SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB/A
Annual Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
For the Fiscal Year Ended June 30, 1999 Commission file number 0-9476
OASIS RESORTS INTERNATIONAL, INC.
(Exact name of registrant as specified in its charter)
Nevada 48-0680109
(State of other jurisdiction of (I.R.S. Employer I.D. No.)
incorporation or organization)
3753 Howard Hughes Parkway, Suite 200, Las Vegas, Nevada 89103
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code:
(949) 833-5381
____________
Securities registered pursuant to Section 12(b) of the Act:
None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $.001 Par Value
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 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 X
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K, is not contained herein and will not be contained,
to the best of Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB.
The Registrant's revenues for its most recent fiscal year were
$5,523,000
The aggregate market value of the voting stock held by non-affiliates
computed by reference to the price at which the stock was sold, or the average
bid and asked prices of such stock, as of February 29, 2000 was approximately
$4,800,000
Class Outstanding at April 7, 2000
Common Stock, $.001 par value 11,301,945 shares
Documents Incorporated by Reference:
None
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TABLE OF CONTENTS
PART I
Page
Item 1. Description of Business............................................ 1
Item 2. Description of Property............................................ 9
Item 3. Legal Proceedings.................................................. 9
Item 4. Submission of Matters to a Vote of Security-Holders................10
PART II
Item 5. Market for Common Equity and Related Stockholder Matters...........10
Item 6. Management's Discussion and Analysis of
Financial Condition and Results of Operations...................12
Item 7. Financial Statements...............................................16
Item 8. Changes in and Disagreements With Accountants on Accounting and
Financial Disclosure............................................15
PART III
Item 9. Directors, Executive Officers, Promoters and Control Persons;
Compliance with Section 16(a) of the Exchange Act...............16
Item 10. Executive Compensation.............................................19
Item 11. Security Ownership of Certain Beneficial Owners and Management.....21
Item 12. Certain Relationships and Related Transactions.....................21
Item 13. Exhibits and Reports on Form 8-K...................................22
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PART I
ITEM 1. DESCRIPTION OF BUSINESS.
(a) General
Oasis Resorts International Inc. (the "Company" or "Oasis") was
originally incorporated under the name Flexweight Drillpipe Company in 1958, and
became publicly-held in August 1980. From 1961 through 1985, the Company's
activities were limited to the manufacture and sale of oilfield equipment. In
1985, the Company filed for protection from creditors under Chapter 11 of the
U.S. Bankruptcy Code in the District of Kansas.
During the pendency of its reorganization proceedings, the Company
liquidated all of its oilfield related assets. The Company filed a Plan of
Reorganization in June 1987, which was approved in February 1988, and resumed,
on a limited scale, its manufacturing operations. During fiscal 1995, the
Company discontinued its manufacturing operations and liquidated its remaining
assets.
Following the close of fiscal 1995, the Company began evaluating
investment and merger opportunities outside of the manufacturing industry.
During fiscal 1996, the Company experienced a change in control and, in the
process, adopted a new strategy to renew operations and grow by acquiring and
developing business interests in the legalized gaming, hotel management and real
estate industries.
Following the change of control in fiscal 1996 and the adoption of a
new business plan and growth strategy in May, 1998, the Company acquired 100%
interest of Oasis Hotel, Resort & Casinos III Inc. ("Oasis III"), which owned
and was in the process of developing a destination resort hotel and casino
gaming property in Oasis, Nevada (the "Oasis III Property"). In October 1998,
the Company acquired the operational and development-stage international hotel
and gaming assets of NuOasis International Inc. ("NuOasis"), a wholly-owned
subsidiary of NuOasis Resorts Inc. ("Resorts"), making NuOasis the Company's
largest single shareholder.
(b) Business Development
Through subsidiaries, the Company now develops, owns interests in,
leases, manages and operates themed hotels, gaming casinos and related
operations worldwide. The Company operates its facilities under two marketing
themes: "Cleopatra Palace" and "Oasis Resorts." The Company's "Cleopatra"-themed
facilities are owned and operated by Cleopatra Palace Resorts and Casinos
Limited, a British corporation ("CPRC"), a 75% owned subsidiary. CPRC conducts
its operations through Cleopatra Cap Gammarth Casino Limited, a Tunisian
corporation in organization ("CCGL") and Cleopatra's World Inc., a British
Virgin Island corporation ("CWI"), entities which, at June 30, 1999 were 90% and
80% owned, respectively.
(c) Description of Business
The Company's business interests are comprised of casino gaming and
hotel management, and to a limited extent, real estate acquisition and
development. The casino gaming and resort hotels, operated and planned for
development by the Company and its subsidiaries, are presently located in the
Mediterranean and the United States, and are Las Vegas-style facilities. Some of
the Company's casino facilities are or will be associated with Company-managed
hotel properties.
The Company's strategy is to acquire existing hotel and casino
facilities, or obtain management contracts, with a view to re-branding the
facilities as "Cleopatra" or "Oasis"-themed properties.
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The Company's focus and target markets are growth-stage vacation markets in the
Mediterranean, Caribbean, South Pacific (including certain Asian markets and
Pacific Rim islands) and the United States. The Company also intends to develop
"sportsbook" and Internet-based gaming activities where possible.
In addition to its present activities and interests in Tunisia, North
Africa and the United States, the Company is evaluating casino and hotel
projects located in Spain, Morocco, and South Korea which it hopes to acquire
outright or on which it intends to obtain management rights.
(1) Gaming and Hotel Management Activities
Domestic Gaming and Hotel Facilities
As a result of the merger in May 1998 of Flex Holdings Inc.
("Flex"), a wholly-owned subsidiary of the Company, into Oasis III, the
Company acquired the Oasis III Property, a 20-acre interest in
partially-developed land located in Oasis, Nevada together with an
option to acquire an additional 30 acres adjacent to the 20-acre
parcel. The Oasis III Property presently contains a 6-unit motel, an
eight-pump truck stop, a cafe and mini-market store and was subdivided
from an 1100- acre parcel originally purchased in December, 1995 by
Oasis III from Oasis International Hotel & Casinos Inc. ("OHIC"), which
was at the time of the transaction, and continues to be, a shareholder
of the Company.
The Company intends to develop the Oasis III Property as a
500-room resort hotel with a 30,000 square-foot Las Vegas style gaming
casino with 38 gaming tables, Keno, Sportsbook, and 1,000 slot
machines, together with an entertainment complex with movie theaters,
outdoor rodeo facilities, and bowling alley. The Company is currently
evaluating financing proposals to develop this property.
International Gaming and Hotel Activities
Through the acquisition of CPRC, the Company intends to
develop and expand its casino gaming and resort hotel activities
outside of the United States. The Company believes that international
leisure and entertainment opportunities offer much greater potential,
and have far less competition than domestic market because of the
"emerging market" status of many of the host countries. The Company's
goal is to capitalize on the expected growth in tourism trade and the
surge of entertainment spending worldwide, and to take advantage of
certain investment opportunities in emerging markets which appear to be
the greatest beneficiaries of this expected growth. Prior to and
following its acquisition of CPRC, the Company has been soliciting and
evaluating prospects in certain resort hotel and casino gaming markets
in Asia, North Africa, South America, the Caribbean, and the South
Pacific.
CPRC's predecessor, Cleopatra Palace Limited ("CPL"),
developed the concept of resort hotels and Las Vegas style gaming
casinos designed along the theme "Cleopatra Palace," in 1993.
In October 1994, CPL became the lessee of a 200,000 square
foot casino and Las Vegas- style showroom (the "Cap Gammarth Casino")
pursuant to a Casino Lease Agreement and Operating Management Contract
(the "Gammarth Casino Lease") with Societe Animation Loisers
Touristique ("SALT"). The Cap Gammarth Casino is part of a large resort
development located in Tunisia, North Africa, in the town of Gammarth,
approximately 6 miles north of the city of Tunis, the country's
capital. In conjunction with this casino, an affiliate of SALT, Societe
Touristique Tunisie Golfe ("STTG"), partially constructed a five-star
hotel (the "Le Palace Hotel"), is currently
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attempting to complete construction on an adjacent health and sports
center, a beach club, a 54-unit shopping mall and 250 apartments, all
located within walking distance to the Cap Gammarth Casino
(collectively, the "Gammarth Resort"). The Gammarth Casino Lease was
subsequently assigned by CPL to CWI who serves as the operator of the
Gammarth Resort.
In 1996, CPL deposited approximately $2,000,000 with SALT as
a lease deposit on the Cap Gammarth Casino. In April 1998, CPL
converted the Cap Gammarth Casino lease deposit to a 9% equity
ownership in SALT.
After a long history of missed completion dates set by STTG,
CWI opened the Le Palace Hotel in October 1996 with only 100 of 350
total rooms ready for occupancy, and without any of the other resort
facilities. Through internally operated cash flow and working capital
provided by NuOasis, CWI completed the Le Palace Hotel and marketed the
facility since its opening. And, while the balance of the resort
remained unfinished at June 30, 1999, the Le Palace Hotel has been
actively managed and marketed by CWI with steadily increasing annual
room rental rates and revenues; however, the reputation of the hotel is
not what is expected by management for a 5-star Hotel due to such
delays as completing the Hotel by STTG.
In October 1994, in a separate transaction, CPL entered into
an agreement to lease and operate a casino and French-style cabaret in
Hammamet, Tunisia (the "Hammamet Casino"). The Hammamet Casino was
completed in the first half of calendar 1997 and opened December 6,
1997. Adjoining the Hammamet Casino is a five-star hotel and villa
resort (the "Hammamet Hotel") which was completed and opened in
September 1996, and is operated by the Occidental Group. The Hammamet
Hotel is one of forty-five (45) hotels planned or currently under
construction in south Hammamet as part of a Tunisian
government-sponsored expansion of the Hammamet resort area. When
completed, these additional hotels are expected to provide up to
thirty-eight thousand (38,000) additional beds for the Hammamet area.
Both the Hammamet Casino and Hammamet Hotel are situated within walking
distance of other hotels, with approximately eighteen hundred (1,800)
beds.
CPL financed the completion and opening of the Hammamet Casino
through loans from NuOasis and financing from Cedric Investment Company
Inc., a Panamanian corporation ("Cedric"). In connection with a $1.5
million loan from Cedric to complete and open the Hammamet Casino, the
Company pledged its 70% interest in Cleopatra Hammamet Casino, Ltd.,
the lease holder of the Hammamet Casino to Cedric. The Company had the
right to repurchase such interest for $1.5 million plus interest. Such
right expired September 22, 1998 and accordingly, the Company had no
further interest in the Hammamet Casino. To finance the remaining
expenditures on the Cap Gammarth Casino, CPRC has been negotiating
possible joint ventures with foreign banks and investment groups, and
attempting early collection of its receivables.
Between 1996 and 1999, CPL and other related CPRC
subsidiaries, increased their interest in CWI and entered into Letters
of Intent and contracts to acquire additional proposed and existing
resort hotel and casino gaming interests in the Mediterranean and
Southern Europe. On July 7, 1996, CPL entered into an agreement between
Compagnie Monastirienne Immobiliere et Touristique S.A. ("CMI") to take
over and operate a casino in Monastir, Tunisia (the "Monastir Casino
Lease"); it entered into an agreement with CMI dated July 7, 1996 to
take over and operate a resort hotel in Monastir, Tunisia (the
"Monastir Hotel Lease"); it entered into an agreement in principle to
lease an existing potential casino site and to acquire a gaming license
in Morocco (the "Morocco Project"); and, it entered into an agreement
to acquire certain real property interests in San Roque, Spain and the
gaming license related to a casino under construction in Marbella,
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Spain (the "Marbella Casino"). However, at June 30, 1999, none of the
properties under contract or agreements in principle have been acquired
by the Company or any of its subsidiaries.
(2) Real Estate Activities
The Company did not have any real estate operations during
fiscal 1998 or fiscal 1999.
(d) Marketing
(1) Gaming and Hotel Management
Domestic Gaming
The Company did not have any domestic gaming activities in
fiscal 1998 and fiscal 1999 and did not utilize or rely upon any
marketing for domestic gaming activities in fiscal 1998.
International Casino Gaming and Hotel Management
The Company's current international activities are located in
North Africa, but the Company intends to enter the European and
Caribbean markets beginning in fiscal 2000.
The Company's marketing strategy is to target past and repeat
middle-market, value- oriented visitors to its facilities by systematic
marketing programs directed to the individual visitors and to the tour
operators who have historically promoted and booked the tours to the
respective areas in the past. The Company uses general marketing
approaches to attract first time customers to its casinos by
advertising its slot player club program, popular entertainment and
other promotions. Once customers enter the Company's casinos, the
Company attempts to capture the name and playing level of each slot
machine and table game player.
The Company uses this information to follow up promotions.
The Company believes that utilizing the "Cleopatra" name in the
Mediterranean area, and the proposed "Oasis" theme in other areas,
combined with personalized database driven marketing programs, will
create a strong brand image synonymous with quality casino gaming and
hotel facilities, service and food. With respect to its existing hotel
and casino gaming activities in Tunisia, the Company is currently
working with the Tunisian government and local organizations with the
goal of promoting the areas to increase the number of tourists.
As the markets surrounding the Company's current and future
hotel and casino facilities continue to mature, it intends to expand
its focus to other markets in the respective regions. The Company has
utilized and intends to continuously monitor the effectiveness of
direct mail, television advertising, newspapers, billboards and tourist
magazine advertising placed in the surrounding areas to increase the
visibility of the Company's facilities and to promote the image that
these facilities are part of the history and romance of the region of
the past. Management believes that the advent of Las Vegas-style casino
gaming in the Mediterranean area will increase the current length of a
tourist's stay as well as increase the number of tourists into its
market areas.
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(e) Raw Materials
The Company's casino gaming and hotel management, and its
related real estate acquisition and development activities, are not
manufacturing-based businesses and, therefore, do not rely on raw
materials.
(f) Patents, Trademarks and Licenses
The Company's proposed gaming activities do not require
patents or trademarks, and the Company does not intend to rely on
patents or trademarks. The operations of the proposed gaming casinos
and resort hotel properties will depend on and be subject to gaming
licenses and permits from their respective jurisdictions.
(g) Seasonality
The Company's domestic gaming activities were non-operational
in fiscal 1998 and fiscal 1999. The Company's international casino
gaming and hotel management activities are seasonal and are strongly
affected by weather and other factors that influence the tourist trade
in Tunisia. Higher revenues are typically realized from the Company's
current operations in North Africa during the late spring, summer and
early fall months. Additionally, due to their location on the southern
Mediterranean coast, tourist traffic can be especially adversely
affected by severe weather.
(h) Customer Dependence
The Company's domestic gaming activities were in the
development stage during fiscal 1998 and fiscal 1999; its international
casino gaming and hotel management activities, except for one Tunisian
casino and its Tunisian hotel management operations, were also
development stage and, therefore, not subject to customer dependence.
The Company's resort hotel operations are solely dependent upon
Tunisian tourism and the Company's ability to attract foreign visitors
to its Tunisian operations; two Tunisian gaming segments remained under
development at the close of fiscal 1999.
(i) Backlog of Orders
The Company's domestic gaming, international gaming and hotel
management, and real estate subsidiaries were not subject to the type
of business activities which would give rise to "orders."
(j) Government Contracts
None of the Company's industry segment activities involved
government contracts in fiscal 1998 or fiscal 1999.
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(k) Competition
Gaming and Hotel Management Activities
Domestic Gaming
The Company did not have any domestic gaming activities in
fiscal 1998 or fiscal 1999 and, therefore, was not subject to
competition.
International Gaming and Hotel Management Activities
The Company competes with other gaming companies for
opportunities to manage casino gaming and hotel management activities
in emerging international gaming jurisdictions. The Company expects
many competitors to enter new international jurisdictions that
authorize gaming, some of whom may have more personnel and greater
financial and other resources than the Company or its subsidiaries.
Further expansion of international legalized gaming in the
markets where the Company is active or proposes to become active could
also significantly and adversely affect its proposed gaming activities.
In particular, the expansion of casino gaming in or near any geographic
area where the Company is active, or in pursuit of a gaming license or
rights to manage casino gaming activities, may diminish or otherwise
detract from the activities of the Company or its subsidiaries. In this
regard, the Company believes that its gaming markets are extremely
competitive and expects them to become even more competitive as the
number of gaming and other entertainment establishments increases. Such
competition is growing in the Mediterranean market and the Company also
competes with gaming facilities worldwide. It is also possible that
substantial competition could cause the supply of casino gaming
facilities to exceed the demand for casino gaming.
Additionally, many of the Company's competitors have more
casino gaming industry experience, larger operations or significantly
greater financial and other resources than the Company. Given these
factors it is possible that substantial competition could have a
material adverse effect on the Company's future results of operations.
(3) Real Estate Activities
Real estate investments through June 30, 1999 consisted solely
of the Oasis III Property, which was undeveloped at the close of fiscal
1999 and, therefore, competition as it relates to real estate
activities is not applicable.
(l) Research and Development
The Company's business strategy is to acquire or obtain
management contracts on upscale hotels, resorts and gaming casinos and
to renovate (where necessary) and re-brand in growth-stage vacation
markets in the Mediterranean, Caribbean, South Pacific (including
certain Asian markets and Pacific Rim islands) and the United States.
The Company also intends to develop "sportsbook" and Internet-based
gaming opportunities where possible.
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(m) Government Regulation
(1) Gaming and Hotel Management Activities
Domestic Gaming
The Company did not have any domestic gaming activities during
fiscal 1998 or fiscal 1999 and, therefore, was not subject to
government regulation.
International Casino Gaming and Hotel
Management Activities
The Company's international operations are generally dependent
on the continued licenseability, qualification and operations of the
Company or the subsidiaries and/or that hold the requisite licenses or
permits in the jurisdictions where it conducts or proposes to conduct
gaming and hotel management activities. Generally, such operations are
reviewed periodically by local, state and/or federal governmental
authorities. In addition, in most jurisdictions, the Company's
directors and many of the employees of casinos and hotels are often
required to be approved. The failure of the Company or any of its key
personnel to obtain or retain a license or a permit in a particular
jurisdiction could have a material adverse effect on the Company's
ability to continue or expand its casino gaming and/or hotel management
operations, or to obtain or retain licenses or permits in other
jurisdictions. In addition, any regulations adopted by the local, state
and/or federal governmental authorities, the legislatures or any
governmental authority in jurisdictions in which the Company intends to
have casino gaming and/or hotel management operations, may materially
adversely affect its operations.
At the close of fiscal 1999, the Company's only international
casino gaming and hotel management investments were in Tunisia, North
Africa. Under Tunisian law, casino gaming is closely supervised and
monitored through the use of on-site government representatives and
strict published operating procedures. The process through which a
company obtains a license to conduct casino gaming in Tunisia is
similar to that of many of the various states in the U.S. which have
recently adopted legalized gaming statutes, involving background
checks, personal interviews and the discretionary right of the
government body overseeing gaming activities to deny or withdraw a
license to any applicant.
The Tunisian government has approved the Company's management
for gaming licenses at the Cap Gammarth Casino and the Hammamet Casino.
(2) Real Estate Activities
The Company did not have any real estate development
activities in fiscal 1998 or fiscal 1999 and, therefore, was not
subject to government regulation.
(n) Compliance With Environmental Laws
Compliance with United States federal, state and local
provisions regulating the discharge of materials into the environment
or otherwise relating to the protection of the environment has no
material effect on the capital expenditures, earnings and competitive
position and operations of the Company's casino gaming and hotel
management activities.
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(o) Employees
There were two (2) corporate officers of the Company and 176
employees of significant subsidiaries who rendered services during
fiscal 1999 and fiscal 1998.
(p) Forward Looking Statements
The statements contained herein include forward-looking
statements based on management's current expectations of the Company's
future performance. Predictions relating to future performance are
inherently uncertain and subject to a number of risks. Consequently,
the Company's actual results could differ materially from the
expectations expressed in this Report. Factors that could cause the
Company's actual results to differ materially from the expected results
include, among other things: increases in the number and the intensely
competitive nature of competitors in the markets in which the Company
operates; the seasonality of the hotel and casino gaming industry in
certain markets in which the Company operates; the susceptibility of
the Company's operating results to adverse weather conditions and
natural disasters; the availability of sufficient capital to finance
the Company's business plan on terms satisfactory to the Company; the
risk that jurisdictions in which the Company proposes to operate hotels
or casinos rescind or fail to enact legislation permitting casino
gaming or do not enact such legislation in a timely manner; changes in
governmental regulations governing the Company's activities; changes in
labor, equipment and capital costs; the ability of the Company to
consummate contemplated joint ventures and acquisitions on terms
satisfactory to the Company, and to obtain necessary regulatory
approvals therefor; and other risks detailed in the Company's filings
with the Securities and Exchange Commission ("SEC").
Additionally, all statements contained herein that are not
historical facts, including but not limited to statements regarding the
Company's current business strategy, the Company's prospective joint
ventures, asset sales and expansions of existing projects, and the
Company's plans for future development and operations, are based upon
current expectations. In addition to being forward- looking in nature,
these statements involve a number of risks and uncertainties.
Generally, the words "anticipates," "believes," "estimates," "expects,"
and similar expressions as they relate to the Company and its
management are intended to identify forward-looking statements. The
Company wishes to caution readers not to place undue reliance on any
such forward-looking statements, which statements are made pursuant to
the Private Litigation Reform Act of 1995 and, as such, speak only as
of the date made.
(q) Year 2000 Issues
Many computers systems today may be unable to interpret data
correctly after December 31, 1999 because they allow only two digits to
indicate the year in a date. The Company and its subsidiaries have been
engaged in assessing this Year 2000 issue as it relates to their
businesses, including their electronic interactions with banks,
vendors, customers, and others. This project along with developing and
implementing solutions to the year 2000 issue has been completed and
management has concluded that the impact of the Year 2000 issue on its
complete systems will not have a material impact on the Company's
consolidated financial results or position. The Company's consolidated
financial results could be adversely affected if one or more of the
companies in which it has material investments were materially
adversely affected by the Year 2000 issue.
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ITEM 2. DESCRIPTION OF PROPERTY.
(a) Corporate Headquarters
The Company currently leases space and maintains its executive
office at 3753 Howard Hughes Parkway, Las Vegas, Nevada. From May 1998
to December 31, 1998, the Company was provided office space at the
office of its President in Wendover, Nevada.
(b) Gaming and Hotel Management Facilities
Domestic Gaming
At the close of fiscal 1999, the Company did not own any
domestic real property interests related to its proposed hotel and
casino gaming activities, nor did it have any domestic casinos or hotel
management activities subject to lease obligations.
International Gaming and Hotel Management Facilities
At the close of fiscal 1999, the Company, through its
subsidiaries, was a lessee under three (3) lease agreements related to
the Cap Gammarth Casino, the Gammarth Resort, and Hammamet Casino in
Tunisia. Due to its position as a lessee, neither the Company or its
subsidiaries owned any real or personal property.
(c) Real Estate Activities
The Company did not have any domestic real estate operations at the
close of fiscal 1998 or fiscal 1999.
ITEM 3. LEGAL PROCEEDINGS.
The Company settled, or had agreements to settle all material
litigation where it was a defendant at the close of fiscal 1999 and
knows of no material threatened legal proceedings, other than ordinary
routine litigation incidental to its business; provided however that
one of the Company's indirect subsidiaries, CWI, is currently in
arbitration with STTG, the developer/owner of the Gammarth Resort over
the amount of rent due for the LePalace Hotel since its opening. An
initial judgement was granted, however the parties by mutual agreement
are continuing the matter and this arbitration remained open at June
30, 1999.
On July 13, 1998, Resorts filed a civil complaint for damages in the
U.S. District Court, District of Nevada against SALT and several other
defendants. On July 2, 1999 the District Court adjudged and decreed
compensatory damages in the amount of $292 Million plus interest and
$10 Million in punitive damages (the "SALT Judgment"). The SALT
Judgment affects the Cap Gammarth Casino and is expected to result in
the Company foreclosing on the interest of SALT and the individual
defendants equity ownership of SALT. CPRC management currently has
instituted proceedings in Tunisia to collect upon its money judgement.
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ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY-HOLDERS.
On April 8, 1998, there was a special meeting of the Company's
shareholders (the "Fiscal 98 Meeting") at which: (a) Ms. Tammy Gehring, Mr.
Cliff Halling, and Ms. Bonnie Jean C. Tippetts were elected to serve as the
directors of the Company; (b) the shareholders approved an amendment to the
Company's Articles of Incorporation to increase the number of authorized shares
of the Company's $0.10 par value common stock from 5,000,000 shares to
25,000,000 shares; (c) the shareholders approved a 1-for- 100 reverse stock
split of the Company's issued and outstanding common stock; (d) the shareholders
approved the selection of Jones, Jensen & Company as the Company's independent
auditors for the fiscal year ended August 31, 1998 (which were subsequently
dismissed).
The Company's Board of Directors, at the time of the Fiscal 98
Meeting, recommended in the Proxy Statement that shareholders vote for each of
the proposals presented. No solicitation in opposition to management's nominees
was received prior to, nor presented at the meeting, and all of the proposals
were passed by margins of at least 89% of the shares represented at the meeting.
On October 19, 1998, there was a special meeting of the Company's
shareholders (the "Fiscal 99 Meeting") at which the Company's shareholders
approved an Agreement of Merger with Oasis Resorts International, Inc., a Nevada
corporation ("Oasis") to implement a reincorporation of the company known as
Flexweight Corporation in the state of Nevada. Oasis was incorporated by the
company known as Flexweight Corporation specifically for the purpose of
implementing the reincorporation. Oasis had no assets or liabilities. As a
result of the reincorporation, the name of the Company was changed to Oasis
Resorts International, Inc. and all the assets and liabilities of the company
known as Flexweight Corporation became the assets and liabilities of Oasis, and
each share of $.10 par value common stock for one (1) share of preferred stock
in the company known as Flexweight Corporation was exchanged for one (1) share
of common stock and one (1) share of preferred stock of preferred stock in
Oasis.
The Company's Board of Directors, at the time of the Fiscal 99
Meeting, recommended in the Proxy Statement that shareholders vote in favor of
each of the proposal's presented. No solicitation in opposition to management's
recommendations was received prior to or at the meeting, and all of the
proposals were passed by margins of at least 67% of the shares represented at
the meeting.
PART II
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
(a) Market Information
Through November 1998, the Company's common stock was traded through
the NASDAQ Over- the-Counter Electronic Bulletin Board system under the symbol
"FXWA." From November 1998 to March 2000, the Company's shares have traded on
the NASDAQ Electronic Bulletin Board system under the symbol "OAIS." In February
2000, as a result of the Company failing to be in compliance with respect to the
disclosure requirements of the Exchange Act, the NASD delisted the Company's
common stock and ceased trading on the Bulletin Board. The Company intends to
take the steps necessary to resume trading after it becomes current with its
Exchange Act filing requirements. On March 3, 2000, the Company's symbol was
changed to "OAII."
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The range of high and low "bid" quotations for the Company's common
stock for the last two fiscal years as reported by NASDAQ OTC Bulletin Board are
provided below. These over-the-counter market quotations reflect inter-dealer
prices without retail markup, markdown or commissions and may not necessarily
represent actual transactions.
Bid Price of Common Stock
Fiscal 1999 High (1) Low (1)
Quarter ended 06/30/99 $10.05 $ 2.50
Quarter ended 03/31/99 $33.75 $ 3.15
Quarter ended 12/31/98 $36.25 $26.25
Quarter ended 09/30/98 $47.50 $26.25
Fiscal 1998 High (1) Low (1)
Quarter ended 06/30/98 $36.25 $18.20
Quarter ended 03/31/98 $ .05 $ .05
Quarter ended 12/31/97 $ .05 $ .05
Quarter ended 09/30/97 $ .05 $ .05
_____________
(1) Amounts have been adjusted to give retroactive effect for the five to
one reverse stock split in February 2000 and the one for 100 reverse
stock split of April 1998.
(b) Holders
The Company had approximately 722 holders of record of its single
class of equity securities at June 30, 1999. This approximate number of record
holders of common stock does not include an unknown number of beneficial holders
whose shares are registered in "street name."
(c) Dividends
The Company has not paid any cash dividends with respect to its common
stock since its inception. No cash or property dividends were paid or declared
during fiscal 1998 or fiscal 1999. At the close of fiscal 1999, the Board of
Directors of the Company had not approved a dividend distribution policy,
however, there are no contractual restrictions on the Company's present or
future ability to pay dividends.
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ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
(a) Forward Looking Statements
EXCEPT FOR HISTORICAL INFORMATION CONTAINED HEREIN, THE MATTERS
DISCUSSED IN THIS FORM 10-KSB ARE FORWARD-LOOKING STATEMENTS THAT ARE SUBJECT TO
CERTAIN RISKS AND UNCERTAINTIES THAT COULD CAUSE ACTUAL RESULTS TO DIFFER
MATERIALLY FROM THOSE SET FORTH IN SUCH FORWARD LOOKING STATEMENTS. SUCH RISKS
AND UNCERTAINTIES INCLUDE, WITHOUT LIMITATION, THE COMPANY'S DEPENDENCE ON THE
TIMELY DEVELOPMENT, INTRODUCTION AND CUSTOMER ACCEPTANCE OF SERVICES AND
PRODUCTS, THE IMPACT OF COMPETITION AND DOWNWARD PRICING PRESSURES, THE ABILITY
OF THE COMPANY TO REDUCE ITS OPERATING EXPENSES AND RAISE ANY NEEDED CAPITAL AND
THE EFFECT OF CHANGING ECONOMIC CONDITIONS.
(b) Significant Events During the Fiscal Year Ended June 30, 1999 and 1998
On May 1, 1998, the Company, a Nevada corporation and a wholly owned
subsidiary of the Company, merged with Oasis III, which held assets consisting
of 20 acres of partially-developed land in Oasis, Nevada. In connection with the
merger, the Company issued 602,000 shares of common stock to the shareholders of
Oasis III to acquire 100% of the issued and outstanding common stock of Oasis
III. In addition, the Company issued the shareholders of Oasis III 200,000
shares of its common stock in connection with the real estate agreement dated
April 9, 1998. Upon the close of the merger, the shareholders of the Company
held 149,916 shares of the Company's common stock and the shareholders of Oasis
III held approximately 802,000 shares of the Company's common stock,
representing approximately 80% of the issued and outstanding common stock.
In October 1998, the Company entered into an Asset Purchase Agreement
with NuOasis which resulted in the Company acquiring 75% of CPRC. The
consideration for the purchase of CPRC consisted of 1,563,450 shares of the
Company's common stock (the "Oasis Stock"), warrants to purchase 7.2 million
shares of the Company's common stock at $30.00 per share (the "Oasis Warrants")
and $80 million of promissory notes issued by the Company (the "Oasis Notes").
CPRC acquired all of the equity interest owned by NuOasis in CCGL
(which operates the casino Cleopatra Cap Gammarth), a right to re-acquire an
interest in Cleopatra Hammamet Limited (which operates the casino Cleopatra
Hammamet Casino) and CWI (which operates the Le Palace Hotel & Resort at Cap
Gammarth). All of the properties are located in Tunisia.
The Oasis Warrants represent the right to acquire 7,200,000 shares of
the Company's common stock at $30.00 per share. The Oasis Notes consist of
promissory notes with an aggregate face value of $180 million. At the time of
the transaction, Oasis had no ability to repay the notes, and therefore, the
notes had an estimated fair value at the date of issuance of $7 million.
Management estimated the fair value of the $180 million of notes payable to
NuOasis at approximately $7 million based on an enterprise value of Oasis.
Management considered factors such as the fair value of the assets received from
Oasis III, as well as the value of the Company's common stock at the date of the
acquisition and post-acquisition period of 90 to 120 days. Management estimated
a fair value of Oasis III at $16.6 million. The $7 million fair value of the
notes was deemed a constructive dividend since the amount is payable to the
controlling shareholders, NuOasis, and accordingly, the value of such notes was
reflected as a reduction of paid-in capital.
On November 15, 1999, NuOasis converted the notes into 8.1 million
shares or $0.87 per share. After the conversion, the shareholders of NuOasis
controlled approximately 85% of the issued and outstanding common stock.
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The acquisition of NuOasis interests by the Company has been accounted
for as a "reverse acquisition," whereby NuOasis is the acquiror, and since the
operations of NuOasis are more significant than that of the Company and, NuOasis
acquired a controlling interest in Oasis on November 15, 1999. Accordingly, the
accompanying consolidated financial statements include the operations of NuOasis
interests acquired for all periods presented. The net assets of Oasis are deemed
to have been acquired in the reverse acquisition and, accordingly, the assets
and liabilities were recorded at fair value at the date of acquisition.
(c) Going Concern
The Company's working capital resources during the years ended
June 30, 1999 and 1998 were provided by utilizing the cash on hand and from the
operations of the Le Palace Hotel. The Company has experienced recurring net
losses, has limited liquid resources, negative working capital. Management's
intent is to continue searching for additional sources of capital and, in the
case of NuOasis International, new casino gaming and hotel management
opportunities. In the interim, the Company intends to continue operating with
minimal overhead and key administrative functions provided by consultants who
are compensated in the form of the Company's common stock. It is estimated,
based upon its historical operating expenses and current obligations, that the
Company may need to utilize its common stock for future financial support to
finance its needs during fiscal 2000. Accordingly, the accompanying consolidated
financial statements have been presented under the assumption the Company will
continue as a going concern and do not include any adjustments that might result
from the outcome of this uncertainty.
(d) Liquidity and Capital Resources
A comparison of working capital, cash and cash equivalents and current
ratios for the past two fiscal years are reflected in the following table:
<TABLE>
<CAPTION>
June 30,
1999 1998
<S> <C> <C>
Working Capital (Deficit) $ (5,021,869) $ (3,769,553)
Cash and Cash Equivalents $ 51,698 $ 104,454
Current Ratio .20 .48
</TABLE>
The most significant effects on working capital and its components
during fiscal 1999 were the operations of the Le Palace Hotel & Resort, the
continued accrual of rent on the Le Palace Hotel & Resort as well as general
administrative expenses, legal and professional advisory fees, and the
acquisition of a controlling interest of CPRC and its subsidiaries.
The Company's current plan for growth is to increase its working
capital by arranging debt and equity financing to finance the activities of its
subsidiaries and for future acquisitions. Additionally, the Company anticipates
receiving a distribution of net operating revenues from its hotel management
activities and its proposed international casino gaming activities beginning in
fiscal 2000 or its fiscal year ended June 30, 2001 ("fiscal 2001"). However, the
Le Palace Hotel & Resort has been in operation for more than one (1) year, but
has yet been able to generate positive cash flows and there are no assurances
that it will be able to generate positive cash flow, or that the Cap Gammarth
Casino will open or generate positive cash flow. As of the close of fiscal 1999,
the Company's sole operations were derived from its hotel management subsidiary
and, therefore, there is considerable risk that the Company will not have
adequate working capital to sustain its current status or that the Company or
its subsidiaries may not be able to secure the required debt or equity financing
to complete their proposed projects on a timely basis. In such event the Company
or its
13
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subsidiaries may be forced to sell all or certain projects, or contribute them
to a third party on terms which would preclude the Company from realizing
significant future benefit, or any benefit at all from the projects. The Company
may also need to issue additional shares of its common stock to pay for services
incurred, to generate working capital for the development and current operations
of its subsidiaries, or to continue to sustain itself.
(e) Capital Expenditures
General
The Company has no commitments for material capital expenditures;
however, the Company's subsidiaries, CPRC and Oasis III, are seeking financing
commitments in the aggregate amount of $100 Million to complete their various
properties.
As to any future projects undertaken by the Company, additional
project financing will be required. Capital investments may include all or some
of the following: acquisition and development of land, acquisition of leasehold
investments and contract rights, and construction of other facilities. In
connection with development activities relating to potential acquisitions or new
jurisdictions, the Company also makes expenditures for professional services
which are expenses as incurred. The Company's financing requirements depend upon
actual development costs, the amounts and timing of such expenditures, the
amount of available cash flow from operations and the availability of other
financing arrangements including selling equity securities and selling or
borrowing against assets (including current facilities). The Company may also
consider strategic combinations or alliances. Although there can be no assurance
that the Company can effectuate any of the financing strategies discussed above,
the Company believes that if it determines to seek any additional licenses to
operate gaming or permits to conduct hotel operations in other jurisdictions it
will be able to raise sufficient capital to pursue its strategic plan.
If for any reason, any of the Company's subsidiaries' joint ventures
or projects are unable to borrow or otherwise meet their commitments under
current agreements to provide the furniture, fixtures, equipment and working
capital to acquire, develop and operate future casino gaming and hotel
management projects, the Company may be required to intercede and provide the
requisite financing and working capital, or be forced to sell all or a portion
of the respective interests, or lose the respective rights to the projects and
properties entirely.
Cap Gammarth Casino
At June 30, 1999, the Cap Gammarth Casino had approximately $1,000,000
remaining to be paid as security deposits and advance rent before the Company
could take possession and open the facility. Additionally, there was
approximately $6,000,000 remaining to be paid for furniture, fixtures and
equipment, bankroll and pre-opening costs for the casino.
To finance the remaining expenditures on the Cap Gammarth Casino, the
Company has been negotiating debt financing and possible joint ventures with
foreign banks and investment groups.
Gammarth Resort
During fiscal 1998, CWI made a partial payment on the lease on the
Gammarth Resort and, simultaneously, filed a request for arbitration in its
dispute with the developer, STTG, claiming that STTG had breached the terms of
the underlying lease by not completing for occupancy, on a timely basis, the Le
Palace Hotel, the shopping arcade, the health club or the beach club comprising
the resort in accordance with the terms of the lease, causing CWI significant
loss of revenue and profits. The matter was removed from the arbitration
calendar by mutual agreement between the parties, however, in fiscal 1999, the
matter was
14
<PAGE>
put back on the arbitration calendar and subsequent to the close of fiscal 1999,
in December 1999, the arbitration board awarded CWI damages of approximately
$2,500,000 to offset against the past due rent. The arbitration board did not
address the issue of the reduction of rent due to STTG as a result of the resort
not being completed and CWI has requested arbitration in France to have the rent
issue decided.
(f) Cash Flows
Cash used by operating activities was $134,000 for the year ended
June 30, 1999 as compared to cash provided by operations of $210,000 for the
comparable period last year. The increase is due to the increase in cash paid
for interest.
Cash used by investing activities was $613,000 for the year ended
June 30, 1999 as compared to cash provided by investing activities of $218,000
for the comparable period last year. During fiscal 1999 the Company purchased
equipment and during fiscal 1998 the Company made certain advances.
Cash provided by financing activities was $539,000 for the year ended
June 30, 1999 as compared to cash used in financing activities of $986,000 for
the comparable period last year. During fiscal 1999, advances from the lessor
decreased advances to the controlling shareholder were increased, and additional
capital contributions were made.
(g) Results of Operations
Year Ended June 30, 1999 Compared to Year Ended June 30, 1998.
The Company's total revenues for the year ended June 30, 1999 were
$5.5 million as compared to $5.3 million for the year ended June 30, 1998. These
revenues were entirely derived from the operations of the LePalace Hotel. To
date, the hotel has not been able to realize its potential due the failure of
the developer to complete certain amenities at the hotel, the Cap Gammarth
Casino and the surrounding properties associated with the complex. Occupancy
rates have been in the 35% to 45% range during the summer months and 10% to 18%
during the winter months.
Total cost of revenues were $5.8 million in fiscal 1999 as compared to
$5.5 million in fiscal 1998. The increase is due to increased rent expense due
to scheduled rent increases. Selling, general and administrative costs decreased
$233,000.
In fiscal 1999 and 1998, the Company recorded impairments of
long-lived assets of $8.3 million and $3.5 million, respectively. As of June 30,
1999, management believed that the goodwill generated by the reverse acquisition
of Oasis was impaired, and accordingly, the Company charged operations $8.3
million. In 1998, management determined that its investment in the Cleopatra Cap
Gammarth casino and its Club Hammamet receivable was impaired, and accordingly,
they recorded a provision totaling approximately $3.5 million.
As a result of change in stock ownership which occurred in fiscal
1999, the Company's use of its net operating loss carry forwards may be limited
by Section 382 of the Internal Revenue Code until such net operating loss carry
forwards expire.
ITEM 7. FINANCIAL STATEMENTS.
The financial statements are filed as a part of this Annual Report on
Form 10-KSB commencing on page F-1 attached hereto.
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ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE.
During fiscal 1999, in connection with the restructuring of the
Company, the Board of Directors, decided to replace Jones, Jensen & Company as
the independent accountants for the Company with the accounting firm of
McKennon, Wilson & Morgan LLP. Jones, Jensen & Company previously issued a
report dated November 11, 1997. The report noted that the Company was a
development stage company and had no operating capital which raises significant
doubt about the ability of the Company to continue as a going concern. Other
than the Company's ability to continue as a going concern, the report did not
contain any adverse opinion or disclaimer of opinion, or any qualification as to
uncertainty, audit scope or accounting principles. Such report subsequent to
issuance has not been modified by Jones, Jensen & Company. There were no
disagreements with Jones, Jensen & Company on any matter of accounting
principles or practices, financial statement disclosure or auditing scope or
procedure during the two-year period prior covered by their report and
subsequently through April 10, 2000.
PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL
PERSONS; COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT.
(a) Identification of Directors and Executive Officers.
The Company, pursuant to its Bylaws is authorized to maintain
executive officers as needed, but not less than three (3) and not more than nine
(9) members on its Board of Directors. The directors and officers for fiscal
1998 and fiscal 1999 were as follows:
Name Age Position Period Served as Director
Walt Sanders 53 President May 1, 1998 to present
Director
Charles R. Longson 51 Director May 1, 1998 to present
Richard O. Weed 37 Director October 1, 1998 to present
Jon L. Lawver 61 Director October 1, 1998 to present
All directors of the Company hold office until the next annual meeting
of shareholders and until their successors have been elected and qualified.
Vacancies in the Board of Directors are filled by the remaining members of the
Board until the next annual meeting of shareholders. The officers of the Company
are elected by the Board of Directors at its first meeting after each annual
meeting of the Company's shareholders and serve at the discretion of the Board
of Directors or until their earlier resignation or death.
(b) Business Experience
The following is a brief account of the business experience during the
past five years of each director, director nominee and executive officer of the
Company, including principal occupations and employment during that period and
the name and principal business of any corporation or other organization in
which such occupation and employment were carried on.
Walter Sanders. 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. Sanders' construction experience
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<PAGE>
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. 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 26 years in developing and managing large gaming
resorts. Mr. Longson specializes in start-up construction, including: design,
development, floor layouts and operations and personnel.
Richard O. Weed. Richard O. Weed (Director), is Managing
Director/Special Projects with Weed & Co. L.P. in Newport Beach, California.
Weed & Co. provides advice on capital formation, business strategy and legal
matters on a special project basis. Mr. Weed is known for using analytical
firepower, creative problem solving and resourceful implementation to assist
clients. Mr. Weed's abilities are the result of his association with prominent
law firms in California and Texas and graduate business education. Mr. Weed
received a Master of Business Administration - International Management in 1992
from the University of Southern California, Juris Doctor in 1987 from St. Mary's
University School of Law, and Bachelor of Business Administration -
International Business in 1984 from The University of Texas at Austin. Mr. Weed
is a member of the State Bar of California and State Bar of Texas.
Jon L. Lawver. Mr. Jon L. Lawver has been Secretary and a Director of
the Company since October 1, 1998. Mr. Lawver has twenty-two (22) years of
experience in the area of bank financing where he has assisted medium size
companies by providing expertise in documentation preparation and locating
financing for expansion requirements. Mr. Lawver was with Bank of America from
1961 to 1970, ending his employment as Vice President and Manager of one of its
branches. From 1970 to present Mr. Lawver has served as President and a Director
of J.L. Lawver Corp., a financial consulting firm ("Lawver Corp."). Since 1988,
as President and a Director of Eurasia Inc., a private finance equipment leasing
company.
(c) Identification of Certain Significant Employees and Consultants
In fiscal 1996, the Company entered into a Consulting Agreement with
AZ Professional Consultants Inc. ("AZ") pursuant to which the Company agreed to
engage AZ to provide certain services related to the day-to-day management
record keeping and regulatory reporting requirements of the company, the ("AZ"
Agreement). The AZ Agreement had a term of one (1) year and continued on a
month-to-month basis after expiration of the one-year term. The Agreement was
mutually terminated on April 1, 1997. During the term of the AZ Agreement, the
Company issued to AZ, as consideration for the services provided by AZ,
approximately One Hundred Eighty Thousand (180,000) shares of its common stock.
On July, 1997, the Company entered into consulting agreements with
Mr. Kurtz, doing business as Park Street (the "Park Street Agreement"). Pursuant
to the Park Street Agreement, the Company agreed to pay Mr. Kurtz Four Thousand
(4,000) shares of its common stock each month for the term of the subject
agreement and further compensate Park Street for the introduction of businesses
which are acquired by the Company. These agreements expired in July, 1999.
During fiscal 1998, the Company entered into an Exchange Agreement
with NuOasis pursuant to which the Company issued Two Hundred Thousand (200,000)
shares of its common stock to NuOasis in exchange for Six Hundred Fifty Thousand
(650,000) shares of common stock of Resorts owned by NuOasis. As part of the
transaction, the Company also granted NuOasis an Option to purchase an
additional Fifty Thousand (50,000) shares of its common stock (the "NuOasis
Option") at $0.50 per share. At June 30, 1999,
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<PAGE>
NuOasis had not exercised the NuOasis Option; the options were scheduled to
expire July 1, 1999; however, such option term was extended until July 1, 2003.
During fiscal 1999, the Company entered into two (2) consulting
agreements, one with Hudson Consulting Group Inc. ("Hudson") on July 18, 1998,
as amended September 15, 1998 (the "Hudson Agreement") and another with NuVen
Advisors Inc. ("NuVen") on July 18, 1999 subsequently amended and assigned to
NuVen Advisors Limited Partnership on July 1, 1999 (the "NuVen Agreement"). The
Company agreed to pay Hudson certain performance based fees upon the merger with
or acquisition of a business introduced by Hudson, and to pay Hudson Three
Thousand (3,000) shares of its common stock each month for the term of the
subject agreement. Following the purchase of the assets of NuOasis in October
1998, the Company issued 300,000 shares of its common stock to Hudson as its fee
for identifying and assisting in the closing of the transaction. The Hudson
Agreement had a term of one (1) year and expired on January 1, 1999.
Pursuant to the NuVen Agreement, the Company agreed to retain NuVen to
assist it in identifying and effecting the purchase of business and assets
relative to its hotel and gaming business (the "NuVen Agreement"). The NuVen
Agreement became effective April 1, 1998 and expired in March 31, 1999 and
resulted in the Company issuing Eight Thousand (8,000) shares of its common
stock for services; NuVen waived its right to expense reimbursement and to
receive additional shares of the Company's common stock on the closing of the
purchase of the assets of NuOasis. As incentive to execute the NuVen Agreement,
the Company granted NuVen the option to purchase Seventy Thousand (70,000)
shares of the Company; common stock at a price of $30.00 per share. At June 30,
1999, NuVen had not exercised the NuVen Option.
In connection with the purchase of CPRC in fiscal 1999, the Company
acquired the existing operations of a resort hotel and development-stage casino
gaming interests in Tunisia, North Africa and, with it, acquired employee
relationships with certain executives who hold officers', directors' and key
management positions in various foreign subsidiaries of CPRC. None of these
individuals are shareholders of the Company and the Company is not dependent on
any single such individual for operations.
At June 30, 1999, NuOasis owned 1,563,450 shares, or approximately
forty-nine percent (49%), of the issued and outstanding common stock of the
Company, and it has two (2) appointees sitting on the Company's four (4) member
Board of Directors. On November 15, 1999, NuOasis was issued 8.1 million shares
as settlement of the $7 million of notes taken at fair value. Fred G. Luke is
the President of NuOasis and its parent corporation, Resorts, and he has been
instrumental in the Company's purchase of the NuOasis assets and in identifying,
acquiring, financing and developing the assets and business interests of Resorts
and NuOasis, including those acquired by the Company. Pursuant to the
relationship between the Company and NuVen Limited Partnership ("NuVen LP") and
as a result of Mr. Luke's position with NuOasis and Resorts, he is in a position
to influence the business affairs of the Company and therefore deemed a "control
person," as defined in the Exchange Act.
Mr. Luke has been President of NuOasis since fiscal 1995, and the
Chief Executive Officer and Director of Resorts, the parent of NuOasis since
June 1993. Mr. Luke has more than thirty (30) years of experience in domestic
and international financing and the management of private and publicly held
companies. Since 1982, Mr. Luke has provided financial and corporate
restructuring consulting services and has served, for brief periods lasting
usually six months, as Chief Executive Officer and/or Chairman of the Board of
various publicly held and privately held companies in conjunction with such
financial and corporate restructuring services. In addition to his position with
Resorts and NuOasis, Mr. Luke currently serves as Chairman and President of
NuVen and General Partner, NuVen LP, which have provided consulting services,
office space and other general and administrative services to the Company since
the beginning of fiscal 1999. NuVen and NuVen LP currently provide managerial,
acquisition, and administrative services to other public
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and private companies in addition to the Company. NuVen LP and NuVen are
controlled by Mr. Luke and are affiliates of the Company. Mr. Luke received a
Bachelor of Arts Degree in Mathematics from California State University, San
Jose in 1969.
Mr. Gabriel Tabarani serves as Director of CPRC and CWI. Fred Graves
Luke, Fred G. Luke's father, is a Director of CPRC and owns personally 10% of
CPRC.
(d) Family Relationships
Fred Graves Luke is the father of Fred G. Luke. He serves as a
Director of CPRC, CCGL, CHL and CWI.
(e) Involvement in Certain Legal Proceedings.
During the past five years, no director or officer of the Company has:
(1) Filed or has filed against him a petition under the federal bankruptcy
laws or any state insolvency law, nor has a receiver, fiscal agent or similar
officer been appointed by a court for the business or property of such person,
or any partnership in which he was a general partner, or any corporation or
business association of which he was an executive officer at or within two years
before such filings.
(2) Been convicted in a criminal proceeding;
(3) Been the subject of any order, judgment, or decree, not subsequently
reversed, suspended or vacated, of any court of competent jurisdiction,
permanently or temporarily enjoining such person from, or otherwise limiting his
involvement in any type of business, securities or banking activities.
(4) Been found by a court of competent jurisdiction in a civil action, the
SEC or the Commodity Futures Trading Commission ("FTC") to have violated any
federal or state securities or commodities law, which judgment has not been
reversed, suspended, or vacated.
(f) Compliance with Section 16(a) of the Exchange Act
Section 16(a) of the Securities Exchange Act of 1934 (the "Exchange
Act") requires the Company's directors and officers and persons who own more
than ten percent (10%)of the Company's equity securities, to file reports of
ownership and changes in ownership with the SEC. Directors, officers and greater
than ten-percent shareholders are required by SEC regulation to furnish the
Company with copies of all Section 16(a) reports filed.
ITEM 10. EXECUTIVE COMPENSATION.
(a) Summary Compensation Table
The following summary compensation table sets forth in summary form
the compensation received during each of the Company's last three completed
fiscal years by the Company's President and four most highly compensated
executive officers other than the President.
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Name and Principal Fiscal Salary Other Annual Options
Position Year ($) Compensation ($) Granted (#)
Walter Sanders, 1999 - - -
President 1998 - - -
1997 - - -
(b) Stock Options
During the years ended June 30, 1999 and 1998, the Company had no
stock options granted to employees. However, the Company granted options and
warrants to non-employees. The Company issued warrants to purchase 7,200,000
shares at $30.00 per share to NuOasis and 200,000 shares at $0.50 per share. The
Company issued options to NuVen to purchase 70,000 shares at $30.00 per share.
On November 15, 1999, Oasis cancelled the 7,200,000 warrants and issued
8,111,240 shares of common stock to NuOasis.
(c) Long-Term Incentive Plans
Not applicable.
(d) Compensation of Directors
The Company has no standard arrangement for the compensation of
directors or their committee participation or special assignments.
(e) Contracts With Executive Officers
None
(f) Change of Control
On May 1, 1998, following the Company's acquisition of Oasis III,
Tammy Gehring, Bonnie Jean Tippetts and Cliff Halling resigned from their
respective positions as officers and directors of the Company in favor of Mr.
Walter Sanders and Mr. Charles Longson. In fiscal 1999, following the purchase
of the NuOasis assets, Mr. Jon L. Lawver and Mr. Richard O. Weed were appointed
to hold positions as directors of the Company.
(g) Report on Repricing of Options
Not applicable.
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ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
(a) and (b) Security Ownership of Certain Beneficial Owners and Management.
The following table sets forth information regarding the ownership of
the Company's voting securities by persons owning more than 5% of such
securities as of February 29, 2000, the most recent practicable date.
Title
of Name and Address Amount and Nature of Percent
Class of Beneficial Owner Beneficial Interest (1) of Class
$.001 par value NuOasis Resorts Int'l Inc. 9,674,690 85.6%
Common Stock 43 Elizabeth Avenue, Box N-8680
Nassau, Bahamas
(1) Amounts have been adjusted to give retroactive effect to the five for
one reverse stock split in February 2000.
The following sets forth information with respect to the Company's
voting stock beneficially owned by each current and former officer and director,
and by all current and former officers and directors as a group, as of February
29, 2000:
Title Amount and Nature
of Name and Address of Percent
Class of Beneficial Owner Beneficial Interest(1) of Class
$.001 par value Mr. Walter Sanders 400,000 3.6%
Common Stock P.O. Box 2329
West Wendover NV 89883
$.001 par value All Officers and 400,000 3.6%
Common Stock Directors as a group
(1) Amounts have been adjusted to give retroactive effect to the five for
one reverse stock split in February 2000.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
(a) Transactions with Directors and Affiliates.
There were no transactions or series of similar related transactions
during fiscal 1999 or fiscal 1998 that exceeded an aggregate amount of $60,000.
(b) Indebtedness of Management
There were no transactions, or series of similar related transactions
during fiscal 1999 or fiscal 1998.
(c) Transactions with Promoters
Not applicable.
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PART IV
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Consolidated Financial Statements
The Consolidated Financial Statements included in this Item are
indexed on Page F-1, "Index to Consolidated Financial Statements."
(b) Financial Statement Schedules
Not applicable.
(c) Exhibits
Unless otherwise noted, Exhibits are filed herewith.
Exhibit
Number Description
3.1 Articles of Incorporation of Oasis Resorts International, Inc.
3.2 Bylaws of Oasis Resorts International, Inc.
10.1 Exchange Agreement between Cleopatra's Palace Resorts and
Casinos Limited and Cleopatra's World, Inc.
10.2 Exchange Agreement between Cleopatra's World, Inc. and
Cleopatra Palace Limited
10.3 Exchange Agreement between Cleopatra's Palace Resorts and
Casinos Limited and Cleopatra Palace Limited
10.4 Exchange Agreement between Cleopatra's Palace Resorts and
Casinos Limited and NuOasis International Inc.
10.5 Advisory Agreement between NuVen Advisors, Inc. and
Flexweight Corporation
10.6 Merger Agreement between Oasis Resorts International, Inc.
and Flexweight Corporation
10.7 Warrant Agreement between NuOasis International Inc. and
Flexweight Corporation
10.8 Asset Purchase Agreement between NuOasis International Inc.
and Flexweight Corporation
10.9 Option Agreement between NuOasis International Inc. and
Flexweight Corporation
10.10 Option Agreement between NuVen Advisors Inc.. and Flexweight
Corporation
10.11 Flexweight Corporation 1998 Stock Option Plan
10.12 Exchange Agreement between NuOasis International Inc. and
Cleopatra's World, Inc.
22.1 Schedule of Subsidiaries of the Company
27 Financial Data Schedule
22
<PAGE>
SIGNATURES
In accordance with Section 13 or 15 (d) of the Securities Exchange Act
of 1934, the Company has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.
OASIS RESORTS INTERNATIONAL, INC.
(formerly, Flexweight Corporation)
Date: April 20, 2000 By: /s/ Walter Sanders
Walter Sanders, President
and Director
Date: April 20, 2000 By: /s/ Jon L. Lawver
Jon L. Lawver, Principal
Accounting Officer and Director
In accordance with the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons on behalf of
the Company and in the capacities and on the dates indicated.
OASIS RESORTS INTERNATIONAL, INC.
(formerly, Flexweight Corporation)
Date: April 20, 2000 By: /s/ Walter Sanders
Walter Sanders, President
and Director
Date: April 20, 2000 By: /s/ Jon L. Lawver
Jon L. Lawver, Principal
Accounting Officer and Director
Date: April 20, 2000 By: /s/ Charles Longson
Charles Longson, Director
Date: April 20, 2000 By: /s/ Richard O. Weed
Richard O. Weed, Director
23
<PAGE>
OASIS RESORTS INTERNATIONAL, INC.
(Formerly Flexweight Corporation)
Index to Consolidated Financial Statements
Description Page
Independent Auditors' Report................................................F-2
Consolidated Balance Sheet as of June 30, 1999..............................F-3
Consolidated Statements of Operations and Comprehensive Loss
for the years ended June 30,1999 and 1998.................................F-4
Consolidated Statements of Stockholders' Equity (Deficit)
and Comprehensive Loss for the years ended June 30,1999 and 1998..........F-5
Consolidated Statements of Cash Flows for the years ended
June 30,1999 and 1998.....................................................F-7
Notes to Consolidated Financial Statements..................................F-9
F-1
<PAGE>
INDEPENDENT AUDITORS' REPORT
Board of Directors
Oasis Resorts International, Inc.
(Formerly Flexweight Corporation)
We have audited the accompanying consolidated balance sheet of Oasis Resorts
International, Inc., formerly Flexweight Corporation ("Oasis"), and subsidiaries
(collectively the "Company") a company controlled by NuOasis Resorts
International, Inc. ("NuOasis"), as of June 30, 1999, and the related
consolidated statements of operations, stockholders' equity (deficit) and cash
flows for each of the years in the two-year period ended June 30, 1999. These
consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of Oasis
Resorts International, Inc., formerly Flexweight Corporation, as of June 30,
1999, and the consolidated results of their operations and their cash flows for
each of the years in the two-year period ended June 30, 1999, in conformity with
generally accepted accounting principles.
The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in Note 2 to the
consolidated financial statements, the Company has recurring losses from
operations since its inception. The Company requires substantial long-term
financing to complete certain projects, as well as working capital financing to
meet its past- due and current obligations. These factors raise substantial
doubt about the Company's ability to continue as a going concern. Management's
plans in regard to these matters are also described in Note 2. The consolidated
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.
As discussed in Notes 1 and 2, Oasis entered into an exchange agreement
accounted for as a reverse acquisition, whereby Oasis is deemed to have been
acquired by NuOasis for accounting purposes. Accordingly, the accompanying
consolidated financial statements have been retroactively restated to include
the historical assets and liabilities, and the historical operations of the net
assets acquired from NuOasis for all periods presented. The operations of Oasis
are included in the accompanying consolidated financial statements from the date
of acquisition, October 19, 1998, to June 30, 1999.
/s/ McKennon, Wilson & Morgan LLP
Irvine, California
April 4, 2000
F-2
<PAGE>
OASIS RESORTS INTERNATIONAL, INC.
(Formerly Flexweight Corporation)
Consolidated Balance Sheet
June 30, 1999
<TABLE>
<CAPTION>
<S> <C>
ASSETS
Cash and cash equivalents $ 51,698
Accounts receivable, net 373,550
Inventory 170,126
Marketable securities (Note 4) 345,000
Receivable from NuOasis (Note 4) 264,000
Other current assets 84,729
Total current assets 1,289,103
Property and equipment, net 256,834
Receivable from Lessor (Note 3) 1,183,858
Lease deposit (Note 6) 687,000
Land held for development (Note 5) 3,700,000
Investment, at cost (Notes 2 and 3) 2,000,000
Other 598,389
Total assets $ 9,715,184
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable $ 1,801,078
Due Lessor (Notes 3 and 8) 3,397,146
Accrued liabilities 511,525
Current portion of notes payable (Note 7) 601,223
Total current liabilities 6,310,972
Notes payable, net of current portion (Note 7) 3,348,777
Fair value of notes payable to NuOasis (Note 1) 7,000,000
Total liabilities 16,659,749
Commitments and contingencies (Note 8)
Stockholders' deficit (Notes 1, 2, and 9):
Preferred stock, par value $0.001; 25,000,000 shares
authorized, no shares issued and outstanding -
Common stock, par value $0.001; 75,000,000 shares
authorized, 3,190,705 shares issued and outstanding 3,190
Additional paid-in capital 23,462,668
Accumulated deficit (24,176,499)
Accumulated other comprehensive loss (233,924)
Notes receivable from Resorts (6,000,000)
Total stockholders' deficit (6,944,565)
Total liabilities and stockholders' deficit $ 9,715,184
</TABLE>
See accompanying notes to these consolidated financial statements.
F-3
<PAGE>
OASIS RESORTS INTERNATIONAL, INC.
(Formerly Flexweight Corporation)
Consolidated Statements of Operations and Comprehensive Loss
For The Years Ended June 30, 1999 and 1998
<TABLE>
<CAPTION>
1999 1998
<S> <C> <C>
Revenues $ 5,522,626 $ 5,292,604
Costs of revenues 5,795,187 5,512,702
Gross profit (loss) (272,561) (220,098)
Selling, general and administrative expenses 1,012,300 1,244,870
Impairment of long-lived assets (Notes 2 and 3) 8,319,241 3,453,000
Loss from operations (9,604,102) (4,917,968)
Loss on sale of marketable securities 803,000 -
Interest expense 400,309 31,591
Net loss (10,807,411) (4,949,559)
Other comprehensive income (loss):
Unrealized gain (loss) on marketable
securities 133,000 (590,000)
Foreign currency translation adjustment 154,781 79,005
Comprehensive loss $(10,519,630) $ (5,460,554)
Basic and diluted net loss per share $ (4.01) $ (3.17)
Weighted average shares included in basic and
diluted net loss per share 2,698,008 1,563,450
</TABLE>
See accompanying notes to these consolidated financial statements.
F-4
<PAGE>
OASIS RESORTS INTERNATIONAL, INC.
(Formerly Flexweight Corporation)
Consolidated Statements of Stockholders' Equity (Deficit) and Comprehensive Loss
For The Years Ended June 30, 1999 and 1998
<TABLE>
<CAPTION> Notes
Preferred Stock Common Stock Additional Other Receivable
Paid-In Accumulated Comprehensive From
Shares Amount Shares Amount Capital Deficit Loss Resorts Total
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Balances, July 1,
1997 - $ - 1,563,450 $ 1,563 $12,136,144 $ (8,419,529) $ (10,710) $ - $ 3,707,468
Recapitalization by
NuOasis - - - - 10,657,000 - - (10,000,000) 657,000
Shares of Oasis
assigned from
NuOasis for lease
deposit - - - - - - - 1,000,000 1,000,000
Constructive
dividend to CPL - - - - (13,000,000) - - - (13,000,000)
Capital contributions - - - - 551,126 - - - 551,126
Net loss and
comprehensive
loss - - - - - (4,949,559) (510,995) - (5,460,554)
Balances, June 30, - $ - 1,563,450 $ 1,563 $10,344,270 $(13,369,088) $ (521,705)$ (9,000,000)$(12,544,960)
1998
</TABLE>
See accompanying notes to these consolidated financial statements.
F-5
<PAGE>
OASIS RESORTS INTERNATIONAL, INC.
(Formerly Flexweight Corporation)
Consolidated Statements of Stockholders'
Equity (Deficit) and Comprehensive Loss (continued)
For The Years Ended June 30, 1999 and 1998
<TABLE>
<CAPTION> Notes
Additional Other Receivable
Preferred Stock Common Stock Paid-In Accumulated Comprehensive From
Capital Deficit Income (Loss) Resorts Total
Shares Amount Shares Amount
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Restructuring, July 1,
1998 - $ - - $ - $10,000,000 $ - $ - $ 3,000,000 $ 13,000,000
Capital contributions - - - - 466,750 - - - 466,750
Cancellation of note
payable to NuOasis - - - - 1,517,000 - - - 1,517,000
Common stock
retained by Oasis
shareholders
after reverse
acquisition - - 1,627,255 1,627 8,134,648 - - - 8,136,275
Constructive dividend
for fair value of
notes payable
issued to NuOasis - - - - (7,000,000) - - - (7,000,000)
Net loss and -
comprehensive
loss - - - - - (10,807,411) 287,781 - (10,519,630)
Balances, June 30, - $ - 3,190,705 $ 3,190 $23,462,668 $(24,176,499) $(233,924) $(6,000,000)$ (6,944,565)
1999
</TABLE>
See accompanying notes to these consolidated financial statements.
F-6
<PAGE>
OASIS RESORTS INTERNATIONAL, INC.
(Formerly Flexweight Corporation)
Consolidated Statements of Cash Flows
For The Years Ended June 30, 1999 and 1998
<TABLE>
<CAPTION>
1999 1998
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(10,807,411) $(4,949,559)
Adjustments to reconcile net loss to
net cash provided by (used in) operating activities:
Depreciation and amortization 9,777 -
Write-off of note receivable from Club Hammamet - 1,905,000
Impairment of SALT equity investment and Cleopatra Cap Gammarth
Casino interest - 1,548,000
Loss on sale of marketable securities 803,000 -
Impairment of goodwill 8,006,241 -
Impairment of lease deposit 313,000 -
Changes in operating assets and liabilities:
Accounts receivable 245,734 (357,793)
Inventory 1,111 22,764
Other current assets (84,729) 2,231
Accounts payable 89,445 635,720
Accrued liabilities (166,729) 157,070
Due Lessor 1,456,450 1,247,019
Net cash provided by (used in) operating activities (134,111) 210,452
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of equipment (266,611) (52,597)
Advances on note receivable from Club Hammamet - (154,200)
Other assets (345,980) 424,647
Net cash provided by (used in) investing activities (612,591) 217,850
CASH FLOWS FROM FINANCING ACTIVITIES:
Advances due from Lessor (198,966) (984,892)
Payments on notes payable (25,000) -
Repayment of short-term bank loans - (300,000)
Advances (repayments) from NuOasis 296,381 (252,574)
Capital contributions 466,750 551,126
Net cash provided by (used in) financing activities 539,165 (986,340)
Foreign currency effect on cash 154,781 79,005
Net decrease in cash (52,756) (479,033)
Cash and cash equivalents at beginning of year 104,454 583,487
Cash and cash equivalents at end of year $ 51,698 $ 104,454
</TABLE>
See accompanying notes to these consolidated financial statements.
F-7
<PAGE>
OASIS RESORTS INTERNATIONAL, INC.
(Formerly Flexweight Corporation)
Consolidated Statements of Cash Flows (continued)
For The Years Ended June 30, 1999 and 1998
<TABLE>
<CAPTION>
1999 1998
<S> <C> <C>
Supplemental Disclosure of Cash Flows -
Cash paid during the year for interest $ 350,489 $ 31,591
Non-Cash Financing and Investing Activities:
Capital contribution of marketable securities by NuOasis - 657,000
Lease deposit exchanged for note receivable from Resorts - 1,000,000
Constructive dividend resulting from notes payable issued to
CPL in exchange for assets - 13,000,000
Contribution of notes receivable from Resorts in recapitalization 10,000,000 -
Effective capital contribution from cancellation of notes issued to
CPL for shares of CPRC in restructuring 13,000,000 -
Effective capital contribution resulting from restructuring 10,000,000 -
Exchange of note receivable from Resorts in restructuring 3,000,000 -
Notes payable assumed in reverse acquisition with Oasis III 3,925,000 -
Acquisition of land held for development in reverse acquisition
with Oasis III 3,700,000 -
Estimated fair value of shares retained by shareholders of Oasis in 8,136,275 -
reverse acquisition
Constructive dividend resulting from estimated fair value of notes
payable issued in reverse acquisition of Oasis 7,000,000 -
Receivable from NuOasis resulting from sale of marketable
securities 264,000 -
</TABLE>
See accompanying notes to these consolidated financial statements.
F-8
<PAGE>
OASIS RESORTS INTERNATIONAL, INC.
(Formerly Flexweight Corporation)
Notes to Consolidated Financial Statements
1 - Organization and History
Oasis Resorts International, Inc. (formerly Flexweight Corporation, a Kansas
Corporation) was originally incorporated under the name Flexweight Drill Pipe
Company in 1958. Oasis Resorts International Inc., herein referred to as "Oasis"
and its subsidiaries (collectively the "Company"), develop and operate resort
hotel and gaming operations, primarily in Tunisia, North Africa, and held
undeveloped land in Oasis, Nevada.
On May 1, 1998, Oasis, then Flexweight Corporation, merged with Oasis Resorts,
Hotel & Casino-III, Inc. ("Oasis III"), which held assets representing 20 acres
of partially-developed land in Oasis, Nevada. In connection with the merger,
Oasis issued 602,000 shares of common stock to the shareholders of Oasis III to
acquire 100% of the issued and outstanding common stock of Oasis III. In
addition, the Company issued the shareholders of Oasis III 200,000 shares of
Oasis common stock in connection with the real estate agreement dated April 9,
1998 (Note 5). Upon the close of the merger, the shareholders of Oasis held
149,916 shares of common stock and the shareholders of Oasis III held
approximately 80% of the issued and outstanding common stock of Oasis. Oasis III
has title to 20 acres of commercial real estate located in Nevada which
management intends to develop into a gaming complex.
On October 19, 1998, the Company reincorporated in Nevada and changed its name
from Flexweight Corporation to Oasis Resorts International, Inc. to better
reflect its new corporate direction. The Company then entered into an exchange
agreement with NuOasis International, Inc. ("NuOasis"), a wholly-owned
subsidiary of NuOasis Resorts, Inc. ("Resorts") to acquire NuOasis's 75%
interest in Cleopatra Palace Resorts and Casinos Ltd. ("CPRC"). CPRC had
previously acquired all of the equity interest owned by NuOasis in Cleopatra Cap
Gammarth, Limited ("CCGL") which operates the casino Cleopatra Cap Gammarth, a
right to re-acquire an interest in Cleopatra Hammamet Limited, which operates
the casino Cleopatra Hammamet Casino, and Cleopatra's World, Inc. ("CWI") which
operates the Le Palace Hotel & Resort at Cap Gammarth (see Note 3). All of the
properties are located in Tunisia. Cleopatra Palace Ltd. ("CPL") is a
predecessor company to CPRC, an entity controlled by NuOasis, which previously
held the interests in the Cleopatra Hammamet Casino and the Cleopatra Cap
Gammarth Casino.
In connection with the acquisition of CPRC, the Company issued 1,363,450 shares
of common stock, common stock purchase warrants representing the right to
acquire 7,200,000 shares at $30.00 per share, and issued promissory notes with
an aggregate face value of $180 million to NuOasis in exchange for certain
assets in NuOasis. At the time of the transaction, Oasis had no ability to repay
the notes, and therefore, the notes had an estimated fair value substantially
less than the face value at the date of issuance. Based on the enterprise value
of Oasis at the date of the reverse acquisition of approximately $16.6 million,
the Company valued the debt at $7 million. On November 15, 1999, management of
Oasis agreed to extinguish this debt and cancel the 7,200,000 warrants for the
issuance of 8,111,240 shares of common stock (Note 9), such that the NuOasis
shareholders control approximately 86% of the Company's issued and outstanding
common stock.
F-9
<PAGE>
OASIS RESORTS INTERNATIONAL, INC.
(Formerly Flexweight Corporation)
Notes to Consolidated Financial Statements (continued)
2 - Basis of Presentation and Principles of Accounting
Basis of Presentation
This acquisition of NuOasis interests by the Company on October 19, 1998 is
accounted for as a reverse acquisition, whereby NuOasis is the acquiror, since
the operations of NuOasis are more significant than Oasis and NuOasis acquired a
controlling interest in the Company on November 15, 1999. Accordingly, the
accompanying consolidated financial statements include the historical assets and
liabilities, and the historical operations of NuOasis interests acquired for all
periods presented. The operations of Oasis are included in the accompanying
consolidated financial statements from the date of acquisition, October 19,
1998, through June 30, 1999. The net assets of Oasis were recorded at fair value
at the date of acquisition. Assets, consisting primarily of land valued at $3.7
million based upon an independent appraisal, and marketable securities of
$350,000, and liabilities consisting of $3.975 million in secured notes, were
recorded at fair value. The purchase price in the reverse acquisition was
approximately $8.1 million, with the excess of the purchase price over the fair
value of the net assets acquired of $8 million allocated to goodwill (see
below).
Proforma Financial Data
The unaudited proforma statements of operations data for the years ended June
30, 1999 and 1998, assuming the acquisition of Oasis occurred on July 1, 1997,
are as follows:
1999 1998
Revenues $ 5,522,626 $ 5,292,604
Net loss $(10,106,787) $ (9,684,469)
Basic and diluted net loss per share $ (3.17) $ (3.04)
The above unaudited proforma amounts are not necessarily indicative of what the
actual results might have been if the acquisitions had occurred on July 1, 1997.
Going Concern Considerations
The Company has recurring losses from operations, and at June 30, 1999, the
Company has a working capital deficit of $5 million. The Company requires
approximately $5 million of immediate working capital to complete the final
phase of construction of the Le Palace Hotel & Resort and the Cleopatra Cap
Gammarth casino, as well as service certain past-due trade creditors. The
Company will require additional capital to meet obligations of the hotel and
casino as they become due during the next 12 months. The Company is currently a
plaintiff in litigation with the owners of the Cleopatra Cap Gammarth casino due
to delays in the completion of the project by the owner. The Company has
received a judgment totaling approximately $292 million against Societe
D'Animation et de Loisirs Touristique, a Tunisian corporation ("SALT"), the
ultimate collectibility of which is unknown (see Note 3). The Company is a
defendant in a matter initiated by the owners of the Le Palace Hotel & Resort
for 1999 rents unpaid by the Company. At June 30, 1999, the Company owed
approximately $3.4 million under the lease agreement.
F-10
<PAGE>
OASIS RESORTS INTERNATIONAL, INC.
(Formerly Flexweight Corporation)
Notes to Consolidated Financial Statements (continued)
The Company requires approximately $70 million to continue the development of
it's gaming facility in Oasis, Nevada, and may be subject to foreclosure
proceedings in the event the Company is unable to raise the financing necessary
to complete the project. These factors raise substantial doubt about the
Company's ability to continue as a going concern. Management's plans with
respect to these matters include obtaining sources of capital to complete the
projects, and pay its past-due trade creditors and rents. Meanwhile, the Company
will attempt to perfect its judgment against the landlords of SALT. There are no
assurances that such financing will be consummated on terms favorable to the
Company, if at all, nor that the Company will be successful in collecting on its
judgment against SALT.
Consolidation
The accompanying consolidated financial statements include the accounts of the
Company and its controlled subsidiaries. All inter-company accounts have been
eliminated in consolidation. The accompanying consolidated balance sheet
excludes a minority interest for its 75% interest in CPRC, 80% interest in CWI,
and its 90% interest in CCGL since the entities have shareholder deficiencies.
Fiscal Year End
The Company changed its fiscal year end from August 31 to June 30 as a result of
the change in basis of accounting to coincide with the operations of NuOasis
acquired.
Cash and Cash Equivalents
Cash equivalents include short-term, highly liquid investments with maturities
of three months or less at the time of acquisition.
Marketable Securities
The Company accounts for its equity securities as available-for-sale securities.
In connection therewith, the Company records unrealized gains and losses as a
component of shareholders' equity. Realized gains and losses are recorded in
operations. The Company uses the specific identification method for accounting
for its marketable securities.
Property and Equipment
Property and equipment are depreciated over their estimated useful lives using
the straight-line method ranging from three to five years. Additions and
betterments are capitalized. The cost of maintenance and repairs is charged to
expense as incurred. When depreciable property is retired or otherwise disposed
of, the related cost and accumulated depreciation and amortization are removed
from the accounts and any gain or loss is reflected in the consolidated
statements of operations. Depreciation expense reflected in the accompanying
consolidated financial statements was not significant.
Goodwill
Goodwill represents the excess of purchase price over the fair value of the net
assets of acquired businesses. Goodwill is stated at cost and is amortized on a
straight-line basis over the expected period to be benefitted.
F-11
<PAGE>
OASIS RESORTS INTERNATIONAL, INC.
(Formerly Flexweight Corporation)
Notes to Consolidated Financial Statements (continued)
As discussed above, the Company generated goodwill of $8 million in connection
with the reverse acquisition of Oasis on October 19, 1998 (see impairment
discussion below).
Impairment of Long-lived Assets
The Company assesses the recoverability of long-lived assets by determining
whether the depreciation and amortization of property and goodwill over their
remaining life can be recovered through projected undiscounted future cash
flows. The amount of impairment, if any, is measured based on fair value and is
charged to operations in the period in which such impairment is determined by
management.
Oasis originally acquired its interest in Oasis III in May 1998. Oasis III had
no significant operations, however, Oasis III has a management team, which upon
the close of a funding, intends to obtain a casino gaming license in the state
of Nevada. The Company has been seeking capital to begin construction of its
casino in Oasis, Nevada, with the assistance of NuVen Advisors, Inc. ("NuVen"),
an affiliate of NuOasis, since July 1998. Through June 30, 1999, the Company had
been unsuccessful in obtaining necessary financing, one year after commencing
its search for capital with the assistance of NuVen, and accordingly, the
Company charged operations totaling $8 million, since the recovery of such
goodwill is unlikely. Through March 31, 2000, no construction financing has been
obtained by management of the Company to commence its development in Oasis,
Nevada.
In 1998, management determined that its interests in the Cleopatra Cap Gammarth
Casino, SALT, and Hammamet were impaired, and accordingly, they charged
operations totaling approximately $3.4 million (see Investments, at cost below
and Note 3).
Interest Capitalization
The Company capitalizes interest charges incurred for development of its land.
However, since management has curtailed development until such time funds can be
raised, no interest is capitalized.
Investments, at cost
The Company holds a 9% equity interest in SALT. This investment is carried at
cost, less amounts deemed necessary to reflect the asset at its net realizable
value. The investment was exchanged from CPL to CWI with a carrying value of
$3.1 million. CPL had also incurred costs of $424,000 in connection with its
interest. During 1998, management determined the investment was impaired, and
accordingly, they recorded a provision for loss of $1.5 million in fiscal 1998.
The impairment was based on collection of the money judgement against SALT and
certain of its shareholders (see Note 3). The carrying value at June 30, 1999 is
$2 million.
Foreign Currency
The consolidated financial statements of the Company's non-U.S. operations are
translated into U.S. dollars for financial reporting purposes. The assets and
liabilities of non-U.S. operations whose functional currencies are other than
the U.S. dollar are translated at rates of exchange at fiscal year-end, and
revenues and expenses are translated at average exchange rates for the fiscal
year. The cumulative translation effects are reflected in stockholders' equity.
Foreign currency gains and losses on transactions denominated in other than the
F-12
<PAGE>
OASIS RESORTS INTERNATIONAL, INC.
(Formerly Flexweight Corporation)
Notes to Consolidated Financial Statements (continued)
functional currency of an operation are reflected in other income (expense).
Revenue Recognition
Revenues from hotel operations are recorded when the services are rendered.
Revenues from food and beverage sales are recognized upon delivery of the
product and service.
Provision for Income Taxes
The Company accounts for its income taxes under an asset and liability method
whereby deferred tax assets and liabilities are determined based on temporary
differences between bases used for financial reporting and income tax reporting
purposes. Income taxes are provided based on the enacted tax rates in effect at
the time such temporary differences are expected to reverse. A valuation
allowance is provided for certain deferred tax assets if it is more likely than
not that the Company will not realize tax assets through future operations.
The Company's net deferred tax assets at June 30, 1999, consist of net operating
loss carryforwards amounting to approximately $20 million. At June 30, 1999, the
Company provided a 100% valuation allowance for these net operating loss
carryforwards totaling $8 million. During the years ended June 30, 1999 and
1998, the Company's valuation allowance increased $4 million, and $2 million,
respectively. The Company's annual use of net operating loss carryforwards are
limited due to the change in ownership experienced in 1998. No benefit for
income taxes has been provided since all deferral tax assets have been fully
reserved. Income tax expense is not material to the accompanying consolidated
statements of operations.
Loss Per Share
Basic EPS is computed as net income divided by the weighted average number of
common shares outstanding for the period. Diluted EPS reflects the potential
dilution that could occur from common shares issuable through stock options,
warrants and other convertible securities. Diluted EPS is equal to basic EPS
since the effect of common stock purchase warrants would be anti-dilutive. See
Note 9 for common stock purchase warrants outstanding which are anti-dilutive
for EPS reporting purposes.
Stock Splits
All per share amounts are reported, as adjusted, after the one for 100 reverse
stock split approved on April 8, 1998 and one for five reverse stock splits
approved on February 8, 2000 (Note 9).
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-13
<PAGE>
OASIS RESORTS INTERNATIONAL, INC.
(Formerly Flexweight Corporation)
Notes to Consolidated Financial Statements (continued)
Reporting Comprehensive Income
The Company reports the components of comprehensive income using the income
statement approach. Comprehensive income includes net income, as well as certain
non-shareholder items that are reported directly within a separate component of
stockholders' equity and bypass net income. Components which give rise to the
other comprehensive income are foreign currency translations adjustments and
temporary gains and losses on marketable securities.
Disclosures about Segments of an Enterprise and Related Information
The Company provides disclosures of financial and descriptive information about
an enterprise's operating segments in annual and interim financial reports
issued to stockholders. The Company defines an operating segment as a component
of an enterprise that engages in business activities that generate revenue and
incur expense, whose operating results are reviewed by the chief operating
decision maker in the determination of resource allocation and performance, and
for which discrete financial information is available. As of June 30, 1999 and
1998, the Company has only one reportable operating segment.
Stock-based Compensation
The Company accounts for its employee stock options using the intrinsic method
of accounting prescribed by Accounting Principles Board Opinion No. 25 ("APB
25"), "Accounting for Stock Issued to Employees." The Company must make pro
forma disclosures of net income and earnings per share, as if the fair value
method of accounting defined in Statement of Financial Accounting Standards No.
123 ("SFAS 123"), "Accounting for Stock-Based Compensation," had been applied.
Through June 30, 1999, the Company had no employee stock options outstanding.
The Company accounts for transactions in which goods or services are the
consideration received for the issuances of its equity instruments based on the
fair value of the consideration received or the fair value of the equity
instruments issued, whichever is more reliably measurable.
Accounting for Derivative Instruments and Hedging Activities
The Financial Accounting Standards Board issued Statement of Financial
Accounting Standards No. 133, "Accounting for Derivative Instruments and Hedging
Activities" (FAS 133). Under the provisions of FAS 133, the Company will be
required to recognize all derivatives as either assets or liabilities in the
statements of financial position and measure these instruments at fair value.
The Company has adopted FAS 133 during fiscal 1999. Currently, the Company does
not have any instruments that would qualify as derivatives under FAS 133.
Accordingly, the Company does not believe that FAS 133 would have a material
impact on its current financial position or results of operations.
Financial assets with carrying values approximating fair value include cash and
cash equivalents, marketable securities, notes receivable and other investments.
Financial liabilities with carrying values approximating fair value include
accounts payable and accrued interest, and notes payable. Notes due to and from
related parties have no readily ascertainable fair value.
F-14
<PAGE>
OASIS RESORTS INTERNATIONAL, INC.
(Formerly Flexweight Corporation)
Notes to Consolidated Financial Statements (continued)
3 - Tunisian Operations
Le Palace Hotel & Resort
During fiscal 1997, NuOasis exchanged 600,000 shares of common stock of The
Hartcourt Companies Inc., valued at approximately $862,000 based on a national
quotation system, for a 50% equity ownership in CWI. CWI is the lessee of the Le
Palace Hotel & Resort surrounding the Cap Gammarth Casino (see Note 8 for
discussion of this lease).
On June 1, 1998, CWI acquired certain interests from CPL for $13 million in
notes payable. The assets acquired consisted of an equity interest of 9% in
SALT, with a carrying value of $3.1 million, the leasehold interest in the Cap
Gammarth Casino, with a carrying value of approximately $424,000, and a
receivable from the Societe Loisirs Club Hammamet ("Club Hammamet") with a face
value of $1.9 million. Since the historical carrying value of the assets
acquired of $5.4 million have been reported in these consolidated financial
statements for the periods presented, the purchase price of $13 million was
deemed a constructive dividend to this related party as reflected in the
accompanying consolidated statements of shareholders' equity (deficit) during
the year ended June 30, 1998, since the companies were under common control at
the date of acquisition.
In connection with a letter agreement dated April 26, 1998, effective June 1,
1998, NuOasis recapitalized, and increased its interest to 60% equity ownership
in CWI with $10 million of notes due from Resorts (Note 9), marketable
securities consisting of 2,000,000 shares of Resorts valued at $254,000 and
280,000 shares of common stock of The Hartcourt Companies, Inc. valued at
$403,000 (Note 4); a Put/Option Agreement between Resorts and J. Monterosso
dated August 22, 1997 with no carrying value and a face value of $715,000 and a
promissory note dated August 22, 1997 with no carrying value, and a balance due
of $1,135,000 at the date of recapitalization. The debtor of these notes is in
bankruptcy; therefore the ultimate collection of amounts due the Company is
uncertain. The aggregate historical value of these assets, including the notes
of $10 million, was approximately $10.7 million at the date of transfer as
reflected in the accompanying consolidated statements of stockholders' equity
(deficit) for the year ended June 30, 1998.
In connection with the reorganization of CPRC (see below), the Company
effectively increased its ownership interest to 80% in CWI through the purchase
of an additional equity interest from an individual affiliated with the Company
and existing shareholder of CPRC. No value was attributed to this transaction
since CWI had no significant net assets.
Restructuring
As stated in Note 1, NuOasis entered into an exchange agreement to acquire its
75% interest in CPRC on July 1, 1998. CPRC was formed by the management of
NuOasis as a means to consolidate its off-shore hotel and casino operations,
principally in Tunisia. CPRC was a multi-step restructuring, whereby CPRC first
issued 12,553,125 shares to CWI to acquire from CWI its 9% equity interest in
SALT, the SALT Casino Lease rights, and $1.9 million note due from Club
Hammamet; CWI immediately thereafter exchanged 8,490,625 CPRC shares to fully
satisfy the $13 million notes payable to CWI. Then CPRC acquired the remaining
CPL assets for 946,875 shares and a $3 million note due from Resorts, then
acquired an 80% interest in CWI and a 100% interest in Club Hammamet from
NuOasis for 11,500,000 CPRC shares, and finally, CPRC increased its ownership in
CCGL to 90% by assigning to CCGL, $3.5 million of notes due
F-15
<PAGE>
OASIS RESORTS INTERNATIONAL, INC.
(Formerly Flexweight Corporation)
Notes to Consolidated Financial Statements (continued)
from Resorts and its rights to the SALT Casino Lease. As a result, CPRC owns an
80% interest in CWI, a 90% interest in CCGL, a 100% interest in Club Hammamet
and a 9% equity interest in SALT. In addition, the restructuring of CPRC
satisfied the $13 million of notes due CPL by CWI, recapitalized the Company by
$10 million, and reduced a portion of its notes receivable from Resorts by $3
million.
In connection with the operation of the Le Palace Hotel & Resorts, the Company
provides employees of Societe Touristique Tunisie-Golfe ("STTG" or the "Lessor")
meals and allowances while working at the Cap Gammarth complex. In fiscal 1999
and 1998, the Company incurred reimbursable expenses amounting to approximately
$199,000 and $985,000, respectively. At June 30, 1999, the Company had a
receivable from the Lessor amounting to $1,184,000. Refer to the arbitration
settlement reached with the Lessor regarding lease payments and costs incurred
by the Company in Note 8. Management believes that amounts receivable from the
Lessor will be subject to right of offset when the judgement becomes due.
Accordingly, no provision for loss has been reflected against amounts due from
STTG.
Cleopatra Cap Gammarth Casino
Cleopatra is the lessee of a 200,000 square foot casino and Las Vegas-style
showroom presently under construction (the "Cap Gammarth Casino"), and
substantially complete, pursuant to a Casino Lease Agreement and Operating
Management Contract with STTG. The lease on the Cap Gammarth Casino was
transferred by SALT resulting in a change in lessor from STTG to SALT. See Note
8 for further discussion of this lease arrangement.
On July 13, 1998, the Company filed a civil complaint for damages in the U.S.
District Court, District of Nevada against SALT and several other defendants. On
July 2, 1999, the District Court adjudged and decreed compensatory damages in
the amount of $292 million plus interest, and $10 million in punitive damages.
Management is proceeding in Tunisia to collect upon its money judgement. No
amounts have been recorded in these consolidated financial statements as a
result of this potential gain contingency.
Hammamet Casino
In October 1994, Cleopatra entered into an agreement with Club Hammamet to lease
and operate a 60,000 square foot casino and French-style cabaret recently
completed in Hammamet, Tunisia (the "Hammamet Casino"). On or about September
26, 1997, in order to finance the remaining expenditures on the Hammamet Casino,
the Company and Club Hammamet entered into an agreement with Cedric
International Company Inc., a Panamanian corporation ("Cedric") pursuant to
which the Company and Cedric each agreed to contribute $1.5 million to the
capital of Club Hammamet in making the first annual lease payments on the
Hammamet Casino, the Company pledged to Cedric its 70% interest in Hammamet
Casino. The Company and Cedric agreed that Cedric will return such interest when
and if the Company reimburses Cedric for all funds advanced prior to September
26, 1998 (on an all or nothing basis), plus interest at the rate of 15% per
annum. The Company did not reimburse Cedric, due to sustained losses at the
Hammamet Casino, and the Company forfeited its right to reacquire its interest
in Hammamet Casino. Accordingly, the Company impaired its interest in Hammamet
Casino and charged operations approximately $1.9 million in fiscal 1998.
F-16
<PAGE>
OASIS RESORTS INTERNATIONAL, INC.
(Formerly Flexweight Corporation)
Notes to Consolidated Financial Statements (continued)
4 - Marketable Securities
At June 30, 1998, the Company held 2,000,000 shares of Resorts and 880,000
shares of Hartcourt as available-for-sale securities. Through the acquisition of
Oasis III, the Company acquired an additional 3,250,000 shares of Resorts common
stock valued at $350,000.
During fiscal 1999, NuOasis, on behalf of the Company, liquidated 741,872 shares
of the Hartcourt companies for $264,000. In connection therewith, the Company
recorded a provision for loss of $803,000 in fiscal 1999. At June 30, 1999, the
Company had a receivable from NuOasis totaling $264,000.
The Company has the following marketable securities as of June 30, 1999:
Investee Shares Market Value Cost
NuOasis Resorts Inc. 5,250,000 $ 241,500 $ 604,000
The Hartcourt
Companies, Inc. 138,128 103,500 198,000
Totals $ 345,000 $ 802,000
Subsequent to June 30, 1999, the Company sold 138,128 shares of Hartcourt for
$199,000 and the amounts are currently held by NuOasis in a securities account
on behalf of the Company. Such amounts will be remitted to the Company upon the
establishment of an account for CWI.
5 - Land Held for Development
As discussed in Note 1, Oasis III retained a 20-acre interest in
partially-developed land located in Oasis, Nevada and an option to acquire an
additional 30 acres adjacent to the 20-acre interest. The subject property was
subdivided from a 1100-acre parcel originally purchased on December 27, 1995 for
$1,450,000 by Oasis International Hotel & Casino, Inc. ("OIHC"), a current
shareholder of the Company through the merger of Oasis III on May 1, 1998 (Note
1). The property contains a 6-unit motel and an eight-pump truck stop, including
a cafe and mini store. Substantial expenditures would have to be made to the
property improvements in order for the property to be operative in its current
state.
OIHC entered into a real estate purchase agreement dated April 9, 1998, as
amended, with Oasis III. In connection therewith, the agreement called for a
purchase price of $5,000,000, consisting of shares of the Company's common stock
valued at $1,000,000, the assumption of $550,000 First Trust Deed Note Payable
and the issuance of a note payable to OIHC totaling $3,450,000 (see Note 7).
Oasis closed escrow on the property on or about May 7, 1998.
In December 1998, the Company obtained an independent appraisal valuing the
20-acre parcel at $3.7 million on an "as-is" basis. In connection with the
reverse acquisition (Note 1), the Company valued the property at $3.7 million.
All land-related costs subsequent to October 19, 1998, have been expensed as
incurred.
F-17
<PAGE>
OASIS RESORTS INTERNATIONAL, INC.
(Formerly Flexweight Corporation)
Notes to Consolidated Financial Statements (continued)
6 - Lease deposit
The Company is required to maintain a lease deposit totaling $3 million for the
benefit of the leaseholders of the Le Palace Hotel. In fiscal 1998, the Company
pledged 200,000 shares of its common stock as collateral for the required lease
deposit. At June 30, 1999, the value of the underlying securities was $687,000.
The Company charged operations of $313,000 in 1999 as a result of this decline
in value. At June 30, 1999, the Company was deficient in the collateral held for
the lease deposit. In February 2000, the Company issued 2.75 million shares of
its common stock to provide additional security under the lease arrangement.
Based on the value of such shares of common stock, the Company may be required
to deposit additional collateral.
7 - Notes Payable
In connection with the reverse acquisition of Oasis III on October 19, 1998,
Oasis assumed the $550,000 note payable (See Note 5). The note was due May 11,
1999, with interest-only payments (at an annual rate of 10.9% per annum) of
$5,000 per month. The note amounting to $550,000, outstanding at June 30, 1999,
was extended and is currently due on demand. Total interest expense included in
operations in connection with this note in fiscal 1999 was $45,000.
The Company also assumed a Second Deed of Trust note payable in the amount of
$3.425 million related to the 20-acre parcel payable to OIHC. The term of this
Second Deed of Trust is for 30 years principal and interest payable at 9% per
annum. The Company has been unable to make the required principal payments,
however, OIHC has not notified the Company of any intent to foreclose on the
loan. The Company's ability to continue to make the required payments is
contingent upon its raising additional capital. The principal amount outstanding
at June 30, 1999, was $3.4 million. Total interest expense in fiscal 1999 was
$305,792 related to this note agreement.
Future annual minimum principal payments of notes payable are as follows:
Year Ending
June 30 Amounts Due
2000 $ 601,223
2001 28,201
2002 30,846
2003 33,740
2004 36,905
Thereafter 3,219,085
$ 3,950,000
F-18
<PAGE>
OASIS RESORTS INTERNATIONAL, INC.
(Formerly Flexweight Corporation)
Notes to Consolidated Financial Statements (continued)
8 - Commitments and Contingencies
Leases
CCGL and CWI are lessees under lease agreements related to the Cap Gammarth
Casino and the Le Palace Hotel, respectively, which require annual lease
payments to be made, monthly or quarterly, over their respective terms, which
range from 14 to 20 years (also see Note 3). The Company has not begun
operations at the casino; therefore, this lease is not yet in effect. Upon
consummating the lease, the Company will be required to pay the amounts
reflected in the table below. Management expects the lease to be consummated by
June 2000. Future annual minimum lease payments by these entities in each of the
next five years and thereafter are as follows:
Amounts Due
Cap
Year Ending Gammarth Le Palace
June 30 Casino Hotel Total
2000 $ 3,000,000 $ 7,138,146 $ 10,138,146
2001 3,000,000 4,007,150 7,007,150
2002 3,300,000 4,287,650 7,587,650
2003 3,600,000 4,587,785 8,187,785
2004 3,900,000 4,908,930 8,808,930
Thereafter 74,700,000 52,872,889 127,572,889
$ 91,500,000 $ 77,802,550 $169,302,550
Prior to taking possession of the Cleopatra Cap Gammarth Casino under its lease
agreement, the Company is required to make a lease deposit totaling $1 million.
No rental expense has been included in operations under this arrangement. Total
rent expense included in operations under the Le Palace Hotel lease for the
years ended June 30, 1999 and 1998 was $2.5 million and $2.0 million,
respectively.
Litigation
The Company has been a party to litigation with STTG due to significant delays
in completing the Le Palace Hotel & Resorts. Through June 30, 1999, the Company
has not paid rents to STTG in connection with its lease arrangement. However,
the Company has paid opening costs and purchased equipment totaling
approximately $1.8 million which were the responsibility of STTG. STTG filed a
complaint and received an arbitration award for calendar year lease rental
payments for 1997 and 1998, net of amounts expended by the Company. At June 30,
1999, the Company owed STTG approximately $3.4 million for the net rental
payments under the agreement. Also, see Note 3 for discussion of amounts due to
the Company from STTG.
The Company is subject to claims and suits that arise from time to time out of
the ordinary course of its business. Through June 30, 1999, management of the
Company is not aware of any claims that will have a material impact on the
Company's business, financial condition or results of operations which are not
reflected in the accompanying consolidated financial statements.
F-19
<PAGE>
OASIS RESORTS INTERNATIONAL, INC.
(Formerly Flexweight Corporation)
Notes to Consolidated Financial Statements (continued)
9 - Stockholders' Deficit
Capital Structure
On April 8, 1998, the shareholders approved among other matters a one 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 and per share amounts have been restated to
reflect this reverse stock split for all periods presented. Effective October
19, 1998, the Company increased its authorized capital stock from 25,000,000
shares of $0.10 par value common stock to 75,000,000 shares of $0.001 par value
common stock and 25,000,000 shares of $0.001 par value preferred stock. Each
share of the Company was exchanged for one (1) share in the new corporation. All
share amounts have been restated to reflect this amendment to the Company's
Articles of Incorporation. On February 8, 2000, the board of directors approved
a one for five reverse stock split of the Company's $0.001 par value common
stock. All share and per share amounts have been restated to reflect this
reverse stock split for all periods presented.
Common Stock
In connection with the recapitalization on June 1, 1998, the Company received
contributions from NuOasis of $10,000,000 of notes receivable from Resorts and
$657,000 in marketable securities. Immediately thereafter, in order to meet the
lease deposit requirements of the Le Palace Hotel, the Company received 200,000
shares of the Company's common stock held by NuOasis, valued at $1 million, in
exchange for a reduction of $1 million in notes receivable from Resorts. See
Note 3 and below for further discussion.
As discussed in Note 3, the Company acquired certain assets and liabilities from
CPL which were part of the control group, and included in the assets and
liabilities, as well as the operations of the net assets acquired for all
periods presented (see basis of presentation). Accordingly, the $13 million in
notes issued to CPL for such assets, is treated as a constructive dividend in
the accompanying consolidated statement of stockholders' equity (deficit) for
the year ended June 30, 1998.
As part of the restructuring on July 1, 1998 (Note 3), the Company exchanged
certain shares held by the Company in CPRC with CPL for cancellation of $13
million in notes payable due CPL and transfer of $3 million in notes receivable
from Resorts held by the Company. Since the companies are under common control,
the net effect of this transaction was to capitalize the Company by $13 million
as reflected in the accompanying consolidated statements of stockholders' equity
(deficit) for the year ended June 30, 1999.
On July 1, 1998, the Company also transferred certain shares in CPRC for
cancellation of $1.5 million in notes payable to NuOasis. The reduction of such
obligation with NuOasis is treated as an effective contribution of capital in
the accompanying consolidated statements of stockholders' equity (deficit) for
the year ended June 30, 1999.
As discussed in Note 1, the Company's reverse acquisition caused the 1,563,450
shares of common stock held by NuOasis on October 19, 1998, to be reflected as
outstanding on July 1, 1997, with the 1,627,255 shares held by the Oasis
shareholders reflected as consideration. NuOasis shareholders were issued
1,363,450 share of the Company's common stock in connection with the reverse
acquisition (Note 1) and 200,000 shares issued in the exchange for 3,250,000
shares of Resorts (Note 10). The shares were valued by the board of directors of
the Company at $5.00 per share or $8.1 million, based on the market price of the
Company's common stock subsequent to the close of the transaction.
F-20
<PAGE>
OASIS RESORTS INTERNATIONAL, INC.
(Formerly Flexweight Corporation)
Notes to Consolidated Financial Statements (continued)
On November 15, 1999, the Company issued 8,111,240 share of the Company's common
stock in satisfaction of Notes payable to NuOasis valued at $7,000,000 and
warrants to purchase 7,200,000 at $30.00 per share.
Common Stock Purchase Warrants
Prior to October 19, 1998, the Company issued options to purchase 200,000 shares
at $0.50 per share and options to purchase 70,000 shares at $30.00 per share
outstanding and exercisable. Such options and warrants expire from July 1, 2001
to July 1, 2003. On October 19, 1998, the Company issued warrants to purchase
7,200,000 shares at $30.00 per share. On November 15, 1999, the Company canceled
such warrants to purchase 7,200,000 shares of common stock as part of the
extinguishment of Notes payable to NuOasis (Note 1).
Notes Receivable From Resorts
On July 1, 1998, in connection with the recapitalization of the Company by
NuOasis (see Note 3), the Company received a contribution of notes receivable
from Resorts in the amount of $10,000,000. These notes are due on demand and
bear interest at the rate of 6% per annum. Management has reflected such notes
as a reduction of shareholders' deficit since the original capitalization was
reflected as additional paid- in capital. A provision will be included in the
accompanying consolidated financial statements in the event the notes become
uncollectible. Management of Resorts intends to satisfy these notes with in-kind
consideration.
10 - Related Party Transactions
On May 30, 1998, the Company issued 200,000 shares of its common stock in
exchange for 3,250,000 shares of Resorts, classified as marketable securities.
The fair value of the NuOasis shares of common stock were valued at $350,000,
based on the closing bid price of such shares at the date of issuance. The
effects of this transaction were reflected prior to the reverse merger on
October 19, 1998.
On May 30, 1998, the Company granted NuOasis an option to purchase up to 50,000
shares of its common stock at $.50 per share. The term of the option is through
July 1, 2001, and allows the holder to adjust the number of options to an amount
that allows NuOasis to maintain the greater of its percentage ownership in the
Company or 19.5%. The shares under option were increased to 200,000 shares as a
result of this anti- dilution provision of this agreement. In addition, the
Company approved the appointment of a director to the Company's board of
directors. Using the Black-Scholes model, the Company valued these warrants at
$4.56 per share, or $910,000 and were charged to operations prior to the
acquisition of Oasis on October 19, 1998, and not to the operations herein.
Advisory Agreement
On July 18, 1998, the Company entered into an advisory agreement with NuVen
through April 1, 1999. In connection therewith, the Company issued warrants to
purchase 70,000 shares of common stock at $30.00 per share. The estimated fair
value of these warrants using the Black-Scholes model was determined to be $3.25
per share or approximately $227,500 of which approximately $130,000 was charged
to operations from the acquisition of Oasis on October 19, 1998 to June 30,
1999. The options expire on July 1, 2001. No other remuneration was granted to
NuVen in connection with this advisory agreement.
F-21
<PAGE>
OASIS RESORTS INTERNATIONAL, INC.
(Formerly Flexweight Corporation)
Notes to Consolidated Financial Statements (continued)
Director Compensation
Two directors of the Company have entered into agreements which expired
September 30, 1999, but have continued on a month-to-month basis since that
date, which provide for payments of $3,000 per month. No payments have been
made. Included in accounts payable are amounts due such directors of $72,000 at
June 30, 1999.
See Notes 1, 3, 8, and 9 for additional related party transactions.
F-22
EXHIBIT 3.1
ARTICLES OF INCORPORATION
OF
OASIS RESORTS INTERNATIONAL, INC.
* * * * *
FIRST: The name of the corporation is:
Oasis Resorts International, Inc.
SECOND: Its registered office in the State of Nevada is located at
4001 South Decatur Blvd., Suite #37-130, Las Vegas Nevada 89103. The name of
its resident agent at that address is Fred Graves Luke.
THIRD: The aggregate number of shares of all classes of stock,
which the Corporation shall have authority to issue is One Hundred Million
(100,000,000) of which Seventy Five Million (75,000,000) shares will be
designated Common Stock, with $.001 par value; and Twenty Five Million
(25,000,000) shares shall be designated $.001 par value "Preferred Stock".
Without further authorization from the shareholders, the Board of Directors
shall have the authority to divide and issue from time to time any or all of the
Twenty Five Million (25,000,000) shares of such Preferred Stock into one or more
series with such designations, preferences and relative, participating, optional
or other special rights, or qualification, limitations or restrictions thereof,
as may be designated by the Board of Directors, prior to the issuance of such
series, and the Board of Directors is hereby expressly authorized to fix by
resolution or resolutions only and without further action or approval, prior to
such issuance, such designations, preferences and relative, participating,
optional or other special rights, or qualifications, limitations or
restrictions, including, without limitation the date and times at which, and
the rate, if any, or rates at which dividends on such series of Preferred
<PAGE>
Stock shall be paid; the rights, if any, of the holders of such series of the
Preferred Stock to vote and the manner of voting, except as otherwise provided
by the law, the rights, if any, of the holders of shares of such series of
Preferred Stock to convert the same into, or exchange the same for, other
classes of stock of the Corporation, and the terms and conditions for such
conversion or exchange; the redemption price or prices and the time at which,
and the terms and conditions of which, the shares of such series of Preferred
Stock may be redeemed; the rights of the holders of shares of such series of
Preferred Stock upon the voluntary or involuntary liquidation, distribution or
sale of assets, dissolution or winding up of the Corporation, and the terms of
the sinking fund or redemption or purchase account, if any, to be provided for
such series of Preferred Stock. The designations, preferences, and relative,
participating, optional or other special rights, the qualifications, limitations
or restrictions thereof, of each additional series, if any, may differ from
those of any and all other series already outstanding. Further, the Board of
Directors shall have the power to fix the number of shares constituting any
classes or series and thereafter to increase or decrease the number of shares of
any such class or series subsequent to the issue of shares of that class or
series but not below the number of shares of that class or series then
outstanding.
FOURTH: The governing Board of this Corporation shall be known as
directors, and the number of directors may from time to time be increased or
decreased in such manner as shall be provided by the by-laws of this
Corporation.
The names and addresses of the first Board of Directors, which shall be
one (1) in number, is as follows:
NAME ADDRESS
Jon L. Lawver 4695 MacArthur Court, Suite 530
Newport Beach, California 92660
FIFTH: The name and address of the incorporator signing the
Articles of Incorporation is as follows:
NAME ADDRESS
Jon L. Lawver 4695 MacArthur Court, Suite 530
Newport Beach, California 92660
SIXTH: To the fullest extent permitted by Nevada Revised Statute
78.037 as the same exists or may hereafter be amended, an officer or director of
the corporation shall not be personally liable to the corporation or its
stockholders for monetary damages due to breach of fiduciary duty as such
officer or director.
SEVENTH: The purpose of this Corporation is to engage in any lawful
act or activity for which a corporation may be organized under the General
Corporation Law of Nevada.
<PAGE>
EIGHTH: The following provisions are inserted for the management of
the business and for the conduct of the affairs of the Corporation, and for
further definition, limitation and regulation of the powers of the Corporation
and of its directors and stockholders:
(1) The Board of Directors shall have power without the assent or
vote of the stockholders:
(a) To make, alter, amend, change, add to or repeal the
by-laws of the Corporation; to fix and vary the amount
of capital or shares of the Corporation's capital stock
to be reserved or issued for any proper purpose; to
authorize and cause to be executed mortgages and liens
upon all or any part of the property of the Corporation;
to determine the use and disposition of any surplus or
net profits; and to fix the times for the declaration
and payment of dividends.
(b) To determine from time to time whether, and to what
times and places, and under what conditions the accounts
and books of the Corporation (other than the stock
ledger) or any of them, shall be open to the inspection
of the stockholders.
(2) The directors in their discretion may submit any contract or act
for approval or ratification at any annual meeting of the
stockholders or any meeting of the stockholders called for the
purpose of considering any such act or contract, and any contract
or act that shall be approved or be ratified by the vote of the
holders of a majority of the stock of the Corporation which is
represented in person or by proxy at such meeting and entitled to
vote thereat (provided that a lawful quorum of stockholders be
there represented in person or by proxy) shall be as valid and as
binding upon the Corporation and upon all the stockholders as
though it has been approved or ratified by every stockholder of
the Corporation, whether or not the contract or act would
otherwise be open to legal attack because of directors' interest,
or for any other reason.
<PAGE>
(3) In addition to the powers and authorities hereinbefore or by
statute expressly conferred upon them, the directors are hereby
empowered to exercise all such powers and do all such acts and
things as may be exercised or done by the Corporation; subject,
nevertheless, to the provisions of the statutes of Nevada, of
this certificate, and to any by-laws from time to time made by
the stockholders; provided, however, that no by-laws so made
shall invalidate any prior act of the directors which would have
been valid if such by-law had not been made.
(4) The holders of one-third of the voting power of the shares
entitled to vote at a meeting, represented either in person or by
proxy, shall constitute a quorum for the transaction of business
at any regular or special meeting of shareholders.
(5) Cumulative voting by the shareholders of this Corporation shall
not be permitted in any election of directors.
IN WITNESS WHEREOF, the undersigned, Jon L. Lawver, for the purpose of
filing the Corporation's Articles of Incorporation pursuant to the General
Corporation Law of the State of Nevada, does make and file the Articles of
Incorporation, hereby declaring and certifying that the facts herein stated are
true; and accordingly I have hereunto set my hand this 14nd day of October,
1998.
/s/ Jon L. Lawver
Jon L. Lawver, Incorporator
State of California
County of Orange
On October 14, 1998 before me, Julie Bienias, Notary Public ,
Date Name and Title of Officer
(e.g., "Jane Doe, Notary Public")
personally appeared Jon Lawver
Name(s) of Signer(s)
|_| personally known to me - OR - |_| proved to me on the basis of satisfactory
evidence to be the person(s) whose name (s) is/are subscribed to the within
instrument and acknowledged to me that he/she/they executed the same in
his/her/their authorized capacity(ies), and that by his/her/their signature(s)
on the instrument the person(s), or the entity upon behalf of which the
person(s) acted, executed the instrument.
WITNESS my hand and official seal.
/s/ Julie Bienias
Signature of Notary Public
EXHIBIT 3.2
Oasis Resorts International, Inc.
* * * * *
B Y - L A W S
* * * * *
ARTICLE I
OFFICES
Section 1. The registered office shall be in Las Vegas, Nevada.
Section 2. The corporation may also have offices at such other places
both within and without the State of Nevada as the board of directors may from
time to time determine or the business of the corporation may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
Section l. All annual meetings of the stockholders shall be held in the
City of Las Vegas, State of Nevada. Special meetings of the stockholders may be
held at such time and place within or without the State of Nevada as shall be
stated in the notice of the meeting, or in a duly executed waiver of notice
thereof.
Section 2. Annual meetings of stockholders shall be held on October
20th, if not a legal holiday, and if a legal holiday, then on the next secular
day following, at 10:00~A.M., at which they shall elect by a plurality vote
a board of directors, and transact such other business as may properly be
brought before the meeting.
<PAGE>
Section 3. Special meetings of the stockholders, for any purpose or
purposes, unless otherwise prescribed by statute or by the articles of
incorporation, may be called by the president and shall be called by the
president or secretary at the request in writing of a majority of the board of
directors, or at the request in writing of stockholders owning a majority in
amount of the entire capital stock of the corporation issued and outstanding and
entitled to vote. Such request shall state the purpose or purposes of the
proposed meeting.
Section 4. Notices of meetings shall be in writing and signed by the
president or a vice president, or the secretary, or an assistant secretary, or
by such other person or persons as the directors shall designate. Such notice
shall state the purpose or purposes for which the meeting is called and the time
when and the place where it is to be held. A copy of such notice shall be either
delivered personally to or shall be mailed, postage prepaid, to each stockholder
of record entitled to vote at such meeting not less than ten nor more than sixty
days before such meeting. If mailed, it shall be directed to a stockholder at
his address as it appears upon the records of the corporation and upon such
mailing of any such notice, the service thereof shall be complete, and the time
of the notice shall begin to run from the date upon which such notice is
deposited in the mail for transmission to such stockholder. Personal delivery of
any such notice to any officer of a corporation or association, or to any member
of a partnership shall constitute delivery of such notice to such corporation,
association or partnership. In the event of the transfer of stock after delivery
or mailing of the notice of and prior to the holding of the meeting it shall not
be necessary to deliver or mail notice of the meeting to the transferee.
Section 5. Business transacted at any special meeting of stockholders
shall be limited to the purposes stated in the notice.
Section 6. The holders of a majority of the stock issued and
outstanding and entitled to vote thereat, present in person or represented by
proxy, shall constitute a quorum at all meetings of the stockholders for the
transaction of business except as otherwise provided by statute or by the
articles of incorporation. If, however, such quorum shall not be present or
represented at any meeting of the stockholders, the stockholders entitled to
vote thereat, present in person or represented by proxy, shall have power to
adjourn the meeting from time to time, without notice other than announcement
at the meeting, until a quorum shall be present or represented. At such
adjourned meeting at which a quorum shall be present or represented, any
business may be transacted which might have been transacted at the meeting as
originally notified.
<PAGE>
Section 7. When a quorum is present or represented at any meeting, the
vote of the holders of a majority of the stock having voting power present in
person or represented by proxy shall decide any question brought before such
meeting, unless the question is one upon which by express provision of the
statutes or of the articles of incorporation a different vote is required in
which case such express provision shall govern and control the decision of such
question.
Section 8. Every stockholder of record of the corporation shall be
entitled at each meeting of stockholders to one vote for each share of stock
standing in his name on the books of the corporation.
Section 9. At any meeting of the stockholders, any stockholder may be
represented and vote by a proxy or proxies appointed by an instrument in
writing. In the event that any such instrument in writing shall designate two
or more persons to act as proxies, a majority of such persons present at
the meeting, or, if only one shall be present, then that one shall have and may
exercise all of the powers conferred by such written instrument upon all of the
persons so designated unless the instrument shall otherwise provide. No such
proxy shall be valid after the expira tion of six months from the date of its
execution, unless coupled with an interest, or unless the person executing it
specifies therein the length of time for which it is to continue in force, which
in no case shall exceed seven years from the date of its execution. Subject to
the above, any proxy duly executed is not revoked and continues in full force
and effect until an instrument revoking it or a duly executed proxy bearing a
later date is filed with the secretary of the corporation.
Section 10. Any action, which may be taken by the vote of the
stockholders at a meeting, may be taken without a meeting if authorized by the
written consent of stockholders holding at least a majority of the voting power,
unless the provisions of the statutes or of the articles of incorporation
require a greater proportion of voting power to authorize such action in which
case such greater proportion of written consents shall be required.
ARTICLE III
DIRECTORS
Section l. The number of directors shall be neither more than 5 nor
less than 3. The number of directors is to be fixed by vote of the shareholders.
The directors shall be elected at the annual meeting of the stockholders, and
except as provided in Section 2 of this article, each director elected shall ]
hold office until his successor is elected and qualified. Directors need not be
stockholders.
Section 2. Vacancies, including those caused by an increase in the
number of directors, may be filled by a majority of the remaining directors
though less than a quorum. When one or more directors shall give notice of
his or their resignation to the board, effective at a future date, the board
shall have power to fill such vacancy or vacancies to take effect when such
resignation or resignations shall become effective, each director so appointed
to hold office during the remainder of the term of office of the resigning
director or directors.
Section 3. The business of the corporation shall be managed by its
board of directors which may exercise all such powers of the corporation and do
all such lawful acts and things as are not by statute or by the articles of
incorporation or by these by-laws directed or required to be exercised or done
by the stockholders.
<PAGE>
MEETINGS OF THE BOARD OF DIRECTORS
Section 4. The board of directors of the corporation may hold meetings,
both regular and special, either within or without the State of Nevada.
Section 5. The first meeting of each newly elected board of directors
shall be held at such time and place as shall be fixed by the vote of the
stockholders at the annual meeting and no notice of such meeting shall be
necessary to the newly elected directors in order legally to constitute the
meeting, provided a quorum shall be present. In the event of the failure of the
stockholders to fix the time or place of such first meeting of the newly elected
board of directors, or in the event such meeting is not held at the time and
place so fixed by the stockholders, the meeting may be held at such time and
place as shall be specified in a notice given as hereinafter provided for
special meetings of the board of directors, or as shall be specified in a
written waiver signed by all of the directors.
Section 6. Regular meetings of the board of directors may be held
without notice at such time and place as shall from time to time be determined
by the board.
Section 7. Special meetings of the board of directors may be called by
the president or secretary on the written request of one director. Written
notice of special meetings of the board of directors shall be given to each
director at least 3 days before the date of the meeting.
Section 8. A majority of the board of directors, at a meeting duly
assembled, shall be necessary to constitute a quorum for the transaction of
business and the act of a majority of the directors present at any meeting
at which a quorum is present shall be the act of the board of directors, except
as may be otherwise specifically provided by statute or by the articles of
incorporation. Any action required or permitted to be taken at a meeting of the
directors may be taken without a meeting if a consent in writing, setting forth
the action so taken, shall be signed by all of the directors entitled to vote
with respect to the subject matter thereof.
<PAGE>
COMMITTEES OF DIRECTORS
Section 9. The board of directors may, by resolution passed by a
majority of the whole board, designate one or more committees, each committee to
consist of one or more of the directors of the corporation, which, to the extent
provided in the resolution, shall have and may exercise the powers of the board
of directors in the management of the business and affairs of the corporation,
and may have power to authorize the seal of the corporation to be affixed to all
papers on which the corporation desires to place a seal. Such committee or
commit tees shall have such name or names as may be determined from time to time
by resolution adopted by the board of directors.
Section 10. The committees shall keep regular minutes of their
proceedings and report the same to the board when required.
COMPENSATION OF DIRECTORS
Section 11. The directors may be paid their expenses, if any, of
attendance at each meeting of the board of directors and may be paid a fixed sum
for attendance at each meeting of the board of directors or a stated salary as
director. No such payment shall preclude any director from serving the
corporation in any other capacity and receiving compensation therefor. Members
of special or standing committees may be allowed like compensation for attending
committee meetings.
<PAGE>
ARTICLE IV
NOTICES
Section l. Notices to directors and stockholders shall be in writing
and delivered personally or mailed to the directors or stockholders at their
addresses appearing on the books of the corporation. Notice by mail shall be
deemed to be given at the time when the same shall be mailed. Notice to
directors may also be given by facsimile telecommunication.
Section 2. Whenever all parties entitled to vote at any meeting,
whether of directors or stockholders, consent, either by a writing on the
records of the meeting or filed with the secretary, or by presence at such
meeting and oral consent entered on the minutes, or by taking part in the
deliberations at such meeting without objection, the doings of such meeting
shall be as valid as if had at a meeting regularly called and noticed, and at
such meeting any business may be transacted which is not excepted from the
written consent or to the consideration of which no objection for want of notice
is made at the time, and if any meeting be irregular for want of notice or of
such consent, provided a quorum was present at such meeting, the proceedings of
said meeting may be ratified and approved and rendered likewise valid and the
irregularity or defect therein waived by a writing signed by all parties having
the right to vote at such meetings; and such consent or approval of stockholders
may be by proxy or attorney, but all such proxies and powers of attorney must be
in writing.
Section 3. Whenever any notice whatever is required to be given under
the provisions of the statutes, of the articles of incorporation or of these
by-laws, a waiver thereof in writing, signed by the person or persons entitled
to said notice, whether before or after the time stated therein, shall be deemed
equivalent thereto.
<PAGE>
ARTICLE V
OFFICERS
Section l. The officers of the corporation shall be chosen by the board
of directors and shall be a president, a vice president, a secretary and a
treasurer. Any person may hold two or more offices.
Section 2. The board of directors at its first meeting after each
annual meeting of stockholders shall choose a president, a vice president, a
secretary and a treasurer, none of whom need be a member of the board.
Section 3. The board of directors may appoint additional vice
presidents, and assistant secretaries and assistant treasurers and such other
officers and agents as it shall deem necessary who shall hold their offices for
such terms and shall exercise such powers and perform such duties as shall be
determined from time to time by the board.
Section 4. The salaries of all officers and agents of the corporation
shall be fixed by the board of directors.
Section 5. The officers of the corporation shall hold office until
their successors are chosen and qualify. Any officer elected or appointed by
the board of directors may be removed at any time by the affirmative vote of a
majority of the board of directors. Any vacancy occurring in any office of the
corporation by death, resignation, removal or otherwise shall be filled by the
board of directors.
THE PRESIDENT
Section 6. The president shall be the chief executive officer of the
corporation, shall preside at all meetings of the stockholders and the board of
directors, shall have general and active management of the business of the
corporation, and shall see that all orders and resolutions of the board of
directors are carried into effect.
Section 7. He shall execute bonds, mortgages and other contracts
requiring a seal, under the seal of the corporation, except where required or
permitted by law to be otherwise signed and executed and except where the
signing and execution thereof shall be expressly delegated by the board of
directors to some other officer or agent of the corporation.
<PAGE>
THE VICE PRESIDENT
Section 8. The vice president shall, in the absence or disability of
the president, perform the duties and exercise the powers of the president and
shall perform such other duties as the board of directors may from time to time
prescribe.
THE SECRETARY
Section 9. The secretary shall attend all meetings of the board of
directors and all meetings of the stockholders and record all the proceedings of
the meetings of the corporation and of the board of directors in a book to be
kept for that purpose and shall perform like duties for the standing committees
when required. He shall give, or cause to be given, notice of all meetings of
the stockholders and special meetings of the board of directors, and shall
perform such other duties as may be prescribed by the board of directors or
president, under whose supervision he shall be. He shall keep in safe custody
the seal of the corporation and, when authorized by the board of directors,
affix the same to any instrument requiring it and, when so affixed, it shall be
attested by his signature or by the signature of the treasurer or an assistant
secretary.
THE TREASURER
Section 10. The treasurer shall have the custody of the corporate funds
and securities and shall keep full and accurate accounts of receipts and
disbursements in books belonging to the corporation and shall deposit all moneys
and other valuable effects in the name and to the credit of the corporation in
such depositories as may be designated by the board of directors.
Section 11. He shall disburse the funds of the corporation as may be
ordered by the board of directors taking proper vouchers for such disbursements,
and shall render to the president and the board of directors, at the regular
meetings of the board, or when the board of directors so requires, an account of
all his transactions as treasurer and of the financial condition of the
corporation.
Section 12. If required by the board of directors, he shall give the
corporation a bond in such sum and with such surety or sureties as shall be
satisfactory to the board of directors for the faithful performance of the
duties of his office and for the restoration to the corporation, in case of his
death, resignation, retirement or removal from office, of all books, papers,
vouchers, money and other property of whatever kind in his possession or under
hiscontrol belonging to the corporation.
<PAGE>
ARTICLE VI
CERTIFICATES OF STOCK
Section l. Every stockholder shall be entitled to have a certificate,
signed by the president or a vice president and the treasurer or an assistant
treasurer, or the secretary or an assistant secretary of the corporation,
certifying the number of shares owned by him in the corporation. If the
corporation is authorized to issue shares of more than one class or more than
one series of any class, there shall be set forth upon the face or back of the
certificate, or the certificate shall have a statement that the corporation will
furnish to any stockholders upon request and without charge, a full or summary
statement of the designations, preferences and relative, participating, optional
or other special rights of the various classes of stock or series thereof and
the qualifications, limitations or restrictions of such rights, and, if the
corporation shall be authorized to issue only special stock, such certificate
shall set forth in full or summarize the rights of the holders of such stock.
Section 2. Whenever any certificate is countersigned or otherwise
authenticated by a transfer agent or transfer clerk, and by a registrar, then a
facsimile of the signatures of the officers or agents of the corporation may
be printed or lithographed upon such certificate in lieu of the actual
signatures. In case any officer or officers who shall have signed, or whose
facsimile signature or signatures shall have been used on, any such certificate
or certificates shall cease to be such officer or officers of the corporation,
whether because of death, resignation or otherwise, before such certificate or
certificates shall have been delivered by the corporation, such certificate or
certificates may nevertheless be adopted by the corporation and be issued and
delivered as though the person or persons who signed such certificate or
certificates, or whose facsimile signature or signatures shall have been used
thereon, had not ceased to be an officer or officers of such corporation.
LOST CERTIFICATES
Section 3. The board of directors may direct a new certificate or
certificates to be issued in place of any certificate or certificates
theretofore issued by the corporation alleged to have been lost or destroyed,
upon the making of an affidavit of that fact by the person claiming the
certificate of stock to be lost or destroyed. When authorizing such issue of a
new certificate or certificates, the board of directors may, in its discretion
and as a condition precedent to the issuance thereof, require the owner of such
lost or destroyed certificate or certificates, or his legal representative, to
advertise the same in such manner as it shall require and/or give the
corporation a bond in such sum as it may direct as indemnity against any claim
that may be made against the corporation with respect to the certificate alleged
to have been lost or destroyed.
<PAGE>
TRANSFER OF STOCK
Section 4. Upon surrender to the corporation or the transfer agent of
the corporation of a certificate for shares duly endorsed or accompanied by
proper evidence of succession, assignment or authority to transfer, it shall
be the duty of the corporation to issue a new certificate to the person
entitled thereto, cancel the old certificate and record the transaction upon its
books.
CLOSING OF TRANSFER BOOKS
Section 5. The directors may prescribe a period not exceeding sixty
days prior to any meeting of the stock holders during which no transfer of stock
on the books of the corporation may be made, or may fix a day not more than
sixty days prior to the holding of any such meeting as the day as of which
stockholders entitled to notice of and to vote at such meeting shall be
determined; and only stockholders of record on such day shall be entitled to
notice or to vote at such meeting.
REGISTERED STOCKHOLDERS
Section 6. The corporation shall be entitled to recognize the exclusive
right of a person registered on its books as the owner of shares to receive
dividends, and to vote as such owner, and to hold liable for calls and
assessments a person registered on its books as the owner of shares, and shall
not be bound to recognize any equitable or other claim to or interest in
such share or shares on the part of any other person, whether or not it shall
have express or other notice thereof, except as otherwise provided by the laws
of Nevada.
<PAGE>
ARTICLE VII
GENERAL PROVISIONS
DIVIDENDS
Section l. Dividends upon the capital stock of the corporation, subject
to the provisions of the articles of incorporation, if any, may be declared by
the board of directors at any regular or special meeting pursuant to law.
Dividends may be paid in cash, in property, or in shares of the capital stock,
subject to the provisions of the articles of incorporation.
Section 2. Before payment of any dividend, there may be set aside out
of any funds of the corporation avail able for dividends such sum or sums as the
directors from time to time, in their absolute discretion, think proper as a
reserve or reserves to meet contingencies, or for equalizing dividends, or
for repairing or maintaining any property of the corporation, or for such other
purpose as the directors shall think conducive to the interest of the
corporation, and the directors may modify or abolish any such reserves in the
manner in which it was created.
CHECKS
Section 3. All checks or demands for money and notes of the corporation
shall be signed by such officer or officers or such other person or persons as
the board of directors may from time to time designate.
FISCAL YEAR
Section 4. The fiscal year of the corporation shall be fixed by
resolution of the board of directors.
<PAGE>
SEAL
Section 5. The corporate seal shall have inscribed thereon the name of
the corporation, the year of its incorporation and the words "Corporate Seal,
Nevada."
ARTICLE VIII
AMENDMENTS
Section l. These by-laws may be altered or repealed at any regular
meeting of the stockholders or of the board of directors or at any special
meeting of the stockholders or of the board of directors if notice of such
alteration or repeal be contained in the notice of such special meeting.
I, THE UNDERSIGNED, being the secretary of Oasis Resorts International, Inc.,
DO HEREBY CERTIFY the foregoing to be the by-laws of said corporation, as
adopted at a meeting of the shareholders held on the 19th day of October, 1998.
/s/ Charles Longson
Charles Longson, Secretary
EXHIBIT 10.1
EXCHANGE AGREEMENT
BETWEEN:
1. Cleopatra's Palace Resorts and Casinos Limited
("CPR&C")
and
2. Cleopatra's World Inc.
(the "Company").
Whereas, the Company owns certain assets consisting of
(a) Negotiable Promissory notes in the aggregate principal amount of Six
Million Five Hundred Thousand Dollars (USD6,500,000) issued by NuOasis Resorts
Inc., copies of which are annexed hereto on Schedule 1 (the "Notes"),
(b) shares of capital stock of Societe D'Animation et de Loisirs Touristiques,
a Tunisian corporation ("SALT") comprising approximately twenty percent (20%)
of the total equity of SALT (the "SALT Shares"), (c) the rights to the Casino
Lease and Management Agreement dated October 1993, as amended, between SALT and
Cleopatra Palace Limited, a copy of which is annexed hereto as Schedule "2"
(the "SALT Lease") and, (d) the trade account receivable in the approximate
amount of One Million Nine Hundred Thousand Dollars (USD1,900,000) due from
Cleopatra Hammamet Limited (the "CHL Receivable"); and,
Whereas, CPR&C wishes to acquire the Company's interest in the Notes,
the SALT Interest and the SALT Lease and the CHL Receivable in exchange for
newly issued ordinary 1.00 pound sterling par value shares of CPR&C.
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, CPR&C
and the Company agree as follows:
1.0 On the basis of the representations and warranties herein contained,
subject to the terms and conditions set forth herein, the Company agrees to
exchange its interest in the Notes, the SALT Interest and the SALT Lease
for Twelve Million, Five Hundred Fifty-Three Thousand One Hundred Twenty
Five (12,553,125) shares of 1.00 pound sterling par value shares of CPR&C
(the "Shares").
2.0 The closing of the exchange contemplated by this Agreement (the "Closing"
or "Transfer Date") shall occur not later than 30 September 1998. At the
Closing, CPR&C shall the Company shall deliver the Notes, the SALT Interest
and the SALT Lease to CPR&C, and CPR&C shall issue and deliver the Shares
to the Company. Notwithstanding the date of Closing, the Effective Date
shall be the 1st of July, 1998.
<PAGE>
3.0 The parties agree to select a mutually agreeable third party to act as
escrowholder ("Escrowholder") and to effect the exchange transaction
contemplated through such Escrowholder, through which the parties will
deliver the Notes and the Shares.
4.0 The Company hereby represents and warrants to CPR&C that:
4.1 The Company is a corporation validly existing and in good
standing under the laws of the British Virgin Islands, with the
power 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 the Company. This
Agreement has been duly executed and delivered by the Company
and constitutes a binding, and enforceable obligation of the
Company;
4.2 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 the Company in connection
with the execution, delivery, or performance of this Agreement,
or if required, the Company has or will obtain same prior to
Closing;
4.3 The Company is not a defendant or a plaintiff against whom a
counterclaim has been made or reduced to judgement, in any
litigation or proceedings before any local, state or U.S.
government, or any department, board, body or agency thereof,
which could result in a claim against the Notes;
4.4 The Notes and the SALT Shares were validly issued by Resorts and
SALT, respectively, and to the best of CPR&C's knowledge the
Notes and the SALT Shares were issued for valid consideration.
Further, there is not in effect or pending, any claim by Resorts
or SALT which would serve as an offset to or to restrict the
transfer or exchange of the Notes or the SALT Shares,
respectively, as contemplated herein. Additionally, the Company
has not created any option, security interest or encumbrance
involving the Notes, the SALT Shares or the SALT Lease that
would give rise to any claims by third parties or otherwise
conflict with or preclude the exchange as contemplated herein;
and
4.5 This Agreement has been duly executed by the Company, 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 the Company is a
party or to which the Company is subject.
5.0 All obligations of CPR&C under this Agreement are subject to the
fulfillment, prior to or as of the Closing Date, of each of the
following conditions:
5.1 CPR&C shall have issued and delivered the Shares to the
Escrowholder.
5.2 The Company shall have taken all action necessary to assign
and deliver the Notes, the SALT Shares and the SALT Lease to
Escrowholder.
5.3 All instruments and documents delivered to CPR&C and the
Company pursuant to the provisions of this Agreement shall be
satisfactory to CPR&C and the Company and their legal counsel.
<PAGE>
6.0 CPR&C and the Company 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 they
consider to be adequate to make a decision to exchange the Notes, the
SALT Shares and the SALT Lease for the Shares.
7.0 The officers of CPR&C and the Company 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.
8.0 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 the Company: Cleopatra's Palace Resorts and Casinos Limited
21 Aylmer Parade
Aylmer Road
London, England N2 OPE
Telephone: +181 340-4646
Facsimile: +181 340-6100
With copy to: NuOasis International Inc.
43 Elizabeth Avenue, Box N-8680, Nassau, Bahamas
Telephone: (809) 356-2903
Facsimile: (809) 326-8434
To the Company: Cleopatra's World Inc.
c/o Flat 2, Chartwell House
80 Wimbledon Parkside
London SW19 5LN, ENGLAND
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.
9.0 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.
10.0 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 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.
11.0 None of the parties hereto may assign this Agreement without the
express written consent of the other parties and any approved
assignment shall be binding on and inure to the benefit of such
successor or, in the event of death or incapacity, on assignor's heirs,
executors, administrators and successors.
12.0 This Agreement has been negotiated and is being contracted for in
England and shall be governed by the laws of England, notwithstanding
any conflict-of-law provision to the contrary.
<PAGE>
13.0 If any legal action or other preceding (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 this
Agreement, 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.
14.0 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.
15.0 At any time, and from time to 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 Shares, the Notes, the SALT Shares and the SALT Lease to be
transferred hereunder, or otherwise to carry out the intent and
purposes of this Agreement.
16.0 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.
17.0 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.
<PAGE>
18.0 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.
SIGNED AS A DEED FOR AND ON BEHALF OF
Cleopatra's Palace Resorts and Casinos Limited
For Grosvenor Administration Limited For Grosvenor Secretaries Limited
By:/s/Grosvenor Administration Limited By:/s/Grosvenor Secretaries Limited
Authorised signature(s) Authorised signature
Secretary
Effective the 1st day of July, 1998
SIGNED AS A DEED FOR AND ON BEHALF OF
Cleopatra's World Inc.
By: /s/ Gabriel Tabarani
Authorised signature(s)
Effective the 1st day of July, 1998
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed the day and year first above written.
SIGNED AS A DEED FOR AND ON BEHALF OF
Cleopatra's Palace Resorts and Casinos Limited
By: /s/ Fred G. Luke
Authorised signature(s)
Effective the 1st day of July, 1998
SIGNED AS A DEED FOR AND ON BEHALF OF
Cleopatra's World Inc.
By: /s/ Gabriel Tabarani
Authorised signature(s)
Effective the 1st day of July, 1998
EXHIBIT 10.2
EXCHANGE AGREEMENT
BETWEEN THE UNDERSIGNED:
1 - Cleopatra's World Inc., a joint stock company having its head office at
Box 3186, Road Town, Tortola, British Virgin Islands
hereinafter called the "Company"
On the one hand,
and
2 - Cleopatra Palace Limited, a joint stock company having its head office at
Flat 2, Chartwell House, 80 Wimbledon Parkside, London SW19 5LN, England
hereinafter called "CPL").
On the other hand
Preamble
Whereas, the Company owns ordinary shares of Cleopatra's Palace Resorts
and Casinos Limited, a limited liability company organised under the laws of
England ("CPR&C") ; and,
Whereas, CPL owns certain Promissory Notes issued by the Company in the
aggregate principal amount of Thirteen Million Dollars, excluding accrued
interest through the date hereof, copies of which are annexed hereto on Schedule
"1" (the "Notes"); and,
Whereas, the Company wishes to extinguish and settle the
Notes by way of the transfer to CPL of 1.00 par value shares of
Cleopatra Palace Resorts and Casinos Limited ("CPR&C").
The following has been agreed and settled:
Article 1:
On the basis of the representations and warranties herein contained,
subject to the terms and conditions set forth herein, CPL agrees to exchange the
Notes for Eight Million, Four Hundred Ninety Thousand, Six Hundred Twenty Five
(8,490,625) shares of CPR&C 1.00 pound sterling par value ordinary shares (the
"CPR Shares").
Article 2:
The closing of the exchange contemplated by this Agreement (the "Closing"
or "Transfer Date") shall occur upon the transfer of the Notes to the Company,
but shall not be later than 30th September 1998. At the Closing, the Company
shall deliver the Notes to CPL and CPL shall issue and deliver the CPR Shares to
the Company. Notwithstanding the date of Closing, the Effective Date shall be
the 1st of July, 1998.
<PAGE>
Article 3:
The parties agree to select a mutually agreeable third party to act as
escrowholder ("Escrowholder") and to effect the exchange transaction
contemplated through such Escrowholder, through which the parties will deliver
the Notes and the CPR Shares
Article 4:
CPL hereby represents and warrants to the Company that:
4.1 CPL is a corporation validly existing and in good standing
under the laws of the British Virgin Islands, with the
power 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
CPL. This Agreement has been duly executed and delivered
by CPL and constitutes a binding, and enforceable
obligation of CPL;
4.2 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 CPL in
connection with the execution, delivery, or performance of
this Agreement, or if required, CPL has or will obtain same
prior to Closing;
4.3 CPL is not a defendant or a plaintiff against whom a
counterclaim has been made or reduced to judgement, in any
litigation or proceedings before any local, state or U.S.
government, or any department, board, body or agency
thereof, which could result in a claim against the Notes;
4.4 The CPR Shares are validly issued by CPR&C and, to the best
of the Company's knowledge, the CPR Shares were issued for
valid consideration which was delivered to and accepted by
CPR&C, as the issuer. Further, there is not in effect or
pending, any claim by CPR&C which would serve as an offset
to or to restrict the transfer or exchange of the Notes as
contemplated herein. Additionally, CPL has not created any
option, security interest or encumbrance involving the CPR
Shares that would give rise to any claims by third parties
or otherwise conflict with or preclude the exchange as
contemplated herein; and
4.5 This Agreement has been duly executed by CPL, 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 CPL is a party or to which CPL is subject.
<PAGE>
Article 5:
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:
5.1 The Company shall have delivered the CPR Shares to the
Escrowholder with all appropriate executed stockpowers and
transfer documents.
5.2 CPL shall have taken all action necessary to assign and
deliver the original Notes to Escrowholder marked "Paid."
5.3 All instruments and documents delivered to the Company and
CPL pursuant to the provisions of this Agreement shall be
satisfactory to the Company and CPL and their legal
counsel.
Article 6:
The Company and CPL 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
they consider to be adequate to make a decision to exchange the Notes for the
CPR Shares.
Article 7:
The officers of the Company and CPL 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.
Article 8:
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 CPL: Cleopatra's World Inc.
c/o Flat 2, Chartwell House
80 Wimbledon Parkside
London SW19 5LN, ENGLAND
With copy to: NuOasis International Inc.
43 Elizabeth Avenue, Box N-8680
Nassau, Bahamas
Telephone: (809) 356-2903
Facsimile: (809) 326-8434
To CPL: Cleopatra Palace Limited
c/o Flat 2, Chartwell House
80 Wimbledon Parkside
London SW19 5LN, ENGLAND
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.
<PAGE>
Article 9:
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.
Article 10:
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 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.
Article 11:
None of the parties hereto may assign this Agreement without the express written
consent of the other parties and any approved assignment shall be binding on and
inure to the benefit of such successor or, in the event of death or incapacity,
on assignor's heirs, executors, administrators and successors.
Article 12:
This Agreement has been negotiated and is being contracted for outside of
England but shall be governed by the laws of England, notwithstanding any
conflict-of-law provision to the contrary.
Article 13:
If any legal action or other preceding (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 this Agreement, 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.
Article 14:
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.
Article 15:
At any time, and from time to 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 CPR Shares to be
transferred hereunder, or otherwise to carry out the intent and purposes of this
Agreement.
Article 16:
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.
<PAGE>
Article 17:
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.
Article 18:
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, this Agreement is executed in duplicate copies of like terms
and effective the 1st day of July, 1998.
Cleopatra's World Inc.
By: /s/ Gabriel Tabarani
Authorised signature(s)
For Cleopatra Palace Limited
By: /s/ Fred G. Luke
Authorised signature(s)
EXHIBIT 10.3
EXCHANGE AGREEMENT
BETWEEN:
1. Cleopatra's Palace Resorts and Casinos Limited ("CPR&C")
and
2. Cleopatra Palace Limited ("CPL").
Whereas, CPR&C owns certain Negotiable Promissory notes in the
aggregate principal amount of Three Million Five Hundred Thousand Dollars
(USD3,000,000) issued by NuOasis Resorts Inc. ("Resorts"), copies of which are
annexed hereto on Schedule 1 (the "Notes"); and,
Whereas, CPL wishes to acquire the Notes and to receive newly issued
shares of CPR&C's 1.00 pound sterling par value ordinary shares, in exchange for
certain investments and assets of CPL, as set forth herein.
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, CPR&C
and CPL agree as follows:
1.0 On the basis of the representations and warranties herein contained,
subject to the terms and conditions set forth herein, in exchange for
the Notes, and Nine Hundred Forty Six Thousand, Eight Hundred Seventy
Five (946,875) shares of CPR&C 1.00 pound sterling par value shares
(the "Shares"), CPL agrees to assign and transfer to CPR&C certain of
its assets consisting of (a) CPL's investment in, and receivables due
from Cleopatra Cap Gammarth Limited, a company in formation under the
laws of Tunisia ("CCGL") in the amount of Two Million Fifty Seven
Thousand, One Hundred Forty Dollars (USD2,057,140) along with CPL's
rights to CCGL share capital exclusive of ten percent (10%) of CCGL's
share capital which shall be retained by CPL (collectively, the rights
to all but 10% of the CCGL share capital and the CCGL Receivable shall
be referred to herein as the "CCGL Interest"); and (b) its investment
in Cleopatra Monastir Limited, a company in formation under the laws of
Tunisia ("CML"), in the amount of approximately Three Thousand Dollars
(USD3,000) and any rights to CML share capital (collectively, the "CML
Interest") along with (c) the receivable due from Belgravia Fund Ltd.
("BFL") in the amount of Sixty Five Thousand Dollars (USD65,000) and
(d) the receivable due from Pennydome Ltd. ("Pennydome") in the amount
of Four Hundred Thousand Dollars (USD400,000).
<PAGE>
2.0 The closing of the exchange contemplated by this Agreement (the
"Closing" or "Transfer Date") shall occur upon the transfer of the
Notes to CPR&C, but shall not be later than 30th September 1998. At
the Closing, CPL shall deliver the CCGL Interest, the Belgravia
Receivable, the Pennydome Receivable and the CML Interest to CPR&C, and
CPR&C shall issue and deliver the Shares to CPL. Notwithstanding the
date of Closing, the Effective Date shall be 1st day of
July, 1998.
3.0 The parties agree to select a mutually agreeable third party to act as
escrowholder ("Escrowholder") and to effect the exchange transaction
contemplated through such Escrowholder, through which the parties will
deliver the CCGL Interest, the Belgravia Receivable, the Pennydome
Receivable and the CML Interest and the Shares.
4.0 CPL hereby represents and warrants to CPR&C that:
4.1 CPL is a limited liability company validly existing and in good
standing under the laws of Ireland, with the power 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 CPL. This Agreement has been duly
executed and delivered by CPL and constitutes a binding, and
enforceable obligation of CPL;
4.2 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 CPL in connection with the
execution, delivery, or performance of this Agreement, or if
required, CPL has or will obtain same prior to Closing;
4.3 CPL is not a defendant or a plaintiff against whom a
counterclaim has been made or reduced to judgement, in any
litigation or proceedings before any local, state or U.S.
government, or any department, board, body or agency thereof,
which could result in a claim against the Notes;
4.4 This Agreement has been duly executed by CPL, 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 CPL is a party
or to which CPL is subject.
5.0 All obligations of CPR&C and CPL under this Agreement are subject to
the fulfillment, prior to or as of the Closing Date, of each of the
following conditions:
5.1 CPR&C shall have issued and delivered the Shares to the
Escrowholder.
5.2 CPL shall have taken all action necessary to assign and deliver
all documents necessary to effect the transfer to CPR&C of the
CCGL Interest, the Belgravia Receivable, the Pennydome
Receivable and the CML Interest to Escrowholder.
5.3 All instruments and documents delivered to CPR&C and CPL
pursuant to the provisions of this Agreement shall be
satisfactory to CPR&C and CPL and their legal counsel.
6.0 CPR&C and CPL 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 they consider to be adequate to
make a decision to exchange the CCGL Interest, the Belgravia
Receivable, the Pennydome Receivable and the CML Interest for the
Shares.
<PAGE>
7.0 The officers of CPR&C and CPL 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.
8.0 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 CPR&C: Cleopatra's Palace Resorts and Casinos Limited
21 Aylmer Place
Aylmer Road
London, England N2 OPE
Telephone: +181 340-4646
Facsimile: +181 340-6100
To CPL: Cleopatra Palace Limited
c/o Flat 2, Chartwell House
80 Wimbledon Parkside
London SW19 5LN, ENGLAND
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.
9.0 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.
10.0 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 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.
11.0 None of the parties hereto may assign this Agreement without the
express written consent of the other parties and any approved
assignment shall be binding on and inure to the benefit of such
successor or, in the event of death or incapacity, on assignor's heirs,
executors, administrators and successors.
12.0 This Agreement has been negotiated and is being contracted for in
England and shall be governed by the laws of England, notwithstanding
any conflict-of-law provision to the contrary.
13.0 If any legal action or other preceding (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 this
Agreement, 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.
14.0 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.
<PAGE>
15.0 At any time, and from time to 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 Shares, the Notes, the CCGL Interest, the Belgravia Receivable, the
Pennydome Receivable and the CML Interest to be transferred hereunder,
or otherwise to carry out the intent and purposes of this Agreement.
16.0 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.
17.0 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.
18.0 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.
SIGNED AS A DEED FOR AND ON BEHALF OF
Cleopatra's Palace Resorts and Casinos Limited
By: /s/ Grosvenor Administration Limited
Authorised signature(s)
Effective the 1st day of July, 1998
SIGNED AS A DEED FOR AND ON BEHALF OF
Cleopatra Palace Limited
By: /s/ Fred G. Luke
Authorised signature(s)
Effective the 1st day of July, 1998
EXHIBIT 10.4
EXCHANGE AGREEMENT
BETWEEN:
1. Cleopatra's Palace Resorts and Casinos Limited
("CPR&C")
and
2. NuOasis International Inc.
(the "Company").
Whereas, the Company owns Thirty Thousand (30,000) shares of
Cleopatra's World Inc., a corporation organized under the laws of the British
Virgin Islands contained in certificates, copies of which are annexed hereto on
Schedule "1" (the "CWI Shares"); and,
Whereas, the Company owns Seventy Thousand (70,00) shares of Cleopatra
Hammamet Limited, a Tunisian corporation, contained in certificates, copies of
which are annexed hereto on Schedule "2" (the "CHL Shares"); and,
Whereas, the Company owns, or has the right to acquire One Hundred
Thousand (100,000) shares of Cleopatra Hammamet Limited, a Tunisian corporation
(the "CHL Shares"); and,
Whereas, CPR&C wishes to acquire the CWI Shares and the CHL Shares in
exchange for newly issued shares of 1.00 pound srerling par value shares of
CPR&C.
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, CPR&C
and the Company agree as follows:
1.0 On the basis of the representations and warranties herein contained,
subject to the terms and conditions set forth herein, the Company
agrees to the exchange of the CHL Shares and the CWI Shares for Eleven
Million Five Hundred Thousand (11,500,000) shares of CPR&C 1.00 pound
sterling par value ordinary shares (the "CPR Shares").
2.0 The closing of the exchange contemplated by this Agreement (the
"Closing") shall occur upon the transfer of the CWI Shares to CPR&C
(the "Transfer Date"), but shall not be later than 30 September 1998.
At the Closing, CPR&C shall deliver the CWI Shares and the CHL Shares
to the Company and the Company shall issue and deliver the CPR Shares
to CPR&C. Notwithstanding the date of Closing, the Effective Date
shall be 1 July 1998.
3.0 The parties agree to select a mutually agreeable third party to act as
escrowholder ("Escrowholder") and to effect the exchange transaction
contemplated through such Escrowholder, through which the parties will
deliver the CWI Shares, the CHL Shares and the CPR Shares.
<PAGE>
4.0 The Company hereby represents and warrants to CPR&C that:
4.1 The Company is a corporation validly existing and in good
standing under the laws of the Commonwealth of the Bahamas,
with the power 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
the Company. This Agreement has been duly executed and
delivered by the Company and constitutes a binding, and
enforceable obligation of the Company;
4.2 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 the Company in connection
with the execution, delivery, or performance of
this Agreement, or if required, the Company has or will obtain
same prior to Closing;
4.3 The Company is not a defendant or a plaintiff against whom a
counterclaim has been made or reduced to judgement, in any
litigation or proceedings before any local, state or U.S.
government, or any department, board, body or agency thereof,
which could result in a claim against the CWI Shares or the
CHL Shares;
4.4 This Agreement has been duly executed by the Company, 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 the
Company is a party or to which the Company is subject.
5.0 All obligations of CPR&C under this Agreement are subject to the
fulfillment, prior to or as of the Closing Date, of each of the
following conditions:
5.1 CPR&C shall have issued and delivered the CPR Shares to the
Escrowholder.
5.2 The Company shall have taken all action necessary to assign
and deliver the CWI Shares and the CHL Shares to Escrowholder.
5.3 All instruments and documents delivered to CPR&C and the
Company pursuant to the provisions of this Agreement shall be
satisfactory to CPR&C and the Company and their legal counsel.
6.0 CPR&C and the Company 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 they
consider to be adequate to make a decision to exchange the CWI Shares
and the CHL Shares for the CPR Shares.
5.1 The officers of CPR&C and the Company 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.
5.2 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:
<PAGE>
To the Company: Cleopatra's Palace Resorts and Casinos Limited
21 Alymer Parade, Alymer Road
London N2 OPE
Telephone: +181 340 4646
Facsimile: +181 340 6100
To the Company: NuOasis Resorts Inc.
4001 So. Decatur Blvd., Suite
Las Vegas, Nevada
With copy to: NuOasis International Inc.
43 Elizabeth Avenue, Box N-8680
Nassau, Bahamas
Telephone: (809) 356-2903
Facsimile: (809) 326-8434
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.
9.0 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.
10.0 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 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.
11.0 None of the parties hereto may assign this Agreement without the
express written consent of the other parties and any approved
assignment shall be binding on and inure to the benefit of such
successor or, in the event of death or incapacity, on assignor's heirs,
executors, administrators and successors.
12.0 This Agreement has been negotiated and is being contracted for outside
of England shall be governed by the laws of England, notwithstanding
any conflict-of-law provision to the contrary.
13.0 If any legal action or other preceding (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 this
Agreement, 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.
14.0 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.
15.0 At any time, and from time to 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 CWI Shares, the CHL Shares and the CPR Shares to be transferred
hereunder, or otherwise to carry out the intent and purposes of this
Agreement.
<PAGE>
16.0 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.
17.0 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.
18.0 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.
SIGNED AS A DEED FOR AND ON BEHALF OF
Cleopatra's Palace Resorts and Casinos Limited
By: /s/ James Ward
Authorised signature(s)
Effective the 1st day of July, 1998
SIGNED AS A DEED FOR AND ON BEHALF OF
NuOasis International Inc.
By: /s/ Fred G. Luke
Authorised signature(s)
Effective the 1st day of July, 1998
EXHIBIT 10.5
ADVISORY AGREEMENT
THIS ADVISORY AGREEMENT ("Agreement") is made this 18th day
of July 1998, by and between NuVen Advisors, Inc., a Nevada corporation
("Advisor") and Flexweight Corporation, a Kansas corporation (the "Company").
WHEREAS, Advisor and Advisor's Personnel (as defined below) have
experience in evaluating and effecting mergers and acquisitions, supervising
corporate management, and in performing general administrative duties for
publicly-held companies and development stage investment ventures; and
WHEREAS, the Company desires to retain Advisor to advise and assist the
Company in its development on the terms and conditions set forth below.
NOW, THEREFORE, in consideration of the mutual promises, covenants and
agreements contained herein, and for other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the Company and Advisor
agree as follows:
1. Engagement
The Company hereby retains Advisor, retroactive to April 1, 1998, the
date Advisor first began providing the services (the "Effective Date")
and continuing until termination as provided herein, to assist the
Company in it's effecting the purchase of businesses and assets
relative to its business and growth strategy (the "Services"). The
Services are to be provided on a "best efforts" basis directly and
through Advisor's officers or others employed or retained and under
the direction of Advisor ("Advisor's Personnel"); provided, however,
that the Services shall expressly exclude all legal advice, accounting
services or other services which require licenses or certification
which Advisor may not have.
2. Term
This Agreement shall have an initial term of one (1) year (the
"Primary Term"), commencing with the Effective Date. At the conclusion
of the Primary Term this Agreement will automatically be extended on an
annual basis (the "Extension Period") unless Advisor or the Company
shall serve written notice on the other party terminating the
Agreement. Any notice to terminate given hereunder shall be in writing
and shall be delivered at least thirty (30) days prior to the end of
the Primary Term or any subsequent Extension Period.
3. Time and Effort of Advisor
Advisor shall allocate time and Advisors Personnel as it deems
necessary to provide the Services. The particular amount of time may
vary from day to day or week to week. Except as otherwise agreed,
Advisor's monthly statement identifying, in general, tasks performed
for the Company shall be conclusive evidence that the Services have
been performed. Additionally, in the absence of willful misfeasance,
bad faith, negligence or reckless disregard for the obligations or
duties hereunder by Advisor, neither Advisor nor Advisor's Personnel
shall be liable to the Company or any of its any shareholders for any
act or omission in the course of or connected with rendering the
Services, including but not limited to losses that may be sustained
in any corporate act in any subsequent Business Opportunity (as defined
herein) undertaken by the Company as a result of advice provided by
Advisor or Advisor's Personnel.
<PAGE>
4. Compensation
The Company agrees to pay Advisor a fee for the Services (the "Initial
Fee") by way of the issuance by the Company of Forty Thousand (40,000)
shares of the Company's common stock following the Company's closing on
the purchase of the initial Business Opportunity (as defined below),
and a monthly fee ("Advisory Fee") equal to Three Thousand Dollars
(USD $3,000), payable monthly in cash or shares of the Company's
common stock, at the Company's election.
As incentive to execute this Agreement, the Company hereby grants to
Advisor an option to purchase Three Hundred Fifty Thousand (350,000)
shares of the Company's common stock ("Option Shares") exercisable at a
price of $6.00 per share, which is approximately 110% of the 10-day
moving average closing bid price for such shares at July 15, 1998.
Advisory's right to purchase such Option Shares shall be governed by
the terms and conditions of the Option Agreement attached hereto as
Exhibit "A" and incorporated herein by reference (the "Option"). The
right of Advisor to exercise such Option will vest to Advisor upon
execution hereof.
5. Other Services
If, following the Closing by the Company of the first Business
Opportunity, the Company enters into a merger or exchange securities
with, or purchases the assets or enters into a joint venture with, or
makes an investment in a company introduced by Advisor (a "Business
Opportunity"), the Company agrees to pay Advisor a fee equal to five
percent (5%) of the value of each Business Opportunity introduced by
Advisor and acquired or otherwise participated in by the Company
(collectively referred to herein, in each instance, as the "Transaction
Fee"), which shall be payable immediately following the closing of each
such transaction, in cash or in shares of the Company's common stock.
The Company and Advisor acknowledge that in the event Advisor, as a
result of this Agreement, receives shares of the Company's common
stock it may be considered an affiliate subject to Section 16(b) of the
Securities Exchange Act of 1934 (the "'34 Act"). In this regard the
Company and Advisor agree, that for purposes of any "profit"
computation under Section 16(b) of the '34 Act, the price paid for such
shares is equal to the Initial Fee, the Advisory Fee or the Transaction
Fee, as the case may be.
6. Registration of Shares
No later than ten (10) days following the date hereof as to shares
issued to satisfy the Advisory Fee (if paid in shares), the Option
Shares and, as to an event giving use to the Company's obligation to
pay a Transaction Fee, such shares shall be registered by the Company
with the Securities and Exchange Commission under a Form S-8 or other
applicable registration statement, and the Company shall cause such
registration statement to be remain effective until the earlier of the
first anniversary of the issuance of the most recently issued shares,
or the sale of all such shares by Advisor, whichever is the earlier
date. At Advisor's election, such shares may be issued prior to
registration in reliance on exemptions from registration provided by
Section 4(2) of the Securities Act of 1933 (the "'33 Act"), Regulation
D of the '33 Act, and applicable state securities laws. Such issuance
or reservation of shares shall be in reliance on representations and
warranties of Advisor set forth herein. Failing to register such
shares, or maintain the effectiveness of the applicable registration
statement, the Company shall satisfy any Initial Fee, Transaction Fee
or Advisory Fee in cash within ten (10) days of receipt of Advisor's
statement setting out the amount and type of fee then due and payable.
<PAGE>
7. Costs and Expenses
All third party and out-of-pocket expenses incurred by Advisor in the
performance of the Services shall be paid by the Company, or Advisor
shall be reimbursed if paid by Advisor on behalf of the Company, within
ten (10) days of receipt of written notice by Advisor, provided that
the Company must approve in advance all such expenses in excess of $500
per month.
8. Place of Services
The Services provided by Advisor or Advisor's Personnel hereunder will
be performed at Advisor's offices except as otherwise mutually agreed
by Advisor and the Company.
9. Independent Contractor
Advisor and Advisor's Personnel will act as an independent contractor
in the performance of its duties under this Agreement. Accordingly,
Advisor will be responsible for payment of all federal, state, and
local taxes on compensation paid under this Agreement, including income
and social security taxes, unemployment insurance, and any other taxes
due relative to Advisor's Personnel, and any and all business license
fees as may be required. This Agreement neither expressly nor
impliedly creates a relationship of principal and agent, or employee
and employer, between Advisor's Personnel and the Company. Neither
Advisor nor Advisor's Personnel are authorized to enter into any
agreements on behalf of the Company. The Company expressly retains the
right to approve, in its sole discretion, each Business Opportunity
introduced by Advisor, and to make all final decisions with respect to
effecting a transaction on any Business Opportunity.
10. Rejected Business Opportunity
If, during the Primary Term of this Agreement or any Extension Period,
the Company elects not to proceed to acquire, participate or invest in
any Business Opportunity identified and/or selected by Advisor,
notwithstanding the time and expense the Company may have incurred
reviewing such transaction, such Business Opportunity shall revert back
to and become proprietary to Advisor, and Advisor shall be entitled to
acquire or broker the sale or investment in such rejected Business
Opportunity for its own account, or submit such assets or Business
Opportunity elsewhere. In such event, Advisor shall be entitled to any
and all profits or fees resulting from Advisor's purchase, referral or
placement of any such rejected Business Opportunity, or the Company's
subsequent purchase or financing with such Business Opportunity in
circumvention of Advisor.
11. No Agency Express or Implied
This Agreement neither expressly nor impliedly creates a relationship
of principal and agent between the Company and Advisor, or employee and
employer as between Advisor's Personnel and the Company.
<PAGE>
12. Termination
The Company and Advisor may terminate this Agreement prior to the
expiration of the Primary Term upon thirty (30) days written notice
with mutual written 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 with
thirty (30) days written notice under the following conditions:
(A) By the Company.
(i) If during the Primary Term of this Agreement or any
Extension Period, Advisor is unable to provide the
Services as set forth herein for thirty (30) consecutive
business days because of illness, accident, or other
incapacity of Advisor's Personnel; or,
(ii) If Advisor willfully breaches or neglects the duties
required to be performed hereunder; or,
(B) By Advisor.
(i) If the Company breaches this Agreement or fails to make
any payments or provide information required hereunder;
or,
(ii) If the Company ceases business or, other than in the
Initial Merger, sells a controlling interest to a third
party, or agrees to a consolidation or merger of itself
with or into another corporation, or enters into such a
transaction outside of the scope of this Agreement, or
sells substantially all of its assets to another
corporation, entity or individual outside of the scope
of this Agreement; or,
(iii) If the Company has a receiver appointed for its business
or assets, or otherwise becomes insolvent or unable to
timely satisfy its obligations in the ordinary course of
business, including but not limited to the obligation to
pay the Initial Fee, the Transaction Fee, or the
Advisory Fee; or,
(iv) If the Company institutes, makes 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 Advisor are determined to be
materially false or misleading.
<PAGE>
In the event Advisor elects to terminate without cause or this
Agreement is terminated prior to the expiration of the Primary Term or
any Extension Period by mutual written agreement, or by the Company for
the reasons set forth in A(i) and (ii) above, the Company shall only be
responsible to pay Advisor for unreimbursed expenses, Advisory Fee and
Transaction Fee accrued up to and including the effective date of
termination. If this Agreement is terminated by the Company for any
other reason, or by Advisor for reasons set forth in B(i) through (v)
above, Advisor shall be entitled to any outstanding unpaid portion of
reimbursable expenses, Transaction Fee, if any, and the balance of the
Advisory Fee for the remainder of the unexpired portion of the
applicable term (Primary Term or Extension Period) of the Agreement.
13. Indemnification
Subject to the provisions herein, the Company and Advisor agree to
indemnify, defend and hold each other harmless from and against all
demands, claims, actions, losses, damages, liabilities, costs and
expenses, including without limitation, interest, penalties and
attorneys' fees and expenses asserted against or imposed or incurred by
either party by reason of or resulting from any action or a breach of
any representation, warranty, covenant, condition, or agreement of the
other party to this Agreement.
14. Remedies
Advisor and the Company acknowledge that in the event of a breach of
this Agreement by either party, money damages would be inadequate and
the non-breaching party would have no adequate remedy at law.
Accordingly, in the event of any controversy concerning the rights or
obligations under this Agreement, such rights or obligations shall be
enforceable in a court of equity by a decree of specific performance.
Such remedy, however, shall be cumulative and non-exclusive and shall
be in addition to any other remedy to which the parties may be
entitled.
15. Miscellaneous
(A) Subsequent Events. Advisor and the Company each agree to notify
the other party if, subsequent to the date of this Agreement,
either party incurs obligations which could compromise its
efforts and obligations under this Agreement.
(B) Amendment. This Agreement may be amended or modified at any
time and in any manner only by an instrument in writing executed
by the parties hereto.
(C) Further Actions and Assurances. At any time and from time to
time, each party agrees, at its or their expense, to take
actions and to execute and deliver documents a may be reasonably
necessary to effectuate the purposes of this Agreement.
<PAGE>
(D) Waiver. Any failure of any party to this Agreement to comply
with any of its obligations, agreements, or conditions hereunder
may be waived in writing by the party to whom such compliance is
owed. The failure of any party to this Agreement to enforce at
any time any of the provisions of this Agreement shall in no way
be construed to be a waiver of any such provision or a waiver of
the right of such party thereafter to enforce each and every
such provision. No waiver of any breach of or non-compliance
with this Agreement shall be held to be a waiver of any other or
subsequent breach or non-compliance.
(E) Assignment. Neither this Agreement nor any right created by it
shall be assignable by either party without the prior written
consent of the other.
(F) Notices. Any notice or other communication required or
permitted by this Agreement must be in writing and shall be
deemed to be properly given when delivered in person to an
officer of the other party, when deposited in the United States
mails for transmittal by certified or registered mail, postage
prepaid, or when deposited with a public telegraph company for
transmittal, or when sent by facsimile transmission charges
prepared, provided that the communication is addressed:
(i) In the case of the Company:
Flexweight Corporation
915 North Wells
Wendover, NV 89803
Telephone: (702) 664-3919
Facsimile: (702) 664-2331
With copy to:
Hudson Consulting Group
268 West 400 South, suite 300
Salt Lake City, Utah 84101
Telephone: (801) 575-8073
Telefax: (801) 575-8092
(ii) In the case of Advisor:
NuVen Advisors, Inc.
6337 So. Highland Drive, Suite 319
Salt Lake City, Utah 84121
Telephone: (801) 277-8755
Telefax: (801) 277-8755
<PAGE>
With copy to:
Richard O. Weed
Archer & Weed
4695 MacArthur Court, Suite #530
Newport Beach, CA 92660
Telephone: (714) 833-5363
Telefax: (714) 833-5384
or to such other person or address designated in writing by
the Company or Advisor to receive notice.
(G) 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.
(H) Governing Law. This Agreement was negotiated and is being
contracted for in Nevada, and shall be governed by the laws of
the Nevada, notwithstanding any conflict-of-law provision to
the contrary.
(I) Binding Effect. This Agreement shall be binding upon the
parties hereto and inure to the benefit of the parties, their
respective heirs, administrators, executors, successors, and
assigns.
(J) Entire Agreement. This Agreement contains the entire
agreement between the parties hereto and supersedes any and
all prior agreements, arrangements, or understandings between
the parties relating to the subject matter of this Agreement.
No oral understandings, statements, promises, or inducements
contrary to the terms of this Agreement exist. No
representations, warranties, covenants, or conditions, express
or implied, other than as set forth herein, have been made by
any party.
(K) Severability. If any part of this Agreement is deemed to be
unenforceable the balance of the Agreement shall remain in
full force and effect.
<PAGE>
(L) Counterparts. A facsimile, telecopy, or other reproduction of
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, by one or more parties hereto and such executed
copy may be delivered by facsimile of similar instantaneous
electronic transmission device pursuant to which the signature
of or on behalf of such party can be seen. In this event,
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
Agreement as well as any facsimile, telecopy or other
reproduction hereof.
(M) Time is of the Essence. Time is of the essence of this
Agreement and of each and every provision hereof.
IN WITNESS WHEREOF, the parties have executed this Agreement
on the date above written.
"Advisor"
NUVEN ADVISORS, INC.
a Nevada corporation
By: /s/ Fred G. Luke
Name: Fred G. Luke
Title: President
The "Company"
Flexweight Corporation
a Kansas corporation
By: /s/ Walter G. Sanders
Name: Walter G. Sanders
Title: President/CEO
EXHIBIT 10.6
MERGER AGREEMENT
THIS MERGER AGREEMENT ("Agreement") is made and entered into as of the
19th day of October, 1998 by and between Oasis Resorts International Inc.,
a Nevada corporation (hereinafter "Oasis"), and Flexweight Corporation, a Kansas
corporation ("Flexweight"). Oasis and Flexweight are hereinafter sometimes
referred to collectively as the "Constituent Corporations."
WHEREAS, Flexweight is a privately-held company; and,
WHEREAS, Oasis is a recently formed privately-held Nevada corporation;
and,
WHEREAS, the Boards of Directors of Flexweight and Oasis have
determined that it is advisable that Flexweight merge with and into Oasis, and
that the shareholders of Flexweight exchange their shares of the capital stock
of Flexweight for shares of the capital stock of Oasis. The transaction
contemplated hereby is hereinafter referred to as the "Merger"; and,
WHEREAS, the Constituent Corporations desire to enter into and adopt
this Merger Agreement for the purpose of setting forth certain terms and
provisions that will govern the Merger and to consummate the Merger as a "change
in domicile merger" in accordance with the provisions of Section 368 (a)(2)(F)
of the Internal Revenue Code of 1986, as amended (the "Code"); and,
WHEREAS, the principal purpose of the Merger is to effectuate a change
in corporate domicile from Kansas to Nevada.
NOW, THEREFORE, in consideration of the agreements hereinafter set
forth, in accordance with the business corporation law of the State of Nevada
and the State of Kansas, and for the purpose of setting forth the terms and
conditions of the Merger, the mode of completing the Merger, and the manner of
converting the shares of the capital stock of Flexweight into shares of capital
stock of Oasis, the parties agree as follows:
1. The Reorganization
1.1 The Effective Time. The Merger shall be accomplished by filing
appropriate articles of merger with the Secretary of State of the
State of Nevada and the Secretary of State of the State of Kansas
in the form provided for by the business corporation laws of such
States as soon as practicable after execution of this Merger
Agreement. The term "Effective Time" shall mean the time at
which all necessary Certificates of Merger have been issued by
the Secretary of State of the State of Nevada and the Secretary
of State of the State of Kansas.
<PAGE>
1.2 Manner of Merger. At the Effective Time, Flexweight shall be
merged into Oasis, which shall be the corporation that survives
the Merger. The corporate existence of Oasis with all its
purposes, powers and objects shall continue unaffected and
unimpaired by the Merger; and, as the corporation surviving the
Merger, Oasis shall be governed by the laws of the State of
Nevada and shall succeed to all rights, assets, liabilities and
obligations of Flexweight, as provided in the business
corporation laws of the State of Kansas. The separate existence
and corporate organizations of Oasis and Flexweight shall cease
at the Effective Time, and thereafter Oasis shall continue as
Oasis under the laws of the State of Nevada under the new name of
Oasis Resorts International Inc., a Nevada corporation. All the
property, real, personal, and mixed, and all debts of other
obligations due to Flexweight, shall be transferred to and shall
be vested in Oasis, without further act or deed, as provided in
the business corporation laws of the States of Nevada and Kansas.
1.3 Articles of Incorporation and Bylaws of Oasis.
(a) At the Effective Time, the Articles of Incorporation, as
amended, and By-Laws of Oasis, copies of which are attached
hereto as Exhibits "A" and "B" respectively, and
incorporated herein by reference, shall become the
surviving Articles and By-Laws of the Constituent
Corporations.
(b) The directors and officers of Oasis as of the Effective
Time shall be the directors and officers of Flexweight,
until their successors shall have been elected and
qualified, or as otherwise provided by the General
Corporation Law of the State of Nevada and in the Bylaws
of Oasis. If at the Effective Time a vacancy exists in the
Board of Directors or in any of the offices of Oasis, such
vacancy shall thereafter be filled in the manner provided
in the Bylaws of Oasis.
1.4 Status and Conversion of Shares. The manner of converting the
shares of capital stock of Flexweight outstanding immediately
prior to the Merger into shares of common stock of Oasis shall be
as follows:
(a) At the Effective Time, each share of the issued and
outstanding $0.10 par value common stock of Flexweight
shall, by virtue of the Merger and without any action on
the part of the holder thereof, become and be converted
into one (1) share of the $.001 par value common stock of
Oasis.
(b) Any shares of the capital stock of Flexweight held in
treasury as of the Effective Time shall become an equal
number of shares held in the treasury of Oasis.
<PAGE>
(c) After the Effective Time, each holder of a certificate or
certificates theretofore representing outstanding shares
of the capital stock of Flexweight may surrender such
certificate or certificates to such agent or agents as
shall be appointed by Oasis (the "Exchange Agent"), and
shall be entitled to receive in exchange therefor a
certificate or certificates representing the number of
whole shares of capital stock of Oasis into which the
shares of capital stock of Flexweight theretofore
represented by the certificates so surrendered have been
converted.
(d) If any certificate evidencing shares of the capital stock
of Flexweight is to be issued in a name other than the
name in which the certificate surrendered is registered,
the certificate so surrendered shall be properly endorsed
and shall otherwise be in proper form for transfer. The
person requesting the transfer shall pay to the Exchange
Agent any transfer or other fees or taxes required by
reason of the issuance of a certificate in name other than
that of the registered holder of the certificate
surrendered.
(e) Oasis may, without notice to any person, terminate all
exchange agencies at any time after 120 days following the
Effective Time. After such termination, all exchanges,
payments and notices provided for in this Agreement to be
made to or by the Exchange Agent shall be made to or by
Oasis or its agent.
(f) On or before October 19, 1998, notice of the proposed
merger will be given to all shareholders of record of
Flexweight, and such holders of a majority of the
outstanding shares of the $0.10 par value common stock,
representing all classes of capital stock of Flexweight
entitled to vote on and approve or reject the Merger. In
such Notice to Shareholders, all Flexweight shareholders,
shall be made aware of any dissenter's rights under Kansas
law and, in particular, that they will have waived any
dissenter's rights under the Business Corporation Act of
the State of Kansas by voting in favor of such merger.
(g) The sole share of $.001 par value common stock of Oasis
owned by Flexweight shall be canceled as of the Effective
Time and shall not thereafter be issued or outstanding.
<PAGE>
2. Miscellaneous
2.1 Amendments. This Merger Agreement may be amended with the
approval of the Boards of Directors of the Constituent
Corporations at any time before or after the approval hereof by
their respective shareholders, but after any such approval no
amendment shall be made that substantially and adversely changes
the terms hereof as to any party without the approval of the
shareholders of such party.
2.2 Extension; Waiver. At any time before the Effective Time, the
Board of Directors of either of the Constituent Corporations may
(a) extend the time for the performance of any of the obligations
or other acts of another party hereto, or (b) waive compliance by
another party with any of the agreements or conditions contained
herein. Any such extension or waiver shall be valid only if set
forth in an instrument in writing duly executed and delivered on
behalf of such party.
IN WITNESS WHEREOF, the Constituent Corporations have executed
this Merger Agreement as of the day and year first above written.
"Oasis"
Oasis Resorts International Inc.,
a Nevada corporation
By: /s/ Fred G. Luke
Name: Fred G. Luke
Title: President
"Flexweight"
Flexweight Corporation,
a Kansas corporation
By: /s/ Walter G. Sanders
Name: Walter G. Sanders
Title: President/CEO
EXHIBIT 10.7
WARRANT AGREEMENT
THIS WARRANT AGREEMENT effective the 19th day of October 1998, is
entered into by and between Flexweight Corporation, a Kansas corporation (the
"Company"), NuOasis International Inc., a corporation organized under the laws
of the Commonwealth of the Bahamas ("NuOasis") and the undersigned who, by their
execution hereof, agrees to serve as the agent for registration and transfer of
the Warrants (as defined below).
WHEREAS, the Company proposes to issue a class up to an aggregate of
Thirty Six Million (36,000,000) warrants (the "Warrants") to purchase shares of
its Common Stock (as hereinafter described), subject to adjustment as provided
herein (the shares of Common Stock issuable on exercise of the Warrants being
referred to herein as the "Warrant Shares"). The Warrants are being issued and
the Warrant Shares are hereinafter being reserved by the Company in connection
with that certain Asset Purchase Agreement dated August , 1998 ("Purchase
Agreement") between the Company, NuOasis and NuOasis Resorts Inc., a Nevada
corporation ("Resorts"), sole shareholder of NuOasis, pursuant to which the
Company is acquiring shares of capital stock of Cleopatra Palace Resort and
Casinos Limited, a UK corporation ("CPR") and the rights of NuOasis to the share
capital of NuOasis Resort & Casino N.V., a Netherlands Antilles corporation in
organization ("NRCNV"). The Purchase Agreement is attached hereto and
incorporated by reference herein as Exhibit "A"; and
WHEREAS, the Company has selected the current registrar ("Transfer
Agent") for its $ par value common stock (the "Common Stock") to serve as the
Warrant Agent, and by its signature below, the Warrant Agent is willing to act
in connection with the issuance, division, transfer,
exchange, redemption and exercise of Warrants and the Warrant Shares.
NOW, THEREFORE, for value received, the sufficiency and adequacy of
which is hereby acknowledged and accepted, and in consideration of the foregoing
and for the purposes of defining the terms and provisions of the Warrants, and
the respective rights and obligations hereunder of the Company and NuOasis (or
its transferees as the registered owners of the Warrants, collectively, the
"Holders"), the Company, NuOasis and the Warrant Agent hereby agree as follows:
1. Appointment of Warrant Agent
The Company hereby appoints the Warrant Agent to serve in accordance with
the instructions set forth in this Agreement, for the benefit of NuOasis
and the Company, and the Warrant Agent hereby accepts such appointment.
2. Registration, Transferability and Form of Warrant
2.1 Registration. The Warrants shall be numbered and shall be
registered in a Warrant register by the Warrant Agent as they are
issued. The Company and the Warrant Agent shall be entitled to
treat the Holder of any Warrant(s) as the owner in fact thereof
for all purposes, and shall not be bound to recognize any
equitable or other claim to or interest in such Warrant(s) on the
part of any other person.
2.2 Transferability. The Warrants shall be transferable by the Holders
upon notice and delivery of such transfer delivered to the Company
or the Warrant Agent at the respective address, properly endorsed by
the registered Holder or transferor, or their duly authorized
attorney or representative, and accompanied by proper evidence
succession, assignment or authority to transfer. In all cases of
transfer by an attorney, the original power of attorney, duly
approved by the Warrant Agent, or a copy thereof, duly notarized,
shall be deposited and remain with the Warrant Agent. In case of
transfer by executors, administrators, guardians or other legal
representatives, duly authenticated evidence of their authority
shall be produced, and may be required to be deposited and remain
with the Warrant Agent in its discretion. Upon any registration of
transfer, the Warrant Agent shall countersign and deliver a new
Warrant or Warrants to the persons entitled thereto.
2.3. Form of Warrant. The terms and conditions pursuant to which the
Warrants have been established and approved by the Company, and
Warrants are established pursuant to which the Warrants shall be
issued and available for future transfer, is set forth in the
resolutions adopted by the Company's Board of directors on behalf of
the Company effective October 19, 1998, copies of which resolutions
are available for inspection at the Company's principal office
during normal business hours, the language of which shall be set
forth a form of Warrant containing each certificate representing the
Warrants attached hereto as Exhibit "B"
The Warrants shall be dated as of October 19, 1998 notwithstanding
the date of countersignature thereof by the Warrant Agent or upon
division, exchange, substitution or transfer. Warrants shall be
numbered as follows: "ORI-XXXXX".
3. Countersignature of Warrants
The price to purchase each Warrant Share and the number of Warrant
Shares issuable upon exercise of each Warrant are subject to adjustment
upon the occurrence of certain events, all as hereinafter provided. The
Warrants shall each be executed on behalf of the Company by its
Chairman of the Board or President under its corporate seal reproduced
thereon and attested by its Secretary or an Assistant Secretary. The
signature of any such officers on the Warrants may be manual or
facsimile.
Warrants bearing the manual or facsimile signature of individuals who
were at any time the proper officers of the Company shall bind the
Company, notwithstanding that such individuals or any one of them shall
have ceased to hold such office prior to the delivery of such Warrants,
or did not hold such office on the date of this Agreement.
The Warrants shall be countersigned by the Warrant Agent (or any
successor to the Warrant Agent then acting as Warrant Agent under this
Agreement) and shall not be valid for any purpose unless so
countersigned. Warrants may be countersigned, however, by the Warrant
Agent (or by its successor as Warrant Agent hereunder) and may be
delivered by the Warrant Agent, notwithstanding that the persons whose
manual or facsimile signatures appear thereon as proper officers of the
Company shall have ceased to be such officers at the time of such
countersignature, issuance or delivery. Unless otherwise provided in
this Agreement, the Warrant Agent shall, upon written instruction of
the Chairman of the Board, President, or Secretary of the Company,
countersign, issue and deliver the Warrants which, according to the
terms hereof, shall entitle the Holders thereof to purchase in the
aggregate up to Thirty Six Million (36,000,000) shares of the Company's
Common Stock (subject to the conditions and set forth herein).
<PAGE>
4. Exchange of Warrant Certificates
The certificate(s) representing a Warrant or Warrants may be exchanged
for another certificate or certificates entitling the Holder thereof to
purchase a like aggregate number of Warrant Shares as the certificate
or certificates surrendered then entitle such Holder to purchase. Any
Holder desiring to exchange a Warrant certificate or certificates shall
make such request in writing delivered to the Warrant Agent, and shall
surrender, properly endorsed, the certificate or certificates to be so
exchanged. Thereupon, the Warrant Agent shall countersign and deliver
to the person entitled thereto a new Warrant certificate or
certificates, as the case may be, as so requested.
5. Term of Warrants; Exercise of Warrants
5.1. Term of Warrants. Subject to the terms hereof, NuOasis and/or
the Holders shall have the right, which may be exercised
commencing the Effective Date of issuance and until September
30, 2003, to purchase from the Company the number of fully paid
and non-assessable Warrant Shares which NuOasis and/or the
Holder may at the time be entitled to purchase on exercise of
such Warrants.
5.2. Exercise of Warrants. Warrants may only be exercised for the
purchase of whole Warrant Shares. Warrants may be exercised
upon surrender of the certificate or certificates evidencing the
Warrants to be exercised (except as otherwise provided below),
or directly to the Company at its principal office together with
the form of election to purchase using the Warrant Exercise Form
attached hereto as Exhibit "C" (duly completed and signed and
accompanied by the payment of the Exercise Price (as defined in
and determined in accordance with the provisions hereof), for
the account of the Company for the number of Warrant Shares in
respect of which such Warrants are then exercised.
5.3 Transferability. The Warrants are freely transferable without
the prior consent or notice to the Company. If the Warrants are
assigned or transferred by NuOasis or a registered Holder,
unless such assignment or transfer is to a NuOasis Affiliate or
Subsidiary, or is the result of a corporate reorganization or
recapitalization of NuOasis, the Exercise Price for the Warrant
Shares must be paid in cash. In the event the Warrants are
retained by NuOasis, or are assigned or transferred to a NuOasis
Affiliate or Subsidiary, or are assigned or transferred as a
result of a corporate reorganization or recapitalization of
NuOasis, the Exercise Price may be paid in cash or by the
application of the surrender and cancellation of a pro rata
portion of the Notes (as defined in the Purchase Agreement), or
by the transfer by NuOasis of assets of pro rata value, the
valuation of which shall be subject to recognized independent
valuation experts.
The term "Affiliate" for the purposes of this Agreement shall
mean, as applied to any Person, (i) any other Person directly or
indirectly controlling, controlled by or under common control
with, that Person, (ii) any other Person that owns or controls
five percent (5%) or more of any class of equity securities
(including any equity securities issuable upon the exercise of
any Option) of that Person or any of its Affiliates, or (iii)
any member, director, partner, officer, agent, employee or
relative of such Person. For the purposes of this definition,
"control" (including with correlative meanings, the terms
"controlling", "controlled by", and "under common control with")
as applied to any Person, means the possession, directly or
indirectly, of the power to direct or cause the direction of
the management and policies of that Person, whether through
ownership of voting securities or by contract or otherwise.
<PAGE>
The term "Subsidiary" for the purposes of the Agreement shall
mean, any Person in which Oasis, directly or indirectly,
beneficially owns more than fifteen percent (15%) of either the
equity interests in, or the voting control of, such Person.
Subject to Section 5 hereof, upon such surrender of Warrants and
payment of the Exercise Price, upon the exercise of such
Warrants, the Company shall issue and cause to be delivered with
all reasonable dispatch to or upon the written order of NuOasis
and/or the Holder, and in such name or names as NuOasis and/or
the Holder may designate, a certificate or certificates for the
number of full Warrant Shares so purchased together with cash,
as provided herein, in respect of any fractional Warrant Shares
otherwise issuable upon such exercise of Warrants. Such
certificate or certificates shall be deemed to have been issued
and any person so designated to be named therein shall be deemed
to have become a holder of record of such Warrant Shares as of
the date of the surrender of such Warrants and payment of such
Warrant Price, as set forth herein; provided, however, that if,
at the date of surrender of such Warrants and payment of such
Warrant Price, the transfer books for the Warrant Shares or
other class of stock purchasable upon the exercise of such
Warrants shall be closed, the certificates for the Warrant
Shares in respect of which such Warrants are then exercised
shall be issuable as of the date on which such books shall next
be opened and until such date the Company shall be under no duty
to deliver any certificate for such Warrant Shares. However,
that the transfer books of record, unless otherwise required by
law, shall not be closed at any one time for a period of longer
than twenty days. The rights of purchase represented by the
Warrants shall be exercisable, at the election of the Holders
thereof, either in full or from time to time in part, and in the
event that a certificate evidencing warrants is exercised in
respect of less than all of the Warrant Shares purchasable on
such exercise at any time prior to the date of expiration of the
Warrant, a new certificate evidencing the remaining Warrant or
Warrants will be issued, and the Warrant Agent is hereby
irrevocably authorized to countersign and to deliver the
required new Warrant certificate or certificates pursuant to the
provisions of this paragraph and otherwise set forth herein. The
Company, whenever required by the Warrant Agent, will supply the
Warrant Agent with Warrant certificates duly executed on behalf
of the Company for such purpose.
6. Payment of Taxes
The Company will pay all documentary stamp taxes, if any, attributable
to the initial issuance of Warrant Shares upon the exercise of
Warrants; provided, however, that the Company shall not be required to
pay any tax or taxes which may be payable in respect of any transfer
involved in the issue or deliver of any Warrants or certificates for
Warrant Shares in a name other than that of the registered Holder of
Warrants in respect of which such Warrant Shares are issued. Any and
all other taxes or assessments are the sole responsibility and
obligation of the Holder(s).
<PAGE>
7. Mutilated or Missing Warrants
In case any of the certificates evidencing the Warrants shall be
mutilated, lost, stolen or destroyed, the Company may in its discretion
issue, and the Warrant Agent shall countersign and deliver in exchange
and substitution for and upon cancellation of the mutilated Warrant
certificate, or in lieu of and substitution for the Warrant certificate
lost, stolen or destroyed, a new Warrant certificate of like tenor and
representing an equivalent right or interest; but only upon receipt of
evidence satisfactory to the Company and the Warrant Agent of such
loss, theft or destruction of such Warrant and indemnity if requested,
also satisfactory to them. An applicant for such a substitute Warrant
certificate shall also comply with such other reasonable regulations
and pay such other reasonable charges as the Company or the Warrant
Agent may prescribe.
8. Reservation of Warrant Shares; Purchase and Cancellation of Warrants
8.1. Reservation of Warrant Shares. There have been reserved, and
the Company shall at all times keep reserved and available
out of its authorized Common Stock, such number of shares of
its Common Stock as shall be sufficient to provide for the
exercise of the outstanding Warrants. The Transfer Agent for
the Common Stock and every subsequent transfer agent for any
shares of the Company's capital stock issuable upon the
exercise of the Warrants 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 its Transfer Agent,
or its successors, and with every subsequent transfer agent for
any shares of the Company's capital stock issuable upon the
exercise of the rights of purchase represented by the Warrants.
The Warrant Agent is hereby irrevocably authorized to
requisition from time to time from the Transfer Agent (if they
are not one in the same), or its successors, the stock
certificates required to honor outstanding Warrants upon
exercise thereof in accordance with the terms of this Agreement.
The Company agrees to timely supply its Transfer Agent or its
successors with duly executed stock certificates for such
purposes and will provide or otherwise make available any cash
which may be payable as provided for herein. All Warrants
surrendered in the exercise of the rights thereby evidenced
shall be cancelled by the Warrant Agent and shall thereafter be
delivered to the Company.
8.2. Purchase of Warrants by the Company. The Company shall have the
right, except as limited by law, other agreement or herein, to
purchase or otherwise acquire Warrants at such times, in such
manner and for such consideration as it may deem appropriate.
<PAGE>
8.3. Cancellation of Warrants. In the event the Company shall
purchase or otherwise acquire Warrants, the same shall thereupon
be delivered to the Warrant Agent and be cancelled by it and
retired. The Warrant Agent shall cancel any Warrants surrendered
for exchange, substitution, transfer or exercise in whole or in
part.
9. Exercise Price
Each Warrant shall entitle the holder thereof to purchase one (1) share
of the Company's Common Stock (subject to adjustment as set forth
herein), at a purchase price per share (the "Exercise Price") of Five
Dollars ($5.00).
10. Adjustment of Exercise Price and Number of Warrant Shares
At any time after the Company first issues the Warrants and while any
of the Warrants remain outstanding, if the Company shall effect a
subdivision or combination of its Common Stock, subject to the
Protective Provisions (as defined below), the Exercise Price and number
of Warrant Shares then in effect immediately before that subdivision or
combination shall be proportionately adjusted. Any adjustment shall
become effective at the close of business on the date the subdivision
or combination becomes effective, as hereinafter defined:
10.1. Mechanical Adjustments. The number of Warrant Shares
purchasable upon the exercise of each Warrant and the
Exercise Price shall be subject to adjustment as follows:
(a) Reclassification, Exchange or Substitution. In case
the Company shall (i) pay a dividend in shares of
Common Stock or make a distribution in shares of
Common Stock, (ii) subdivide its outstanding shares
of Common Stock, (iii) combine its outstanding shares
of capital stock into a greater number of shares of
Common Stock, or (iv) issue by reclassification of
recapitalization of its shares of Common Stock other
securities of the Company, the number of Warrant
Shares purchasable upon exercise of each Warrant
immediately prior thereto shall be adjusted so that
the Holder of each Warrant shall be entitled to
receive the kind and number of Warrant Shares or
other securities of the Company which he would have
owned or have been entitled to receive after the
happening of any of the events described above, had
such Warrant been exercised immediately prior to the
happening of such event or any record date with
respect thereto. An adjustment made pursuant to this
paragraph (a) shall become effective immediately
after the effective date of such event retroactive to
the record date, if any, for such event.
(b) Dividend, Distribution, Subscription Rights. In case
the Company shall distribute to all holders of its
shares of Common Stock evidence of its indebtedness
or assets (excluding cash dividends or distributions
payable out of consolidated earnings or earned
surplus and dividends or distributions referred to in
paragraph (a) above, or rights, options or warrants
or exercisable or exchangeable securities containing
the right to subscribe for or purchase shares of
Common Stock, then in each case the number of Warrant
Shares thereafter purchasable upon the exercise of
each Warrant, by a fraction, of which the numerator
shall be the then current market price per share of
Common Stock (as defined in Section 10.2 hereof) on
<PAGE>
the date of such distribution, and of which the
denominator shall be the then current market price
per share of Common Stock, less the then fair value
(as determined by the Board of Directors of the
Company, whose determination shall be conclusive) of
the portion of the assets or evidences of
indebtedness so distributed or of such subscription
rights, options or warrants, or of such exercisable
or exchangeable securities applicable to one
share of Common Stock. Such adjustment shall be made
whenever any such distribution is made, and shall
become effective on the date of distribution
retroactive to the record date for the determination
of stockholders entitled to receive such
distribution.
(c) Reorganization, Mergers, Consolidations or Sales of
Assets. At any time after the Company first issues
the Warrants and while any of the Warrants remain
outstanding, if there shall be a capital
reorganization of the Common Stock (other than a
subdivision, combination, reclassification, or
exchange of shares), or a merger or consolidation of
the Company with or into another Company, or the sale
of all or substantially all of the Company's assets
to any other person, then as a part of such
reorganization, merger, consolidation, or sale,
provision shall be made so that the holders of the
Warrants thereafter shall be entitled to receive upon
exercise of the Warrants, the number of shares of
Common Stock or other securities or property of the
Company, or of the successor Company resulting from
such merger or consolidation or sale, to which a
holder of Warrants deliverable upon exercise would
have been entitled on such capital reorganization,
merger, consolidation, or sale.
The provisions of this paragraph shall similarly apply to
successive consolidations, mergers, sales or conveyances. The
Warrant Agent shall be under no duty or responsibility to
determine the correctness of any provisions contained in any
such agreement relating either to the kind or amount of
shares of stock or other securities or property receivable
upon exercise of Warrants or with respect to the method
employed and provided therein for any adjustments.
10.2 Adjustment to Exercise Price. Except as otherwise provided
herein, whenever the number of Warrant Shares purchasable
upon the exercise of each Warrant is adjusted, as herein
provided, the Exercise Price payable upon exercise of each
Warrant in effect immediately prior to such adjustment, shall
be adjusted by multiplying such Exercise Price immediately
prior to such adjustment by a fraction, of which the
numerator shall be the number of Warrant Shares purchasable
upon the exercise of each Warrant immediately prior to such
adjustment, and of which the denominator shall be the number
of Warrant Shares so purchasable immediately thereafter.
<PAGE>
10.3 Definitions and Recalculation of Exercise Price and Warrant
Shares. For the purpose of this Agreement, the term "shares
of Common Stock" shall mean (i) the class of stock designated
as the Common Stock of the Company at the date of this
Agreement, or (ii) any other class of stock resulting from
successive changes or reclassification of such shares
consisting solely of changes in par value, or from par value
to no par value, or from no par value to par value. In the
event that at any time, as a result of an adjustment made
pursuant to the terms hereof, the Holders shall become
entitled to purchase any shares of the Company other than
shares of Common Stock, thereafter the number of such other
shares so purchasable upon exercise of each Warrant and the
Exercise Price of such shares shall be subject to adjustment
from time to time in a manner and on terms as nearly
equivalent as practicable to the provisions with respect to
the Warrant Shares contained in paragraphs 10.1(a) through
Section 10.1(c) and paragraph 10.2 above, and the provisions
of paragraphs 10.2 and 10.3 hereof, with respect to the
Warrant Shares, shall apply on like terms to any such other
shares.
For the purpose of any computation under this Agreement, or
otherwise set forth herein, the current market price per
share of Common Stock at any date shall be the average
closing bid price of the Common Stock (if then traded in the
over-the-counter market) or the average closing price of the
Common Stock (if then traded on any other national securities
exchange) for the five consecutive trading days ending the
day prior to the date as of which such computation is made.
If the Common Stock is not so listed or admitted to unlisted
trading privileges, or if bid or closing prices are not so
reported, the current market price per share shall be
determined in such reasonable manner as may be prescribed by
the Board of Directors of the Company, but in no event more
than the liquidation value of the Company divided by the
total number of shares of capital stock outstanding on a
fully diluted basis.
10.4. Notice of Adjustment. Whenever the number of Warrant Shares
purchasable upon the exercise of each Warrant or the Exercise
Price of such Warrant Shares is adjusted, as herein provided,
the Company shall cause the Warrant Agent promptly to mail by
first class mail, postage prepaid, to each Holder notice of
such adjustment or adjustments, and shall deliver to the
Warrant Agent a certificate of a firm of independent public
accountants selected by the Board of Directors of the Company
(who may be the regular accountants employed by the Company)
setting forth the number of Warrant Shares purchasable upon
the exercise of each Warrant and the Exercise Price of such
Warrant Shares after such adjustment, setting forth a brief
<PAGE>
statement of the facts requiring such adjustment and setting
forth the computation by which such adjustment was made. Such
certificate shall be conclusive of the correctness of such
adjustment. The Warrant Agent shall be entitled to rely on
such certificate and shall be under no duty or responsibility
with respect to any such certificate, except to exhibit the
same, from time to time, to any Holder desiring an inspection
thereof during reasonable business hours. The Warrant Agent
shall not at any time be under any duty or responsibility to
any Holders to determine whether any facts exist which may
require any adjustment of the Exercise Price or the number of
Warrant Shares or other stock or property purchasable on
exercise thereof, or with respect to the nature or extent of
any such adjustment when made, or with respect to the method
employed in making such adjustment.
10.5. No Adjustment for Dividends. Except as provided herein, no
adjustment in respect of any cash dividend shall be made
during the term of a Warrant or upon the exercise of a
Warrant.
10.6. Reduction of Exercise Price. The Company shall have the
right to reduce the Exercise Price at any time upon thirty
days prior written notice to all Holders.
10.7 Statement on Warrants. Irrespective of any adjustments in
the Exercise Price or the number or kind of equity securities
purchasable upon the exercise of the Warrants, the Warrant
certificates issued pursuant to this Agreement may continue
to express the same price and number and kind of shares as
are stated in the Warrant certificates initially issuable
pursuant to this Agreement.
10.8 Protective Provisions. Notwithstanding anything contained
herein to the contrary, including but not limited to
paragraphs 10.1 through 10.3 above, so long as any of the
Warrants shall be outstanding, the Company shall not without
first obtaining the approval (by vote or written consent, as
provided by law) of the holders of at least two-thirds of the
total number of Warrants:
(i) alter or change the rights, preferences or privileges
contained in the Warrants by way of reverse stock
split, reclassification, merger consolidation or
otherwise, so as to adversely affect in any manner
the rights of the Holder(s); notwithstanding the
effects of any reverse stock split, recapitalization,
or reincorporation which has the effect of reducing
the total number of issued and outstanding shares of
the Company's Common Stock, each Warrant shall
entitle the Holder to purchase one (1) Warrant Share
at an exercise Price not to exceed Five Dollars
($5.00);
(ii) create any new class of Warrants to purchase Common
Stock, or increase the authorized number of Warrants;
<PAGE>
(iii) create any new class of shares having preferences
over or being on a parity with the Company's Common
Stock as presently constituted as to dividends or
assets, unless the purpose of creation of such class
is, and the proceeds to be derived from the sale and
issuance thereof are to be used for, the retirement
of all the Notes then outstanding;
(iv) effect a merger, consolidation or reorganization of
the Company;
(v) effect a sale or other transfer of all or
substantially all of the Company's assets;
(vi) effect a sale of additional shares of the Company's
Common Stock so as to give a person or entity fifty
percent (50%) or greater voting control of the
Company;
(vii) effect a purchase or redemption by the Company of its
capital stock except as provided herein;
(viii) make a payment of a dividend or distribution from
funds legally available therefor;
(ix) issue or sell any shares of Common Stock (other than
the Warrant Shares) without consideration or for a
consideration per share less than the Exercise Price
in effect immediately prior to the time of such issue
or sale, unless and except the Company forthwith upon
such issuance or sale, reduces the Exercise Price of
the Warrant Shares to a price (computed to the
nearest cent) determined by dividing (i) the sum of
<PAGE>
(x) the number of shares of Common Stock outstanding
immediately prior to such issue or sale multiplied by
the Exercise Price in effect immediately prior to
such issue or sale, and (y) the consideration, if
any, received by the Company upon such issue or sale,
by (ii) the total number of shares of Common Stock
outstanding immediately after such issue or sale.
For purposes of this subsection, the following
provisions (A) to (B) shall also be applicable:
(A) Options. In case the Company shall in any manner
grant any right to subscribe for or to purchase or
any option for the purchase of Common Stock
(collectively, "Rights") or any stock or other
securities convertible into or exchangeable for
Common Stock (such convertible or exchangeable
stock or securities being hereinafter referred to
as "Convertible Securities") other than the
Warrants, and the minimum price per share for
which Common Stock is issuable, pursuant to such
Rights or upon conversion or exchange of such
Convertible Securities (determined by dividing (i)
the total amount, if any, received or receivable
by the Company as consideration for the granting
of such Rights, plus the minimum aggregate amount
of additional consideration payable to the Company
upon the exercise of such Rights, plus, in the
case of such Convertible Securities, the minimum
aggregate amount of additional consideration, if
any, payable upon the conversion or exchange
thereof, by (ii) the total maximum number of
shares of Common Stock issuable pursuant to such
Rights or upon the conversion or exchange of the
total maximum amount of such Convertible
Securities issuable upon the exercise of such
Rights) shall be less than the Exercise Price in
effect immediately prior to the time of the
granting of such Rights, then the total maximum
number of shares of Common Stock issuable pursuant
to such Rights or upon conversion or exchange of
the total maximum amount of such Convertible
Securities issuable upon the exercise of such
Rights shall (as of the date of granting of such
Rights) be deemed to be outstanding and to have
been issued for said price per share as so
determined; provided, that no further adjustment
of the Exercise Price shall be made upon the
actual issue of Common Stock so deemed to have
been issued; and further provided, that, upon the
expiration of such Rights (including Rights to
convert or exchange or options to purchase), (a)
the number of shares of Common Stock deemed to
have been issued and outstanding by reason of the
fact that they were issuable pursuant to such
Rights (including Rights to convert or exchange)
that were not so issued, shall no longer be deemed
to be issued and outstanding, and (b) the Exercise
Price shall forthwith be adjusted to the price
which would have prevailed had all adjustments
been made on the basis of the issue only of the
shares of Common Stock actually issued upon the
exercise of such Rights or upon conversion or
exchange of such Convertible Securities.
(B) Convertible Securities. In case the Company shall
in any manner issue or sell any Convertible
Securities, and the minimum price per share for
which Common Stock is issuable upon conversion or
exchange of such Convertible Securities
(determined by dividing (i) the total amount
received or receivable by the Company as
consideration for the issue or sale of such
Convertible Securities, plus the minimum aggregate
amount of additional consideration, if any,
payable to the Company upon the conversion or
exchange thereof, by (ii) the total maximum number
of shares of Common Stock issuable upon the
conversion or exchange of all such Convertible
<PAGE>
Securities) shall be less than the Exercise Price
in effect immediately prior to the time of such
issue or sale, then the total maximum number of
shares of Common Stock issuable upon conversion or
exchange of all such Convertible Securities shall
(as of the date of the issue or sale of such
Convertible Securities) be deemed to be
outstanding and to have been issued for said price
per share as so determined; provided, that no
further adjustment of the Exercise Price shall be
made upon the actual issue of Common Stock so
deemed to have been issued; and further provided,
that if any such issue or sale of such Convertible
Securities is made upon exercise of any Rights
related to such Convertible Securities for which
an adjustment of the Exercise Price has been or is
to be made pursuant to other provisions of this
paragraph no further adjustment of the Exercise
Price shall be made by reason of such issue or
sale; and, further provided, that, upon the
termination of the right to convert or to exchange
such Convertible Securities for Common Stock, (a)
the number of shares of Common Stock deemed to
have been issued and outstanding by reason of the
fact that they were issuable upon conversion or
exchange of any such Convertible Securities, which
were not so issued, shall no longer be deemed to
be issued and outstanding, and (b) the Exercise
Price shall forthwith be adjusted to the price
which would have prevailed had all adjustments
been made on the basis of the issue only of the
shares of Common Stock actually issued upon
conversion or exchange of such Convertible
Securities.
Upon the happening of any of the above events,
namely, if the purchase price provided for any
Rights, option or warrant granted by the Company to
subscribe for or to purchase additional stock or
convertible securities,
or the additional consideration, if any, payable upon
the conversion or exchange of any Convertible
Securities, or the rate at which any Convertible
Securities are convertible into or exchangeable for
additional stock shall change in any manner and at
any time (other than under or by reason of provisions
designed to protect against dilution), the Exercise
Price in effect at the time of such event shall
forthwith be adjusted or re-adjusted to the Exercise
Price which would have been in effect at such time
had such Rights or Convertible Securities still
outstanding provided for such changed purchase price,
additional consideration or rate of conversion or
exchange, as the case may be, at the time initially
granted, issued or sold. On the expiration of any
Rights granted by the Company to subscribe for or to
purchase additional stock or Convertible Securities
or the termination of any right to convert or
exchange such Convertible Securities, the Exercise
Price then in effect hereunder shall forthwith be
adjusted to the Exercise Price which would have been
in effect at the time of such expiration or
termination had such Rights or Convertible
Securities, to the extent outstanding immediately
prior to such expiration or termination, never been
issued, and the additional stock issuable thereunder
shall be no longer deemed to be outstanding;
(x) Determination of Issue Price. In case any shares
of Common Stock or convertible Securities or any
Rights to purchase any such stock or securities shall
be issued for cash the consideration received
therefor, before deducting therefrom any commission
or other expenses paid or incurred by the Company for
any underwriting of, or otherwise in connection with,
the issuance thereof, shall be deemed to be the
amount received by the Company therefor. In case any
shares of Common Stock or Convertible Securities or
any Rights to purchase any such stock or securities
shall be issued for a consideration part or all of
which
<PAGE>
shall be other than cash, then, for the purpose of
this paragraph, the Board of Directors of the Company
shall determine the fair value of such consideration,
irrespective of accounting treatment, and such Common
Stock, Convertible Securities or Rights shall be
deemed to have been issued for an amount of cash
equal to the value so determined by the Board of
Directors. The re-classification of securities other
than Common Stock into securities including Common
Stock shall be deemed to involve the issuance for a
consideration other than cash of such Common Stock
immediately prior to the close of business on the
date fixed for the determination of security holders
entitled to receive such Common Stock. In case any
shares of Common Stock or Convertible Securities or
any Rights to purchase any such stock or other
securities shall be issued together with other stock
or securities or other assets of the Company for a
consideration which includes both, the Board of
Directors of the Company shall determine what part of
the consideration so received is to be deemed to be
consideration for the issue of such shares of such
Common Stock, Convertible Securities or Rights.
(xi) Determination of Date of Issue. In case the
Company shall take a record of the holders of any
Common Stock for the purpose of entitling them (i) to
receive a dividend or other distribution payable in
Common Stock or in Convertible Securities, or (ii)
Rights to subscribe for or purchase Common Stock or
Convertible Securities, then such record date shall
be deemed to be the date of the issue or sale of the
shares of Common Stock deemed to have been issued or
sold upon the declaration of such dividend or the
make of such other distribution or the date of the
granting of such right of subscription or purchase,
as the case may be.
(xii) Treasury Shares. For the purpose of this
subsection shares of Common Stock at any relevant
time owned or held by, or for the account of, the
Company shall not be deemed outstanding.
11. Expiration of Warrants
All outstanding Warrants shall become void, and all Rights of the
Holders thereof under this Agreement shall cease at the close of
business on September 30, 2003.
12. Fractional Shares
The Company shall not be required to issue fractional Warrant Shares on
the exercise of Warrants. The number of full Warrant Shares which shall
be issuable upon the exercise of Warrants shall be computed on the
basis of the aggregate number of Warrant Shares purchasable on exercise
of the Warrant so presented. And, if the amount tendered by a holder of
a Warrant is less than the full Exercise Price times the Warrants being
exercised, the Company may return all of that portion of the Exercise
Price which is deficient.
13. No Rights as Stockholders; Notices to Holders
Nothing contained in this Agreement or in any of the Warrants shall be
construed as conferring upon the Holders of the Warrants, or their
transferees, the right to vote or to receive dividends or to consent to
or receive notice as stockholders in respect of any meeting of
stockholders for the election of directors of the Company or any other
matter, or any Rights whatsoever as stockholders of the Company. If,
however, at any time prior to the expiration of the Warrants and prior
to their exercise, any of the following events shall occur:
(i) the Company shall declare any dividend payable in any
securities upon its shares of Common Stock, or make any
distribution (other than a cash dividend) to the holders of
its shares of Common Stock; or
<PAGE>
(ii) the Company shall offer to the holders of its shares of
Common Stock any additional shares of Common Stock or
securities exercisable into shares of Common Stock or any
right to subscribe thereto; or
(iii) a dissolution, liquidation or winding up of the Company
(other than in connection with a consolidation, merger, or
sale of all or substantially all of its property, assets, and
business as an entirety) shall be proposed;
then, in any one or more of said events, the Company shall (i) give
notice in writing, as provided for herein, of such event to the Warrant
Agent and the Holders as provided for herein; and (ii) cause notice of
such event to be published once in one or more newspapers printed in
the English language and in United States national circulation, such
giving of notice and publication to be completed at least fifteen days
prior to the date fixed as a record date or the date of closing the
transfer books for the determination of the stockholders entitled to
such dividend, distribution, or subscription Rights, or for the
determination of stockholders entitled to vote on such proposed
dissolution, liquidation or winding up. Such notice shall specify such
record date or the date of closing the transfer books, as the case may
be. Failure to publish or mail such notice or any defect therein or in
the publication or mailing thereof shall not affect the validity of any
action taken in connection with such dividend, distribution or
subscription Rights, or proposed dissolution, liquidation or winding
up.
14. Disposition of Proceeds on Exercise of Warrants; Inspection of
Warrant Agreement
The Warrant Agent agrees to account promptly to the Company following
the close of each calendar quarter with respect to Warrants exercised,
and concurrently tender to the Company promptly any and all checks or
drafts, and to wire transfer all monies received by the Warrant Agent
for the purchase of the Warrant Shares through the exercise of such
Warrants.
The Company and the Warrant Agent shall each keep copies of this
Agreement and any notices given or received hereunder available for
inspection by the Holders during normal business hours at their
principal offices. The Company shall supply the Warrant Agent from time
to time with such numbers of copies of this Agreement as the Warrant
Agent may request.
15. Merger or Consolidation or Change of Warrant Agent
Any corporation into which the Warrant Agent may be merged or with
which it may be consolidated, or any corporation resulting from any
merger or consolidation or sale of assets to which the Warrant Agent
shall be a party, shall be the successor to the Warrant Agent hereunder
without the execution or filing of any paper or any further act on the
part of any of the parties hereto, provided that such corporation would
be eligible for appointment as a successor Warrant Agent as provided
herein. In case at the time such successor to the Warrant Agent shall
succeed to the agency created by this Agreement, any of the Warrants
shall have been countersigned but not delivered, any such successor to
the Warrant Agent may adopt the countersignature of the original
Warrant Agent and deliver such Warrants so countersigned; and in case
at that time any of the Warrants shall not have been countersigned, any
successor to the Warrant Agent may countersign such Warrants either in
the name of the predecessor Warrant Agent or in the name of the
successor Warrant Agent; and in all such cases Warrants shall have the
full force provided in the Warrants and in this Agreement.
In case at any time the name of the Warrant Agent shall be changed and
at such time any of the Warrants shall have been countersigned but not
delivered, the Warrant Agent may adopt the countersignatures under its
prior name and deliver such Warrants so countersigned; and in case at
that time any of the Warrants shall not have been countersigned, the
Warrant Agent
<PAGE>
may countersign such Warrants either in its prior name or in its
changed name; and in all such cases such Warrants shall have the full
force provided in the Warrants and in this Agreement.
16. Concerning the Warrant Agent
By its execution of this Agreement the Warrant Agent agrees to
undertake the duties and obligations set forth herein upon the
following terms and conditions, by all of which the Company, NuOasis
and the Holders, by their acceptance of Warrants, shall be bound:
16.1. Correctness of Statements. The statements contained
herein and in the Warrants shall be taken as statements of the
Company and the Warrant Agent assumes no responsibility for
the correctness of any of the same except such as describe the
Warrant Agent or action taken by it. The Warrant Agent assumes
no responsibility with respect to the distribution of the
Warrants except as herein otherwise provided.
16.2. Breach of Covenants. The Warrant Agent shall not be
responsible for any failure of the Company to comply with the
covenants contained in this Agreement or in the Warrants to be
complied with by the Company.
16.3. Performance of Duties. The Warrant Agent may execute any
of the Rights or powers hereby vested in it or perform any
duty hereunder either itself or by or through its attorneys or
agents (which shall not include its employees).
16.4. Reliance on Counsel. The Warrant Agent may consult at
any time with legal counsel satisfactory to it (who may be
counsel for the Company), and the Warrant Agent shall incur no
liability or responsibility to the Company, NuOasis, or to any
Holder in respect of any action taken, suffered or omitted by
it hereunder in good faith and in accordance with the opinion
or the advice of such counsel.
16.5. Proof of Actions Taken. Whenever in the performance of
its duties under this Agreement the Warrant Agent shall deem
it necessary or desirable that any fact or matter be proved or
established by the Company prior to taking or suffering any
action hereunder, such fact or matter (unless other evidence
in respect thereof be herein specifically prescribed) may be
deemed conclusively to be proved and established by a
certificate signed by the Chairman of the Board, President and
Secretary or Assistant Secretary of the Company and delivered
to the Warrant Agent; and such certificate shall be full
authorization to the Warrant Agent for any action taken or
suffered in good faith by it under the provisions of this
Agreement in reliance upon such certificate.
16.6. Compensation. The Company agrees to pay the Warrant
Agent compensation for all services rendered by the Warrant
Agent in the performance of its duties under this Agreement;
to reimburse the Warrant Agent for all expenses, taxes and
governmental charges and other charges incurred by the Warrant
Agent in the performance of its duties under this Agreement in
accordance with a schedule of fees to be mutually agreed
between the Company and the Warrant Agent concurrently with
the execution hereof. The Company further agrees to indemnify
the Warrant Agent and hold it harmless against any and all
liabilities, including judgments, costs and actual counsel
fees, for anything done or omitted in good faith by the
Warrant Agent in the performance of its duties under this
Agreement except liabilities, including judgments, costs and
fees arising as a result of the Warrant Agent's negligence or
bad faith, to be agreed in writing between the parties
concurrently with the execution of this Agreement.
<PAGE>
16.7. Legal Proceedings. The Warrant Agent shall be under no
obligation to institute any action, suit or legal proceeding
or to take any other action likely to involve expense unless
the Company, NuOasis or one or more Holders shall furnish the
Warrant Agent with reasonable security and indemnity for any
costs and expenses which it may incur, but this provision
shall not affect the power of the Warrant Agent to take such
action as the Warrant Agent may consider proper, whether with
or without any such security or indemnity. All Rights of
action under this Agreement or under any of the Warrants may
be enforced by the Warrant Agent without the possession of any
of the Warrants or the production thereof at any trial or
other proceeding relative thereto, and any such action, suit
or proceeding instituted by the Warrant Agent shall be brought
in its name as Warrant Agent, and any recovery of judgment
shall be for the ratable benefit of the Holders, as their
respective Rights or interests may appear.
16.8. Other Transactions in Securities of Company. The Warrant
Agent and any stockholder, director, officer or employee of
the Warrant Agent may buy, sell or deal in any of the
Warrants, the Common Stock or other securities of the Company,
or hold a beneficial interest in any transaction in which the
Company may be interested, or otherwise act as fully and
freely as though it were not the Warrant Agent under this
Agreement. Nothing herein shall preclude the Warrant Agent
from acting in any other capacity for the Company or for any
other legal entity.
16.9. Liability of Warrant Agent. The Warrant Agent shall act
hereunder solely as agent, and its duties shall be determined
solely by the provisions thereof. The Warrant Agent shall not
be liable for anything which it may do or refrain from doing
in connection with this Agreement except for its own
negligence or bad faith.
16.10. Reliance on Documents. The Warrant Agent will not incur
any liability or responsibility to the Company, NuOasis or to
any Holder for any action taken in reliance on any notice,
resolution, waiver, consent, order, certificate, or other
paper, document or instrument reasonably believed by it to be
genuine and to have been signed, sent or presented by the
proper party or parties.
16.11. Validity of Agreement, etc. The Warrant Agent shall not
be under any responsibility in respect of the validity of this
Agreement or the execution and delivery hereof (except the due
execution hereof by the Warrant Agent) or in respect of the
validity or execution of any Warrant (except its
countersignature thereof) or in respect of the necessity or
the extent of any adjustment to the Exercise Price or the
number of Warrant Shares purchasable under a Warrant; nor
shall the Warrant Agent by any act hereunder be deemed to make
any representation or warranty as to the authorization,
reservation, value or registration under securities laws of
any Warrant Shares (or other stock) to be issued pursuant to
this Agreement or any Warrant, or as to whether any Warrant
Shares(or other stock) will, when issued, be validly issued,
fully paid and non-assessable, or as to the Exercise Price or
the number or amount of Warrant Shares or other securities or
other property issuable upon exercise of any Warrant or the
method employed in making any adjustment to the foregoing.
16.12. Instructions from Company. The Warrant Agent is hereby
authorized and directed to rely upon the resolutions adopted
by the Company concurrently with the execution hereof, and, in
the absence of written instructions signed by a majority of
the Company's Board of Directors from time to time, accept
instructions with respect to the performance of its duties
hereunder from the Chairman of the Board or the President when
countersigned by either the Secretary or Assistant Secretary
of the Company, and to apply to such officers, as the case may
be, for advice or instructions in connection with any conflict
as to its duties. The Warrant Agent shall not be liable for
any action taken or suffered to be taken by it in good faith
in
<PAGE>
accordance with instruction of any such officer or officers or
the attached resolutions, as the case may be.
17. Change of Warrant Agent
The Warrant Agent may resign and be discharged from all further duties
and liabilities under this Agreement (except liabilities arising as a
result of the Warrant Agent's own negligence or bad faith) by giving to
the Company thirty days prior notice in writing. The Warrant Agent may
be removed by like notice to the Warrant Agent from the Company. If the
Warrant Agent shall resign or be removed or shall otherwise become
incapable of acting, the Company shall appoint a successor to the
Warrant Agent. If the Company shall fail to make such appointment
within a period of thirty days after such removal or after it has been
notified in writing of such resignation or incapacity by the resigning
or incapacitated Warrant Agent or by any Holder (who shall with such
notice submit his Warrant for inspection by the Company), then any
Holder may apply to any court of competent jurisdiction for the
appointment of a successor to the Warrant Agent. Any successor warrant
agent, whether appointed by the Company or such a court, shall be a
bank or trust company, in good standing, incorporated under the laws of
the United States of America or any state thereof and having at the
time of its appointment as warrant agent a combined capital and surplus
of at least $50,000,000, or a stock transfer company. After acceptance
in writing of such appointment is received by the Company, the
successor warrant agent shall be vested with the same powers, Rights,
duties and responsibilities as if it had been originally named as
Warrant Agent without further act or deed; but the former Warrant Agent
shall deliver and transfer to the successor warrant agent any property
at the time held by it hereunder, and legally and validly execute and
deliver any further assurance, conveyance, act or deed necessary for
that purpose. Failure to file any notice provided for in this
Agreement, however, or any defect therein, shall not affect the
legality or validity of the resignation or removal of the Warrant Agent
or the appointment of the successor warrant agent, as the case may be.
In the event of such resignation or removal, the successor warrant
agent shall mail by first class mail, postage prepaid, to each Holder,
written notice of such resignation or removal and the name and address
of such successor warrant agent.
18. Identity of Transfer Agent
Forthwith upon the appointment of any transfer agent other than the
Company's Transfer Agent on the date hereof, subsequent to the date
hereof, the Company will promptly notify the Warrant Agent in writing
setting forth the name and address of such subsequent transfer agent.
19. Notices
Any notice pursuant to this Agreement, to the Warrant Agent, to the
Company or NuOasis by the parties hereto or by any Holder, shall be in
writing and shall be mailed first class, postage prepaid, or delivered
concurrently (a) to the Company at its offices at 915 North Wells,
Wendover, Nevada 89803, to the attention of the President, with copies
to Law Offices of Richard O. Weed, Archer & Weed, 4695 MacArthur Court,
Suite 530, Newport Beach, California 92660; (b) to NuOasis, 43
Elizabeth Avenue, Box N-8680, Nassau, Bahamas, with copy to NuOasis
Resorts Inc., 4001 So. Decatur Blvd, Las Vegas, Nevada 89103; and, (c)
to the Warrant Agent as its address appears below. Each party hereto
may from time to time change the address to which notices to it are to
be delivered or mailed hereunder by notice in writing to the other
party.
Any notice mailed pursuant to this Agreement shall be in writing and
shall be mailed first class, postage prepaid, or delivered to the
Company, the Warrant Agent, NuOasis or such Holders, as the case may
be, at their respective addresses in accordance to the records of the
Warrant Agent.
<PAGE>
20. Supplements and Amendments
The Company and the Warrant Agent may from time to time supplement or
amend this Agreement, in order to cure any ambiguity or to correct or
supplement any provision contained herein which may be defective or
inconsistent with any other provision herein, or to make any other
provisions in regard to matters or questions arising hereunder which
the Company and the Warrant Agent may deem necessary or desirable, and
which shall not be inconsistent with the provisions of the Warrants and
which shall not adversely affect the interests of NuOasis or the
Holders; provided, however, that this Agreement shall not otherwise be
supplemented or amended in any respect except with the consent in
writing of NuOasis or the Holders of Warrants at the time of such
proposed amendment, representing not less than 50% of the Warrants then
outstanding; and provided further that no change in the number or
nature of the securities purchasable upon the exercise of any Warrant,
or the Exercise Price therefor shall be made without the consent in
writing of NuOasis or the Holder of the certificate representing such
Warrant, other than changes as are specifically prescribed by this
Agreement as originally executed.
21. Successors
All the covenants and provisions of this Agreement by or for the
benefit of the Company, NuOasis, or the Warrant Agent shall bind and
inure to the benefit of their respective successors and assigns.
22. Applicable Law
This Agreement and each Warrant issued hereunder shall be governed by
and construed in accordance with the laws of the State of Nevada,
without giving effect to any principles of conflicts of law.
23. Benefits of this Agreement
Nothing in this Agreement shall be construed to give any person or
corporation other than the Warrant Agent, the Company, Resorts, NuOasis
and the Holders of the Warrants from time to time, any legal or
equitable right, remedy or claim under this Agreement; this Agreement
shall be for the sole and exclusive benefit of the Company, the Warrant
Agent and the Holders of the Warrants.
24. Counterparts
This Agreement may be executed in any number of counterparts, and each
of such counterparts shall for all purposes be deemed to be an
original, and all such counterparts shall together constitute but one
and the same instrument.
25. Captions
The captions of the paragraphs and subsections of this Agreement have
been inserted for convenience only and shall have no substantive
effect.
<PAGE>
26. Termination
This Agreement shall terminate at the close of business at 5:00 p.m.,
Pacific Daylight Savings Time, September 30, 2003, or such earlier date
upon which all Warrants have been exercised (the "Expiration Date")
except as to Warrants exercised and postmarked prior to the Expiration
Date but received by the Warrant Agent with the appropriate Exercise
Price after the termination hereof.
The "Company"
Flexweight Corporation,
a Kansas corporation
By: /s/ Fred G. Luke
Name: Fred G. Luke
Title: President
"NuOasis"
NuOasis International Inc.
a corporation organized under the Commonwealth
of the Bahamas
By: /s/ Theodora Savas
Name: Theodora Savas
Title: Assistant Secretary
The "Warrant Agent"
By: Rick Weed
Name:
Title:
Address: 4695 MacArthur Court, Suite 530
Newport Beach, CA 92660
EXHIBIT 10.8
ASSET PURCHASE AGREEMENT
ASSET PURCHASE AGREEMENT, ("Agreement") dated this 30th day of September 1998,
among Flexweight Corporation, a Kansas corporation ("Flexweight") and NuOasis
International Inc., a corporation organized under the laws of The Commonwealth
of the Bahamas ("NuOasis").
WHEREAS, Flexweight desires to acquire the assets of NuOasis consisting of not
less than 75% of the capital stock of Cleopatra Palace Resorts and Casinos
Limited, a U.K. corporation ("CPR") and not less than 80% of the total issued
and outstanding capital stock of NuOasis Resorts & Casinos N.V., a Netherlands
Antilles corporation in organization ("NAC") for a purchase price of Two Hundred
Twenty Million Dollars $220,000,000 (the "Purchase Price);
WHEREAS, NuOasis desires to sell the NuOasis Assets (as defined below) to
Flexweight for the Purchase Price; and
WHEREAS, Flexweight is a SEC reporting company whose shares of common stock are
traded on the NASDAQ OTC Bulletin Board.
NOW, THEREFORE, in consideration of the mutual covenants and agreements set
forth in this Agreement, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
ARTICLE I
DEFINITIONS
Definitions. (a) As used in this Agreement, the following defined terms shall
have the meanings indicated below:
"Actions or Proceedings" means any action, suit, proceeding, arbitration or
Governmental or Regulatory Authority investigation or audit.
"Affiliate" means, as applied to any Person, (i) any other Person directly or
indirectly controlling, controlled by or under common control with, that Person,
(ii) any other Person that owns or controls five percent (5%) or more of any
class of equity securities (including any equity securities issuable upon the
exercise of any Option) of that Person or any of its Affiliates, or (iii) any
member, director, partner, officer, agent, employee or relative of such Person.
For the purposes of this definition, "control" (including with correlative
meanings, the terms "controlling", "controlled by", and "under common control
with") as applied to any Person, means the possession, directly or indirectly,
of the power to direct or cause the direction of the management and policies of
that Person, whether through ownership of voting securities or by contract or
otherwise.
"Agreement" means this Asset Purchase Agreement, the Exhibits and the Disclosure
Schedule and the certificates delivered in connection herewith, as the same may
be amended, modified or restated from time to time in accordance with the terms
hereof.
<PAGE>
"Assets and Properties" of any Person means all assets and properties of every
kind, nature, character and description (whether real, personal or mixed,
whether tangible or intangible, whether absolute, accrued, contingent, fixed or
otherwise and wherever situated), including the goodwill related thereto,
operated, owned or leased by such Person, including, without limitation, cash,
cash equivalents, accounts and notes receivable, chattel paper, documents,
instruments, general intangibles, real estate, equipment, inventory, goods and
Intellectual Property.
"Audited Financial Statements" has the meaning ascribed to it in Section 3.8.
"Books and Records" means all files, documents, instruments, papers, books and
records relating to the Business, NuOasis or the Subsidiaries, including without
limitation financial statements, Tax Returns and related work papers and letters
from accountants, budgets, pricing guidelines, ledgers, journals, deeds, title
policies, minute books, stock certificates and books, stock transfer ledgers,
Contracts, Permits, customer lists, computer files and programs, retrieval
programs, operating data and plans and environmental studies and plans.
"Business Combination" means with respect to any Person any (i) merger,
consolidation or combination to which such Person is a party, (ii) any sale,
issuance dividend, split or other disposition of any capital stock or other
equity interests (or any security or loan convertible into or exchangeable for
such capital stock or other equity interests) of such Person, (iii) any tender
offer (including without limitation a self-tender), exchange offer,
recapitalization, liquidation, dissolution or similar transaction, (iv) any
sale, dividend or other disposition of all or a material portion of the Assets
and Properties of such Person or (v) the entering into of any agreement or
understanding, or the granting of any rights or options, with respect to any of
the foregoing.
"Business Day" means a day other than Saturday, Sunday or any day on which banks
located in the State of Nevada are authorized or obligated to close.
"Business and/or Condition of NuOasis" means the Business, condition (financial
or otherwise), results of operations, Assets and Properties of NuOasis and the
Subsidiaries taken as a whole.
"Closing Date" means September 30, 1998, or such earlier date as the parties
hereto may mutually agree.
"Code" means the Internal Revenue Code of 1986, as amended, and the rules and
regulations promulgated thereunder.
"Contract" means any agreement, lease, license, evidence of Indebtedness,
mortgage, indenture, security agreement or other contract or other commitment
(whether written or oral).
"NuOasis Assets" means, collectively, the 75% equity ownership of CPR,consisting
of not less than 18,750,000 shares of CPR capital stock (the "CPR shares") and
80.0% equity ownership of NRC, consisting of not less than 4,000,000 shares of
NRC capital stock (the "NRC Shares")
"Disclosure Schedule" means the schedules delivered to Flexweight by or on
behalf of NuOasis, containing all lists, descriptions, exceptions and other
information and materials as are required to be included therein by NuOasis
pursuant to Article 3 of this Agreement.
"Exchange Act" means the Securities Exchange Act of 1934, as amended, and the
rules and regulations of the SEC thereunder.
"GAAP" means United States generally accepted accounting principles,
consistently applied throughout the specified period and in all prior comparable
periods.
<PAGE>
"Governmental or Regulatory Authority" means any court, tribunal, authority,
agency, commission, official or other instrumentality of the United States, any
foreign country or any domestic or foreign state, county, city or other
political subdivision, any arbitrator, tribunal or panel of arbitrators and,
shall include, without limitation, any stock exchange, quotation service and the
National Association of Securities Dealers.
"Indebtedness" means, as to any Person: (i) all obligations, whether or not
contingent, of such Person for borrowed money (including, without limitation,
reimbursement and all other obligations with respect to surety bonds, letters of
credit and bankers' acceptances, whether or not matured), (ii) all obligations
of such Person evidenced by notes, bonds, debentures or similar instruments,
(iii) all obligations of such Person representing the balance of deferred
purchase price of property or services, except trade accounts payable and
accrued commercial or trade liabilities arising in the ordinary course of
business, (iv) all interest rate and currency swaps, caps, collars and similar
agreements or hedging devices under which payments are obligated to be made by
such Person, whether periodically or upon the happening of a contingency, (v)
all indebtedness created or arising under any conditional sale or other title
retention agreement with respect to property acquired by such Person (even
though the rights and remedies of the seller or lender under such agreement in
the event of default are limited to repossession or sale of such property), (vi)
all obligations of such Person under leases which have been or should be, in
accordance with GAAP, recorded as capital leases, (vii) all indebtedness secured
by any Lien (other than Liens in favor of lessors under leases other than leases
included in clause (vii)) on any property or asset owned or held by that Person
regardless of whether the indebtedness secured thereby shall have been assumed
by that Person or is non-recourse to the credit of that Person, and (viii) all
Indebtedness of any other Person referred to in clauses (i) through (vii) above,
guaranteed, directly or indirectly, by that Person.
"Intellectual Property" means all patents and patent rights, trademarks and
trademark rights, trade names and trade name rights, service marks and service
mark rights, service names and service name rights, brand names, inventions,
processes, formulae, copyrights and copyright rights, trade dress, business and
product names, logos, slogans, trade secrets, industrial models, processes,
designs, methodologies, computer programs (including all source codes) and
related documentation, technical information, manufacturing, engineering and
technical drawings, know-how and all pending applications for and registrations
of patents, trademarks, service marks and copyrights.
"IRS" means the United States Internal Revenue Service.
"Laws" means all laws, statutes, rules, regulations, ordinances and other
pronouncements having the effect of law of the United States, any foreign
country or any domestic or foreign state, county, city or other political
subdivision or of any Governmental or Regulatory Authority.
"Liabilities" means all Indebtedness, obligations and other liabilities of a
Person (whether absolute, accrued, contingent, known or unknown, fixed or
otherwise, or whether due or to become due).
"Liens" means any mortgage, pledge, assessment, security interest, lease, lien,
adverse claim, levy, charge or other encumbrance of any kind, or any conditional
sale Contract, title retention Contract or Contract committing to grant any of
the foregoing.
"Loss" means any and all damages, fines, fees, penalties, deficiencies, losses
and expenses, including, without limitation, interest, reasonable expenses of
investigation, court costs, reasonable fees and expenses of attorneys,
accountants and other experts or other expenses of litigation or other
proceedings or of any claim, default or assessment (such fees and expenses to
include without limitation, all fees and expenses, including, without
limitation, fees and expenses of attorneys, incurred in connection with (i) the
investigation or defense of any third party claims or (ii) asserting or
disputing any rights under this Agreement against any party hereto or
otherwise).
<PAGE>
"Option" with respect to any Person means any security, right, subscription,
warrant, option, "phantom" stock right or other Contract that gives the right to
(i) purchase or otherwise receive or be issued any shares of capital stock or
other equity interests of such Person or any security of any kind convertible
into or exchangeable or exercisable for any shares of capital stock or other
equity interest of such Person or (ii) receive any benefits or rights similar to
any rights enjoyed by or accruing to the holder of shares of capital stock or
other equity interest of such Person, including, without limitation, any rights
to participate in the equity, income or election of directors, management
committee members or officers of such Person.
"Order" means any writ, judgment, decree, injunction or similar order of any
Governmental or Regulatory Authority (in each such case whether preliminary or
final).
"Permits" means all licenses, permits, certificates of authority,
authorizations, approvals, registrations, franchises and similar consents
granted or issued by any Governmental or Regulatory Authority.
"Permitted Lien" means (i) any Lien for Taxes, governmental, charges or levies
not yet due or delinquent or being contested in good faith by appropriate
proceedings for which adequate reserves have been established in accordance with
GAAP, (ii) the Liens set forth in any Disclosure Schedule, (iii) any minor
imperfection of title, easements, rights of way or similar Lien as normally
exist with respect to property similar in character to the property affected
thereby and which individually or in the aggregate with other such Liens does
not impair the value or marketability of the property subject to such Lien or
interfere with the use of such property in the conduct of the business of the
Company or any Subsidiary and which do not secure obligations for money borrowed
and (iv) Liens imposed by any law, such as mechanic's, materialman's,
landlord's, warehouseman's and carrier's Liens, securing obligations incurred in
the ordinary course of business which are not yet overdue or which are being
diligently contested in good faith by appropriate proceedings and, with respect
to such obligations which are being contested, for which the Company has set
aside adequate reserves.
"Person" means any individual, corporation, joint stock corporation, limited
liability company or partnership, general partnership, limited partnership,
proprietorship, joint venture, other business organization, trust, union,
association or Governmental or Regulatory Authority.
"Projections" means the projections for the NuOasis assets, results of
operations, assets, liabilities, cash flow and other information supplied by
NuOasis.
"Purchase Price" has the meaning ascribed to it in Section 2.1.
"Flexweight" has the meaning ascribed to it in the forepart of this Agreement.
"Securities Act" means the Securities Act of 1933, as amended, and the rules and
regulations thereunder.
"Subsidiary" means any Person in which NuOasis, directly or indirectly,
beneficially owns more than fifteen percent (15%) of either the equity interests
in, or the voting control of, such Person.
"Tax" or "Taxes" means all federal, state, local or foreign net or gross income,
gross receipts, net proceeds, sales, use, ad valorem, value added, franchise,
bank shares, withholding, payroll, employment, excise, property, alternative or
add-on minimum, environmental or other taxes, assessments, duties, fees, levies
or other governmental charges of any nature whatever, whether disputed or not,
together with any interest, penalties, additions to tax or additional amounts
with respect thereto.
<PAGE>
"Tax Returns" means any returns, reports or statements (including any
information returns) required to be filed for purposes of a particular Tax.
"Taxing Authority" means any governmental agency, board, bureau, body,
department or authority of any United States Federal, state or local
jurisdiction or any foreign jurisdiction, having or purporting to exercise
jurisdiction with respect to any Tax.
"Transfer Taxes" means sales, use, transfer, real property transfer, recording,
gains, stock transfer and other similar taxes and fees.
"Unaudited Financial Statements" has the meaning ascribed to it in Section 3.8.
(b) Unless the context of this Agreement otherwise requires, (i) words of any
gender include each other gender, (ii) words using the singular or plural number
also include the plural or singular number, respectively, (iii) the terms
"hereof," "herein," "hereby" and derivative or similar words refer to this
entire Agreement, (iv) the terms "Article" or "Section" refer to the specified
Article or Section of this Agreement, and (v) the phrases "ordinary course of
business" and "ordinary course of business consistent with past practice" refer
to the business and practice of NuOasis or a Subsidiary. All accounting terms
used herein and not expressly defined herein shall have the meanings given to
them under GAAP.
(c) When used herein, the phrase "to the knowledge of " any Person, "to the
best knowledge of " any Person or any similar phrase, means (i) with respect to
any Person who is an individual, the actual knowledge of such Person, and (ii)
with respect to any other Person, the actual knowledge of the directors,
officers, members, general partners and other similar Person in a similar
position or having similar powers and duties; and, in the case of each of (i)
and (ii), the knowledge of facts that such individuals should have after
reasonable inquiry.
ARTICLE II
SALE OF PURCHASED INTERESTS; CLOSING
2.1 Purchase and Sale. On the terms and subject to the conditions of this
Agreement,
(a) At the Closing, Flexweight shall purchase from NuOasis, free and clear
of all Liens, all of the NuOasis Assets.
(b) The Purchase Price shall be payable at the Closing as set forth below.
(c) The Purchase Price shall consist of (a) Seven Million (7,000,000)
shares of Flexweight's Common Stock (the "Flexweight Shares"), (b)
Promissory Notes in the aggregate principal amount of One Hundred
Eighty Million Dollars ($180,000,000), and (c) Six Million (6,000,000)
Warrants to Purchase Common Stock ("Warrants") pursuant to which
NuOasis, or the holder of the Warrants, may purchase six (6) shares of
Flexweight Common Stock for each Warrant at a price of six dollars
($6.00) per share.
2.2 Closings. The Closing will take place at the offices of Archer & Weed,
4695 MacArthur Court, Suite 530, Newport Beach, California 92660 on the
Closing Date in accordance with the terms of this Agreement, or at such
other place or time as Flexweight and NuOasis mutually agree. At the
Closing, Flexweight shall pay to NuOasis the Purchase Price pursuant to
Section 2.1. Simultaneously, NuOasis shall deliver to Flexweight one or
more certificates representing the NuOasis Assets together with all
necessary instruments of transfer, in form and substance reasonably
satisfactory to Flexweight. At the Closing, there shall also be
delivered to Flexweight and NuOasis the opinions, certificates and
other Contracts, documents and instruments required to be delivered
under the terms of this Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF NUOASIS
NuOasis represents and warrants to Flexweight that the statements contained in
this Article III are true and correct as of the date of this Agreement, and will
be true and correct as of the Closing Date (as though made then and as though
such Closing Date was substituted for the date of this Agreement throughout this
Article III). NuOasis has delivered a Disclosure Schedule (including exhibits
thereto) to Flexweight setting forth certain information, the disclosure of
which is required or appropriate in relation to any or all of the following
representations and warranties.
3.1 Organization of NuOasis. (a) NuOasis is a corporation duly
incorporated, validly existing and in good standing under the laws of
Kansas. The property and business activity of NuOasis is the ownership
(beneficial and of record), on the Closing Date, of the NuOasis Assets,
that is
(a) NuOasis is duly qualified, licensed or admitted to do business and is
in good standing in those jurisdictions in which the ownership, use or
leasing of its Assets and Properties, or the conduct or nature of its
business, makes such qualification, licensing or admission necessary.
NuOasis agrees, prior to the Closing Date, to deliver to Flexweight
true and complete English language copies of its (i) certificate of
incorporation with all amendments thereto (the "Charter") and (ii)
by-laws, in each case as in effect on the date hereof and the name of
each director and officer and the position held by each of them with
NuOasis.
3.2 Power and Authority. NuOasis has the requisite power and authority to
execute and deliver this Agreement and to perform its obligations
hereunder and to consummate the transactions contemplated hereby. The
execution and delivery by NuOasis of this Agreement, the performance by
NuOasis of the obligations hereunder and the consummation of the
transactions contemplated hereby have been duly and validly authorized
by all necessary corporate action. This Agreement has been duly and
validly executed and delivered by NuOasis and constitutes a legal,
valid and binding obligation of NuOasis enforceable against NuOasis in
accordance with its terms.
3.3 Capitalization. As of the date hereof, and immediately prior to the
consummation of the transactions contemplated hereby and before giving
effect to such transactions, the authorized capital stock of NuOasis
consists of Seventy Five Million (75,000,000) shares of Common Stock,
of which not more than Seven Five Million (75,000,000) shares are
issued and outstanding and Twenty Five Million (25,000,000) shares of
Preferred Stock of which Twenty Four Million (24,000,000) shares are
issued and outstanding as Series A Convertible Preferred Stock (the
"Series A Shares").
As of the date hereof, there are no preemptive or similar rights
to purchase or otherwise acquire shares of the capital stock of NuOasis
pursuant to any provision of law, the Charter or By- laws (in each
case, as amended and in effect on the date hereof), or any agreement to
which NuOasis is a party. All of the outstanding shares of capital
stock of NuOasis have been duly authorized and validly issued, are
fully paid and non-assessable.
3.4 Subsidiaries. Section 3.4 of the Disclosure Schedule lists the name of
each Subsidiary and the ownership interest of NuOasis therein. Each
Subsidiary is a corporation duly organized, validly existing and in
good standing under the Laws of its jurisdiction of incorporation or
organization and has full power and authority to conduct its business
as presently conducted and to own, use and lease its Assets and
Properties. Each Subsidiary is duly qualified, licensed or admitted to
do business and is in good standing in those jurisdictions in which the
ownership, use or leasing of such Subsidiary's Assets and Properties,
or the conduct or nature of its business, makes such qualification,
licensing or
<PAGE>
admission necessary. All of the outstanding shares of capital stock of each
Subsidiary have been duly authorized and validly issued, are fully paid and non
assessable, and, except as set forth in any Disclosure Schedule, are owned,
beneficially and of record, by NuOasis or Subsidiaries wholly owned by the
Company free and clear of all Liens. There are no outstanding Options with
respect to any Subsidiary. NuOasis agrees, prior to the Closing Date, to deliver
to Flexweight true and complete copies of the certificate or articles of
incorporation and by-laws (or other comparable charter documents) of each of the
Subsidiaries. Except for the Subsidiaries, the Company holds no equity,
partnership, limited liability company, joint venture or other interest in any
Person.
3.5 No Conflicts. The execution and delivery by NuOasis this Agreement,
the performance by NuOasis of its obligations hereunder and the
consummation of the transactions contemplated hereby does not and will
not: (a) conflict with or result in a violation or breach of any of the
terms, conditions or provisions of the Charter or the certificate or
articles of incorporation or organization or by-laws (or other
comparable charter documents) of NuOasis, or any Subsidiary; (b)
conflict with or result in a violation or breach of any term or
provision of any Law or Order applicable to NuOasis, or any Subsidiary
or any of their respective Assets and Properties; or (c) (i) conflict
with or result in a violation or breach of, (ii) constitute (with or
without notice or lapse of time or both) a default under, (iii) require
NuOasis, or any Subsidiary to obtain any consent or approval, make any
filing with or give any notice to any Person as a result or under the
terms of, (iv) result in or give to any Person any right of
termination, cancellation, acceleration or modification in or with
respect to, (v) result in or give to any Person any additional rights
or entitlement to increased, additional, accelerated or guaranteed
payments under, (vi) result in the creation of any new additional or
increased liability of the Company or any Subsidiary under or (vii)
result in the creation or imposition of any Lien upon, NuOasis or any
Subsidiary or any of their respective Assets and Properties under, any
Contract or Permit to which NuOasis, or any Subsidiary is a party or by
which any of their respective Assets and Properties are bound.
3.6 Governmental Approvals and Filings. No consent, approval or action of,
filing with or notice to any Governmental or Regulatory Authority on
the part of NuOasis, or any Subsidiary is required in connection with
the execution, delivery and performance of this Agreement, or the
consummation of the transactions contemplated hereby.
3.7 Corporate Formalities; Books and Records.
(a) NuOasis has complied in all material respects with all corporate
formalities required to be complied with under applicable laws.
(b) The minute books and other similar records of NuOasis and each
Subsidiary as made available to Flexweight prior to the Closing Date
under this Agreement contain a true and complete record, in all
material respects, of all action taken at all meetings and by all
written consents in lieu of meetings of directors, members,
stockholders, the management committee or boards of directors,
subcommittees and committees of the boards of directors of NuOasis and
each Subsidiary.
3.8 Financial Statements.
(a) NuOasis has furnished the Flexweight with true and complete copies of
its audited consolidated balance sheets and its Subsidiaries as of June
30, 1998 and 1997 and the related consolidated statements of
operations, statement of changes in stockholder's equity and cash flows
for the years then ended, together with the notes thereto, (the
"NuOasis Financial Statements"), setting forth in each case in
comparative form the corresponding figures for the corresponding dates
and periods of the previous fiscal year, together with reports of
auditors thereon, except as to June 30, 1998 which is presently
unaudited. The June 30, 1998 financial statements and those of CPR and
NRC and their subsidiaries for periods ending prior to June 30, 1998
which are unaudited, if any, fairly present in all material respects
the consolidated financial position of NuOasis and its
<PAGE>
Subsidiaries as of the respective dates thereof, and the results of operations,
changes in stockholder's equity and cash flows for the periods set forth
therein, all in conformity with GAAP. The Unaudited Financial Statements fairly
present in all material respects the consolidated financial position of NuOasis
and its Subsidiaries as of the dates thereof and the results of operations,
changes in stockholder's equity and cash flows of the Company and its
Subsidiaries for the periods set forth therein, all in conformity with GAAP,
except as specifically noted in the notes thereto.
(b) The Projections constitute a reasonable forecast of the NuOasis Assets
and business operations for the periods set forth therein. The
Projections have been prepared based on the estimates and assumptions
set forth therein, which assumptions and estimates are all of the
assumptions and estimates used in formulating such Projections and are
reasonable and fair in light of current conditions and reflect the
reasonable estimate of NuOasis of the results of operations, assets,
liabilities, cash flow and other information projected therein. To the
knowledge of NuOasis, no facts exist which would result in any material
change in any such Projections, save the adjustments set forth above.
3.9 Absence of Changes. Since June 30, 1998 except (a) as set forth in
Section 3.9 of the Disclosure Schedule or (b) the transactions
contemplated by this Agreement, there has not been any event or
development which, individually or together with other such events,
could reasonably be expected to have a material adverse effect on the
NuOasis Assets. In addition, without limiting the foregoing, except as
disclosed in Section 3.9 of the Disclosure Schedule and except for the
transactions contemplated by this Agreement since June 30, 1998 neither
NuOasis nor any Subsidiary:
(a) has (i) declared, set aside or paid any dividend or other distribution
in respect of the capital stock of NuOasis or any Subsidiary or (ii)
directly or indirectly redeemed, purchased or otherwise acquired any
such capital stock or other equity interests;
(b) authorized, issued, sold or otherwise disposed of, or granted any
Option with respect to any shares of capital stock or other equity
interests of NuOasis or any Subsidiary, or modified or amended any
right of any holder of any outstanding shares of capital stock or other
equity interests of NuOasis or any Subsidiary or Option with respect
thereto;
(c) (i) increased salary, wages or other compensation (including, without
limitation, any bonuses, commissions and any other payments) of any
officer, employee or consultant of NuOasis or any Subsidiary whose
annual salary, wages and such other compensation is, or after giving
effect to such change would be, in the aggregate, $100,000 or more per
annum; (ii) established or modified (A) targets, goals, pools or
similar provisions under any benefit plan, employment contract or other
employee compensation arrangement or (B) salary ranges, increase
guidelines or similar provisions in respect of any benefit plan,
employment Contract or other employee compensation arrangement; or
(iii) adopted, entered into, amended, modified or terminated (in whole
or in part) any benefit plan;
(d) (i) incurred any Indebtedness, (ii) made or agreed to make any loans to
any Person or (iii) made or agreed to make any voluntary purchase,
cancellation, prepayment or complete or partial discharge in advance of
a scheduled payment date with respect to, or waiver of any right of
NuOasis or any Subsidiary under, any Indebtedness of or owing to
NuOasis or any Subsidiary;
(e) suffered any physical damage, destruction or other casualty loss
(whether or not covered by insurance) adversely affecting any of the
real or personal property or equipment of the material Assets and
Properties of NuOasis or any Subsidiary;
(f) failed to pay or satisfy when due any obligation of NuOasis or any
Subsidiary, except when the failure would not have a material adverse
effect on the Business or Condition of NuOasis or its Subsidiaries;
<PAGE>
(g) acquired any business or Assets and Properties of any Person (whether
by merger, consolidation or otherwise) or disposed or leased, or
incurred a Lien (other than a Permitted Lien) on, any Assets and
Properties of NuOasis or any Subsidiary, in each case, other than
acquisitions or dispositions of products in the ordinary course of
business of NuOasis or such Subsidiary consistent with past practice;
(h) entered into, amended, modified, terminated (in whole or in part) or
granted a waiver under or given any consent with respect to any
Intellectual Property;
(i) commenced, terminated or changed any line of the Business;
(j) entered into any transaction with any stockholder or Affiliate of
NuOasis or any Subsidiary, other than pursuant to any Contract in
effect on the Audited Financial Statement Date;
(k) made any change in the accounting methods or procedures of NuOasis or
any Subsidiary or became subject to any conditions or event which has
or could reasonably be expected to have a material adverse effect on
the Business or Condition of NuOasis; or
(l) entered into any agreement to do any of the things described in the
preceding paragraphs, including, without limitation, with respect to
any Business Combination not otherwise restricted by the preceding
paragraphs.
3.10 No Undisclosed Liabilities. At Closing, NuOasis will have no
Liabilities of, relating to or affecting the NuOasis Assets or any
Subsidiary or any of their respective Assets and Properties, except (i)
Liabilities reflected or reserved against in the Audited Financial
Statements, (ii) Liabilities disclosed in Section 3.10 of the
Disclosure Schedule, or (iii) Liabilities incurred in the ordinary
course of business consistent with past practice since the Audited
Financial Statement Date and in accordance with the provisions of this
Agreement.
3.11 Taxes. (a) All Taxes which could constitute a lien on the Assets and
Properties of NuOasis or the Subsidiaries and which were due and
payable by NuOasis or the Subsidiaries with respect to the Closing Date
and all periods beginning and ending prior thereto have been or will be
paid by NuOasis prior to delinquency. All Tax Returns that have been
filed by or with respect to NuOasis or any Subsidiary, or any
affiliated, combined, consolidated, unitary or similar group of which
NuOasis is or was a member with any Taxing Authority correctly and
completely reflects the income, franchise or other Tax liability and
all other information required to be reported thereon. NuOasis and the
Subsidiaries have withheld and paid all Taxes required to have been
withheld and paid in connection with amounts paid or due and payable to
any employee, creditor, independent contractor or other third party.
(b) NuOasis does not expect any Taxing Authority to assess any
additional Taxes against or in respect of it or any Subsidiary for any
past period. There is no dispute or claim concerning any Tax liability
of NuOasis or any Subsidiary either (i) claimed or raised by any Taxing
Authority or (ii) otherwise known to NuOasis, or any Subsidiary.
NuOasis has delivered to Flexweight, with respect to NuOasis and each
Subsidiary, complete and correct copies of all federal, state, local
and foreign income Tax Returns filed by, and all correspondence,
agreements, notices, reports or statements of deficiencies with, from
or to any Taxing Authority, in each case since January 1, 1996.
3.12 Legal Proceedings. (a) (i) Neither NuOasis nor any Subsidiary has
knowledge of any Orders outstanding against NuOasis or any Subsidiary;
and (ii) there are no Actions or Proceedings pending or, to the
knowledge of NuOasis, or any Subsidiary, threatened against, relating
to or affecting NuOasis or any Subsidiary or any of their respective
Assets and Properties. Neither NuOasis nor any Subsidiary is in default
with respect to any Order of any court or Governmental or Regulatory
Authority and there are no unsatisfied judgments against NuOasis, or
any Subsidiary.
<PAGE>
3.13 Compliance With Laws and Orders. NuOasis and the Subsidiaries and the
conduct of the Business are in compliance with all applicable Laws and
Orders, except where the failure to comply would not have a material
adverse effect on the Business or Condition of NuOasis or the NuOasis
Assets. None of NuOasis, or any Subsidiary has any knowledge that it is
not in compliance with any of such Laws or Orders where the failure to
comply would have a material adverse effect on the Business or
Condition of NuOasis or the NuOasis Assets. None of NuOasis, or any
Subsidiary has any reasonable basis to anticipate that any presently
existing circumstances are likely to result in violations of any such
Laws or Orders which would, individually or in the aggregate, have a
material adverse effect on the Business or Condition of NuOasis.
3.14 Permits. Section 3.14 of the Disclosure Schedule contains a true and
complete list of all Permits used in and material to the business or
operations of NuOasis or any Subsidiary, setting forth the owner, the
function and the expiration and renewal date of each. Prior to the
execution of this Agreement, NuOasis has delivered to Flexweight true
and complete copies of all such Permits. Except as disclosed in Section
3.14 of the Disclosure Schedule: (i) NuOasis and each Subsidiary own or
validly hold all Permits that are material to the Business, (ii) each
Permit listed in Section 3.14 of the Disclosure Schedule is valid,
binding and in full force and effect and (iii) neither NuOasis nor any
Subsidiary is, or has received any notice that it is, in default (or
with the giving of notice or lapse of time or both, would be in
default) under any such Permit.
3.15 Affiliate Transactions. (a) Except as disclosed in Section 3.15(a) of
the Disclosure Schedule and except as contemplated by this Agreement,
(i) there are no Liabilities owed to NuOasis or any Subsidiary, on the
one hand, by any current or former equity holder or Affiliate of
NuOasis, on the other hand, (ii) there are no liabilities owed by
NuOasis or any Subsidiary on the one hand, to any such current or
former stockholder or Affiliate of NuOasis or any Affiliate of any such
stockholder or Affiliate, on the other hand, (iii) neither NuOasis, nor
any such current or former stockholder or Affiliate provides or causes
to be provided any Assets and Properties, services or facilities to
NuOasis or any Subsidiary, and (iv) neither NuOasis nor any Subsidiary
provides or causes to be provided any assets, services or facilities to
any such current or former stockholder or Affiliate.
(b) Except as disclosed in Section 3.15(b) of the Disclosure Schedule, each
of the Liabilities and transactions listed in Section 3.15(a) of the
Disclosure Schedule was incurred or engaged in, as the case may be, on
an arm's-length basis on competitive terms.
3.16 Business Relationships. Since June 30, 1998, no business relationship
of NuOasis or any Subsidiary with any customer, supplier or any group
of customers or suppliers whose purchases or sales, as the case may be,
are individually or in the aggregate material to the Business or
Condition of NuOasis has been, or to the knowledge of NuOasis, or any
Subsidiary, has been threatened to be, terminated, canceled, limited or
changed or modified adversely, and, to the knowledge of NuOasis, or any
Subsidiary, there exists no present condition or state of facts or
circumstances with respect to such business relationship that would
materially adversely affect the Business or Condition of NuOasis, or
prevent NuOasis from conducting the Business after the consummation of
the transactions contemplated by this Agreement, in substantially the
same manner in which it has heretofore been conducted.
3.17 Other Negotiations; Brokers. Except as set forth in Section 3.17 of the
Disclosure Schedule, neither NuOasis, nor any of their respective
Affiliates (nor any investment banker, financial advisor, attorney,
accountant or other Person retained by or acting for or on behalf of
NuOasis, any Subsidiary, or any such Affiliate) (i) has entered into
any agreement that conflicts with any of the transactions contemplated
by this Agreement or (ii) has entered into any agreement or had any
discussions with any third party regarding any transaction involving
the Company or any Subsidiary which could result in Flexweight or its
members, officers, director, employee, agent or Affiliate of any of
them being subject to any claim for liability to said third party as a
result of entering into this Agreement or consummating the transactions
contemplated hereby or thereby.
<PAGE>
3.18 Disclosure. This Agreement does not, and the documents and
certificates executed by NuOasis or otherwise furnished by NuOasis to
Flexweight do not contain any untrue statement of a material fact or
omit to state a material fact necessary in order to make the statements
contained herein or therein, in light of the circumstances under which
they were made, not misleading.
4. Representations and Warranties of Flexweight
Flexweight represents and warrants to NuOasis that:
4.1 Organization and Authority. Flexweight is a corporation duly incorporated,
validly existing and in good standing under the laws of the State of Kansas,
with the corporate power and authority to carry on its business as now being
conducted. The execution and delivery of this Agreement and the consummation of
the transactions contemplated in this Agreement have been, or will be prior to
closing, duly authorized by all requisite corporate actions on the part of
Flexweight. This Agreement has been duly executed and delivered by Flexweight
and constitutes the valid, binding, and enforceable obligation of Flexweight.
4.2 Ability to Carry Out Agreement. To the best of Flexweight's knowledge and
belief, the execution and performance of this Agreement will not violate, or
result in a breach of, or constitute a default in, any provisions of applicable
law, any agreement, instrument, judgment, order or decree to which Flexweight is
a party or to which Flexweight is subject. No consents of any persons under any
contract or agreement required to be disclosed pursuant to this Agreement are
required for the execution, delivery, and performance by Flexweight of this
Agreement.
4.3 The Shares. The Shares to be issued pursuant to this Agreement will be
issued at Closing, free and clear of liens, claims, and encumbrances, and
Flexweight has all necessary right and power to issue the Shares to NuOasis as
provided in this Agreement without the consent or approval of any person, firm,
corporation, or governmental authority.
4.4 Capitalization of Flexweight. The capitalization of Flexweight is, as of the
date hereof, comprised of forty million (40,000,000) shares of authorized no par
value common stock of which, as of the Closing Date, not more than Seven Million
Five Hundred Thousand (7,500,000) shares will be issued and outstanding. All
issued and outstanding shares are legally issued, fully paid, and
non-assessable, and are not issued in violation of the preemptive or other right
of any person. In addition to the shares outstanding, there will be, as of the
Closing Date, certain outstanding options and warrants to purchase shares of
Flexweight's common stock as follows: (i) stock options with an exercise price
of $6.00 per share covering 300,000 shares; [(ii) stock options with an exercise
price of $3.00 per share covering 400,000 shares; (iii) stock options with an
exercise price of $5.00 per share covering 20,000 shares; (iv) Class A Warrants
granting the holder the right to buy up to 1,000,000 shares of Flexweight Common
Stock at $6.00 per share; (v) Class B Warrants granting the holder the right to
buy up to 2,000,000 shares of Flexweight Common Stock at $7.00 per share; (vi)
and Class C Warrants granting the holder the right to buy up to 1,000,000 shares
of Flexweight Common Stock at $8.00 per share.
4.5 Financial Information. Flexweight has provided to NuOasis, or will provide
prior to Closing, copies of its Annual Report on Form 10-K and/or 10-KSB for the
two (2) years ending at or prior to August 30, 1997 and the interim quarterly
financial statement on Form 10-QSB for the quarters ended November 30, 1997,
February 28, 1998 and May 31, 1998. The quarterly financial statements and such
Annual Reports, and all other information included in such reports, shall be
referred to as the "Flexweight's Financials." Flexweight has no obligations or
liabilities (whether accrued, absolute, contingent, liquidated or otherwise,
including without limitation any tax liabilities due or to become due) which are
not fully disclosed and adequately provided for in Flexweight Financials,
excepting current liabilities incurred and obligations under agreements entered
<PAGE>
into in the usual and ordinary course of business since the date of Flexweight
Financials, none of which (individually or in the aggregate) are material except
as expressly indicated in Flexweight Financials. Flexweight is not a guarantor
or otherwise contingently liable for any material amount of such indebtedness.
Except as indicated in Flexweight Financials or Flexweight Disclosure Documents,
there exists no default under the provisions of any instrument evidencing such
indebtedness or of any agreement relating thereto.
4.6 Litigation. To the best knowledge and belief of Flexweight, except as
disclosed pursuant to this Agreement, there is neither pending nor threatened,
any action, suit or arbitration to which its property, assets or business is or
is likely to be subject and in which an unfavorable outcome, ruling or finding
will or is likely to have a material adverse effect on the condition, financial
or otherwise, or properties, assets, business or operations, which would create
a material liability on the part of Flexweight, or which would conflict with
this Agreement or any action taken or to be taken in connection with it.
4.7 Tax Matters. Flexweight has filed or will file 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 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.
4.8 Contracts. Except as disclosed pursuant to this Agreement, there are no
contracts, actual or contingent obligations, agreements, franchises, license
agreements, or other commitments between Flexweight and other third parties
which are material to the business, financial condition, or results of operation
of Flexweight, taken as a whole. For purposes of the preceding sentence, the
term "material" refers to any obligation or liability which by its terms calls
for aggregate payments of more than $25,000.
The following material contracts will be valid and binding obligations of
Flexweight with third parties ("Approved Agreements") as of the Closing Date:
4.8.1 Advisory Agreement with NuVen Advisors Inc.
4.8.2 Agreement with OTC Communications for Investor Relations
4.8.3 Class A Warrant Agreement
4.8.4 Class B Warrant Agreement
4.8.5 Class C Warrant Agreement
4.8.6 Stock Option Agreement with NuVen Advisors Inc.
4.8.7 Stock Option Agreement with Richard Surber
4.8.8 Stock Option Agreement with NuOasis International Inc.
4.8.9 Stock Option and Warrant Plan
4.9 Material Contract Breaches; Defaults. To the best of Flexweight's knowledge
and belief, except as disclosed in Flexweight Financials, it has not materially
breached, nor has it any knowledge of any pending or threatened claims or any
legal basis for a claim that it has materially breached, any of the terms or
conditions of any agreements, contracts, or commitments to which it is a party
or is bound and which might give rise to a claim by anyone against Flexweight.
To the best of its knowledge and belief, Flexweight is not in default in any
material respect under the terms of any outstanding contract, agreement, lease,
<PAGE>
or other commitment which might give rise to a claim against Flexweight, and
there is no event of default or other event which, with notice or lapse of time
or both, would constitute a default in any material respect under any such
contract, agreement, lease, or other commitment which might give rise to a claim
against Flexweight in respect of which Flexweight has not taken adequate steps
to prevent such a default from occurring.
4.10 Securities Laws. Flexweight is a public company and represents that, except
as disclosed in Flexweight Disclosure Documents and in Flexweight's Financials,
it has no existing or threatened liabilities, claims, lawsuits, or basis for the
same with respect to its original stock issuance to its founders, its initial
public offering, any other issuance of stock, or any dealings with its
stockholders, the public, the brokerage community, the SEC, any state regulatory
agencies, or other persons. Flexweight is required to file periodic reports
under Section 12(g) of the '34 Act. Flexweight represents that all reports
required to be filed pursuant to the '34 Act and any applicable U.S. state "Blue
Sky" laws have been filed.
4.11 Brokers. Flexweight has not agreed to pay any brokerage fees, finder's
fees, or other fees or commissions with respect to the transactions contemplated
in this Agreement which could give rise to a claim against the Shares. To the
best of Flexweight's knowledge, except for Hudson Consulting Group Inc. and
NuVen Advisors Inc., no person or entity is entitled, or intends to claim that
it is entitled, to receive any such fees or commissions in connection with such
transactions. Flexweight further agrees to indemnify and hold harmless the other
parties to this Agreement against liability to any other broker claiming to act
on behalf of Flexweight.
4.12 Corporate Records. Copies of all corporate books and records, including,
but not limited to, any other documents and records of Flexweight relating to
the proceeding of its shareholders and directors will be provided to NuOasis
prior to Closing at the request of NuOasis. All such records and documents are
and will be complete, true, and correct.
4.13 Approvals. Except as otherwise provided in this Agreement, 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
Flexweight in connection with the execution, delivery, or performance of this
Agreement.
4.14 Full Disclosure. The information concerning Flexweight, set forth in this
Agreement, and in Flexweight Disclosure Documents, is, to the best of
Flexweight's 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.
4.15 Date of Representations and Warranties. Each of the representations
and warranties of Flexweight set forth in this Agreement is true and correct at
and as of the Closing Date, with the same force and effect as though made at and
as of the Closing Date, except for changes permitted or contemplated by this
Agreement. Without limiting the generality of the foregoing, Company represents
and warrants that as of the Closing Date, its payables will be $20,000 or less.
5. Conditions Precedent to Obligations of NuOasis
All obligations of NuOasis under this Agreement are subject to the fulfillment,
prior to or as of the Closing Date, of each of the following conditions:
5.1 Representations and Warranties. The representations and warranties by
Flexweight set forth in this Agreement shall be true and correct at and as of
the Closing Date, with the same force and effect as though made at and as of the
Closing Date, except for changes permitted or contemplated by this
<PAGE>
Agreement. Flexweight shall deliver on the Closing Date a certificate to this
effect, referred to as Flexweight Certificate of Representations and Warranties.
5.2 No Breach or Default. Flexweight shall have performed and complied with all
covenants, agreements, and conditions required by this Agreement to be performed
or complied with by it prior to or at the Closing.
5.3 Action to Pay Purchase Price. Flexweight shall have taken all corporate and
other action necessary to issue and deliver the Shares, the Notes and the
Warrants representing the Purchase Price to NuOasis pursuant to this Agreement
at Closing.
5.4 Company Disclosure Documents. Before Closing, Flexweight will have delivered
to NuOasis, or caused the delivery of, Flexweight Disclosure Documents.
5.5 Approval of Other Instruments and Documents by NuOasis. All instruments
and documents delivered to NuOasis pursuant to the provisions of this Agreement
shall be reasonably satisfactory to their legal counsel.
5.6 Opinion of Counsel. Flexweight shall have delivered to NuOasis an opinion of
counsel dated the Closing Date to the effect that:
(A) Flexweight is duly organized, validly existing, and in good standing under
the laws of the United States, State of Kansas.
(B) Flexweight has the corporate power to conduct business and, specifically, to
carry on its business as now being conducted and is duly qualified to do
business in the United States, State of Kansas.
(C) All corporate actions and director approvals have been properly obtained and
completed by Flexweight, to the extent, if any, that they are necessary, for all
actions required under this Agreement prior to Closing.
(D) This Agreement has been duly authorized, executed, and delivered by
Flexweight and is a valid and binding obligation of Flexweight and, in this
regard, Flexweight shall provide NuOasis at Closing with a certified copy of the
resolution or resolutions of the Board of Directors of Flexweight, approving and
authorizing the issuance by Flexweight of the Shares upon the terms and
conditions herein set forth.
6. Conditions Precedent to Obligations of Flexweight
All obligations of Flexweight under this Agreement are subject to the
fulfillment, prior to or as of the Closing Date, of each of the following
conditions:
6.1 Representations and Warranties. The representations and warranties executed
by and on behalf NuOasis set forth in this Agreement shall be true and correct
at and as of the Closing Date, with the same force and effect as though made at
and as of the Closing Date, except for changes permitted or contemplated by this
Agreement. NuOasis shall cause to be delivered on the Closing Date the
certificate to this effect, referred to in this Agreement as the Certificate of
Representations and Warranties executed by the President and Chief Executive
Officer of NuOasis.
6.2 No Breach or Default. NuOasis shall have performed and complied with all
covenants, agreements, and conditions required by this Agreement to be performed
or complied with by them prior to or at the Closing.
<PAGE>
6.3 Action to Transfer the NuOasis Assets. NuOasis shall have taken all action
necessary to transfer the NuOasis Assets to Flexweight pursuant to this
Agreement. In this regard, the conveyance(s) of the NuOasis Assets shall contain
such good and sufficient stock powers, and other good and sufficient instruments
of sale, conveyance, transfer, and assignment, in form and substance reasonably
satisfactory to Flexweight's counsel and with all requisite documentary stamps,
if any, affixed, as shall be required or as may be appropriate in order
effectively to vest in Flexweight's good, indefeasible, and marketable title to
the NuOasis Assets free and clear of all liens, mortgages, conditional sales,
and other title retention agreements, pledges, assessments, covenants,
restrictions, reservations, easements, and all other encumbrances of every
nature.
In addition to the conveyance and delivery of the NuOasis Assets, NuOasis shall
have taken all action necessary to deliver all of NuOasis's corporate books and
records, including but not limited to its files, documents, papers, agreements,
formulas, books of account, and records pertaining to its business, and evidence
of compliance with applicable securities laws, if required and requested by
Flexweight's counsel.
6.4 NuOasis Financials. Before Closing, NuOasis will have delivered the Audited
Financial Statements and the Unaudited Financial Statements translated into
English to Flexweight. The NuOasis Disclosure Documents shall specifically
include the information set forth in paragraph 3.8.
6.5 Approval of Other Instruments and Documents by Flexweight. All instruments
and documents delivered to Flexweight pursuant to the provisions of this
Agreement shall be reasonably satisfactory to Flexweight and its legal counsel.
6.6 Opinions, Affidavits and Declarations of NuOasis. NuOasis shall have
delivered to Flexweight an opinion of qualified legal counsel reasonably
satisfactory to Flexweight, and its counsel and auditors, dated as at the
Closing Date, that:
(A) NuOasis is duly organized, validly existing, and in good standing under the
laws of the Commonwealth of the Bahamas and that the NuOasis Assets are free and
clear of any and all liens, encumbrances or contingent liabilities except as
disclosed pursuant to this Agreement.
(B) NuOasis has the corporate power to carry on its business as now being
conducted and is duly qualified to do business in any other jurisdiction where
required or where the non-qualification to do business would have a material
adverse affect on the value of its business.
(C) All action and approvals required in connection to the transfer of the
NuOasis Assets to Flexweight have been properly taken, completed or obtained by
NuOasis, to the extent, if any, that they are necessary.
(D) This Agreement has been duly authorized, executed, and delivered by NuOasis
and is a valid and binding obligation of NuOasis.
7. Covenants and Agreements of NuOasis
Up to and including the Closing Date, NuOasis covenants that:
7.1 Access and Information. After the execution of this Agreement, NuOasis will
permit Flexweight to have reasonable access to all information necessary to
verify the representations and warranties made herein. After the Closing,
NuOasis will continue to permit Flexweight access to such additional
documentation and information as is reasonably necessary to completion of the
transactions contemplated under this Agreement.
<PAGE>
7.2 Conduct of Business as Usual. Up until the Closing Date, NuOasis shall
insure that NuOasis's operations shall be conducted only in the usual and
ordinary course, and that no change will be made to such operations which might
adversely affect the value of the NuOasis Assets to be transferred to
Flexweight.
7.3 Best Efforts. NuOasis shall use its best efforts to fulfill all conditions
of the Closing including the timely solicitation of affirmative consent of all
third parties necessary to effect a Closing under this Agreement.
7.4 Assent to Sale of NuOasis Assets. In the event the sale of the NuOasis
Assets is consummated, then the shareholders of NuOasis agree to such sale and
waive, surrender, and agree not to exercise any rights which such shareholders
might have concerning the sale of the NuOasis Assets.
8. Covenants and Agreements of Flexweight
Up to and including the Closing Date, Flexweight covenants that:
8.1 Change in Flexweight Directors. Flexweight's Board of Directors will consist
of five (5) seats. At Closing, Flexweight agrees that four (4) of the five (5)
seats on Flexweight's Board will be vacant and may be filled by two (2) new
directors to be chosen by NuOasis and two (2) new directors to be chosen by
mutual agreement between Flexweight and NuOasis, with such directors to be
"Independent", as such termis defined in the Listing Requirements for the Nasdaq
National Market System.
8.2 Maintenance of Capital Structure. Up until the Closing Date, or termination
hereof, whichever is the earlier, except as disclosed herein or required under
the terms of this Agreement, no change shall be made in the Articles of
Incorporation or Bylaws of Flexweight, or the authorized capital stock of
Flexweight.
8.3 Avoidance of Distributions. Up until the Closing Date, Flexweight shall not
declare any dividends, make any payments or distributions to its stockholders or
purchase for cash or redeem any of its shares of capital stock.
8.4 Conduct of Business as Usual. Up until the Closing Date, Flexweight shall
conduct its operations only in the usual and ordinary course, and that no change
will be made to such operations which might adversely affect the value of
Flexweight.
8.5 Access and Information. After the execution of this Agreement, Flexweight
will permit NuOasis to have reasonable access to all information necessary to
verify the representations and warranties of Flexweight. After the Closing,
Flexweight will continue to permit NuOasis access to such additional
documentation and information regarding Flexweight as is reasonably necessary to
completion of the transactions contemplated under this Agreement.
8.6 Best Efforts. Flexweight shall use its best efforts to fulfill or obtain the
fulfillment of all conditions of the Closing, including the timely solicitation
of affirmative consent of all third parties necessary to effect a Closing under
this Agreement.
9. Termination
9.1 Termination Without Cause. This Agreement may be terminated at any time
prior to the Closing Date without cost or penalty to either party:
(A) Mutual Consent. By mutual consent of NuOasis and Flexweight.
<PAGE>
(B) Actions or Proceedings. By NuOasis or Flexweight, (unless the action or
proceeding referred to is caused by a breach or default on the part of NuOasis
or Flexweight of any of their representations, warranties, or obligations under
this Agreement), if there shall be any actual or threatened action or proceeding
by or before any court or any other governmental body which shall seek to
restrain, prohibit, or invalidate the transactions contemplated by this
Agreement and which, in the judgment of NuOasis or Flexweight, made in good
faith and based upon the advice of legal counsel, makes it inadvisable to
proceed with the transactions contemplated by this Agreement.
9.2 Termination with Cause
This Agreement may be terminated, with the terminating party to be reimbursed by
the other party of all expenses and costs related to this Agreement, if:
(A) Breach or Noncompliance by NuOasis. NuOasis shall fail to comply in any
material aspect with any of their representations, warranties, or obligations
under this Agreement, or if any of the representations or warranties made by
NuOasis under this Agreement shall be inaccurate in any material respect and is
not cured within ten (10) business days of notice of such breach.
(B) Breach or Noncompliance by Flexweight. Flexweight shall fail to comply in
any material aspect with any of its representations, warranties, or obligations
under this Agreement, or if any of the representations or warranties made by
Flexweight under this Agreement shall be inaccurate in any material respect and
is not cured within ten (10) business days of notice of such breach.
10. Securities Registration; Disclosure
10.1 Private Transaction. NuOasis understand that the Shares issued pursuant to
this Agreement, have not been nor will they be registered under the Securities
Act of 1933 as amended ("'33 Act"), but are issued pursuant to exemptions from
registration including but not limited to Regulation D and Section 4(2) of the
'33 Act, and Flexweight's reliance on such exemptions in issuing the Shares is
predicated in part on the representations of NuOasis set forth herein and in the
Investment Letter attached hereto as Exhibit "A" (the "Investment Letter"), to
be executed by NuOasis and delivered to Flexweight at Closing.
10.2 Access to Information. NuOasis represents that, by virtue of its economic
bargaining power or otherwise, it has had access to or has been furnished with,
prior to or concurrently with Closing, the same kind of information that would
be available in a registration statement under the '33 Act should registration
of the Shares issued pursuant to this Agreement have been necessary, and that
they have had the opportunity to ask questions of and receive answers from
Flexweight's officers and directors, or any party acting on their behalf,
concerning the business of Flexweight and that they have had the opportunity to
obtain any additional information, to the extent that Flexweight possesses such
information or can acquire it without unreasonable expense or effort, necessary
to verify the accuracy of information obtained or furnished by Flexweight.
11. Indemnification
As provided herein, NuOasis and Flexweight shall each indemnify and hold
harmless the other for one (1) year following the date of Closing under this
Agreement against and in respect of any liability, damage, or deficiency, all
actions, suits, proceedings, demands, assessments, judgments, costs and expenses
resulting from any misrepresentations, breach of covenant or warranty, or from
any misrepresentation contained in any certificate furnished hereunder. In this
regard, NuOasis agrees that Flexweight is held harmless from and indemnified
against any loss, damage, or expense resulting from the falsity or breach of any
of the representations, warranties, or agreements of NuOasis contained herein
under which the Shares hereunder are transferred to NuOasis.
<PAGE>
12. Confidential Information
Notwithstanding any termination of this Agreement, Flexweight, NuOasis and their
representatives, agree to hold in confidence any information not generally
available to the public received by them from the other party pursuant to the
terms of this Agreement. If this Agreement is terminated for any reason,
Flexweight, NuOasis and their representatives will continue to hold such
information in confidence and will, to the extent requested by any party,
promptly return to the requesting party all written material and all copies or
abstracts thereof previously furnished.
13. Miscellaneous Provisions
13.1 Survival of Representations and Warranties. All representations,
warranties, and covenants made by any party in this Agreement shall survive the
Closing hereunder and the consummation of the transactions contemplated hereby
for three (3) years from the Closing Date. NuOasis and Flexweight are executing
and carrying out the provisions of this Agreement in reliance on the
representations, warranties, and covenants and agreements contained in this
Agreement or at the Closing of the transactions herein provided for including
any investigation upon which they might have made or any representations,
warranty, agreement, promise, or information, written or oral, made by the other
party or any other person other than as specifically set forth herein.
13.2 Costs and Expenses. Subject to paragraph 9 herein, all costs and expenses
in the proposed sale and transfer described in this Agreement shall be borne by
NuOasis and Flexweight in the following manner:
(A) Attorneys Fees and Costs. Each party has been represented by its own
attorney(s) in this transaction, shall pay the fees of its own attorney(s),
except as may be expressly set forth herein to the contrary.
(B) Costs of Closing. Each party shall bear its reasonable share of all other
Closing costs and expenses arising from this Agreement.
13.3 Further Assurances. At any time and from time to time, after the effective
date, each party will execute such additional instruments and take such action
as may be reasonably requested by the other party to confirm or perfect title to
any property transferred hereunder or otherwise to carry out the intent and
purposes of this Agreement.
13.4 Waiver. Any failure of any party to this Agreement to comply with any of
its obligations, agreements, or conditions hereunder may be waived in writing by
the party to whom such compliance is owed. The failure of any party to this
Agreement to enforce at any time any of the provisions of this Agreement shall
in no way be construed to be a waiver of any such provision or a waiver of the
right of such party thereafter to enforce each and every such provision. No
waiver of any breach of or non-compliance with this Agreement shall be held to
be a waiver of any other or subsequent breach or non-compliance.
13.5 Notices. All notices and other communications hereunder shall either be in
writing and shall be deemed to have been given if delivered in person, sent by
overnight delivery service or sent by facsimile transmission, to the parties
hereto, or their designees, as follows:
To Flexweight: Flexweight Corp.
1946 Plateau Way
Wendover, Nevada 89883
Telephone: (702) 664-3919
Facsimile: (702) 664-2331
<PAGE>
13.6 Headings. The paragraph and subparagraph headings in this Agreement are
inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
13.7 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.
13.8 Governing Law. This Agreement shall be governed by the laws of the United
States, State of Nevada.
13.9 Binding Effect. This Agreement shall be binding upon the parties hereto and
inure to the benefit of the parties, their respective heirs, administrators,
executors, successors, and assigns.
13.10 Entire Agreement. This Agreement contains the entire agreement between the
parties hereto and supersedes any and all prior agreements, arrangements, or
understandings between the parties relating to the subject matter of this
Agreement. No oral understandings, statements, promises, or inducements contrary
to the terms of this Agreement exist. No representations, warranties, covenants,
or conditions, express or implied, other than as set forth herein, have been
made by any party.
13.11 Severability. If any part of this Agreement is deemed to be unenforceable
the balance of the Agreement shall remain in full force and effect.
13.12 Amendment. This Agreement may be amended only by a written instrument
executed by the parties or their respective successors or assigns.
13.13 Facsimile Counterparts. A facsimile, telecopy or other reproduction of
this Agreement may be executed by one or more parties hereto and such executed
copy may be delivered by facsimile of 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 Agreement as well as any facsimile,
telecopy or other reproduction hereof.
13.14 Time is of the Essence. Time is of the essence of this Agreement and of
each and every provision hereof.
IN WITNESS WHEREOF, the parties have executed this Agreement the day and year
first above written.
"Flexweight"
Flexweight Corporation
By: Walter G. Sanders
Name: Walter G. Sanders
Title: President/CEO
"NuOasis"
NuOasis International Inc.
By: /s/ Fred G. Luke
Name: Fred G. Luke
Title: President
EXHIBIT 10.9
OPTION AGREEMENT
THIS OPTION AGREEMENT ("Agreement") is entered into this 1st 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 options to purchase
shares of its $.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
$.10 per share ("Option Price").
2. Term 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 enterprises that directly, or indirectly through one or
more intermediaries, controls, or is controlled by, or is under
common control with the Company.
<PAGE>
3. Reservation of Option Shares
The Company shall at all times keep reserved and available, out of 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 events, 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 a 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
event 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 in case of any sale or conveyance to
another corporation of the property of the Company as an entirety
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.
<PAGE>
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 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 "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.
<PAGE>
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 Corp.
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 no 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 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.
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 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.
<PAGE>
15. 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.
IN WITNESS WHEREOF, the parties have executed this Agreement the day
and year first written above.
"NuOasis"
NuOasis International Inc.
By: /s/ Fred G. Luke
Name: Fred G. Luke
Title: President
Address: 43 Elizabeth Avenue, Box N-8680
Nassau, Bahamas
"Flex"
Flexweight Corp.
By: /s/ Walter G. Sanders
Name: Walter G. Sanders
Title: President
Address: 1946 Plateau Way
Wendover, Nevada 89883
EXHIBIT 10.10
OPTION AGREEMENT
THIS OPTION AGREEMENT ("Agreement") is entered into and effective this
1st day of July 1998, by and between NuVen Advisors Inc., a Nevada corporation
("NuVen"), and Flexweight Corp., a Kansas corporation (the "Company").
WHEREAS, the Company proposes to issue to NuVen options to purchase
shares of its common stock (the "Common Stock") in connection with the Company's
engagement of NuVen pursuant to the Advisory Agreement of even date between the
Company and NuVen, a copy of which is attached hereto as Exhibit "A" and
incorporated by reference herein (the "Advisory Agreement"); and,
WHEREAS, to induce NuVen to execute the Advisory Agreement the Company
hereby grants NuVen an option to purchase 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, NuVen and the Company agree as follows:
1. The Option
The Company hereby grants to NuVen (hereinafter "Holder") an option
(the "Option") to acquire Three Hundred Fifty Thousand (350,000) shares
of the Company's 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 $6.00 per share ("Option
Price").
2. Term 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, 2001.
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
C. Issuance of Option Shares. Upon such notice of exercise and
payment of the Option Price, the Company shall issue and cause to
be delivered within five (5) business days following 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 4 hereof. The Company irrevocably agrees
to reconstitute the Option Shares as provided herein.
<PAGE>
3. Reservation of Option Shares
The Company shall at all times keep reserved and available, out of its
authorized Common Stock, such number of shares of Common Stock as shall
be sufficient to provide for the exercise of the rights represented by
this 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 shares as shall be requisite for such purpose. The Company will
cause a copy of this Agreement to be kept on file with the transfer
agent or its successors.
4. Adjustment 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 events, as follows:
A. Adjustment for Recapitalization. Subject to paragraph 4.B below,
in the event the Company shall (a) subdivide its outstanding
shares of Common Stock, or (b) issue or convert by a
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 measured as a percentage
of the total issued and outstanding shares of the Company's Common
Stock as of the hereof which it would have been entitled to
receive immediately preceding 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.B. below and
shall become effective immediately after the effective date of
such event retroactive to the effective date.
B. Adjustment of the Exercise Price and Number of Option Shares. In
the event of any change in the Company's Common Stock by reason of
a reverse stock split, the number and Option Price of the shares
subject to this Option shall not change or be adjusted.
C. Preservation of Purchase Rights Under Consolidation. Subject to
paragraph 4.B above, in case of any Recapitalization or any other
consolidation of the Company with or merger of the Company into
another corporation, or in case of any sale or conveyance to
another corporation of the property of the Company as an entirety
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.
<PAGE>
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.
5. Failure to Deliver Option Shares Constitutes Breach Under Advisory
Agreement
Failure by the Company, for any reason, to deliver the certificates
representing any shares purchased pursuant to this Option within the
five (5) business day period set forth in paragraph 2 above, or the
placement of a Stop Transfer order by the Company on any Option Shares
once issued, shall constitute a "Breach" under the Advisory Agreement
and, for the purpose of determining the terms of this Agreement, 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
The Option represented by this Agreement may only be assigned or
transferred by NuVen 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, or is controlled by, or is under common control with the
Company otherwise, this Agreement and the rights hereunder shall not be
assigned by either party hereto.
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:
<PAGE>
To NuVen: NuVen Advisors Inc.
6337 So. Highland, Suite 319
Salt Lake City, Utah 84121
Telephone: (801) 277-8755
Telefax: (801) 277-8755
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 Corp.
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
Nevada notwithstanding any conflict-of-law provision to the contrary.
12. 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.
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 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.
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 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.
<PAGE>
15. 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.
IN WITNESS WHEREOF, the parties have executed this Agreement the day
and year first written above.
"NuVen"
NuVen Advisors Inc.
By: /s/ Fred G. Luke
Name: Fred G. Luke
Title: President
Address: 6337 So. Highland, Suite 319
Salt Lake City, Utah 84121
The "Company"
Flexweight Corp.
By: /s/ Walter G. Sanders
Name: Walter G. Sanders
Title: President/CEO
Address: 1946 Plateau Way
Wendover, Nevada 89883
EXHIBIT 10.11
FLEXWEIGHT CORPORATION
1998 STOCK OPTION PLAN
Amended by the Board of Directors to increase number of option or
shares by 1,018,333 September 15, 1998
10. Purpose.
The purpose of this plan (the "Plan") is to secure for Flexweight
Corporation (the "Company") and its shareholders the benefits arising from
capital stock ownership by employees or officers of and consultants or advisors
to, the Company who have contributed to the Company in the past and who are
expected to contribute to the Company's future growth and success. Except where
the context otherwise requires, the term "Company" shall include the parent and
all present and future subsidiaries of the Company as defined in Sections 424(e)
and 424(f) of the Internal Revenue Code of 1986, as amended or replaced from
time to time (the "Code").
11. Type of Stock or Options and Administration.
(a) Types of Stock or Options. The shares of Common Stock issued for
services rendered or the stock options granted pursuant to the Plan shall be
authorized by action of the Board of Directors of the Company (the "Board"), or
a Committee (the "Committee") designated by the Board of Directors. The stock
options are non-statutory options and are not intended to meet the requirements
of Section 422 of the Code.
(b) Administration. The Plan will be administered by the Board, whose
construction and interpretation of the terms and provisions of the Plan shall be
final and conclusive. The Board may, to the full extent permitted by or
consistent with applicable laws or regulations (including, without limitation,
applicable state laws and Rule 16b-3 promulgated under the Securities Exchange
Act of 1934 (the "Exchange Act"), or any successor rule ("Rule 16b- 3")),
delegate any or all of its powers under the Plan to a Committee appointed by the
Board, and if the Committee is so appointed all references to the "Board" in
this Plan shall mean and relate to such Committee. The Board may in its sole
discretion authorize the Company's Common Stock ("Common Stock") and issue
shares upon exercise of such options as provided in the Plan, or the Board may
delegate the power to issue shares or grant options to the Committee. The Board
shall have authority, subject to the express provisions of the Plan, to construe
the respective stock issuance agreements, the option agreements and the Plan, to
prescribe, amend and rescind rules and regulations relating to the Plan, to
determine the terms and provisions of the respective stock issuance agreements
or option agreements, which need not be identical, and to make all other
determinations in the judgment of the Board necessary or desirable for the
administration of the Plan. The Board may correct any defect or supply any
omission or reconcile any inconsistency in the Plan or in any stock issuance
agreement or option agreement in the manner and to the extent it shall deem
expedient to carry the Plan into effect and it shall be the sole and final judge
of such expediency. No director or person acting pursuant to authority delegated
by the Board or the Committee shall be liable for any action or determination
under the Plan made in good faith.
(c) Applicability of Rule 16b-3. Those provisions of the Plan which make
express reference to Rule 16b-3 shall apply only to such persons as are required
to file reports under Section 16(a) of the Exchange Act (a "Reporting Person").
<PAGE>
3. Eligibility.
(a) General. Options may be granted to persons who are, at the time of
issuance or grant, employees or officers of, or consultants or advisors to, the
Company and Common Stock or Options may be issued to consultants to render (in
the case of Options) consulting or advisory services, including Professional
advisory services, to the Company, not involving a capital raising transaction.
(b) Grant of Options to Officers. The selection of an officer (as the
term "officer" is defined for purposes of Rule 16b-3) as a recipient of either
stock or an option, the timing of the stock issuance or the option grant, the
exercise price of the option and the number of shares subject to the issuance or
the option shall be determined either (i) by the Board, or (ii) by two or more
directors having full authority to act in the matter, each of whom shall be a
"disinterested person." For the purposes of the Plan, a director shall be deemed
to be a "disinterested person" only if such person qualifies as a "disinterested
person" within the meaning of Rule 16b-3, as such term is interpreted from time
to time.
(c) Issuance of Stock. Stock may be issued only to eligible persons for
(i) services (as defined in Section 3(a) above) which have been rendered
(including incidental expenses incurred in connection with the rendering of
services) to the Company, or (ii) upon the exercise of previously granted stock
options.
4. Stock Subject to Plan.
Subject to adjustment as provided in Section 14 below, the maximum number
of shares of Common Stock of the Company which may be issued and sold under the
Plan, including shares issuable pursuant to the exercise of stock options, is
2,518,333 shares. If an option granted under the Plan shall expire or terminate
for any reason without having been exercised in full, the unpurchased shares
subject to such option shall again be available for subsequent option grants or
stock issuances under the Plan.
5. Forms of Stock Issuance Agreements and Option Agreements.
As a condition to the issuance of Stock or the grant of an option under the
Plan, each recipient of either stock or an option shall execute either an
employee or advisor compensation agreement or an option agreement in such form
not inconsistent with the Plan as may be approved by the Board. Such agreements
may differ among recipients.
6. Purchase Price.
(a) General. The stock issuance price and the purchase price per share
of stock deliverable upon the exercise of an option shall be determined by the
Board.
(b) Payment of Purchase Price. Options granted under the Plan may
provide for the payment of the exercise price by delivery of cash or a check to
the order of the Company in an amount equal to the exercise price of such
options, or, to the extent provided in the applicable option agreement, (i) by
delivery to the Company of shares of Common Stock of the Company already owned
and held by the optionee for at least twelve months and having a fair market
value equal in amount to the exercise price of the options being exercised, (ii)
by any other means which the Board determines are consistent with the purpose of
the Plan and with applicable laws and regulations (including, without
limitation, the provisions of Rule 16b-3 and Regulation T promulgated by the
Federal Reserve Board), or (iii) by any combination of such methods of payments.
The fair market value of any shares of the Company's Common Stock or other
non-cash consideration which may be delivered upon exercise of any option shall
be determined by the Board.
7. Option Period.
(a) Each option and all rights thereunder shall expire on such date as
shall be set forth in the applicable option agreement, and options shall be
subject to earlier termination as provided in the Plan.
<PAGE>
8. Exercise of Options.
Each option granted under the Plan shall be exercisable either in full or
in installments at such time or times and during such period as shall be set
forth in the agreement evidencing such option subject to the provisions of the
Plan.
9. Nontransferability of Options.
All options granted to Reporting Persons shall not be assignable or
transferable by the person to whom they are granted, either voluntarily or by
operation of law, except by will or the laws of descent and distribution, and,
during the life of the optionee, shall be exercisable only by the optionee;
provided, however, that options may be transferred pursuant to a qualified
domestic relations order (as defined in Rule 16b-3).
10. Effect of Termination of Employment or Other Relationship.
(a) Options. Subject to the provisions of the Plan, the Board shall
determine the period of time during which an optionee or his/her valid assigns
may exercise an option following (i) the termination of the optionee's
employment or other relationship with the Company or (ii) the death or
disability of the optionee, but such period shall in no event be less than three
months. Such periods shall be set forth in the agreement evidencing such option.
(b) Stock. Shares of stock that are issued for services rendered
pursuant to the Plan may not be canceled by the Company, provided that when the
shares are issued, the recipient of the shares shall acknowledge having received
full payment for the services previously rendered and shall waive any right to
additional or different payment by the Company for such services.
11. Additional Provisions.
(a) Additional Option Provisions. The Board may, in its sole discretion,
include additional provisions in option agreements covering options granted
under the Plan, including without limitations, restrictions on transfer,
repurchase rights, commitments to pay cash bonuses, to make, arrange for or
guaranty loans or to transfer other property to optionees upon exercise of
options, or such provisions as shall be determined by the Board; provided that
such additional provisions shall not be inconsistent with any other term or
condition of the Plan.
(b) Acceleration, Extension, Etc. The Board may, in its sole discretion,
(i) accelerate the date or dates on which all or any particular option or
options granted under the Plan may be exercised or (ii) extend the dates during
which all or any particular, option or options granted under the Plan may be
exercised, provided, however, that no such extension shall be permitted if it
would cause the Plan to fail to comply with Rule 16b-3.
12. General Restrictions.
The shares issued pursuant to the Plan and each option shall be subject to
the requirement that if, at any time, counsel to the Company shall determine
that the listing, registration or qualification of the shares, including the
shares subject to such option, upon any securities exchange or under any state
or federal law, or that the consent or approval of any governmental or
regulatory body, or that the disclosure of non-public information or the
satisfaction of any other condition is necessary as a condition of or in
connection with the issuance or purchase of shares thereunder, such shares may
not be issued or such option may not be exercised, in whole or in part unless
such listing, registration, qualification, consent or approval, or satisfaction
of such condition shall have been effected or obtained on conditions acceptable
to the Board.
13. Rights as a Shareholder.
The holder of an option shall have no rights as a shareholder with respect
to any shares covered by the option (including, without limitation, any rights
to receive dividends or non-cash distributions with respect to such shares)
until the date of issue of a stock certificate to him or her for such shares. No
adjustment shall be made for dividends or other rights for which the record date
is prior to the date such stock certificate is issued.
<PAGE>
14. Adjustment Provisions for Recapitalizations and Related Transactions.
(a) General. If, through or as a result of any merger, consolidation,
sale of all or substantially all of the assets of the Company, reorganization,
recapitalization, reclassification, stock dividend, stock split, reverse stock
split or other similar transaction, (i) the outstanding shares of Common Stock
are increased, decreased or exchanged for a different number or kind of shares
or other securities of the Company, or (ii) additional shares or new or
different shares or other securities, as appropriate and proportionate
adjustment may be made in (x) the maximum number and kind of shares reserved for
issuance under the Plan, (y) the number and kind of shares or other securities
subject to any then outstanding options under the Plan, and (z) the price for
each share subject to any then outstanding options under the Plan, without
changing the aggregate purchase price as to which such options remain
exercisable. Notwithstanding the foregoing, no adjustment shall be made pursuant
to this Section 14 if such adjustment would cause the Plan to fail to comply
with rule 16b-3.
(b) Board Authority to Make Adjustments. Any adjustments under this
Section 14 will be made by the Board, whose determination as to what
adjustments, if any, will be made and the extent thereof will be final, binding
and conclusive. No fractional shares will be issued under the Plan on account of
any such adjustments.
15. Merger, Consolidation, Asset Sale, Liquidation, Etc.
(a) General. In the event of a consolidation or merger or sale of all or
substantially all of the assets of the Company in which outstanding shares of
Common Stock are exchanged for securities, cash or other property of any other
corporation or business entity, or in the event of a liquidation of the Company,
the Board, or the board of directors of any corporation assuming the obligations
of the Company, may, in its discretion, take any one or more of the following
actions, as to outstanding options (i) provide that such options shall be
assumed, or equivalent options shall be substituted, by the acquiring or
succeeding corporation (or affiliate thereof), (a) upon written notice to the
optionees, provide that all unexercised options will terminate immediately prior
to the consummation of such transactions unless exercised by the optionee with a
specified period following the date of such notice, (iii) in the event of a
merger; under the terms of which holders of the Common Stock of the Company will
receive upon consummation thereof a cash payment for each share surrendered in
the merger ("Merger Price"), make or provide for a cash payment to the optionees
equal to the difference between (A) the Merger Price times the number of shares
of Common Stock subject to such outstanding options (to the extent then
exercisable at prices not in excess of the Merger Price) and (B) the aggregate
exercise price of all such outstanding options in exchange for the termination
of such options, and (iv) provide that all or any outstanding options shall
become exercisable in full immediately prior to such event.
(b) Substitute Stock or Options. The Company may issue stock or grant
options under the Plan in substitution for stock or options held by employees
of, or consultants or advisors to, another corporation who become employees of
or consultants or advisors to the Company or a subsidiary of the Company, as the
result of a merger or consolidation of the employing corporation with the
Company or a subsidiary of the Company, or as a result of the acquisition by the
Company, or one of its subsidiaries, or property or stock of the employing
corporation. The Company may direct that substitute stock be issued or options
be granted on such terms and conditions as the Board considers appropriate in
the circumstances.
16. No Special Employment Rights.
Nothing contained in the Plan or in any stock issuance or option shall
confer upon any recipient or optionee any right with respect to the continuation
of his or her employment by the Company or interfere in any way with the right
of the Company any time to terminate such employment or to increase or decrease
the compensation of the recipient or optionee.
<PAGE>
17. Amendment of the Plan.
(a) The Board may at any time, and from time to time, modify or amend the
Plan in any respect, except that if at any time the approval of the shareholders
of the Company is required under any law or rule, the Board may not effect such
modification or amendment without such approval.
(b) The termination or any modification or amendment of the Plan shall
not, without the consent of a recipient of stock or an optionee, affect his or
her rights under stock or an option previously issued or granted to him or her.
With the consent of the recipient or optionee affected, the Board may amend
outstanding stock agreements or option agreements in a manner not inconsistent
with the Plan. The Board shall have the right to amend or modify the terms and
provisions of the Plan and of any outstanding stock or option to the extent
necessary to ensure the qualifications of the Plan under rule 16b-3.
18. Withholding.
(a) The Company shall have the right to deduct from payments of any kind
otherwise due to the recipient or optionee any federal, state or local taxes of
any kind required by law to be withheld with respect to any shares issued or
issuable upon exercise of options under the Plan. Subject to the prior approval
of the Company, which may be withheld by the Company in its sole discretion, the
recipient or optionee may elect to satisfy such obligations, in whole or in
part, (i) by causing the Company to withhold shares of Common Stock otherwise
issued or issuable pursuant to the exercise of an option or (a) by delivering to
the Company shares of Common Stock already owned by the recipient or the
optionee. The shares so delivered or withheld shall have a fair market value
equal to such withholding obligations. The fair market value of the shares used
to satisfy such withholding obligation shall be determined by the Company as of
the date that the amount of tax to be withheld is to be determined. A recipient
or optionee who has made an election pursuant to this Section 18(a) may only
satisfy his or her withholding obligation with shares of Common Stock which are
not subject to any repurchase, forfeiture, unfulfilled vesting or other similar
requirements.
(b) Notwithstanding the foregoing, in the case of a Reporting Person, no
election to use shares for the payment of withholding taxes shall be effective
unless made in compliance with any applicable requirements of Rule 16b-3.
19. Cancellation and New Grant of Options, Etc.
The Board shall have the authority to effect, at any time and from time to
time, with the consent of the affected optionees, (i) the cancellation of any or
all outstanding options under the Plan and the grant in substitution thereof of
new options under the Plan covering the same or different numbers of shares of
Common Stock and having an option exercise price per share which may be lower or
higher than the exercise price per share of the canceled options or (ii) the
amendment of the terms of any and all outstanding options under the Plan to
provide an option exercise price per share which is higher or lower than the
then-current exercise price per share of such outstanding options.
20. Effective Date and Duration of the Plan.
(a) Effective Date. The Plan shall become effective when adopted by the
board. Amendments to the Plan shall become effective when adopted by the Board.
Shares may be issued and options may be granted under the Plan at any time after
the effective date and before the date fixed as the termination date of the
Plan.
(b) Termination. Unless sooner expressly terminated in accordance with
the provisions of the Plan, the Plan shall terminate upon the earlier of (i) the
close of business on the day next preceding the tenth anniversary of the date of
its adoption by the Board, or (ii) the date on which all shares available for
issuance under the Plan shall have been issued pursuant to the issuance of
shares or the exercise or cancellation of options granted under the Plan. Unless
sooner expressly terminated in accordance with the provisions of the Plan, the
Plan shall terminate with respect to options on the date specified in (ii)
above, then options outstanding on such date shall continue to have force and
effect in accordance with the provisions of the instruments evidencing such
options.
21. Provision for Foreign Participants.
The Board of Directors, may, without amending the Plan, modify stock
issuances or options granted to participants who are foreign nationals or
employed outside the United States to recognize differences in laws, rules,
regulations or customs or such foreign jurisdiction with respect to tax,
securities, currency, employee benefit or other matters.
22. Registration of Shares and Options.
In the Board's discretion, the Board may agree with respect to certain
shares and options issued under the Plan, to prepare and file Registration
Statements on Form S-8, which Registration Statements may include reoffer
prospectuses as that term is defined in Form S-8, to register and continue to
keep effectively registered for resale the shares issued as compensation under
the Plan and the shares of Common Stock issued upon the exercise of options
granted under the Plan.
Adopted by the Board of Directors
September 15, 1998
By: /s/ Walter G. Sanders
Walter G. Sanders
President/Director
EXHIBIT 10.12
EXCHANGE AGREEMENT
THIS EXCHANGE AGREEMENT (the "Agreement") is made effective June 15, 1998
by and between NuOasis International, Inc., organized under the laws of the
Commonwealth of the Bahamas ("NUOI") and Cleopatra's World, Inc., a corporation
organized under the laws of the British Virgin Islands ("CWI").
WHEREAS, NUOI is the Assignee and beneficial owner of one million
(1,000,000) shares of Flexweight Corp., a Kansas corporation ( the "Flex
Shares"); and,
WHEREAS, CWI owns a Promissory Note in the principal amount of one million
dollars ($1,000,000) issued by NuOasis Resorts, Inc. ("Resorts"), a copy of
which is attached hereto as Exhibit "A" and incorporated herein by reference
(the "Resorts Note"); and,
WHEREAS, CWI and NUOI wish to exchange the Resorts Note owned by CWI for
the Flex Shares owned by NUOI.
NOW, THEREFORE, 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, CWI and NUOI agree as follows:
1. Exchange
On the basis of the representations and warranties herein contained,
subject to the terms and conditions set forth herein, NUOI hereby exchanges
and agrees to assign and deliver the Flex Shares for the NuOasis Note.
2. Closing
The closing of the exchange contemplated by this Agreement (the "Closing")
shall occur upon the transfer of the Flex Shares to CWI (the "Transfer
Date"), but shall not be later than June 30, 1998. At the Closing, CWI
shall deliver the NuOasis Note to NUOI and NUOI shall deliver the Flex
Shares to CWI.
3.1 Representations and Warranties of NUOI
NUOI hereby represents and warrants to CWI that:
A. Organization. NUOI is a corporation validly existing and in good
standing under the laws of the Commonwealth of the Bahamas, with the
power 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 NUOI. This Agreement has been duly executed and delivered
by NUOI and constitutes a binding, and enforceable obligation of NUOI;
and,
B. 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 NUOI in connection with
the execution, delivery, or performance of this Agreement, or if
required, NUOI has or will obtain same prior to Closing; and,
<PAGE>
C. Litigation. NUOI is not a defendant or a plaintiff against whom a
counterclaim has been made or reduced to judgement, in any litigation
or proceedings before any state, local or federal government, or any
department, board, body or agency thereof, which could result in a
claim against the Flex Shares; and,
D. Status of Flex Shares. To the best of NUOI's knowledge, the Flex
Shares are validly123 issued and there is no claim by any third parties
which would serve to restrict the assignment, transfer or exchange of
the Flex Shares as contemplated herein. Further, NUOI has not created
any option, security interest or encumbrance involving the Flex Shares
that would give rise to any claims by third parties or otherwise
conflict with or preclude the exchange as contemplated herein; and
E. Authority. This Agreement has been duly executed by NUOI, 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 NUOI is a party or to which NUOI is
subject.
3.2 Representations and Warranties of CWI
CWI hereby represents and warrants to NUOI that:
A. Organization. CWI is a corporation validly existing and in good
standing under the laws of the British Virgin Islands, with the power
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 CWI. This Agreement has been duly executed and delivered by CWI
and constitutes a binding, and enforceable obligation of CWI; and,
B. 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 CWI in connection with the
execution, delivery, or performance of this Agreement, or if required,
CWI has or will obtain same prior to Closing; and
C. Litigation. CWI is not a defendant or a plaintiff against whom a
counterclaim has been made or reduced to judgement, in any litigation
or proceedings before any state, local or federal government, or any
department, board, body or agency thereof, which could result in a
claim against the NuOasis Note; and,
D. Status of the NuOasis Note. To the best of CWI's knowledge, the
NuOasis Note is validly issued by NuOasis Resorts, Inc. or any third
parties and there is no claim by NuOasis Resorts, Inc. or any third
parties which would serve to restrict the collection, transfer or
exchange of the NuOasis Note as contemplated herein. Further, CWI has
not created any option, security interest or encumbrance involving the
rights to the NuOasis Note that would give rise to any claims by third
parties or otherwise conflict with or preclude the exchange as
contemplated herein; and
E. Authority. This Agreement has been duly executed by CWI, 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 CWI is a party or to which CWI is
subject.
<PAGE>
4. Conditions Precedent to Obligations of CWI and NUOI
All obligations of CWI and NUOI 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 NuOasis Note. CWI shall have executed
proper transfer documents to assign and convey merchantable title to
the NuOasis Note and the underlying collateral, and delivered same
along with the original of such NuOasis Note to NUOI; and
B. Transfer and Delivery of the Flex Shares. NUOI shall have taken all
action necessary to deliver the Flex Shares to CWI; and
C. Acceptance of Documents. All instruments and documents delivered by
CWI and NUOI pursuant to the provisions of this Agreement shall be
satisfactory to CWI and NUOI and their legal counsel.
5. Availability of Information
CWI and NUOI 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 they consider to be adequate to make a decision to
exchange the NuOasis Note for the Flex Shares.
6. Private Transaction
A. Private Offering. NUOI and CWI understand each that the exchange
contemplated herein constitutes a private, arms-length transaction
between the parties without the use or reliance upon a distribution or
securities underwriter; and,
B. Purchase for Own Account. Neither NUOI nor CWI are underwriters of, or
dealers in, the respective securities to be exchanged hereunder, and
neither party is acting as such or participating in the distribution of
such securities; and
C. Investment Risk. Because of their financial position and other
factors, 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
D. Access to Information. NUOI, CWI and their respective advisors have
been afforded the opportunity to discuss the transaction with legal and
accounting professionals and to examine and evaluate the financial
impact of the exchange contemplated herein.
7. Termination
This Agreement may be terminated at anytime prior to the date of Closing by
either party if (a) there shall be any actual or threatened action or
proceeding by or before any court or any other governmental body which
shall seek to restrain, prohibit, or invalidate the transaction
contemplated by this Agreement, and which, in the judgment of such party
giving notice to terminate and based upon the advice of legal counsel,
makes it inadvisable to proceed with the transaction contemplated by this
Agreement, or (b) if the transaction contemplated herein has not closed by
June 30, 1998.
<PAGE>
8. Miscellaneous
A. Authority. The officers of CWI and NUOI 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 NUOI: NuOasis International Incorporated
43 Elizabeth Avenue, Box N-8680
Nassau, Bahamas
Telephone: (809) 326-2903
Facsimile: (809) 326-8434
To CWI: Cleopatra's World, Inc.
P.O. Box 3186, Road Town
Tortola, British Virgin Islands
Telephone: (949) 475-7731
Facsimile: (949) 475-7738
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 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 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. None of the parties hereto may assign this Agreement
without the express written consent of the other parties and any
approved assignment shall be binding on and inure to the benefit of
such successor or, in the event of death or incapacity, on assignor's
heirs, executors, administrators and successors.
F. Applicable Law. This Agreement has been negotiated and is being
contracted for in the State of Nevada, it shall be governed by the laws
of the State of Nevada, County of Clark, notwithstanding any
conflict-of-law provision to the contrary.
G. Attorney's Fees. If any legal action or other preceding
(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 this Agreement, 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.
<PAGE>
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, and from time to 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 NuOasis Note and the Flex Shares, or
otherwise to carry out the intent and purposes of this Agreement.
K. Broker's or Finder's Fee; Expenses. NUOI and CWI 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, all fees, costs and expenses incurred by either party
relating to this Agreement shall be paid by the party incurring same.
L. 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.
M. 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.
N. 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.
"CWI"
Cleopatra's World, Inc.
By: /s/ Gabriel Tabarani
Name: Gabriel Tabarani
Title: Chairman
"NUOI"
NuOasis International, Incorporated
By: /s/ Fred G. Luke
Name: Fred G. Luke
Title: President
EXHIBIT 22.1
SCHEDULE OF SUBSIDIARIES OF THE COMPANY
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Jurisdiction of Parent Percentage
Subsidiary Incorporation Corporation Ownership
Oasis Hotel, Resorts & Casino III ("Oasis III") Nevada Company 100%
Cleopatra Palace Resorts and Casinos Limited United Kingdom Company 75%
("CPRC")
Cleopatra Cap Gammarth Limited ("CCGL")(1) Ireland CPRC 90%
Cleopatra's World Inc. ("CWI") British Virgin CPRC 90%
Islands
NuOasis Resorts & Casinos N.V.(1) Netherlands Company 80%
Antilles
</TABLE>
(1) In organization: capital stock not issued at June 30, 1999.
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUN-30-1999
<PERIOD-END> JUN-30-1999
<CASH> 51,698
<SECURITIES> 345,000
<RECEIVABLES> 373,550
<ALLOWANCES> 0
<INVENTORY> 170,126
<CURRENT-ASSETS> 1,289,103
<PP&E> 256,834
<DEPRECIATION> 0
<TOTAL-ASSETS> 9,715,184
<CURRENT-LIABILITIES> 6,310,972
<BONDS> 0
0
0
<COMMON> 3,190
<OTHER-SE> (6,947,755)
<TOTAL-LIABILITY-AND-EQUITY> 9,715,184
<SALES> 5,522,626
<TOTAL-REVENUES> 5,522,626
<CGS> 5,795,187
<TOTAL-COSTS> 6,807,487
<OTHER-EXPENSES> 803,000
<LOSS-PROVISION> 8,319,241
<INTEREST-EXPENSE> 400,309
<INCOME-PRETAX> (10,807,411)
<INCOME-TAX> 0
<INCOME-CONTINUING> (10,807,411)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (10,807,411)
<EPS-BASIC> (4.01)
<EPS-DILUTED> (4.01)
</TABLE>
