U.S. Securities and Exchange Commission
Washington, D.C. 20549
FORM 10-SB
GENERAL FORM FOR REGISTRATION OF SECURITIES OF SMALL
BUSINESS ISSUERS
Under Section 12(b) or (g) of the Securities Exchange Act of 1934
VIVA GAMING & RESORTS INC.
--------------------------
(Name of Small Business Issuer in its charter)
Florida 65-0609891
------- ----------
(State of incorporation) (I.R.S. Employer Identification No.)
3753 Howard Hughes Parkway
Suite 200
Las Vegas, NV 89109
- ------------- -----
(Address of principal executive offices) (Zip Code)
Issuer's Telephone Number: (702)262-6477
-------------
Securities to be registered pursuant to 12(b) of the Act:
None
----
Securities to be registered pursuant to 12(g) of the Act:
Common Stock, $.001 Par Value
-----------------------------
(Title of Class)
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
Page No.
--------
PART I
<S> <C> <C>
Item 1. Description of Business.............................................................. 3
Item 2. Description of Property.............................................................. 7
Item 3. Directors, Executive Officers and Significant Employees.............................. 8
Item 4. Remuneration of Directors and Officers............................................... 9
Item 5. Security Ownership of Management and Certain Security
Officers............................................................................. 11
Item 6. Interest of Management and Others in Certain Transactions............................ 12
Item 7. Securities Being Offered............................................................. 13
PART II
Item 1. Market Price of and Dividends on the Registrant's
Common Equity and Other Shareholder Matters.......................................... 15
Item 2. Legal Proceedings.................................................................... 15
Item 3. Changes in and Disagreements with Accountants........................................ 16
Item 4. Recent Sales of Unregistered Securities.............................................. 16
Item 5. Indemnification of Directors and Officers............................................ 17
PART FS
Financial Statements................................................................. 18
PART III
Item 1. Index to Exhibits.................................................................... E-1
</TABLE>
-2-
<PAGE>
The information contained in this registration statement about us and
our business and operations contains "forward-looking statements." Such
statements consist of any statement other than a recitation of historical fact
and can be identified by the use of forward-looking terminology such as "may,"
"expect," "anticipate," "estimate" or "continue" or the negative thereof or
other variations thereon or comparable terminology. You are cautioned that all
forward-looking statements are necessarily speculative, and there are certain
risks and uncertainties that could cause actual events or results to differ
materially from those referred to in such forward looking statements. We do not
have a policy of updating or revising forward- looking statements and thus it
should not be assumed that silence by our management over time means that actual
events are bearing out as estimated in such forward looking statements.
PART I
------
ITEM 1. DESCRIPTION OF BUSINESS
General
References in this registration statement to VIVA, us, we and our are
to VIVA GAMING & RESORTS INC.
We have no obligation to file this Form 10-SB registration statement
pursuant to the Securities Exchange Act of 1934, as amended (the "Exchange
Act"). We are registering our common stock on this Form 10-SB registration
statement on a voluntary basis, so that we can meet the criteria for continued
listing of our common stock on the OTC Bulletin Board. Commencing on the
effective date of this registration statement, we will become obligated to file
reports in accordance with Section 13 of the Exchange Act. We believe that these
filings, together with the visibility that continued listing on the Bulletin
Board will provide, are in the best interest of our shareholders and the
investment community.
Organization
We were incorporated in Florida on December 9, 1997, under the name
Watt Comm International, Inc. Effective April 1, 1998, we entered into an
agreement to acquire all of the outstanding shares of Watt Shop Communications
Ltd., a retailer of wireless products and provider of telecommunications
services in Western Canada. Watt Shop is related to us by common control. In
April 1999, by mutual consent of the parties, our agreement to acquire the
shares of Watt Shop was rescinded. As a result, we reconveyed the shares of Watt
Shop we acquired under the agreement and returned to our treasury the 1,500,000
shares of our common stock issued in connection with the agreement. On May 11,
1999, we changed our name to VIVA GAMING & RESORTS.COM, INC., and on October 12,
1999, we changed our name to VIVA RESORTS & GAMING INC.
-3-
<PAGE>
Except as described in the preceding paragraph, we have not been
involved in any bankruptcy, receivership or similar proceeding, nor have we been
involved in any material reclassification, merger, consolidation, or purchase or
sale or a significant amount of assets not in the ordinary course of business.
Planned Operations
Following rescission of our stock purchase agreement to acquire The
Watt Shop, management undertook to identify various industries in which to seek
an operating business to serve as our core operations. Management identified the
casino gaming industry as exhibiting strong potential for reasons including:
o the increasing popularity of casino gaming in the United States;
o the recent world-wide expansion of casino gaming;
o the lack of experienced gaming management; and
o the vast financial market associated with the casino gaming industry.
Following an evaluation of relevant circumstances, we concluded that we
could create a viable and successful business by acquiring or developing and
managing casino gaming operations that are either undervalued or evidence a high
rate of profitability, and by providing consulting and managerial services
relating to the management and operation of those facilities. The business model
that we have created requires us to identify and recruit strong managerial
talent in the casino and gaming industry. The successful implementation of our
business model will enable us to generate revenues from:
o casino management and participation fees;
o consulting fees;
o activities conducted by businesses acquired by us; and
o appreciation from equity acquired in connection with project
participation.
In furtherance of our business model:
o We have entered into an agreement to employ Martin R. Gross as
our President and Chief Executive Officer. Mr. Gross has over
20 years experience in the gaming and hotel industries,
including executive management positions with properties
including the MGM Grand, The Mirage and the Flamingo Hilton.
He also led the financial turnaround of prominent Las Vegas
hotel/casinos including Four Queens Hotel and Casino, Maxim
Hotel and Casino and Riviera Hotel & Casino.
o John D. Lee has become a member of our board of directors. Mr.
Lee is a practicing attorney in Nevada, actively engaged in
providing legal services in areas including gaming,
entertainment law and real estate development.
-4-
<PAGE>
o We have engaged two independent consultants to provide us with
advice and consultation in connection with our efforts to own
and operate gaming properties world-wide, including securing
related financing.
o In November 1999, we entered into a Memorandum of
Understanding with Wagon Wheel Resorts, Casinos and
Entertainment Inc. which provides that we develop and operate
a full-service casino facility on behalf of the Roseau River
First Nation, to be located approximately 60 miles south of
Winnipeg, Canada. Following our review of applicable
government regulations, we have determined that completion of
the project is not economically feasible unless and until
changes are made to existing regulations governing First
Nation gaming in Manitoba, Canada. We will continue to monitor
government policy to determine the future of casino operations
in Manitoba.
o In November 1999, we entered into a Memorandum of
Understanding with Onion Lake First Nation, for us to design,
develop and operate a newly-planned casino facility in
Alberta, Canada, and to manage the facility for at least five
years. Following our review of applicable government
regulations, we have determined that completion of the project
is not economically feasible unless changes are made to
existing revenue-sharing regulations. We are actively
participating in negotiations with regulatory authorities
designed to modify existing regulations so that this project
might become economically viable.
o We have engaged Las Vegas Internet Partners to design, develop
and manage our web site. Our web site, with a URL at
www.vivagaming.com, became operational in November 1999.
We have not yet engaged in any revenue-producing activities, nor are we
a party to any binding agreements that will generate revenues. However, we
continue to seek and evaluate various opportunities consistent with our business
model that we believe will, over time, allow us to become profitable and enhance
shareholder values. Due to our lack of revenue-production to date, and our lack
of contractual commitments to generate revenue, there is no basis at this time
for investors to make an informed determination as to the prospects for our
future success. For similar reasons, our auditors have included in their report
covering our financial statements for the year ended December 31, 1998, that
there is substantial doubt about our ability to continue as a going concern.
To date, we have funded our operations through a combination of
borrowings and the sale of our equity securities. In early 2000, we completed
the sale of 120,000 shares of stock and 80,000 warrants, resulting in net
proceeds to us of approximately $430,000, and we are seeking to raise
approximately an additional $500,000 prior to completion of this phase of
financing. The sale of these shares was effected off-shore, pursuant to SEC
rules, regulations and interpretations, including Regulation S.
-5-
<PAGE>
We believe that the funds presently available to us will enable us to
sustain operations for a period of at least 12 months. Thereafter, to the extent
that we are unable to generate revenues from operations sufficient to cover our
operating costs, we will be required to seek additional funding. There is no
assurance additional financing, if required, will be available to us upon
acceptable terms.
Competition
We will compete with numerous casinos and gaming management companies,
many of which have far greater financial and other resources than we do. Many of
these companies have established histories and relationships in the gaming
industry that enable them to attract talent, manage gaming and hotel facilities
and financing. Moreover, proven track records are of paramount consideration in
selecting managerial talent. While our management team has significant
experience in the casino industry, we, as a company, have no proven track record
in the casino and hotel industry. There is no assurance that we will be able to
successfully compete in this industry.
Government Regulations
Casino operations are subject to numerous state, local and provincial
regulations, the compliance with which could have a significant impact upon our
proposed operations. Gaming is considered by all jurisdictions as a privilege,
not a right. Each state and Canadian province, as well as many Native American
jurisdictions, have their own gaming laws and regulatory agencies. Depending
upon the degree of regulatory enactment, the level of scrutiny and governing
bodies differ, both as to application of rules and approvals necessary in order
to operate.
In order for any individual or legal entity to do business as a gaming
company, most jurisdictions require that an application be completed and filed
with the applicable gaming commission. This application must be submitted by the
individual or legal entity which encompasses detailed information involving
personal histories and financial information over the last five years. The
application process is currently taking between six months and two years to be
completed. The range in times reflects the complexity of the applicant's
background. Applicants that have previously held licenses can generally be
approved quicker than those that have not previously been licensed. An
applicant's behavior and compliance with the applicable regulatory requirements
of a jurisdiction will generally be considered at the time of application, and,
thereafter, the failure to follow existing gaming regulations in one
jurisdiction may have a detrimental effect on gaming privileges in a
jurisdiction that the applicant is already licensed in. Each Gaming Board
charges the applicant a fee for the application and also the costs associated
with the investigation of the applicant. The amount of fees and costs varies
from jurisdiction to jurisdiction. No applicant can do business as a gaming
company in a jurisdiction until such time as the applicable Gaming Board has
approved the applicant.
-6-
<PAGE>
Employees
We currently have one full-time employee - Mr. Martin Gross. As
prospects and circumstances warrant, we will engage additional full-time and
part-time employees, as well as consultants, to perform required services.
Availability of Additional Information
We have filed this registration statement on Form 10-SB under the
Exchange Act. This registration statement does not contain all of the
information contained in the exhibits filed with it. Statements contained in
this registration statement as to the content of any contract or other document
referred to are not necessarily complete. In each instance, we refer you to the
copy of the contracts or other documents filed as exhibits to this registration
statement, and these statements are qualified in their entirety by reference to
the contract or document.
The registration statement, including all exhibits, may be inspected
without charge at the SEC's Public Reference Room at 450 Fifth Street, N.W.
Washington, D.C. 20549, and at the SEC's regional offices located at Seven World
Trade Center, Suite 1300, New York, New York 10048 and Citicorp Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of these materials
may also be obtained from the SEC's Public Reference at 450 Fifth Street, N.W.,
Room 1024, Washington D.C. 20549, upon the payment of prescribed fees. You may
obtain information on the operation of the Public Reference Room by calling the
SEC at 1- 800-SEC-0330.
The registration statement, including all exhibits, has been filed with
the SEC through the Electronic Data Gathering, Analysis and Retrieval system.
Following the effective date of the registration statement, we will become
subject to the reporting requirements of the Exchange Act and in accordance with
these requirements, will file annual, quarterly and special reports, and other
information with the SEC. We also intend to furnish our shareholders with annual
reports containing audited financial statements and other periodic reports as we
think appropriate or as may be required by law. This registration statement and
other filings made by us with the SEC through its Electronic Data Gathering,
Analysis and Retrieval Systems are publicly available through the SEC's site on
the World Wide Web located at http//www.sec.gov.
ITEM 2. DESCRIPTION OF PROPERTY
We currently lease approximately 315 square feet of office space at
3753 Howard Hughes Parkway, Las Vegas, Nevada. The lease, which commenced on
August 15, 1999 and terminates on July 31, 2000, requires us to pay monthly
rental of $2,650. Upon expiration of the lease we intend to renew our current
lease or, should circumstances warrant, seek additional space in Las Vegas.
-7-
<PAGE>
ITEM 3. DIRECTORS, EXECUTIVE OFFICERS AND SIGNIFICANT
EMPLOYEES
The following table contains the names, ages and positions of our
executive officers and directors. Directors will be elected at our annual
meeting of shareholders and serve for one year or until their successors are
elected and qualify. Officers are elected by the board, and their terms of
office are, except to the extent governed by employment contract, at the
discretion of the board.
<TABLE>
<CAPTION>
Director
Name Age Position Since
- ---- --- -------- -----
<S> <C> <C> <C>
Robert Sim 46 Chairman of the Board 1999
Rosemarie Sim 43 Secretary and Director 1999
Martin R. Gross 43 Chief Executive Officer
President and Director 1999
John D. Lee 45 Director 1999
</TABLE>
Robert Sim, our founder, served as our President from December 7, 1997
to April 30, 1999, as a director since December 7, 1997 and as our Chairman of
the Board since April 30, 1999. Mr. Sim served as a director of International
Thunderbird Gaming Co. from October 1992 until August 1995. He has also served
as a director of Jaguar Gaming Corporation, a publicly-held company from March
1998 to June 1999. For the preceding five years, Mr. Sim has also participated,
as founder, officer, director and/or partner, of approximately 20
privately-held, service-oriented businesses in Canada. These businesses operate
in such areas as electrical services, fire alarm services and night club
operations.
Rosemarie Sim has served as our Secretary and a director since April
30, 1999. She is the spouse of Robert Sim and, since 1985, has managed marketing
and promotion for the Robert Sim group of companies. Since November 1998, Ms.
Sim has also served as President of 619,712 Saskatchewan Ltd., the operator of
Habano's, a cigar and martini club located in Regina, Saskatchewan.
Martin R. Gross has served as our President since June 1999. From
September 1998 until June 1999, Mr. Gross acted as an independent gaming
consultant. From June 1998 to September 1998, he served as Acting General
Manager for the Maxim Hotel and Casino in Las Vegas, Nevada, where he analyzed
that company's condition and provided his advise in areas of operations,
controls, marketing programs and financial status. From January 1996 until June
1998 he was General Manager of Four Queens Hotel and Casino/Riviera Gaming
Management, where he supervised all operations of this 700 room, 32,000 square
foot casino. From April 1992 until June 1998 Mr. Gross also served as Vice
President of Riviera Gaming Management and Vice President of Sales and
Marketing/Special Events, Riviera Hotel and Casino in Las Vegas, Nevada, where
he administered all sales revenue operations for the 2,100 room hotel, 100,000
-8-
<PAGE>
square foot casino. Mr. Gross was a member of the management team engaged to
revitalize Riviera Hotel and Casino following its Chapter 11 bankruptcy filing.
Mr. Gross' career in the gaming industry also includes executive positions with
the Alexis Park Resort Hotel, The Mirage, the MGM Grand Hotel Corp./Bally's, the
Frontier Hotel & Casino and the Flamingo Hilton Hotel & Casino, all located in
Las Vegas, Nevada. Mr. Gross received a bachelor of science degree in Hotel
Administration from the University of Nevada , Las Vegas, in 1979.
John Lee has served as a member of our board of directors since July
1999. In 1981, Mr. Lee founded and continues to serve as managing attorney for
John Doechung, Chtd., a Nevada professional corporation. Mr. Lee practices in
the fields of general and complex litigation, immigration, real estate
development, gaming and entertainment law.
There are no family relationships between any of our directors,
executive officers and/or directors, nominees therefore or significant
employees, except that Robert Sim and Rosemarie Sim are husband and wife.
Involvement in Certain Legal Proceedings.
During the past five years, none of the following events have occurred
which are material to the evaluation of the ability or integrity of any of our
directors, executive officers or persons nominated to become directors or
executive officers:
(1) a petition under the Bankruptcy Act or any state insolvency law was
filed by or against, or a receiver, fiscal agent or similar officer was
appointed by a court for the business or property of such person, or any
partnership in which he was general partner at or within two years before the
time of such filing, or any corporation or business association if which he was
an executive officer at or within two years before the time of such filing;
and/or
(2) such person was convicted in a criminal proceeding (excluding
traffic violations and other minor offenses).
ITEM 4. REMUNERATION OF DIRECTORS AND OFFICERS
Compensation of Officers
We currently have four officers and directors. We paid no salary or
other compensation to any of our officers or directors during the fiscal year
ended December 31, 1999.
Compensation of Directors
There are no standard arrangements pursuant to which our directors are
compensated for any services provided as director. No additional amounts are
payable to our directors for committee participation or special assignments.
Employment Contracts and Termination of Employment and Change-in-Control
Arrangements
-9-
<PAGE>
There are no employment contracts, compensatory plans or arrangements,
including payments to be received from us, with respect to any of our directors
or executive officers which would in any way result in payments to any such
person because of his or her resignation, retirement or other termination of
employment with us, any change in control of us, or a change in the person's
responsibilities following such a change in control.
On June 15, 1999, we entered into a three year employment agreement to
employ Martin Gross as our Chief Executive Officer. Under the agreement, we have
agreed to pay Mr. Gross salary at the rate of $180,000 per year and a bonus
equal to 1% of our annual gross revenues. We also agreed to issue options to
purchase 300,000 shares of our common stock, exercisable at $3.35 per share
until December 28, 2001. We also granted Mr. Gross 300,000 stock appreciation
rights that enable him to exercise the stock options granted to him, and to
receive cash or shares, or a combination of both, equal in value to the excess
of the fair market value of one share as of the date of exercise, over the
option exercise price, multiplied by the number of shares in respect of which
the stock appreciation right is exercised.
Incentive and Non-Qualified Stock Option Plan
On October 8, 1999 our board of directors and a majority of our
shareholders adopted the 1999 Stock Option Plan.
We believe the plan will work to increase the employees', consultants'
and employee directors' proprietary interest in VIVA and to align more closely
their interests with the interests of our shareholders. We also believe the plan
will assist us in attracting and retaining the services of experienced and
highly qualified professionals.
We have reserved an aggregate of 1,500,000 shares of our common stock
for issuance upon exercise of options granted under the plan. Our board of
directors or a committee of the board administers the plan including, without
limitation, the selection of persons who will be granted options under the plan,
the type of options to be granted, the number of shares subject to each option
and the option price.
The plan authorizes the issuance of incentive stock options - those
qualified under Section 422A of the Internal revenue Code of 1986 - and
non-qualified stock options. Our officers, directors, key employees and
consultants will be eligible to receive non-qualified options under the plan.
Only our officers, directors and employees who are employed by us or any
subsidiary are eligible to receive incentive options. In conjunction with all or
part of the options granted under the plan, stock appreciation rights may be
granted at the time of the grant or in the case of non-qualified options, the
SAR maybe granted after the time of grant.
Incentive options granted under the plan must provide for an exercise
price of not less than 100% of the fair market value of the underlying shares on
the date of the grant, but the exercise price of any incentive option granted to
an eligible employee owning more than 10% of our common stock must be at lease
110% of such fair market value as determined on the date of
-10-
<PAGE>
the grant. No plan option may be exercisable more than ten years after the date
of its grant and , in the case of an incentive option, no more than five years
after the date of the grant. The exercise price of the non-qualified options may
not be not less than 55% of the fair market value of the underlying shares on
the date of the grant.
The per share price of shares subject to options granted under the plan
may be adjusted in the event of certain changes in our capitalization. All plan
options are nonassignable and nontransferable, except by will of by the laws of
descent and distribution, and during the lifetime of the optionee, may be
exercised only by such optionee. Options are subject to early termination upon
termination of employment, death or disability of the optionee. Options are also
subject to cash redemption in the event we undergo a change in control.
The board of directors may amend, alter, or discontinue the plan to the
extent it deems appropriate in our best interests, but no amendment, alteration
or discontinuation may impair the rights of an optionee under an option or a
recipient of a SAR theretofore granted. In addition, no such amendments shall be
made without the approval of our shareholders, to the extent such approval is
required by law or agreement. Unless the plan shall theretofore have been
discontinued, the plan will terminate on October 7, 2009.
As of December 31, 1999 options to purchase 1,155,000 shares and
300,000 SARs have been granted under the plan.
ITEM 5. SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN
SECURITY HOLDERS
The following table sets forth, as of the date of this registration
statement, information known to us relating to the beneficial ownership of our
common stock by:
o each person who is the beneficial owner of more than five
percent of our outstanding common stock;
o each director;
o each executive officer; and
o all executive officers and directors as a group.
As of the date hereof, there were 6,934,400 shares of our common stock
issued and outstanding. Except as to the beneficial ownership of shares issuable
upon exercise of options, the table does not give effect to the issuance of up
to 1,500,000 shares upon exercise of options under our stock option plan,
1,155,000 have been awarded. The table also excludes the effects of our issuance
of up to 89,600 shares in the event of the exercise of outstanding warrants.
Unless otherwise indicated, the address of each beneficial owner in the
table set forth below is care of VIVA Gaming & Resorts Inc., 3753 Howard Hughes
Parkway, Suite 200, Las Vegas, Nevada.
-11-
<PAGE>
We believe that all persons named in the table have sole voting and
investment power with respect to all shares of common stock beneficially owned
by them.
Under securities laws, a person is considered to be the beneficial
owner of securities he owns and that can be acquired by him within 60 days upon
the exercise of options, warrants, convertible securities or other
understandings. Beneficial assumes that options, warrants or convertible
securities that are held by a named person, but not those held by any other
person, and which are exercisable within 60 days of the date of this prospectus,
have been exercise or converted.
<TABLE>
<CAPTION>
Amount of Percentage
Name of Beneficial of
Beneficial Owner Ownership of Stock Class
---------------- ------------------ -----
<S> <C> <C>
Robert Sim 640,000 9.1%
Rosemarie Sim 360,000 5.1%
Martin Gross 330,000 4.6%
John D. Lee 110,000 1.6%
All Executive Officers
and Directors as a Group
(4 persons) 1,440,000 19.0%
</TABLE>
Change of Control.
There are currently no arrangements known to us, which will or in the
future could, result in a change of control of VIVA.
ITEM 6. INTEREST OF MANAGEMENT AND OTHERS IN CERTAIN
TRANSACTIONS
Except as set forth below, and in connection with employment agreements
described elsewhere in this registration statement, there have been no material
transactions, series of similar transactions, currently proposed transactions,
or series of similar transactions, to which we were or are to be a party, in
which the amount involved exceeded $60,000 and in which any of our directors or
executive officers, any security holder who is known by us to own of record or
beneficially more than five percent of our common stock, any promoter, or any
member of the immediate family of any of the foregoing persons, had a material
interest.
During the fiscal year ended December 31, 1998, we loaned $112,500 to
Robert Sim, who, at the time, was one of our officers and directors. The loan
was evidenced by a promissory note due and payable on December 31, 1999. In
December 1998, the note was modified to provide for the payment of interest at
the rate of 6% per year. Outstanding principal and interest on the note was
repaid in June 1999.
-12-
<PAGE>
During the year ended December 31, 1998:
o Robert Sim, an officer and director, advanced various
operating expenses on our behalf, the outstanding balance of
which was $13,840 at December 31, 1998;
o management services were provided to us by Archie and Curtis
Sim, the brother and son, respectively, of Robert Sim, each of
whom is a shareholder. Management fees total $30,000 at
December 31, 1998; and
o we received $67,228 from Watt Shop Communication Ltd., a
company in which Robert Sim, has a beneficial interest. As at
December 31, 1998, we owed $67,228 to Watt Shop.
While we do not anticipate that we will enter into additional
related-party transactions, and have not adopted any corporate policies for
entering into transactions with affiliated parties,
o we are subject to Section 617.0832 of the Florida Business
Corporation Law which requires that transactions between VIVA
and one or more of its directors be approved by disinterested
directors, be approved by VIVA's shareholders or be fair to
VIVA; however,
o we are not subject to Section 617.0901 of the Florida Business
Corporation Law which places additional limitations and
restrictions on certain business transactions with affiliated
parties.
Members of our management team, other than Mr. Gross, are not employed
by us on a full-time basis. They are involved in other business activities and
may, in the future become involved in other businesses. If a specific business
opportunity becomes available, such persons may face a conflict in selecting
between our business and their other business interests. We have not and do not
intend in the future to formulate a policy for the resolution of such conflicts.
ITEM 7. SECURITIES BEING OFFERED
Common Stock
We are authorized to issue 100,000,000 shares of common stock, par
value $.001 per share, of which 6,934,400 shares are issued and outstanding as
of the date of this registration statement. The issued and outstanding shares of
common stock are fully paid and non-assessable. Holders of our shares are
entitled to one vote per share on each matter submitted to a vote at a meeting
of shareholders. Holders of our common stock do not have cumulative voting
rights or preemptive rights and there are no redemption or conversion privileges
attached thereto. Holders of our common stock are entitled to receive ratably
such dividends as may be declared by the board of directors and to participate
ratably in the distribution of any assets legally available for distribution
with respect to our common stock. We do not expect to pay dividends for the
foreseeable future.
-13-
<PAGE>
Preferred Stock
Our articles of incorporation authorize us to issue up to 10,000,000
shares of undesignated, blank check preferred stock, par value $.10, in such
series and bearing such voting, dividend, conversion, liquidation and other
rights and preferences as the board of directors may determine. As of December
31, 1999, no shares of preferred stock are issued or outstanding.
We have no present intent to issue shares of preferred stock. The
future issuance of preferred stock could dilute our ownership by existing common
stock holders and could be used to inhibit a hostile takeover.
Warrants
In connection with our January 2000 off-shore private placement, we
issued common stock purchase warrants to purchase a total of 89,600 shares of
our common stock. Each warrant, which is not freely transferable, entitles the
owner to purchase one share, until January 14, 2001, for an exercise price of
$6.25. None of the warrants have been exercised.
Transfer Agent
The transfer agent for our common stock is Interstate Transfer Company,
874 East 5900 South, Suite 101, Salt Lake City, Utah 84107, telephone number
(801) 281-9746.
Shares Eligible For Future Sale
As of the date of this registration statement, we had outstanding an
aggregate of 6,934,400 shares of our common stock. Of the total outstanding
shares, 6,500,000 shares are freely tradable without restriction or further
registration under the Securities Act. The remaining 434,400 shares will be
eligible for resale on various dates in 2000 and 2001 under Rule 144.
Under Rule 144, a person (or persons whose shares are aggregated) who
has beneficially owned restricted securities for at least a year, including the
holding period of any prior owner except an affiliate, is generally entitled to
sell within any three month period a number of our shares that does not exceed
1% of the number of outstanding shares. Sales under Rule 144 are also subject to
certain manner of sale provisions, notice requirements and the availability of
current public information about us. Any person (or persons whose shares are
aggregated) who is not deemed to have been an affiliate of ours at any time
during the three months preceding a sale, and who has beneficially owned shares
for at least two years (including any period of ownership of preceding
non-affiliated holders), may sell such shares under Rule 144(k) without regard
to the volume limitations, manner-of-sale provisions, public information
requirements or notice requirements.
Sales of our shares pursuant to Rule 144 could have a depressive effect
on the market price of our stock.
-14-
<PAGE>
PART II
-------
ITEM 1. MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S
COMMON EQUITY AND OTHER STOCKHOLDER MATTERS
Our shares are traded over-the-counter and quoted on the OTC Electronic
Bulletin Board under the symbol "VIGA". The reported high and low bid prices for
our common stock are shown below for the period from inception of trading in May
1999 through December 31, 1999. The closing bid price on January 31, 2000 is
also shown. The quotations reflect inter-dealer prices, without retail mark-up,
mark-down or commissions, and may not represent actual transactions.
<TABLE>
<CAPTION>
Period High Low
------ ---- ---
<S> <C> <C>
May 14, 1999 - June 30, 1999 $12.625 $8.00
July 1, 1999 - September 30, 1999 $11.375 $2.00
October 1, 1999 - December 31, 1999 $5.4375 $2.875
January 28, 2000 $12.75
</TABLE>
As of December 31, 1999, there were approximately 106 holders of record
of our common stock.
We have never paid cash dividends on our common stock. We intend to
keep future earnings, if any, to finance the expansion of our business, and we
do not anticipate that any cash dividends will be paid for the foreseeable
future. The future dividend policy will depend on our earnings, capital
requirements, expansion plans, financial condition and other relevant factors.
The SEC has adopted regulations which generally define a "penny stock"
to be any equity security that has a market price of less than $5.00 per share,
subject to certain exceptions. Depending on market fluctuations, our common
stock would be considered a "penny stock". As a result, it may be subject to
rules that impose additional sales practice requirements on broker/dealers who
sell these securities to persons other than established customers and accredited
investors. For transactions covered by these rules, the broker-dealer must make
a special suitability determination for the purchase of our securities. In
addition he must receive the purchaser's written consent to the transaction
prior to the purchase. He must also provide certain written disclosures to the
purchaser. Consequently, the "penny stock" rules may restrict the ability of
broker/dealers to sell our securities, and may negatively affect the ability of
holders of our shares to resell them.
ITEM 2. LEGAL PROCEEDINGS
We are not a party to any pending legal proceeding and none or our
directors, executive officers or affiliates is a party adverse to us or has a
material interest adverse to us in any proceeding.
-15-
<PAGE>
ITEM 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
Not Applicable.
ITEM 4. RECENT SALES OF UNREGISTERED SECURITIES
The following sets forth information relating to all previous sales by
us which were not registered under the Securities Act:
In July 1998, we issued 3,750,000 shares of our common stock, at a
price of $0.04 per share, to 44 investors pursuant to Rule 504 of Regulation D
promulgated under the Securities Act of 1933, as amended (the "Securities Act"),
resulting in net proceeds to us of approximately $112,500. No general
solicitation or advertising was used in connection with this transaction. The
certificates evidencing the shares did not bear a legend restricting their
transferability under the Securities Act. Each purchaser had access to financial
and other information about us and was afforded the opportunity to ask questions
of us concerning our operations and the terms of the offering. Each purchaser
represented that he was acquiring the shares for investment purposes.
In May 1998, we issued 1,500,000 shares to four non-U.S. persons in
connection with our acquisition of all of the issued and outstanding shares of
Watt Shop Communications Ltd. This transaction was effected outside the United
States, to non-U.S. persons, and was either (a) not subject to the registration
provisions of Federal securities laws or (b) was exempt from the registration
requirements thereof pursuant to the provisions of Regulation S. In April 1999,
we mutually agreed with the selling shareholders of Watt Shop to the rescind the
acquisition. As a result, we canceled the 1,500,000 shares we issued to Watt
Shop shareholders, and reconveyed to the selling shareholders, Watt Shop shares
that we acquired.
In February 1999, we converted unpaid current liabilities amounting to
$110,000 into 2,750,000 shares, at a price of $0.04 per share, to 5 creditors
(two of whom were our affiliates or family members of affiliates). These shares
were issued pursuant to the requirements of Rule 504 of Regulation D promulgated
under the Securities Act. No general solicitation or advertising was used in
connection with this transaction. The certificates evidencing the shares did not
bear a legend restricting their transferability under the Securities Act. The
creditors had access to financial and other information about us and was
afforded the opportunity to ask questions of us concerning our operations and
the terms of the debt conversion.
In September 1999 we issued an aggregate of 200,000 shares of common
stock to a firm for consulting services. This was an "offshore" transaction,
effected outside the United States, to a non-U.S. person, and was either (a) not
subject to the registration provisions of Federal securities laws or (b) was
exempt from the registration requirements thereof pursuant to the provisions of
Regulation S. The purchasers had access to financial and other information about
us and was afforded the opportunity to ask questions of us concerning our
operations and the terms of the share issuance. Each purchaser represented that
he was acquiring the shares for investment purposes and the documentation
evidencing the transaction contained the disclosure
-16-
<PAGE>
required by Regulation S. The certificates evidencing the shares that were
issued contained a legend restricting their transferability absent registration
under the Securities Act or the availability of an applicable exemption from
registration.
In November 1999 we issued an aggregate of 100,000 shares of Common
Stock to a firm for consulting services. This was an "offshore" transaction,
effected outside the United States, to a non-U.S. person, and was either (a) not
subject to the registration provisions of Federal securities laws or (b) was
exempt from the registration requirements thereof pursuant to the provisions of
Regulation S. The purchasers had access to financial and other information about
us and was afforded the opportunity to ask questions of us concerning our
operations and the terms of the share issuance. Each purchaser represented that
he was acquiring the shares for investment purposes and the documentation
evidencing the transaction contained the disclosure required by Regulation S.
The certificates evidencing the shares that were issued contained a legend
restricting their transferability absent registration under the Securities Act
or the availability of an applicable exemption from registration.
In January 2000, we issued 20 units, each unit consisting of 6,000
shares and warrants to purchase 4,000 shares, for an aggregate purchase price of
$500,000 or $25,000 per unit. The units were sold to 16 non-U.S. persons. In
connection with this transaction, we also issued 14,400 shares and 9,600
warrants to non-U.S. finders who assisted us in identifying the purchasers of
units. This was an "offshore" transaction, effected outside the United States,
to non-U.S. persons, and was either (a) not subject to the registration
provisions of Federal securities laws or (b) was exempt from the registration
requirements thereof pursuant to the provisions of Regulation S. The purchasers
had access to financial and other information about us and was afforded the
opportunity to ask questions of us concerning our operations and the terms of
the share issuance. Each purchaser represented that he was acquiring the shares
for investment purposes and the documentation evidencing the transaction
contained the disclosure required by Regulation S. The certificates evidencing
the shares that were issued contained a legend restricting their transferability
absent registration under the Securities Act or the availability of an
applicable exemption from registration.
We have never utilized an underwriter for an offering of our
securities. Other than the securities mentioned above, we have not issued or
sold any securities during the preceding three years.
ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Florida Business Corporation Act permits the indemnification of
directors, employees, officers and agents of Florida corporations. Our articles
of incorporation and bylaws provide that we indemnify our directors and officers
to the fullest extent permitted by the Business Corporation Act. Insofar as
indemnification for liabilities arising under the Securities Act may be
permitted to directors, officers or persons controlling us pursuant to the
foregoing provisions, we are advised that, in the opinion of the Securities and
Exchange Commission, such indemnification is against public policy as expressed
in the Securities Act and is therefore unenforceable.
-17-
<PAGE>
As authorized by the Florida Business Corporation Law, our articles of
incorporation provide that none of our directors shall be personally liable to
us or our shareholders for monetary damages for breach of fiduciary duty as a
director, except liability for:
o any breach of the director's duty of loyalty to our company
or its shareholders;
o acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law;
o unlawful payments of dividends or unlawful stock redemptions
or repurchases; and
o any transaction from which the director derived an improper
personal benefit.
This provision limits our rights and the rights of our shareholders to
recover monetary damages against a director for breach of the fiduciary duty of
care except in the situations described above. This provision does not limit our
rights or the rights of any shareholder to seek injunctive relief or rescission
if a director breaches his duty of care. These provisions will not alter the
liability of directors under federal securities laws.
PART F/S
Following are our:
o unaudited financial statements for the nine months ended
September 30, 1999 and 1998, including the balance sheets as
of September 30, 1999 and 1998 and the related statements of
operations, changes in stockholders' equity and cash flows for
the three and nine months ended September 30, 1999 and 1998;
o audited financial statements for the year ended December 31,
1998, including the independent auditors' report, the balance
sheets as of December 31, 1998 and the related statements of
operations, changes in stockholders' equity and cash flows for
the year ended December 31, 1998; and
o audited financial statements for the year ended December 31,
1997, including the balance sheets as of December 31, 1997 and
the related statements of operations, changes in stockholders'
equity and cash flows for the year ended December 31, 1997.
-18-
<PAGE>
VIVA GAMING & RESORTS INC.
(A Development Stage Company)
FINANCIAL STATEMENTS
(Unaudited - Prepared by Management)
For the nine month period ended September 30, 1999
and September 30, 1998
Las Vegas, Nevada
January 25, 2000
F-1
<PAGE>
<TABLE>
<CAPTION>
VIVA GAMING & RESORTS INC.
(A Development Stage Company)
Balance Sheets
(Unaudited - Prepared by Management)
September 30, 1999 and September 30, 1998
- ----------------------------------------------------------------------------------
1999 1998
<S> <C> <C>
Assets
Current assets
Cash $ 2,903 $ --
Loan advance -- 113,665
Prepaid expenses and deposits 190,835 --
- ----------------------------------------------------------------------------------
193,738 113,665
Capital assets (net of depreciation) 11,538 --
- ----------------------------------------------------------------------------------
$ 205,276 $ 113,665
- ----------------------------------------------------------------------------------
Liabilities and Shareholders' Deficiency
Current liabilities
Bank overdraft $ 8,068 $ --
Accounts payable and accrued liabilities 136,837 152,239
Advances payable 63,633 --
- ----------------------------------------------------------------------------------
208,538 152,239
Shareholders' deficiency
Share capital
Authorized
100,000,000 common shares with $0.001 par value
10,000,000 preferred shares with $0.10 par value
Issued
6,700,000 common shares 6,700 --
3,750,000 common shares -- 3,750
Additional paid in capital 415,800 108,750
Deficit (425,762) (151,074)
- ----------------------------------------------------------------------------------
(3,262) (38,574)
- ----------------------------------------------------------------------------------
$ 205,276 $ 113,665
- ----------------------------------------------------------------------------------
</TABLE>
F-2
<PAGE>
<TABLE>
<CAPTION>
VIVA GAMING & RESORTS INC.
(A Development Stage Company)
Statements of Operations and Deficit
(Unaudited - Prepared by Management)
For the nine month period ended September 30, 1999 and September 30, 1998
- -----------------------------------------------------------------------------------------------
1999 1998
<S> <C> <C>
Revenues $ -- $ --
Expenses
Advertising and promotion 3,929 --
Consultants 12,500 82,500
Depreciation 208 --
Legal and accounting 12,877 6,157
Management fees, salaries and wages 82,538 22,500
Office and administration 40,895 39,134
Regulatory, transfer and fees 15,538 2,035
Travel and entertainment 68,349 --
- -----------------------------------------------------------------------------------------------
236,834 152,326
- -----------------------------------------------------------------------------------------------
Operating (loss) (236,834) (152,326)
Other income (expenses)
Foreign exchange (2,084) 87
Interest 2,866 1,165
- -----------------------------------------------------------------------------------------------
782 1,252
- -----------------------------------------------------------------------------------------------
(Loss) for period (236,052) (151,074)
- -----------------------------------------------------------------------------------------------
Deficit, beginning of period (189,710) --
- -----------------------------------------------------------------------------------------------
Deficit, end of period $ (425,762) $ (151,074)
- -----------------------------------------------------------------------------------------------
Net Loss per common share (basic and diluted) $ (0.04) $ (0.04)
- -----------------------------------------------------------------------------------------------
Weighted average number of common shares 6,176,000 3,750,000
- -----------------------------------------------------------------------------------------------
</TABLE>
F-3
<PAGE>
<TABLE>
<CAPTION>
VIVA GAMING & RESORTS INC.
(A Development Stage Company)
Statements of Operations and Deficit
(Unaudited - Prepared by Management)
For the three month period ended September 30, 1999 and September 30, 1998
- ----------------------------------------------------------------------------------------------
1999 1998
<S> <C> <C>
Revenues $ -- $ --
Expenses
Advertising and promotion 929
Consultants 12,500 14,000
Depreciation 208
Legal and accounting 4,457 1,157
Management fees, salaries and wages 70,353 7,500
Office and administration 31,378 11,788
Regulatory, transfer and fees 10,915 300
Travel and entertainment 43,489 --
- ----------------------------------------------------------------------------------------------
174,229 34,745
- ----------------------------------------------------------------------------------------------
Operating (loss) (174,229) (34,745)
Other income (expenses)
Foreign exchange 4,219 (85)
Interest -- 1,165
- ----------------------------------------------------------------------------------------------
4,219 1,080
- ----------------------------------------------------------------------------------------------
(Loss) for period (170,010) (33,665)
- ----------------------------------------------------------------------------------------------
Deficit, beginning of period (255,752) (117,409)
- ----------------------------------------------------------------------------------------------
Deficit, end of period $ (425,762) $ (151,074)
- ----------------------------------------------------------------------------------------------
(Loss) per share $ (0.03) $ (0.01)
- ----------------------------------------------------------------------------------------------
Weighted average number of common shares 6,504,348 3,750,000
- ----------------------------------------------------------------------------------------------
</TABLE>
F-4
<PAGE>
<TABLE>
<CAPTION>
VIVA GAMING & RESORTS INC.
(A Development Stage Company)
Statements of Operations and Deficit
(Unaudited - Prepared by Management)
For period from inception December 7, 1997 to September 30, 1999 and September 30, 1998
- -----------------------------------------------------------------------------------------------
1999 1998
<S> <C> <C>
Revenues $ -- $ --
Expenses
Advertising and promotion 3,929 --
Consultants 112,665 82,500
Depreciation 208 --
Interest 1,153 --
Legal and accounting 19,034 6,157
Management fees, salaries and wages 116,595 22,500
Office and administration 87,084 39,134
Regulatory, transfer and fees 18,046 2,035
Travel and entertainment 72,720 --
- -----------------------------------------------------------------------------------------------
431,434 152,326
- -----------------------------------------------------------------------------------------------
Operating (loss) (431,434) (152,326)
Other income (expenses)
Foreign exchange (60) 87
Interest 5,732 1,165
- -----------------------------------------------------------------------------------------------
5,672 1,252
- -----------------------------------------------------------------------------------------------
(Loss) for period (425,762) (151,074)
- -----------------------------------------------------------------------------------------------
Deficit, beginning of period -- --
- -----------------------------------------------------------------------------------------------
Deficit, end of period $ (425,762) $ (151,074)
- -----------------------------------------------------------------------------------------------
(Loss) per share $ (0.09) $ (0.04)
- -----------------------------------------------------------------------------------------------
Weighted average number of common shares 4,785,260 3,750,000
- -----------------------------------------------------------------------------------------------
</TABLE>
F-5
<PAGE>
<TABLE>
<CAPTION>
VIVA GAMING & RESORTS INC.
(A Development Stage Company)
Statements of Cash Flows
(Unaudited - Prepared by Management)
For the nine month period ended September 30, 1999 and September 30, 1998
- -------------------------------------------------------------------------------------------------------------
1999 1998
<S> <C> <C>
Cash provided by (used in) operating activities $ 14,649 $(112,500)
Cash provided by (used in) financing activities
Proceeds from issuance of common stock -- 112,500
- -------------------------------------------------------------------------------------------------------------
-- 112,500
- -------------------------------------------------------------------------------------------------------------
Cash provided by (used in) investing activities
Acquisition of capital assets (11,746) --
- -------------------------------------------------------------------------------------------------------------
(11,746) --
- -------------------------------------------------------------------------------------------------------------
Increase in cash 2,903 --
Cash, beginning of period -- --
- -------------------------------------------------------------------------------------------------------------
Cash, end of period $ 2,903 $ --
- -------------------------------------------------------------------------------------------------------------
Supplemental Disclosure of Non-Cash Financing and Investing Activities
Issuance of common stock for accounts payable $ 110,000 --
Issuance of common stock for consulting 200,000 --
- -------------------------------------------------------------------------------------------------------------
$ 310,000 $ --
- -------------------------------------------------------------------------------------------------------------
</TABLE>
F-6
<PAGE>
<TABLE>
<CAPTION>
VIVA GAMING & RESORTS INC.
(A Development Stage Company)
Statements of Cash Flows
(Unaudited - Prepared by Management)
For the three month period ended September 30, 1999 and September 30, 1998
- ---------------------------------------------------------------------------------------------------------------
1999 1998
<S> <C> <C>
Cash provided by (used in) operating activities $ (18,634) $ --
Cash provided by (used in) financing activities
Proceeds from issuance of common stock -- --
- ---------------------------------------------------------------------------------------------------------------
-- --
- ---------------------------------------------------------------------------------------------------------------
Cash provided by (used in) investing activities
Acquisition of capital assets (11,746) --
- ---------------------------------------------------------------------------------------------------------------
(11,746) --
- ---------------------------------------------------------------------------------------------------------------
(Decrease) in cash (30,380) --
Cash, beginning of period 33,283 --
- ---------------------------------------------------------------------------------------------------------------
Cash, end of period $ 2,903 $ --
- ---------------------------------------------------------------------------------------------------------------
Supplemental Disclosure of Non-Cash Financing and Investing Activities
Issuance of common stock for consulting $ 200,000 $ --
- ---------------------------------------------------------------------------------------------------------------
$ 200,000 $ --
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
F-7
<PAGE>
<TABLE>
<CAPTION>
VIVA GAMING & RESORTS INC.
(A Development Stage Company)
Statements of Cash Flows
(Unaudited - Prepared by Management)
For the period from inception December 7, 1997 to September 30, 1999 and September 30, 1998
- ---------------------------------------------------------------------------------------------------------------
1999 1998
<S> <C> <C>
Cash provided by (used in) operating activities $ (97,851) $ 1,665
Cash provided by (used in) financing activities
Proceeds from issuance of common stock 112,500 112,500
Advance to stockholder (115,366) (113,665)
Repay stockholder advance 115,366
Proceeds from notes payable 112,500 112,500
Repayment of note payable (112,500) (112,500)
- ---------------------------------------------------------------------------------------------------------------
112,500 (1,665)
- ---------------------------------------------------------------------------------------------------------------
Cash provided by (used in) investing activities
Acquisition of capital assets (11,746) --
- ---------------------------------------------------------------------------------------------------------------
(11,746) --
- ---------------------------------------------------------------------------------------------------------------
Increase in cash 2,903 --
Cash, beginning of period -- --
- ---------------------------------------------------------------------------------------------------------------
Cash, end of period $ 2,903 $ --
- ---------------------------------------------------------------------------------------------------------------
Supplemental Disclosure of Non-Cash Financing and Investing Activities
Issuance of common stock for accounts payable $ 110,000 --
Issuance of common stock for consulting 200,000 --
- ---------------------------------------------------------------------------------------------------------------
$ 310,000 $ --
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
F-8
<PAGE>
<TABLE>
<CAPTION>
VIVA GAMING & RESORTS INC.
(A Development Stage Company)
Statement of Changes in Stockholders' Deficit
(Unaudited - Prepared by Management)
September 30, 1999
- ----------------------------------------------------------------------------------------------------
Additional Retained
Common Stock Paid-In Earnings
Shares Amount Capital (Deficit) Total
------ ------ ------- --------- -----
<S> <C> <C> <C> <C> <C>
Shares issued
June 30, 1998
for cash 3,750,000 $ 3,750 $ 108,750 -- $ 112,500
Net (loss)
for the year ended
December 31,
1998 -- -- -- (189,710) (189,710)
- ----------------------------------------------------------------------------------------------------
Balance
December 31
1998 3,750,000 $ 3,750 $ 108,750 $(189,710) $ (77,210)
Shares issued
February 12,
1999 for
settlement of
accounts payable 2,750,000 2,750 107,250 -- 110,000
Shares issued for
Consulting contract
September 29, 1999 200,000 200 199,800 -- 200,000
Net (loss)
for the nine month
period ended
September 30,
1999 -- -- -- (236,052) (236,052)
- ----------------------------------------------------------------------------------------------------
Balance
September 30,
1999 6,700,000 $6,700 $415,800 $(425,762) $ (3,262)
- ----------------------------------------------------------------------------------------------------
</TABLE>
F-9
<PAGE>
VIVA GAMING & RESORTS INC.
(A Development Stage Company)
Notes to Financial Statements
(Unaudited - Prepared by Management)
For the nine month period ended September 30, 1999 and September 30, 1998
- --------------------------------------------------------------------------------
1 NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES
Nature of Business
In October 1999, the Company changes its name from Viva Gaming &
Resorts.com Inc., to Viva Gaming & Resorts Inc.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principals requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
the disclosures of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenue and expenses
during the reporting period. Actual results could differ from those
estimates.
2. LOAN ADVANCE
The loan to an officer of the Company of $112,500 was repaid in full with
accrued interest of $5,732.
3. CAPITAL STRUCTURE
Common Stock
During the period the Company issued 2,750,000 shares of common stock in
satisfaction of $110,000 of unpaid accounts payable and 200,000 shares of
common stock for business development consulting services to be provided
over the period September 1, 1999 through December 31, 2000.
3. RELATED PARTY TRANSACTIONS
Management fees and salaries paid directors and officers $52,500.
During the period, a director of the Company and a company controlled by a
director of the Company paid various operating expenses for the Company. As
at September 30, 1999 $44,540 and $10,981 remained outstanding respectively
which amounts are recorded in accounts payable and accrued liabilities. In
addition a director and officer settled an outstanding balance of $71,705
due to an entity in which the director had a beneficial interest. This
amount is also recorded in accounts payable and accrued liabilities.
F-10
<PAGE>
VIVA GAMING & RESORTS INC.
(A Development Stage Company)
Notes to Financial Statements
(Unaudited - Prepared by Management)
For the nine month period ended September 30, 1999 and September 30, 1998
- --------------------------------------------------------------------------------
4. SUBSEQUENT EVENTS
Capital Structure
Subsequent to September 30, 1999 the Company: Issued 100,000 shares of common
stock for business development consulting services to be provided over the
period November 15, 1999 through November 14, 2000. Established a 1999 Stock
Option Plan and thereunder reserved for issuance the amount of 1,500,000 shares
of common stock. Granted 1,155,000 Stock Options and 300,000 Stock Appreciation
Rights to certain directors, officers, employees and advisors of the Company at
prices ranging from $3.35 to $5.25 per share. Issued, pursuant to a REG S
Private Placement of Units of the Company, 120,000 shares of common stock and
80,000 share purchase warrants for net proceeds of $430,000. The share purchase
warrants entitle the holder to purchase one share of common stock at $6.25 per
share for a period of one year. Issued an additional 14,400 shares of common
stock and 9,600 share purchase warrants for fees related to the REG S Private
Placement.
F-11
<PAGE>
VIVA GAMING & RESORTS.COM INC.
(Formerly Watt Comm International, Inc.)
(A Development Stage Company)
Financial Statements
December 31, 1998
F-12
<PAGE>
VIVA GAMING & RESORTS.COM INC.
(Formerly Watt Comm International, Inc.)
(A Development Stage Company)
TABLE OF CONTENTS
DECEMBER 31, 1998
PAGE
----
INDEPENDENT AUDITOR'S REPORT F-14
FINANCIAL STATEMENTS
Balance Sheet F-15
Statement of Operations F-16
Statement of Stockholders' Deficit F-17
Statement of Cash Flows F-18
Notes to the Financial Statements F-19 - 21
F-13
<PAGE>
GOLDSTEIN LEWIN & CO
CERTIFIED PUBLIC ACCOUNTANTS
INDEPENDENT AUDITOR'S REPORT
To The Board of Directors and Stockholders
Viva Gaming & Resorts.com Inc.
Formerly Watt Comm International, Inc.
Fort Lauderdale, Florida
We have audited the accompanying balance sheet of Viva Gaming & Resorts.com Inc.
(a development stage company) (formerly Watt Comm International, Inc.) as of
December 31, 1998, and the related statements of operations, stockholders'
deficit and cash flows for the period December 9, 1997 (inception) to December
31, 1998 and for the twelve months ended December 31, 1998. The 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 Viva Gaming & Resorts.com Inc.
as of December 31, 1998, and the results of its operations and cash flows for
the period December 9, 1997 (inception) to December 31, 1998 and for the twelve
months ended December 31, 1998, in conformity with generally accepted accounting
principles.
The accompanying financial statements have been prepared assuming the Company
will continue as a going concern. As more fully described in Note 2, the Company
has incurred significant losses since inception. This condition raises
substantial doubt about the Company's ability to continue as a going concern.
The Company's continued existence is dependent upon its ability to raise
additional capital and to successfully market and sell its services. The
financial statements do not include any adjustments to reflect the possible
future effects on the recoverability and classification of assets or the amounts
and classification of liabilities that may result from the outcome of this
uncertainty.
GOLDSTEIN LEWIN & CO
Boca Raton, Florida
July 13, 1999
F-14
<PAGE>
<TABLE>
<CAPTION>
VIVA GAMING & RESORTS.COM INC.
(Formerly Watt Comm International, Inc.)
(A Development Stage Company)
BALANCE SHEET
DECEMBER 31, 1998
ASSETS
<S> <C>
CURRENT ASSETS
Loan Advance $ 115,366
==================
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES
Accounts Payable and Accrued Liabilities $ 192,576
------------------
STOCKHOLDERS' DEFICIT
Preferred Stock, Par Value $0.10 per share; authorized 10,000,000 shares;
issued and outstanding 0 shares
Common Stock, Par Value $0.001 per
share; authorized 100,000,000 shares;
issued and outstanding 3,750,000 shares $ 3,750
Additional Paid-in Capital 108,750
Deficit Accumulated During the Development Stage (189,710)
------------------
(77,210)
------------------
$ 115,366
==================
</TABLE>
The Accompanying Notes are an Integral
Part of These Financial Statements
F-15
<PAGE>
<TABLE>
<CAPTION>
VIVA GAMING & RESORTS.COM INC.
(Formerly Watt Comm International, Inc.)
(A Development Stage Company)
STATEMENT OF OPERATIONS
DECEMBER 9, 1997 (INCEPTION) TO DECEMBER 31, 1998 AND
FOR THE TWELVE MONTHS ENDED DECEMBER 31, 1998
<S> <C>
REVENUES $
------------------
EXPENSES
Consultants 100,165
Interest 1,153
Legal and Accounting 6,157
Management Fees 34,057
Office and Administration 46,189
Regulatory, Transfer and Fees 2,508
Travel, Entertainment and Promotion 4,371
------------------
Total Expenses 194,600
------------------
Loss from Operations Before Other Income (194,600)
------------------
OTHER INCOME
Foreign Exchange 2,024
Interest 2,866
------------------
Total Other Income 4,890
------------------
Net Loss $ (189,710)
==================
</TABLE>
The Accompanying Notes are an Integral
Part of These Financial Statements
F-16
<PAGE>
<TABLE>
<CAPTION>
VIVA GAMING & RESORTS.COM INC.
(Formerly Watt Comm International, Inc.)
(A Development Stage Company)
STATEMENT OF STOCKHOLDERS' DEFICIT
DECEMBER 31, 1998
Deficit
Additional Accumulated During
Preferred Common Paid-in the Development
Stock Stock Capital Stage
----- ----- ------- -----
<S> <C> <C> <C> <C>
Initial Capitalization on June 30, 1998:
Common Stock, Issued for
Cash, 3,750,000 Shares $ $ 3,750 $ 108,750 $
Net Loss (189,710)
----------- ---------- ------------ -------------
Balance as of December 31, 1998 $ $ 3,750 $ 108,750 $ (189,710)
=========== ========== ============ =============
</TABLE>
The Accompanying Notes are an Integral
Part of These Financial Statements
F-17
<PAGE>
<TABLE>
<CAPTION>
VIVA GAMING & RESORTS.COM INC.
(Formerly Watt Comm International, Inc.)
(A Development Stage Company)
STATEMENT OF CASH FLOWS
DECEMBER 9, 1997 (INCEPTION) TO DECEMBER 31, 1998 AND
FOR THE TWELVE MONTHS ENDED DECEMBER 31, 1998
<S> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net Loss $ (189,710)
Adjustments to Reconcile Net
Loss to Net Cash Provided By
Operating Activities:
Change in Assets and Liabilities:
Increase in Accounts Payable and Accrued Liabilities 192,576
------------------
Net Cash Provided By Operating Activities 2,866
------------------
CASH FLOWS USED IN FINANCING ACTIVITIES
Proceeds from the Issuance of Common Stock 112,500
Advances to Stockholder (115,366)
Proceeds from Note Payable 112,500
Repayment of Note Payable (112,500)
------------------
Net Cash Used in Financing Activities (2,866)
------------------
Increase (Decrease) in Cash and Cash Equivalents
------------------
Cash and Cash Equivalents:
Beginning
------------------
Ending $ -
==================
SUPPLEMENTARY DISCLOSURE:
Cash Paid for Interest $ 1,153
==================
</TABLE>
The Accompanying Notes are an Integral
Part of These Financial Statements
F-18
<PAGE>
VIVA GAMING & RESORTS.COM INC.
(Formerly Watt Comm International, Inc.)
(A Development Stage Company)
NOTES TO THE FINANCIAL STATEMENTS
NOTE 1: NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES
Nature of Business
- ------------------
Viva Gaming & Resorts.com Inc. (formerly Watt Comm International, Inc.) (the
"Company") was incorporated under the laws of the State of Florida on December
9, 1997. The Company is currently engaged in the management and development of
gaming assets in North America and plans to seek acquisitions of casino
properties in niche markets during fiscal 1999. The Company was originally
established to engage in the sale and rental of wireless telecommunication
services and equipment, through the operation of retail outlets, primarily in
Western Canada. As of December 31, 1998, the Company was in the development
stage, planned operations have not commenced and its activities were limited to
negotiating the acquisition of existing gaming outlets.
In May 1999, the Company changed its name from Watt Comm International, Inc. to
Viva Gaming & Resorts.com Inc. In addition, the number of preferred stock shares
increased from 3,000,000 to 10,000,000 shares. Both of these events are
reflected in the financial statements as of December 31, 1998.
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 the disclosures of
contingent assets and liabilities at the date of the financial statement and the
reported amounts of revenue and expenses during the reporting period. Actual
results could differ from those estimates.
Cash and Cash Equivalents
- -------------------------
For purposes of the statement of cash flows, the Company considers cash and
highly liquid investments purchased with a maturity of three months or less to
be cash equivalents.
NOTE 2: GOING CONCERN
The financial statements have been presented on the basis that the Company is a
going concern, which contemplates the realization of assets and the satisfaction
of liabilities in the normal course of business. The Company reported a net loss
of approximately $189,710 since inception and for the year ended December 31,
1998. The Company is currently seeking to raise up to $10 million of additional
funds through the private placement of convertible redeemable preferred shares.
Although the Company believes that there are a number of parties interested in
participating in such placement, there is no guarantee that the Company will be
successful in raising all or a portion of such additional funds (Note 7).
F-19
<PAGE>
VIVA GAMING & RESORTS.COM INC.
(Formerly Watt Comm International, Inc.)
(A Development Stage Company)
NOTES TO THE FINANCIAL STATEMENTS
NOTE 2: GOING CONCERN (CONTINUED)
The Company's continued existence is dependent upon its ability to raise capital
and to market and sell its service successfully. The financial statements do not
include any adjustments to reflect the possible future effects on the
recoverability and classification of assets or the amounts and classifications
of liabilities that may result from the outcome of this uncertainty.
NOTE 3: LOAN ADVANCE
The Company has entered into a loan agreement with an officer of the corporation
for $112,500. Interest on the loan is calculated at the rate of 6% per annum,
payable annually. The principal amount of the loan is due and payable on or
before December 31, 1999. As of December 31, 1998, the outstanding loan balance
is $115,366. In June, 1999 the loan was repaid.
NOTE 4: CAPITAL STRUCTURE
Preferred Stock
- ---------------
The Company has 10,000,000 shares of preferred stock (par value $0.10)
authorized. The Board has the authority to issue the shares in one or more
series and to fix the designations, preferences, powers and other rights as it
deems appropriate. No shares of preferred stock have been issued.
Common Stock
- ------------
The Company has 100,000,000 shares of common stock (par value $0.001)
authorized. Common stock has one vote per share for the election of directors
and all other matters submitted to a vote of stockholders. Shares of common
stock do not have cumulative voting, preemptive, redemption or conversion
rights.
NOTE 5: INCOME TAXES
The deficit accumulated during the development stage (inception through December
31, 1998) of approximately $190,000 is capitalized for income tax purposes as
accumulated start-up costs, and is to be amortized over a sixty month period
when operations commence. The Company has recorded a valuation allowance of
approximately $57,000 with respect to any future tax benefits arising from the
amortization of the start-up costs due to the uncertainty of their ultimate
realization.
F-20
<PAGE>
VIVA GAMING & RESORTS.COM INC.
(Formerly Watt Comm International, Inc.)
(A Development Stage Company)
NOTES TO THE FINANCIAL STATEMENTS
NOTE 6: RELATED PARTIES
Management services are being provided by a company that is owned by several
shareholders. At December 31, 1998, the management fees totaled $30,000.
During the year, a director and officer paid various operating expenses for the
Company. The outstanding balance as of December 31, 1998 was $13,840, which is
included in accounts payable and accrued liabilities.
As of December 31, 1998 the Company had an outstanding accounts payable balance
of $67,228 due to an entity in which a director and officer has a beneficial
interest. The transactions incurred during the year were to pay for normal
operating expenses of the Company.
NOTE 7: SUBSEQUENT EVENTS
Capital Structure
- -----------------
Subsequent to December 31, 1998, the Company issued 2,750,000 shares of common
stock in satisfaction of $110,000 of unpaid accounts payable
F-21
<PAGE>
WATT COMM INTERNATIONAL, INC.
(A DEVELOPMENT STAGE COMPANY)
FINANCIAL STATEMENTS
DECEMBER 31, 1997
F-22
<PAGE>
WATT COMM INTERNATIONAL, INC.
(A DEVELOPMENT STAGE COMPANY)
TABLE OF CONTENTS
DECEMBER 31, 1997
PAGE
----
INDEPENDENT AUDITOR'S REPORT F-24
FINANCIAL STATEMENTS
Balance Sheet F-25
Statement of Operations F-26
Statement of Stockholders' Equity F-27
Statement of Cash Flows F-28
Notes to the Financial Statements F-29-30
F-23
<PAGE>
INDEPENDENT AUDITOR'S REPORT
To The Board of Directors and Stockholders
Watt Comm International, Inc.
Fort Lauderdale, Florida
We have audited the accompanying balance sheet of Watt Comm International, Inc.
(a development stage company) as of December 31, 1997, and the related
statements of operations, stockholders' equity, and cash flows for the period
December 9, 1997 (inception) to December 31, 1997. The 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 Watt Comm International, Inc.
as of December 31, 1997, and the results of its operations and cash flows for
the period December 9, 1997 (inception) to December 31, 1997 in conformity with
generally accepted accounting principles.
GOLDSTEIN LEWIN & CO.
Boca Raton, Florida
April 28, 1998
F-24
<PAGE>
<TABLE>
<CAPTION>
WATT COMM INTERNATIONAL, INC.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEET
DECEMBER 31, 1997
ASSETS
<S> <C>
ASSETS $ -
===========
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES $ -
-----------
STOCKHOLDERS' EQUITY
Preferred Stock, Par Value $0.10 per share; authorized 3,000,000 shares;
issued and outstanding 0 shares
Common Stock, Par Value $0.001 per share; authorized 100,000,000 shares;
issued and outstanding 0 shares
Subscribed For and Not Issued -
2,160,000 shares of common stock 64,800
Subscriptions Receivable (64,800)
-----------
-
-----------
$ -
===========
</TABLE>
The Accompanying Notes are an Integral
Part of these Financial Statements
F-25
<PAGE>
<TABLE>
<CAPTION>
WATT COMM INTERNATIONAL, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF OPERATIONS
DECEMBER 9, 1997 (INCEPTION) TO DECEMBER 31, 1997
<S> <C>
SALES $ -
-----------
EXPENSES $ -
-----------
NET INCOME $ -
===========
</TABLE>
The Accompanying Notes are an Integral
Part of These Financial Statements
F-26
<PAGE>
WATT COMM INTERNATIONAL, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF STOCKHOLDERS' EQUITY
DECEMBER 31, 1997
<TABLE>
<CAPTION>
Common Subscrip-
Common Preferred Stock tions Retained
Stock Stock Subscribed Receivable Earnings
----- ----- ---------- ---------- --------
<S> <C> <C> <C> <C> <C> <C>
Preferred Stock, Par
Value $0.10 per share;
authorized 3,000,000
shares; issued and
outstanding 0 shares $ -- $ -- $ -- $ -- $ --
Common Stock, Par
Value $0.001 per
share; authorized
100,000,000 shares;
issued and out-
standing 0 shares -- -- -- -- --
Subscribed For and Not
Issued - 2,160,000
shares of common stock -- -- 64,800 -- --
Subscriptions Receivable -- -- -- (64,800) --
Net Income -- -- -- -- --
------- -------- -------- -------- -------
$ -- $ -- $ 64,800 $(64,800) $ --
======= ======== ======== ======== =======
</TABLE>
The Accompanying Notes are an Integral
Part of These Financial Statements
F-27
<PAGE>
WATT COMM INTERNATIONAL, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CASH FLOWS
DECEMBER 9, 1997 (INCEPTION) TO
DECEMBER 31, 1997
Cash Flows From Operating, Investing,
and Financing Activities $ -
===========
The Accompanying Notes are an Integral
Part of These Financial Statements
F-28
<PAGE>
WATT COMM INTERNATIONAL, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
NOTE 1: NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES
Nature of Business
- ------------------
Watt Comm International, Inc. (the "Company") was incorporated under the laws of
the State of Florida on December 9, 1997. The Company was established to engage
in the sale and rental of wireless telecommunication services and equipment,
through the operation of retail outlets, primarily in Western Canada. As of
December 31, 1997, the Company was in the development stage, planned operations
have not commenced and its activities were limited to negotiating the
acquisition of an existing retailer.
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 the disclosures of
contingent assets and liabilities at the date of the financial statement and the
reported amounts of revenue and expenses during the reporting period. Actual
results could differ from those estimates.
NOTE 2: CAPITAL STRUCTURE
Preferred Stock
- ---------------
The Company has 3,000,000 shares of preferred stock (par value $0.10)
authorized. The Board has the authority to issue the shares in one or more
series and to fix the designations, preferences, powers and other rights as it
deems appropriate. No shares of preferred stock have been issued.
Common Stock
- ------------
The Company has 100,000,000 shares of common stock (par value $0.001)
authorized. Common stock has one vote per share for the election of directors
and all other matters submitted to a vote of stockholders. Shares of common
stock do not have cumulative voting, preemptive, redemption or conversion
rights. No shares of common stock have been issued.
Stock Subscriptions
- -------------------
The Company had, at December 31, 1997, stock subscriptions receivable for
2,160,000 shares of common stock for $64,800.
F-29
<PAGE>
WATT COMM INTERNATIONAL, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
NOTE 3: SUBSEQUENT EVENTS
Stock Subscriptions
- -------------------
Subsequent to December 31, 1997, the Company received additional stock
subscriptions for 1,590,000 shares of common stock for $47,700.
Acquisition of Watt Shop Communications Ltd.
- --------------------------------------------
The Company has entered into an agreement to acquire all of the issued and
outstanding common stock of The Watt Shop Communications Ltd. (a Canadian
corporation) in exchange for 1,500,000 shares of the Company's common stock.
Since the Companies are under common control, the assets and liabilities of The
Watt Shop Communications, Ltd. are to be recorded at historical cost and
accounted for in a manner similar to a pooling of interest. The Watt Shop
Communications, Ltd. operates cellular and telecommunications outlets in Western
Canada.
F-30
<PAGE>
PART III
--------
ITEM 1. INDEX TO EXHIBITS
Exhibit Description of Document
- ------- -----------------------
3.1 Articles of Incorporation, as amended
3.2 Articles of Amendment changing name and authorized capital
3.3 Articles of Amendment changing name
3.4 By-Laws
10.1 1999 Stock Option Plan
10.2 Employment Agreement with Martin Gross
10.3 Office Lease Covering Las Vegas, Nevada Office
10.4 Memorandum of Understanding for Roseau River Project
10.5 Memorandum of Understanding for Onion Lake Project
27 Financial Data Schedule
E-1
<PAGE>
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of
1934, the Registrant caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized.
VIVA GAMING & RESORTS INC.
By: /s/ Robert Sim
------------------------
Robert Sim, Chairman
Date: February 9, 2000
Exhibit 3.1
ARTICLES OF INCORPORATION
-------------------------
OF
--
WATT COMM INTERNATIONAL, INC.
-----------------------------
The undersigned, a natural person competent to contract, does hereby
make, subscribe and file these Articles of Incorporation for the purpose of
organizing a corporation under the laws of the State of Florida.
ARTICLE I
CORPORATE NAME
--------------
The name of this Corporation shall be : WATT COMM INTERNATIONAL, INC.
ARTICLE II
PRINCIPAL OFFICE AND MAILING ADDRESS
------------------------------------
The principal office and mailing address of the Corporation is c/o
Atlas, Pearlman, Trop & Borkson, P.A., 200 East Las Olas Boulevard, Suite 1900,
Fort Lauderdale, Florida 33301.
ARTICLE III
NATURE OF CORPORATE BUSINESS AND POWERS
---------------------------------------
The general nature of the business to be transacted by this Corporation
shall be to engage in any and all lawful business permitted under the laws of
the United States and the State of Florida.
ARTICLE IV
CAPITAL STOCK
-------------
The maximum number of shares that this Corporation shall be authorized
to issue and have outstanding at any one time shall be one hundred million
(100,000,000) shares of common stock, par value $.001 per share and three
million (3,000,000 shares of Preferred Stock having a par value of $.10 per
share.
<PAGE>
Series of the Preferred Stock may be created and issued from time to
time, with such designations, preferences, conversion rights, cumulative,
relative, participating, optional or other rights, including voting rights,
qualifications, limitations or restrictions thereof as shall be stated and
expressed in the resolution or resolutions providing for the creation and
issuance of such series of Preferred Stock as adopted by the Board of Directors
pursuant to the authority in this paragraph given.
ARTICLE V
TERM OF EXISTENCE
-----------------
This Corporation shall have perpetual existence.
ARTICLE VI
REGISTERED AGENT AND
INITIAL REGISTERED OFFICE IN FLORIDA
------------------------------------
The Registered Agent and the street address of the initial Registered
Office of this Corporation in the State of Florida shall be:
James M. Schneider, Esq.
Atlas, Pearlman, Trop & Borkson, P.A.
200 East Las Olas Boulevard, Suite 1900
Fort Lauderdale, Florida 33301
ARTICLE VII
BOARD OF DIRECTORS
------------------
This Corporation shall have two (2) Directors initially.
ARTICLE VIII
INITIAL DIRECTORS
-----------------
The names and addresses of the initial Directors of this Corporation
are:
Robert Sim
Ron Crumley
510-700 West Pender St.
Vancouver, BC
Canada V6C 1G8
The persons named as initial Directors shall hold office for the first
year of existence of this
2
<PAGE>
Corporation, or until their successors are elected or appointed and have
qualified, whichever occurs first.
ARTICLE IX
INCORPORATOR
------------
The name and address of the person signing these Articles of
Incorporation as the Incorporator is James M. Schneider, Esq., c/o Atlas,
Pearlman, Trop & Borkson, P.A., 200 East Las Olas Boulevard, Suite 1900, Fort
Lauderdale, Florida 33301.
ARTICLE X
INDEMNIFICATION
---------------
This Corporation may indemnify any director, officer, employee or agent
of the Corporation to the fullest extent permitted by Florida law.
ARTICLE XI
AFFILIATED TRANSACTIONS
-----------------------
This Corporation expressly elects not to be governed by Section
607.0901 of the Florida Business Corporation Act, as amended from time to time,
relating to affiliated transactions.
IN WITNESS WHEREOF, the undersigned Incorporator has executed the
foregoing Articles of Incorporation on the 9th day of December, 1997.
/s/ James M. Schneider
--------------------------------
James M. Schneider, Incorporator
3
<PAGE>
CERTIFICATE DESIGNATING REGISTERED AGENT
AND OFFICE FOR SERVICE OF PROCESS
WATT COMM INTERNATIONAL, INC., a corporation existing under the laws of
the State of Florida with its principal office and mailing address c/o Atlas,
Pearlman, Trop & Borkson, P.A., 200 East Las Olas Boulevard, Suite 1900, Fort
Lauderdale, Florida 33301 has named James M. Schneider whose address is c/o
Atlas, Pearlman, Trop & Borkson, P.A., 200 East Las Olas Boulevard, Suite 1900,
Fort Lauderdale, Florida 33301 as its agent to accept service of process within
the State of Florida.
ACCEPTANCE
----------
Having been named to accept service of process for the above named
Corporation, as the place designated in this Certificate, I hereby accept the
appointment as Registered Agent, and agree to comply with all applicable
provisions of law. In addition, I hereby am familiar with and accept the duties
and responsibilities as Registered Agent for said Corporation.
/s/ James M. Schneider
--------------------------------
James M. Schneider, Incorporator
4
Exhibit 3.2
ARTICLES OF AMENDMENT
TO THE
ARTICLES OF INCORPORATION
OF
WATT COMM INTERNATIONAL, INC.
Pursuant to Section 607.1006 of the Business Corporation Act of the
State of Florida, the undersigned President of WATT COMM INTERNATIONAL, INC., a
corporation organized and existing under and by virtue of the Business
Corporation Act of the State of Florida ("Corporation"), bearing document number
P97000103756, does hereby certify:
First: That pursuant to written consent of the majority of the
Shareholders and all of the Directors of said Corporation on April 28, 1999, the
Shareholders and Directors approved the following amendments to the
Corporation's Articles of Incorporation:
ARTICLE I
CORPORATE NAME
--------------
The name of this Corporation shall be VIVA GAMING & RESORTS.COM INC.
ARTICLE II
PRINCIPAL OFFICE AND MAILING ADDRESS
------------------------------------
The principal office and mailing address of the Corporation is 750 West
Pender Street, Suite 401, Vancouver, British Columbia, Canada V6C 2T8.
ARTICLE IV
CAPITAL STOCK
-------------
The maximum number of shares of stock that this Corporation shall be
authorized
<PAGE>
to issue and have outstanding at any one time shall be 110,000,000 shares of
capital stock, consisting of: (a) 100,000,000 shares of Common Stock having a
par value of $.001 per share, and (b) 10,000,000 shares of Preferred Stock,
having a par value of $.10 per share. Shareholders of the Corporation shall not
be entitled to pre-emptive rights and shall not be entitled to cumulative voting
rights.
The Preferred Stock may be issued from time to time, with such
designations, preferences, conversion rights, cumulative, relative,
participating, optional or other rights, including voting rights,
qualifications, limitations or restrictions thereof as shall be stated and
expressed in the resolution or resolutions providing for the creation and
issuance of such series of Preferred Stock as adopted by the Board of Directors
pursuant to the authority in this paragraph given.
The foregoing amendment was adopted, pursuant to the Florida Business
Corporation Act, by all of the Directors and a majority of the Shareholders of
the Common Stock of the Corporation, which shares consenting and voted
represented a majority of the total issued and outstanding capital stock of the
Corporation entitled to vote, pursuant to written consent dated April 28, 1999.
Therefore, the number of votes cast by the Shareholders of the Corporation for
the amendment to the Corporation's Articles of Incorporation was sufficient for
approval.
IN WITNESS WHEREOF, the undersigned, being the President of this
Corporation, has executed these Articles of Amendment as of May 7, 1999.
WATT COMM INTERNATIONAL, INC.
By: /s/ Robert Sim
---------------------
Robert Sim, President
2
Exhibit 3.3
ARTICLES OF AMENDMENT
TO THE
ARTICLES OF INCORPORATION
OF
VIVA GAMING & RESORTS.COM, INC.
Pursuant to Section 607.1006 of the Business Corporation Act of the State of
Florida, the undersigned President of VIVA GAMING & RESORTS.COM, INC., a
corporation organized and existing under and by virtue of the Business
Corporation Act of the State of Florida ("Corporation"), bearing document number
P97000103756, does hereby certify:
First: That pursuant to written consent of the majority of the Shareholders of
the Common Stock of the Corporation and all of the Directors of said Corporation
on September 15, 1999, the Shareholders and Directors approved the following
amendments to the Corporation's Articles of Incorporation: Therefore the number
of votes cast was sufficient for approval.
ARTICLE I
The name of this Corporation shall be VIVA GAMING & RESORTS INC.
ARTICLE II
PRINCIPAL OFFICE AND MAILING ADDRESS
The principal office and mailing address of the Corporation is:
3653 Howard Hughes Parkway
Suite #200
Las Vegas, Nevada
USA 89109
IN WITNESS WHEREOF, the undersigned, being the Chairman of the Board of
Directors of this Corporation, has executed these Articles of Amendment as of
September 30, 1999.
VIVA GAMING & RESORTS.COM, INC.
By: /s/ Robert C. Sim
----------------------------------
Robert C. Sim - Chairman, Director
Exhibit 3.4
BY-LAWS
OF
WATT COM INTERNATIONAL, INC.
a Florida corporation
<PAGE>
<TABLE>
<CAPTION>
INDEX
PAGE
----
ARTICLE I
---------
Offices
-------
<S> <C> <C> <C> <C>
Section 1.01 Principal Office........................................................ 1
----------------
Section 1.02 Registered Office....................................................... 1
-----------------
Section 1.03 Other Offices........................................................... 1
-------------
ARTICLE II
----------
Meetings of Shareholders
------------------------
Section 2.01 Annual Meeting.......................................................... 1
--------------
Section 2.02 Special Meetings........................................................ 2
----------------
Section 2.03 Shareholders' List for Meeting.......................................... 2
------------------------------
Section 2.04 Record Date............................................................. 3
-----------
Section 2.05 Notice of Meetings and Adjournment...................................... 3
----------------------------------
Section 2.06 Waiver of Notice........................................................ 4
----------------
ARTICLE III
-----------
Shareholder Voting
------------------
Section 3.01 Voting Group Defined.................................................... 5
--------------------
Section 3.02 Quorum and Voting Requirements for
----------------------------------
Voting Groups........................................................... 5
-------------
Section 3.03 Action by Single and Multiple Voting
------------------------------------
Groups.................................................................. 5
------
Section 3.04 Shareholder Quorum and Voting; Greater
--------------------------------------
or Lesser Voting Requirements........................................... 6
-----------------------------
Section 3.05 Voting for Directors; Cumulative Voting................................. 6
---------------------------------------
<PAGE>
Section 3.06 Voting Entitlement of Shares............................................ 7
----------------------------
Section 3.07 Proxies................................................................. 8
-------
Section 3.08 Shares Held by Nominees................................................. 9
-----------------------
Section 3.09 Corporation's Acceptance of Votes....................................... 10
---------------------------------
Section 3.10 Action by Shareholders Without Meeting.................................. 11
--------------------------------------
ARTICLE IV
----------
Board of Directors and Officers
-------------------------------
Section 4.01 Qualifications of Directors............................................. 11
---------------------------
Section 4.02 Number of Directors..................................................... 11
-------------------
Section 4.03 Terms of Directors Generally............................................ 12
----------------------------
Section 4.04 Staggered Terms for Directors........................................... 12
-----------------------------
Section 4.05 Vacancy on Board........................................................ 12
----------------
Section 4.06 Compensation of Directors............................................... 12
-------------------------
Section 4.07 Meetings................................................................ 13
--------
Section 4.08 Action by Directors Without a Meeting................................... 13
-------------------------------------
Section 4.09 Notice of Meetings...................................................... 13
------------------
Section 4.10 Waiver of Notice........................................................ 13
----------------
Section 4.11 Quorum and Voting....................................................... 14
-----------------
Section 4.12 Committees.............................................................. 14
----------
Section 4.13 Loans to Officers, Directors and
--------------------------------
Employees; Guaranty of Obligations...................................... 15
----------------------------------
Section 4.14 Required Officers....................................................... 15
-----------------
Section 4.15 Duties of Officers...................................................... 16
------------------
Section 4.16 Resignation and Removal of Officers..................................... 16
-----------------------------------
ii
<PAGE>
Section 4.17 Contract Rights of Officers............................................. 16
---------------------------
Section 4.18 General Standards for Directors......................................... 16
-------------------------------
Section 4.19 Director Conflicts of Interest.......................................... 17
------------------------------
Section 4.20 Resignation of Directors................................................ 18
------------------------
ARTICLE V
---------
Indemnification of Directors, Officers,
---------------------------------------
Employees and Agents
--------------------
Section 5.01 Directors, Officers, Employees
------------------------------
and Agents.............................................................. 18
----------
ARTICLE VI
----------
Office and Agent
----------------
Section 6.01 Registered Office and Registered Agent.................................. 22
--------------------------------------
Section 6.02 Change of Registered Office or Registered
-----------------------------------------
Agent; Resignation of Registered Agent.................................. 23
--------------------------------------
ARTICLE VII
-----------
Shares, Option, Dividends and Distributions
-------------------------------------------
Section 7.01 Authorized Shares....................................................... 24
-----------------
Section 7.02 Terms of Class or Series Determined
-----------------------------------
by Board of Directors................................................... 24
---------------------
Section 7.03 Issued and Outstanding Shares........................................... 25
-----------------------------
Section 7.04 Issuance of Shares...................................................... 25
------------------
Section 7.05 Form and Content of Certificates........................................ 26
--------------------------------
Section 7.06 Shares Without Certificates............................................. 27
---------------------------
Section 7.07 Restriction on Transfer of Shares
---------------------------------
and Other Securities.................................................... 27
--------------------
Section 7.08 Shareholder's Pre-emptive Rights........................................ 27
--------------------------------
iii
<PAGE>
Section 7.09 Corporation's Acquisition of its
--------------------------------
Own Shares.............................................................. 28
----------
Section 7.10 Share Options........................................................... 28
-------------
Section 7.11 Terms and Conditions of Stock Rights
------------------------------------
and Options............................................................. 28
-----------
Section 7.12 Share Dividends......................................................... 29
---------------
Section 7.13 Distributions to Shareholders........................................... 29
-----------------------------
ARTICLE VIII
------------
Amendment of Articles and Bylaws
--------------------------------
Section 8.01 Authority to Amend the Articles of
----------------------------------
Incorporation........................................................... 31
-------------
Section 8.02 Amendment by Board of Directors......................................... 31
-------------------------------
Section 8.03 Amendment of Bylaws by Board of
-------------------------------
Directors............................................................... 32
---------
Section 8.04 Bylaw Increasing Quorum or Voting
----------------------------------
Requirements for Directors.............................................. 32
--------------------------
ARTICLE IX
----------
Records and Report
------------------
Section 9.01 Corporate Records....................................................... 33
-----------------
Section 9.02 Financial Statements for Shareholders................................... 34
-------------------------------------
Section 9.03 Other Reports to Shareholders........................................... 34
-----------------------------
Section 9.04 Annual Report for Department of State................................... 35
-------------------------------------
ARTICLE X
---------
Miscellaneous
-------------
Section 10.01 Definition of the "Act"................................................. 35
-----------------------
Section 10.02 Application of Florida Law.............................................. 36
--------------------------
iv
<PAGE>
Section 10.03 Fiscal Year............................................................. 36
-----------
Section 10.04 Conflicts with Articles of
--------------------------
Incorporation........................................................... 36
-------------
</TABLE>
v
<PAGE>
ARTICLE I
Offices
-------
Section 1.01. Principal Office.
-----------------
The principal office of the corporation in the State of Florida shall
be established at such places as the board of directors from time to time
determine.
Section 1.02. Registered Office.
------------------
The registered office of the corporation in the State of Florida shall
be at the office of its registered agent as stated in the articles of
incorporation or as the board of directors shall from time to time determine.
Section 1.03. Other Offices.
--------------
The corporation may have additional offices at such other places,
either within or without the State of Florida, as the board of directors may
from time to time determine or the business of the corporation may require.
ARTICLE II
Meetings of Shareholders
------------------------
Section 2.01. Annual Meeting.
---------------
(1) The corporation shall hold a meeting of shareholders annually, for
the election of directors and for the transaction of any proper business, at a
time stated in or fixed in accordance with a resolution of the board of
directors.
(2) Annual shareholders' meeting may be held in or out of the State of
Florida at a place stated in or fixed in accordance with a resolution by the
board of directors or, when not inconsistent with the board of directors'
resolution stated in the notice of the annual meeting. If no place is stated in
or fixed in accordance with these bylaws, or stated in the notice of the annual
meeting, annual meetings shall be held at the corporation's principal office.
(3) The failure to hold the annual meeting at the time stated in or
fixed in accordance with these bylaws or pursuant to the Act does not affect the
validity of any corporate action and shall not work a forfeiture of or
dissolution of the corporation.
Section 2.02. Special Meeting.
----------------
(1) The corporation shall hold a special meeting of shareholders:
(a) On call of its board of directors or the person or persons
authorized to do so by the board of directors; or
<PAGE>
(b) If the holders of not less than 10% of all votes entitled to
be cast on any issue proposed to be considered at the proposed special meeting
sign, date and deliver to the corporation's secretary one or more written
demands for the meeting describing the purpose or purposes for which it is to be
held.
(2) Special shareholders' meetings may be held in or out of the State
of Florida at a place stated in or fixed in accordance with a resolution of the
board of directors, or, when not inconsistent with the board of directors'
resolution, in the notice of the special meeting. If no place is stated in or
fixed in accordance with these bylaws or in the notice of the special meeting,
special meetings shall be held at the corporation's principal office.
(3) Only business within the purpose or purposes described in the
special meeting notice may be conducted at a special shareholders' meeting.
Section 2.03. Shareholders' List for Meeting.
-------------------------------
(1) After fixing a record date for a meeting, a corporation shall
prepare a list of the names of all its shareholders who are entitled to notice
of a shareholders' meeting, in accordance with the Florida Business Corporation
Act (the "Act"), or arranged by voting group, with the address of, and the
number and class and series, if any, of shares held by, each.
(2) The shareholders' list must be available for inspection by any
shareholder for a period of ten days prior to the meeting or such shorter time
as exists between the record date and the meeting and continuing through the
meeting at the corporation's principal office, at a place identified in the
meeting notice in the city where the meeting will be held, or at the office of
the corporation's transfer agent or registrar. A shareholder or his agent or
attorney is entitled on written demand to inspect the list (subject to the
requirements of Section 607.1602(3) of the Act), during regular business hours
and at his expense, during the period it is available for inspection.
(3) The corporation shall make the shareholders' list available at the
meeting, and any shareholder or his agent or attorney is entitled to inspect the
list at any time during the meeting or any adjournment.
Section 2.04. Record Date.
------------
(1) The board of directors may set a record date for purposes of
determining the shareholders entitled to notice of and to vote at a
shareholders' meeting; however, in no event may a record date fixed by the board
of directors be a date preceding the date upon which the resolution fixing the
record date is adopted.
(2) Unless otherwise fixed by the board of directors, the record date
for determining shareholders entitled to demand a special meeting is the date
the first shareholder delivers his demand to the corporation. In the event that
the board of directors sets the record date for a special meeting of
shareholders, it shall not be a date preceding the date upon which the
corporation receives the first demand from a shareholder requesting a special
meeting.
(3) If no prior action is required by the board of directors pursuant
to the Act, and,
2
<PAGE>
unless otherwise fixed by the board of directors, the record date for
determining shareholders entitled to take action without a meeting is the date
the first signed written consent is delivered to the corporation under Section
607.0704 of the Act. If prior action is required by the board of directors
pursuant to the Act, the record date for determining shareholders entitled to
take action without a meeting is at the close of business on the day on which
the board of directors adopts the resolution taking such prior action.
(4) Unless otherwise fixed by the board of directors, the record date
for determining shareholders entitled to notice of and to vote at an annual or
special shareholders' meeting is the close of business on the day before the
first notice is delivered to shareholders.
(5) A record date may not be more than 70 days before the meeting or
action requiring a determination of shareholders.
(6) A determination of shareholders entitled to notice of or to vote at
a shareholders' meeting is effective for any adjournment of the meeting unless
the board of directors fixes a new record date, which it must do if the meeting
is adjourned to a date more than one 120 days after the date fixed for the
original meeting.
Section 2.05. Notice of Meetings and Adjournment.
-----------------------------------
(1) The corporation shall notify shareholders of the date, time and
place of each annual and special shareholders' meeting no fewer than 10 or more
than 60 days before the meeting date. Unless the Act requires otherwise, the
corporation is required to give notice only to shareholders entitled to vote at
the meeting. Notice shall be given in the manner provided in Section 607.0141 of
the Act, by or at the direction of the president, the secretary, of the officer
or persons calling the meeting. If the notice is mailed at least 30 days before
the date of the meeting, it may be done by a class of United States mail other
than first class. Notwithstanding Section 607.0141, if mailed, such notice shall
be deemed to be delivered when deposited in the United Statement mail addressed
to the shareholder at his address as it appears on the stock transfer books of
the corporation, with postage thereon prepaid.
(2) Unless the Act or the articles of incorporation requires otherwise,
notice of an annual meeting need not include a description of the purpose or
purposes for which the meeting is called.
(3) Notice of a special meeting must include a description of the
purpose or purposes for which the meeting is called.
(4) If an annual or special shareholders meeting is adjourned to a
different date, time, or place, notice need not be given of the new date, time,
or place if the new date, time or place is announced at the meeting before
adjournment is taken, and any business may be transacted at the adjourned
meeting that might have been transacted on the original date of the meeting. If
a new record date is or must be fixed under Section 607.0707 of the Act,
however, notice of the adjourned meeting must be given under this section to
persons who are shareholders as of the new record date who are entitled to
notice of the meeting.
(5) Notwithstanding the foregoing, no notice of a shareholders' meeting
need be given
3
<PAGE>
if: (a) an annual report and proxy statements for two consecutive annual
meetings of shareholders, or (b) all, and at least two checks in payment of
dividends or interest on securities during a 12-month period, have been sent by
first-class United States mail, addressed to the shareholder at his address as
it appears on the share transfer books of the corporation, and returned
undeliverable. The obligation of the corporation to give notice of a
shareholders' meeting to any such shareholder shall be reinstated once the
corporation has received a new address for such shareholder for entry on its
share transfer books.
Section 2.06. Waiver of Notice.
-----------------
(1) A shareholder may waive any notice required by the Act, the
articles of incorporation, or bylaws before or after the date and time stated in
the notice. The waiver must be in writing, be signed by the shareholder entitled
to the notice, and be delivered to the corporation for inclusion in the minutes
or filing with the corporate records. Neither the business to be transacted at
nor the purpose of any regular or special meeting of the shareholders need be
specified in any written waiver of notice.
(2) A shareholder's attendance at a meeting: (a) Waives objection to
lack of notice or defective notice of the meeting, unless the shareholder at the
beginning of the meeting objects to holding the meeting or transacting business
at the meeting; or (b) waives objection to consideration of a particular matter
at the meeting that is not within the purpose or purposes described in the
meeting notice, unless the shareholder objects to considering the matter when it
is presented.
ARTICLE III
Shareholder Voting
------------------
Section 3.01. Voting Group Defined.
---------------------
A "voting group" means all shares of one or more classes or series that
under the articles of incorporation or the Act are entitled to vote and be
counted together collectively on a matter at a meeting of shareholders. All
shares entitled by the articles of incorporation or the Act to vote generally on
the matter are for that purpose a single voting group.
Section 3.02. Quorum and Voting Requirements for Voting Groups.
-------------------------------------------------
(1) Shares entitled to vote as a separate voting group may take action
on a matter at a meeting only if a quorum of those shares exists with respect to
that matter. Unless the articles of incorporation or the Act provides otherwise,
a majority of the votes entitled to be cast on the matter by the voting group
constitutes a quorum of that voting group for action on that matter.
(2) Once a share is represented for any purpose at a meeting, it is
deemed present for quorum purposes for the remainder of the meeting and for any
adjournment of that meeting unless a new record date is or must be set for that
adjourned meeting.
(3) If a quorum exists, action on a matter (other than the election of
directors) by a voting group is approved if the votes cast within the voting
group favoring the action exceed the
4
<PAGE>
votes cast opposing the action, unless the articles of incorporation or the Act
requires a greater number of affirmative votes.
Section 3.03. Action by Single and Multiple Voting Groups.
--------------------------------------------
(1) If the articles of incorporation or the Act provides for voting by
a single voting group on a matter, action on that matter is taken when voted
upon by that voting group as provided in Section 3.02 of these bylaws.
(2) If the articles of incorporation or the Act provides for voting by
two or more voting groups on a matter, action on that matter is taken only when
voted upon by each of those voting groups counted separately as provided in
Section 3.02 of these bylaws. Action may be taken by one voting group on a
matter even though no action is taken by another voting group entitled to vote
on the matter.
Section 3.04. Shareholder Quorum and Voting; Greater or Lesser Voting
-------------------------------------------------------
Requirements.
-------------
(1) A majority of the shares entitled to vote, represented in person or
by proxy, shall constitute a quorum at a meeting of shareholders, but in no
event shall a quorum consist of less than one-third of the shares entitled to
vote. When a specified item of business is required to be voted on by a class or
series of stock, a majority of the shares of such class or series shall
constitute a quorum for the transaction of such item of business by that class
or series.
(2) An amendment to the articles of incorporation that adds, changes or
deletes a greater or lesser quorum or voting requirement must meet the same
quorum requirement and be adopted by the same vote and voting groups required to
take action under the quorum and voting requirements then in effect or proposed
to be adopted, whichever is greater.
(3) If a quorum exists, action on a matter, other than the election of
directors, is approved if the votes cast by the holders of the shares
represented at the meeting and entitled to vote on the subject matter favoring
the action exceed the votes cast opposing the action, unless a greater number of
affirmative votes or voting by classes is required by the Act or the articles of
incorporation.
(4) After a quorum has been established at a shareholders' meeting, the
subsequent withdrawal of shareholders, so as to reduce the number of shares
entitled to vote at the meeting below the number required for a quorum, shall
not affect the validity of any action taken at the meeting or any adjournment
thereof.
(5) The articles of incorporation may provide for a greater voting
requirement or a greater or lesser quorum requirement for shareholders (or
voting groups of shareholders) than is provided by the Act, but in no event
shall a quorum consist of less than one-third of the shares entitled to vote.
Section 3.05. Voting for Directors; Cumulative Voting.
----------------------------------------
(1) Directors are elected by a plurality of the votes cast by the
shares entitled to vote
5
<PAGE>
in the election at a meeting at which a quorum is present.
(2) Each shareholder who is entitled to vote at an election of
directors has the right to vote the number of shares owned by him for as many
persons as there are directors to be elected and for whose election he has a
right to vote. Shareholders do not have a right to cumulate their votes for
directors unless the articles of incorporation so provide.
Section 3.06. Voting Entitlement of Shares.
-----------------------------
(1) Unless the articles of incorporation or the Act provides otherwise,
each outstanding share, regardless of class, is entitled to one vote on each
matter submitted to a vote at a meeting of shareholders. Only shares are
entitled to vote.
(2) The shares of the corporation are not entitled to vote if they are
owned, directly or indirectly, by a second corporation, domestic or foreign, and
the first corporation owns, directly or indirectly, a majority of shares
entitled to vote for directors of the second corporation.
(3) This section does not limit the power of the corporation to vote
any shares, including its own shares, held by it in a fiduciary capacity.
(4) Redeemable shares are not entitled to vote on any matter, and shall
not be deemed to be outstanding, after notice of redemption is mailed to the
holders thereof and a sum sufficient to redeem such shares has been deposited
with a bank, trust company, or other financial institution upon an irrevocable
obligation to pay the holders the redemption price upon surrender of the shares.
(5) Shares standing in the name of another corporation, domestic or
foreign, may be voted by such officer, agent, or proxy as the bylaws of the
corporate shareholder may prescribe or, in the absence of any applicable
provision, by such person as the board of directors of the corporate shareholder
may designate. In the absence of any such designation or in case of conflicting
designation by the corporate shareholder, the chairman of the board, the
president, any vice president, the secretary, and the treasurer of the corporate
shareholder, in that order, shall be presumed to be fully authorized to vote
such shares.
(6) Shares held by an administrator, executor, guardian, personal
representative, or conservator may be voted by him, either in person or by
proxy, without a transfer of such shares into his name. Shares standing in the
name of a trustee may be voted by him, either in person or by proxy, but no
trustee shall be entitled to vote shares held by him without a transfer of such
shares into his name or the name of his nominee.
(7) Shares held by or under the control of a receiver, a trustee in
bankruptcy proceedings, or an assignee for the benefit of creditors may be voted
by him without the transfer thereof into his name.
(8) If a share or shares stand of record in the names of two or more
persons, whether fiduciaries, members of a partnership, joint tenants, tenants
in common, tenants by the entirety, or otherwise, or if two or more persons have
the same fiduciary relationship respecting the
6
<PAGE>
same shares, unless the secretary of the corporation is given notice to the
contrary and is furnished with a copy of the instrument or order appointing them
or creating the relationship wherein it is so provided, then acts with respect
to voting have the following effect:
(a) If only one votes, in person or in proxy, his act binds all;
(b) If more than one vote, in person or by proxy, the act of the
majority so voting binds all;
(c) If more than one vote, in person or by proxy, but the vote is
evenly split on any particular matter, each faction is entitled to vote the
share or shares in question proportionally;
(d) If the instrument or order so filed shows that any such
tenancy is held in unequal interest, a majority or a vote evenly split for
purposes of this subsection shall be a majority or a vote evenly split in
interest;
(e) The principles of this subsection shall apply, insofar as
possible, to execution of proxies, waivers, consents, or objections and for the
purpose of ascertaining the presence of a quorum;
(f) Subject to Section 3.08 of these bylaws, nothing herein
contained shall prevent trustees or other fiduciaries holding shares registered
in the name of a nominee from causing such shares to be voted by such nominee as
the trustee or other fiduciary may direct. Such nominee may vote shares as
directed by a trustee or their fiduciary without the necessity of transferring
the shares to the name of the trustee or other fiduciary.
Section 3.07. Proxies.
--------
(1) A shareholder, other person entitled to vote on behalf of a
shareholder pursuant to Section 3.06 of these bylaws, or attorney in fact may
vote the shareholder's shares in person or by proxy.
(2) A shareholder may appoint a proxy to vote or otherwise act for him
by signing an appointment form, either personally or by his attorney in fact. An
executed telegram or cablegram appearing to have been transmitted by such
person, or a photographic, photostatic, or equivalent reproduction of an
appointment form, is a sufficient appointment form.
(3) An appointment of a proxy is effective when received by the
secretary or other officer or agent authorized to tabulate votes. An appointment
is valid for up to 11 months unless a longer period is expressly provided in the
appointment form.
(4) The death or incapacity of the shareholder appointing a proxy does
not affect the right of the corporation to accept the proxy's authority unless
notice of the death or incapacity is received by the secretary or other officer
or agent authorized to tabulate votes before the proxy exercises his authority
under the appointment.
(5) An appointment of a proxy is revocable by the shareholder unless
the appointment
7
<PAGE>
form conspicuously states that it is irrevocable and the appointment is coupled
with an interest. Appointments coupled with an interest include the appointment
of: (a) a pledgee; (b) a person who purchased or agreed to purchase the shares;
(c) a creditor of the corporation who extended credit to the corporation under
terms requiring the appointment; (d) an employee of the corporation whose
employment contract requires the appointment; or (e) a party to a voting
agreement created in accordance with the Act.
(6) An appointment made irrevocable under this section becomes
revocable when the interest with which it is coupled is extinguished and, in a
case provided for in Subsection 5(c) or 5(d), the proxy becomes revocable three
years after the date of the proxy or at the end of the period, if any, specified
herein, whichever is less, unless the period of irrevocability is renewed from
time to time by the execution of a new irrevocable proxy as provided in this
section. This does not affect the duration of a proxy under subsection (3).
(7) A transferee for value of shares subject to an irrevocable
appointment may revoke the appointment if he did not know of its existence when
he acquired the shares and the existence of the irrevocable appointment was not
noted conspicuously on the certificate representing the shares or on the
information statement for shares without certificates.
(8) Subject to Section 3.09 of these bylaws and to any express
limitation on the proxy's authority appearing on the face of the appointment
form, a corporation is entitled to accept the proxy's vote or other action as
that of the shareholder making the appointment.
(9) If an appointment form expressly provides, any proxy holder may
appoint, in writing, a substitute to act in his place.
Section 3.08. Shares Held by Nominees.
------------------------
(1) The corporation may establish a procedure by which the beneficial
owner of shares that are registered in the name of a nominee is recognized by
the corporation as the shareholder. The extent of this recognition may be
determined in the procedure.
(2) The procedure may set forth (a) the types of nominees to which it
applies; (b) the rights or privileges that the corporation recognizes in a
beneficial owner; (c) the manner in which the procedure is selected by the
nominee; (d) the information that must be provided when the procedure is
selected; (e) the period for which selection of the procedure is effective; and
(f) other aspects of the rights and duties created.
Section 3.09. Corporation's Acceptance of Votes.
----------------------------------
(1) If the name signed on a vote, consent, waiver, or proxy appointment
corresponds to the name of a shareholder, the corporation if acting in good
faith is entitled to accept the vote, consent waiver, or proxy appointment and
give it effect as the act of the shareholder.
(2) If the name signed on a vote, consent, waiver, or proxy appointment
does not correspond to the name of its shareholder, the corporation if acting in
good faith is nevertheless entitled to accept the vote, consent, waiver, or
proxy appointment and give it effect as the act of
8
<PAGE>
the shareholder if: (a) the shareholder is an entity and the name signed
purports to be that of an officer or agent of the entity; (b) the name signed
purports to be that of an administrator, executor, guardian, personal
representative, or conservator representing the shareholder and, if the
corporation requests, evidence of fiduciary status acceptable to the corporation
has been presented with respect to the vote, consent, waiver, or proxy
appointment; (c) the name signed purports to be that of a receiver, trustee in
bankruptcy, or assignee for the benefit of creditors of the shareholder and, if
the corporation requests, evidence of this status acceptable to the corporation
has been presented with respect to the vote, consent, waiver, or proxy
appointment; (d) the name signed purports to be that of a pledgee, beneficial
owner, or attorney in fact of the shareholder and, if the corporation requests,
evidence acceptable to the corporation of the signatory's authority to sign for
the shareholder has been presented with respect to the vote, consent, waiver, or
proxy appointment; or (e) two or more persons are the shareholder as covenants
or fiduciaries and the name signed purports to be the name of at least one of
the co-owners and the person signing appears to be acting on behalf of all the
co-owners.
(3) The corporation is entitled to reject a vote, consent, waiver, or
proxy appointment if the secretary or other officer or agent authorized to
tabulate votes, acting in good faith, has reasonable basis for doubt about the
validity of the signature on it or about the signatory's authority to sign for
the shareholder.
(4) The corporation and its officer or agent who accepts or rejects a
vote, consent, waiver, or proxy appointment in good faith and in accordance with
the standards of this section are not liable in damages to the shareholder for
the consequences of the acceptance or rejection.
(5) Corporate action based on the acceptance or rejection of a vote,
consent, waiver, or proxy appointment under this section is valid unless a court
of competent jurisdiction determines otherwise.
Section 3.10. Action by Shareholders Without Meeting.
---------------------------------------
(1) Any action required or permitted by the Act to be taken at any
annual or special meeting of shareholders of the corporation may be taken
without a meeting, without prior notice and without a vote, if the action is
taken by the holders of outstanding stock of each voting group entitled to vote
thereon having not less than the minimum number of votes with respect to each
voting group that would be necessary to authorize or take such action at a
meeting at which all voting groups and shares entitled to vote thereon were
present and voted. In order to be effective, the action must by evidenced by one
or more written consents describing the action taken, dated and signed by
approving shareholders having the requisite number of votes of each voting group
entitled to vote thereon, and delivered to the corporation by delivery to its
principal office in this state, its principal place of business, the corporate
secretary, or another office or agent of the corporation having custody of the
book in which proceedings of meetings of shareholders are recorded. No written
consent shall be effective to take the corporate action referred to therein
unless, within 60 days of the date of the earliest dated consent is delivered in
the manner required by this section, written consent signed by the number of
holders required to take action is delivered to the corporation by delivery as
set forth in this section.
(2) Within 10 days after obtaining such authorization by written
consent, notice in
9
<PAGE>
accordance with Section 607.0704(3) of the Act must be given to those
shareholders who have not consented in writing.
ARTICLE IV
Board of Directors and Officers
-------------------------------
Section 4.01. Qualifications of Directors.
----------------------------
Directors must be natural persons who are 18 years of age or older but
need not be residents of the State of Florida or shareholders of the
corporation.
Section 4.02. Number of Directors.
(1) The board of directors shall consist of not less than one nor more
than nine individuals.
(2) The number of directors may be increased or decreased from time to
time by amendment to these bylaws.
(3) Directors are elected at the first annual shareholders' meeting and
at each annual meeting thereafter unless their terms are staggered under Section
4.04 of these bylaws.
Section 4.03. Terms of Directors Generally.
-----------------------------
(1) The terms of the initial directors of the corporation expire at the
first shareholders' meeting at which directors are elected.
(2) The terms of all other directors expire at the next annual
shareholders' meeting following their election unless their terms are staggered
under Section 4.04 of these bylaws.
(3) A decrease in the number of directors does not shorten an incumbent
director's term.
(4) The term of a director elected to fill a vacancy expires at the
next shareholders' meeting at which directors are elected.
(5) Despite the expiration of a director's term, he continues to serve
until his successor is elected and qualifies or until there is a decrease in the
number of directors.
Section 4.04. Staggered Terms for Directors.
------------------------------
The directors of any corporation organized under the Act may, by the
articles of incorporation, or by amendment to these bylaws adopted by a vote of
the shareholders, be divided into one, two or three classes with the number of
directors in each class being as nearly equal as possible; the term of office of
those of the first class to expire at the annual
10
<PAGE>
meeting next ensuing; of the second class one year thereafter; at the third
class two years thereafter; and at each annual election held after such
classification and election, directors shall be chosen for a full term, as the
case may be, to succeed those whose terms expire. If the directors have
staggered terms, then any increase or decrease in the number of directors shall
be so apportioned among the classes as to make all classes as nearly equal in
number as possible.
Section 4.05. Vacancy on Board.
-----------------
(1) Whenever a vacancy occurs on a board of directors, including a
vacancy resulting from an increase in the number of directors, it may be filled
by the affirmative vote of a majority of the remaining directors.
(2) A vacancy that will occur at a specific later date (by reason of a
resignation effective at a later date may be filled before the vacancy occurs
but the new director may not take office until the vacancy occurs.
Section 4.06. Compensation of Directors.
--------------------------
The board of directors may fix the compensation of directors.
Section 4.07. Meetings.
---------
(1) The board of directors may hold regular or special meetings in or
out of the State of Florida.
(2) A majority of the directors present, whether or not a quorum
exists, may adjourn any meeting of the board of directors to another time and
place. Notice of any such adjourned meeting shall be given to the directors who
were not present at the time of the adjournment and, unless the time and place
of the adjourned meeting are announced at the time of the adjournment, to the
other directors.
(3) Meetings of the board of directors may be called by the chairman of
the board or by the president.
(4) The board of directors may permit any or all directors to
participate in a regular or special meeting by, or conduct the meeting through
the use of, any means of communication by which all directors participating may
simultaneously hear each other during the meeting. A director participating in a
meeting by this means is deemed to be present in person at the meeting.
Section 4.08. Action by Directors Without a Meeting.
--------------------------------------
(1) Action required or permitted by the Act to be taken at a board of
directors' meeting or committee meeting may be taken without a meeting if the
action is taken by all members of the board or of the committee. The action must
be evidenced by one or more written consents describing the action taken and
signed by each director or committee member.
(2) Action taken under this section is effective when the last director
signs the consent,
11
<PAGE>
unless the consent specifies a different effective date.
(3) A consent signed under this section has the effect of a meeting
vote and may be described as such in any document.......
Section 4.09. Notice of Meetings.
-------------------
Regular and special meetings of the board of directors may be held
without notice of the date, time, place, or purpose of the meeting.
Section 4.10. Waiver of Notice.
-----------------
Notice of a meeting of the board of directors need not be given to any
director who signs a waiver of notice either before or after the meeting.
Attendance of a director at a meeting shall constitute a waiver of notice of
such meeting and a waiver of any and all objections to the place of the meeting,
the time of the meeting, or the manner in which it has been called or convened,
except when a director states, at the beginning of the meeting or promptly upon
arrival at the meeting, any objection to the transaction of business because the
meeting is not lawfully called or convened.
Section 4.11. Quorum and Voting.
------------------
(1) A quorum of a board of directors consists of a majority of the
number of directors prescribed by the articles of incorporation or these bylaws.
(2) If a quorum is present when a vote is taken, the affirmative vote
of a majority of directors present is the act of the board of directors.
(3) A director of a corporation who is present at a meeting of the
board of directors or a committee of the board of directors when corporate
action is taken is deemed to have assented to the action taken unless:
(a) He objects at the beginning of the meeting (or promptly upon
his arrival) to holding it or transacting specified business at the meeting; or
(b) He votes against or abstains from the action taken.
Section 4.12. Committees.
-----------
(1) The board of directors, by resolution adopted by a majority of the
full board of directors, may designate from among its members an executive
committee and one or more other committees each of which, to the extent provided
in such resolution, shall have and may exercise all the authority of the board
of directors, except that no such committee shall have the authority to:
(a) Approve or recommend to shareholders actions or proposals
required by the Act to be approved by shareholders.
12
<PAGE>
(b) Fill vacancies on the board of directors or any committee
thereof.
(c) Adopt, amend, or repeal these bylaws.
(d) Authorize or approve the reacquisition of shares unless
pursuant to a general formula or method specified by the board of directors.
(e) Authorize or approve the issuance or sale or contract for the
sale of shares, or determine the designation and relative rights, preferences,
and limitations of a voting group except that the board of directors may
authorize a committee (or a senior executive officer of the corporation) to do
so within limits specifically prescribed by the board of directors.
(2) The sections of these bylaws which govern meetings, notice and
waiver of notice, and quorum and voting requirements of the board of directors
apply to committees and their members as well.
(3) Each committee must have two or more members who serve at the
pleasure of the board of directors. The board, by resolution adopted in
accordance herewith, may designate one or more directors as alternate members of
any such committee who may act in the place and stead of any absent member or
members at any meeting of such committee.
(4) Neither the designation of any such committee, the delegation
thereto of authority, nor action by such committee pursuant to such authority
shall alone constitute compliance by any member of the board of directors not a
member of the committee in question with his responsibility to act in good
faith, in a manner he reasonably believes to be in the best interests of the
corporation, and with such care as an ordinarily prudent person in a like
position would use under similar circumstances.
Section 4.13. Loans to Officers, Directors, and Employees; Guaranty of
--------------------------------------------------------
Obligations.
------------
The corporation may lend money to, guaranty any obligation of, or
otherwise assist any officer, director, or employee of the corporation or of a
subsidiary, whenever, in the judgment of the board of directors, such loan,
guaranty, or assistance may reasonably be expected to benefit the corporation.
The loan, guaranty, or other assistance may be with or without interest and may
be unsecured or secured in such manner as the board of directors shall approve,
including, without limitation, a pledge of shares of stock of the corporation.
Nothing in this section shall be deemed to deny, limit, or restrict the powers
of guaranty or warranty of any corporation at common law or under any statute.
Loans, guaranties, or other types of assistance are subject to section 4.19.
Section 4.14. Required Officers.
------------------
(1) The corporation shall have such officers as the board of directors
may appoint from time to time.
(2) A duly appointed officer may appoint one or more assistant
officers.
13
<PAGE>
(3) The board of directors shall delegate to one of the officers
responsibility for preparing minutes of the directors' and shareholders'
meetings and for authenticating records of the corporation.
(4) The same individual may simultaneously hold more than one office in
the corporation.
Section 4.15. Duties of Officers.
-------------------
Each officer has the authority and shall perform the duties set forth
in a resolution or resolutions of the board of directors or by direction of any
officer authorized by the board of directors to prescribe the duties of other
officers.
Section 4.16. Resignation and Removal of Officers.
------------------------------------
(1) An officer may resign at any time by delivering notice to the
corporation. A resignation is effective when the notice is delivered unless the
notice specifies a later effective date. If a resignation is made effective at a
later date and the corporation accepts the future effective date, the board of
directors may fill the pending vacancy before the effective date if the board of
directors provides that the successor does not take office until the effective
date.
(2) The board of directors may remove any officer at any time with or
without cause. Any assistant officer, if appointed by another officer, may
likewise be removed by the board of directors or by the officer which appointed
him in accordance with these bylaws.
Section 4.17. Contract Rights of Officers.
----------------------------
The appointment of an officer does not itself create contract rights.
Section 4.18. General Standards for Directors.
--------------------------------
(1) A director shall discharge his duties as a director, including his
duties as a member of a committee:
(a) In good faith;
(b) With the care an ordinarily prudent person in a like position
would exercise under similar circumstances; and
(c) In a manner he reasonably believes to be in the best interests
of the corporation.
(2) In discharging his duties, a director is entitled to rely on
information, opinions, reports or statements, including financial statements and
other financial data, if prepared or presented by:
14
<PAGE>
(a) One or more officers or employees of the corporation whom the
director reasonably believes to be reliable and competent in the matters
presented;
(b) Legal counsel, public accountants, or other persons as to
matters the director reasonably believes are within the persons' professional or
expert competence; or
(c) A committee of the board of directors of which he is not a
member if the director reasonably believes the committee merits confidence.
(3) In discharging his duties, a director may consider such factors as
the director deems relevant, including the long-term prospects and interests of
the corporation and its shareholders, and the social, economic, legal, or other
effects of any action on the employees, suppliers, customers of the corporation
or its subsidiaries, the communities and society in which the corporation or its
subsidiaries operate, and the economy of the state and the nation.
(4) A director is not acting in good faith if he has knowledge
concerning the matter in question that makes reliance otherwise permitted by
subsection (2) unwarranted.
(5) A director is not liable for any action taken as a director, or any
failure to take any action, if he performed the duties of his office in
compliance with this section.
Section 4.19. Director Conflicts of Interest.
-------------------------------
No contract or other transaction between a corporation and one or more
interested directors shall be either void or voidable because of such
relationship or interest, because such director or directors are present at the
meeting of the board of directors or a committee thereof which authorizes,
approves or ratifies such contract or transaction, or because his or their votes
are counted for such purpose, if:
(1) The fact of such relationship or interest is disclosed or known to
the board of directors or committee which authorizes, approves or ratifies the
contract or transactions by a vote or consent sufficient for the purpose without
counting the votes or consents of such interested directors;
(2) The fact of such relationship or interest is disclosed or known to
the shareholders entitled to vote and they authorize, approve or ratify such
contract or transaction by vote or written consent; or
(3) The contract or transaction is fair and reasonable as to the
corporation at the time it is authorized by the board, a committee or the
shareholders.
Common or interested directors may be counted in determining the
presence of a quorum at the meeting of the board of directors or a committee
thereof which authorizes, approves or ratifies such contract or transaction.
For the purpose of paragraph (2) above, a conflict of interest
transaction is authorized, approved or ratified if it receives the vote of a
majority of the shares entitled to be counted under this subsection. Shares
owned by or voted under the control of a director who has a relationship
15
<PAGE>
or interest in the conflict of interest transaction may not be counted in a vote
of shareholders to determine whether to authorize, approve or ratify a conflict
of interest transaction under paragraph (2). The vote of those shares, however,
is counted in determining whether the transaction is approved under other
sections of the Act. A majority of the shares, whether or not present, that are
entitled to be counted in a vote on the transaction under this subsection
constitutes a quorum for the purpose of taking action under this section.
Section 4.20. Resignation of Directors.
-------------------------
A director may resign at any time by delivering written notice to the
board of directors or its chairman or to the corporation.
A resignation is effective when the notice is delivered unless the
notice specifies a later effective date. If a resignation is made effective at a
later date, the board of directors may fill the pending vacancy before the
effective date if the board of directors provides that the successor does not
take office until the effective date.
ARTICLE V
Indemnification of Directors, Officers,
---------------------------------------
Employees and Agents
--------------------
Section 5.01. Directors, Officers, Employees and Agents.
------------------------------------------
(1) The corporation shall have power to indemnify any person who was or
is a party to any proceeding (other than an action by, or in the right of, the
corporation), by reason of the fact that he is or was a director, officer,
employee, or agent of the corporation or is or was serving at the request of the
corporation as a director, officer, employee, or agent of another corporation,
partnership, joint venture, trust, or other enterprise against liability
incurred in connection with such proceeding, including any appeal thereof, if he
acted in good faith and in a manner he reasonably believed to be in, or not
opposed to, the best interests of the corporation, and, with respect to any
criminal action or proceeding, had no reasonable cause to believe his conduct
was unlawful. The termination of any proceeding by judgment, order, settlement,
or conviction or upon a plea of nolo contendere or its equivalent shall not, of
itself, create a presumption that the person did not act in good faith and in a
manner which he reasonably believed to be in, or not opposed to, the best
interests of the corporation or, with respect to any criminal action or
proceeding, had reasonable cause to believe that his conduct was unlawful.
(2) The corporation shall have power to indemnify any person, who was
or is a party to any proceeding by or in the right of the corporation to procure
a judgment in its favor by reason of the fact that he is or was a director,
officer, employee, or agent of the corporation or is or was serving at the
request of the corporation as a director, officer, employee, or agent of another
corporation, partnership, joint venture, trust, or other enterprise, against
expenses and amounts paid in settlement not exceeding, in the judgment of the
board of directors, the estimated expense of litigating the proceeding to
conclusion, actually and reasonably incurred in connection with the defense or
settlement of such proceeding, including any appeal thereof. Such
indemnification shall be authorized if such person acted in good faith and in a
manner he reasonably believed to be in,
16
<PAGE>
or not opposed to, the best interests of the corporation, except that no
indemnification shall be made under this subsection in respect of any claim,
issue, or matter as to which such person shall have been adjudged to be liable
unless, and only to the extent that, the court in which such proceeding was
brought, or any other court of competent jurisdiction, shall determine upon
application that, despite the adjudication of liability but in view of all
circumstances of the case, such person is fairly and reasonably entitled to
indemnity for such expenses which such court shall deem proper.
(3) To the extent that a director, officer, employee, or agent of the
corporation has been successful on the merits or otherwise in defense of any
proceeding referred to in subsections (1) or (2), or in defense of any claim,
issue, or matter therein, he shall be indemnified against expenses actually and
reasonably incurred by him in connection therewith.
(4) Any indemnification under subsections (1) or (2), unless pursuant
to a determination by a court, shall be made by the corporation only as
authorized in the specific case upon a determination that indemnification of the
director, officer, employee, or agent is proper in the circumstances because he
has met the applicable standard of conduct set forth in subsections (1) or (2).
Such determination shall be made:
(a) By the board of directors by a majority vote of a quorum
consisting of directors who were not parties to such proceeding;
(b) If such a quorum is not obtainable or, even if obtainable, by
majority vote of a committee duly designated by the board of directors (in which
directors who are parties may participate) consisting solely of two or more
directors not at the time parties to the proceeding;
(c) By independent legal counsel:
(i) Selected by the board of directors prescribed in
paragraph (a) or the committee prescribed in paragraph (b); or
(ii) If a quorum of the directors cannot be obtained for
paragraph (a) and the committee cannot be designed under paragraph (b), selected
by majority vote of the full board of directors (in
which directors who are parties may participate); or
(d) By the shareholders by a majority vote of a quorum consisting
of shareholders who were not parties to such proceeding or, if no such quorum is
obtainable, by a majority vote of shareholders who were not parties to such
proceeding.
(5) Evaluation of the reasonableness of expenses and authorization of
indemnification shall be made in the same manner as the determination that
indemnification is permissible. However, if the determination of permissibility
is made by independent legal counsel, persons specified by paragraph (4)(c)
shall evaluate the reasonableness of expenses and may authorize indemnification.
(6) Expenses incurred by an officer or director in defending a civil or
criminal proceeding may be paid by the corporation in advance of the final
disposition of such proceeding upon receipt
17
<PAGE>
of an undertaking by or on behalf of such director or officer to repay such
amount if he is ultimately found not to be entitled to indemnification by the
corporation pursuant to this section. Expenses incurred by other employees and
agents may be paid in advance upon such terms or conditions that the board of
directors deems appropriate.
(7) The indemnification and advancement of expenses provided pursuant
to this section are not exclusive, and the corporation may make any other or
further indemnification or advancement of expenses of any of its directors,
officers, employees, or agents, under any bylaw, agreement, vote of shareholders
or disinterested directors, or otherwise, both as to action in his official
capacity and as to action in another capacity while holding such office.
However, indemnification or advancement of expenses shall not be made to or on
behalf of any director, officer, employee, or agent if a judgment or other final
adjudication establishes that his actions, or omissions to act, were material to
the cause of action so adjudicated and constitute:
(a) A violation of the criminal law, unless the director, officer,
employee, or agent had reasonable cause to believe his conduct was lawful or had
no reasonable cause to believe his conduct was unlawful;
(b) A transaction from which the director, officer, employee, or
agent derived an improper personal benefit;
(c) In the case of a director, a circumstance under which the
liability provisions of Section 607.0834 under the Act are applicable; or
(d) Willful misconduct or a conscious disregard for the best
interests of the corporation in a proceeding by or in the right of the
corporation to procure a judgment in its favor or in a proceeding by or in the
right of a shareholder.
(8) Indemnification and advancement of expenses as provided in this
section shall continue as, unless otherwise provided when authorized or
ratified, to a person who has ceased to be a director, officer, employee, or
agent and shall inure to the benefit of the heirs, executors, and administrators
of such a person, unless otherwise provided when authorized or ratified.
(9) Notwithstanding the failure of the corporation to provide
indemnification, and despite any contrary determination of the board or of the
shareholders in the specific case, a director, officer, employee, or agent of
the corporation who is or was a party to a proceeding may apply for
indemnification or advancement of expenses, or both, to the court conducting the
proceeding, to the circuit court, or to another court of competent jurisdiction.
On receipt of an application, the court, after giving any notice that it
considers necessary, may order indemnification and advancement of expenses,
including expenses incurred in seeking court-ordered indemnification or
advancement of expenses, if it determines that:
(a) The director, officer, employee, or agent if entitled to
mandatory indemnification under subsection (3), in which case the court shall
also order the corporation to pay the director reasonable expenses incurred in
obtaining court-ordered indemnification or advancement of expenses;
18
<PAGE>
(b) The director, officer, employee, or agent is entitled to
indemnification or advancement of expenses, or both, by virtue of the exercise
by the corporation of its power pursuant to subsection (7); or
(c) The director, officer, employee, or agent is fairly and
reasonably entitled to indemnification or advancement of expenses, or both, in
view of all the relevant circumstances, regardless of whether such person met
the standard of conduct set forth in subsection (1), subsection (2) or
subsection (7).
(10) For purposes of this section, the term "corporation" includes, in
addition to the resulting corporation, any constituent corporation (including
any constituent of a constituent) absorbed in a consolidation or merger, so that
any person who is or was a director, officer, employee, or agent of a
constituent corporation, or is or was serving at the request of a constituent
corporation as a director, officer, employee, or agent of another corporation,
partnership, joint venture, trust or other enterprise, is in the same position
under this section with respect to the resulting or surviving corporation as he
would have with respect to such constituent corporation if its separate
existence had continued.
(11) For purposes of this section:
(a) The term "other enterprises" includes employee benefit plans;
(b) The term "expenses" includes counsel fees, including those for
appeal;
(c) The term "liability" includes obligations to pay a judgment,
settlement, penalty, fine (including an excise tax assessed with respect to any
employee benefit plan), and expenses actually and reasonably incurred with
respect to a proceeding;
(d) The term "proceeding" includes any threatened, pending, or
completed action, suit or other type of proceeding, whether civil, criminal,
administrative, or investigative and whether formal or informal;
(e) The term "agent" includes a volunteer;
(f) The term "serving at the request of the corporation" includes
any service as a director, officer, employee, or agent of the corporation that
imposes duties on such persons, including duties relating to an employee benefit
plan and its participants or beneficiaries; and
(g) The term "not opposed to the best interest of the corporation"
describes the actions of a person who acts in good faith and in a manner he
reasonably believes to be in the best interests of the participants and
beneficiaries of an employee benefit plan.
(12) The corporation shall have power to purchase and maintain
insurance on behalf of any person who is or was a director, officer, employee,
or agent of the corporation or is or was serving at the request of the
corporation as a director, officer, employee, or agent of another corporation,
partnership, joint venture, trust, or other enterprise against any liability
asserted against him and incurred by him in any such capacity or arising out of
his status as such, whether
19
<PAGE>
or not the corporation would have the power to indemnify him against such
liability under the provisions of this section.
ARTICLE VI
----------
Office and Agent
----------------
Section 6.01. Registered Office and Registered Agent.
---------------------------------------
(1) The corporation shall have and continuously maintain in the State
of Florida:
(a) A registered office which may be the same as its place of
business; and
(b) A registered agent, who, may be either:
(i) An individual who resides in the State of Florida whose
business office is identical with such registered office; or
(ii) Another corporation or not-for-profit corporation as
defined in Chapter 617 of the Act, authorized to transact business or conduct
its affairs in the State of Florida, having a business office identical with the
registered office; or
(iii) A foreign corporation or not-for-profit foreign
corporation authorized pursuant to chapter 607 or chapter 617 of the Act to
transact business or conduct its affairs in the State of Florida, having a
business office identical with the registered office.
Section 6.02. Change of Registered Office or Registered Agent; Resignation
------------------------------------------------------------
of Registered Agent.
--------------------
(1) The corporation may change its registered office or its registered
agent upon filing with the Department of State of the State of Florida a
statement of change setting forth:
(a) The name of the corporation;
(b) The street address of its current registered office;
(c) If the current registered office is to be changed, the street
address of the new registered office;
(d) The name of its current registered agent;
(e) If its current registered agent is to be changed, the name of
the new registered agent and the new agent's written consent (either on the
statement or attached to it) to the appointment;
(f) That the street address of its registered office and the
street address of the business office of its registered agent, as changed, will
be identical;
20
<PAGE>
(g) That such change was authorized by resolution duly adopted by
its board of directors or by an officer of the corporation so authorized by the
board of directors.
ARTICLE VII
Shares, Options, Dividends and Distributions
--------------------------------------------
Section 7.01. Authorized Shares.
------------------
(1) The articles of incorporation prescribe the classes of shares and
the number of shares of each class that the corporation is authorized to issue,
as well as a distinguishing designation for each class, and prior to the
issuance of shares of a class the preferences, limitations, and relative rights
of that class must be described in the articles of incorporation.
(2) The articles of incorporation must authorize:
(a) One or more classes of shares that together have unlimited
voting rights, and
(b) One or more classes of shares (which may be the same class or
classes as those with voting rights) that together are entitled to receive the
net assets of the corporation upon dissolution.
(3) The articles of incorporation may authorize one or more classes of
shares that have special, conditional, or limited voting rights, or no rights,
or no right to vote, except to the extent prohibited by the Act;
(a) Are redeemable or convertible as specified in the articles of
incorporation;
(b) Entitle the holders to distributions calculated in any manner,
including dividends that may be cumulative, non-cumulative, or partially
cumulative;
(c) Have preference over any other class of shares with respect to
distributions, including dividends and distributions upon the dissolution of the
corporation.
(4) Shares which are entitled to preference in the distribution of
dividends or assets shall not be designated as common shares. Shares which are
not entitled to preference in the distribution of dividends or assets shall be
common shares and shall not be designated as preferred shares.
Section 7.02. Terms of Class or Series Determined by Board of Directors.
----------------------------------------------------------
(1) If the articles of incorporation so provide, the board of directors
may determine, in whole or part, the preferences, limitations, and relative
rights (within the limits set forth in Section 7.01) of:
(a) Any class of shares before the issuance of any shares of that
class, or
21
<PAGE>
(b) One or more series within a class before the issuance of any
shares of that series.
(2) Each series of a class must be given a distinguishing designation.
(3) All shares of a series must have preferences, limitations, and
relative rights identical with those of other shares of the same series and,
except to the extent otherwise provided in the description of the series, of
those of other series of the same class.
(4) Before issuing any shares of a class or series created under this
section, the corporation must deliver to the Department of State of the State of
Florida for filing articles of amendment, which are effective without
shareholder action, in accordance with Section 607.0602 of the Act.
Section 7.03. Issued and Outstanding Shares.
------------------------------
(1) A corporation may issue the number of shares of each class or
series authorized by the articles of incorporation. Shares that are issued are
outstanding shares until they are reacquired, redeemed, converted, or canceled.
(2) The reacquisition, redemption, or conversion of outstanding shares
is subject to the limitations of subsection (3) and to Section 607.06401 of the
Act.
(3) At all times that shares of the corporation are outstanding, one or
more shares that together have unlimited voting rights and one or more shares
that together are entitled to receive the net assets of the corporation upon
dissolution must be outstanding.
Section 7.04. Issuance of Shares.
-------------------
(1) The board of directors may authorize shares to be issued for
consideration consisting of any tangible or intangible property or benefit to
the corporation, including cash, promissory notes, services performed, promises
to perform services evidenced by a written contract, or other securities of the
corporation.
(2) Before the corporation issues shares, the board of directors must
determine that the consideration received or to be received for shares to be
issued is adequate. That determination by the board of directors is conclusive
insofar as the adequacy of consideration for the issuance of shares relates to
whether the shares are validly issued, fully paid, and non-assessable. When it
cannot be determined that outstanding shares are fully paid and non-assessable,
there shall be a conclusive presumption that such shares are fully paid and
non-assessable if the board of directors makes a good faith determination that
there is no substantial evidence that the full consideration for such shares has
not been paid.
(3) When the corporation receives the consideration for which the board
of directors authorized the issuance of shares, the shares issued therefor are
fully paid and non-assessable. Consideration in the form of a promise to pay
money or a promise to perform services is received by the corporation at the
time of the making of the promise, unless the agreement specifically provides
otherwise.
22
<PAGE>
(4) The corporation may place in escrow shares issued for a contract
for future services or benefits or a promissory note, or make other arrangements
to restrict the transfer of the shares, and may credit distributions in respect
of the shares against their purchase price, until the services are performed,
the note is paid, or the benefits received. If the services are not performed,
the shares escrowed or restricted and the distributions credited may be canceled
in whole or part.
Section 7.05. Form and Content of Certificates.
---------------------------------
(1) Shares may but need not be represented by certificates. Unless the
Act or another statute expressly provides otherwise, the rights and obligations
of shareholders are identical whether or not their shares are represented by
certificates.
(2) At a minimum, each share certificate must state on its face:
(a) The name of the issuing corporation and that the corporation
is organized under the laws of the State of Florida;
(b) The name of the person to whom issued; and
(c) The number and class of shares and the designation of the
series, if any, the certificate represents.
(3) If the shares being issued are of different classes of shares or
different series within a class, the designations, relative rights, preferences,
and limitations applicable to each class and the variations in rights,
preferences, and limitations determined for each series (and the authority of
the board of directors to determine variations for future series) must be
summarized on the front or back of each certificate. Alternatively, each
certificate may state conspicuously on its front or back that the corporation
will furnish the shareholder a full statement of this information on request and
without charge.
(4) Each share certificate:
(a) Must be signed (either manually or in facsimile) by an officer
or officers designated by the board of directors, and
(b) May bear the corporate seal or its facsimile.
(5) If the person who signed (either manually or in facsimile) a share
certificate no longer holds office when the certificate is issued, the
certificate is nevertheless valid.
(6) Nothing in this section may be construed to invalidate any share
certificate validly issued and outstanding under the Act on July 1, 1990.
23
<PAGE>
Section 7.06. Shares Without Certificates.
----------------------------
(1) The board of directors of the corporation may authorize the issue
of some or all of the shares of any or all of its classes or series without
certificates. The authorization does not affect shares already represented by
certificates until they are surrendered to the corporation.
(2) Within a reasonable time after the issue or transfer of shares
without certificates, the corporation shall send the shareholder a written
statement of the information required on certificates by the Act.
Section 7.07. Restriction on Transfer of Shares and Other Securities.
-------------------------------------------------------
(1) The articles of incorporation, these bylaws, an agreement among
shareholders, or an agreement between shareholders and the corporation may
impose restrictions on the transfer or registration of transfer of shares of the
corporation. A restriction does not affect shares issued before the restriction
was adopted unless the holders of such shares are parties to the restriction
agreement or voted in favor of the restriction.
(2) A restriction on the transfer or registration of transfer of shares
is valid and enforceable against the holder or a transferee of the holder if the
restriction is authorized by this section, and effected in compliance with the
provisions of the Act, including having a proper purpose as referred to in the
Act.
Section 7.08. Shareholder's Pre-emptive Rights.
---------------------------------
The shareholders of the corporation do not have a pre-emptive right to
acquire the corporation's unissued shares.
Section 7.09. Corporation's Acquisition of its Own Shares.
--------------------------------------------
(1) The corporation may acquire its own shares, and, unless otherwise
provided in the articles of incorporation or except as provided in subsection
(4), shares so acquired constitute authorized but unissued shares of the same
class but undesignated as to series.
(2) If the articles of incorporation prohibit the reissue of acquired
shares, the number of authorized shares is reduced by the number of shares
acquired, effective upon amendment of the articles of incorporation.
(3) Articles of amendment may be adopted by the board of directors
without shareholder action, shall be delivered to the Department of State of the
State of Florida for filing, and shall set forth the information required by
Section 607.0631 of the Act.
(4) Shares of the corporation in existence on June 30, 1990, which are
treasury shares under Section 607.004(18), Florida Statutes (1987), shall be
issued, but not outstanding, until canceled or disposed of by the corporation.
Section 7.10. Share Options.
--------------
(1) Unless the articles of incorporation provide otherwise, the
corporation may issue
24
<PAGE>
rights, options, or warrants for the purchase of shares of the corporation. The
board of directors shall determine the terms upon which the rights, options, or
warrants are issued, their form and content, and the consideration for which the
shares are to be issued.
(2) The terms and conditions of stock rights and options which are
created and issued by the corporation, or its successor, and which entitle the
holders thereof to purchase from the corporation shares of any class or classes,
whether authorized by unissued shares, treasury shares, or shares to be
purchased or acquired by the corporation, may include, without limitation,
restrictions, or conditions that preclude or limit the exercise, transfer,
receipt, or holding of such rights or options by any person or persons,
including any person or persons owning or offering to acquire a specified number
or percentage of the outstanding common shares or other securities of the
corporation, or any transferee or transferees of any such person or persons, or
that invalidate or void such rights or options held by any such person or
persons or any such transferee or transferees.
Section 7.11. Terms and Conditions of Stock Rights and Options.
-------------------------------------------------
The terms and conditions of the stock rights and options which are
created and issued by the corporation [or its successor], and which entitle the
holders thereof to purchase from the corporation shares of any class or classes,
whether authorized but unissued shares, treasury shares, or shares to be
purchased or acquired by the corporation, may include, without limitation,
restrictions or conditions that preclude or limit the exercise, transfer,
receipt or holding of such rights or options by any person or persons, including
any person or persons owning or offering to acquire a specified number or
percentage of the outstanding common shares or other securities of the
corporation, or any transferee or transferees of any such person or persons, or
that invalidate or void such rights or options held by any such person or
persons or any such transferee or transferees.
Section 7.12. Share Dividends.
----------------
(1) Shares may be issued pro rata and without consideration to the
corporation's shareholders or to the shareholders of one or more classes or
series. An issuance of shares under this subsection is a share dividend.
(2) Shares of one class or series may not be issued as a share dividend
in respect of shares of another class or series unless:
(a) The articles of incorporation so authorize,
(b) A majority of the votes entitled to be cast by the class or
series to be issued approves the issue, or
(c) There are no outstanding shares of the class or series to be
issued.
(3) If the board of directors does not fix the record date for
determining shareholders entitled to a share dividend, it is the date of the
board of directors authorizes the share dividend.
25
<PAGE>
Section 7.13. Distributions to Shareholders.
------------------------------
(1) The board of directors may authorize and the corporation may make
distributions to its shareholders subject to restriction by the articles of
incorporation and the limitations in subsection (3).
(2) If the board of directors does not fix the record date for
determining shareholders entitled to a distribution (other than one involving a
purchase, redemption, or other acquisition of the corporation's shares), it is
the date the board of directors authorizes the distribution.
(3) No distribution may be made if, after giving it effect:
(a) The corporation would not be able to pay its debts as they
become due in the usual course of business; or
(b) The corporation's total assets would be less than the sum of
its total liabilities plus (unless the articles of incorporation permit
otherwise) the amount that would be needed, if the corporation were to be
dissolved at the time of the distribution, to satisfy the preferential rights
upon dissolution of shareholders whose preferential rights are superior to those
receiving the distribution.
(4) The board of directors may base a determination that a distribution
is not prohibited under subsection (3) either on financial statements prepared
on the basis of accounting practices and principles that are reasonable in the
circumstances or on a fair valuation or other method that is reasonable in the
circumstances. In the case of any distribution based upon such a valuation, each
such distribution shall be identified as a distribution based upon a current
valuation of assets, and the amount per share paid on the basis of such
valuation shall be disclosed to the shareholders concurrent with their receipt
of the distribution.
(5) Except as provided in subsection (7), the effect of a distribution
under subsection (3) is measured;
(a) In the case of distribution by purchase, redemption, or other
acquisition of the corporation's shares, as of the earlier of:
(i) The date money or other property is transferred or debt
incurred by the corporation, or
(ii) The date the shareholder ceases to be a shareholder with
respect to the acquired shares;
(b) In the case of any other distribution of indebtedness, as of
the date the indebtedness is distributed;
(c) In all other cases, as of:
(i) The date the distribution is authorized if the payment
occurs within 120 days after the date of authorization, or
26
<PAGE>
(ii) The date the payment is made if it occurs more than 120
days after the date of authorization.
(6) A corporation's indebtedness to a shareholder incurred by reason of
a distribution made in accordance with this section is at parity with the
corporation's indebtedness to its general, unsecured creditors except to the
extent subordinated by agreement.
(7) Indebtedness of the corporation, including indebtedness issued as a
distribution, is not considered a liability for purposes of determinations under
subsection (3) if its terms provide that payment of principal and interest are
made only if and to the extent that payment of a distribution to shareholders
could then be made under this section. If the indebtedness is issued as a
distribution, each payment of principal or interest is treated as a
distribution, the effect of which is measured on the date the payment is
actually made.
ARTICLE VIII
Amendment of Articles and Bylaws
--------------------------------
Section 8.01. Authority to Amend the Articles of Incorporation.
-------------------------------------------------
(1) The corporation may amend its articles of incorporation at any time
to add or change a provision that is required or permitted in the articles of
incorporation or to delete a provision not required in the articles of
incorporation. Whether a provision is required or permitted in the articles of
incorporation is determined as of the effective date of the amendment.
(2) A shareholder of the corporation does not have a vested property
right resulting from any provision in the articles of incorporation, including
provisions relating to management, control, capital structure, dividend
entitlement, or purpose or duration of the corporation.
Section 8.02. Amendment by Board of Directors.
--------------------------------
The corporation's board of directors may adopt one or more amendments
to the corporation's articles of incorporation without shareholder action:
(1) To extend the duration of the corporation if it was incorporated at
a time when limited duration was required by law;
(2) To delete the names and addresses of the initial directors;
(3) To delete the name and address of the initial registered agent or
registered office, if a statement of change is on file with the Department of
State of the State of Florida;
(4) To delete any other information contained in the articles of
incorporation that is solely of historical interest;
(5) To change each issued and unissued authorized share of an
outstanding class into a greater number of whole shares if the corporation has
only shares of that class outstanding;
27
<PAGE>
(6) To delete the authorization for a class or series of shares
authorized pursuant to Section 607.0602 of the Act, if no shares of such class
or series have been issued;
(7) To change the corporate name by substituting the word
"corporation," "incorporated," or "company," or the abbreviation "corp.," Inc.,"
or Co.," for a similar word or abbreviation in the name, or by adding, deleting,
or changing a geographical attribution for the name; or
(8) To make any other change expressly permitted by the Act to be made
without shareholder action.
Section 8.03. Amendment of Bylaws by Board of Directors.
------------------------------------------
The corporation's board of directors may amend or repeal the
corporation's bylaws unless the Act reserves the power to amend a particular
bylaw provision exclusively to the shareholders.
Section 8.04. Bylaw Increasing Quorum or Voting Requirements for Directors.
-------------------------------------------------------------
(1) A bylaw that fixes a greater quorum or voting requirement for the
board of directors may be amended or repealed:
(a) If originally adopted by the shareholders, only by the
shareholders;
(b) If originally adopted by the board of directors, either by the
shareholders or by the board of directors.
(2) A bylaw adopted or amended by the shareholders that fixes a greater
quorum or voting requirement for the board of directors may provide that it may
be amended or repealed only by a specified vote of either the shareholders or
the board of directors.
(3) Action by the board of directors under paragraph (1)(b) to adopt or
amend a bylaw that changes the quorum or voting requirement for the board of
directors must meet the same quorum requirement and be adopted by the same vote
required to take action under the quorum and voting requirement then in effect
or proposed to be adopted, whichever is greater.
ARTICLE IX
Records and Reports
-------------------
Section 9.01. Corporate Records.
------------------
(1) The corporation shall keep as permanent records minutes of al
meetings of its shareholders and board of directors, a record of all actions
taken by the shareholders or board of directors without a meeting, and a record
of all actions taken by a committee of the board of directors in place of the
board of directors on behalf of the corporation.
(2) The corporation shall maintain accurate accounting records.
28
<PAGE>
(3) The corporation or its agent shall maintain a record of its
shareholders in a form that permits preparation of a list of the names and
addresses of all shareholders in alphabetical order by class of shares showing
the number and series of shares held by each.
(4) The corporation shall maintain its records in written form or in
another form capable of conversion into written form within a reasonable time.
(5) The corporation shall keep a copy of the following records:
(a) Its articles or restated articles of incorporation and all
amendments to them currently in effect;
(b) Its bylaws or restated bylaws and all amendments to them
currently in effect;
(c) Resolutions adopted by the board of directors creating one or
more classes or series of shares and finding their relative rights, preferences,
and limitations, if shares issued pursuant to those resolutions are outstanding;
(d) The minutes of all shareholders' meetings and records of all
action taken by shareholders without a meeting for the past three years;
(e) Written communications to all shareholders generally or all
shareholders of a class or series within the past three years, including the
financial statements furnished for the past three years;
(f) A list of the names and business street addresses of its
current directors and officers; and
(g) Its most recent annual report delivered to the Department of
State of the State of Florida.
Section 9.02. Financial Statements for Shareholders.
--------------------------------------
(1) Unless modified by resolution of the shareholders within 120 days
of the close of each fiscal year, the corporation shall furnish its shareholders
annual financial statements which may be consolidated or combined statements of
the corporation and one or more of its subsidiaries, as appropriate, that
include a balance sheet as of the end of the fiscal year, an income statement
for that year, and a statement of cash flows for that year. If financial
statements are prepared for the corporation on the basis of generally-accepted
accounting principles, the annual financial statements must also be prepared on
that basis.
(2) If the annual financial statements are reported upon by a public
accountant, his report must accompany them. If not, the statements must be
accompanied by a statement of the president or the person responsible for the
corporation's accounting records:
(a) Stating his reasonable belief whether the statements were
prepared on the basis of generally-accepted accounting principles and, if not,
describing the basis of preparation; and
29
<PAGE>
(b) Describing any respects in which the statements were not
prepared on a basis of accounting consistent with the statements prepared for
the preceding year.
(3) The corporation shall mail the annual financial statements to each
shareholder within 120 days after the close of each fiscal year or within such
additional time thereafter as is reasonably necessary to enable the corporation
to prepare its financial statements, if for reasons beyond the corporation's
control, it is unable to prepare its financial statements within the prescribed
period. Thereafter, on written request from a shareholder who was not mailed the
statements, the corporation shall mail him the latest annual financial
statements.
Section 9.03. Other Reports to Shareholders.
------------------------------
(1) If the corporation indemnifies or advances expenses to any
director, officer, employee or agent otherwise than by court order or action by
the shareholders or by an insurance carrier pursuant to insurance maintained by
the corporation, the corporation shall report the indemnification or advance in
writing to the shareholders with or before the notice of the next shareholders'
meeting, or prior to such meeting if the indemnification or advance occurs after
the giving of such notice but prior to the time such meeting is held, which
report shall include a statement specifying the persons paid, the amounts paid,
and the nature and status at the time of such payment of the litigation or
threatened litigation.
(2) If the corporation issues or authorizes the issuance of shares for
promises to render services in the future, the corporation shall report in
writing to the shareholders the number of shares authorized or issued, and the
consideration received by the corporation, with or before the notice of the next
shareholders' meeting.
Section 9.04. Annual Report for Department of State.
--------------------------------------
(1) The corporation shall deliver to the Department of State of the
State of Florida for filing a sworn annual report on such forms as the
Department of State of the State of Florida prescribes that sets forth the
information prescribed by Section 607.1622 of the Act.
(2) Proof to the satisfaction of the Department of State of the State
of Florida on or before July 1 of each calendar year that such report was
deposited in the United States mail in a sealed envelope, properly addressed
with postage prepaid, shall be deemed in compliance with this requirement.
(3) Each report shall be executed by the corporation by an officer or
director or, if the corporation is in the hands of a receiver or trustee, shall
be executed on behalf of the corporation by such receiver or trustee, and the
signing thereof shall have the same legal effect as if made under oath, without
the necessity of appending such oath thereto.
(4) Information in the annual report must be current as of the date the
annual report is executed on behalf of the corporation.
30
<PAGE>
(5) Any corporation failing to file an annual report which complies
with the requirements of this section shall not be permitted to maintain or
defend any action in any court of this state until such report is filed and all
fees and taxes due under the Act are paid and shall be subject to dissolution or
cancellation of its certificate of authority to do business as provided in the
Act.
ARTICLE X
Miscellaneous
-------------
Section 10.01. Definition of the "Act".
------------------------
All references contained herein to the "Act" or to sections of the
"Act" shall be deemed to be in reference to the Florida Business Corporation
Act.
Section 10.02. Application of Florida Law.
---------------------------
Whenever any provision of these bylaws is inconsistent with any
provision of the Florida Business Corporation Act, Statutes 607, as they may be
amended from time to time, then in such instance Florida law shall prevail.
Section 10.03. Fiscal Year.
------------
The fiscal year of the corporation shall be determined by resolution of
the board of directors.
Section 10.04. Conflicts with Articles of Incorporation.
-----------------------------------------
In the event that any provision contained in these bylaws conflicts
with any provision of the corporation's articles of incorporation, as amended
from time to time, the provisions of the articles of incorporation shall prevail
and be given full force and effect, to the full extent permissible under the
Act.
31
Exhibit 10.1
VIVA GAMING & RESORTS.COM INC.
------------------------------
1999 STOCK OPTION PLAN
----------------------
SECTION 1. PURPOSE; DEFINITIONS
The purpose of the Plan is to give the Company a competitive advantage
in attracting, retaining and motivating officers and employees and to provide
the Company and its subsidiaries with a stock plan providing incentives more
directly linked to the profitability of the Company's businesses and increases
in shareholder value.
For purposes of the Plan, the following terms are defined as set forth
below:
(a) "Affiliate" means a corporation or other entity controlled by the
Company and designated by the Committee from time to time as such.
(b) "Award" means an award of Stock Appreciation Rights or Stock
Options.
(c) "Board" means the Board of Directors of the Company.
(d) "Cause" means (1) conviction of a participant for committing a
felony under federal law or the law of the state in which such action occurred,
(2) dishonesty in the course of fulfilling a participant's employment duties,
(3) willful and deliberate failure on the part of a participant to perform his
employment duties in any material respect, (4) breach on the part of a
participant of any employment agreement between such participant and the Company
or any of its Subsidiaries, or (5) such other events as shall be determined by
the Committee. The Committee shall have the sole discretion to determine whether
"Cause" exists, and its determination shall be final. Notwithstanding the
foregoing, if an optionee has an employment agreement with the Company which
provides for a definition of "Cause", then such definition shall be the
definition for purposes of this Plan.
(e) "Change in Control" and "Change in Control Price" have the meanings
set forth in Sections 8(b) and (c), respectively.
(f) "Code" means the Internal Revenue Code of 1986, as amended from
time to time, and any successor thereto.
(g) "Commission" means the Securities and Exchange Commission or any
successor agency.
<PAGE>
(h) "Committee" means the Committee referred to in Section 2.
(i) "Common Stock" means common stock, par value $.001 per share, of
the Company.
(j) "Company" means VIVA GAMING & RESORTS.COM INC., a Florida
corporation.
(k) "Disability" means permanent and total disability as determined
under Company procedures in effect on the effective date of the Plan or as
otherwise established by the Committee for purposes of the Plan. Notwithstanding
the foregoing, if an optionee has an employment agreement with the Company which
provides for a definition of "Disability", then such definition shall be the
definition for purposes of this Plan.
(l) "Exchange Act" means the Securities Exchange Act of 1934, as
amended from time to time, and any successor thereto.
(m) "Fair Market Value" means, as of any given date, the mean between
the highest and lowest reported sales prices of the Common Stock on any national
securities exchange or automated quotation system on which the Common Stock is
listed or, if not listed on any such exchange or system, the mean of the closing
bid and ask price for the Common Stock on the NASD OTC Bulletin Board. If there
is no regular public trading market for such Common Stock, the Fair Market Value
of the Common Stock shall be determined by the Committee in good faith.
(n) "Incentive Stock Option" or "ISO" means any Stock Option designated
as, and qualified as, an "incentive stock option" within the meaning of Section
422 of the Code.
(o) "Non-Employee Director" means a member of the Board who qualifies
as a "Non-Employee Director" as defined in Rule 16b-3(b)(3), as promulgated by
the Commission under the Exchange Act, or any successor definition adopted by
the Commission.
(p) "Non-qualified Stock Option" means any Stock Option that is not an
Incentive Stock Option.
(q) "Plan" means the VIVA GAMING & RESORTS.COM INC. 1999 Stock Option
Plan, as set forth herein and as hereinafter amended from time to time.
(r) "Rule 16b-3" means Rule 16b-3, as promulgated by the Commission
under Section 16(b) of the Exchange Act, as amended from time to time.
(s) "Stock Appreciation Right" means a right granted under Section 6.
2
<PAGE>
(t) "Stock Option" means an option granted under Section 5.
(u) "Subsidiary" means a "subsidiary corporation", whether now or
hereafter existing, as defined in Section 424(f) of the Code.
(v) "Termination of Employment" means the termination of the
participant's employment with the Company and any Subsidiary or Affiliate. A
participant employed by a Subsidiary or an Affiliate shall also be deemed to
incur a Termination of Employment if the Subsidiary or Affiliate ceases to be
such a Subsidiary or an Affiliate, as the case may be, and the participant does
not immediately thereafter become an employee of the Company or another
Subsidiary or Affiliate. Temporary absences from employment because of illness,
vacation or leave of absence and transfers among the Company and it Subsidiaries
and Affiliates shall not be considered Terminations of Employment.
In addition, certain other terms used herein have definitions given to
them in the first place in which they are used.
SECTION 2. ADMINISTRATION
The Plan shall be administered by the Board or a committee designated
by the Board.
The Committee shall have plenary authority to grant Awards pursuant to
the terms of the Plan to officers and employees of the Company and its
Subsidiaries and Affiliates.
Among other things, the Committee shall have the authority, subject to
the terms of the Plan:
(a) To select the officers and employees to whom Awards may from time
to time be granted;
(b) Determine whether and to what extent Incentive Stock Options,
Non-qualified Stock Options, Stock Appreciation Rights or any combination
thereof are to be granted hereunder;
(c) Determine the number of shares of Common Stock to be covered by
each Award granted hereunder;
(d) Determine the terms and conditions of any Award granted hereunder
(including, but not limited to, the option price (subject to Section 5(a)), any
vesting condition, restriction or limitation and any acceleration of vesting or
waiver of forfeiture regarding any Award and the shares of Common Stock relating
thereto, based on such factors as the Committee shall determine; provided,
however, that the terms and conditions of any Award intended to qualify as
"performance-based" compensation as described in Section 162(m)(4)(C) of the
Code shall include, but not be limited to, such terms and conditions
3
<PAGE>
as may be necessary to meet the applicable provisions of Section 162(m)(4)(C) of
the Code;
(e) Subject to the provisions of Section 9, modify, amend or adjust the
terms and conditions of any Award, at any time or from time to time; and
(f) Determine to what extent and under what circumstances Common Stock
and other amounts payable with respect to an Award shall be deferred.
The Committee shall have the authority to adopt, alter and repeal such
administrative rules, guidelines and practices governing the Plan as it shall
from time to time deem advisable, to interpret the terms and provisions of the
Plan and any Award issued under the Plan (and any agreement relating thereto)
and to otherwise supervise the administration of the Plan.
The Committee may act only by a majority of its members then in office,
except that the Committee may (1) authorize the delegation to designated
officers or employees of the Company such of its powers and authority under the
Plan as it deems appropriate (provided that no such authorization may be made
that would cause Awards or other transactions under the Plan to fail to be
exempt from Section 16(b) of the Exchange Act) and (2) authorize any one or more
of the members of the Committee or any designated officer or employee of the
Company to execute and deliver documents on behalf of the Committee.
Any determination made by the Committee or pursuant to delegated
authority pursuant to the provisions of the Plan with respect to any Award shall
be made in the sole discretion of the Committee or such delegate(s) at the time
of the grant of the Award or, unless in contravention of any express terms of
the Plan, at any time thereafter. All decisions made by the Committee or any
appropriately delegated officer(s) or employee(s) pursuant to the provisions of
the Plan shall be final and binding on all persons, including the Company and
Plan participants.
SECTION 3. COMMON STOCK SUBJECT TO PLAN
(a) Optioned Stock Authorized. Subject to the provisions hereof, the
total number of shares of Common Stock reserved and available for issuance
pursuant to Stock Options under the Plan shall be One Million Five Hundred
Thousand Shares (1,500,000) (the "Plan Maximum"). However, except for purposes
of determining the number of shares available for issuance pursuant to Incentive
Stock Options (which shall not exceed such number), the Plan Maximum shall be
increased by (i) the number of shares of Common Stock used to pay the exercise
price of Stock Options and (ii) the number of Stock Options which have
4
<PAGE>
terminated upon expiration, cancellation, forfeiture or otherwise, subject to
the limitations of Section 3(b) of the Plan. Shares subject to an Award under
the Plan may be authorized and unissued shares or may be treasury shares.
(b) Adjustments Upon Changes in Capitalization or Merger. In the event
of any change in corporate capitalization, such as a stock split or a corporate
transaction, such as any merger, consolidation, separation, including a
spin-off, or other distribution of stock or property of the Company, any
reorganization (whether or not such reorganization comes within the definition
of such term in Section 368 of the Code) or any partial or complete liquidation
of the Company, the Committee or Board may make such substitution or adjustments
in the aggregate number and kind of shares reserved for issuance under the Plan,
in the aggregate limit on grants to individuals, in the number, kind and Option
Price of shares subject to outstanding Stock Options and Stock Appreciation
Rights, and/or such other equitable substitution or adjustments as it may
determine to be appropriate in its sole discretion; provided, however, that the
number of shares subject to any Award shall always be a whole number.
SECTION 4. ELIGIBILITY
All officers, directors, employees and consultants of the Company, its
Subsidiaries and Affiliates are eligible to be granted Awards under the Plan;
provided however that an Incentive Stock Option may granted only to individuals
employed by the Company.
SECTION 5. STOCK OPTIONS
Stock Options may be granted alone or in addition to other Awards
granted under the Plan and may be of two types: Incentive Stock Options and
Non-qualified Stock Options. Any Stock Option granted under the Plan shall be in
such form as the Committee may from time to time approve.
The Committee shall have the authority to grant any optionee Incentive
Stock Options, Non-qualified Stock Options or both types of Stock Options (in
each case with or without Stock Appreciation Rights); provided, however, that an
Incentive Stock Option may be granted to an optionee if the Fair Market Value at
the date of grant of shares with respect to which such option would first become
exercisable in any calendar year, when added to the Fair Market Value at the
date of grant of any other shares with respect to which an Incentive Stock
Option granted to such optionee under the Plan (or any other incentive stock
option plan maintained by the Company, its parent or any Subsidiary) first
becomes exercisable in such calendar year, would exceed $100,000; and provided
further, however, that Incentive Stock Options may be granted only to employees
of the Company and its Subsidiaries. To the extent that any Stock Option is not
designated as an Incentive Stock Option or even if so designated does not
qualify as an Incentive Stock Option, it shall constitute a Non-qualified Stock
Option.
5
<PAGE>
Stock Options shall be evidenced by option agreements, the terms and
provisions of which may differ. An option agreement shall indicate on its face
whether it is intended to be an agreement for an Incentive Stock Option or a
Non-qualified Stock Option. The grant of a Stock Option shall occur on the date
the Committee, by resolution, selects an individual to be a participant in any
grant of a Stock Option, determines the number of shares of Common Stock to be
subject to such Stock Option to be granted to such individual and specifies the
terms and provisions of the Stock Option. The Company shall notify a participant
of any grant of a Stock Option, and a written option agreement or agreements
shall be duly executed and delivered by the Company to the participant. Such
agreement or agreements shall become effective upon execution by the Company and
the participant.
Anything in the Plan to the contrary notwithstanding, no term of the
Plan relating to Incentive Stock Options shall be interpreted, amended or
altered nor shall any discretion or authority granted under the Plan be
exercised so as to disqualify the Plan under Section 422 of the Code or, without
the consent of the optionee affected, to disqualify any Incentive Stock Option
under such Section 422.
Stock Options granted under the Plan shall be subject to the following
terms and conditions and shall contain such additional terms and conditions as
the Committee shall deem desirable:
(a) Option Price. The option price per share of Common Stock
purchasable under a Non-qualified Stock Option shall not be less than 55% of the
Fair Market Value of the Common Stock subject to the Stock Option on the date of
grant. The option price per share of Common Stock purchasable under an Incentive
Stock Option shall not be less than 100% of the Fair Market Value of the Common
Stock subject to the Stock Option on the date of grant; provided, however, that
in the case of an Incentive Stock Option granted to an optionee who, immediately
before the grant of such Incentive Stock Option, owns shares representing more
than 10% of the total combined voting power of all classes of shares of the
Company, its parent or Subsidiary, in no event shall the per share option price
be less than 110% of the Fair Market Value per share of Common Stock on the date
of grant.
(b) Option Term. The term of each Stock Option shall be fixed by the
Committee, but no Incentive Stock Option shall be exercisable more than ten 10
years after the date the Stock Option is granted; provided, however, that in the
case of an Incentive Stock Option granted to an optionee who, immediately before
the grant of such Incentive Stock Option, owns shares representing more than 10%
of the total combined voting power of all classes of shares of the Company, its
parent or Subsidiary, in no event shall the Incentive Stock Option by its terms
be exercisable more than five (5) years after the date such Incentive Stock
Option is granted.
6
<PAGE>
(c) Exercisability. Except as otherwise provided herein, Stock Options
shall be exercisable at such time or times and subject to such terms and
conditions as shall be determined by the Committee. If the Committee provides
that any Stock Option is exercisable only in installments, the Committee may at
any time waive such installment exercise provisions, in whole or in part, based
on such factors as the Committee may determine. In addition, the Committee may
at any time accelerate the exercisability of any Stock Option.
(d) Method of Exercise. Subject to the provisions of this Section 5,
Stock Options may be exercised, in whole or in part, at any time during the
option term by giving written notice of exercise to the Company specifying the
number of shares of Common Stock subject to the Stock Option to be purchased.
Such notice shall be accompanied by payment in full of the purchase
price by certified or bank check or such other instrument as the Company may
accept. Unless otherwise determined by the Committee, such payment may also be
made in full or in part in the form of unrestricted Common Stock already owned
by the optionee of the same class as the Common Stock subject to the Stock
Option (based on the Fair Market Value of the Common Stock on the date the Stock
Option is exercised); provided, however, that, (i) any Common Stock used to make
such payment shall have been held for at least six (6) months, and (ii) in the
case of an Incentive Stock Option, the right to make payment in the form of
already owned shares of Common Stock may be authorized only at the time the
Stock Option is granted.
The Company may make loans to such participants as the Committee, in
its discretion, may determine (including a participant who is a director or
officer of the Company) in connection with the exercise of Stock Options in an
amount up to the exercise price of the Stock Option to be exercised plus any
applicable withholding taxes. In no event may any such loan exceed the Fair
Market Value, at the date of exercise, of the shares covered by the Stock
Option, or portion thereof, exercised by the participant. Such loans shall be
subject to such terms and conditions as the Committee shall determine. Every
loan shall comply with all applicable laws, regulations and rules of the Federal
Reserve Board and any other governmental agency having jurisdiction.
Unless otherwise determined by the Committee, payment for any shares
subject to a Stock Option may also be made by delivering a properly executed
exercise notice to the Company, together with a copy of irrevocable instructions
to a broker to deliver promptly to the Company the amount of sale or loan
proceeds to pay the purchase price, and, if requested, by the amount of any
federal, state, local or foreign withholding taxes. To facilitate the foregoing,
the Company may enter into agreements for coordinated procedures with one or
more brokerage firms.
No shares of Common Stock shall be issued until full payment therefor
has been
7
<PAGE>
made. An optionee shall have all of the rights of a shareholder of the Company
holding the class or series of Common Stock that is subject to such Stock Option
(including, if applicable, the right to vote the shares and the right to receive
dividends), when the optionee has given written notice of exercise, has paid in
full for such shares and, if requested, has given the representation described
in Section 11(a).
(e) Nontransferabilitv of Stock Options. No Stock Option shall be
transferable by the optionee other than (1) by will or by the laws of descent
and distribution; (2) in the case of a Non-qualified Stock Option, pursuant to a
qualified domestic relations order (as defined in the Code or title 1 of the
Employee Retirement Income Security Act of 1974, as amended, or the rules
thereunder); or (3) as otherwise determined by the Committee (provided that no
such determination may be made that would cause Awards or other transactions
under the Plan to fail to be exempt under Section 16(b) of the Exchange Act).
All Stock Options shall be exercisable, subject to the terms of this Plan,
during the optionee's lifetime, only by the optionee or by the guardian or legal
representative of the optionee, or, in the case of a Non-qualified Stock Option,
its alternative payee pursuant to such qualified domestic relations order, or
the recipient of a transfer of such Stock Option permitted pursuant to clause
(3) of the preceding sentence, it being understood that the terms "holder" and
"optionee" include the guardian and legal representative of the optionee named
in the option agreement and any permitted transferee thereof.
(f) Termination by Reason of Death. Unless otherwise determined by the
Committee, if an optionee's employment terminates by reason of death, any Stock
Option held by such optionee may thereafter be fully exercised (whether or not
the Stock Option was fully exercisable) by the estate of the optionee, or by a
person who acquired the right to exercise the Stock Option by bequest or
inheritance, or otherwise by reason of the death of the Optionee, for a period
of one (1) year from the date of such death or until the expiration of the
stated term of such Stock Option, whichever period is the shorter.
(g) Termination by Reason of Disability. Unless otherwise determined by
the Committee, if an optionee's employment terminates by reason of Disability,
any Stock Option held by such optionee may thereafter be fully exercised by the
optionee "whether or not the Stock Option was fully exercisable, unless provided
otherwise in the option agreement) for a period of one (1) year from the date of
such termination of employment or until the expiration of the stated term of
such Stock Option, whichever period is the shorter. If following the optionee's
termination of employment by reason of Disability the optionee dies, the Stock
Option may be exercised by the classes of persons identified in Section 5(f). In
the event of termination of employment by reason of Disability, if an Incentive
Stock Option is exercised after the expiration of the exercise periods that
apply for purposes of Section 422 of the Code, such Stock Option will thereafter
be treated as a Non-qualified Stock Option.
(h) Other Termination. Unless otherwise determined by the Committee:
(1) if an
8
<PAGE>
optionee incurs a Termination of Employment for Cause, all Stock Options held by
such optionee shall thereupon terminate; and (2) if an optionee incurs a
Termination of Employment for any reason other than death, Disability or Cause,
any Stock Option held by such optionee, to the extent then exercisable, or on
such accelerated basis as the Committee may determine, may be exercised for the
lesser of three (3) months from the date of such Termination of Employment or
the balance of such Stock Option's term; provided, however, that if the optionee
dies within such three (3) month period, any unexercised Stock Option held by
such optionee shall, notwithstanding the expiration of such three (3) month
period, continue to be exercisable to the extent to which it was exercisable at
the time of death for a period of one (1) year from the date of such death or
until the expiration of the stated term of such Stock Option, whichever period
is the shorter. In the event of Termination of Employment, if an Incentive Stock
Option is exercised after the expiration of the exercise periods that apply for
purposes of Section 422 of the Code, such Stock Option will thereafter be
treated as a Non-qualified Stock Option.
(i) Change in Control Cash-Out. Notwithstanding any other provision of
the Plan, during the 60-day period from and after a Change of Control (the
"Exercise Period"), unless the Committee shall determine otherwise at the time
of grant, an optionee shall have the right, whether or not the Stock Option is
fully exercisable and in lieu of the payment of the exercise price for the
shares of Common Stock being purchased under the Stock Option and by giving
notice to the Company, to elect (within the Exercise Period) to surrender all or
part of the Stock Option to the Company and to receive cash, within 30 days of
such notice, in an amount equal to the amount by which the Change in Control
Price per share of Common Stock on the date of such election shall exceed the
exercise price per share of Common Stock under the Stock Option (the "Spread")
multiplied by the number of shares of Common Stock granted under the Stock
Option as to which the right granted under this Section 5(i) shall have been
exercised.
SECTION 6. STOCK APPRECIATION RIGHTS
(a) Grant and Exercise. Stock Appreciation Rights may be granted in
conjunction with all or part of any Stock Option granted under the Plan. In the
case of a Non-qualified Stock Option, such rights maybe granted either at or
after the time of grant of such Stock Option. In the case of an Incentive Stock
Option, such rights may be granted only at the time of grant of such Stock
Option. A Stock Appreciation Right shall terminate and no longer be exercisable
upon the termination or exercise of the related Stock Option.
A Stock Appreciation Right may be exercised by an optionee in
accordance with Section 6(b) by surrendering the applicable portion of the
related Stock Option in accordance with procedures established by the Committee.
Upon such exercise and surrender, the optionee shall be entitled to receive an
amount determined in the manner prescribed in Section 6(b). Stock Options which
have been so surrendered shall no longer be exercisable to the extent the
related Stock Appreciation Rights have been exercised.
9
<PAGE>
(b) Terms and Conditions. Stock Appreciation Rights shall be subject to
such terms and conditions as shall be determined by the Committee, including the
following:
(i) Stock Appreciation Rights shall be exercisable only at such
time or times and to the extent that the Stock Options to which they relate are
exercisable in accordance with the provisions of Section 5 and this Section 6.
(ii) Upon the exercise of a Stock Appreciation Right, an optionee
shall be entitled to receive an amount in cash shares of Common Stock or both,
equal in value to the excess of the Fair Market Value of one share of Common
Stock as of the date of exercise over the Option Price per share specified in
the related Stock Option multiplied by the number of shares in respect of which
the Stock Appreciation Right shall have been exercised, with the Committee
having the right to determine the form of payment.
(iii) Stock Appreciation Rights shall be transferable only to
permitted transferees of the underlying Stock Option in accordance with Section
5(e).
SECTION 7. DEFERRAL
The Committee may establish procedures whereby participants may elect
to defer the receipt of shares or cash in settlement of Awards for a specified
period or until a specified event.
SECTION 8. CHANGE IN CONTROL PROVISIONS
(a) Impact of Event. Notwithstanding any other provision of the Plan to
the contrary, in the event of a Change in Control, any Stock Options and Stock
Appreciation Rights outstanding as of the date such Change in Control is
determined to have occurred, and which are not then exercisable and vested,
shall become fully exercisable and vested to the full extent of the original
grant.
(b) Definition of Change in Control. For purposes of the Plan, a
"Change in Control" shall mean the happening of any of the following events:
(1) An acquisition after the effective date of the Plan by any
individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2)
of the Exchange Act) (a "Person") of beneficial ownership (within the meaning of
Rule 13d-3 promulgated under the Exchange Act) of 20% or more of either (A) the
then outstanding shares of common stock of the Company (the "Outstanding Company
Common Stock") or (B) the combined voting power of the then outstanding voting
securities of the Company entitled to vote generally in the election of
directors (the "Outstanding Company Voting Securities"); excluding, however, the
following: (i) any acquisition directly from the Company, other than an
acquisition by virtue of the exercise of a conversion privilege unless the
security being so
10
<PAGE>
converted was itself acquired directly from the Company, (ii) any acquisition by
the Company, (iii) any acquisition by any employee benefit plan (or related
trust) sponsored or maintained by the Company or any company controlled by the
Company, or (iv) any acquisition by any company pursuant to a transaction which
complies with clauses (A), (B) and (C) of Subsection (3) of this Section 8(b);
or
(2) A change in the composition of the Board such that the
individuals who, as of the effective date of the Plan, constitute the Board
(such Board shall be hereinafter referred to as the "Incumbent Board") cease for
any reason to constitute at least a majority of the Board; provided, however,
for purposes of this Section 8(b), that any individual who becomes a member of
the Board subsequent to the effective date of the Plan, whose election, or
nomination for election by the Company's shareholders, was approved by a vote of
at least a majority of those individuals who are members of the Board and who
were also members of the Incumbent Board (or who shall be deemed to be such by
election pursuant to this proviso) shall be considered as though such individual
were a member of the Incumbent Board; but, provided, further, that any such
individual whose initial assumption of office occurs as a result of either an
actual or threatened election contest (as such terms are used in Rule 14a-11 of
Regulation 14A promulgated under the Exchange Act) or other actual or threatened
solicitation of proxies or consents by or on behalf of a Person other than the
Board shall not be so considered as a member of the Incumbent Board; or
(3) The approval by the shareholders of the Company of a
reorganization, merger or consolidation or sale or other disposition of all or
substantially all of the assets of the Company ("Corporate Transaction") or, if
consummation of such Corporate Transaction is subject, at the time of such
approval by shareholders, to the consent of any government or governmental
agency, obtaining of such consent (either explicitly or implicitly by
consummation); excluding, however, such a Corporate Transaction pursuant to
which (A) all or substantially all of the individuals and entities who are the
beneficial owners, respectively, of the Outstanding Company Common Stock and
Outstanding Company Voting Securities immediately prior to such Corporate
Transaction will beneficially own, directly or indirectly, more than 60% of,
respectively, the outstanding shares of common stock, and the combined voting
power of the outstanding voting securities entitled to vote generally in the
election of directors, as the case may be, of the corporation resulting from
such Corporate Transaction (including, without limitation, a corporation which
as a result of such transaction owns the Company or all or substantially all of
the Company's assets either directly or through one or more subsidiaries) in
substantially the same proportions as their ownership, immediately prior to such
Corporate Transaction, of the Outstanding Company Common Stock and Outstanding
Company Voting Securities, as the case may be, (B) no Person (other than the
Company, any employee benefit plan (or related trust) of the Company or such
corporation resulting from
11
<PAGE>
such Corporate Transaction) will beneficially own, directly or indirectly, 20%
or more of, respectively, the outstanding shares of common stock of the
corporation resulting from such Corporate Transaction or the combined voting
power of the outstanding voting securities of such corporation entitled to vote
generally in the election of directors except to the extent that such ownership
existed prior to the Corporate Transaction, and (C) individuals who were members
of the Incumbent Board will constitute at least a majority of the members of the
board of directors of the corporation resulting from such Corporate Transaction;
or
(4) The approval by the shareholders of the Company of a complete
liquidation or dissolution of the Company.
(c) Change in Control Price. For purposes of the Plan, "Change in
Control Price" means the higher of (1) the highest reported sales price, regular
way, of a share of Common Stock in any transaction reported on any national
exchange on which such shares are listed or, if not listed on any such exchange,
as quoted on the Nasdaq National Market during the 60-day period prior to and
including the date of a Change in Control or (2) if the Change in Control is the
result of a tender or exchange offer or a Corporate Transaction, the highest
price per share of Common Stock paid in such tender or exchange offer or
Corporate Transaction; provided, however, that in the case of Incentive Stock
Options and Stock Appreciation Rights relating to Incentive Stock Options, the
Change in Control Price shall be in all cases the Fair Market Value of the
Common Stock on the date such Incentive Stock Option or Stock Appreciation Right
is exercised. To the extent that the consideration paid in any such transaction
described above consists all or in part of securities or other noncash
consideration, the value of such securities or other noncash consideration shall
be determined in the sole discretion of the Board.
SECTION 9. AMENDMENT AND TERMINATION
The Plan will terminate on October 7, 2009. Awards outstanding as of
the date of any such termination shall not be affected or impaired by the
termination of the Plan.
The Board may amend, alter, or discontinue the Plan to the extent it
deems appropriate in the best interest of the Company, but no amendment,
alteration or discontinuation shall be made which would (1) impair the rights of
an optionee under a Stock Option or a recipient of a Stock Appreciation Right
theretofore granted without the optionee's or recipient's consent, except such
an amendment which is necessary to cause any Award or transaction under the Plan
to qualify, or to continue to qualify, for the exemption provided by Rule 16b-3,
or (2) disqualify any Award or transaction under the Plan from the exemption
provided by Rule 16b-3. In addition, no such amendment shall be made without the
approval of the Company's shareholders to the extent such approval is required
by law or agreement.
The Committee may amend the terms of any Stock Option or other Award
theretofore granted, prospectively or retroactively, but no such amendment shall
impair the
12
<PAGE>
rights of any holder without the holder's consent except such an amendment which
is necessary to cause any Award or transaction under the Plan to qualify, or to
continue to qualify, for the exemption provided by Rule 16b-3.
Subject to the above provisions, the Board shall have authority to
amend the Plan to take into account changes in law and tax and accounting rules
as well as other developments, and to grant Awards that qualify for beneficial
treatment under such rules without shareholder approval.
SECTION 10. UNFUNDED STATUS OF PLAN
It is presently intended that the Plan constitute an "unfunded" plan
for incentive and deferred compensation. The Committee may authorize the
creation of trusts or other arrangements to meet the obligations created under
the Plan to deliver Common Stock or make payments; provided, however, that
unless the Committee otherwise determines, the existence of such trusts or other
arrangements is consistent with the "unfunded" status of the Plan.
SECTION 11. GENERAL PROVISIONS
(a) The Committee may require each person purchasing or receiving
shares pursuant to an Award to represent to and agree with the Company in
writing that such person is acquiring the shares without a view to the
distribution thereof. The certificates for such shares may include any legend
which the Committee deems appropriate to reflect any restrictions on transfer.
Notwithstanding any other provision of the Plan or agreements
made pursuant thereto, the Company shall not be required to issue or deliver any
certificate or certificates for shares of Common Stock under the Plan prior to
fulfillment of all of the following conditions:
(1) Any registration or other qualification (or exemption
therefrom) of such shares of the Company under any state or federal law or
regulation, or the maintaining in effect of any such registration or other
qualification which the Committee shall, in its absolute discretion upon the
advice of counsel, deem necessary or advisable; and
(2) Obtaining any other consent, approval, or permit from any
state or federal governmental agency which the Committee shall, in its absolute
discretion after receiving the advice of counsel, determine to be necessary or
advisable.
(b) Nothing contained in the Plan shall prevent the Company or any
Subsidiary or Affiliate from adopting other or additional compensation
arrangements for its employees.
13
<PAGE>
(c) Adoption of the Plan shall not confer upon any employee any right
to continued employment, nor shall it interfere in any way with the right of the
Company or any Subsidiary or Affiliate to terminate the employment of any
employee at any time.
(d) No later than the date as of which an amount first becomes
includable in the gross income of the participant for federal income tax
purposes with respect to any Award under the Plan, the participant shall pay to
the Company, or make arrangements satisfactory to the Company regarding the
payment of, any federal, state, local or foreign taxes of any kind required by
law to be withheld with respect to such amount. Unless otherwise determined by
the Company, withholding obligations may be settled with Common Stock, including
Common Stock that is part of the Award that gives rise to the withholding
requirement. The obligations of the Company under the Plan shall be conditional
on such payment or arrangements, and the Company and its Affiliates shall, to
the extent permitted by law, have the right to deduct any such taxes from any
payment otherwise due to the participant. The Committee may establish such
procedures as it deems appropriate, including making irrevocable elections, for
the settlement of withholding obligations with Common Stock.
(e) The Committee shall establish such procedures as it deems
appropriate for a participant to designate a beneficiary to whom any amounts
payable in the event of the participant's death are to be paid or by whom any
rights of the participant, after the participant's death, may be exercised.
(f) In the case of a grant of an Award to any employee of a Subsidiary
of the Company, the Company may, if the Committee so directs, issue or transfer
the shares of Common Stock, if any, covered by the Award to the Subsidiary, for
such lawful consideration as the Committee may specify, upon the condition or
understanding that the Subsidiary will transfer the shares of Common Stock to
the employee in accordance with the terms of the Award specified by the
Committee pursuant to the provisions of the Plan.
(g) Notwithstanding the foregoing, if any right to receive cash granted
pursuant to this Plan would make a Change in Control transaction ineligible for
pooling-of-interests accounting under APB No. 16 that but for the nature of such
grant would otherwise be eligible for such accounting treatment, the Committee
shall have the ability to substitute for such cash Common Stock with a Fair
Market Value equal to the cash that would otherwise be payable hereunder.
(h) The Plan and all Awards made and actions taken thereunder shall be
governed by and construed in accordance with the laws of the State of Florida,
without reference to principles of conflict of laws.
(i) The Committee may grant Awards to employees who are subject to the
tax laws of nations other than the United States, which Awards may have terms
and conditions
14
<PAGE>
that differ from other Awards granted under the Plan for the purposes of
complying with foreign tax laws. The Committee may grant Stock Appreciation
Rights to employees without the grant of an accompanying Stock Option if the
employees are subject at the time of grant to the laws of a jurisdiction that
prohibits them from owning common stock. The Stock Appreciation Rights shall
permit the employees to receive cash at the time of any exercise thereof.
(j) Any transaction effected pursuant to this Plan that is deemed to be
a "Discretionary Transaction" (as defined in Rule 16b-3) that occurs within six
(6) months of an "opposite way" discretionary transaction (as described in Rule
16b-3(f) thereunder) is automatically voided and will be deferred until six (6)
months have elapsed from the date of the most recent "opposite way"
discretionary transaction under any Plan of the Company. If any provision of the
Plan is found not to be in compliance with Florida or other applicable law, such
provision shall be deemed null and void to the extent required to permit the
Plan to comply with Florida or such other applicable law.
(k) Notwithstanding any provision of this Plan to the contrary, the
number of shares of Common Stock issuable upon the exercise of Stock Options
granted under this Plan shall at all times be subject to there being sufficient
authorized but unissued shares of Common Stock available to permit such
exercise. The Company agrees to take appropriate corporate action, by amending
its Certificate of Incorporation or otherwise, so that the Company will have
sufficient authorized but unissued Common Stock to permit full implementation of
this Plan.
SECTION 12. LIMITATIONS APPLICABLE TO PERFORMANCE-BASED COMPENSATION
Notwithstanding any other provision of this Plan, any Award intended to
qualify as performance-based compensation as described in Section 162(m)(4)(C)
of the Code shall be subject to any additional limitations set forth in Section
162(m) of the Code (including any amendment to Section 162(m) of the Code) or
any regulations or rulings issued thereunder that are requirements for
qualification as performance-based compensation as described in Section
162(m)(4)(C) of the Code, and this Plan shall be deemed amended to the extent
necessary to conform to such requirements.
SECTION 13. EFFECTIVE DATE OF PLAN
The Plan shall be effective on October 7, 1999; provided, however, that
to the extent required by the Code, this Plan shall be approved, confirmed and
ratified by the Company's stockholders within twelve (12) months from such date.
15
EMPLOYMENT AGREEMENT
--------------------
THIS EMPLOYMENT AGREEMENT (the "Agreement") made and entered into as of
the 2nd day of June 1999, by and between VIVA GAMING & RESORTS.com INC., a
Florida corporation having its office at 200 East Las Olas Boulevard, Suite
1900, Fort Lauderdale, Florida 33301, USA (hereinafter referred to as the
"Company"), and MARTIN GROSS, residing in Las Vegas, Nevada (hereinafter
referred to as "Employee").
Statement of Purpose
--------------------
WHEREAS, the Company desires to secure Employee's participation and
services in the business of the Company as President/CEO an Director and
Employee is willing to be so employed by the Company, and
WHEREAS, as considerations for employment by the Company and the
compensation to be earned and paid under such employees, the parties desire to
make certain covenants as hereinafter set forth;
NOW, THEREFORE, in consideration of the terms, provisions and
conditions of this Agreement, the parties hereto mutually consent, covenant,
represent, warrant and agree as follows:
1. Employment. The Company hereby employs Employees, and Employee
accepts said employment as President/CEO and Director. In such capacity,
employee shall perform such duties as directed by the Board of Directors (the
"Board") and shall perform the duties and have the responsibilities described in
Exhibit A, which is attached hereto and incorporated herein by reference. In the
performance of his duties hereunder, Employee shall perform his duties in
accordance with reasonable rules, regulations and instructions as may be adopted
from time to time by the Board.
2. Compensation. Subject to the terms of this Agreement the Company
agrees to compensate employee in accordance with the compensation schedule
attached hereto as Exhibit B and incorporated herein by reference.
3. Terms of Employment. Employee's employment hereunder shall commence
as of June 15, 1999 (the "Commencement Date"), and shall continue until June 15,
2002, at 11:59 p.m. (the "Initial Term") unless terminated earlier for "Cause"
as defined below or due to Employee's death. At the end of the Initial Term
hereof, this Agreement shall be automatically renewed for successive one-year
terms, unless canceled by either party by written notice of such cancellation to
the other party as least thirty (30) days prior to the end of the Initial Term
or any renewal thereof.
4. Termination for Cause by Company. The Company may terminate
Employees's employment hereunder for "Cause" upon giving Employee written notice
of such termination, said termination to be effective as of the date of such
notice. "Cause" means an act, action or series of acts or actions, which
constitute or result in:
<PAGE>
(a) the continued failure by the Employee to substantially perform his
duties according to the terms of this Agreement after the Company has given
Employee reasonable notice of such failure and a reasonable opportunity to
correct it.
(b) the commission of a crime by Employee which constitutes a felony;
or
(c) Employee's becoming an alcoholic or addicted to habit-forming
drugs;
(d) Employee becoming disabled by reason of physical or mental
infirmity or both, thereby rendering him unable to perform satisfactorily his
duties under this Agreement, said disability to be determined on the basis of
certification by two (2) physicians duly licensed to practice medicine in the
State of Nevada or by the Board in that event Employee fails or refuses to
submit to the examination of any such physician upon the request of the Board;
or
(e) the willful or wanton misconduct of Employee which results in
material damage to the Company, its business, reputation or interest.
5. Termination For Cause By Employee. Employee may terminate this
Agreement for "Cause" at any time, effective upon delivery of written notice of
said termination to the Company. "Cause" shall mean a material or willful breach
of any of the Company's obligations under this Agreement.
6. Termination After Initial Term of Agreement. Either party may
terminate this Agreement after the Initial Term set forth in paragraph 3 upon
ninety-(90) days written notice to the other.
7. Confidentiality. Unless permitted by resolution of the Board,
Employee shall not, during the term of this Agreement or at any time thereafter,
use for his own purpose or for any purposes other than those of the Company any
intellectual property or confidential information of any kind whatsoever he may
acquire in relation to the Company's business or the business of its
subsidiaries or affiliates, and such shall be and remain the property of the
Company.
8. Severance Compensation. Employee shall be entitled to compensation
as set forth in this paragraph upon (i) the Company's termination of Employee
for any reason except for "Cause," (as defined in paragraph 4 above) within the
Initial Term or any renewal term of this Agreement or (ii) the Company's
"Constructive Termination" (as defined below) of Employee's employment within
the Initial Term or any renewal term of this Agreement. Upon such termination,
the Company shall compensate Employee as follows:
(a) If employee is terminated without cause within three years of
the commencement date of this agreement, the Employee shall receive compensation
equal to the base salary of Employee which remains unpaid for the three year
period.
The term "Constructive Termination" means and refers to an action by
the Company, without Cause, resulting in (i) a material change of Employee's
responsibilities, position (status, office, title, reporting relationships or
working conditions), authority or duties (change resulting
2
<PAGE>
from Employee's assignment to duties inconsistent with Employee's position,
duties or responsibilities in effect at the inception of Employee's
employment); or (ii) a material reduction in Employee's compensation or benefits
or (iii) failure of the Company to provide Employee with compensation, bonus,
stock options or other benefits comparable to other executives of the Company.
In the event Employee has to institute litigation to enforce this
specific paragraph 8, Employee shall be entitled to recover from the Company
Employee's reasonable attorneys fees and court costs incurred in conjunction
with such proceeding.
9. Notices. All notices and other communications hereunder must be in
writing and shall be deemed to have been duly given when delivered by hand or
mailed by registered or certified mail, return receipt requested, postage
prepaid, addressed to the parties hereto as follows:
As to Company VIVA GAMING & RESORTS.com INC.
200 East Las Olas Boulevard
Suite 1900
Fort Lauderdale, Florida 33301
As to Employee: Martin Gross
2112 Whitebirch Lane
Las Vegas, Nevada 89134
10. Entire Agreement Amendments. This Agreement constitutes the entire
agreement between the parties hereto with respect to the subject matter hereof
and may not be changed or modified orally but only by an instruction in writing
signed by the parties, which states that it is an amendment to this Agreement.
11. Choice of Law. This Agreement is made and executed in Florida and
with the intention that the construction, interpretation and validity hereof
shall be determined in accordance with and governed by the laws of the State of
Nevada.
12. Severability. Should any provision of this Agreement be held
invalid, the same shall not affect or impair any other provision of this
Agreement and the invalidity of any provision of this Agreement shall not have
any effect or impair the obligation of Company or the Employee.
13. Sections and Subheadings. Sections and subheadings inserted in this
Agreement are for convenience only and shall not be deemed to have any legal
effect whatsoever in the interpretation of this instrument.
14. Binding Effect. This Agreement shall inure to the benefit of and be
binding upon the parties hereto and their respective heirs, executors,
administrators, personal representatives and successors.
3
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Agreement to be signed
by its duly authorized officers and its corporate seal to be hereto, and
Employee has hereunto set his hand and seal as of the day and year first above
written.
Witnesses: VIVA GAMING & RESORTS.com INC.
/s/ Bram Solloway /s/ Robert Sim
- ------------------------ -------------------------------
Director and Chairman
Vancouver, BC
- ------------------------
Address ATTEST:
/s/ Rosemarie Sim
-------------------------------
Secretary
[CORPORATE SEAL]
Witnesses: MARTIN GROSS
/s/ Darin Gangwish 6/4/99 /s/ MARTIN GROSS
- ------------------------- -------------------------------
Las Vegas, Nevada 89128 6/4/99
- ------------------------
Address
801 South Rompart, Ste 150
4
<PAGE>
EXHIBIT A
---------
DUTIES AND RESPONSIBILITIES OF
------------------------------
PRESIDENT/CEO and DIRECTOR
--------------------------
1. Direct management of all personnel of the Company;
2. Direct supervision of all on-going and/or proposed corporate projects,
assets and revenue centers;
3. Direct negotiation responsibilities in all contractual agreements,
including but not limited to, new hires and terminations, according to
Company policy and departmental budgets;
4. Direct involvement in the Marketing and Sales activities, as required,
for the development of any and all existing or new corporate products,
assets, revenue centers and acquisitions as the case may be;
5. Direct supervision of projects contracted to independent engineering
and development sources, lawyers, accountants and auditors.
6. Procurement of specification(s) for products; development of prototype
or products; and coordination of the testing of products by authorized
laboratories for product(s) in conjunction with the Marketing and
Sales Department, Manufacturing Department, and/or the Board of
Directors of the Company.
7. Direct responsibility for analyzing cost and time involved for new
projects, businesses and/or potential acquisitions and reporting to the
Board and departmental directors involved in the project(s).
8. Responsible for delivering the plan(s), drawing(s), bill of material(s)
and procedure(s) along with prototype(s) of the developed product(s) to
the Manufacturing Department.
9. Coordinate the management and training of all necessary personnel for
the Company.
10. In carrying out the duties, it is understood that the company shall
allow the President/CEO to employ and use the assistance of one or more
employees who will provide help in carrying out the duties enumerated
in this schedule.
5
<PAGE>
EXHIBIT B
---------
COMPENSATION
------------
(A) Base Salary. During the Initial Term of one year of Employee's employment
under the Agreement to which this Exhibit B is attached, the Company shall pay
to Employee a base salary at an annual rate of One hundred and eighty thousand
Dollars ($180,000.00) (U.S. Dollars) (the "Base Salary"), payable in twelve (12)
equal monthly installments or at such intervals as shall be in conformity with
the Company's practice, as such practice shall be established or modified from
time to time. For any renewal term(s) of this Agreement, the base Salary will be
adjusted at the end of the 1st year subject to review of this employee's
performance by the Board.
(B) Bonus. In addition to the Base Salary, the Employee shall be
eligible for an annual bonus ("Bonus") of 1% of the gross revenues of the sales
of the Company.
(C) Withholding. All compensation paid to Employee shall be subject to
withholding and employment taxes as required by the laws of the United States
and the State of Nevada.
(D) Employee & Director Benefits. Employee shall be entitled to such
other benefits, including major medical, dental, and life insurance coverages(s)
and Director insurance, in such form and in such manner and at such times as
each is available to other employees of the Company.
(E) Vacation. Employee shall be entitled to four (4) weeks of vacation
during each twelve (12) month period of this Agreement.
(F) Reimbursement for Company Expenses. The Company shall reimburse
Employee in accordance with policies and practices then in effect for
out-of-pocket expenses incurred by the Employee in the performance of Employee's
duties hereunder.
(G) Stock Options. It is agreed that stock options will be issued to
the President/CEO and Director to be mutually agreed upon within thirty (30)
days of the signing of this Agreement.
6
SECTION A - OFFICE LEASE
This Office Lease (the "Lease") is made by and between Client and Company whose
names appear in the Summary and definition of Terms (the "Summary") attached
hereto and incorporated herein and states the terms and conditions under which
Company hereby leases to Client: and Client hereby leases from Company, the
Premises described in the Summary. All terms defined in the Summary shall have
the same meaning herein.
This Lease shall be subject to the terms and conditions of the General
Provisions (the "General Provisions") attached hereto as Section C and
incorporated herein.
1. PREMISES. Company leases to Client and Client leases from Company the
Premises designated in the Summary. The Premises includes access to common areas
including restrooms, corridors, reception lobby and client services area at no
charge. Utilities and janitorial services are included in the Lease Rental, with
utilities provided in accordance with building rules and regulations.
2. TERM. Subject to earlier termination as provided for herein, this Lease shall
commence and expire on the date set forth in the Summary.
3. COMMENCEMENT DATE, Client's obligation to pay Lease Rental shall begin on the
commencement date (the "Commencement Date"). If Company is unable to deliver
possession of the Premises to Client on the Commencement Date, Company will not
be liable for any resulting damage, nor will this Lease be affected, except that
Client will not be obligated to pay Lease Rental until Company delivers
possession. If Client occupies the Premises prior to the Commencement Date, such
occupancy shall be subject to the terms and conditions herein.
4. RENTAL PAYMENTS. Client agrees to pay Company the monthly Lease Rental stated
in the Summary.
5. POSSESSION AND USE. (a) Client shall use the Premises for general
professional business purposes and for no other purpose, without the prior
written consent of Company. Client shall abide by all rules, laws, ordinances
and regulations, pertaining to the use of the Center, which may be changed from
time to time at the discretion of the Company. Client agrees that no more than
two (2) persons shall occupy an office, without the prior written consent of
Company. Client shall not offer or use the Premises to provide services provided
by Company to third parties, nor use or permit any use of the Premises which is
forbidden by law or regulation, may be hazardous or unsafe, or may impair the
character, reputation, appearance or operation of the Center. Client shall not
create a noise level, which interferes with or annoys other clients. Client will
use only telephone equipment and telephone service provided by Company and any
ringing devices shall be adjusted to the lowest reasonable volume. Client
supplied coffee makers, microwaves, refrigerators and space heaters are
prohibited.
(b) Client understands and agrees that occupancy of the Premises and
the Center is subject to, in addition to the Lease, the provisions of the master
lease pursuant to which Company occupies office space in the building
("Building") which includes the Premises. Client will comply with all rules,
regulations, and requirements of Building and with other reasonable rules and
regulations established by Company and the master lessor relating to the
Premises and Client's use thereof. Client shall attorn to the lessor under the
master lease in such cases as may be required by the master lease. Termination
of the master lease shall terminate this lease and all of Company's obligations
hereunder. No provisions of the master lease impose obligations on Client which
are in addition to or inconsistent with the obligations hereunder.
(c) In Company's sole and absolute discretion, upon fifteen (15) days'
prior written notice to Client, Company shall have the right to relocate Client
to comparable Premises within the Center. Company will incur all reasonable
direct out-of-pocket moving costs associated with such relocation. Client shall
not be entitled to any compensation for any inconvenience or interference with
its business, nor to any abatement or reduction in Lease Rental, nor shall the
terms and conditions of this Lease be otherwise affected as a result of the
relocation. Client's failure to comply with all obligations included in this
paragraph shall constitute a material breach of this Lease.
(d) Client shall neither use nor occupy the Premises in any manner, nor
commit any act, resulting in a cancellation or reduction of any insurance
coverage or increase in premiums on any insurance policy covering the Premises,
Center, or Building. Client agrees to maintain a general liability insurance
policy with a minimum coverage of One Million Dollars ($1,000,000.00). Client
also agrees to furnish Company with a Certificate of Insurance naming Company
and the master lessor as additional insureds. Failure to furnish Company with a
Certificate of Insurance within fifteen (15) days of occupancy shall constitute
a material breach of this Lease.
6. IMPROVEMENTS AND ALTERATIONS. Company has made no promise to alter or improve
the Premises and has made no representations concerning the condition thereof.
By taking possession of the Premises, Client acknowledges that the Premises are
in good order and condition and accepts them "AS-IS" in their present condition.
Client shall maintain the Premises in good condition and repair, will not make
any holes in walls for any reason except hanging pictures, or cause or permit
the Premises and/or the Center to be damaged or defaced in any manner
whatsoever. Client will make no alterations or additions to the Premises or the
Center without Company's prior written consent, which Company may grant or
withhold in its sole discretion. Client will return the Premises at the end of
the Term in the same condition and repair as when Client took possession. Client
shall provide, at Client's expense, a plastic mat(s) to be placed under each
executive chair located within the Premises and will use it (them) at all times.
Client shall pay the cost of repairing any damage done to the Premises and the
Center by Client or any person who may be in or upon the Premises or Center with
the consent of Client. Company may make repairs or replacements for Client's
account, and Client will pay Company all costs and expenses for such repairs and
replacements upon demand. Upon termination of this Lease, whether upon
expiration of the Term hereof or sooner, Client agrees to pay Company Two
Hundred Dollars ($200.00) per leased office within the Premises to cover
painting and cleaning costs for each such office.
7. DESTRUCTION OF PREMISES. Should the Premises, Center, or Building be so
damaged by flood, fire, earthquake, explosion, or other cause, that, in the
opinion of Company, it is impractical or inadvisable to restore the same, then
this Lease shall terminate as of the date of such damage, and both Company and
Client shall be released from all obligations hereunder, subsequent to the date
of such damage. If Company elects to restore the Premises or the Center, Company
shall have ninety (90) days from the date of destruction to do so, or such
additional time as may be mutually agreed to between the parties herein. In such
event, this Lease shall remain in full force and effect except that the Lease
Rental due hereunder during the period that the Premises are in need of or are
being restored shall be proportionately abated to the extent that the Premises
are untenantable.
8. EMINENT DOMAIN. In the event that all or part of the Premises shall be taken
under the power of eminent domain or sold under threat of such taking, this
Lease shall terminate. The entire award of proceeds from such taking or sale of
land and/or improvements, including severance damages, shall belong to Company
and Client shall be entitled only to the portion of the award specifically
allocated to its personal property which may be taken, and any relocation
allowance actually paid by the condemning authority.
9. ASSIGNMENT AND SUBLETTING. Only with the prior written consent of Company may
Client assign this Lease or any interest herein or any portion thereof or permit
any other person to occupy the Premises or any portion hereof. Such consent will
not be provided that such consent may be conditioned upon Client agreeing to pay
Company all rent or other consideration paid by such assignee of the Lease
Rental. No transfer permitted by this paragraph shall release Client or change
Client's primary liability to pay to perform all other obligations of Client
hereunder. Consent to assignment or subletting shall not constitute a waiver of
this to any further assignments or subletting. No assignee for the benefit of
creditors, trustee in bankruptcy or purchaser in any ave any right to possess or
occupy the Premises or any part thereof, or claim of right hereunder. Client
agrees to reimburse Company all reasonable attorneys' fees incurred in
connection with the processing and documentation of any requested transfer,
assignment, or subletting. The consent of Company required hereunder shall not
be unreasonably withheld; provided, however, that Company and Client agree that
it shall not be unreasonable for Company to withhold its consent to any proposed
assignment, subletting or other transfer for any of the following not exclusive:
2
<PAGE>
(a) The transferee is not a party of reasonable financial stability in
light of the responsibilities involved on the date consent is requested;
(b) In the sole judgment of Company, the transferee is not of a
character or engaged in a business which is in keeping with the standards of
Company for the Center;
(c) In the reasonable discretion of Company, the transferee would (i)
materially increase burdens upon the Center, in relation to uses of other
clients then occupying space in the Center, or (ii) cause potential security
problems or additional security concerns for the Center or the Building;
(d) The transferee is an existing client of Company in the Center or a
previous client of Company.
Notwithstanding the foregoing, in the event that the Client under this Lease is
a sole proprietorship, the association of partners shall be deemed to have
resulted in a prohibited transfer under this paragraph 9, unless Company's prior
written consent is obtained, which consent shall not be unreasonably withheld.
Any such attempted or purported transfer, without Company's prior written
consent, shall be void and shall be of no force and effect and shall not confer
any interest or estate in the purported transferee, shall constitute default
under this Lease and permit Company, at its election, to terminate this Lease.
10. SURRENDER OF POSSESSION BY CLIENT. Client hereby agrees, upon termination of
this Lease, to immediately and peaceably yield possession of the Premises. Any
personal property remaining in the Premises upon expiration or termination shall
be deemed abandoned. Company may demand possession of the Premises upon
termination of the Term or any applicable renewal period (the "Possession
Date"). If Client remains in possession of the Premises after the Possession
Date, Client shall become a tenant at will upon the same terms and conditions
contained herein except that the Lease Rental shall equal Two Hundred Percent
(200%) of the Lease Rental which was in effect immediately prior to the
Possession Date. Acceptance by Company of any payments after the Possession Date
shall not constitute consent to a holdover by Client or result in a renewal of
this Lease. In addition, Client shall indemnify and hold harmless Company from
any and all claims, demands, losses or damages incurred by or asserted against
Company due to Client's failure to deliver possession of the Premises on the
Possession Date including, without limitation, any claims by any succeeding
tenant for the Premises based on such delay.
11. RIGHT OF ENTRY. Company and the master lessor's agents and employees may
enter upon the Premises at any reasonable time to inspect the Premises and to
see that the covenants hereof are being maintained and performed, to take action
which may be required or permitted hereunder, to make such repairs, additions,
or improvements as Company may deem necessary, or to exhibit the Premises to
prospective tenants or purchasers. Tenant shall not change or rekey the office
door locks during tenancy.
12. SIGNS AND KEY. Except pursuant to the express written consent of Company, or
as provided pursuant to this Lease, Client shall not place or permit to be
placed, any sign, advertisement, notice or other similar matter on any doors,
windows, walls or other areas of the Premises and the Center which are open to
the view of persons in common areas of the Center or Building. Company will
furnish two (2) keys to the Premises. Additional keys will be furnished at the
rates described in Company's Price List. Client shall not cause or permit the
duplication of any keys to be made, and Client shall not cause or permit any
keys to be possessed by any person other than an authorized agent of Client.
Client agrees to return to Company all keys to the Premises and Building upon
termination of this Lease. Company shall have the right to charge Client Twenty
Dollars ($20.00) for each key (including additional keys furnished to Client as
provided hereunder), which Client does not return to Company within five (5)
days of termination of the Term.
13. EXHIBITS. Any and all exhibits or riders attached to this Lease, including,
but not limited to, the General Provisions attached hereto as Section C are
incorporated herein and made part of this Lease. Without limiting the generality
of the foregoing, it is expressly agreed that this Lease is subject to the terms
and provisions of the General Provisions and Client agrees to abide with the
General Provisions. Breach of any obligation under the General Provisions shall
constitute a material breach of this Lease. This Lease may be executed in one or
more counterparts. In the event of variation or discrepancy, the duplicate
original hereof (including exhibits or riders, if any) held by Company shall
control.
SECTION B - GENERAL SERVICES AGREEMENT
This General Services Agreement ("GSA") is made by and between Client and
Company whose names appear in the Summary attached hereto as page one (1) and
incorporated herein and states the terms and conditions under which Company will
provide services and rent furniture and equipment (the "Equipment") to Client.
All terms defined in the Summary shall have the same meaning herein.
This GSA shall be subject to the terms and conditions of the General Provisions
attached hereto as Section C and incorporated herein. The GSA Schedule attached
hereto as page one (1) sets forth the services Company shall provide and the
monthly fixed charges Client shall pay Company for such services.
1. TERM. Subject to earlier termination as provided for herein, this GSA shall
commence and expire on the dates set forth in this Summary.
2. SERVICES PROVIDED. Company agrees to provide reception, telephone and other
services and facilities, including conference room allowance at the Center from
8:30 a.m. to 5:00 p.m., Monday through Friday, Company recognized holidays
excepted, at the monthly fixed charges described in the GSA Schedule. Company
agrees to provide services and facilities at the in-house rates described on
Company's Price List. Telephone Service includes:
(a) Telephone instrument rental, including dial tone.
(b) Live Answering, which includes a reasonable allowance of answers of
incoming calls, defined as four hundred (400) per month for one office, one
hundred (100) per month for each additional office. Client agrees not to place
advertisements using Center owned telephone numbers that would result in
unreasonable numbers of incoming calls. In the event Client's incoming calls
exceed the allowance defined above, at Company's election, the Client shall be
required to answer their own incoming calls, upon thirty (30) days notice from
Company. Client shall not be entitled to any compensation for any inconvenience
to or interference with its business, which results from such conversion. Client
shall be entitled to a reduction of the GSA Rental in the amount of the monthly
charge for Live Answering.
(c) Voice Mail, 24 hours, and 7 days per week retrieval from any
touchtone phone.
If Company owns telephone switching equipment, Client: (i) will be
provided with local, long distance, and international services and moves, adds
and changes at Company's published rates; (ii) understands that it has chosen to
use telephone services exclusively provided by Company; (iii) understands that
it is not a member of the general public, is not protected by the Public
Utilities Commission and waives any right 1 shall direct any requests for
service, or complaints, to Company and not the local telephone company; (v)
shall provide Company with a forwarding address so that residual billings can be
mailed to Client; and (vi) agrees that Company may increase the telephone no
during the Term to an amount not to exceed Client's highest monthly telephone
billing during the preceding portion of the Term.
Services offered by Company are subject to human, electrical and
mechanical error, failure, or illness, which may result in the delay or
discontinuance of these services. Client hereby represents that Client has read
and agrees to the provisions of Section C, Paragraph 2 (Limitation of Liability)
and Section C, Paragraph 3 (Indemnity) included in the General Provisions and
incorporated herein. IN THE EVENT THIS GSA TERMINATES, OR CLIENT IS IN DEFAULT
UNDER THIS GSA, COMPANY MAY, AT ITS ELECTION, IMMEDIATELY A SERVICES INCLUDING
WITHOUT LIMITATION, TO PROVIDE ANY FURTHER GSA SERVICES, INCLUDING WITHOUT nONE
SERVICE, AND COMPANY SHALL NOT BE IN BREACH OF ANY OF ITS OBLIGATIONS HEREUNDER,
OR UNDER ANY OTHER AGREEMENT, NOR SHALL SUCH REFUSAL BE DEEMED AN EVICTION OF
CLIENT UNDER THE OFFICE LEASE.
3
<PAGE>
3. EQUIPMENT. In the event Client uses Company's Equipment, Client shall not
damage Equipment or make any modifications or attachments thereto, nor remove
the same. If in the opinion of Company, any of Client's modifications, whether
or not made with the permission of Company, interfere with the normal use or
maintenance of Equipment and/or telephone system at the Center or otherwise
creates a safety hazard, Company may, at Client's expense, remove any such
modifications. Equipment shall only be moved by Company or its authorized
representatives. Client shall be responsible to pay all costs of such moves at
the rates described in Company's Price List. Client agrees that only
Company-provided telephone equipment will be used in the Premises.
4. MAIL. Subject to any restrictions set forth herein, Client is hereby
authorized to use the Center address as Client's business address. Client
acknowledges that it has read United States Post Office Form #1 583 and
understands that in the event its use of the Center address terminates, Company
shall cease to act as its agent for receipt of mail. It will be Client's
responsibility to notify all parties of termination of use of the Center
address. In the event that this GSA terminates for whatever reason including an
event of default hereunder, Client's right to use the Center address shall
immediately terminate, and Company shall return to senders all mail addressed to
Client. Provided Client is not in default under this GSA, Client may elect to
maintain Mail Service by submitting Company a completed Communications Service
Agreement ("GSA"). Payment for such service shall be made monthly, in advance,
prior to the first day of each month. Failure to make such payment shall
immediately terminate all of Company's obligations under the GSA.
5. EMPLOYEES. Client, including its principals, and any parent, subsidiary, or
affiliated companies, jointly and severally, agrees that during the term of this
GSA or within one (1) year following the termination of this GSA it will not
hire any of Company's employees or persons employed by Company during the Term
hereof. In the event Client shall breach any obligation contained in this
paragraph, Client shall be liable for, and shall pay Company on demand, damages
of Ten Thousand Dollars ($10,000.00) for each employee so hired, it being
mutually agreed by Client and Company that this provision for liquidated damages
is reasonable and that the actual damage which would be sustained by Company as
the result of the failure to comply with this provision would be impractical or
extremely difficult to determine.
6. EXHIBITS. Any and all exhibits or riders attached to this GSA, including, but
not limited to, the General Provisions attached hereto are incorporated herein
and made part of this GSA. Without limiting the foregoing, it is expressly
agreed that this GSA is subject to the terms and provisions of the General
Provisions, by which Client agrees to abide, Breach of any obligation under the
General Provisions shall be deemed a material breach of this GSA. This GSA may
be executed in one or more counterparts. In the event of variation or
discrepancy, the duplicate original hereof (including exhibits or riders, if
any) held by Company shall control.
SECTION C - GENERAL PROVISIONS
Company and Client hereby agree to the following terms and conditions, which
supplement the Lease and/or GSA to which these General Provisions are attached
as Section C. All definitions included in the Lease and/or GSA shall apply
herein unless otherwise indicated. As used herein, the "Agreements" shall refer
to the Lease and/or GSA, as the context may indicate.
1. PAYMENTS. Client agrees to pay Company when due the Lease Rental, GSA Rental,
and other charge(s) including any applicable sales, use and other taxes now or
hereafter imposed by any governmental body to:
The Business Center of Las Vegas, Inc.
3753 Howard Hughes Parkway, Suite 200
Las Vegas, NV 89109
All payments are due and payable prior to the first of every month without
notice, demand or offset. The billing cycle for all variable charges shall be
from the 16th of the prior month through the 15th of the current month. ANY
PAYMENTS NOT RECEIVED WITHIN FIVE (5) DAYS OF THE DUE DATE ARE SUBJECT TO A LATE
CHARGE EQUAL TO TEN PERCENT (10%) OF THE PAST DUE BALANCE, BUT NOT LESS THAN
TWENTY DOLLARS ($20.00), TO COMPENSATE COMPANY FOR THE EXTRA COSTS INCURRED AS A
RESULT OF SUCH LATE PAYMENT. Company shall charge Client Twenty-Five Dollars
($25.00) for each dishonored check. In the event Client fails to pay any amount
when due, Client shall pay Company interest thereon at an annual rate of Twelve
Percent (1 2%) or such lower rate, as may be the maximum lawful rate. Client
agrees to pay Company Two Hundred Dollars ($200.00) for each Five (5) Day Notice
or Notice of Termination of Services which Company serves upon Client's failure
to make timely payments in the event more than one of either notice is served
during the Term. Client agrees to pay for all services ordered or incurred by
Client, its employees, agents, and invitees, even if such services are not
described in the Lease, GSA or GSA Schedule attached hereto. Client will
complete Company's Answering Service Form, indicating which individuals are
authorized to use Company's services and incur charges at the Center.
2. LIMITATION OF LIABILITY. (a) THE AGREEMENTS ARE MADE UPON THE EXPRESS
CONDITION THAT COMPANY SHALL BE FREE FROM ALL LIABILITY AND CLAIM FOR DAMAGES,
EXCEPT THOSE SOLELY CAUSED BY THE GROSS NEGLIGENCE OF COMPANY, by reason of any
injury to any person(s), property or business interest of any kind, from any
cause(s), in any way connected with the Center, it's use or occupancy thereof,
or the GSA services, during the term of the Agreements or any extensions. In no
event shall Company be liable for the conduct of any other Client or tenant of
Building, and any such conduct shall not give Client the right to terminate the
Agreements between Company and Client. Company shall not be liable under any
circumstances for consequential damages or damages or injury to Client's
business or potential business.
(b) THE USE OF THE PREMISES AND ANY SERVICES, FURNISHINGS AND
FAC1LITIES PROVIDED PURSUANT TO THE AGREEMENTS IS MADE WITHOUT WARRANTY.
Client's sole remedy, and Company's sole obligation for any failure to render
any service, furnishing or facility, any error or omission, or any delay or
interruption with respect thereto, is limited to an adjustment to Client's
billing in an amount equal to the charge for such service, furnishing or
facility for the period during which the failure, delay, or interruption
continues. (By way of example only, if the Premises are reasonably determined to
be unusable solely due to the gross negligence of Company, Client's billing will
be reduced in proportion to Client's reduced use thereof.) With the sole
exception of the remedy set forth in this paragraph 2(b), Client expressly and
specifically agrees to waive, and agrees not to make any claim for damages,
direct or consequential, arising out of any failure to furnish any service,
furnishing or facility, any error or omission, or any delay or interruption of
the same. Notwithstanding anything in this paragraph, there shall be no billing
adjustment if Client is in default hereunder.
3. INDEMNITY. Client hereby covenants and agrees to indemnify and save harmless
Company and the master lessor from all liability, loss, cost, or obligations
including actual attorney's fees relating to Client's use of the Center and
anything done or allowed to be done by Client in the Center or Building. Client
shall not be required to indemnify Company or Master Lessor for the sole
negligence or willful misconduct of Company or Master Lessor.
4. DEFAULT. Client shall be in default hereunder if it does not pay all amounts
due under either the Lease or the GSA, or if Client fails to perform any of it's
covenants or provisions under the Agreements. If Client does not cure such
default within five (5) days after written have the right, with or without
further notice, and in addition to and not in lieu of other remedies available
by law, to rights under .the Agreements, or such of those rights as Company
designates in such written notice. Such notice shall addition to, any notice
required by California Code of Civil Procedure Section 1161. If Client's rights
under the Lease are so terminated, Company may, after complying with any
applicable requirements of law, take possession of the Premises. Upon any such
action shall remain liable for all obligations, which have previously accrued,
and, to the maximum extent permitted by law, for all obligations, which may
subsequently accrue under the Agreements. In addition to terminating Client's
rights to possession under the Lease and/or discontinuing services under the
GSA, Company shall have the right to pursue all other remedies provided by law.
5. SECURITY DEPOSIT. Upon execution of the Agreements, Client shall pay Company
the amounts set forth in the Summary as Lease posit (the "Deposits"). Company
shall hold the Deposits as security for the full, faithful, and complete
performance by covenants, and agreements to be kept by Client under the
Agreements. If Client fails to perform any of its obligations, the Deposits to
any amounts due, including any amounts Company may be required to spend by
reason of Client's breach under the Agreements. Upon written demand by Company,
Client will pay Company any amount so applied so that the Deposits are returned
to
4
<PAGE>
their original amount. If at the end of the Term Client has performed all of the
provisions of the Agreements, the Deposits, or any remaining balance, will be
returned, without interest, within sixty (60) days after the end of the Term.
6. TERMINATiON AND NOTICES. UPON THE ENDING DATE SET FORTH HEREIN, OR ANY
EXTENSION THEREOF, THE AGREEMENT SHALL BE EXTENDED FOR THE SAME PERIOD OF TIME
AS THE INITIAL TERM AND, UPON THE SAME TERMS AND CONDITIONS AS CONTAINED HEREIN,
UNLESS EITHER PARTY NOTIFIES THE OTHER IN WRITING BY CERTIFIED OR REGISTERED
MAIL, RETURN RECEIPT REQUESTED, THAT THE AGREEMENT WILL NOT BE EXTENDED WITHIN
THE PERIOD HEREINAFTER SPECIFIED. IF CLIENT HAS LESS THAN THREE OFFICES, SUCH
NOTICE MUST BE GIVEN AT LEAST SIXTY (60) DAYS PRIOR TO THE EXPIRATION DATE OF
THIS AGREEMENT. IF CLIENT HAS THREE OR MORE OFFICES, SUCH NOTICE MUST BE GIVEN
AT LEAST NINETY (90) DAYS PRIOR TO THE EXPIRATION DATE OF THIS AGREEMENT._______
INITIAL
7. FORCE MAJEURE. If Company's performance of its obligations under the
Agreements is prevented or restricted by reason of any cause beyond the control
of Company, including, but not limited to, mechanical or electrical breakdown,
fire, explosion or other casualty, acts of God, acts of public enemies, embargo,
delays of supplies, acts of any governmental agency, labor difficulties, strikes
or inclement weather, Company, upon giving timely notice to Client, shall be
excused from such performance to the extent of such breakdown, prevention, or
restriction, provided that Company shall resume performance within a reasonable
time after any such cause has been removed or ceases. Except as set forth in the
Lease, there shall be no abatement or reduction of Lease Rental.
8. WAIVER. One or more waivers by Company of any breach of any covenant or
condition under the Agreements shall not be construed as a waiver of a
subsequent or continuing breach of the same or any other covenant Or condition,
and consent or approval by Company Of any act by Client requiring Company's
consent or approval shall not be deemed to waive or render unnecessary
Company's consent or approval to any subsequent act.
9. TIME OF THE ESSENCE. Time is expressly of the essence under the Agreements.
10. AUTHORITY, SUCCESSORS AND ASSIGNS. Each party represents that it has full
power and authority to enter into and perform the Agreements. The covenants and
conditions herein contained shall, subject to the Lease's provision as to
assignments and subletting, apply to and bind the heirs, successors, executors,
administrators, and assigns of the respective parties hereto. If the Agreements
are executed by more than one party as Client, their obligation shall be joint
and several,
11. ATTORNEY'S FEES. In the event of any legal action or proceeding by Client or
Company against the other under the Agreements, the prevailing party shall be
entitled to recover all expenses and costs, including reasonable attorney's fees
and costs of appeal, if any.
12. SEVERABILITY. The invalidity or unenforceability of any provision of the
Agreements shall not affect or impair the validity or enforceability of any
other provision. No waiver of any default of Client shall be implied from any
failure by Company to take action with respect to such default. Except for the
provisions of Section C, Paragraph 4 above regarding default, each of the Lease
and GSA are separate and independent agreements.
13. DOCUMENTS AND ENTIRE AGREEMENT. Client agrees to complete and sign
additional documents and do such other things as may be required by Company or
any other entity in order to permit Company to provide services and facilities
to Client. The Agreements supersede any prior agreement(s) and embodies the
entire agreement between Company and Client, and may not be modified or altered
except in writing. Submission of this instrument for examination does not
constitute a reservation of or option for the Premises. The Agreements become
effective only upon execution and delivery by both parties. The Agreements shall
be interpreted and enforced in accordance with the laws of the State of
California.
IN WITNESS WHEREOF, the parties have caused the General Provisions to be
executed on the date set forth below.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Company: BUSINESS CENTER OF LAS VEGAS, INC. Client:
By: /s/ Fred Geraghty By: /s/ Martin Gross Viva Gaming & Resorts
------------------------------ ------------------------------------------
Name: Fred Geraghty Name: Martin Gross
----------------------------- ------------------------------------------
(Please Print) (Please Print)
Title: Center Manager Title: Pres/CEO
------------------------------ ------------------------------------------
Date: 7/12/99 Date: 7/9/99
------------------------------ ------------------------------------------
</TABLE>
5
THIS MEMORANDUM OF UNDERSTANDING made, in duplicate, this 29th day of October,
1999
BETWEEN:
VIVA GAMING & RESORTS INC.,
a body corporate with head offices in the
City of Las Vegas, in the State of Nevada
(hereinafter referred to as "Viva")
-and-
WAGON WHEEL RESORTS, CASINOS &
ENTERTAINMENT, INC.
a body corporate with head offices in
Rockton, in the State of Illinois
(hereinafter referred to as "WWRCE")
WHEREAS Viva is in the business of designing, developing, supplying,
financing and managing gaming facilities in North America;
AND WHEREAS WWRCE has a signed contract to develop a bingo hall with
VLT's on reserve land, and a casino gaming facility and other income producing
businesses on the 500 acres at the U.S. Canadian border on Route 75 for and on
behalf of the Roseau River First Nation (hereinafter referred to as "Roseau
First Nation");
NOW THEREFORE THIS MEMORANDUM WITNESSETH THAT the parties hereto do
hereby agree as follows:
1. The parties hereby enter into this Memorandum of Understanding
(hereinafter referred to in this and other documents as the "MOU") to
set forth their understandings and agreement relating to the
development of gaming facilities on lands owned by/or to be acquired by
Roseau First Nation.
<PAGE>
2. Viva undertakes to design, develop and finance a plan for a gaming
facility at such location designated by Roseau First Nation as follows:
a) Firstly, a temporary facility on the twelve acres on reserve
lands currently owned by Roseau First Nation (15,000 square feet
structure to house the bingo and other gaming activities - includes
a paved parking lot);
b) After assessment of the viability of a permanent facility and
securing appropriate approval, a permanent facility on Roseau First
Nation property (500 acre parcel adjacent to #75 Highway -
including services, equipment and parking lot).
Such plans shall be submitted to WWRCE for review and approval by
Roseau First Nation
3. Upon receipt of approval of the plans by Roseau First Nation, Viva
undertakes in consultation with WWRCE to secure and work with a
designated construction company to construct the required buildings and
support services. Viva undertakes to arrange financing, equipment, and
supplies to operate the facilities in accordance with approved plans.
4. After constructing and equipping the facilities, Viva shall manage the
gaming facilities in accordance with the Management Contract obtained
by WWRCE with Roseau First Nation. The Management Contract shall:
a) Be for a period of ten years, plus an option for an additional ten
years as identified in the Management Contract;
b) Provide that Viva will train employees approved by Roseau First
Nation to operate the facilities during the contract, and to manage
and operate the facilities after termination of the Management
Contract;
c) Provide for management of the facilities and general operations.
2
<PAGE>
5. The Parties agree to share proprietary information and acknowledge
entering into a Non-Disclosure and Non-Circumvention Agreement dated
October 28, 1999, a copy of which is attached hereto as Addendum One.
Viva shall arrange for the execution and return of the Non-Disclosure
and Non-Circumvention Agreement by Martin Gross.
6. WWRCE agrees that it shall:
a) Review such plans and other material provided by Viva quickly and
efficiently, and provide such plans and materials to Roseau First
Nation for their review. If such plans and material are not
acceptable, WWRCE will so advise Viva in a short period of time
and, if necessary, return the plans and materials to Viva for
amendment;
b) Enter into good faith negotiations with Viva to settle the terms
of a Management Agreement between Viva and WWRCE for the ten year
term to provide management of the casino and training of the
employees. Such Management Agreement shall, once approved, attach
to this MOU as Addendum Two;
c) Enter into good faith negotiations with Viva to settle the
terms of any additional agreements relating to the casino, i.e.
lease agreements, equipment leasing, and a marketing agreement;
d) Arrange for the approval of such Agreements by appropriate
Roseau First Nation parties.
7. Viva shall provide such assistance to WWRCE and Roseau First Nation
as it may require to seek appropriate approvals to commence the
planning process for developing the facilities.
8. Viva shall prepare a business plan for Roseau First Nation relating
to the development of gaming facilities. Viva shall bear the cost of
the business plan provided the development of gaming facilities
proceeds in accordance with the good faith provisions in the foregoing
clauses.
3
<PAGE>
9. The parties agree that any plans, designs or other documents
prepared by Viva shall be confidential and shall not be disclosed to
any other party without the consent of Viva; such plans, designs or
other documents prepared by Viva shall be owned by Viva until
compensation is received therefor.
10. The parties recognize that the Province of Manitoba may have
jurisdiction over some of the approvals required to construct and
operate a casino in Manitoba. Neither Viva nor WWRCE shall be in
default on any of the approvals required herein if such approvals
require the consent of the Province of Manitoba and such consent is
denied.
IN WITNESS WHEREOF the parties hereto have executed this Agreement on
the day and year first above written.
VIVA GAMING & RESORTS INC.
Per: /s/ Martin Gross - PRES/CEO
---------------------------------
3753 Howard Hughes Parkway, Suite 200
Las Vegas, Nevada 89109
WAGON WHEEL RESORTS, CASINOS &
ENTERTAINMENT, INC.,
Per: /s/ Frank R. Mckenzie Jr.
---------------------------------
Per:_________________________________
Sunset Development c/o Roseau River
First Nations hereby acknowledges the
execution of the Memorandum of
Understanding and agrees to the terms
thereof as if a signatory thereto.
Sunset Development
Per: /s/ Leonard Nelson - Board Member
------------------------------------
Leonard Nelson/Richard Johnson
4
<PAGE>
(hereinafter referred to as ("WWRCE")
REVISE: AND WHEREAS WWRCE has a signed contract to develop a BINGO HALL with
VLT's ON RESERVE LAND, AND a casino gaming facility AND OTHER INCOME
PRODUCING BUSINESS' ON THE %)) ACRES AT THE U.S. CANADIAN BORDER ON
ROUTE 75 for and on behalf of the Roseau River First Nation
(hereinafter referred to as "Roseau First Nation");
NUMBER 1. third sentence: understanding and agreement relating to the
development of (remove a) gaming FACILITIES
PAGE 2. 2A) Firstly, a temporary facility on THE TWELVE ACRES on reverse lands
(etc.)
Last sentence under 2. change wagon wheel to WWRCE
3. change wagon wheel to WWRCE
4. second sentence; facilities in accordance with THE Management
Contract OBTAINED BY WWRCE with Roseau First Nation.
4A.) Be for a period of 10 years, PLUS AN OPTION FOR AN ADDITIONAL 10
YEARS, (delete; until Viva has received a return on its
investment) as identified in the Management Contract.
(delete: whichever is the later).
PAGE 3. 5. (Martin Gross to sign Non-Disclosure and Non-Circumvention
Agreement and return to WWRCE).
6. change wagon wheel to WWRCE
6A. change wagon wheel to WWRCE
6B. Delete completely, we have contract with the Roseau River already.
6C. please explain this
6D. we have management agreement already. change to 10 years
PAGE 4 6F. ok but not 6B-6D and possibly 6C
6G. Please explain and clarify. change wagon wheel to WWRCE
7. change wagon wheel to WWRCE
10. change wagon wheel to WWRCE
PAGE 5 delete signatory line for Roseau River First Nation.
MARTY. We think the $200,000 promised to the tribe from the construction loan
should be entered into MOU and we also think the $650,000 that we have told Bob
and Mick that we have invested already in this project should be mentioned in
this MOU and how we are going to get paid back. The other management companies
that we have met with had our costs figured in the construction loan and stock
from their company, and there is no mention in this MOU regarding the 30%
management fee and how it is going to be split between our companies. Please
advise. We would like to prepare an agreement immediately and then meet in
Canada to finalize everything and set a date to break ground. If you have any
questions, please do not hesitate to call me.
Respectfully,
/s/ Frank McKenzie, Jr.
- ------------------------
Frank McKenzie, Jr.
ONION LAKE FIRST NATION
BOX 100 ONION LAKE, SASK, S0M 2E0
PHONE (403) 847-2200
FAX (403) 847-2226
MEMORANDUM OF UNDERSTANDING
This MEMORANDUM OF UNDERSTANDING made in duplicate this 27th day of October,
1999
BETWEEN
Viva Gaming & Resorts Inc. (hereafter referred to as "Viva") a body
corporate with head offices in Las Vegas NV.
AND
Chief Wallace Fox, for and on behalf of the Onion Lake First Nation
(hereafter referred to as "Onion Lake")
TOGETHER
The "parties"
WHEREAS "Viva" is in the business of designing, developing, supplying,
financing, and managing gaming facilities in Canada,
AND WHEREAS "Onion Lake" wishes to develop a casino in the
Lloydminster, AB. area
NOW THEREFORE THIS DEED WITNESSETH THAT:
1. The parties do hereby enter into this Memorandum of Understanding
(hereinafter referred to in this and other documents as the M.O.U.)
To set forth their understandings and agreement relating to the
development of a gaming facility on Lands to be acquired by "Onion
Lake".
2. "Viva" undertakes to design, develop, and finance a plan for a
casino in such
<PAGE>
location designated by "Onion Lake" and submit those plans for
approval. On approval being granted by "Onion Lake", "Viva"
undertakes to work with a designated construction company, to
construct the required building and support services. "Viva"
undertakes to arrange financing, equipment, and supplies to operate
the casino in accordance with the approved plans
3. After constructing and equipping the casino, "Viva" shall manage
the casino for a minimum period of five years, or such time as Viva
requires to receive a return on investment agreed to by the
"parties" in the Casino Management Contract. During that period of
time the management contract will provide that "Viva" will train
employees approved by "Onion Lake" to operate the casino during the
contract, and to manage and operate the casino after termination of
the management contract.
4. "Onion Lake agrees that it shall:
a. Approve the M.O.U. herein by resolution of the Onion Lake Band
Council, and provide such approval to "Viva";
b. Review such plans and other materials provided by "Viva" quickly
and efficiently. If such plans and other materials are not
acceptable, advise "Viva" in a brief time, and if necessary return
to "Viva" for amendment;
c. Enter into good faith negotiations with "Viva" exclusively for a
period of one year to settle the terms of a comprehensive agreement
(Casino Development Agreement) with "Viva" to carry out the
financing, planning, development and management of the casino. Such
agreement, once approved, shall attach to this M.O.U. as Addendum
One;
d. Enter into good faith negotiation with "Viva" to settle the terms
of a management agreement for the five year term to provide
management of the casino and training of the employees, such
management agreement shall be attached to the Casino Development
Agreement as an Addendum Two and shall be a condition to the
execution of the Casino Development Agreement.
e. Enter into a good faith negotiations with "Viva" to settle the
terms of any additional agreements relating to the casino, ie.,
lease agreements, equipment leasing, and a marketing agreement. Such
agreements shall be attached to the Casino Development Agreement
f. Approve all such agreements by appropriate Onion Lake Band
Council procedures.
5. "Viva" shall provide such assistance to "Onion Lake" as it may
require to seek
<PAGE>
appropriate approvals to commence the planning process for
developing the casino.
6. "Viva" shall provide a business plan for "Onion lake" relating to
the casino development. Viva shall bear the cost of the business
plan provided the casino development proceeds in accordance with the
good faith provisions in the foregoing clauses.
7. The "parties" agree that any plans, designs, or other documents
prepared by "Viva" shall be confidential and shall not be disclosed
to any other party without the consent of "Viva" such plans,
designs, and other documents prepared by "Viva" shall be owned by
"Viva" until compensation is received therefor.
8. The "parties" recognize that the Province of Alberta may have
jurisdiction over some of the approvals required to construct and
operate a casino in Alberta. Neither "Viva" nor "Onion Lake" shall
be in default on any of the approvals required herein if such
approvals require the consent of the Province of Alberta and such
consent is denied.
IN WITNESS WHEREOF of the "parties" hereto have executed this
agreement on the date and year first above written.
VIVA GAMING & RESORTS Inc.
per /s/ Martin Gross
---------------------------
per /s/ Robert Sim
---------------------------
3753 Howard Hughes Parkway
Suite 200
Las Vegas Nevada, 89109
ONION LAKE FIRST NATION
per /s/ Wallace Fox
---------------------------
Wallace Fox
Box 100
Onion Lake, AB
S0M 2E0
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE AUDITED
FINANCIAL STATEMENTS OF VIVA GAMING & RESORTS INC. FOR THE YEAR ENDED DECEMBER
31, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH REPORT.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> DEC-31-1998
<CASH> 115,366
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 115,366
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 115,366
<CURRENT-LIABILITIES> 192,576
<BONDS> 0
0
0
<COMMON> 112,500
<OTHER-SE> (189,710)
<TOTAL-LIABILITY-AND-EQUITY> (115,366)
<SALES> 0
<TOTAL-REVENUES> 4,890
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 193,447
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,153
<INCOME-PRETAX> (189,710)
<INCOME-TAX> 0
<INCOME-CONTINUING> (189,710)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (189,710)
<EPS-BASIC> (0.05)
<EPS-DILUTED> (0.05)
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE AUDITED
FINANCIAL STATEMENTS OF VIVA GAMING & RESORTS INC. FOR THE NINE MONTHS ENDED
SEPTEMBER 30, 1999 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH REPORT.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> SEP-30-1999
<CASH> 2,903
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 193,738
<PP&E> 11,746
<DEPRECIATION> 208
<TOTAL-ASSETS> 205,276
<CURRENT-LIABILITIES> 208,538
<BONDS> 0
0
0
<COMMON> 422,500
<OTHER-SE> (425,762)
<TOTAL-LIABILITY-AND-EQUITY> (205,276)
<SALES> 0
<TOTAL-REVENUES> 782
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 236,834
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (236,052)
<INCOME-TAX> 0
<INCOME-CONTINUING> (236,052)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (236,052)
<EPS-BASIC> (0.04)
<EPS-DILUTED> (0.04)
</TABLE>
