS. The Executive recognizes that
the Company has legitimate business interests to protect and
as a consequence, the Executive agrees to the restrictions
contained in this Agreement because
<PAGE>
they further the Company's legitimate business interests.
These legitimate business interests include, but are not
limited to (i) trade secrets as defined in Section 7(a), (ii)
valuable confidential business or professional information
that otherwise does not qualify as trade secrets including all
Confidential Information, (iii) substantial relationships with
specific prospective or existing customers or clients; (iv)
customer or client goodwill associated with the Company's
business; and (v) specialized training relating to the
Company's technology, methods, and procedures.
(C) CONFIDENTIALITY. For a period of three years following
termination of the Executive's employment, the Confidential
information shall be held by the Executive in the strictest
confidence and shall not, without prior written consent of the
company, be disclosed to any person other than in connection
with Executive's employment by the company. The Executive
further acknowledges that such Confidential Information as is
acquired and used by the Company or its affiliates is a
special, valuable, and unique asset. The Executive shall
exercise all due and diligent precautions to protect the
integrity of the Company's Confidential Information and to
keep it confidential whether it is in written form, on
electronic media or oral. The Executive shall not copy any
Confidential Information except to the extent necessary to
his/her employment nor remove any Confidential Information or
copies thereof from the Company's premises except to the
extent necessary to his/her employment. All records, files,
materials and other Confidential Information obtained by the
Executive in the course of his/her employment with the Company
are confidential and proprietary and shall remain the
exclusive property of the Company or its customers, as the
case may be. The Executive shall not, except in connection
with and as required by his/her performance of his/her duties
under this Agreement, for any reason use for his/her own
benefit or the benefit of any person or entity with which he
may be associated or disclose any such Confidential
Information to any person, firm, corporation, association,
association or other entity for any reason or purpose
whatsoever without prior written consent of an officer of the
Company (excluding the Executive, if applicable).
8. EQUITABLE RELIEF
(a) The Company and the Executive recognize that the services to
be rendered under this Agreement by the Executive are special,
unique and of extraordinary character, and that in the event
of the breach by the Executive of the terms and conditions of
this Agreement or if the Executive, without the prior consent
of the board of directors of the Company, shall leave his/her
employment for any reason and take any action in violation of
Section 6 or Section 7, the Company will be entitled to
institute and prosecute proceedings in any court of competent
jurisdiction referred to in Section 8(b) below, to enjoin the
Executive from
<PAGE>
breaching the provisions of Section 6 or Section 7. In such
action, the Company will not be required to plead or prove
irreparable harm or lack of an adequate remedy at law. Nothing
contained in this Section 8 shall be construed to prevent the
Company from seeking such other remedy in arbitration in case
of any breach of this Agreement by the Executive, as the
Company may elect.
(b) Any proceeding or action must be commenced in Collier County,
Florida. The Executive and the Company irrevocably and
unconditionally submit to the exclusive jurisdiction of such
courts and agree to take any and all further action necessary
to submit to the jurisdiction of such courts. The Executive
and the Company irrevocably waive any objection that they now
have or hereafter irrevocably waive any objection that they
now have or hereafter may have to the laying of venue of any
suit, action or proceeding brought in any such court and
further irrevocably waive any claim that any such suit, action
or proceeding brought in any such court has been brought in an
inconvenient forum. Final judgment against the Executive or
the Company in any such suit shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment, a
certified or true copy of which shall be conclusive evidence
of the fact and the amount of any liability of the Executive
or the Company therein described, or by appropriate
proceedings under any applicable treaty or otherwise.
9. ASSIGNABILITY. The rights and obligations of the Company under this
Agreement shall inure to the benefit of and be binding upon the
successors and assigns of the Company, provided that such successor or
assign shall acquire all or substantially all of the securities or
assets and business of the Company. The Executive's obligations
hereunder may not be assigned or alienated and any attempt to do so by
the Executive will be void.
10. SEVERABILITY
(a) The Executive expressly agrees that the character, duration
and geographical scope of the non-competition provisions set
forth in this Agreement are reasonable in light of the
circumstances as they exist on the date hereof. Should a
decision, however, be made at a later date by a court of
competent jurisdiction that the character, duration or
geographical scope of such provisions is unreasonable, then it
is the intention and the agreement of the Executive and the
Company that this Agreement shall be construed by the court in
such a manner as to impose only those restrictions on the
Executive's conduct that are reasonable in the light of the
circumstances and as are necessary to assure to the Company
the benefits of this Agreement. If, in any judicial
proceeding, a court shall refuse to enforce all of the
separate covenants deemed included herein because taken
together they are more extensive than necessary to assure to
the Company the intended benefits of this Agreement, it is
expressly
<PAGE>
understood and agreed by the parties hereto that the
provisions of this Agreement that, if eliminated, would permit
the remaining separate provisions to be enforced in such
proceeding shall be deemed eliminated, for the purpose of such
proceeding, from this Agreement.
(b) If any provision of this Agreement otherwise is deemed to be
invalid or unenforceable or is prohibited by the laws of the
state or jurisdiction where it is to be performed, this
Agreement shall be considered divisible as to such provision
and such provision shall be inoperative in such state or
jurisdiction and shall not be part of the consideration moving
from either of the parties to the other. The remaining
provisions of this Agreement shall be valid and binding and of
like effect as though such provision were not included.
11. NOTICES AND ADDRESSES. All notices, offers, acceptance and any other
acts under this Agreement (except payment) shall be in writing, and
shall be sufficiently given if delivered to the addresses in person, by
Federal Express or similar receipted delivery, by facsimile delivery
or, if mailed, postage prepaid, by certified mail, return receipt
requested, as follows:
To the Company: BGS Southwest FL
1660 Trade Center Way
Naples, FL 34109
Facsimile: (941) 594-2701
With a copy to: Michael D. Harris, Esq.
Michael Harris, P.A.
1645 Palm Beach Lakes, Blvd. Suite 550
West Palm Beach, FL 33401
Facsimile: (561) 478-1817
To the Executive: Debbie Briscoe
18362 Fern Road
Fort Myers, FL 33912
Facsimile: (941) N/A
Or to such other address as either of them, by notice to the other may
designate from time to time. The transmission conformation receipt from
the sender's facsimile machine shall be conclusive evidence of
successful facsimile delivery. Time shall be counted to, or from, as
the case may be, the delivery in person or by mailing.
12. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of
which together shall constitute one
<PAGE>
and the same instrument. The execution of this Agreement may be actual
or facsimile signature.
13. ATTORNEY'S FEES. In the event that there is any controversy or claim
arising out of or relating to this Agreement, or to the interpretation,
breach or enforcement thereof, and any action or proceeding is
commenced to enforce the provisions of this Agreement, the prevailing
party shall be entitled to a reasonable attorney's fee, costs and
expenses.
14. GOVERNING LAW. This Agreement and any dispute, disagreement, or issue
of construction or interpretation arising hereunder whether relating to
its execution, its validity, the obligations provided therein or
performance shall be governed or interpreted according to the internal
laws of the State of Florida without regard to choice of law
considerations.
15. ENTIRE AGREEMENT. This Agreement constitutes the entire Agreement
between he parties and supersedes all prior oral and written agreements
between the parties hereto with respect to he subject matter hereof.
Neither this Agreement nor any provision hereof may be changed, waived,
discharged or terminated orally, except by a statement in writing
signed by the party or parties against which enforcement of the change,
waiver discharge or termination is sought.
16. ADDITIONAL DOCUMENTS. The parties hereto shall execute such additional
instruments as may be reasonably required by their counsel in order to
carry out the purpose and intent of this Agreement and to fulfill the
obligations of the parties hereunder.
17. SECTION AND PARAGRAPH HEADINGS. The section and paragraph headings in
this Agreement are for reference purposes only and shall not affect the
meaning or interpretation of this Agreement.
<PAGE>
IN WITNESS WHEREOF, the Company and the Executive have executed this Agreement
as of the date and year first above written.
WhOOdoo.com, Inc.
a Delaware Corporation
- ----------------------------------------------
Paulo Mylla, President and CEO
- ----------------------------------------------
Executive
- ----------------------------------------------
Witness
- ----------------------------------------------
Witness
EXHIBIT 10.7
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") entered into as of this 4th day of
August 1999, between BGS (Southwest Florida), Inc. (the "Company") and Kevin
Casey , (the "Executive").
WHEREAS, the Company desires to employ the Executive and to ensure the continued
availability to the Company of the Executive's services, and the Executive is
willing to accept such employment and render such services, all upon and subject
to the terms and conditions contained in this Agreement:
NOW, THEREFORE, in consideration of the premises and the mutual covenants set
forth in this Agreement, and intending to be legally bound, the Company and the
Executive agree as follows:
1. TERM OF EMPLOYMENT
(a) TERM. The Company hereby employs the Executive, and the
Executive hereby accepts employment with the Company for a
period commencing on the date of this Agreement and ending one
year from the date of this Agreement. This contract is in
effect for one year and is renewable only upon renegotiation
by the parties involved.
(b) CONTINUING EFFECT. Notwithstanding any termination of this
agreement at the end of the Term or otherwise, the provisions
of Sections 6 and 7 shall remain in full force and effect and
the provisions of Section 7 shall be binding upon the legal
representatives, successors and assigns of the Executive.
2. DUTIES
(a) GENERAL DUTIES.
The Executive shall serve as the Director of Information
Technologies is responsible for the system architecture,
implementation, operation, administration and maintenance of
all information systems and technology at the Company. The
Director of Information Technologies coordinates the efforts
of both the Art Department and the Programming Department;
establishes budgets for technology purchases; evaluates
vendors, equipment, service agreements, etc; and analyzes new
technologies and reviews current procedures and methodologies.
This position is responsible for the hiring and staffing of
positions within both the Art and Programming Departments. The
Director is responsible for charting the
<PAGE>
technological growth of the company, controlling expenses, and
finding solutions. This position reports directly to the Chief
Executive Officers.
(b) DEVOTION OF TIME. The Executive shall conscientiously devote
his time, attention and energies to the affairs of the
Company.
(c) LOCATION OF OFFICE. In no event shall the Company relocate its
principal offices to any area outside a 15-mile radius of its
current location without the Executive's express written
consent.
3. COMPENSATION.
(a) SALARY. For the services of the Executive to be rendered under
this agreement, the Company shall pay the Manager an annual
salary of $85,000 (the "Base Salary").
4. BENEFITS
(a) VACATION. During the Term, the Executive will be entitled to
10 unpaid personal days, and 20 business days of vacation
without loss of compensation or other benefits to which he is
entitled under this Agreement, to be taken at such times as
the Executive may select and the affairs of the Company may
permit.
(b) EMPLOYEE BENEFIT PROGRAMS. The Executive is entitled to
participate in any pension, 401(k), insurance or any other
employee benefit plan that is maintained by the Company for
its executive officers, including programs of life, medical,
dental and vision insurance and stock options or other
profit-sharing plans.
(c) MEDICAL/DENTAL/VISION INSURANCE. The Company shall provide the
Executive with company-paid medical, vision and dental
insurance.
(d) LIFE INSURANCE. The Company shall maintain a life insurance
policy on the Executive in the amount of $100,000.00 and pay
all premiums on such policy. The Executive or his assigns
shall be the beneficiaries of such policy.
(e) STOCK OPTIONS/PROFIT-SHARING. Should the Company offer
stock-options or other profit sharing plans to other
executives of the Company, then the Company shall offer said
options or plans to the Executive in an amount commiserate
with the salary and/or duties of the Executive's position.
5. TERMINATION
(a) TERMINATION FOR CAUSE. The Company may terminate the
Executive's
<PAGE>
employment pursuant to the terms of this Agreement at any time
for cause by giving written notice of termination. Such
termination will become effective upon the giving of such
notice. Upon any such termination for cause, the Executive
shall have no right to compensation or reimbursement under
Section 3, or to participate in any employee benefit programs
under section 4, except as provided by law, for any period
subsequent to the effective date of termination. For purposes
of this Section 5(a), "cause" shall mean: (i) the Executive is
convicted of a felony which is related to the Manager's
employment or the business of the company, (ii) the Executive,
in carrying out his duties hereunder, has been found in a
civil action to have committed gross negligence or intentional
misconduct resulting in either case in material harm to the
Company; or (iii) the Executive has been found in a civil
action to have materially breached any provision of Section 6
or Section 7 and to have caused material harm to the company.
The term "found in a civil action" shall not apply until all
appeals permissible under the applicable rules of procedure or
statutes have been determined and no further appeals are
permissible.
6. NON-COMPETITION AGREEMENT
(a) COMPETITION WITH THE COMPANY. Until termination of his
employment and for a period of 12 months commencing on the
date of termination, the Executive, directly or indirectly, in
association with or as a stockholder, director, officer,
consultant, employee, partner, joint venturer, member or
otherwise of or through any person, firm, corporation,
partnership, association or other entity, will not compete
with the Company or any of its affiliates in the offer, sale,
or marketing of products or services that are competitive with
the search engine portal technology products and service
offered by the company("Prohibited Business"), within any
metropolitan area in the United States or elsewhere in which
the Company is then engaged. The foregoing shall not prevent
Executive from accepting employment with an enterprise engaged
in two or more lines of business, one of which is a Prohibited
Business if Executive's employment is totally unrelated to the
Prohibited Business. Further, the foregoing shall not prohibit
Manager from owning up to 5% of the securities of any
publicly-traded enterprise provided Manager is not an
employee, director, officer, consultant to such enterprise or
otherwise reimbursed for services rendered to such enterprise.
(b) SOLICITATION OF CUSTOMERS. During the periods in which the
provisions of section 6(a) shall be in effect, the Executive,
directly or indirectly, will not seek Prohibited Business from
any Customer (as defined below) on behalf of any enterprise or
business other than the Company or receive commissions based
on sales or otherwise relating to the Prohibited Business from
any Customer, or any enterprise or business other than the
Company. For purposes of this Section 6(b), the term
"Customer" means
<PAGE>
any person, firm, corporation, partnership, association or
other entity to which the Company or any of its affiliates
sold or provided goods or services from the initial date of
this Agreement to the time at which any determination is
required to be made as to whether any such person, firm,
corporation, partnership, association or other entity is a
Customer. Notwithstanding the above, a Customer shall not
include those individuals and entities listed on Schedule 6(b)
with whom the Executive had a relationship with prior to
entering into this agreement.
(c) NO PAYMENT. The Executive acknowledges and agrees that no
separate or additional payment will be required to be made to
him in consideration of his undertakings in this Section 6.
7. NON-DISCLOSURE OF CONFIDENTIAL INFORMATION.
(a) CONFIDENTIAL INFORMATION. Confidential Information includes,
but is not limited to, trade secrets as defined by the common
law and statute in Florida or any future Florida statute,
processes, policies, procedures, techniques, designs,
drawings, know-how, technical information, specifications,
computer software and source code, information and data
relating to the development, research, testing, manufacturing
costs, marketing and uses of the Products (as defined herein),
the Company's budgets and strategic plans, and the identity
and special needs of customers for the Products, databases,
data, and all technology relating to the Company's businesses,
systems, methods of operations, customer lists, customer
information, solicitation leads, marketing and advertising
materials, methods and manuals and forms, all of which pertain
to the activities or operations of the Company, names, home
addresses and all telephone numbers and e-mail addresses of
the Company's employees and former employees. Confidential
Information also includes, without limitation, Confidential
Information received from the Company's subsidiaries and
affiliates. For purposes of this Agreement, the following will
not constitute Confidential Information (i) information which
is or subsequently becomes generally available to the public
through no act of the Executive, (ii) information set forth in
the written records of the Executive prior to disclosure to
the Executive by or on behalf of the Company, (iii)
information which is lawfully obtained by the Executive in
writing from a third party (excluding any affiliates of the
Executive) who did not acquire such confidential information
or trade secret, directly or indirectly, from Executive or the
Company and (iv) any information required to be disclosed in
the normal course of performing the Executive's duties. As
used herein, the term "Products" shall include all Internet
search engines marketed by it, together with all services
provided by the Company during the term of the Executive's
Employment.
<PAGE>
(b) LEGITIMATE BUSINESS INTERESTS. The Executive recognizes that
the Company has legitimate business interests to protect and
as a consequence, the Executive agrees to the restrictions
contained in this Agreement because they further the Company's
legitimate business interests. These legitimate business
interests include, but are not limited to (i) trade secrets as
defined in Section 7(a), (ii) valuable confidential business
or professional information that otherwise does not qualify as
trade secrets including all Confidential Information, (iii)
substantial relationships with specific prospective or
existing customers or clients; (iv) customer or client
goodwill associated with the Company's business; and (v)
specialized training relating to the Company's technology,
methods, and procedures.
(c) CONFIDENTIALITY. For a period of three years following
termination of the Executive's employment, the Confidential
information shall be held by the Executive in the strictest
confidence and shall not, without prior written consent of the
company, be disclosed to any person other than in connection
with Executive's employment by the company. The Executive
further acknowledges that such Confidential Information as is
acquired and used by the Company or its affiliates is a
special, valuable, and unique asset. The Executive shall
exercise all due and diligent precautions to protect the
integrity of the Company's Confidential Information and to
keep it confidential whether it is in written form, on
electronic media or oral. The Executive shall not copy any
Confidential Information except to the extent necessary to his
employment nor remove any Confidential Information or copies
thereof from the Company's premises except to the extent
necessary to his employment. All records, files, materials and
other Confidential Information obtained by the Executive in
the course of his employment with the Company are confidential
and proprietary and shall remain the exclusive property of the
Company or its customers, as the case may be. The Executive
shall not, except in connection with and as required by his
performance of his duties under this Agreement, for any reason
use for his own benefit or the benefit of any person or entity
with which he may be associated or disclose any such
Confidential Information to any person, firm, corporation,
association, association or other entity for any reason or
purpose whatsoever without prior written consent of an officer
of the Company (excluding the Executive, if applicable).
8. EQUITABLE RELIEF
(a) The Company and the Executive recognize that the services to
be rendered under this Agreement by the Executive are special,
unique and of extraordinary character, and that in the event
of the breach by the Executive of the terms and conditions of
this Agreement or if the Executive, without the prior consent
of the board of directors of the Company, shall leave his
employment for any reason and take any action in violation of
Section 6 or Section 7, the Company will be entitled to
<PAGE>
institute and prosecute proceedings in any court of competent
jurisdiction referred to in Section 8(b) below, to enjoin the
Executive from breaching the provisions of Section 6 or
Section 7. In such action, the Company will not be required to
plead or prove irreparable harm or lack of an adequate remedy
at law. Nothing contained in this Section 8 shall be construed
to prevent the Company from seeking such other remedy in
arbitration in case of any breach of this Agreement by the
Executive, as the Company may elect.
(b) Any proceeding or action must be commenced in Collier County,
Florida. The Executive and the Company irrevocably and
unconditionally submit to the exclusive jurisdiction of such
courts and agree to take any and all further action necessary
to submit to the jurisdiction of such courts. The Executive
and the Company irrevocably waive any objection that they now
have or hereafter irrevocably waive any objection that they
now have or hereafter may have to the laying of venue of any
suit, action or proceeding brought in any such court and
further irrevocably waive any claim that any such suit, action
or proceeding brought in any such court has been brought in an
inconvenient forum. Final judgment against the Executive or
the Company in any such suit shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment, a
certified or true copy of which shall be conclusive evidence
of the fact and the amount of any liability of the Executive
or the Company therein described, or by appropriate
proceedings under any applicable treaty or otherwise.
9. ASSIGNABILITY.The rights and obligations of the Company under this
Agreement shall inure to the benefit of and be binding upon the
successors and assigns of the Company, provided that such successor or
assign shall acquire all or substantially all of the securities or
assets and business of the Company. The Executive's obligations
hereunder may not be assigned or alienated and any attempt to do so by
the Executive will be void.
10. SEVERABILITY
(a) The Executive expressly agrees that the character, duration
and geographical scope of the non-competition provisions set
forth in this Agreement are reasonable in light of the
circumstances as they exist on the date hereof. Should a
decision, however, be made at a later date by a court of
competent jurisdiction that the character, duration or
geographical scope of such provisions is unreasonable, then it
is the intention and the agreement of the Executive and the
Company that this Agreement shall be construed by the court in
such a manner as to impose only those restrictions on the
Executive's conduct that are reasonable in the light of the
circumstances and as are necessary to assure to the Company
the benefits of this Agreement. If, in any judicial
proceeding, a court shall refuse to enforce all of the
separate covenants deemed included herein
<PAGE>
because taken together they are more extensive than necessary
to assure to the Company the intended benefits of this
Agreement, it is expressly understood and agreed by the
parties hereto that the provisions of this Agreement that, if
eliminated, would permit the remaining separate provisions to
be enforced in such proceeding shall be deemed eliminated, for
the purpose of such proceeding, from this Agreement.
(b) If any provision of this Agreement otherwise is deemed to be
invalid or unenforceable or is prohibited by the laws of the
state or jurisdiction where it is to be performed, this
Agreement shall be considered divisible as to such provision
and such provision shall be inoperative in such state or
jurisdiction and shall not be part of the consideration moving
from either of the parties to the other. The remaining
provisions of this Agreement shall be valid and binding and of
like effect as though such provision were not included.
11. NOTICES AND ADDRESSES. All notices, offers, acceptance and any other
acts under this Agreement (except payment) shall be in writing, and
shall be sufficiently given if delivered to the addresses in person, by
Federal Express or similar receipted delivery, by facsimile delivery
or, if mailed, postage prepaid, by certified mail, return receipt
requested, as follows:
To the Company: Whoodoo.com, Inc.
1660 Trade Center Way
Naples, FL 34109
Facsimile: (941) 594-2701
With a copy to: Michael D. Harris, Esq.
Michael Harris, P.A.
1645 Palm Beach Lakes, Blvd. Suite 550
West Palm Beach, FL 33401
Facsimile: (561) 478-1817
To the Executive: Mr. Kevin Casey
1581 Northgate Dr.
Naples, FL 34105
Facsimile: (941) 262-5950
Or to such other address as either of them, by notice to the other may
designate from time to time. The transmission conformation receipt from
the sender's facsimile machine shall be conclusive evidence of
successful facsimile delivery. Time shall be counted to, or from, as
the case may be, the delivery in person or by mailing.
<PAGE>
12. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of
which together shall constitute one and the same instrument. The
execution of this Agreement may be actual or facsimile signature.
13. ATTORNEY'S FEES. In the event that there is any controversy or claim
arising out of or relating to this Agreement, or to the interpretation,
breach or enforcement thereof, and any action or proceeding is
commenced to enforce the provisions of this Agreement, the prevailing
party shall be entitled to a reasonable attorney's fee, costs and
expenses.
14. GOVERNING LAW. This Agreement and any dispute, disagreement, or issue
of construction or interpretation arising hereunder whether relating to
its execution, its validity, the obligations provided therein or
performance shall be governed or interpreted according to the internal
laws of the State of Florida without regard to choice of law
considerations.
15. ENTIRE AGREEMENT. This Agreement constitutes the entire Agreement
between he parties and supersedes all prior oral and written agreements
between the parties hereto with respect to he subject matter hereof.
Neither this Agreement nor any provision hereof may be changed, waived,
discharged or terminated orally, except by a statement in writing
signed by the party or parties against which enforcement of the change,
waiver discharge or termination is sought.
16. ADDITIONAL DOCUMENTS. The parties hereto shall execute such additional
instruments as may be reasonably required by their counsel in order to
carry out the purpose and intent of this Agreement and to fulfill the
obligations of the parties hereunder.
17. SECTION AND PARAGRAPH HEADINGS. The section and paragraph headings in
this Agreement are for reference purposes only and shall not affect the
meaning or interpretation of this Agreement.
IN WITNESS WHEREOF, the Company and the Manager have executed this Agreement as
of the date and year first above written.
Witnesses BGS SOUTHWEST FLORIDA, INC
a Florida corporation
By:
- ---------------------------- ------------------------------------
Paulo Mylla, President
- ---------------------------- ------------------------------------
Kevin Casey, IT Director
EXHIBIT 11
whOOdoo.com, Inc.
SCHEDULE OF COMPUTATION OF NET LOSS PER SHARE
<TABLE>
<CAPTION>
THREE MONTHS APRIL 9, 1999 APRIL 9, 1999
ENDED TO TO
SEPTEMBER 30, JUNE 30, SEPTEMBER 30,
1999 1999 1999
------------ ------------ ------------
BASIC
<S> <C> <C> <C>
Net loss available to common stock holders $ (1,780,951) $ (117,985) (1,898,936)
============ ============ ============
Weighted-average number of shares
outstanding during period 17,081,189 11,414,108 14,349,645
============ ============ ============
Basic net loss per share $ (0.10) $ (0.01) (0.13)
============ ============ ============
DILUTED
Net loss available to common stock holders $ (1,780,951) $ (117,985) $ (1,898,936)
Effect of assumed conversions -- -- --
------------ ------------ ------------
Net loss available to common stock holders, for
diluted earnings per share $ (1,780,951) $ (117,985) $ (1,898,936)
============ ============ ============
Weighted average number of shares outstanding
during the period 17,081,189 11,414,108 14,349,645
============ ============ ============
Diluted net loss per share $ (0.10) $ (0.01) (0.13)
============ ============ ============
</TABLE>
EXHIBIT 21
Subsidiaries
1. whOOdoo.com, Florida, Inc., Florida corporation
2. postoffer.com, inc. , a Florida corporation
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 3-MOS
<FISCAL-YEAR-END> JUN-30-1999 JUN-30-1999
<PERIOD-START> APR-09-1999 JUL-1-1999
<PERIOD-END> JUN-30-1999 SEP-30-1999
<CASH> 2,208 662,361
<SECURITIES> 0 0
<RECEIVABLES> 0 0
<ALLOWANCES> 0 0
<INVENTORY> 0 0
<CURRENT-ASSETS> 2,208 662,361
<PP&E> 18,914 91,972
<DEPRECIATION> (1,907) (7,512)
<TOTAL-ASSETS> 19,215 750,295
<CURRENT-LIABILITIES> 0 45,447
<BONDS> 0 0
0 0
0 0
<COMMON> 11,554 19,236
<OTHER-SE> 7,661 685,612
<TOTAL-LIABILITY-AND-EQUITY> 19,215 750,295
<SALES> 0 0
<TOTAL-REVENUES> 0 0
<CGS> 0 0
<TOTAL-COSTS> 117,985 1,780,951
<OTHER-EXPENSES> 0 0
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 0 0
<INCOME-PRETAX> (117,985) (1,780,951)
<INCOME-TAX> 0 0
<INCOME-CONTINUING> (117,985) (1,780,951)
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (117,985) (1,780,951)
<EPS-BASIC> (0.01) (0.10)
<EPS-DILUTED> (0.01) (0.10)
</TABLE>
EXHIBIT 99
WHOODOO.COM, INC.
1999 STOCK OPTION PLAN
1. PURPOSE AND ELIGIBILITY. This Stock Option Plan (the "Plan") is
intended to advance the interests of whOOdoo.com, inc. (the "Company"), and its
Related Corporations, as defined below, by enhancing the ability of the Company
to attract and retain qualified employees, consultants, officers and directors
by creating incentives and rewards for their contributions to the success of the
Company. This Plan will provide to: (a) officers and other employees of the
Company and its Related Corporations opportunities to purchase stock in the
Company pursuant to options granted hereunder which qualify as incentive stock
options ("ISOs") under Section 422(b) of the Internal Revenue Code of 1986, as
amended (the "Code") and (b) directors, officers, employees and consultants of
the Company and Related Corporations opportunities to purchase stock in the
Company pursuant to options granted hereunder which do not qualify as ISOs
("Non-Qualified Options"). ISOs and Non-Qualified Options are referred to
hereafter as "Options".
For purposes of the Plan, the term "Related Corporations" shall mean a
corporation which is a subsidiary corporation with respect to the Company within
the meaning of Section 424(f) of the Code.
This Plan is intended to comply in all respects with Rule 16b-3 and its
successor rules as promulgated under Section 16(b) of the Securities Exchange
Act of 1934 ("Rule 16b-3") for participants who are subject to Section 16 of the
Securities Exchange Act of 1934 (the "Exchange Act"). To the extent any
provision of the Plan or action by the Plan administrators fails to so comply,
it shall be deemed null and void to the extent permitted by law and deemed
advisable by the Plan administrators. Provided, however, such exercise of
discretion by the Plan administrators shall not interfere with the contract
rights of any participant. In the event that any interpretation or construction
of this Plan is required, it shall be interpreted and construed in order to
insure, to the maximum extent permissible by law, that such participant does not
violate the short-swing profit provisions of Section 16(b) of the Exchange Act
and that any exemption available under Rule 16b-3 is available.
2. STOCK. The stock subject to Options shall be authorized but unissued
shares of common stock (the "Common Stock"), or shares of Common Stock
reacquired by the Company in any manner. The aggregate number of shares of
Common Stock which may be issued pursuant to the Plan is 2,000,000 shares
subject to adjustment as provided in Section 14. Any such shares may be issued
as ISOs or Non-Qualified Options so long as the number of shares so issued does
not exceed the limitations in this Section. If any Options granted under the
Plan shall expire or terminate for any reason without having been exercised in
full or shall cease for any reason to be exercisable in whole or in part the
unexercised shares subject to such Options shall again be available for grants
of Options under the Plan.
3. ADMINISTRATION OF THE PLAN.
(a). The Plan may be administered by the entire board of
directors of the Company (the "Board") or by a committee composed solely of two
or more Non-Employee Directors as that term is defined by Rule 16b-3(b)(3) of
the Exchange Act, or the Company shall otherwise act in accordance with the
permissible interpretations of Rule 16b-3 (the "Committee"). Once appointed,
<PAGE>
such Committee shall continue to serve until otherwise directed by the Board. A
majority of the members of any such Committee shall constitute a quorum, and all
determinations of the Committee shall be made by the majority of its members
present at a meeting. Any determination of the Committee under the Plan may be
made without notice or meeting of the Committee by a writing signed by all of
the Committee members. Subject to ratification of the grant by the Board (but
only if so required by applicable state law), and subject to the terms of the
Plan, the Committee shall have the authority to (i) determine the employees of
the Company and Related Corporations (from among the class of employees eligible
under Section 3 to receive ISOs) to whom ISOs may be granted, and to determine
(from among the class of individuals and entities eligible under Section 3 to
receive Non-Qualified Options) to whom Non-Qualified Options may be granted;
(ii) determine the time or times at which Options may be granted; (iii)
determine the exercise price of shares subject to each Option which price for
any ISO shall not be less than the minimum price specified in Section 7; (iv)
determine whether each Option granted shall be an ISO or a Non-Qualified Option;
(v) determine (subject to Section 8) the time or times when each Option, except
for non-discretionary Options, shall become exercisable, the duration of the
exercise period and when each Option shall vest; (vi) determine whether
restrictions such as repurchase options are to be imposed on shares subject to
Options and the nature of such restrictions, if any, and (vii) interpret the
Plan and promulgate and rescind rules and regulations relating to it. Such
determination, whether made by the Committee or the Board shall be made in
advance of a grant and may be ratified after the fact only by the Company's
stockholders at or before the next annual meeting of stockholders held
subsequent to the grant. The interpretation and construction by the Committee of
any provisions of the Plan or of any Options granted under it shall be final,
binding and conclusive unless otherwise determined by the Board. The Committee
may from time to time adopt such rules and regulations for carrying out the Plan
as it may deem appropriate.
No members of the Committee or the Board shall be liable for any action
or determination made in good faith with respect to the Plan or any Options
granted under it. No member of the Committee or the Board shall be liable for
any act or omission of any other member of the Committee or the Board or for any
act or omission on his own part, including but not limited to the exercise of
any power and discretion given to him under the Plan, except those resulting
from his own gross negligence or willful misconduct.
(b) The Committee may select one of its members as its
chairman and shall hold meetings at such time and places as it may determine.
All references in this Plan to the Committee shall mean the Board if no
Committee has been appointed. From time to time the Board may increase the size
of the Committee and appoint additional members thereof, remove members (with or
without cause) and appoint new members in substitution therefor, fill vacancies
however caused or remove all members of the Committee and thereafter directly
administer the Plan.
(c) Options may be granted to members of the Board, whether
such grants are in their capacity as directors, employees or consultants.
Members of the Board who are either (i) eligible for Options pursuant to the
Plan or (ii) have been granted Options may vote on any matters affecting the
administration of the Plan or the grant of any Options pursuant to the Plan.
(d) Notwithstanding any other provision of Section 2, any
discretionary grants to a person who is a member of the Board shall be made only
by the Committee. The requirements imposed by this Section 2(d) shall also apply
with respect to grants to officers who are also directors.
2
<PAGE>
(e) In addition to such other rights of indemnification as he
may have as a member of the Board, and with respect to administration of the
Plan and the granting of Options under it, each member of the Board and of the
Committee (the "Indemnitee") shall be entitled without further act on the
Indemnitees part to indemnification from the Company for all expenses (including
advances of litigation expenses, the amount of judgment and the amount of
approved settlements made with a view to the curtailment of costs of litigation)
reasonably incurred by the Indemnitee in connection with or arising out of any
action, suit or proceeding, including any appeal thereof, with respect to the
administration of the Plan or the granting of Options under it in which the
Indemnitee may be involved by reason of the Indemnitee being or having been a
member of the Board or the Committee, whether or not the Indemnitee continues to
be such member of the Board or the Committee at the time of the incurring of
such expenses; provided, however, that such indemnity shall not include any
expenses incurred by the Indemnitee (i) in respect of matters as to which the
Indemnitee shall be finally adjudged in such action, suit or proceeding to have
been guilty of or liable for gross negligence or willful misconduct in the
performance of his duties as a member of the Board or the Committee; (ii) in
respect of any matter in which any settlement is effected to an amount in excess
of the amount approved by the Company on the advice of its legal counsel or
(iii) arising from any action in which the Indemnitee asserts a claim against
the Company whether such claim is termed a complaint, counterclaim, crossclaim,
third party complaint or otherwise and, provided further, that no right of
indemnification under the provisions set forth herein shall be available to any
such member of the Board or the Committee unless within 10 days after
institution of any such action, suit or proceeding the Indemnitee shall have
offered the Company in writing the opportunity to handle and defend such action,
suit or proceeding at its own expense. The foregoing right of indemnification
shall inure to the benefit of the heirs, executors or administrators of each
such Indemnitee and shall be in addition to all other rights to which such
Indemnitee would be entitled to as a matter of law, contract or otherwise.
Provided, however, the exception in Section 3 (e) (iii) shall not apply to an
action for indemnification under circumstances where the Company has failed to
provide indemnification to the Indemnitee which indemnification is required by
this Plan.
(f) Notwithstanding the indemnification provided for by this
Section 3, the Company's bylaws, or any written agreement, such indemnity shall
not include any expenses, liabilities or losses incurred by such Indemnitees
relating to or arising from any Proceeding in which the Company asserts a direct
claim (as opposed to a stockholders' derivative action) against the Indemnitees,
whether such claim by the Company is termed a complaint, counterclaim,
crossclaim, third-party complaint or otherwise.
4. ELIGIBLE EMPLOYEES AND OTHERS.
(a) ISOs may be granted to any employee of the Company or any
Related Corporation. Those officers and directors of the Company who
are not employees may not be granted ISOs under the Plan unless they
are employees of the Company or any Related Corporation. Subject to
compliance with Rule 16b-3 and other applicable securities laws,
Non-Qualified Options may be granted to any director (whether or not an
employee), officer, employee or consultant of the Company or any
Related Corporation. The Committee may take into consideration a
recipient's individual circumstances in determining whether to grant an
3
<PAGE>
ISO or a Non-Qualified Option. Granting of any Option to any individual
or entity shall neither entitle that individual or entity to, nor
disqualify him from participation in any other grant.
(b) All Options shall be exercisable for a period of 10 years
from the date of grant, except where a shorter period is required by
the Code for certain ISOs or where the board or committee selects a
shorter period at the time of any discretionary grant.
5. GRANTING OF OPTIONS.
(a) Options may be granted under the Plan at any time on and
after September 1, 1999, provided, however, that no ISO shall be
granted more than 10 years after the effective date of this Plan. The
date of grant of Options under the Plan will be the date specified by
the Committee at the time it grants the Options; provided, however,
that such date shall not be prior to the date on which the Committee
acts to approve the grant. The Committee shall have the right, with the
consent of the optionee, to convert ISOs granted under the Plan to
Non-Qualified Options pursuant to Section 15.
(b) The Board or Committee shall grant Options to participants
that it, in its sole discretion, selects. Options shall be granted on
such terms as the Board or Committee shall determine except that ISOs
shall be granted on terms that comply with the Code and regulations
thereunder.
(c) Notwithstanding any provision of this Plan, the Board or
the Committee may impose conditions and restrictions on any grant of
Options including forfeiture of vested Options, cancellation of Common
Stock acquired upon exercise of Options and forfeiture of profits from
the sale of Common Stock.
6. SALE OF SHARES ACQUIRED UPON EXERCISE OF OPTIONS. Any shares of the
Company's Common Stock acquired pursuant to Options granted hereunder as set
forth herein, cannot be sold by any officer, director or other person, subject
to Section 16 of the Exchange Act, until at least six months elapse from the
date of grant of the Options or unless the grant is otherwise exempt under Rule
16b-3 and the Board permits the sale. Nothing in this Section 6 shall be deemed
to reduce the holding period set forth under the applicable securities laws.
7. ISO MINIMUM OPTION PRICE AND OTHER LIMITATIONS.
(a) The exercise price per share of all Options granted under
the Plan shall not be less than the fair market value per share of
Common Stock on the date of such grant. For purposes of determining the
exercise price grants of ISOs, the date of the grant shall be the later
of (i) the date of approval by the Committee or the Board or (ii) the
date the recipient becomes an employee of the Company. In the case of
ISOs to be granted to an employee owning stock which represents more
than 10 percent of the total combined voting power of all classes of
stock of the Company or any Related Corporation, the price per share
shall not be less than 110 percent of the fair market value per share
of Common Stock on the date of grant and such ISOs shall not be
exercisable after the expiration of five years from the date of grant.
4
<PAGE>
(b) In no event shall the aggregate fair market value
(determined at the time any ISOs are granted) of Common Stock for which
ISOs granted to any employee are exercisable for the first time by such
employee during any calendar year (under all stock option plans of the
Company and any Related Corporation) exceed $100,000.
(c) If, at the time Options are granted under the Plan, the
Company's Common Stock is publicly traded, "fair market value" shall be
determined as of the last trading day prior to the date such Options
are granted and shall mean:
(1) the closing price of the Company's Common Stock
appearing on a national securities exchange if the principal
market for the common stock is such an exchange, or, if not
listed or not the principal market, the closing price on The
Nasdaq Stock Market ("Nasdaq");
(2) if the Company's shares are not listed on Nasdaq,
then the closing price for its Common Stock as listed on the
National Association of Securities Dealers Regulation, Inc.'s
electronic bulletin board; or
(3) if the Company's Common Stock is not listed on
the electronic bulletin board, then the average bid and asked
price for the Company's shares as listed in the National
Quotation Bureau's "pink sheets"; or
(4) if there are no listed bid and asked prices
published in the pink sheets, then the fair market value shall
be based upon the average closing bid and asked price as
determined following a polling of all dealers making a market
in the Company's Common Stock.
8. DURATION OF OPTIONS. Subject to earlier termination as provided in
Sections 5, 9 and 10, all Options shall expire on the date specified in the
original grant of such Options (except with respect to any ISOs that are
converted into Non-Qualified Options pursuant to Section 17) provided, however,
that such grant must comply with Section 422 of the Code with regard to ISOs and
Rule 16b-3 with regard to all Options granted pursuant to this Plan to officers,
directors and 10% stockholders of the Company. For the purpose of this Plan, the
term "officer" shall have the same meaning as defined in Rule 16a-1(f)
promulgated under the Exchange Act.
9. EXERCISE OF OPTIONS. Subject to the provisions of Sections 4(b) and
9 through 13, all Options granted under the Plan shall be exercisable as
follows:
(a) The Options shall either be fully vested and exercisable
from the date of grant or shall become vested and exercisable in such
installments as the Committee may specify.
(b) Once an installment becomes exercisable, it shall remain
exercisable until expiration or termination of the Options, unless
otherwise specified by the Committee.
(c) All Options, once exercisable and vested, may be exercised
at any time or from time to time, in whole or in part, for up to the
total number of shares with respect to which they
5
<PAGE>
are then exercisable.
(d) The Committee shall have the right to accelerate the
vesting date to allow exercise of any installment of any Options;
provided that the Committee shall not accelerate the vesting and
exercisability date of any installment of any Options granted to any
employee as an ISO (and not previously converted into Non-Qualified
Options pursuant to Section 17) if such acceleration would violate the
annual vesting limitation contained in Section 422 of the Code as
described in Section 6(b).
(e) The vesting date of all Options shall accelerate in the
event of any of the following: (i) the Company is to merge or
consolidate with or into any other corporation or entity except a
transaction where the Company is the surviving corporation or a change
of domicile merger or similar transaction exempt from registration
under the Securities Act of 1933, (ii) the sale of all or substantially
all of the Company's assets, (iii) the sale of at least 90% of the
outstanding Common Stock of the Company to a third party (subsections
(i), (ii) and (iii) collectively referred to as an "Acquisition"); or
(iv) the Company is dissolved. Upon a minimum of 20 days prior written
notice to the optionees, the exercisability of such Options shall
commence two business days prior to the earlier of (A) the scheduled
closing of an Acquisition or proposed dissolution or (B) the actual
closing of an Acquisition or proposed dissolution.
10. TERMINATION OF EMPLOYMENT. Subject to any greater restrictions or
limitations as may be imposed by the Committee upon the granting of any ISOs, if
an ISO optionee ceases to be employed by the Company and all Related
Corporations other than by reason of death or disability as defined in Section
11, no further installments of such ISOs shall become exercisable, and such ISOs
shall terminate on the day three months after the day of the termination of
employment, but in no event later than on their specified expiration dates,
except to the extent that such ISOs (or unexercised installments thereof) have
been converted into Non-Qualified Options pursuant to Section 17. Employment
shall be considered as continuing uninterrupted during any bona fide leave of
absence (such as those attributable to illness, military obligations or
governmental service) provided that the period of such leave does not exceed
three months or, if longer, any period during which such optionee's right to
re-employment is guaranteed by statute. A leave of absence with the written
approval of the Company's Board shall not be considered an interruption of
employment under the Plan, provided that such written approval contractually
obligates the Company or any Related Corporation to continue the employment of
the optionee after the approved period of absence. ISOs granted under the Plan
shall not be affected by any change of employment within or among the Company
and Related Corporations so long as the optionee continues to be an employee of
the Company or any Related Corporation.
11. DEATH; DISABILITY. Subject to any greater restrictions or
limitations as may be imposed by the Committee upon the granting of any ISOs:
(a) If an ISO optionee ceases to be employed by the Company
and all Related Corporations by reason of death, such person's ISOs may
be exercised to the extent of the number of shares with respect to
which he could have exercised it on the date of his death, by his
estate, personal representative or beneficiary who has acquired the ISO
by will or by the
6
<PAGE>
laws of descent and distribution, at any time prior to the earlier of
the ISO's specified expiration date or three months from the date of
the optionee's death.
(b) If an ISO optionee ceases to be employed by the Company
and all Related Corporations by reason of his disability, he shall have
the right to exercise any ISOs held by him on the date of termination
of employment until the earlier of (i) the ISOs' specified expiration
date or (ii) one year from the date of the termination of the
optionee's employment. For the purposes of the Plan, the term
"disability" shall mean "permanent and total disability" as defined in
Section 22(e)(3) of the Code, as amended, or successor statute.
12. ASSIGNMENT, TRANSFER OR SALE.
(a) No ISOs and no Options granted to an employee who is an
officer, director or beneficial owner of 10% or more of the Company's
Common Stock ("10% Owner") shall be assignable or transferable by the
grantee except as provided below or by will or by the laws of descent
and distribution, and during the lifetime of the grantee, each Option
shall be exercisable only by him, his guardian or legal representative.
The shares underlying the ISOs cannot be assigned, transferred or sold
until at least two years from the date of the granting of the ISOs and
one year after the transfer of such shares to the optionee.
(b) No ISOs shall be assignable or transferable by the
grantee.
(c) Provided however, any officer, director or 10% Owner may
transfer Non-Qualified Options to members of his or her immediate
family (I.E. children, grandchildren or spouse), to trusts for the
immediate benefit of such family members and to partnerships in which
such family members are the only partners, upon approval of the
Committee so long as no consideration is received for the transfer.
(d) Notwithstanding the terms of this Section 12, subject to
approval by the Committee, any executive officer, director or 10% Owner
may transfer Non-Qualified Options, granted under circumstances where
the exemption provided by Rule 16b-3 promulgated under the Exchange Act
is not applicable, to a spouse or former spouse if such transfer is
made in connection with a divorce proceeding and the specific terms of
the transfer are incorporated into a final divorce decree. The shares
of Common Stock underlying such Options may not be sold prior to the
entry of the divorce decree.
13. TERMS AND CONDITIONS OF OPTIONS. Options shall be evidenced by
instruments (which need not be identical) in such forms as the Committee may
from time to time approve. Such instruments shall conform to the terms and
conditions set forth in Sections 7 through 12 hereof and may contain such other
provisions as the Committee deems advisable which are not inconsistent with the
Plan, including restrictions applicable to shares of Common Stock issuable upon
exercise of Options and forfeiture provisions. In granting any Non-Qualified
Options, the Committee may specify that such Non-Qualified Options shall be
subject to the restrictions set forth herein with respect to ISOs, or to such
other termination and cancellation provisions as the Committee may determine.
The Committee may from time to time confer authority and responsibility on one
or more of its own members and/or one or more officers of the Company to execute
and deliver such instruments. The
7
<PAGE>
proper officers of the Company are authorized and directed to take any and all
action necessary or advisable from time to time to carry out the terms of such
instruments.
14. ADJUSTMENTS. Upon the occurrence of any of the following events, an
optionee's rights with respect to Options granted to him hereunder shall be
adjusted as hereinafter provided unless otherwise specifically provided in the
written agreement between the optionee and the Company relating to such Options:
(a) If the shares of Common Stock shall be subdivided or
combined into a greater or smaller number of shares or if the Company
shall issue any shares of its Common Stock as a stock dividend on its
outstanding Common Stock, the number of shares of Common Stock
deliverable upon the exercise of Options shall be appropriately
increased or decreased proportionately, and appropriate adjustments
shall be made in the purchase price per share to reflect such
subdivision, combination or stock dividend.
(b) If the Company is to be consolidated with or acquired by
another entity pursuant to an Acquisition, the Committee or the board
of directors of any entity assuming the obligations of the Company
hereunder (the "Successor Board") shall, as to outstanding Options not
exercised pursuant to Section 10, either (i) make appropriate provision
for the continuation of such Options by substituting on an equitable
basis for the shares then subject to such Options the consideration
payable with respect to the outstanding shares of Common Stock in
connection with the Acquisition; or (ii) terminate all Options in
exchange for a cash payment equal to the excess of the fair market
value of the shares subject to such Options over the exercise price
thereof.
(c) In the event of a recapitalization or reorganization of
the Company (other than a transaction described in Section 14(b) above)
pursuant to which securities of the Company or of another corporation
are issued with respect to the outstanding shares of Common Stock, an
optionee upon exercising Options shall be entitled to receive for the
purchase price paid upon such exercise the securities he would have
received if he had exercised his Options prior to such recapitalization
or reorganization.
(d) Notwithstanding the foregoing, any adjustments made
pursuant to Section 14(a), (b) or (c) with respect to ISOs shall be
made only after the Committee, after consulting with counsel for the
Company, determines whether such adjustments would constitute a
"modification" of such ISOs (as that term is defined in Section 424(h)
of the Code) or would cause any adverse tax consequences for the
holders of such ISOs. If the Committee determines that such adjustments
made with respect to ISOs would constitute a modification of such ISOs
it may refrain from making such adjustments.
(e) Except as expressly provided herein, no issuance by the
Company of shares of Common Stock of any class or securities
convertible into shares of Common Stock of any class shall affect, and
no adjustment by reason thereof shall be made with respect to, the
number or price of shares subject to Options. No adjustments shall be
made for dividends or other distributions paid in cash or in property
other than securities of the Company.
8
<PAGE>
(f) No fractional shares shall be issued under the Plan and
the optionees shall receive from the Company cash in lieu of such
fractional shares.
(g) Upon the happening of any of the foregoing events
described in Section 14(a), (b) or (c) above, the class and aggregate
number of shares set forth in Section 14 hereof that are subject to
Options which previously have been or subsequently may be granted under
the Plan shall also be appropriately adjusted to reflect the events
described therein. The Committee or the Successor Board shall determine
the specific adjustments to be made under this Section 14 and, subject
to Section 3, its determination shall be conclusive. If any person or
entity owning restricted Common Stock obtained by exercise of Options
made hereunder receives securities or cash in connection with a
corporate transaction described in Section 14(a), (b) or (c) above as a
result of owning such restricted Common Stock, such securities or cash
shall be subject to all of the conditions and restrictions applicable
to the restricted Common Stock with respect to which such securities or
cash were issued, unless otherwise determined by the Committee or the
Successor Board.
15.MEANS OF EXERCISING OPTIONS.
(a) An Option (or any part or installment thereof) shall be
exercised by giving written notice to the Company at its principal
office address. Such notice shall identify the Option being exercised
and specify the number of shares as to which such Option is being
exercised, accompanied by full payment of the purchase or exercise
price therefor either (i) in United States dollars in cash or by check;
(ii) at the discretion of the Committee, through delivery of shares of
Common Stock having a fair market value equal as of the date of the
exercise to the cash exercise price of the Option; (iii) at the
discretion of the Committee, by delivery of the grantee's personal
recourse note bearing interest payable not less than annually at no
less than 100% of the lowest applicable federal rate, as defined in
Section 1274(d) of the Code; (iv) at the discretion of the Committee,
by delivery of a letter from the grantee to his broker and the Company
directing his broker to send all proceeds of the sale of his securities
to the Company so the Company can deduct the exercise price and
withholding taxes prior to disbursement of the remaining proceeds to
grantee; or (v) at the discretion of the Committee, by any combination
of (i), (ii), (iii) and (iv) above. If the Committee exercises its
discretion to permit payment of the exercise price of an ISO by means
of the methods set forth in clauses (ii), (iii), (iv) or (v) of the
preceding sentence, such discretion shall be exercised in writing
anytime prior to exercise of the ISO in question. The holder of an
Option shall not have the rights of a stockholder with respect to the
shares covered by his Option until the date of issuance of a stock
certificate to him for such shares. Except as expressly provided above
in Section 14 with respect to changes in capitalization and stock
dividends, no adjustment shall be made for dividends or similar rights
for which the record date is before the date such stock certificate is
issued.
(b) Each notice of exercise shall, unless the Common Stock
underlying the Options (the "Option Shares") are covered by a then
current registration statement under the Securities Act of 1933, as
amended (the "Act"), contain the optionee's acknowledgment in form and
substance satisfactory to the Company that (i) such Option Shares are
being purchased for investment and not for distribution or resale
(other than a distribution or resale which, in the
9
<PAGE>
opinion of counsel to the Company, may be made without violating the
registration provisions of the Act), (ii) the optionee has been advised
and understands that (1) the Option Shares have not been registered
under the Act and are "restricted securities" within the meaning of
Rule 144 under the Act and are subject to restrictions on transfer, and
(2) the Company is under no obligation to register the Option Shares
under the Act or to take any action which would make available to the
optionee any exemption from such registration, and (iii) such Option
Shares may not be transferred without compliance with all applicable
federal and state securities laws. Notwithstanding the above, should
the Company be advised by counsel that issuance of Option Shares should
be delayed pending registration under federal or state securities laws
or the receipt of an opinion that an appropriate exemption therefrom is
available, the Company may defer exercise of any Options granted
hereunder until either such event has occurred.
16. TERM AND AMENDMENT OF PLAN. This Plan was adopted by the Board and
the sole stockholder on September 1, 1999. This Plan shall have no expiration
date, provided however that no ISOs shall be granted more than 10 years after
the Plan's effective date. The Board may terminate or amend the Plan in any
respect at any time. If stockholder approval is required by any national
securities exchange or Nasdaq, such approval must be obtained in accordance with
the appropriate rules requiring approval which may include: (a) increase of the
total number of shares that may be issued under the Plan (except by adjustment
pursuant to Section 14); and (b) modification of the provisions of Section 3
regarding eligibility for grants of ISOs. Except as provided herein or as
specified in the original instrument granting such Options, no action of the
Board or stockholders may alter or impair the rights of a grantee, without his
consent, under any Options previously granted to him.
17. CONVERSION OF ISOS INTO NON-QUALIFIED OPTIONS; TERMINATION OF ISOS.
The Committee, at the written request of any optionee, may in its discretion
take such actions as may be necessary to convert such optionee's ISOs (or any
installments or portions of installments thereof) that have not been exercised
on the date of conversion into Non-Qualified Options at any time prior to the
expiration of such ISOs, regardless of whether the optionee is an employee of
the Company or a Related Corporation at the time of such conversion. Such
actions may include, but not be limited to, extending the exercise period or
reducing the exercise price of the appropriate installments of such Options. At
the time of such conversion, the Committee (with the consent of the optionee)
may impose such conditions on the exercise of the resulting Non-Qualified
Options as the Committee in its discretion may determine, provided that such
conditions shall not be inconsistent with this Plan. Nothing in the Plan shall
be deemed to give any optionee the right to have such optionee's ISOs converted
into Non-Qualified Options, and no such conversion shall occur until and unless
the Committee takes appropriate action. The Committee, with the consent of the
optionee, may also terminate any portion of any ISOs that have not been
exercised at the time of such termination.
18. APPLICATION OF FUNDS. The proceeds received by the Company from the
exercise of Options granted under the Plan shall be used for general corporate
purposes.
19. GOVERNMENTAL REGULATIONS. The Company's obligation to sell and
deliver shares of Common Stock under this Plan is subject to the approval of any
governmental authority required in connection with the authorization, issuance
or sale of such shares.
20. WITHHOLDING OF ADDITIONAL INCOME TAXES. Upon the exercise of
Non-Qualified Options
10
<PAGE>
or the making of a Disqualifying Disposition (as defined in Section 21) the
Company, in accordance with Section 3402(a) of the Code may require the optionee
to pay additional withholding taxes in respect of the amount that is considered
compensation includable in such person's gross income. The Committee in its
discretion may condition the exercise of Options on the payment of such
withholding taxes.
To the extent that the Company is required to withhold taxes for
federal income tax purposes in connection with the exercise of any Options, the
Company shall have the discretion to determine if any optionee may elect to
satisfy such withholding requirement by (i) paying the amount of the required
withholding tax to the Company; (ii) delivering to the Company shares of its
Common Stock previously owned by the optionee; or (iii) having the Company
retain a portion of the Option Shares. If permitted by the Company, the number
of shares to be delivered to or withheld by the Company times the fair market
value of such shares shall equal the cash required to be withheld. To the extent
that the participant is authorized to either deliver or have withheld shares of
the Company's Common Stock, the Board, or the Committee, may require him to make
such election only during a certain period of time as may be necessary to comply
with appropriate exemptive procedures regarding the "short-swing" profit
provisions of Section 16(b) of the Exchange Act or to meet certain Code
requirements.
21. NOTICE TO COMPANY OF DISQUALIFYING DISPOSITION. Each employee who
receives ISOs must agree to notify the Company in writing immediately after the
employee makes a Disqualifying Disposition of any Common Stock acquired pursuant
to the exercise of such ISOs. A Disqualifying Disposition is any disposition
(including any sale) of such Common Stock before the later of (i) two years
after the date of employee was granted the ISOs, or (ii) one year after the date
the employee acquired Common Stock by exercising the ISO. If the employee has
died before such Common Stock is sold, these holding period requirements do not
apply and no Disqualifying Disposition can occur thereafter.
22. CONTINUED EMPLOYMENT. The grant of Options pursuant to the Plan
shall not be construed to imply or to constitute evidence of any agreement,
express or implied, on the part of the Company or any Related Corporation to
retain the optionee as an employee of the Company or a Related Corporation, as a
member of the Company's Board or in any other capacity, whichever the case may
be.
23. BONUSES OR LOANS TO EXERCISE OPTIONS. If requested by any person to
whom a grant of Options has been made, the Company or any Related Corporation
may, upon full Board approval, loan such person, guarantee a bank loan, or pay
such person additional compensation of the amount of money necessary to pay the
federal income taxes incurred as a result of the exercise of any Non-Qualified
Options, assuming that such person is in the maximum federal income tax bracket
and assuming that such person has no deductions which would reduce the amount of
such tax owed. The tax loan shall be made or tax offset bonus paid on or after
April 15th of the year following the year in which the tax is incurred and any
loan shall be made on such terms as the Company or lending bank determines.
24. GOVERNING LAW; CONSTRUCTION. The validity and construction of the
Plan and the instruments evidencing Options shall be governed by the laws of the
State of Delaware. In construing
11
<PAGE>
this Plan, the singular shall include the plural and the masculine gender shall
include the feminine and neuter, unless the context otherwise requires.
12
