SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[X] Quarterly report under Section 13 or 15(d) of the Securities Exchange Act
of 1934 for the quarterly period ended May 31, 1998.
[ ] Transition report under Section 13 or 15(d) of the Securities Exchange
Act of 1934 for the transition period from to.
Commission file number: 0-9476
FLEXWEIGHT CORPORATION
(Exact name of small business issuer as specified in its charter)
Kansas 48-0680109
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1946 Plateau Way Wendover, Nevada 89883
(Address of principal executive office) (Zip Code)
(702) 664-3919
(Issuer's telephone number)
Check whether the issuer: (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
Yes No XX
The number of outstanding shares of the issuer's common stock, $0.001
par value (the only class of voting stock), as of July 15, 1998 was 6,418,543.
1
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TABLE OF CONTENTS
Part I
ITEM 1. FINANCIAL STATEMENTS .................................................3
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.............4
Part II
ITEM 1. LEGAL PROCEEDINGS.....................................................6
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS...................6
ITEM 5 OTHER INFORMATION.....................................................7
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K......................................8
SIGNATURES.....................................................................9
INDEX TO EXHIBITS.............................................................10
2
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PART I
ITEM 1. FINANCIAL STATEMENTS
As used herein, the term "Company" refers to Flexweight Corporation, a
Kansas corporation, and its subsidiaries and predecessors unless otherwise
indicated. Consolidated, unaudited, condensed interim financial statements
including a balance sheet for the Company as of the quarter ended May 31, 1998
and statements of operations, statements of shareholders equity and statements
of cash flows for the interim period up to the date of such balance sheet and
the comparable period of the preceding year are attached hereto as Pages F-1
through F-7 and are incorporated herein by this reference.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS Page
Consolidated Balance Sheets..................................................F-1
Consolidated Statements of Operations........................................F-2
Consolidated Statements of Stockholders' Equity..............................F-3
Consolidated Statements of Cash Flows........................................F-4
Condensed Notes to Consolidated Financial Statements.........................F-5
[THIS SPACE HAS BEEN INTENTIONALLY LEFT BLANK]
F-3
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ASSETS
May 31,
1998
-----------------
CURRENT ASSETS
Cash $ 121
-----------------
Total Current Assets 121
-----------------
LAND AND IMPROVEMENTS 5,000,000
OTHER ASSETS
Organization costs (Net of amortization) 710
Security deposit 550,000
Investments in securities 325,000
-----------------
TOTAL ASSETS $ 5,875,831
=================
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES
Accounts payable $ 22,633
-----------------
Total Current Liabilities 22,633
-----------------
LONG-TERM DEBT 3,975,000
STOCKHOLDERS' EQUITY
Common stock: 25,000,000 shares authorized of $0.10 par
value, 6,418,543 shares issued and outstanding 641,854
Additional paid-in capital 3,608,124
Deficit accumulated during the development stage (2,371,780)
-----------------
Total Stockholders' Equity 1,878,198
-----------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) $ 5,875,831
=================
F-1
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<TABLE>
<CAPTION>
From
Inception on
November 26,
For the 3 months ended For the 9 months ended 1962 Through
May 31, May 31, May 31,
------------------------------- ----------------------------
1998 1997 1998 1997 1998
------------ --------------- -------------- ------------ --------------------
<S> <C> <C> <C> <C> <C>
REVENUES $ - $ - $ - $ - $ -
LOSS FROM DISCONTINUED
OPERATIONS - - - - (2,048,687)
GAIN FROM DISPOSITION OF
DISCONTINUED OPERATIONS - - 210,755 - 489,738
GENERAL AND ADMINISTRATIVE
EXPENSES (812,831) - (812,831) - (812,831)
-------------- --------------- -------------- -------------- -------------------
NET INCOME (LOSS) $ (812,831)$ - $ (602,076)$ - (2,371,780)
============== =============== ============== ============== ===================
NET INCOME (LOSS) PER SHARE
OF COMMON STOCK $ (0.49) - $ (1.00) -
============== =============== ============== ==============
</TABLE>
F-2
<PAGE>
<TABLE>
<CAPTION>
Deficit
Accumulated
Additional During the
Common Stock Paid-In Development
Shares Amount Capital Stage
----------- ----------- ------------- -------------
<S> <C> <C> <C> <C>
At inception on November 26, 1962 - $ - $ - $ -
Common stock issued for cash
at approximately $0.55 per share 2,120,500 212,050 946,395
Common stock issued for reorganization
at approximately $0.14 per share 1,781,462 178,146 71,906
Sale of treasury stock - - 22,207
Common stock issued for consulting
fee at $0.10 per share 976,116 97,612 - -
Net loss from inception on November
26, 1962 to August 31, 1996 - - - (1,761,704)
----------- ---------- ------------- ------------
Balance, August 31, 1996 4,878,078 487,808 1,040,508 (1,761,704)
Common stock issued for consulting
fee at $0.10 per share 80,000 8,000 - -
Net loss for the year ended
August 31, 1997 - - - (8,000)
------------ ---------- ------------- -------------
Balance, August 31, 1997 4,958,078 $ 495,808 $ 1,040,508 $ (1,769,704)
Adjusted for 1 for 100 reverse split (4,908,497) (490,850) 490,850 -
-------------- ----------- --------------- -------------
Adjusted total 49,581 4,958 1,531,358 (1,769,704)
Shares issued for services 708,962 70,896 638,066 -
Shares issued for purchase of subsidiary 3,010,000 301,000 (271,300) -
Shares issued for property 1,000,000 100,000 900,000 -
Shares issued for security deposit and
fees 650,000 65,000 585,000 -
Shares issued for securities 1,000,000 100,000 225,000
Net loss for period 9 months ended - - - (602,076)
-------------- ----------- ---------------- -------------
Balance, May 31, 1998 6,418,543 $ 641,854 $ 3,608,124 $ (2,371,780)
============== =========== ================= =============
</TABLE>
F-3
<PAGE>
<TABLE>
<CAPTION>
From
Inception on
November 26,
For the 9 months ended 1962 Through
May 31, May 31,
------------------------------------
1998 1997 1998
------------- -------------- ---------------
CASH FLOWS FROM OPERATING ACTIVITIES
<S> <C> <C> <C>
Net income (loss) $ (602,076) $ - $ (2,371,780)
Adjustments to reconcile net loss to
net cash used by operating activities:
Loss on discontinued operations - - 303,243
Gain on disposal of assets - - (278,983)
Stock issued for services 808,962 - 914,574
Increase (decrease) in accounts and taxes payable (210,755) - 22,633
------------- -------------- ---------------
Net Cash Used by Operating Activities (3,869) - (1,410,313)
------------- -------------- ---------------
CASH FLOWS FROM INVESTING ACTIVITIES
Stock issued for assets 1,028,990 - 1,028,990
Purchase of property and equipment (5,000,000) - (5,524,208)
-------------- --------------- ---------------
Net Cash Used by Investing Activities (3,971,000) - (4,495,218)
-------------- --------------- ---------------
CASH FLOW FROM FINANCING ACTIVITIES
Proceeds from notes payable 3,975,000 - 4,725,000
Issuance of common stock for cash - - 1,180,652
-------------- --------------- --------------
Net Cash Provided by Financing Activities 3,975,000 - 5,905,652
-------------- --------------- --------------
NET INCREASE (DECREASE) IN CASH 121 - 121
-------------- --------------- --------------
CASH AT BEGINNING OF PERIOD - - -
-------------- --------------- --------------
CASH AT END OF PERIOD $ 121 $ - $ 121
============== ================ =================
CASH PAID FOR:
NON CASH FINANCING ACTIVITIES
Common stock issued for services $ 808,962 $ - $ 1,623,536
</TABLE>
F-4
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FLEXWEIGHT CORPORATION AND SUBSIDIARIES
(A Development Stage Company)
Notes to the Unaudited Consolidated Financial Statements
May 31, 1998
NOTE 1 - ORGANIZATION AND HISTORY
The Company was incorporated under the laws of the State of Kansas on
November 26, 1962 under the name of "Flexweight Drillpipe Company,
Inc." The purpose of the Company was to engage in manufacturing and
marketing of double-wall drill pipe. It changed its name to "Flexweight
Corporation" on September 11, 1967.
The Company filed for Chapter 11 bankruptcy protection on June 25,
1987. In September 1995, the Company's only asset, a building, was
foreclosed upon.
a. Accounting Method
The Company's financial statements are prepared using the accrual
method of accounting. The Company has elected an August 31 year end.
b. Cash and Cash Equivalents
Cash equivalents include short-term, highly liquid investments with
maturities of three months or less at the time of acquisition.
c. Loss Per Share
The computations of loss per share of common stock are based on the
weighted average number of shares outstanding at the date of the
financial statements.
d. Provision for Taxes
At May 31, 1998, the Company had net operating loss carryforwards of
approximately $1,500,000 that may be offset against future taxable
income through 2012. No tax benefit has been reported in the financial
statements, because the Company believes there is a 50% or greater
chance the carryforwards will expire unused. Accordingly, the potential
tax benefits of the loss carryforwards are offset by a valuation
account of the same amount.
e. Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenues
and expenses during the reporting period. Actual results could differ
from those estimates.
F-5
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FLEXWEIGHT CORPORATION AND SUBSIDIARIES
(A Development Stage Company)
Notes to the Unaudited Consolidated Financial Statements (Continued)
May 31, 1998
NOTE 2 - GOING CONCERN
The Company's financial statements are prepared using generally
accepted accounting principles applicable to a going concern which
contemplates the realization of assets and liquidation of liabilities
in the normal course of business. However, the Company does not have
significant cash or other material assets, nor does it have an
established source of revenues sufficient to cover its operating costs
and to allow it to continue as a going concern. It is the intent of the
Company to seek a merger with an existing, operating company. Until
that time, shareholders of the Company have committed to meeting its
minimal operating needs.
NOTE 3 - DISCONTINUED OPERATIONS
The Company has been inactive since August 1995. All activity
subsequent to August 1995 is relating to the discontinued operations.
The following is a summary of income (loss) from operations of the
Company.
Revenue $ 729,587
Expenses (2,778,274)
Loss from Discontinued Operations $ (2,048,687)
Write-off of assets $ (295,373)
Gain on write off of debt 574,356
Gain on Disposal of Discontinued Operations $ 278,983
NOTE 4 - STOCK TRANSACTIONS
On April 8, 1998, The Shareholders approved among other matters a 1 for
100 Reverse Split of the Company's common stock par value $0.10 and to
amend the Articles of Incorporation to increase the number of
authorized shares from 5,000,000 to 25,000,000. All share amounts have
been restated to reflect this change.
On May 1, 1998, the Company issued 1,000,000 shares of its common stock
to close the purchase of a 20 acres parcel of land for Oasis Hotel,
Resort & Casino-III, Inc.
Oasis Hotel, Resort & Casino-III, Inc. also executed a First Deed of
Trust on the property for $550,000 and a Second Deed of Trust for
$3,425,000 in connection with the land purchase.
F-6
<PAGE>
FLEXWEIGHT CORPORATION AND SUBSIDIARIES
(A Development Stage Company)
Notes to the Unaudited Consolidated Financial Statements (Continued)
May 31, 1998
NOTE 4 - STOCK TRANSACTIONS (Continued)
In addition The Company issued 100,000 shares as a one time fee for the
first Trust Deed and 550,000 shares as additional collateral for the
first Trust Deed.
On May 30, 1998, The Company issued 1,000,000 shares in exchange for
3,250,000 of NuOasis Resorts, Inc.
NOTE 5 - ACQUISTION OF SUBSIDIARY
On May 1, 1998, The Company acquired 100% of the outstanding shares of
Oasis Resort, Hotel & Casino-III, Inc. by issuing 3,010,000 of its
common shares.
F-7
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
Plan of Operations
As used herein, the term "Company" refers to Flexweight Corporation, a
Kansas corporation , and its subsidiaries and predecessors, unless otherwise
indicated. The Company had no revenues from operations in either of the last two
fiscal years.
The Company is in the process of completing plans which include the
development and operation of a casino resort. In furtherance of its plans, the
Company's subsidiary Oasis Hotel, Resort & Casino-III, Inc. ("Oasis") retained
United States Gaming Development, Inc. ("Development") on April 30, 1998.
Development is in the process of preparing a feasibility and marketing study on
the operation of a casino and entertainment center in Oasis, Nevada. Development
has agreed to accept stock in the Company in exchange for its services.
To date, Development has been issued 3,556 shares of the Company's
common stock. A draft of the report has been completed. However, a substantial
amount of additional planning and research is necessary before the Company will
be able to determine whether a casino operation is feasible in Oasis, Nevada.
Nonetheless, based upon the current information available, the Company's
president, Walter Sanders believes that Oasis, Nevada has the potential to be a
successful destination resort, if the Company can obtain the necessary financing
to launch the operation on the proper scale. Until the feasibility study is
complete, the Company will not be able to determine whether it will be able to
obtain the necessary financing to launch a casino and entertainment center. The
preliminary projections provided by Development show that the Company would need
approximately $40,000,000 in capital to establish a casino and entertainment
center that would attract a sufficient number of customers to make Oasis a
successful destination resort.
The Company's subsidiary, Oasis, is currently in the process of setting
the stage to hopefully commence a limited casino operation that will include a
truck stop, convenience store and limited auto repair shop. The Company's first
step towards operation includes the acquisition of Oasis. On May 1, 1998, the
Company and its wholly owned subsidiary Flex Holdings, Inc. ("Flex Holdings")
entered into a Reorganization Agreement with Oasis. The effect of the
Reorganization Agreement caused Oasis to become a wholly owned subsidiary of the
Company. The Company issued a total 3,010,000 shares of its common stock to the
shareholders of Oasis in exchange for 100% of Oasis' issued and outstanding
shares.
The Company's primary reason for acquiring Oasis was to obtain an
ownership interest in 20 acres of real property that Oasis had under contract to
purchase from Oasis International Hotel & Casino, Inc. (the "Seller") pursuant
to a Real Estate Purchase Agreement ("Real Estate Agreement") dated April 9,
1998. The terms of the Real Estate Agreement call for a purchase price of
$5,000,000 and a deposit of Oasis shares in the amount of 250,000 shares of its
restricted common stock under ss.4(2) of the Securities Act of 1933, which was
valued at $25,000 and applied towards the purchase price at closing. In
addition, Oasis was to pay $1,000,000 in cash at closing or in stock of Oasis at
50% of the bid price.
The terms of the Real Estate Agreement have since been modified to
allow for payments in cash or stock of the Company. Oasis closed on the property
May 7, 1998, by transferring 1,000,000 shares of the Company's common stock
valued at $1.00 per share. The value of $1.00 was determined by the board of
directors based upon the limited trading volume, the large number of shares and
the resale restrictions placed upon the shares. In addition, Oasis assumed a
$550,000 First Deed of Trust secured by the property and
4
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550,000 shares of common stock of the Company. The term of the note is for one
year with an option to renew for an additional year with interest only payments
of $5,000 per month with an interest of 10.9% annually. As an inducement to
convince the First Deed of Trust holder to extend credit to Oasis, an additional
100,000 shares of the Company's common stock was issued to the First Deed Trust
Holder and the amount of the under lying debt was increased from $300,000 to
$550,000. The Company and Oasis agreed to this arrangement because of its lack
of operating history and the high degree of risk involved in executing the
Company's and Oasis' plan of operations.
The Sellers agreed to accept a Second Deed of Trust in the amount
$3,425,000. The term of the Second Deed of Trust is for 30 years with an
interest rate of 9% with payment being made monthly. To date, Oasis has made all
the required payments under the terms of the First and Second Deeds of Trust.
The Company's ability to continue to make the required payments is contingent
upon the Company or Oasis raising additional capital to begin operations and
obtaining additional financing.
Furthermore, Oasis has not obtained an MAI appraisal on the Oasis,
Nevada property. Although no MAI appraisal has been obtained management believes
that the purchase price is fair and reflects the value of the property.
Management bases it opinion on the Company's intended use for the property as a
casino and entertainment center; the sale of casino property in Wendover,
Nevada, located approximately 30 miles from the Oasis, Nevada property and the
initial feasibility study conducted by Development which outlines the amount of
funds typically allocated for the purchase of property intended for use as a
casino. The Oasis, Nevada property is currently zoned for casino or other
commercial use.
The Company's subsidiary is currently seeking out sophisticated
investors to purchase its shares in order to renovate existing improvements on
the 20 acre parcel and investigate the feasibility of operating a limited casino
operation which would include approximately 10 slot machines. The improvements
include a truck stop with gas pumps and shower facilities, a convenience store,
a restaurant and a small motel. All of these structures need substantial
renovations. The initial projections show that Oasis will need about $1,000,000
to cover property payments, renovations and operating deficiencies for the first
year.
The operation of the limited casino operations with the truck stop,
convenience store, restaurant, and a small motel is included as part of the
Company's overall business plan being prepared by Development. This phase is
considered Phase I of the Company's plan of operation and the preliminary
projections of $40,000,000 stated above is set forth as Phase III. The Company's
ultimate goal is to attain profitability through its plans as set forth in Phase
III. While the Company's management preliminary analysis appears to show that
the project is feasible. However, management stresses that a multitude of
unexpected occurrences could render the plan unfeasible. Furthermore, management
anticipates difficulty in obtaining financing because the Company lacks a track
record in the casino business. Since the Company will most likely have a
difficult time obtaining financing, the probability of success is currently low.
To account for the high degree of risk and the current low probability
for success in starting up a casino and entertainment center, management is
currently searching out acquisition and merger candidates in the casino, hotel
or resort business. In addition, the Company has hired several consulting
companies to assist the Company in finding these candidates as well as assist in
the preparation of its corporate documents. During the quarter ended May 31,
1998, the Company issued 708,962 shares of its stock to these consultants.
On May 1, 1998, the Company also entered into an Exchange Agreement
with NuOasis International, Inc., a corporation organized under the laws of the
commonwealth of Bahamas ("International") whereby the Company issued 1,000,000
of its restricted shares of common stock in exchange for 3,250,000 shares of
5
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NuOasis Resorts, Inc., a Nevada corporation, stock. Pursuant to this Exchange
Agreement the Company granted International an option to purchase up to 250,000
shares of its common stock at $.10 per share. The term of the option is through
July 1, 1999, and allows International to adjust the number of options to an
amount that allows International to maintain the greater of its percentage
ownership in the Company of 19.5% or a $2.5 million market value based upon the
trading price of the Company's stock on the NASDAQ bulletin board. In addition,
the Company is required to approve the appointment of a director to the
Company's board of directors upon submission of a candidate by International
that is acceptable to the Company.
The Company intends to continue to issue additional shares to pay for
services since it lacks revenues to do so. Accordingly, the shareholders of the
Company can expect to be substantially diluted until the Company can generate
sufficient revenues that would allow it to pay for its expenses in cash.
PART II
ITEM 1. LEGAL PROCEEDINGS
The Company is not a party to any pending legal proceedings that is not
incidental to the Company's business.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
On April 8, 1998 at 10:15 a.m., the Company held a Special Meeting of
Shareholders at 10100 Petunia Way, Sandy, Utah 8409. The matters brought before
the shareholders, included:
Proposal 1. Ratification of the appointment of Tammy Gehring,
Cliff Halling and BonnieJean C. Tippets to the
Company's board of directors;
Proposal 2. Amendment to the Company's Articles of Incorporation
to increase the total number of authorized shares of
the Company's common stock from 5,000,000 to
25,000,000;
Proposal 3. To effect a 1-for-100 reverse split of the Company's
issued and outstanding common stock; and
Proposal 4. Ratification of Jones, Jensen & Company as the
Company's independent auditors for the fiscal year
end August 31, 1998.
6
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The number of vote were cast as follows:
FOR AGAINST ABSTAIN WITHHELD
Proposal 1. 2,794,093 11,333 5,200 0
Ms. Gehring
Proposal 1. 2,760,093 45,333 5,200 0
Mr. Halling
Proposal 1. 2,800,093 5,333 5,200 0
Ms. Tippetts
Proposal 2. 2,512,277 14,900 3,983 0
Proposal 3. 2,737,643 52,700 20,283 0
Proposal 4. 2,799,793 7,500 3,333 0
ITEM 5. OTHER INFORMATION
Change in Control
On May 1, 1998, Tammy Gehring, BonnieJean C. Tippetts and Cliff Halling
resigned from their respective positions as officers and directors of the
Company. The Company's current board and executive officers consist of the
following individuals:
Name Age Positions
Walter Sanders 52 CEO, President and Director
Charles (Sonny) Longson 55 Vice-President and Director
Walter Sanders was appointed CEO, President and Director of the Company on
May 1, 1998. Mr. Sanders is currently the Mayor of the City of West Wendover,
Nevada and the President of Nevlink Enterprises, Inc. a construction company
("Nevlink"). Mr. Sander's construction experience includes the development of
both commercial and residential projects primarily in the western region of the
United States. Mr. Sanders, through his role as President of Nevlink, is
currently focusing on the development of casinos, hotels, golf courses, housing
projects and large public works projects. Mr. Sanders has a wide range of skills
in engineering, design and surveying. Mr. Sanders experience also includes a
substantial role in the development of several casinos located in Wendover,
Nevada including: Nevada Crossing Hotel and Casino, State Line Hotel and Casino,
Peppermill Hotel and Casino and several other casinos.
Charles R. Longson was appointed Vice-President and Director of the Company
on May 1, 1998. Mr. Longson has been the general manager of the Silver Smith
Casino and Resort in Wendover, Nevada since 1979. His experience includes over
24 years in developing and managing large gaming resorts. Mr. Longson
specializes in start-up construction, including: design, development, floor
layouts and operations and personnel.
7
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Subsequent Events
On June 18, 1998, the Company entered into a Stock Exchange Agreement
with Kelly's Coffee Group, Inc. ("Kelly's") whereby the Company exchanged 25,000
shares at $4.00 a share for 2,000,000 shares of Kelly's at $.05 per share. The
Company used the trading price as quoted on the NASDAQ bulletin board on June
18, 1998, as a basis for exchange. However, the Company will book the
transaction for less than $200,000 for the 1998 year end because of resale
restrictions and the potential illiquidity of Kelly's stock.
On June 18, 1998, the Company entered into a Stock Exchange Agreement
with AmeriResource Technologies, Inc. ("ARET") whereby the Company exchanged
113,800 shares at $4.00 a share for 16,257,166 shares of ARET at $.028 per
share. The Company used the trading price as quoted on the NASDAQ bulletin board
on June 18, 1998, as a basis for exchange. However, the Company will book the
transaction for less than $455,200 for the 1998 year end because of resale
restrictions and the potential illiquidity of the ARET stock.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:Exhibits required to be attached by Item 601 of Regulation S-B
are listed in the Index to Exhibits on page 10 of this Form 10-QSB, and
are incorporated herein by this reference.
(b) Reports on Form 8-K. No reports were filed on Form 8-K during the quarter
ended May 31, 1998.
8
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SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized, this 17th day of July 1998.
FLEXWEIGHT CORPORATION
Date: July 17, 1998 By:/s/Walter G. Sanders
Name : Walter G. Sanders
Title: President
9
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INDEX TO EXHIBITS
EXHIBIT PAGE DESCRIPTION
NO. NO.
MATERIAL CONTRACTS
10(i)(a) 11 Reorganization Agreement between the Company and
Oasis Hotel Resort & Casino-III, Inc. dated May 1,
1998.
10(i)(b) 21 Real Estate Purchase Agreement between Oasis Hotel
Resort & Casino -III, Inc. and Oasis Hotel &
Casino, Inc. dated April 9, 1998.
10(i)(c) 26 Exchange Agreement between NuOasis International,
Inc. and the Company dated May 21, 1998.
10(i)(d) 33 Option Agreement between NuOasis International,
Inc. and the Company dated May 30, 1998.
10
REORGANIZATION AGREEMENT
THIS REORGANIZATION AGREEMENT entered into this 1st day of May, 1998
by, between and among Flexweight Corporation ("FLEX"), a Kansas corporation,
FLEX Holdings, Inc. ("FLEX Holdings"), a Nevada Corporation that is a
wholly-owned subsidiary of FLEX and Oasis Hotel, Resort & Casino - III, Inc., a
Nevada Corporation ("OASIS").
NOW, THEREFORE, in consideration of the mutual covenants, agreements,
representations and warranties herein contained, the parties hereby agree as
follows:
1. Merger. FLEX agrees to cause to be organized, a wholly-owned subsidiary
known as FLEX Holdings (a Nevada Corporation). At such time as FLEX
Holdings has been organized and is, in the opinion of FLEX, permitted
by law to execute an acceptance of this Agreement, the board of
directors of FLEX Holdings shall adopt resolutions authorizing the
execution and delivery of the form of plan of merger (Exhibit "A") for
the purpose of a merger of FLEX Holdings with and into OASIS as the
surviving corporation. On adoption of such resolutions and in
consideration of the execution and delivery of this Agreement by OASIS,
FLEX and FLEX Holdings, OASIS shall survive the merger with FLEX
Holdings and become a wholly-owned subsidiary of FLEX.
2. Exchange of Shares. Subject to all the terms and conditions of this
Agreement, all of the OASIS Common Stock outstanding on the date of
closing, as defined later in this Agreement, shall be converted into
3,010,000 shares of FLEX Common Stock (the "Exchanged Stock" or
"Exchanged Shares"). At Closing, the Exchanged Stock shall be issued to
the OASIS stockholders (the "OASIS Stockholders" or "OASIS
Shareholders") thereof in proportion to their interests as they appear
on the books and records of OASIS (Exhibit "B") and the OASIS
Stockholders shall surrender to FLEX, the certificates representing the
OASIS Common Stock which shall be canceled, and all rights in respect
thereof shall cease. The shares of Exchanged Stock issued pursuant to
this Section and the merger shall be, when issued, legally issued,
fully paid, and non-assessable. The merger shall become effective at
the time Articles of Merger are filed with the Secretary of State of
the state of Nevada, and shall have the effect set forth in the
corporation law of the State of Nevada.
a. As the surviving corporation, OASIS may take any action in the
name and on behalf of either FLEX Holdings or OASIS in order
to carry out and effectuate the transactions contemplated by
this Agreement.
b. The directors and officers of OASIS (Exhibit "C") immediately
prior to the merger will remain the directors and officers of
OASIS after the merger and shall further replace the current
directors and officers of FLEX and FLEX Holdings (Exhibit
"D").
c. The Articles of Incorporation of OASIS in effect immediately
prior to the merger will remain the Articles of Incorporation
after the merger, without any modification or amendment as a
result of the merger.
d. The Bylaws of OASIS in effect immediately prior to the merger
will remain the Bylaws after the merger, without any
modification or amendment as a result of the merger.
3. Exemption from Registration. The parties hereto intend that the
Exchanged Shares shall be exempt from the registration requirements of
the Securities Act of 1933, as amended (the " 1933 Act"), pursuant to
Section 4(2) of the 1933 Act and the rules and regulations promulgated
thereunder and exempt from the registration requirements of the
applicable states. In furtherance thereof, the OASIS Shareholders will
execute and deliver to FLEX at Closing, investment letters suitable to
FLEX counsel, in form substantially as per Exhibit "E" attached hereto.
Page -1-
<PAGE>
4. Non-taxable Transaction. The parties intend to effect this transaction
as a non-taxable reorganization.
5. Warranties and Representations of OASIS In order to induce FLEX and
FLEX Holdings to enter into this Agreement and to complete the
transaction contemplated hereby, OASIS warrants and represents to FLEX
and FLEX Holdings that:
a. Organization and Standing. OASIS is a corporation duly
organized, validly existing and in good standing under the
laws of the State of Nevada, is qualified to do business with
a foreign corporation in every other state or jurisdiction in
which it operates to the extent required by the laws of such
states and jurisdictions, and has full power and authority to
carry on its business as now conducted and to own and operate
its assets, properties and business. Attached hereto as
Exhibit "F" are true and correct copies of OASIS's Certificate
of Incorporation, Amendments thereto and all current By-laws.
No changes thereto will be made in any of the Exhibit "F"
documents before Closing.
b. Capitalization. As of Closing, OASIS's entire authorized
equity capital consists of 20,000,000 shares of Common Stock,
of which 3,010,000 shares of Common Stock will be outstanding
as of the Closing and 5,000,000 shares of Preferred Stock of
which there are no shares issued and outstanding. As of
Closing, there will be no other voting or equity securities
authorized or issued, nor any authorized or issued securities
convertible into voting stock, and no outstanding
subscriptions, warrants, calls, options, rights, commitments
or agreements by which OASIS is bound, calling for the
issuance of any additional shares of Common Stock of any other
voting or equity security. The OASIS's Common Shares
constitute 100% of the equity capital of OASIS, which
includes, inter ----- alia, 100% of OASIS's voting power,
right to receive dividends, when, and if declared ----- and
paid, and the right to receive the proceeds of liquidation
attributable to Common Stock, if any. From the date hereof,
and until the Closing Date, no dividends or distributions of
capital, surplus, or profits shall be paid or declared by
OASIS in redemption of their outstanding shares or otherwise,
and except as described herein no additional shares shall be
issued by said corporation.
c. Ownership of OASIS Shares As of the date hereof, the OASIS
Stockholders are the sole owners of the OASIS's Common Shares,
free and clear of all liens, encumbrances and restrictions of
any nature whatsoever, except by reason of the fact that the
OASIS's Common Shares will not have been registered under the
1933 Act, or any applicable State Securities Laws.
d. Taxes. Within the times and in the manner prescribed by law,
OASIS has filed all federal, state and local income or other
tax returns and reports that it is required to file with all
governmental agencies and has paid or accrued for payment all
taxes as shown on such returns, such that a failure to file,
pay or accrue will not have a material adverse effect on
OASIS.
e. No Pending Actions. To the best of OASIS's knowledge, after
diligent inquiry, there are no legal actions, lawsuits,
proceedings or investigations, either administrative or
judicial, pending or threatened against or affecting OASIS, or
against any of OASIS's officers or directors that arise out of
their operation of OASIS, nor is OASIS in violation of any
Federal or State law, material ordinance or regulation of any
kind whatever, including, but not limited to laws, rules and
regulations governing the sale of its products, services or
securities. OASIS is not an investment company as defined in
or otherwise subject to regulation under, the Investment
Company Act of 1940.
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<PAGE>
f. Ownership of Assets. OASIS has good, marketable title, without
any liens or encumbrances of any nature whatever, to all of
the following: its assets, properties and rights of every type
and description, including, without limitation, all cash on
hand and in banks, certificates of deposit, stocks, bonds, and
other securities, goodwill, customer lists, its corporate name
and all variants thereof, trademarks and trade names,
copyrights and interests thereunder, licenses and
registrations, pending licenses and permits and applications
therefor, inventions, processes, know-how, trade secrets, real
estate and interests therein and improvements thereto,
machinery, equipment, vehicles, notes and accounts receivable,
fixtures, rights under agreements and leases, franchises, all
rights and claims under insurance policies and other contracts
of whatever nature, rights in funds of whatever nature, books
and records and all other property and rights of every kind
and nature owned or held by OASIS as of this date, and will
continue to hold such title on and after the completion of the
transactions contemplated by this Agreement; and, except in
its ordinary course of business, OASIS has not disposed of any
such asset since the date of the most recent balance sheet
described herein.
g. Subsidiaries. OASIS has no subsidiaries and owns no interest in
other enterprises.
h. No Interest in Suppliers, Customers, Landlords or Competitors.
No member of the family of any of OASIS's Stockholders or
employees has any interest of any nature whatever in any
supplier, customer, landlord or competitor of OASIS.
i. No Debt Owed by OASIS. Except as set forth in Exhibit "K",
OASIS does not owe any money, securities, or property to any
member of the family of any of OASIS's Stockholders or
employees either directly or indirectly. To the extent that
OASIS may have any undisclosed liability to pay any sum or
property to any such person or entity or any member of their
families, such liability is hereby forever irrevocably
released and discharged. OASIS does not have any material
debt, liability or obligation of any nature, whether accrued,
absolute, contingent or otherwise, and whether due or to
become due, that is not reflected in the balance sheet of
OASIS included hereto. OASIS does not now have, nor will it
have on the Closing Date any pension plan, profit-sharing
plan, or stock purchase plan for any of its employees or
certain options to proposed executive officers.
j. Corporate Records. All of OASIS's books and records,
including, without limitation, its books of account, corporate
records, minute book, stock certificate books and other
records are up-to-date, complete and reflect accurately and
fairly the conduct of its business in all material respects
since its date of incorporation.
k. OASIS Financial Statements. Within 60 days from the date of
this Agreement, OASIS will provide to the approval of FLEX,
audited financial statements for OASIS for the period ended
April 30, 1998 prepared in accordance with generally accepted
accounting principles in the United States ("GAAP") (or as
permitted by regulation S-X, S-B and/or the rules promulgated
under the 1933 Act and the 1934 Act and audited by independent
certified public accountants with substantial SEC experience).
l. Conduct of Business. Prior to Closing, the OASIS Shareholders
represent that OASIS shall conduct its business in the normal
course. OASIS shall not amend its Articles of Incorporation ,
as the case may be, or Bylaws (except as may be described in
this Agreement), declare dividends, redeem securities, incur
additional or newly-funded liabilities outside the ordinary
course of business, acquire or dispose of fixed assets, change
employment terms, enter into any material or long-term
contract, guarantee obligations of any third party, settle or
discharge any balance sheet receivable for less than its
stated amount, pay more on any liability than its stated
amount, or enter into any other transaction without the prior
approval of FLEX, not to be unreasonably withheld.
Page -3-
<PAGE>
m. Corporate Summary. Within 30 days from the date of this
Agreement, OASIS will provide to the approval of FLEX, a
feasibility study and business plan to be attached hereto as
Exhibit "M", which accurately describes OASIS's business,
assets, proposed operations and management.
6. Warranties and Representations of FLEX. In order to induce OASIS to
enter into this Agreement and to complete the transaction contemplated
herein, FLEX warrants and represents to OASIS that:
a. Organization and Standing. FLEX is a corporation duly
organized, validly existing and in good standing under the
laws of Kansas, is qualified to do business as a foreign
corporation in every other state in which it operates to the
extent required by the laws of such states, and has full power
and authority to carry on its business as now conducted and to
own and operate its assets, properties and business. Attached
hereto as Exhibit "N" are true and correct copies of FLEX's
Certificate of Incorporation, Amendments thereto and all
current By-laws. No changes thereto will be made in any of the
Exhibit "N" documents before Closing.
b. Capitalization. FLEX's entire authorized equity capital
consists of 25,000,000 shares of voting Common Stock, $0.10
par value. As of the Closing, but immediately prior to the
reorganization contemplated herein, FLEX shall have a total of
49,625 shares of its Common Stock issued and outstanding.
After giving effect to the 700,000 shares to be issued to
consultants (Exhibit "O"), pursuant to a S-8 Registered
offering under the 1933 Act, and the 3,010,000 shares of
restricted stock issued to OASIS, pursuant to the
Reorganization, there will be a total of 3,759,625 shares of
FLEX issued and outstanding. Upon such issuance, all of the
FLEX Common Stock will be validly issued fully paid and
non-assessable. The relative rights and preferences of FLEX's
equity securities are set forth in FLEX's Articles of
Incorporation, Amendments thereto and all current By-laws
(Exhibit "N"). Except as set forth in Exhibit "Q", there are
no voting or equity securities convertible into voting stock,
and no outstanding subscriptions, warrants, calls, options,
rights, commitments or agreements by which FLEX is bound,
calling for the issuance of any additional shares of Common
Stock or any other voting or equity security. Accordingly, as
of the Closing the 3,010,000 shares being issued to the OASIS
Stockholders will constitute approximately 80.0% of the total
outstanding shares of FLEX, which includes inter alia, that
same percentage of FLEX's voting power, right to receive
dividends, when, as and if declared and paid, and the right to
receive the proceeds of liquidation attributable to Common
Stock, if any. The shares issued to consultants and the 49,625
shares previously issued, will constitute approximately 20.0%
of the total outstanding shares of FLEX after the
reorganization. All of the 49,625 previously issued shares of
FLEX Corporation were issued pursuant to valid exemptions from
registration under the 1933 Act.
c. Ownership of Shares. By FLEX's issuance of the FLEX Common
Shares to the OASIS Stockholders pursuant to this Agreement,
the OASIS Stockholders will thereby acquire good and absolute
marketable title thereto, free and clear of all liens,
encumbrances and restrictions of any nature whatsoever, except
by reason of the fact that such FLEX Common Shares will not
have been registered under the 1933 Act or any state
securities laws and will be subject to the resale terms under
the investment letter (Exhibit "E").
d. Taxes. At or before Closing, FLEX will have filed all federal,
state and local income or other tax returns and reports that
it is required to file with all governmental agencies and has
paid all taxes as shown on such returns. All of such returns
are true and complete.
Page -4-
<PAGE>
e. No Pending Actions. To the best of FLEX's knowledge, after
diligent inquiry, there are no legal actions, lawsuits,
proceedings or investigations, either administrative or
judicial, pending or threatened against or affecting FLEX, or
against any of FLEX's officers or directors that arise out of
their operation of FLEX, nor is FLEX in violation of any
Federal or State law, material ordinance or regulation of any
kind whatever, including, but not limited to laws, rules and
regulations governing the sale of its products, services or
securities. FLEX is not an investment company as defined in or
otherwise subject to regulation under, the Investment Company
Act of 1940.
f. Filings with the Securities and Exchange Commission "SEC".
FLEX has made all filings with the SEC that it has been
required to make under the Securities Act and the Securities
Exchange Act of 1934 (the "Exchange Act")(collectively, the
"Public Reports"). Each of the Public Reports has complied
with the Securities Act and the Exchange Act in all material
respects. None of the Public Reports, as of their respective
dates, currently contain or have contained any untrue
statement of a material fact or omitted to state a material
fact necessary in order to make the statements made therein,
in light of the circumstances under which they were made,
false or misleading.
g. Corporate Records. All of FLEX's books and records, including
without limitation, its book of account, corporate records,
minute book, stock certificate books and other records are
up-to-date, complete and reflect accurately and fairly the
conduct of its business in all respects since its date of
incorporation. All of said books and records will be delivered
to OASIS at Closing.
7. Warranties and Representations of FLEX Holdings. In order to induce
OASIS to enter into this Agreement and to complete the transaction
contemplated herein, FLEX Holdings warrants and represents to OASIS
that:
a. Organization and Standing. FLEX Holdings is a corporation duly
organized, validly existing and in good standing under the
laws of Nevada, is qualified to do business as a foreign
corporation in every other state in which it operates to the
extent required by the laws of such states, and has full power
and authority to carry on its business as now conducted and to
own and operate its assets, properties and business. Attached
hereto as Exhibit "P" are true and correct copies of FLEX
Holdings's Certificate of Incorporation, Amendments thereto
and all current By-laws. No changes thereto will be made in
any of the Exhibit "P" documents before Closing.
b. Capitalization. FLEX Holdings entire authorized equity capital
consists of 20,000,000 shares of voting Common Stock and
5,000,000 shares of Preferred Stock, both $0.001 par value. As
of the Closing, but immediately prior to the reorganization
contemplated herein, FLEX Holdings shall have a total of 100
shares of its Common Stock issued and outstanding owned 100%
by FLEX free and clear of all liens, encumbrances and
restrictions of any nature whatsoever, except by reason of the
fact that such FLEX Holdings shares will not have been
registered under the 1933 Act or any state securities laws..
The FLEX Holdings shares owned by FLEX are validly issued
fully paid and non- assessable. The relative rights and
preferences of FLEX Holding's equity securities are set forth
in FLEX Holding's Articles of Incorporation, Amendments
thereto and all current By-laws (Exhibit "P"). There are no
other voting or equity securities convertible into voting
stock, and no outstanding subscriptions, warrants, calls,
options, rights, commitments or agreements by which FLEX
Holdings is bound, calling for the issuance of any additional
shares of Common Stock or any other voting or equity security.
Accordingly, as of the Closing the 100 shares of FLEX Holdings
owned by FLEX constitutes 100% of the total outstanding shares
of FLEX Holdings, which includes inter ----- alia, that same
percentage of FLEX's voting power, right to receive dividends,
when, as ----
Page -5-
<PAGE>
and if declared and paid, and the right to receive the
proceeds of liquidation attributable to Common Stock, if any.
c. Taxes. At or before Closing, FLEX Holdings will have filed all
federal, state and local income or other tax returns and
reports that it is required to file with all governmental
agencies and has paid all taxes as shown on such returns. All
of such returns are true and complete.
d. No Pending Actions. To the best of FLEX Holding's knowledge,
after diligent inquiry, there are no legal actions, lawsuits,
proceedings or investigations, either administrative or
judicial, pending or threatened against or affecting FLEX
Holdings , or against any of FLEX Holding's officers or
directors that arise out of their operation of FLEX Holdings,
nor is FLEX Holdings in violation of any Federal or State law,
material ordinance or regulation of any kind whatever,
including, but not limited to laws, rules and regulations
governing the sale of its products, services or securities.
FLEX Holdings is not an investment company as defined in or
otherwise subject to regulation under, the Investment Company
Act of 1940.
e. Corporate Records. All of FLEX Holdings books and records,
including without limitation, its book of account, corporate
records, minute book, stock certificate books and other
records are up-to-date, complete and reflect accurately and
fairly the conduct of its business in all respects since its
date of incorporation. All of said books and records will be
delivered to OASIS at Closing.
8. No Misleading Statements or Omissions. Neither this Agreement nor any
Exhibit, Schedule or Documents attached hereto or presented to FLEX and
FLEX Holdings by OASIS or to OASIS by FLEX and FLEX Holdings in
connection herewith, contains any materially misleading statement, or
omits any fact of statement necessary to make the other statements or
facts therein set forth not materially misleading.
9. Validity of this Agreement. By Closing, all corporate and other
proceedings required to be taken by OASIS, FLEX Holdings and FLEX in
order to enter into and to carry out this Agreement will have been duly
and properly taken. This Agreement has been duly executed by OASIS,
FLEX Holdings and FLEX and constitutes the valid and binding obligation
of each of them and shall inure to the benefit of the heirs, executors,
administrators and assigns of the OASIS Shareholders and upon the
successors and assigns of FLEX and FLEX Holdings, except to the extent
limited by applicable bankruptcy, reorganization, insolvency,
moratorium or other laws relating to or effecting generally the
enforcement of creditors rights. The execution and delivery of this
Agreement and the carrying out of its purposes will not result in the
breach of any of the terms or conditions of, or constitute a default
under or violate the parties Certificate of Incorporation and Amendment
thereto or document of undertaking, oral or written, to which the
parties are a party to or is bound or may be affected by, nor will such
execution, delivery and carrying out violate any order, writ,
injunction, decree, law, rule or regulation of any court, regulatory
agency or other governmental body; and the business now conducted by
the parties can continue to be so conducted after completion of the
transaction contemplated hereby, with OASIS as a wholly- owned
subsidiary of the FLEX resulting from the reorganization between FLEX,
FLEX Holdings and OASIS.
10. Enforceability of this Agreement. When duly executed and delivered,
this Agreement and the Exhibits hereto, which are incorporated herein
and made a part hereof, are legal, valid, and enforceable by the
parties hereto. according to their terms, except to the extent limited
by applicable bankruptcy, reorganization, insolvency, moratorium or
other laws relating to or effecting generally the enforcement of
creditors rights.
Page -6-
<PAGE>
11. Access to Books and Records. During the course of this transaction and
up until Closing, FLEX and OASIS agree to make available for inspection
all corporate books, records and assets, and otherwise afford to each
other and their respective representatives, reasonable access to all
documentation and other information concerning the business, financial
and legal conditions of each other for the purpose of conducting a due
diligence investigation thereof. Such due diligence investigation shall
be for the purpose of satisfying each party as to the business,
financial and legal condition of each other for the purpose of
determining the desireability of consummating the proposed
Reorganization. FLEX and OASIS further agree to keep confidential and
not use for their own benefit, except in accordance with this
Reorganization Agreement, any information or documentation obtained in
connection with any such investigation.
12. Indemnification. All representations, warranties, covenants and
agreements made herein and in the Exhibits attached hereto shall
survive the execution and delivery of this Agreement and payment
pursuant thereto. The officers and directors of the parties hereto
hereby agree, jointly and severally, to indemnify, defend, and hold the
other harmless from and against any damage, loss liability, or expense
(including, without limitation, reasonable expenses of investigation
and reasonable attorney's fees) arising out of any material breach of
any representation, warranty, covenant, or agreement made by the
officers and directors of the other parties to this Agreement.
13. Restricted Shares; Legend. All of the FLEX Common Shares issued to the
OASIS Stockholders herein will be "restricted securities" as defined in
Rule 144 under the 1933 Act; and each stock certificate issued to the
OASIS stockholders hereunder will bear the usual restrictive legend to
such effect. Appropriate Stop Transfer instructions will be given to
FLEX's stock transfer agent.
14. No Reverse Split. As a material term hereto and a condition to FLEX
entering into this Agreement, OASIS and the OASIS Shareholders agree
that for a period of twelve (12) months from the date of Closing, there
will be no reorganizations, recapitalizations or reverse stock splits
which would have a dilutive effect on the pre-acquisition shareholders
of FLEX, without the prior written consent of the existing directors of
FLEX as of the date of this Agreement.
15. Expenses. Each of the Constituent Corporations shall bear and pay all
costs and expenses incurred by it or on its behalf in connection with
the consummation of this Agreement, including, without limiting the
generality of the foregoing, fees and expenses of financial
consultants, accountants and counsel and the cost of any documentary
stamps, sales and excise taxes which may be imposed upon or be payable
in respect to the transaction.
16. Closing. The Closing of the transactions contemplated by this Agreement
("Closing") shall take place at 1:00 P.M. on the day after all parties
have supplied the required documents and obtained the required
approvals as discussed herein except that OASIS shall have until 60
days from the date of this Agreement to obtain the financial statements
as discussed herein. Closing shall take place at the offices of 268
West 400 South, Salt Lake City, Utah 84101 or such other date and place
as the parties hereto shall agree upon or by FAX and Federal Express.
17. Deliveries. At the Closing, the OASIS Shareholders as listed on Exhibit
"B" attached hereto shall deliver certificates representing the OASIS
shares to FLEX for cancellation, and FLEX shall deliver either
certificates representing the Exchanged Shares, duly issued to the
OASIS Shareholders as listed on Exhibit "B" attached hereto, or a copy
of a letter from FLEX to its transfer agent, instructing such transfer
agent to issue the certificates representing the FLEX Shares to the
OASIS Shareholders. Additionally, all other documents and items
referred to herein shall be exchanged.
18. Conditions Precedent to Closing.
a. The obligations of OASIS under this Agreement shall be and are
subject to fulfillment, prior to or at the Closing of each of
the following conditions:
Page -7-
<PAGE>
i. That each of the representations and warranties of
FLEX contained herein shall be true and correct at
the time of the Closing date as if such
representations and warranties were made at such
time;
ii. That FLEX shall have performed or complied with all
agreements, terms and conditions required by this
Agreement to be performed or complied with by them
prior to or at the time of the Closing;
iii. That OASIS's representations and warranties contained
herein shall be true and correct at the time of
Closing date as if such representations and
warranties were made at such time; and
iv. That OASIS has performed or complied with all
agreements, terms and conditions required by this
Agreements to be performed or complied with by them
prior to or at the time of Closing date.
19. Termination. This Agreement may be terminated at any time before or; at
Closing, by:
a. The mutual agreement of the parties;
b. Any party if:
i. Any provision of this Agreement applicable to a party
shall be materially untrue or fail to be
accomplished.
ii. Any legal proceeding shall have been instituted or
shall be imminently threatening to delay, restrain or
prevent the consummation of this Agreement.
iii. There is a materially adverse change in the financial
condition or business operation of the other party.
c. Upon termination of this Agreement for any reason, in
accordance with the terms and conditions set forth in this
paragraph, each said party shall bear all costs and expenses
as each party has incurred and no party shall be liable to the
other.
20. Exhibits. All Exhibits attached hereto are incorporated herein by this
reference as if they were set forth in entirety.
21. Miscellaneous Provisions. This Agreement is the entire agreement
between the parties in respect of the subject matter hereof, and there
are no other agreements, written or oral, nor may this Agreement be
modified except in writing and executed by all of the parties hereto.
The failure to insist upon strict compliance with any of the terms,
covenants or conditions of this Agreement shall not be deemed a waiver
or relinquishment of such right or power at any other time or times.
22. Governing Law. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of Nevada.
23. Notices. All notices, requests, instructions, or other documents to be
given hereunder shall be in writing and sent by registered mail to the
parties at the addresses first appearing herein:
24. Counterparts. This Agreement may be executed in duplicate facsimile
counterparts, each of which shall be deemed an original and together
shall constitute on and the same binding Agreement, with one
counterpart being delivered to each party hereto.
Page -8-
<PAGE>
IN WITNESS WHEREOF, The foregoing Reorganization Agreement, having been
duly approved and adopted by the Board of Directors, and duly approved and
adopted by the stockholders of the constituent corporations, as required, in the
manner provided by the laws of the State of Nevada, the Chairman of the Board,
the President or the Secretary of said corporations, and the Shareholders of
OASIS do now execute this Reorganization Agreement under the respective seals of
said corporation by the authority of the directors and stockholders of each, as
required, as the act, deed and agreement of each of said corporations.
Flexweight Corporation Oasis Hotel, Resort & Casino - III, Inc.
By: By:
Tammy Gehring, President Walt Sanders, President
FLEX Holdings, Inc.
By:
Tammy Gehring, President
Page -9-
<PAGE>
List of Exhibits
Exhibit "A" Plan of Merger.
Exhibit "B" OASIS Stockholders.
Exhibit "C" OASIS officers and directors.
Exhibit "D" FLEX officers and directors.
Exhibit "E" Investment Letters signed by OASIS Stockholders.
Exhibit "F" True and correct copies of OASIS's Certificate of
Incorporation, Amendments thereto and all current By-laws.
Exhibit "K" OASIS's liabilities.
Exhibit "L" OASIS's financial statements.
Exhibit "M" OASIS's Corporate Summary.
Exhibit "N" FLEX's Articles of Incorporation, Amendments thereto and all
current By-Laws.
Exhibit "O" List of Consultants.
Exhibit "P" FLEX Holdings' Articles of Incorporation, Amendments thereto
and all current By-Laws.
Exhibit "Q" FLEX's commitments for issuance of additional shares.
REAL ESTATE PURCHASE AGREEMENT
PARTIES: Oasis Hotel, Resort & Casino III, Inc. - Buyer, a Nevada
Corporation with its principal officers located at 1946
Plateau Way, Wendover, Nevada.
Oasis International Hotel & Casino, Inc. - Seller, a Nevada
corporation with its offices located at 268 West 400 South,
Suite 300, Salt Lake City, Utah 84101.
PROPERTY: Twenty acres of real property, including all improvements
located thereon, located at the Northeast corner of the
intersection of I-80 and Nevada state Highway 233 in the
county of Elko, State of Nevada and commonly known as Oasis,
the twenty acres to be taken from a parcel consisting of 49.96
acres more or less and more specifically described in the
legal description as attached hereto and labeled as Exhibit
"A." The specific twenty acres to be designated by a survey,
subject to the mutual agreement of the parties.
Unless excluded herein, this sale shall include all fixtures presently
attached to the Property: plumbing, heating, air-conditioning and venting
fixtures and equipment, water heater, built-in appliances, light fixtures and
bulbs, bathroom fixtures, curtains and draperies and rods, window and door
screens, storm doors, window blinds, awning, installed television antenna,
satellite dishes and systems, wall-to-wall carpets, fences, trees and shrubs,
inventory, trade fixtures, permits, and licenses, if any such are present on the
property, No items have been specifically represented to be present on the
property. Buyer will grant to Seller an easement for free access to Seller's
property, the easement to be determined during Buyer's due diligence period and
is moveable at the mutual agreement of the parties. No water rights are to be
granted by the sale. Seller agrees to provide water as shall be determined
during Buyer's due diligence.
Seller agrees to sell to Buyer and Buyer agrees to buy from Seller the
property as set forth above upon the following terms and conditions:
Deposit: 250,000 shares, valued at $0.10 each, of common
stock, issued pursuant to regulation 504, in the
buyer to be delivered to seller within 5 business
days of acceptance hereof. The deposit shall be fully
earned by Seller upon delivery thereof.
Price: Total purchase price shall be $5,000,000 for the
property as described herein above, to which the
deposit may be applied, the purchase price to be paid
as provided for at the time of closing.
Payment: The purchase price of $5,000,000 is to be paid with
$1,000,000 in cash at closing, credit for the
deposit, the balance to be seller financed and
secured by the property. Seller will allow for
payments under the terms of repayment to be made with
cash or stock in the buyer corporation at 50% of the
bid price for the stock but only so long as the stock
is quoted. Seller further agrees, upon written
request, to subordinate its secured position in the
property, to loans used in the construction of a
hotel or casino on the property.
DEPOSIT: Within 90 calendar days of this agreement, both parties shall
deposit with an agreed and designated Escrow Holder, all funds and instruments
necessary to complete the sale in accordance with the terms hereof. Escrow fees
to be paid by Buyer.
<PAGE>
CLOSING: This transaction shall be closed on or before 91 days from the
date hereof, or thereafter if extended by the agreement of both parties hereto.
Closing shall occur when: (a) Buyer and Seller have signed and delivered to an
escrow/title company all documents required by this Contract, by written escrow
instructions and by applicable law; and (b) the monies required to be paid under
these documents, have been delivered to the escrow/title company in the form of
cashier's check, collected or cleared funds. Seller and Buyer shall each pay
one-half (1/2) of the escrow Closing fees. Taxes and assessments for the current
year, rents, and interest on assumed obligations shall be prorated as set forth
in this Section. Unearned deposits on tenancies shall be transferred to Buyer at
Closing. Prorations set forth in this Section shall be made as of the date of
Closing.
POSSESSION: Seller shall deliver possession to Buyer upon closing.
BROKER & AGENT: Each party shall be responsible for any commissions to
agents or brokers that it has contracted with.
EVIDENCE OF TITLE: (a) Seller has, or shall gave at Closing, fee title to
the Property and agrees to convey such title to Buyer by general warranty deed,
free of financial encumbrances as warranted herein; (b) Seller agrees to pay for
and furnish Buyer at Closing with a current standard form owner's policy of
title insurance in the amount of the purchase price; (c) the tikle policy shall
conform with Seller's obligations under (a) and (b) above.
SELLER'S DISCLOSURES: Seller will deliver to Buyer the following Seller
Disclosures; (a) a commitment for the policy of title insurance to be issued by
the title company chosen by Seller, including copies of all documents listed as
Exceptions on the Commitment; (b) a copy of all loan documents relating to any
loan now existing which will encumber the Property after closing; and (c) a copy
of all leases affecting the Property not expiring prior to Closing. Seller
agrees to pay any title commitment cancellation charges.
GENERAL CONTINGENCIES: Buyer's approval of the content of items referenced
in Seller's Disclosures and Buyer's inspection of the Property, Any inspection
shall be paid for by Buyer and shall be conducted by an individual/company of
Buyer's choice. Seller agrees to fully cooperate with such inspection and a
walk-through inspection of the Property as reasonably requested by the Buyer.
Buyer shall have 30 days after receipt of the content of Seller's
Disclosures to determine, if, in Buyer's sole discretion, the content of all
Seller Disclosures is acceptable.
If Buyer does not deliver a written objection to Seller regarding a
Seller Disclosure ot the Property Inspection within the time provided above,
that document or inspection will be deemed approved or waived by Buyer.
If Buyer objects, buyer and Seller shall have 21 calendar days after
receipt of the objections to resolve Buyer's objections. Seller may, but shall
not be required to, resolve Buyer's objections. If Buyer's objections are not
resolved within the 21 calendar days, Buyer may void this Contract by providing
written notice to Seller within the same 21 calendar days. If this contract is
not voided by Buyer, Buyer's objection is deemed to have been waived. However,
this waiver does not affect any other matters warranted by Seller.
CHANGES DURING TRANSACTIONS: Seller agrees that no changes in any existing
leases shall be made, no new leases entered into, and no substantial alterations
or improvements to the Property shall be made or undertaken without the written
consent of the Buyer.
<PAGE>
AUTHORITY OF SIGNERS: The persons executing this Contract on behalf of the
Buyer and the Seller warrant that each has the authority to do so and to bind
the named Buyer and Seller corporations.
COMPLETE CONTRACT: This instrument together with its addenda, any attached
exhibits, and Disclosures constitute the entire Contract between the parties and
supersedes and replaces any and all prior negotiations, representations,
warranties, understandings, term sheets or contracts between the parties. This
Contact cannot be changed except by written agreement of the parties.
DISPUTE RESOLUTION: The parties agree that any dispute or claim relating to
this Contract, including but not limited to the disposition of the Deposit, the
breach of termination of this Contract or the services related to this
transaction, shall first be submitted to mediation in accordance with the Rules
of the American Arbitration Association. Disputes shall include representations
made by the parties, any broker or other person or entity in connection with the
sale, purchase, financing, condition or other aspect of the Property to which
this Contract pertains, including without limitation, allegations of
concealment, misrepresentation, negligence and/or fraud. Each party agrees to
bear its own costs of mediation. Any agreement signed by the parties pursuant to
the mediation shall be binding. If mediation fails, the procedures applicable
and remedies available under this Contract shall apply. Nothing in this
paragraph shall prohibit any party from seeking emergency equitable relief
pending mediation. The parties agree that mediation under this paragraph is not
mandatory, but is optional upon agreement of all parties.
DEFAULT: If Buyer defaults, Seller may elect to either retain the Deposit
as liquidated damages or to return the Deposit and sue Buyer to enforce Seller's
rights. If Seller defaults, buyer is entitled to the return of the Deposit or to
sue Seller to enforce Buyer's rights. Where a section of this Contract provides
a specific remedy, the parties intend that the remedy shall be exclusive
regardless of rights which might otherwise be available under common law.
ATTORNEYS FEES: In any action arising out of this Contract, the prevailing
party shall be entitled to costs and reasonable attorney's fees.
APPLICABLE LAW AND VENUE DESIGNATION: The parties agree that the Law of the
State of Nevada shall apply to any issue arising under this Agreement and the
parties further agree and stipulate that the Courts located in the County of
Elko, Nevada have jurisdiction to hear and rule upon any dispute arising under
this Agreement.
ABROGATION: Except for express warranties made in this Contract, the
provisions of this Contract shall not apply after Closing.
RISK OF LOSS: All risk of loss or damage to the Property shall be borne by
Seller until Closing.
TIME IS OF THE ESSENCE: Time is of the essence regarding the dates set
forth in this transaction. Extensions must be agreed to in writing and by all
parties. Performance under eaach section and paragraph of this Contract which
references a date shall be required absolutely by 5:00 p.m. Pacific Time on the
stated date.
ZONING: The parties agree to cooperate in the zoning of any of the
property, including the development of a master plan for the area in support of
any application by either party for zoning change applications.
HEADINGS AND CAPTIONS: The headings or captions of paragraphs are included
solely for convenience. If a conflict exists between any heading or caption and
the text of this Agreement, the text shall control.
<PAGE>
SEVERABILITY: If any of the terms or provisions of this Agreement are
determined to be invalid, such invalid term or provision shall not affect or
impair the remainder of this Agreement, but such remainder shall continue in
full force and effect to the same extent as though the invalid term or provision
were not contained herein.
EXECUTION IN COUNTERPARTS: This Agreement may be executed in two or more
counterparts, each of which may be executed by one of the parties, with the same
force and effect as though all of the parties executing such counterparts have
executed but one instrument.
FACSIMILE (FAX) DOCUMENTS: Facsimile transmission of any sighed original
document, and retransmission of any signed facsimile transmission, shall be the
same as delivery of an original.
SUCCESSORS AND ASSIGNS: This Agreement shall be binding upon and inure to
the benefit of the parties and their respective heirs, legal representatives,
successors and permitted assigns.
ACCEPTANCE: Acceptance occurs when Seller or Buyer, responding to any offer
or counteroffer, (if any) (a) signs the offer or counter where noted to indicate
acceptance; and (b) communicates to the other party or the other party's agent
that the offer or counteroffer has been signed as required.
Oasis Hotel, Resort & Casino III, Inc.
BUYER'S SIGNATURE: /s/Walter Sanders 4-9-98
By: Walter Sanders, President
OASIS INTERNATIONAL HOTEL & CASINO, INC.
SELLER'S SIGNATURE: /s/Richard Surber 4-9-98
By: Richard Surber, President
<PAGE>
REAL PROPERTY DESCRIPTION
Twenty acres of real property located in the County of Elko, State of
Nevada, to be designated by survey from the following parcel described as
follows:
TRACT ONE:
A parcel of land located in Sections 2 and 3, T 36 N, R 66 E, MDB &
Elko County, Nevada, more particularly described as follows:
Beginning at the South 1/4 corner of said Section 2, a point begin
corner no. 1, the true point of beginning.
Thence N 88 deg. 56 min. 46 sec. W, 624.62 feet along the South line of
said Section 2, to corner no. 2, a point being on the Northeasterly
Right of Way of Interstate Route 80,
thence N 02 deg. 47 min. 03 sec. W, 661.90 feet along the North line of
the said East line the SW 1/4 of the SW 14 of Section 2 to corner no.
4, a point being the Northeast corner of the said SW 1/4 of the SW 1/4
of Section 2,
thence N 89 deg. 26 min. 47 sec. W, 1041.89 feet along the North line
of the said Sw 1/4 of the SW 1/4 of Section w to corner no. 5, a point
on the said Northeasterly Right of Way of Interstate Route 80,
thence from a tangent bearing N 45 deg. 17 min. 44 sec. W on a curve to
the right with a radius 4018.00 feet through a central angle of 02 deg.
50 min 36 sec. For an arc length of 199.39 feet along the said
Northeasterly Right of Way of Interstate Route 80 to corner no. 6,
thence N 42 deg. 27 min 08 sec. W, 233.99 feet along the said
Northeasterly Right of Way of Interstate Route 80 to corner no. 7, a
point also being on the West line of said Section 2,
thence N 02 deg. 59 min. 54 sec. W, 118.81 feet along the said West
line of Section 2 to corner no. 8,
thence N 38 deg. 15 min 31 sec. W, 268.12 feet to corner no. 9, a point
also being on the
EXCHANGE AGREEMENT
THIS EXCHANGE AGREEMENT (the "Agreement") is made this day of May 1998,
by and between NuOasis International Inc., a corporation organized under the
laws of the Commonwealth of the Bahamas (the "Company") and Flexweight Corp., a
Kansas corporation ("Flex").
WHEREAS, Flex owns or has the right to acquire a hotel and casino
project in Oasis, Nevada and intends to pursue the business of owning,
developing and operating hotel and casino properties; it is a publicly-held
corporation whose shares are traded in the U.S. on the NASDAQ Electronic
Bulletin Board; and
WHEREAS, the Company is an international company engaged in owning,
developing and operating hotel and casino properties through investments in
equities of operational and development stage hotel and casino companies; and
WHEREAS, the Company owns certain shares of common stock of NuOasis
Resorts Inc., a Nevada corporation ("Resorts"); and
WHEREAS, the Company and Flex wish to diversify their respective
investment portfolios by exchanging shares f Resorts owned by the Company for
shares of Flex to be issued by Flex; and
WHEREAS, this Agreement is executed in reliance upon the transaction
exemption afforded by Section 4(2) of the Securities Act of 1933, as amended
("33 Act") and Regulations S and D as promulgated by the Securities and Exchange
Commission ("SEC") under the 33 Act.
IN CONSIDERATION of the mutual promises contained herein, the benefits
to be derived by each party hereunder and other good and valuable consideration,
the receipt and sufficiency of which are hereby expressly acknowledged, the
Company and Flex agree as follows:
1. Exchange
On the basis of the representations and warranties herein contained,
subject to the terms and conditions set forth herein, Flex agrees to
issue and exchange 1,000,000 shares of its common stock, representing
approximately 19.5% of Flex' total outstanding shares (the "Flex
Shares") and to grant the Company the option to purchase shares of Flex
common stock in the future so as to maintain the great of a 19.5%
equity interest in Flex or $2.5 million in Market Value of Flex Shares,
as more fully described in the Option Agreement attached hereto as
Exhibit "A" (the "Option"). In exchange for the Flex Shares and the
Option the Company shall transfer to Flex Three Million Two Hundred
Fifty Thousand (3,250,000) shares of Resorts (the "Resorts Shares").
2. Closing
A. Method of Exchange. Within ten (10) business days following
execution hereof, the company shall deliver the Resorts Shares
and Flex shall issue and deliver the Flex Shares to the escrow
agent identified in the Joint Escrow Instructions attached
hereto as Exhibit "B" (the "Escrow holder"), in one or more
share certificates, in accordance with this Agreement and the
Joint Escrow Instructions attached hereto. By signing this
Agreement, the Company and Flex each agree to all of the terms
and conditions of, and becomes a party to the Joint Escrow
Instructions, all of the provisions of which are incorporated
herein by this reference as if set forth herein in full.
B. Closing Date. The closing of the exchange contemplated by this
Agreement (the "Closing") shall occur upon such date that the
parties have satisfied their respective obligations and
covenants contained herein, but shall not be later than June
30, 1998. At the Closing, the Company shall assign and deliver
the Resorts Shares to Flex and Flex shall issue and deliver
the Flex Shares to the Company. Notwithstanding the date of
Closing, the Effective Date shall be May 30, 1998.
3. Flex Shares
A. Description. The Flex Shares shall be equal in voting power,
preferences, liquidations rights and relative, participating
optional or any other special rights of Flex' common stock as
presently constituted.
B. Status of Flex Shares. The Flex Shares when issued, will be
validly issued for consideration which Flex hereby
acknowledges and agrees is fair and reasonable. Further, as an
inducement to the Company to enter into this Agreement, Flex
agrees that it will not for any reason place a "stop transfer"
order or assert any claim which wold serve to restrict the
transfer or exchange of the Flex Shares. Flex represents that
it has not created any option, security interest, preemptive
right or encumbrance which could affect the Flex Shares,
otherwise would give rise to any claims by third parties or
create a conflict with or preclude the exchange as
contemplated herein.
4. Flex Business Plan
Flex' working capital, including the proceeds from loans against, or
the sale of the Resorts Shares, will be used for the development of its
Flex Project, a more fully described in Exhibit "C" attached hereto and
incorporated herein by reference.
5. Representations and Warranties of Flex
Flex hereby represents and warrants to the Company that:
A. Organization. Flex is a corporation validly existing and in
good standing under the laws of Kansas, with the pow and
authority to carry on its business as now being conducted. The
execution and delivery of this Agreement and the consummation
of the transaction contemplated in this Agreement have been,
or will be prior to Closing, duly authorized by all requisite
corporate action on the part of Flex. This Agreement has been
duly executed and delivered by Flex and constitutes a binding,
and enforceable obligation of Flex.
B. Capitalization. As of the date of execution of this Agreement,
the capitalization of Flex is comprised of 25,000,000
authorized shares of $.10 par value common stock of which
5,418,588 are issued and outstanding. Al l of the issued and
outstanding shares are duly authorized, validly issued, fully
paid, and nonassessable and have been offered, issued, sold,
and delivered by Flex in compliance with all applicable
securities laws; with the exception of shares issued or
reserved for issuance as disclosed herein, there are no other
outstanding shares, options, warrants, preemptive, conversion,
or other rights issued by or binding on Flex to purchase or
acquire any shares of its capital stock.
C. Third Party Consent. No authorization, consent, or approval of
, or registration or filing with, any governmental authority
or any other person is required to be obtained or made by Flex
in connection with the execution, delivery, or performance of
this Agreement, or if required, Flex has or will obtain same
prior to Closing.
D. Litigation. Neither Flex nor any of its officers and directors
are defendants or plaintiffs against whom a counterclaim has
been made or reduced to judgement, in any litigation or
proceedings before any locate, state or U.S. government, or
any department, board body or agency thereof, which could
result in a judgement or claim against the Flex Project or
otherwise impede or delay the development of the Flex Project,
or result in a claim against the Flex Shares; and,
E. Authority. This Agreement has been duly executed by Flex, and
the execution and performance of this Agreement will not
violate, or result in a breach of, or constitute a default in
any agreement, instrument, judgement, order or decree to which
Flex is a party or to which Flex is subject; and,
F. Disclosure Documents. Flex is a publicly-held company and is
subject to the reporting requirements of Sections 12, 13(a),
14(a), and 15(d) of the Securities and Exchange Act of 1934,
as amended (the "34 Act"), including but not limited to Annual
Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current
Reports on Form 8-K, and proxy statements (the "Disclosure
Documents"). Flex agrees to furnish the Company with a
description of any material changes in Flex' financial
conditions up to and including the date of Closing that may
not be disclosed in the Disclosure Documents.
G. Tax Matters. Flex has filed or will file prior to Closing all
federal, state, and local income, excise, property, and other
tax returns, forms, or reports, which are due or required to
be filed by it and has paid, or made adequate provision for
payment prior to Closing of all taxes, interest, penalty fees,
assessments, or deficiencies shown to be due or claimed to be
due or which have or may become due on or in respect to such
returns or reports.
H. Directors and Officers. The Flex Disclosure Documents
accurately set forth the names and titles of the persons
serving as its directors and officers and their beneficial
interest in the capital of Flex.
I. Full Disclosure. The information concerning Flex, set forth in
this Agreement and in the Disclosure Documents is, to the best
of Flex' knowledge and belief, complete and accurate in all
material respects and does not contain any untrue statement of
a material fact or omit to state a material fact required to
make the statements made, in light of the circumstances under
which they were made, not misleading.
6. Conditions Precedent to Obligations of the Company and Flex
All obligations of the Company under this Agreement are subject to the
fulfillment, prior to or as of the Closing Date, of each of the
following conditions:
A. Transfer and Delivery of the Consideration. The Company shall
have delivered the Resorts Shares to Escrow holder pursuant to
this Agreement.
B. Transfer and Delivery of the Flex Shares. Flex shall have
taken all action necessary to issue and deliver the Flex
Shares to Escrow holder.
C. Acceptance of Documents. All instruments and documents
delivered to the Company and Flex pursuant to the provisions
of this Agreement shall be satisfactory to the Company and
Flex and their legal counsel.
D. Valuation. The Company, in its sole satisfaction, shall have
the right o determine that the value of the Flex Project, and
the Flex Shares to be acquired shall not have declined in
value from the date hereof through the date of Closing. If
there is any adverse change in Flex' financial condition or
change in its management, or if the value of the Flex Project
or the Flex Shares declined prior to Closing, the Company
shall have the option to terminate this Agreement without
penalty. Alternatively, the Company may elect, in its sole
discretion, to proceed with Closing in reliance upon a
warranty of title, guaranty of value, adjustment to the
consideration, or other mutually acceptable form of assurance
to be made by Flex.
E. Flex Board of Directors. Flex shall, simultaneously with
Closing, add one member to its Board of Directors submitted by
the Company. Approval of such new director shall not be
unreasonably withheld by Flex.
F. Acceptance of Documents. All instruments and documents
delivered to the parties pursuant to the provisions of this
Agreement shall be satisfactory to the parties and their legal
counsel. The Company and Flex shall each provide to the other
prior to Closing evidence satisfactory the other that the
representations made herein and the rights to the subject
shares are legally crated and duly enforceable.
7. Availability of Information
The Company and Flex each represent that, by virtue of their respective
business activities and economic bargaining power or otherwise, they
have been able to conduct their own due diligence and have had access
to or have been furnished with, prior to or concurrently with the
execution hereof, the information which hey consider to be adequate to
make a decision to exchange the Flex Shares for the Resorts Shares.
8. Private Transaction
A. Private Offering. Flex and the Company understand each that
the exchange contemplated herein constitutes a private,
arms-length transaction between a willing seller and a willing
buyer without the use or reliance upon a distribution or
securities underwriter.
B. Purchase for Own Account. Neither Flex nor the Company are
underwriters of, or dealers in, the respective securities to
be exchange hereunder, and neither party is acting as such or
participating, pursuant to a contractual agreement, in the
distribution of such securities.
C. Investment Risk. Because of their financial positions and
other factors, but subject to paragraphs 3 and 6 above, the
exchange contemplated by this Agreement may involve a high
degree of financial risk, including the risk that one or both
parties may lose its entire investment, and the parties hereto
agree to execute and deliver to each other at Closing an
investment letter in the form attached hereto as Exhibit "D"
(the "Investment Letter").
D. Access to Information. Flex and the Company and their advisors
have been afforded the opportunity to discuss the transaction
with legal and accounting professional and to examine and
evaluate the financial impact of the exchange contemplated
herein.
9. Termination
Flex and the Company may terminate this Agreement prior to the date of
Closing upon written notice with mutual consent. Failing to have mutual
consent, without prejudice to any other remedy to which the terminating
party may be entitled, if any, either party may terminate this
Agreement upon written notice on the occurrence of any one of the
following events:
A. By the Company
(i) If Flex fails to issue and deliver the Flex Shares or
provide information required hereunder; or
(ii) If Flex willfully breaches or neglects the duties
required to be performed hereunder; or
(iii) If Flex has a receiver appointed for its assets or
property, or otherwise becomes insolvent or unable to
timely satisfy its obligations in the ordinary course
of business; or
(iv) If Flex institutes, make a general assignment for the
benefit of creditors, has instituted against it any
bankruptcy proceeding for reorganization for
rearrangement of its financial affairs, files a
petition in a court of bankruptcy, or is adjudicated
a bankrupt; or
(v) If any of the disclosures made herein or subsequent
hereto by Flex to the Company are determined to be
materially false or misleading.
B. By Flex
(i) If during the term of this Agreement, the Company, or
its assignee, is unable to provide the Resorts Shares
as set forth herein; or
(ii) If the Company willfully breaches or neglects the
duties required to be performed hereunder; or
(iii) If the Company has a receiver appointed for its
assets or property, or otherwise becomes insolvent or
unable to timely satisfy its obligations in the
ordinary course of business; or
(iv) If the Company institutes, make a general assignment
for the benefit of creditors, has instituted against
it any bankruptcy proceeding for reorganization for
rearrangement of its financial affairs, files a
petition in a court of bankruptcy, or is adjudicated
a bankrupt; or
(v) If any of the disclosures made herein or subsequent
hereto by the Company to Flex are determined to be
materially false or misleading; or
In the event a party elects to terminate this Agreement prior to
Closing without mutual consent or cause, as set forth above, such
terminating party shall be responsible to pay the non-terminating party
for such non-terminating party's costs and expenses not to exceed
$25,000.
10. Damages and Limit of Liability
Subsequent to Closing the Company and Flex shall be liable to each
other for any breach of the representations, warranties and covenants
contained herein which results in any loss or expense to the other
party, or in a failure to perform any obligations under this Agreement;
provided however that, the remedy in connection with such reach or
failure to perform under this Agreement, shall be limited to (a) the
return of the respective securities originally transferred by the
parties hereto pursuant to this Agreements and, (b) actual costs and
expenses, including legal fees, not to exceed $25,000.
11. Limitation on Sale of Shares
Flex and the Company mutually agree that, until the first anniversary
hereof, they will sell not more than Two Hundred Thousand (200,000) of
the respective shares in any five (5) consecutive business days.
12. Option to Repurchase
In the event NuOasis or the Company are deemed by reason of their
respective ownership of each other's shares to be subject to review by
the Gaming Control Board of Nevada or other jurisdiction and the
respective party does not wish to submit the necessary applications or
pay the attendant fees, or for any reason is deemed unsuitable for
licensing in a jurisdiction where on of the parties has or intends to
submit to the applicable gaming rules and regulations, then in such
event, the party not wishing to subject to the respective rules and
regulations or pay the attendant fees may be allowed to assign and
dispose of it interest in the shares of the party submitting itself to
the licensing procedure. Such disposal shall be accomplished either by
(a) a sale of the shares of the licensee to a buyer mutually acceptable
to both parties at a price not less than fair market value, or (b) the
transfer of the subject shares of the licensee by the other party into
a "blind trust or other type of trust which satisfies the requirements
of the subject gaming regulatory body.
13. Miscellaneous
A. Authority. The officers of the Company and Flex executing this
Agreement are duly authorized to do so and each party has
taken all action required by law or otherwise to properly and
legally execute this Agreement.
B. Notices. Any notice under this Agreement shall be deemed to
have been sufficiently given if sent by registered or
certified mail, postage prepaid, addressed as follows:
To Flex: Flexweight Corp.
1946 Plateau Way
Wendover, NV 89803
Telephone: (702) 664-3919
Facsimile: (702) 664-2331
The Company: NuOasis International, Inc.
43 Elizabeth Avenue, Box CB-13022
Nassau, Bahamas
Telephone: (809) 356-2903
Facsimile: (809) 326-8434
With Copy to: NuOasis International, Inc.
4695 MacArthur Court, Suite 530
Newport Beach, California 92660
Telephone: (714) 833-5358
Facsimile: (714) 833-7854
or to any other address which may hereafter be designated by
either party by notice given in such manner. All notices shall
be deemed to have been given as of the date of receipt.
C. Entire Agreement. This Agreement sets forth the entire
understanding between the parties hereto and no other prior
written or oral statement or agreement shall be recognized or
enforced.
D. Severability. If a court of competent jurisdiction determined
that any clause or provision of this Agreement is invalid,
illegal or unenforceable, the other clauses and provisions of
the Agreement shall remain in full force and effect and the
clauses and provision which are determined to be void, illegal
or unenforceable shall be limited so that they shall remain in
effect to the extent permissible by law.
E. Assignment. The parties hereto acknowledge that the Flex
Shares are to be acquired by the Company as Replacement
Property, as such term is defined in the Agreement of Exchange
date the 30th of September, 1996 between the Company and C/A/K
Trustkantoor N.V. ("C/A/K") and that this Agreement will be
assigned to C/A/K who shall deliver the Resorts or, in the
event of death or incapacity, on the parties hereto, their
heirs, executors, administrators and successors.
F. Applicable Law. This Agreement has been negotiated and is
being contracted for in the Commonwealth of the Bahamas, it
shall be governed by the laws of the Bahamas, notwithstanding
any conflict-of-law provision to the contrary.
G. Attorney's Fees. If any legal action or other preceeding
(non-exclusively including arbitration) is brought for the
enforcement of or to declare any right or obligation under
this Agreement or as a result of a breach, default or
misrepresentation in connection with any of the provisions of
his Agreements, or otherwise because of a dispute among the
parties hereto, the prevailing party will be entitled to
recover actual attorney's fees (including for appeals and
collection) and other expenses incurred in such action or
proceeding, in addition to any other relief to which such
party may be entitled.
H. No Third Party Beneficiary. Nothing in this Agreement,
expressed or implied, is intended to confer upon any person,
other than the parties hereto and their successors, any rights
or remedies under or by reason of this Agreement, unless this
Agreement specifically states such intent.
I. Counterparts. It is understood and agreed that this Agreement
may be executed in any number of identical counterparts, each
of which may be deemed an original for all purposes.
J. Further Assurances. At any time after the Closing, each party
hereto will execute such additional instruments and take such
action as may be reasonably requested by the other party to
confirm or perfect title to the Warrants to be transferred
hereunder, or otherwise to carry out the intent and purposes
of this Agreement.
K. Broker's or Finder's Fee: Expenses. Flex and the Company each
warrant that they have not incurred any liability, contingent
or otherwise, for brokers' or finders' fees or commissions
relating to this Agreement for which the other party shall
have responsibility. Except as otherwise provided herein, or
mutually agreed between the parties in writing prior to
closing, all fees, costs and expenses incurred by either party
relating to this Agreement shall be paid by the party
incurring same.
L. Confidentiality. Except as may be required by Flex under
applicable United State federal or state securities rules and
regulations, neither party shall disclose the contents of this
Agreement to any person or entity, including, but not limited
to the public or the media provided, however: (I) that the
Company may make such disclosures of this Agreement to persons
whose third party consents are necessary for purposes of
closing this transaction, and (ii) that the Flex may make such
disclosures of this Agreement to any federal, state or local
agency which Flex, in its sole discretion, deems necessary to
know of nay or all of the terms of this Agreement and to any
persons whose third party consents are necessary for purposes
of closing this transaction.
M. Amendment or Waiver. Every right and remedy provided herein
shall be cumulative with every other right and remedy, whether
conferred herein, at law, or in equity, and may be enforced
concurrently herewith, and no waiver by any party of the
performance of any obligation by the other shall be construed
as a waiver of the same or any other default then,
theretofore, or thereafter occurring or existing. At any time
prior to Closing, this Agreement may be amended by a writing
signed by all parties hereto.
N. Headings. The section and subsection headings in this
Agreement are inserted for convenience only and shall not
affect in any way the meaning or interpretation of this
Agreement.
O. Facsimile. A facsimile, telecopy or other reproduction of this
instrument may be executed by one or more parties hereto and
such executed copy may be delivered by facsimile or similar
instantaneous electronic transmission device pursuant to which
the signature of or on behalf of such party can be seen, and
such execution and delivery shall be considered valid, binding
and effective for all purposes. At the request of any party
hereto, all parties agree to execute an original of this
instrument as well as any facsimile, telecopy or other
reproduction hereof.
IN WITNESS WHEREOF the parties hereto have caused this Agreement to be
executed the day and year first above written.
The "Company"
NuOasis International Inc.
By:/s/ Fred G. Luke
Name: Fred G. Luke
Title: President
"Flex"
Flexweight Corp.
By:/s/ Walter Sanders
Name: Walter Sanders
Title: President
OPTION AGREEMENT
THIS OPTION AGREEMENT ("Agreement") is entered into this 30th day of
May 1998, by and between NuOasis International, Inc., a corporation organized
under the laws of the Commonwealth of the Bahamas ("NuOasis"), and Flexweight
Corp., a Kansas corporation (the "Company").
WHEREAS, the Company proposes to issue to NuOasis option to purchase
shares of its $0.10 par value common stock (the "Common Stock") in connection
with the Company's exchange of securities with NuOasis International, Inc.
("NuOasis") pursuant to the Exchange Agreement dated May 21, 1998 between the
Company and NuOasis, a copy of which is attached hereto as Exhibit "A" and
incorporated by reference herein (the "Exchange Agreement"); and,
WHEREAS, to induce NuOasis to execute the Exchange Agreement the
Company hereby grants NuOasis an option to purchase additional shares of the
Company's Common Stock subject to the terms and conditions set forth below.
NOW, THEREFORE, for and in consideration of the mutual promises herein,
and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, and subject to the terms and conditions set forth
below, NuOasis and the Company agree as follows:
1. The Option
The Company hereby grants to NuOasis or its assignee (hereinafter
"Holder") an option (the "Option") to acquire Two Hundred Fifty
Thousand (250,000) shares of the Company common stock, subject to
adjustment as set forth herein (such shares, as adjusted, are
hereinafter referred to as the "Option Shares"), at a purchase price of
$0.10 per share ("Option Price").
2. Terms and Exercise of Option
A. Term of Option. Subject to the terms of this Agreement, Holder
shall have the right to exercise the Option in whole or in
part, commencing the date hereof through the close of business
on July 1, 1999.
B. Exercise of the Option. The Option may be exercised upon
written notice to the Company at its principal office setting
out the number of Option Shares to be purchased, together with
payment of the Option Price (as defined in and determined in
accordance with the provisions of paragraphs 4 and 5 hereof.
Subject to paragraph 5 hereof, upon such Notice of exercise
and payment of the Option Price, the Company shall issue and
cause to be delivered with all reasonable dispatch to or upon
the written order of Holder, or its successor as provided for
herein, and in such name or names as the Holder may designate,
a certificate or certificates for the number of Option Shares
so purchased. The rights of purchase represented by the Option
shall be exercisable, at the election of the Holder thereof,
either in full or from time to time in part, and in the event
the Option is exercised in respect of less than all of the
Option Shares purchasable on such exercise at any time prior
to the date of expiration hereof, the remaining Option Shares
shall continue to be subject to Adjustment as set forth in
paragraph 5 hereof. the company irrevocably agrees to
reconstitute the Option Shares as provided herein. The Option
represented by this Agreement may only be assigned or
transferred by NuOasis to an Affiliate or subsidiary, or as
the result of a corporate reorganization or recapitalization.
For the purpose of this Option the term "Affiliate" shall be
defined as a person or enterprise that directly, or indirectly
through one or more intermediaries, controls, is controlled by
or is under common control with the Company.
3. Reservation of Option Shares
The Company shall at all times keep reserved and available, out if its
authorized Common Stock, such number of shares of Common Stock as shall
be sufficient to provide for the exercise of the rights to purchase the
Company's Common Stock represented by this Option Agreement. The
transfer agent for the Common Stock and any successor transfer agent
for any shares of the Company's capital stock issuable upon the
exercise of any of such rights of purchase, will be irrevocably
authorized and directed at all times to reserve such number of
authorized shares as shall be requisite for such purpose. The Company
will keep a copy of this Agreement on file with the transfer agent or
its successors.
4. Adjustment of the Number of Option Shares
The number of Option Shares purchasable pursuant to this Agreement
shall be subject to adjustment from time to time upon the happening of
certain event, as follows:
A. Adjustment for Future Issuances of Capital Stock. Except as
provided below, the number of Option Shares purchasable
hereunder shall be increased to that total number of shares of
the Company's Common Stock equal to the difference between one
million (1,000,000) plus the number of shares of Common Stock
previously purchased pursuant to this Option and nineteen and
one-half percent (19.5%) of the total number of shares of
Common Stock on a fully diluted basis issued and outstanding
at any time, during the term of this Agreement.
B. Adjustment for Recapitalization. Subject to paragraph 4.A
above, in the event the Company shall (a) subdivide its
outstanding shares of Common Stock, (b) reverse split or
otherwise reduce its outstanding shares of Common Stock into a
smaller number of shares of Common Stock, or (c) issue or
convert by reclassification or recapitalization of its shares
of Common Stock into, for, or with other securities (a
"Recapitalization"), the number of Option Shares purchasable
hereunder immediately following such Recapitalization shall be
adjusted so that the Holder shall be entitled to receive the
kind and number of Option shares or other securities of the
Company which it would have owned or have been entitled to
receive after such Recapitalization, had such Option been
exercised immediately prior to the happening of such event or
any record date with respect thereto. An adjustment made
pursuant to this paragraph shall be calculated and effected
taking into account the formula set forth in paragraph 4.A.
above and shall become effective immediately after the
effective date of such even retroactive to the effective date.
C. Preservation of Purchase Rights Under Consolidation. Subject
to paragraph 4.A above, in case of any Recapitalization or any
other consolidation of the Company with or merger of the
Company into another corporation, or incase of any sale or
conveyance to another corporation of the property of the
Company as an entirely or substantially as an entirety, the
Company shall prior to the closing of such transaction, cause
such successor or purchasing corporation, as the case may be,
to acknowledge and accept responsibility for the Company's
obligations hereunder and to grant the Holder the right
thereafter upon payment of the Option Price to purchase the
kind and amount of shares and other securities and property
which he would have owned or have been entitled to receive
after the happening of such consolidation, merger, sale or
conveyance. The provisions of this paragraph shall similarly
apply to successive consolidations, mergers sales or
conveyances.
D. Notice of Adjustment. Whenever the number of Option Shares
purchasable hereunder is adjusted, as herein provided, the
Company shall mail by first class mail, postage prepaid, to
the Holder Notice of such adjustment or adjustments, and shall
deliver to Holder setting forth the adjusted number of Option
shares purchasable and a brief statement of the facts
requiring such adjustment, including the computation by which
such adjustment was made.
E. No Adjustment for Dividends. Except as provided herein, no
adjustment to the Option Shares shall be made in respect of
any cash dividend.
5. Failure to Deliver Option Shares Constitutes Breach Under Exchange Agreement
Failure by the Company, for any reason, to deliver the certificates
representing any shares purchased pursuant to this Option, or the
placement of a Stop Transfer order by the Company, shall constitute a
"Breach" under the Exchange Agreement and, for the purpose of this
Option, failure to deliver or transfer the subject shares shall
automatically toll the expiration of this Agreement for a period of
time equal to the delay in delivering the subject shares or term of the
Stop Transfer order.
6. Assignment
This Agreement and the rights hereunder shall not be assigned by either
party hereto; provided, however, that in the event NuOasis or the
Company are deemed by reason of their respective ownership of each
other's shares to be subject to review by the Gaming Control Board of
Nevada or other jurisdiction and the respective party does not wish to
submit the necessary applications or pay the attendant fees, or for any
reason is deemed unsuitable for licensing in a jurisdiction where one
of the parties has or intends to submit to the applicable gaming rules
and regulations, then in such event, the party not wishing to subject
to the respective rules and regulations or pay the attendant fees may
be allowed to assign and dispose of its interest in the shares of the
party submitting itself to the licensing procedure. Such disposal shall
be accomplished either by (a) a sale of the shares of the license to a
buyer mutually acceptable to both parties at a price Not less than fair
market value, or (b) the transfer of the subject shares of the license
by the other party into a "blend trust or other type of trust which
satisfies the requirements of the subject gaming regulatory body.
7. Counterparts
A facsimile, telecopy or other reproduction of this instrument may be
executed by one or more parties hereto and such executed copy may be
delivered by facsimile or similar instantaneous electronic transmission
device pursuant to which the signature of or on behalf of such party
can be seen, and such execution and delivery shall be considered valid,
binding and effective for all purposes. At the request of any party
hereto, all parties agree to execute an original of this instrument as
well as any facsimile, telecopy or other reproduction hereof.
8. Further Documentation
Each party hereto agrees to execute such additional instruments and
take such action as may be reasonably requested by the other party to
effect the transaction or otherwise to carry out the intent and
purposes of this Agreement.
9. Notices
All Notices and other communications hereunder shall be in writing and
shall be sent by prepaid first class mail to the parties at the
following addresses as amended by the parties with written Notice to
the other:
To NuOasis: NuOasis International Inc.
43 Elizabeth Avenue, Box N-5680
Nassau, Bahamas
Telephone: (809) 356-2903
Facsimile: (809) 326-8434
With copy to: Archer & Weed
4695 MacArthur Court, Suite 530
Newport Beach, California 92660
Telephone: (714) 833-5363
Facsimile: (714) 833-5384
To the Company: Flexweight Corporation
1946 Plateau Way
Wendover, Nevada 89883
Telephone: (702) 664-3919
Facsimile: (702) 664-2331
10. Counterparts
This Agreement may be executed simultaneously in two or more
counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
11. Governing Law
This Agreement was negotiated, and shall be governed by the laws of the
Commonwealth of the Bahamas notwithstanding any conflict-of-law
provision to the contrary.
12. Entire Agreement
This Agreement sets forth the entire understanding between the parties
hereto and NuOasis other prior written or oral statement or agreement
shall be recognized or enforced.
13. Severability
If a court of competent jurisdiction determines that any clause or
provision of this Agreement is invalid, illegal or unenforceable, the
other clauses and provisions of the Agreement shall remain in full
force and effect and the clauses and provisions which are determined to
be void, illegal or unenforceable shall be limited so that they shall
remain in effect to the extent permissible by law.
14. Amendment or Waiver
Every right and remedy provided herein shall be cumulative with every
other right and remedy, whether conferred herein, at law, or in equity,
and may be enforced concurrently herewith, and NuOasis waiver by any
party of the performance of any obligation by the other shall be
construed as a waiver of the same or any other default then,
theretofore, or thereafter occurring or existing. At any time prior to
Closing, this Agreement may be amended by a writing signed by all
parties hereto.
15. Headings
The section and subsection heading in this Agreement are inserted for
convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement the day
and year first written above.
"NuOasis"
NuOasis International Inc.
By: /s/ Fred Luke
Name: Fred G. Luke
Title: President
Address: 43 Elizabeth Avenue, Box N-8680
Nassau, Bahamas
"Flex"
Flexweight Corporation
By: /s/ Walter G. Sanders
Name: Walter G. Sanders
Title: President
Address: 1946 Plateau Way
Wendover, Nevada 89883
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
CONSOLIDATED AUDITED CONDENSED FINANCIAL STATEMENTS FILED WITH THE COMPANY'S
May 31, 1998 QUARTERLY REPORT ON FORM 10-QSB AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000316128
<NAME> FLEXWIGHT CORPORATION
<MULTIPLIER> 1
<CURRENCY> U. S. DOLLARS
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> AUG-31-1998
<PERIOD-START> MAR-01-1998
<PERIOD-END> MAY-31-1998
<EXCHANGE-RATE> 1
<CASH> 121
<SECURITIES> 325,000
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 121
<PP&E> 5,000,000
<DEPRECIATION> 0
<TOTAL-ASSETS> 5,875,831
<CURRENT-LIABILITIES> 22,633
<BONDS> 0
0
0
<COMMON> 641,854
<OTHER-SE> 1,236,344
<TOTAL-LIABILITY-AND-EQUITY> 5,875,831
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 812,831
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (812,831)
<EPS-PRIMARY> 0.49
<EPS-DILUTED> 0.49
</TABLE>
