U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
ANNUAL REPORT UNDER SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended April 30, 1999
Commission file number 0-14978
Pre-Cell Solutions, Inc.
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(Name of Registrant in its Charter)
Colorado 84-0751916
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(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
255 East Drive, Suite C, Melbourne, Florida 32904
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(Address of Principal Executive Offices) (Zip Code)
(321) 308-2900
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(Issuer's Telephone Number)
Securities registered under Section 12(b) of the Act:
None.
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Securities registered under Section 12(g) of the Exchange Act:
Common Stock, par value $.01 per share
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(Title of Class)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15 (d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes [ ] No [X]
Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-X contained in this form, and no disclosure will be contained, to
the best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ ]
State issuer's revenues for its most recent fiscal year. $ 22,936.
State 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 a specified date within the past 60
days. $317,900
(APPLICABLE ONLY TO CORPORATE REGISTRANTS)
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date: 33,848,426 as of October 1, 1999.
This report contains a total of 81 pages.
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PART I
ITEM 1. DESCRIPTION OF BUSINESS
Other than historical and factual statements, the matters and items
discussed in this Annual Report on Form 10-K are forward-looking statements that
involve risks and uncertainties. Actual results of the Company may differ
materially from the results discussed in the forward-looking statements. Certain
factors that could contribute to such differences are discussed with the
forward-looking statements throughout this report.
General
Corporate Background
Pre-Cell Solutions, Inc. (the "Company") was organized under the laws
of the State of Colorado on July 20, 1981 under the name Oil Field Service
Company, Inc. ("Oil Field"). On January 2, 1986, Oil field changed its name to
Transamerican Petroleum Company ("Transamerican") by virtue of a certificate of
amendment from the Secretary of State of Colorado. At the time, Transamerican
was a wholly owned subsidiary of PTP Resource Corporation, a Canadian
Corporation whose stock was traded on the Vancouver Stock Exchange and Nasdaq.
Pursuant to a request filed with the Chief Counsel, division of Corporate
Finance, of the United States Securities and Exchange Commission ("SEC"), on
March 27, 1986 permission was granted for the stock of Transamerican to be
distributed on a pro-rated bases to all shareholders of PTP Resource
Corporation. The stock was issued on April 24, 1986.
In the past, the Company had provided a vehicle to take advantage of
business opportunities which management believed from time to time were in the
best interest of the Company's shareholders.
Acquisition of Pre-Cell Solutions, Inc.
On December 1, 1998, The Company acquired Pre-Cell Solutions, Inc, a
Florida corporation. ("Pre-Cell") through the issuance of 32,156,000 shares of
its common stock (see "certain transactions"). On December 6, 1998, the Company
filed an amendment to its Article of Incorporation changing its name from
Transamerican to Pre-Cell Solutions, Inc. The business of Pre-Cell has become
the business of the Company. The Company anticipates that the acquisition of
Pre-Cell will significantly increase its revenues and provide it with an
opportunity to acquire market share in an emerging industry.
The Company is a non-facilities based provider of prepaid
telecommunications services primarily to residential customers. The Company
currently offers pre-paid residential local and long distance telecommunications
services to consumers who reside in the state of Florida. The Company markets
its services to consumers who are unable to obtain credit from the Incumbent
Local Exchange Carrier ("ILEC") or other Competitive Local Exchange Carriers
("CLECs"). In particular, a significant number of low-income individuals are
unable to obtain local telephone service from the ILEC or other CLECS because of
a bad credit history or no credit history at all. Most ILECs and CLECs provide
local exchange and/or long distance telecommunications services strictly on a
credit basis. The Company provides its telecommunications services to these
consumers only on a pre-paid basis.
Because no credit is involved, the Company can provide these services
without risk even when a security deposit cannot be provided by the consumer
(which is generally required by the ILEC or other CLECs when service is
requested by low-income, credit deprived consumers). The Company's services are
immediately available to the customer after the establishment of an account and
appropriate payment. The
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service is ideal for consumers with limited income who are unable to obtain
credit from the ILEC or other CLEC, but who desire to place telephone calls from
their home.
Pre-paid phone service is available to certain ILEC and CLEC customers
for their local exchange services, however, these providers do not customarily
provide a combined full service local and long distance exchange service. The
Company believes that it is the only CLEC that has developed the capability of
bundling these services into a single carrier product offering the non-credit
worthy consumer market.
The Company has an agreement to purchase local exchange
telecommunications services from BellSouth Telecommunications, Inc.
("BellSouth") in each of the eleven states where BellSouth provides local
exchange services. Additionally, the Company acquires domestic and international
long distance telecommunication services from Sprint. The Company provides its
customers domestic and international long distance services through a
proprietary switching and customer account based software application, furnished
by a third party Florida based interconnection switching facility.
The company has designed its services to meet the basic
telecommunication needs of the unique customers in its niche target markets
while maintaining a fully featured array of telephone services. Management
believes that Pre-Cell's sensitivity to consumer demands coupled with its
customer care personnel will enable it to tailor its service offerings to meet
customers' needs and to creatively package its services to provide "one-stop
shopping" solutions for those customers.
Local Exchange Services.
Pre-Cell offers local telephone services, including local dial tone as
well as other features such as:
o call forwarding;
o call waiting;
o caller ID;
o voice mail;
o 3 way calling;
o speed dial;
o repeat dial; and
o call return and call block.
Long Distance Services.
Pre-Cell offers a full range of domestic long distance services, such
as:
o interLATA, which are calls that pass one "Local Access and Transport
Area" or "LATA" to another, and such calls must be carried across the
LATA boundary by a long-distance carrier; and
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o international long distance services.
These services including "1+" outbound calling, and such complementary
services as travel cards and operator assistance.
The Company is pursuing a growth strategy to capitalize on its early
entrance into the emerging and expanding markets for prepaid telecommunications
services. Significant components of the Company's strategy include: (i) expand
its customer base within the state of Florida; (ii) expand its customer base to
include consumers who reside in the ten other states where BellSouth provides
local exchange services where the Company has an agreement to acquire and
re-sell local exchange services; (iii) expand its customer base to include
consumers who reside in non-BellSouth states where it can negotiate favorable
re-sale agreements with the ILEC or other facilities based CLECs; (iv) offer its
customers a variety of other prepaid telecommunications products and services,
including, prepaid cellular, prepaid paging, prepaid Internet access and other
enhanced prepaid telecommunications services; and (v) pursue the acquisition of
companies that fit within the Company's business strategy.
Market Overview
Telecommunications Services
The traditional U.S. market for telecommunications services can be
divided into three basic sectors: (1) long distance services, (2) local exchange
services and (3) Internet access services. It is estimated that in 1999 that
local exchange services market accounted for revenues of $92.4 billion, long
distance services market generated revenues of $104.6 billion and Internet
services market revenues totaled $6.3 billion. Revenues for both local exchange
and long distance services include amounts charged by long distance carriers and
subsequently paid to ILECs (or, where applicable, CLECs) for long distance
access.
Long Distance Services. A long distance telephone call can be
envisioned as consisting of three segments. Starting with the originating
customer, the call travels along an ILEC or CLEC network to a long distance
carrier's point of presence ("POP"). At the POP, the call is combined with other
calls and sent along a long distance network to a POP on the long distance
carrier's network near where the call will terminate. The call is then sent from
this POP along an ILEC or CLEC network to the terminating customer. Long
distance carriers provide only the connection between the two local networks,
and pay access charges to LECs for originating and terminating calls.
Local Exchange Services. A local call is one that does not require the
services of a long distance carrier. In general, the local exchange carrier does
provide the local portion of most long distance calls.
Internet Services. Internet services are generally provided in at least
two distinct segments. A local network connection is required from the ISP
customer to the ISP's local facilities. For residential users, these connections
are generally connections through the public switched telephone network obtained
on a dial-up access basis as a local exchange telephone call. Once a local
connection is made to the internet service provider's ("ISP") local facilities,
information can be transmitted and obtained over a packet-switched internet
protocol data network, which may consist of segments provided by many
interconnected networks operated by a number of ISPs. This collection of
interconnected networks makes up the Internet. A key feature of Internet
architecture and packet switching is that a single dedicated channel between
communication points is never established, which distinguishes Internet-based
services from the public switched telephone network.
Strategy
The Company is pursuing a growth strategy to capitalize on its early
entrance into the emerging and expanding markets for prepaid telecommunications
services. The Company intends to focus its sales and
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marketing efforts on the credit-challenged consumer. Additionally, the Company
intends to pursue individual and business consumers who desire to utilize the
Company's prepaid products and services as a mechanism to budget their
telecommunications costs.
Significant components of the Company's strategy include: (i) expand
its customer base within the state of Florida; (ii) expand its customer base to
include consumers who reside in the ten other states where BellSouth provides
local exchange services where the Company is pursuing a growth strategy to
capitalize on its early entrance into the emerging and expanding markets for
prepaid telecommunications services. Significant components of the Company's
strategy include: (i) expand its customer base within the state of Florida; (ii)
expand its customer base to include consumers who reside in the ten other states
where BellSouth provides local exchange services where the Company already has
an agreement in place to acquire and re-sell local exchange services; (iii)
expand its customer base to include consumers who reside in non-BellSouth states
where it can negotiate favorable re-sale agreements with the ILEC or other
facilities based CLECs; (iv) offer its customers a variety of other prepaid
telecommunications products and services, including, prepaid cellular, prepaid
paging, prepaid Internet access and other enhanced prepaid telecommunications
services; and (v) pursue the acquisition of companies that fit within the
Company's business strategy.
Trademarks
None
Sales And Marketing
Distribution Strategy. The Company's distribution strategy is to
utilize alternative distribution channels to sell and market its products and
services. Through the combination of a direct sales force and alternative
distribution channels, the Company believes that it will be able to more rapidly
access markets and increase revenue-producing traffic.
As part of its distribution strategy, the Company is developing several
alternative distribution channels. These include agents and resellers. Agents
are independent organizations that sell the Company's products and services
under the Pre-Cell brand name to end-users in exchange for revenue based
commissions. The Company recruits agents that specialize in marketing products
and services to consumers with demographic characteristics similar to those of
the Company's unique customers. The Company's agents may not necessarily be well
versed in telecommunications, because they are generally convenience stores,
drugstores or supermarkets that offer the Company's products to their retail
customers. Sales through this alternative distribution channel require the
Company to provide the same type of services that would be provided in the case
of sales through its own direct sales force such as order fulfillment, billing
and collections, customer care and direct sales management.
Resellers are independent companies, including other competitive local
exchange companies, that purchase the Company's products and services and then
"repackage" these services for sale to their customers under their own brand
name. Resellers generally require access to certain of the Company's business
operating systems in connection with the sale of the Company's services to the
resellers' customers. Sales through this distribution channel generally do not
require the Company to provide order fulfillment, billing and collection and
customer care.
Government Regulation
Federal
The Telecommunications Act was intended to remove some of the barriers
between the long distance and local telecommunications markets, allowing service
providers from each of these sectors (as well as cable television operators and
others) to compete in all communications markets. The FCC must issue regulations
to address various requirements of the Telecommunications Act. For instance, the
Telecommunications Act generally requires ILECs to (1) allow competitors such as
the Company to interconnect with the ILECs'
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networks and (2) give competitors nondiscriminatory access to the ILEC's
networks on more favorable terms than have been available in the past. In August
1996, the FCC adopted regulations intended to detail the requirements of the
Telecommunications Act relating to interconnection (the "Interconnection
Order"). The Interconnection Order includes detailed provisions regarding the
interconnection of ILEC networks with those of new competitors as well as
requirements that the ILECs make certain of their network elements and services
available to competitors.
In October 1996, portions of the Interconnection Order were stayed by
the United States Court of Appeals for the Eighth Circuit. This court later
invalidated certain of those provisions, including ones in which the FCC
asserted jurisdiction over the pricing of interconnection elements and the
"pick-and-choose" provisions which allow carriers to adopt select provisions of
other carriers' interconnection agreements. The FCC appealed this decision to
the United States Supreme Court. In January 1999, the Supreme Court reversed a
majority of the Eighth Circuit's decision, upholding in many respects the FCC's
local competition rules as set out in the Interconnection Order. Some of the key
elements of the Supreme Court's decision are:
(1) The Court upheld the FCC's pricing authority with regard to
interconnection, resale of ILEC services and competitors' use
of unbundled network elements (i.e., individual elements,
features and functions of an ILEC's network infrastructure
such as access lines, transport lines, operator service and
switching features);
(2) The Court upheld the FCC's "pick and choose" rules (allowing
requesting carriers to select from among individual provisions
of interconnection agreements approved by state commissions);
(3) The Court upheld the FCC's jurisdiction to require all local
phone companies to implement intra LATA presubscription, the
process by which local telephone customers pre-select
interexchange carriers for short-haul long distance calls; and
(4) The Court remanded for further consideration the FCC's rule
that defines those network elements which, under the
Telecommunications Act, must be unbundled by the ILECs and
made available to competitors.
The Court found that the FCC did not impose the limiting standard
required by the Telecommunications Act, which mandates a determination as to
whether those elements are necessary for competitors or the failure to obtain
access to them would impair competitors' ability to provide service. The Supreme
Court's decision has added uncertainty to the regulatory landscape in which
other CLECs and we operate. For example, the FCC is commencing a new and
potentially lengthy rulemaking proceeding to determine which unbundled network
elements the ILECs must make available to competitors. This uncertainty may
adversely impact CLECs, such as the Company, which rely on the facilities of the
ILECs to deliver their telecommunications services.
The FCC recently issued an order addressing the manner in which dial-up
calls to ISPs are to be treated for both jurisdictional and reciprocal
compensation purposes. The FCC ruled that dial-up calls to ISPs constitute a
single call that is interstate in nature and subject to FCC jurisdiction. The
FCC stated, however, that its decision was not intended to impact previous
decisions by state regulators that had declared inter-carrier reciprocal
compensation applicable to these calls. This order has been appealed to the FCC
and several ILECs have requested that state regulators reverse their prior
rulings and hold that dial-up ISP traffic is not subject to reciprocal
compensation under extant interconnection agreements. It is unclear at this time
how such proceedings will conclude. However, in light of the limited amount of
revenues we have generated from reciprocal compensation for ISP traffic, we do
not expect the resolution of this issue to have a material impact on our ongoing
operations in most markets.
The FCC also recently issued an order (the "Collocation Order")
expanding the options available to competitive providers for collocation and
access to unbundled loops from the ILECs. In the Collocation Order, the FCC
significantly expanded the rights of competitive carriers to collocate with
ILECs through a variety of methods, including cage less and shared space
collocation. As a result, the FCC has expanded the manner in which unbundled
local loops could be accessed from the ILECs. The FCC has also issued orders
under the Telecommunications Act reforming LEC access charges and universal
service requirements. Under the access reform order, ILECs that are subject to
price cap regulation are required to reduce the rates they charge long
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distance service providers for interstate switched local access. In October
1998, AT&T filed a petition with the FCC seeking a ruling that long distance
carriers may elect not to purchase switched access services offered under tariff
by CLECs. This could also cause increased FCC scrutiny and regulation of CLEC
interstate access rates. The petition is pending.
Under the FCC's universal service order, all telecommunications service
providers are required to pay for universal service support based on a
percentage of their end user telecommunications revenues to be established
quarterly by the FCC.
Providers of telecommunications services are coming under intensified
regulatory scrutiny for marketing activities that result in alleged unauthorized
switching of customers from one service provider to another, particularly in the
long distance sector. The FCC and a number of state authorities have begun
adopting more stringent regulations to curtail the intentional or erroneous
switching of customers, which include, among other things, the imposition of
fines, penalties and possible operating restriction son entities which engage or
have engaged in unauthorized switching activities. In addition, the FCC has
adopted regulations imposing procedures for verifying the switching of customers
and additional remedies on behalf of carriers for unauthorized switching of
their customers.
The FCC also oversees the administration and assigning of local
telephone numbers. It has designated Lockheed Martin as the numbering plan
administrator. Extensive regulations have been adopted governing telephone
numbering, area code designation, dialing procedures that may be imposed by the
ILECs and the imposition of related fees by the ILECs. In addition, carriers are
required to contribute to the cost of numbering administration through a formula
based on their revenues. In 1996, the FCC permitted businesses and residential
customers to keep their numbers when changing local phone companies (referred to
as number portability). The availability of number portability is important to
competitive carriers like us since customers, may be less likely to switch to a
competitive carrier if they cannot retain their existing telephone numbers. The
FCC has been working with industry groups and companies to address potential
problems stemming from the depletion in certain markets of the pool of telephone
numbers which telecommunications companies can make available to their
customers. If a sufficient amount of telephone numbers are not available in the
market, our operations in that market may be adversely affected or we may be
unable to enter that market until sufficient numbers become available.
State
Some of the Company's services are classified as intrastate and
therefore are subjected to state regulation, generally administered by the
state's PUC. The nature of these regulations varies from state to state and in
some cases may be more extensive than FCC regulations. In most instances, the
Company is required to obtain certification from a state PUC before providing
services in that state. We are certified to provide intrastate non-switched
service and switched local (i.e., CLEC) services in the State of Florida. We
expect that as our business and product lines expand and as more pro-competitive
regulation of the local telecommunications industry is implemented, we will
offer additional intrastate services.
Interstate and intrastate regulatory requirements are changing rapidly
and will continue to change.
Pre-Cell being a reseller of telecommunications services is protected
by the Telecommunications Act of 1996 (the "Telecom Act") which mandated
significant changes in the then regulation of the telecommunications industry.
The Telecom Act is intended to increase competition, to promote competitive
development of new service offerings, to expand public availability of
telecommunications services and to streamline regulation of the industry. The
Act opened the local services market to companies such as Pre-Cell by requiring
ILECs to permit interconnection to their networks and establishing ILEC
obligations with respect to:
o Reciprocal Compensation - Requires all local exchange carriers
to complete calls originated by competing local exchange
carriers under reciprocal arrangements at prices based on
tariffs or negotiated prices.
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o Resale - Requires all ILECs and CLECs to permit resale of
their telecommunications services without unreasonable
restrictions or conditions. In addition, ILECs are required to
offer wholesale versions of all retail services to other
telecommunications carriers for resale at discounted rates,
based on the costs avoided by the ILEC in the wholesale
offering.
o Interconnection - Requires all ILECs and CLECs to permit their
competitors to interconnect with their facilities. Requires
all ILECs to permit interconnection at any technically
feasible point within their networks, on nondiscriminatory
terms, at prices based on cost, which may include a reasonable
profit. At the option of the carrier seeking interconnection,
collocation of the requesting carrier's equipment in the
ILECs' premises must be offered, except where an ILEC can
demonstrate space limitations or other technical impediments
to collocation.
o Unbundled Access - Requires all ILECs to provide
nondiscriminatory access to unbundled network elements
including, network facilities, equipment, features, functions,
and capabilities, at any technically feasible point within
their networks, on nondiscriminatory terms, at prices based on
cost, which may include a reasonable profit.
o Number Portabilty - Requires all ILECs and CLECs to permit
users of telecommunications services to retain existing
telephone numbers without impairment of quality, reliability
or convenience when switching from one telecommunications
carrier to another.
o Dialing Parity - Requires all ILECs and CLECs to provide "1+"
equal access to competing providers of telephone exchange
service and toll service, and to provide nondiscriminatory
access to telephone numbers, operator services, directory
assistance, and directory listing with no unreasonable dialing
delays.
o Access to Rights-of-Ways - Requires all ILECs and CLECs to
permit competing carriers access to poles, ducts, conduits and
rights-of-way at regulated prices.
ILECs are required to negotiate in good faith with carriers, such as
the Company, requesting any or all of the above arrangements. If the negotiating
carriers cannot reach agreement within a prescribed time, either carrier may
request binding arbitration of the disputed issues by the state regulatory
commission. Where an agreement has not been reached, ILECs remain subject to
interconnection obligations established by the FCC and state telecommunication
regulatory commissions.
The Telecommunications Act codifies the ILECs' equal access and
nondiscrimination obligations and preempts inconsistent state regulation. The
Telecommunications Act also contains special provisions that replace prior
antitrust restrictions that prohibited the regional Bell operating companies
from providing long distance services and engaging in telecommunications
equipment manufacturing. The Telecommunications Act permitted the regional Bell
operating companies to enter the out-of-region long distance market immediately
upon its enactment. Further, provisions of the Telecommunications Act permit a
regional Bell operating company to enter the long distance market in its
in-region states if it satisfies several procedural and substantive
requirements, including:
o obtaining FCC approval upon a showing that the regional Bell
operating company has entered into interconnection agreements
or, under some circumstances, has offered to enter into such
agreements in those states in which it seeks long distance
relief;
o the interconnection agreements satisfy a 14-point "checklist"
of competition requirements; and
o the FCC is satisfied that the regional Bell operating
company's entry into the long distance markets is in the
public interest.
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To date, several petitions by regional Bell operating companies for
such entry have been denied by the FCC, and non have been granted. However, it
is likely that additional petitions will be filed in 1999 and it is possible
that regional Bell operating companies may receive approval to offer long
distance services in one or more states. This may have an unfavorable effect on
Pre-Cell's business. Pre-Cell is legally able to offer its customers both long
distance and local exchange services, which the regional Bell operating
companies currently cannot. This ability to offer "one-stop shopping" gives
Pre-Cell a marketing advantage that it would no longer enjoy if the regional
Bell operating companies receive approval to offer long distance services on one
or more states.
Competition
The telecommunications market is intensely competitive and currently is
dominated by the ILECs and the large, established long distance companies. We
have not obtained significant market share nor do we expect to, given the size
of the telecommunications services market, the intense competition and the
diversity of customer requirements. The ILECs and the large, established long
distance companies have long-standing relationships with their customers and
have the potential to subsidize competitive services with revenues from a
variety of business services (to the extent lawful). While legislative and
regulatory changes have provided us and other competitive providers with
increased business opportunities, these changes have also given the incumbent
providers flexibility in the pricing of their services. This may allow the ILECs
and the large, established long distance companies to offer special discounts to
potential customers. Further, as competition increases in the telecommunications
market, we expect general pricing competition and pressures to increase
significantly.
In addition, the Telecommunications Act establishes procedures under
which an RBOC may compete in the long distance business in its region. These
procedures include compliance with a 14-point competitive checklist designed to
open the RBOC's local market to competition. Once an RBOC is authorized to
compete in the long distance business in its region, it may be an even more
significant competitor. In addition to competition from the incumbent providers,
we also face competition from a growing number of other companies.
We also may face competition from cable companies, electric utilities,
ILECs operating outside their current local service areas, long distance
carriers and other entities in the provision of local telecommunications
services. Moreover, the consolidation of telecommunications companies and the
formation of strategic alliances within the telecommunications industry, which
are expected to accelerate, could give rise to significant new or stronger
competitors. We believe that the principal competitive factors affecting our
market share are (i) direct customer contact; (ii) customer service; (iii)
pricing;(iv) quality of service; and (v) a variety of offered services. Our
ability to compete effectively will depend also upon our ability to continue to
provide a broad range of high capacity telecommunications services at attractive
prices.
Employees
The Company currently has 2 executive employees. All other services
utilized by the Company are obtained through an Administrative Services
Agreement with Pre-Paid Solutions, Inc. (see "Certain Relationships and Related
Transactions")
The Company's address and telephone number are: 255 East Drive, Suite
C, Melbourne, Florida 32904, (321) 308-2900.
The Company's SEC filings are available to the public over the Internet
at the SEC's website at http://www.sec.gov. You may also read and copy any
document the Company files at the SEC's public reference room at 450 Fifth
Street, N.W., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for
further information on the public reference room.
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ITEM 2. DESCRIPTION OF PROPERTY
The Company currently subleases approximately 750 square feet of office space at
its Melbourne, Florida corporate headquarters from Pre-Paid Solutions, Inc. (see
"Certain Relationships and related Transactions"). Its monthly lease payments
are $463.75. The remaining term of the lease is two years, commencing June 15,
1999 and ending June 14, 2001.
ITEM 3. LEGAL PROCEEDINGS
The Company is not party to any material litigation
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
PART II
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The Company's common stock is traded on the OTC Bulletin Board under the symbol
"TDCM." In December 1998, the Company changed it trading symbol to "TDCM" from
"TAMP." The following table sets forth the high and low bid quotations for the
common stock for the calendar periods indicated as reported by Nasdaq. These
quotations reflect prices between dealers, do not include retail mark-ups,
markdowns, commissions and may not necessarily represent actual transactions.
This table gives retroactive effect to reverse stock splits at the rates of 1:7
effected in December 1998.
Calendar Period High Low
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Second Quarter ended 6/30/97 .21 .14
Third Quarter ended 9/30/97 .28 .14
Fourth Quarter ended 12/31/97 .28 .035
First Quarter ended 3/31/98 .035 .035
Second Quarter ended 6/30/98 .035 .035
Third Quarter ended 9/30/98 .28 .035
Fourth Quarter ended 12/31/98 .25 .20
First Quarter ended 3/31/99 .29 .02
As of October 25, 1999, there were approximately 584 holders of record of the
33,852,730 shares of common stock that were issued and outstanding. The transfer
agent for the common stock is Interstate Transfer Company, (801) 281-9746.
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The Company has never paid cash dividends on its common stock, and presently
intends to retain future earnings, if any, to finance the expansion of its
business and does not anticipate that any cash dividends will be paid in the
foreseeable future. The future dividend policy will depend on the Company's
earnings, capital requirements, expansion plans, financial condition and other
relevant factors.
The Securities and Exchange Commission has adopted regulations which generally
define a "penny stock" to be any equity security that has a market price (as
defined) of less than $5.00 per share, subject to certain exceptions. The
Company's common stock may be deemed to be a "penny stock" and thus will become
subject to rules that impose additional sales practice requirements on
broker/dealers who sell such securities to persons other than established
customers and accredited investors, unless the common stock is listed on The
Nasdaq SmallCap Market. Consequently, the "penny stock" rules may restrict the
ability of broker/dealers to sell the Company's securities, and may adversely
affect the ability of holders of the Company's common stock to resell their
shares in the secondary market.
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<TABLE>
<CAPTION>
Recent Sales of Unregistered Securities
- -------------- --------------------- ----------------- ----------------------- -------------- -------------------------
Date of Sale Title of Security Number Sold Consideration Exemption If Option, Warrant or
Received and From Convertible Security,
Description of Registration Terms of Exercise or
Underwriting or Other Claimed Conversion
Discounts to Market
Price Afforded to
Purchasers
- -------------- --------------------- ----------------- ----------------------- -------------- -------------------------
<S> <C> <C> <C> <C> <C>
Common Issues and 4(2)
Outstanding Shares in
12/1/98 25,485,353 Pre-Cell
- -------------- --------------------- ----------------- ----------------------- -------------- -------------------------
Options to Purchase Options Granted in 4(2) Exercisable from
Common Stock Connection with 12/1/99 to 12/1/04 at
Employment of an exercise price of
12/1/98 4,000,000 Executive $.04 per share
- -------------- --------------------- ----------------- ----------------------- -------------- -------------------------
Options to Purchase Options Granted in 4(2) Exercisable from
Common Stock Connection with 12/1/99 to 12/1/04 at
Employment of an exercise price of
12/1/98 3,000,000 Executive $.04 per share
- -------------- --------------------- ----------------- ----------------------- -------------- -------------------------
12/1/98 Common Stock 1,661,863 Consulting Services 4(2)
- -------------- --------------------- ----------------- ----------------------- -------------- -------------------------
12/1/98 Common Stock 4,181,694 Consulting Services 4(2)
- -------------- --------------------- ----------------- ----------------------- -------------- -------------------------
12/1/98 Common Stock 238,545 Consulting Services 4(2)
- -------------- --------------------- ----------------- ----------------------- -------------- -------------------------
12/1/98 Common Stock 238,545 Consulting Services 4(2)
- -------------- --------------------- ----------------- ----------------------- -------------- -------------------------
12/1/98 Common Stock 350,000 Consulting Services 4(2)
- -------------- --------------------- ----------------- ----------------------- -------------- -------------------------
</TABLE>
ITEM 6. SELECTED FINANCIAL DATA
The following selected consolidated financial data should be read in conjunction
with the Company's Consolidated Financial Statements and Notes thereto and with
"Management's Discussion and Analysis of Financial Condition and Results of
Operations," each of which is included elsewhere in this Form 10-K. The
consolidated statements of operations data for the fiscal year ended April 30,
1999, and the balance sheet data at April 30, 1999, are derived from audited
financial statements included elsewhere in this Form 10-K. The consolidated
statement of operations data for the fiscal years ended April 30, 1998, 1997,
1996, and 1995, and the balance sheet data at April 30, 1998, 1997, 1996, and
1995, are derived from audited financial statements not included in this Form
10-K.
<TABLE>
<CAPTION>
- ---------------------------------------------------- ---------------------------------------------------------------
Fiscal Year Ended April 30,
- ---------------------------------------------------- ---------------------------------------------------------------
1999 1998 1997 1996 1995
- ---------------------------------------------------- ------------- ---------- --------- -------------- -------------
<S> <C> <C> <C> <C> <C>
Net Sales $22,936 0 0 $10,000 $6,243
- ---------------------------------------------------- ------------- ---------- --------- -------------- -------------
Net income (loss) from continuing operation ($146,366) - $341 ($14,163) ($9,990)
- ---------------------------------------------------- ------------- ---------- --------- -------------- -------------
Income (loss) from continuing operations per share ($.01) - - - -
- ---------------------------------------------------- ------------- ---------- --------- -------------- -------------
Total assets $1,493,522 - - - $749
- ---------------------------------------------------- ------------- ---------- --------- -------------- -------------
Long term obligations and re-deemable preferred - - - - -
stock including long-term debts, capital leases,
and redeemable performed stock
- ---------------------------------------------------- ------------- ---------- --------- -------------- -------------
Cash dividends declared per common share - - - - -
- ---------------------------------------------------- ------------- ---------- --------- -------------- -------------
</TABLE>
12
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION OR PLAN OF
OPERATION
FORWARD-LOOKING STATEMENTS
The Private Securities Litigation Reform Act of 1995 provides a "safe harbor"
for certain forward-looking statements. The forward-looking statements contained
in this Report are subject to certain risks and uncertainties. Actual results
could differ materially from current expectations. Among the factors that could
affect the Company's actual results and could cause results to differ from those
contained in the forward-looking statements contained herein is the Company's
ability to implement its business strategy successfully, which will depend on
business, financial, and other factors beyond the Company's control. There can
be no assurance that the Company will continue to be successful in implementing
its business strategy. Other factors could also cause actual results to vary
materially from the future results covered in such forward-looking statements.
Words used in this Report such as "expects," "believes," "estimates" and
"anticipates" and variations of such words and similar expressions are intended
to identify such forward-looking statements.
The following should be read in conjunction with the Financial Statements of the
Company and the notes thereto included elsewhere in this report.
OVERVIEW
Since 1995, the Company was inactive but structured to take advantage of
business opportunities which management believed would be in the best interest
of the Company's shareholders. In December 1998, the Company acquired Pre-Cell
Florida through the issuance of 32,156,000 shares of its common stock and
changed its name to Pre-Cell Solutions, Inc. The Company currently offers
pre-paid residential local and long distance telecommunications services to
customers who reside in the state of Florida.
13
<PAGE>
Results of Operations
The operating results as reported the Company's financial statements for the
year ended April 30, 1999 are all the result of acquisition of Pre-Cell
Solutions, Inc. the Florida corporation. Since the Company had been inactive for
the year ended April 30, 1998 there is no comparative analysis for these two
periods.
Liquidity and Capital Resources
For the year ended April 30, 1999, net cash used in operating activities was
$44,644. As of April 30, 1999, the Company had cash and cash equivalents of
approximately $3,500 and a net working capital deficit of approximately
$340,000. The Company's ability to meet its future obligations in relation to
the orderly payment of its recurring, general and administrative expenses on a
current basis is totally dependent on its ability to expand its current customer
base and secure and develop new business opportunities through acquisitions or
other venture opportunities. Since the Company has no current source of
liquidity, the Company is unable to predict how long it may be able to survive
without a significant infusion of capital from outside sources and it is further
unable to predict whether such capital infusion, if available, will be on terms
and conditions favorable to the Company.
10
<PAGE>
In order to generate future operating activities, the Company intends to
implement its plan to expand its business and search for, investigate and
attempt to secure and develop business opportunities through acquisitions,
mergers or other business combinations and strategic alliances. There can be no
assurance that the Company will be successful in its plan to expand its customer
base or locate businesses in the same or similar industry for acquisition.
Although the Company engages in these discussions from time to time, it is not
at present party to any agreement or contract.
YEAR 2000 COMPLIANCE
The Company is aware of the issues associated with the programming code in
existing computer systems as the year 2000 approaches. The Year 2000 issue
relates to whether computer systems will properly recognize and process
information relating to dates in and after the year 2000. These systems could
fail or produce erroneous results if they cannot adequately process dates beyond
the year 1999 and are not corrected. Significant uncertainty exists in the
software industry concerning the potential consequences that may result from the
failure of software to adequately address the Year 2000 issue. The Company has
analyzed software and hardware used internally by the Company in all support
systems to determine whether they are Year 2000 compliant. The Company believes
that all of its software has already been upgraded by the manufacturers thereof
or was recently developed or purchased and is Year 2000 compliant. The Company
does not believe that the aggregate cost for the Year 2000 issue will be
material due to the nature of its business. The Company, however, cannot predict
the effect of the Year 2000 issue on entities with which the Company transacts
business, and there can be no assurance that the effect of the Year 2000 issue
on such entities will not have a material adverse effect on the Company's
business, financial condition or results of operations.
Any new software, hardware or support systems implemented in the future will be
Year 2000 compliant or will have updates or upgrades or replacements available
before the Year 2000 to enable the system to be Year 2000 compliant.
The Company is dependent on BellSouth to provide local exchange services and
Sprint for long distance services. To the extent these service providers fail to
address Year 2000 issues which might interfere with their ability to fulfill
their obligations to the Company, such interference could have a material
adverse effect on
14
<PAGE>
future operations. If other telecommunication carriers are unable to resolve
Year 2000 issues, it is likely that the Company will be affected to a similar
degree as others in the telecommunications industry.
ITEM 7A. QUANTITIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
None.
ITEM 8. FINANCIAL STATEMENTS
The financial statements required by this report are appended hereto commencing
on page F-1.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
None
15
<PAGE>
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
The following table sets forth the names, positions with the Company and ages of
the executive officers and directors of the Company. Officers are elected by the
Board and their terms of office are governed by employment contract, at the
discretion of the Board.
Name Age Positions Held
Thomas E. Biddix 30 Director, Chief Executive Officer,
President, Treasurer
Timothy F. McWilliams 36 Director, Chief Operating Officer,
Secretary
Thomas E. Biddix. Since December 1998, Mr. Biddix has served as Chairman of the
Company's Board of Directors, Chief Executive Officer, and President of the
Company. From May 1997 until December 1998, Mr. Biddix served as Chairman of the
Board of Directors, Chief Executive Officer, and President of Pre-Cell.
Currently Mr. Biddix also serves as the Chairman of the Board of Directors,
Chief Executive Officer and President of Pre-Paid Solutions, Inc. ("Pre-Paid"),
a nationwide provider of prepaid cellular products and services. From February,
1996 until October, 1996, Mr. Biddix was General Manager of Suntree Cellular,
Inc., a Florida based AT&T Authorized Cellular Dealer. From March, 1994 until
June, 1996, Mr. Biddix was a real estate salesman for RE/MAX Alternative Realty.
Timothy McWilliams. Since December 1, 1998, Mr. McWilliams has served as a
Director, Chief Operating Officer and Secretary of the Company. From May 1997
through December 1998, Mr. McWilliams served as Chief Operating Officer,
Secretary and a Director of Pre-Cell. Currently, Mr. McWilliams is also Chief
Operating Officer of Pre-Paid, a nationwide provider of prepaid cellular
products and services. From March, 1994 to December, 1999, Mr. McWilliams was
President of RE/MAX Alternative Realty and RE/MAX Alternative II, Florida based
real estate brokerages. Since January 1994 to the present, Mr. McWilliams has
also served as President of Ventana Development Company, Inc., a developer of
single family residential developments
ITEM 11. EXECUTIVE COMPENSATION
Cash Compensation
The following table shows, for the year ended April 30, 1999, the cash and other
compensation paid by the Company to its Chief Executive Officer and to each of
the executive officers of the Company who had annual compensation in excess of
$100,000.
16
<PAGE>
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
- --------------------------- ------- ------------------------------- ----------------------------------- -----------
Annual Compensation Long-Term Compensation
------------------------------- -----------------------------------
Awards
-----------------------------------
Securities
Other Under-
Annual Restricted Lying All Other
Name and Principal Compen- Stock Options/ LIP Compen-
Position Year Salary Bonus sation Award(s) SAYS Payout sation
($) ($) (#) ($) ($)
(a) (b) (c) (d) (e) (f) (g) (h) (i)
- --------------------------- ------- --------- --------- ----------- ------------ ------------- -------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Thomas E. Biddix 1998 0 0 0 0 0 0 0
Chief Executive Officer 1999 0 0 0 0 0 0 0
- --------------------------- ------- --------- --------- ----------- ------------ ------------- -------- -----------
</TABLE>
17
<PAGE>
Employment Agreements
The Company has entered into an employment agreement with each of
Thomas Biddix, its Chairman of the Board, Chief Executive Officer and President
and Timothy McWilliams, its Chief Operating Officer and Secretary. Each of Mr.
Biddix's and Mr. McWilliams employment agreement provides for an initial term of
three years commencing December 1, 1998 and requires Mr. Biddix and Mr.
McWilliams to devote a sufficient portion of his business time, energies and
attention to the performance of his duties. Mr. Biddix's employment agreement
provides for an annual base salary of $180,000. Mr. McWilliams' employment
agreement provides for a base annual salary of $95,000. The Company has accrued
its salary obligations to each of Messrs. Biddix and McWilliams as a part of its
financial statements but has not paid either of them since inception.
Option Grants in Last Fiscal Year
In connection with their employment agreements, Mr. Biddix and Mr.
McWilliams were granted options to purchase 4,000,000 and 3,000,000 shares,
respectively, of the Company's common stock at an exercise price of $.04 per
share.
The following table summarizes the number of shares and the terms of
stock options granted to the Named Executive Officers during the fiscal year
ended April 30, 1999.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
Option/Share Grants During Fiscal Year Ended April 30, 1999
- --------------------------------------------------------------------------------------------------------------------
Name and Position During Options/Shares % of Total Options/Shares Exercise Price Expiration Date
Period Granted Granted to Employees in ($/Share)
Fiscal Year
- ----------------------------- ----------------- ---------------------------- ----------------- ---------------------
<S> <C> <C> <C> <C>
Thomas E. Biddix 57% $.04
Chief Executive Officer 4,000,000 December 1, 2004
- ----------------------------- ----------------- ---------------------------- ----------------- ---------------------
Timothy F. McWilliams 3,000,000 43% $.04 December 1, 2004
- ----------------------------- ----------------- ---------------------------- ----------------- ---------------------
</TABLE>
The following table summarizes the number of exercisable and
unexercisable options held by the Named Executive Officers at April 30, 1999,
and their value at that date if such options were in the money.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
Aggregate Fiscal Year End Option Values at April 30, 1999
- --------------------------------------------------------------------------------------------------------------------
Name and Position During Period Number of Unexercised Options at Value of Unexercised In-The-Money
April 30, 1999 Options at April 30, 1999 (#)(1)
----------------------------------- ----------------------------------------
Exercisable Unexercisable Exercisable Unexercisable
- --------------------------------------- -------------- -------------------- ----------------- ----------------------
<S> <C> <C> <C> <C>
Thomas E. Biddix
Chief Executive Officer 0 4,000,000 0 0
- --------------------------------------- -------------- -------------------- ----------------- ----------------------
Timothy F. McWilliams
Chief Operating Officer 0 3,000,000 0 0
- --------------------------------------- -------------- -------------------- ----------------- ----------------------
</TABLE>
(1) Represents the difference between the aggregate market value at April 30,
1999, of the common stock underlying the options (based on a last sale price
of $.04 on that date) and the options' aggregate exercise price.
18
<PAGE>
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the Company's
common stock, par value $.01 beneficially owned as of October 1, 1999 for (i)
each stockholder known by the Company to be the beneficial owner of five (5%)
percent or more of the Company's outstanding common stock, (ii) each of the
Company's directors, (iii) each named executive officer, and (iv) all executive
officers and directors as a group. At October 1, 1999 there were 33,844,426
shares of common stock outstanding.
Name and Address of Amount and Nature of Percent
Beneficial Owner(1) Beneficial Ownership(2) of Class
- ------------------- ----------------------- --------
Thomas E. Biddix 29,485,353(3) 87%
Timothy McWilliams 3,000,0004) 9%
All directors and officers
as a group (4 persons)(5) 96%
- ----------------------
(1) Unless otherwise indicated, the address of each of the persons named in
the table is 255 East Drive, Suite C, Melbourne, Florida 32904. Unless
otherwise noted, the Company believes that each of the persons named in
the table have sole voting and dispositive power with respect to all the
shares of common stock of the Company beneficially owned by such person.
(2) A person is deemed to be the beneficial owner of securities that can be
acquired by such person within 60 days upon the exercise of warrants or
options or the conversion of convertible securities. Each beneficial
owner's percentage ownership is determined by assuming that warrants or
options that are held by such person (but not those held by any other
person) and that are exercisable within 60 days have been exercised.
(3) All of shares owned by Mr. Biddix were acquired in connection with the
acquisition of Pre-Cell Florida. (See "Certain Relationships and Related
Transactions.") Includes an option to acquire 4,000,000 shares granted to
Mr. Biddix as provided in Mr. Biddix's Employment Agreement with the
Company. (See "Executive Compensation")
(4) Includes an option to acquire 3,000,000 shares granted to Mr. McWilliams
as provided in Mr. McWilliams' Employment Agreement with the Company.
(See "Executive Compensation")
(5) Includes those individuals whose holdings are described in notes 3 and 4,
above.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In December 1998, the Board of Directors of the Company approved an
amendment to its certificate of Incorporation to effect a one-for-seven reverse
stock split. All per share data and references to the numbers of shares have
been retroactively restated to give effect to the reverse stock split.
19
<PAGE>
The company entered into a Share Exchange Agreement as of December 1,
1998 pursuant to which it acquired all of the issued and outstanding capital
shares of Pre-Cell Florida in exchange for 32,156,000 shares of the Company's
common stock. Thomas Biddix, the Company's Chairman of the Board, Chief
Executive Officer and President, was the sole shareholder of Pre-Cell Florida.
Also on December 1, 1998, the company entered into an Administrative
Services Agreement with Pre-Paid Solutions, Inc. ("Pre-Paid") pursuant to which
Pre-Paid performs all of the administrative functions of the company, such as
accounting, legal, tax compliance and all other administrative functions.
Pursuant to the Administrative Services Agreement, the Company pays Pre-Paid
$1,000 per month. Pre-Paid is controlled by Thomas Biddix, the Company's
Chairman of the Board, Chief Executive Officer and President.
The Company subleases its corporate headquarters from Pre-Paid, a company
controlled by Thomas Biddix. The Company subleases 750 square feet of space at a
current rental rate of $486.95 per month. The Company has an option to extend
the sublease commencing on June 15, 2000 and terminating on June 14, 2001 at the
monthly rental rate of $511.26.
ITEM 14. EXHIBITS AND REPORTS ON FORM 8-K
(a) Index to Exhibits
Exhibits Description of Documents
10.1 Share Exchange Agreement entered into between the Company and Pre-Cell
Solutions, Inc., a Florida corporation
10.2 Employment Agreement between the Company and Thomas E. Biddix
10.3 Stock Option Agreement between the Company and Thomas E. Biddix
10.4 Employment Agreement between the Company and Timothy F. McWilliams
10.5 Stock Option Agreement between the Company and Timothy F. McWilliams
10.6 Administrative Services Agreement between the Company and Pre-Paid
Solutions, Inc.
10.7 Sublease between the Company and Pre-Paid Solutions, Inc. for the
property located at 255 East Drive, Suite C, Melbourne, Florida
20
<PAGE>
SIGNATURES
In accordance with Section 13 or 15 (d) of the Securities Exchange Act of 1934,
the Registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
PRE-CELL SOLUTIONS, INC.
(Registrant)
Date: December 30, 1999 By: /s/ Thomas E. Biddix
-----------------------------------
Thomas E. Biddix
Chief Executive Officer/Director
In accordance with the Exchange Act, this report has been signed below by the
following persons on behalf of the Registrant and in the capacities and on the
date indicated.
Date: December 30, 1999
By:/s/ Timothy McWilliams
--------------------------------
Timothy McWilliams, Director
21
<PAGE>
CONTENTS
PAGE
INDEPENDENT AUDITOR'S REPORT F-1
CONSOLIDATED BALANCE SHEETS F-2
CONSOLIDATED STATEMENTS OF OPERATIONS F-3
CONSOLIDATED STATEMENTS OF CASH FLOWS F-4
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY F-5
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS F-6
22
<PAGE>
INDEPENDENT AUDITOR'S REPORT
Pre-Cell Solutions, Inc.
Melbourne, Florida
We have audited the accompanying consolidated balance sheets of Pre-Cell
Solutions, Inc. (A Colorado corporation) as of April 30, 1999 and 1998, and the
related consolidated statements of operations, changes in stockholders' equity
and cash flows for the years then ended. 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 audits to obtain
reasonable assurance about whether the consolidated 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 financial position of the Company as of
April 30, 1999 and 1998, and the results of its operations and its cash flows
for the years then ended in conformity with generally accepted accounting
principles.
Certified Public Accountants
November 12, 1999
F-1
<PAGE>
<TABLE>
<CAPTION>
PRE-CELL SOLUTIONS, INC.
(A COLORADO CORPORATION)
CONSOLIDATED BALANCE SHEETS
April 30, 1999 and 1998
ASSETS
1999 1998
------------- -------------
CURRENT ASSETS:
<S> <C> <C>
Cash $ 507 $ -
Certificate of deposit, 4.26% matures June 28, 2000 3,000 -
Stock subscription receivable 3,000 -
Prepaid Service Fees 5,000 -
------------- -------------
TOTAL CURRENT ASSETS 11,507 -
------------- -------------
EQUIPMENT - net of accumulated
Depreciation of $150 1,713 -
------------- -------------
INTANGIBLE ASSETS - net of accumulated amortization
OF $43,000 (Note 2) 1,480,302 -
------------- -------------
$ 1,493,522 $ -
============= =============
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY
1999 1998
------------ ------------
CURRENT LIABILITIES:
<S> <C> <C>
Accounts payable $ 5,003 $ -
Accrued liabilities 82 -
Due to stockholders/officers (Note 4) 330,000 -
Due to Related Party (Note 4) 18,563 -
------------- -------------
TOTAL CURRENT LIABILITIES 353,648 -
------------- -------------
COMMITMENTS
STOCKHOLDERS' EQUITY:
Preferred Stock - $.10 par value;
5,000,000 shares authorized;
none outstanding - -
Common Stock - $.01 par value;
45,000,000 shares authorized 338,484 118,470
Additional paid-in capital 2,318,346 1,252,120
Accumulated Deficit (1,516,956) (1,370,590)
------------- -------------
TOTAL STOCKHOLDERS' EQUITY 1,139,874 -
------------- -------------
$ 1,493,522 $ -
============= =============
</TABLE>
See notes to consolidated financial statements.
F-2
<PAGE>
<TABLE>
<CAPTION>
PRE-CELL SOLUTIONS, INC.
(A COLORADO CORPORATION)
CONSOLIDATED STATEMENTS OF OPERATIONS
For the Years Ended April 30, 1999 and 1998
1999 1998
------------- -------------
<S> <C> <C>
REVENUE $ 22,936 $ -
COST OF REVENUE 17,340 -
------------- -------------
GROSS PROFIT 5,596 -
GENERAL AND ADMINISTRATIVE EXPENSES 151,962 -
------------- -------------
NET LOSS $ (146,366) $ -
============= =============
LOSS PER SHARE $ (.01) $ -
============= =============
WEIGHTED AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING 14,999,623 11,846,985
============= =============
</TABLE>
See notes to consolidated financial statements.
F-3
<PAGE>
<TABLE>
<CAPTION>
PRE-CELL SOLUTIONS, INC.
(A COLORADO CORPORATION)
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Years Ended April 30, 1999 and 1998
1999 1998
------------- -------------
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C>
Net loss $ (146,366) $ -
Adjustments to reconcile net loss to net cash used
in operating activities:
Depreciation 150 -
Amortization 43,000 -
Net increase (decrease) in cash flows from changes in:
Prepaid service fees (5,000) -
Stock subscription receivable (3,000) -
Other (6,062) -
Accounts payable 5,003 -
Accrued liabilities 82 -
Due to stockholders/officers 50,000 -
Due to Related Party 18,563 -
------------- -------------
NET CASH USED IN OPERATING ACTIVITIES (43,630) -
------------- -------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of certificate of deposit (3,000) -
Sale of certificate of deposit 12,000 -
Purchase of Equipment (1,863) -
------------- -------------
NET CASH PROVIDED BY INVESTING ACTIVITIES 7,137 -
------------- -------------
CASH FLOWS FROM FINANCING ACTIVITIES:
ISSUANCE OF COMMON STOCK OF SUBSIDIARY 37,000 -
NET CASH FLOW FROM FINANCING ACTIVITIES 37,000 -
------------- -------------
NET INCREASE IN CASH 507 -
CASH - BEGINNING OF YEAR - -
------------- -------------
CASH - END OF YEAR $ 507 $ -
============= =============
SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING AND FINANCING ACTIVITIES:
On December 1, 1998, the Company issued 31,328,910 shares of common
stock for the net liabilities of Pre-Cell Solutions, Inc., a Florida
Corporation, and 827,090 of common stock for services rendered.
Additionally, the Company declared a 1 for 7 stock split.
</TABLE>
See notes to consolidated financial statements.
F-4
<PAGE>
<TABLE>
<CAPTION>
PRE-CELL SOLUTIONS, INC.
(A COLORADO CORPORATION)
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
For the Years Ended April 30, 1999 and 1998
COMMON STOCK Additional
Shares Paid-In Accumulated
OUTSTANDING AMOUNT CAPITAL DEFICIT TOTAL
------------- ------------ ------------- ------------- --------------
<S> <C> <C> <C> <C> <C>
BALANCE - April 30, 1997 11,846,985 $ 118,470 $ 1,252,120 $ (1,370,590) $ -
NET INCOME - - - - -
------------- ------------ ------------- ------------- --------------
BALANCE - April 30, 1998 11,846,985 118,470 1,252,120 (1,370,590) -
Effect of 1 for 7 stock split (10,150,255) (101,546) 101,546 - -
Issuance of stock in exchange for
the stock in Pre-Cell Solutions, Inc.
(a Florida corporation) 31,328,910 313,289 939,867 - 1,253,156
Issuance of common stock for
services rendered 827,090 8,271 24,813 - 33,084
NET LOSS - - - (146,366) (146,366)
------------- ------------ ------------- ------------- --------------
BALANCE - APRIL 30, 1999 33,852,730 $ 338,484 $ 2,318,346 $ (1,516,956) $ 1,139,874
============= ============ ============= ============= ==============
</TABLE>
See notes to consolidated financial statements.
F-5
<PAGE>
PRE-CELL SOLUTIONS, INC.
(A COLORADO CORPORATION)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Years Ended April 30, 1999 and 1998
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BUSINESS - Pre-Cell Solutions, Inc. (the Company) f/k/a
Transamerican Petroleum Corporation ("Transamerican"), was
incorporated in Colorado in 1981. The Company, located in
Melbourne, Florida, operates as a competitive local exchange
carrier (CLEC), utilizing Bell South interconnection services.
Such local telephone service is provided throughout Florida.
Prior to December 1, 1998, the Company had been virtually
inactive since 1995.
PRINCIPLES OF CONSOLIDATION - These consolidated financial
statements present the Company and its wholly-owned
subsidiary, Pre-Cell Solutions, Inc., a Florida corporation.
All intercompany transactions and balances have been
eliminated.
USE OF ESTIMATES - The preparation of the consolidated
financial statements in conformity with generally accepted
accounting principles requires management to make estimates
and assumptions that affect certain reported amounts and
disclosures. Accordingly, actual results could differ from
those estimates.
CASH - Cash consists of bank deposits, which at times may
exceed federally insured limits.
EQUIPMENT - Equipment is recorded at cost. Depreciation is
calculated using the straight-line method over the estimated
useful lives of the assets, generally five years. Expenditures
for repairs and maintenance are charged to operations as
incurred.
GOODWILL - The excess of purchase price over net liabilities
acquired in a business combination is accounted for as
goodwill, which is being amortized over fifteen years
utilizing the straight-line method.
INCOME TAXES - The Company accounts for income taxes pursuant
to Statement of Financial Accounting Standards No. 109 (SFAS
109). SFAS 109 requires the recognition of deferred tax assets
and liabilities and adjustments to deferred tax balances for
changes in tax law and rates. In addition, future tax benefits
such as net operating loss carryforwards are recognized to the
extent recognition of such benefits is more likely than not.
F-6
<PAGE>
PRE-CELL SOLUTIONS, INC.
(A COLORADO CORPORATION)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Years Ended April 30, 1999 and 1998
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued
EARNINGS OR LOSS PER SHARE - Earnings or loss per share is
computed based on the weighted average number of common shares
outstanding. The number of shares used in computing the loss
per common share at April 30, 1999 and 1998 was 14,999,623 and
11,846,985, respectively.
NOTE 2 ACQUISITION
On December 1, 1998, the Company exchanged 31,328,910 shares
of its common stock for the outstanding common stock of
Pre-Cell Solutions, Inc., a Florida corporation in a
transaction accounted for as a purchase. The total purchase
price approximated $1,523,000. The excess of the purchase
price over the net liabilities assumed is accounted for as
goodwill.
NOTE 3 INCOME TAXES
At April 30, 1999 and 1998, the Company has approximately
$370,000 of net operating loss carryforwards expiring through
2014, which would have resulted in a deferred tax asset of
approximately $275,000 at April 30, 1999 and 1998. The Company
has not recognized the deferred tax asset applicable to the
carryforward as the balance is offset by a valuation
allowance.
NOTE 4 RELATED PARTY TRANSACTIONS
The Company leases its offices from a related party under a
sublease. The agreement calls for monthly rental payments
totaling approximately $500 with annual renewal options
through June, 2001. Total rent for the year ended April 30,
1999 approximated $4,600 and is included in current
liabilities at April 30, 1999.
The Company has entered into an administrative services
agreement with a related party totaling $1,000 per month
through June 30, 2001. Total fees under this agreement for the
year ended April 30, 1999 totaled $10,000 and is included in
current liabilities at April 30, 1999.
F-7
<PAGE>
PRE-CELL SOLUTIONS, INC.
(A COLORADO CORPORATION)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Years Ended April 30, 1999 and 1998
NOTE 4 RELATED PARTY TRANSACTIONS - Continued
The Company has entered into employment agreements with two
stockholders/officers. Such agreements require annual payments
totaling $180,000 and $95,000, respectively, to each executive
per year through June 30, 1999. Fees under this agreement
totaled $330,000 and are included in current liabilities.
Additionally, the agreements provide for the executives to
receive a total of 4,000,000 and 3,000,000 options,
respectively to purchase common stock at $.04 per share. These
options vest on December 1, 1999 and are exercisable for a
term of five years.
NOTE 5 CONTINGENCIES
The Company is an over-the-counter (OTC) bulletin board
company. In July, 1999, the Company changed its trading symbol
from TAMP to TDCM. However, the Company remains delinquent in
its S.E.C. filings; the last Form 10-K was filed for the year
ended June 30, 1995.
Additionally, the Company is delinquent in its filings with
the Internal Revenue Service.
The effects, if any, of any penalties relating to the above
are not reflected in these consolidated financial statements.
NOTE 6 YEAR 2000 (UNAUDITED)
Management has assessed the Company's exposure to date
sensitive computer hardware and software programs that may not
be operative subsequent to 1999 and has implemented a
requisite course of action to minimize Year 2000 risk and
ensure that neither significant costs nor disruption of normal
business operations are encountered. However, because there is
no guarantee that all systems of outside vendors or other
entities affecting the Company's operations will be 2000
compliant, the Company remains susceptible to consequences of
the Year 2000 Issue.
F-8
SHARE EXCHANGE AGREEMENT
THIS SHARE EXCHANGE (the "Agreement") is made and entered into as of
the 1st day of December 1998 (the "Effective Date") between Thomas E. Biddix
(the "Seller"), and Transamerican Petroleum Corporation, a Colorado Corporation
(the "Purchaser").
W I T N E S S E T H :
WHEREAS, Seller holds all of the issued and outstanding shares of
capital stock of Pre-Cell Solutions, Inc., a Florida corporation ("Pre-Cell"),
which consist of 100 shares of common stock, par value $.01 per share (the
"Shares"); and
WHEREAS, the Purchaser desires to acquire all of the Shares from Seller
by exchanging shares of its common stock for the Shares on the terms and
conditions set forth in this Agreement; and
WHEREAS, the Seller desires to exchange his Shares for shares of the
Purchaser's common stock on the terms and conditions set forth in this
Agreement;
NOW, THEREFORE, in consideration of the mutual promises and covenants
herein contained, and other good and valuable consideration, the receipt of
which is hereby acknowledged, the parties hereby agree as follows:
1. Incorporation by Reference. The above recitals are true and correct
and are incorporated herein by this reference.
2. Share Exchange. Subject to the terms and conditions of this
Agreement, the Purchaser shall acquire all of the Seller's Shares in Pre-Cell in
exchange for 32,156,000 shares of Purchaser's common stock, par value $.01 per
share (the "Exchange Shares"). Simultaneous with the execution of this
Agreement, Seller shall deliver to Purchaser duly endorsed certificates
representing all of the Pre-Cell Shares. Upon receipt of the Pre-Cell Shares,
Purchaser shall deliver to Seller the Exchange Shares.
3. Directors and Officers. Upon consummation of the transactions
contemplated by this Agreement, the current directors shall appoint Thomas E.
Biddix and Timothy F. McWilliams as directors of the Purchaser. Thereafter,
Georges Laroze, Sylvain Laroze and Valerie Puccia shall resign as directors.
<PAGE>
4. Closing and Conditions to Closing.
4.1 Closing. The closing of the transactions contemplated by
this Agreement (the "Closing") shall take place and be effective simultaneously
with the execution of this Agreement (the "Closing Date").
4.2 Conditions to Closing. The Closing shall be subject to
satisfaction of the conditions that (i) the representations and warranties of
the Seller contained in Section 5 hereof and the Purchaser contained in Section
6 hereof shall be true and correct in all material respects; (ii) the Seller
shall have delivered to the Purchaser duly authorized certificates representing
the Shares; (iii) the Purchaser shall have delivered to Seller certificates
representing the Exchange Shares; and (iv) the Purchaser and Seller shall have
performed and complied with all agreements and conditions required by this
Agreement to be performed and complied with by such party.
5. Representations and Warranties of the Seller. Seller hereby
represents and warrants to the Purchaser as follows:
5.1 Organization and Standing of Pre-Cell. Pre-Cell is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Florida, and is entitled to own or lease its property and to
carry on its business as and in the places where such properties are now owned,
leased or operated. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly and validly
authorized by all necessary corporate action on the part of Pre-Cell, and will
not by themselves result in a breach or default under, or result in the creation
of any lien, security interest, charge or encumbrance upon the Shares, or any of
the properties or assets of Pre-Cell as a result of the terms, conditions or
provisions of any contract, note, mortgage or any other agreement, instrument or
obligation to which Pre-Cell is a party or by which Pre-Cell or any of its
properties or assets may be bound.
5.2 Capitalization. The authorized capital stock of Pre-Cell
consists of _____ shares of common stock, par value $.01 per share, one hundred
(100) of which are presently issued and outstanding. There are currently no
outstanding warrants, options, subscription rights or other commitments of any
character granted by Pre-Cell relating to the issued or unissued shares of
capital stock of Pre-Cell.
5.3 Authority of Seller, Consents; Execution of Agreements.
Seller has all requisite power, authority, and capacity to enter into this
Agreement and to perform the transactions and obligations to be performed by him
hereunder. No consent, authorization, approval, license, permit or order of, or
filing with, any person or governmental authority is required in connection with
the execution or the transactions and obligations to be performed by him
hereunder. This
2
<PAGE>
Agreement has been duly executed and delivered by Seller and constitutes a valid
and legally binding obligation of Seller, enforceable in accordance with its
terms, except as enforcement thereof may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws.
5.4 The Shares. The Shares are free and clear of all liens,
pledges, hypothecation, option, contract and other encumbrance, except for such
restrictions provided in this Agreement and pursuant to applicable law.
5.5 Investment. The Seller warrants and acknowledges that:
5.5.1 the Exchange Shares have not been registered
under the Securities Act of 1933, as amended ("Act"), or under applicable state
blue sky laws;
5.5.2 the Seller is acquiring the Exchange Shares
for his own account;
5.5.3 the Seller is aware that the Exchange Shares
may not be sold unless such securities are registered pursuant to the Act or
qualify for an exemption from such registration.
6. Represenations and Warranties of the Purchaser. The Purchaser hereby
represents and warrants to the Seller as follows:
6.1 Organization and Standing of Purchaser. Purchaser is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Colorado, and is entitled to own or lease its property and to
carry on its business as and in the places where such properties are now owned,
leased or operated. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly and validly
authorized by all necessary corporate action on the part of Purchaser, and will
not by themselves result in a breach or default under, or result in the creation
of any lien, security interest, charge or encumbrance upon the Exchange Shares,
or any of the properties or assets of Purchaser as a result of the terms,
conditions or provisions of any contract, note, mortgage or any other agreement,
instrument or obligation to which Purchaser is a party or by which Purchaser or
any of its properties or assets may be bound.
6.2 Authority of the Purchasers; Execution of Agreement. The
Purchaser has all requisite power, authority and capacity to enter into this
Agreement and to perform the transactions and obligations to be performed by
them hereunder. No consent, authorization, approval, license, permit or order
of, or filing with, any person or governmental authority is required in
connection with the execution of the transactions and obligations to be
performed by them hereunder. This Agreement has been duly executed and delivered
by the Purchaser and constitutes a valid and legally
3
<PAGE>
binding obligation of the Purchaser, enforceable in accordance with its terms,
except as enforcement thereof may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws.
6.3 Exchange Shares. The Exchange Shares to be issued pursuant
to Section 3 hereof shall constitute validly authorized and issued, fully paid
and non-assessable shares of Purchaser and shall not be subject to any liens,
security interests, encumbrances, options or agreements with respect thereto.
7. Notices. All notices or other communications required or permitted
hereunder shall be in writing and shall be deemed to have been duly given if
physically delivered, delivered by reputable overnight courier or confirmed
facsimile addressed to the recipient at the address listed on the signature page
of the Agreement. Any of the foregoing addresses may be changed by giving notice
of such change in the foregoing manner, except that notices for changes of
address will be effective only upon receipt.
8. Miscellaneous.
(a) Assignment. This Agreement and the rights granted
hereunder may not be assigned in whole or in part by any of the parties without
the prior written consent of the other parties.
(b) Further Assurances. All parties hereto shall execute and
deliver such other instruments and do such other acts as may be necessary to
carry out the intent and purposes of this Agreement.
(c) Gender. Whenever the context may require, any pronouns
used herein shall include the corresponding masculine, feminine or neuter forms
and the singular form of nouns and pronouns shall include the plural and vice
versa.
(d) Captions. The captions contained in this Agreement are
inserted only as a matter of convenience and in no way define, limit, extend or
prescribe the scope of this Agreement or the intent of any of the provisions
hereof.
(e) Entire Agreement. This Agreement constitutes the entire
agreement between the parties hereto with respect to the subject matter hereof.
It supersedes all prior negotiations, letters and understandings relating to the
subject matter hereof.
4
<PAGE>
(f) Amendment. This Agreement may not be amended, supplemented
or modified in whole or in part except by an instrument in writing signed by the
party or parties against whom enforcement of any such amendment, supplement or
modification is sought.
(g) Choice of Law. This Agreement will be interpreted,
construed and enforced in accordance with the laws of the State of Florida.
(h) Effect of Waiver. The failure of any party at any time or
times to require performance of any provision of this Agreement will in no
manner affect the right to enforce the same. The waiver by any party of any
breach of any provision of this Agreement will not be construed to be a waiver
by any such party of any succeeding breach of that provision or a waiver by such
party of any breach of any other provision.
(i) Severability. Whenever possible, each provision of this
Agreement will be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be invalid,
illegal or unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability will not affect
any other provision or any other jurisdiction, but this Agreement will be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision had never been contained herein.
(j) Enforcement. Should it become necessary for any party to
institute legal action to enforce the terms and conditions of this Agreement,
the successful party will be awarded reasonable attorneys' fees at all trial and
appellate levels, expenses and costs. Venue for any such action, in addition to
any other venue permitted by statute, will be Broward County, Florida.
(k) Binding Nature. This Agreement will be binding upon and
will inure to the benefit of any successor or successors of the parties to this
Agreement.
(l) Counterparts. This Agreement may be executed in one or
more counterparts, each of which will be deemed an original and all of which
together will constitute one and the same instrument.
(m) Construction. This Agreement shall be construed within the
fair meaning of each of its terms and not against the party drafting the
document.
The parties, as evidenced by their signatures below, acknowledge that
this Agreement has been presented to their attorneys and that their attorneys
have had the opportunity to review
5
<PAGE>
and explain to them the terms and provisions of the Agreement, and that they
fully understand those terms and provisions.
IN WITNESS WHEREOF, the parties have respectively caused this Agreement
to be executed on the date first above written.
SELLER:
THOMAS E. BIDDIX
By: /s/ Thomas E. Biddix
----------------------------------
Thomas E. Biddix
PURCHASER:
TRANSAMERICAN PETROLEUM CORPORATION
By: /s/ Timothy F. McWilliams
----------------------------------
Printed name: Timothy F. McWilliams
Title: COO
6
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement"), dated as of December 1,
1998 is entered into between THOMAS E. BIDDIX, residing at 688 Carriage Hill
Road, Melbourne, FL 32940 ("Executive"), and PRE-CELL SOLUTIONS, INC., a
Colorado corporation having its principal office at 255 East Drive, Suite C,
Melbourne, Florida 33326 ("Company").
WHEREAS, the Company and Executive desire to provide for the employment
of Executive by the Company on the terms set forth herein;
IT IS AGREED:
1. Employment, Duties and Acceptance.
1.1 The Company hereby employs Executive as its President and
Chief Executive Officer and President to supervise and control the Company's
business. All of Executive's powers and authority in any capacity shall at all
times be subject to the reasonable direction and control of the Company's board
of directors (the "Board").
1.2 The Board may assign to Executive such other executive
duties for the Company or any Affiliate (as defined in Section 5.1) as are
consistent with Executive's status as Chief Executive Officer and President.
1.3 Executive accepts such employment and agrees to devote a
sufficient portion of his business time, energies and attention to the
performance of his duties. Executive shall perform his duties primarily in and
from the Company's offices located in Melbourne, Florida.
2. Compensation and Benefits.
2.1 The Company shall pay to Executive a base salary
("Salary") at the aggregate rate of $180,000 per annum during the Employment
Term (as such term is defined in Section 3.1, below). Executive's Salary shall
be paid in equal, periodic installments, in accordance with
<PAGE>
the Company's normal payroll procedures and shall be subject to withholding
taxes and other normal payroll deductions.
2.2 The Company may award Executive a bonus (the "Bonus") at
the sole discretion of the Board, which Bonus shall be determined based upon
Executive's performance and the Company's performance generally. Notwithstanding
the foregoing, Executive understands that the Company is not obligated under any
circumstances, to award any such Bonus.
2.3 The Company shall annually review Executive's performance.
Based upon such review and such other factors as the Company may consider, the
Company may determine to increase Executive's salary. Notwithstanding the
foregoing, Executive understands that the Company is not obligated under any
circumstances, to award any such increase in salary.
2.4 Executive shall be entitled to such medical, dental and
disability insurance which is no less favorable than generally afforded to other
senior executives of the Company, subject to applicable waiting periods and
other conditions. Executive shall be entitled to four weeks of vacation in each
employment year and to a reasonable number of other days off for religious and
personal reasons. Executive acknowledges that the Company may, from time to
time, apply for and take out in its own name and at its expense, life, health,
disability, accident or other insurance, including key man insurance, upon
Executive that the Company may deem necessary and advisable to protect its
interests hereunder; and Executive agrees to submit to any medical or other
reasonable examination necessary for such purpose and to assist and cooperate
with the Company in procuring such insurance; and Executive acknowledges that he
shall have no right, title or interest in or to such insurance.
2.5 The Company will pay or reimburse Executive for all
transportation, hotel and other expenses reasonably incurred by Executive on
business trips and for all other ordinary and reasonable out-of-pocket expenses
actually incurred by him in the conduct of the business of the Company against
itemized vouchers submitted with respect to any such expenses approved in
accordance with customary procedures.
2.6 Simultaneous with the execution of this Agreement, the
Company will grant Executive the option to purchase 4,000,000 shares of the
Company's common stock, par value $.01 per share at an exercise price of $.04
per share (the "Option"). The Option shall fully vest one year after the grant
date and shall remain exercisable for a period of five years after vesting. The
Option
2
<PAGE>
shall be evidenced by a Stock Option Agreement entered into between the Company
and Executive of even date herewith.
3. Term and Termination.
3.1 The term of this Agreement commences as of December 1,
1998 and shall continue until December 1, 2001 (the "Employment Term"), unless
sooner terminated or extended as herein provided.
3.2 If Executive dies during the term of this Agreement, this
Agreement shall thereupon terminate.
3.3 The Company, by notice to Executive, may terminate this
Agreement if Executive shall fail because of illness or incapacity to render,
for six consecutive months, services of the character contemplated by this
Agreement.
3.4 The Company, by not less than 30 days notice to Executive,
may terminate this Agreement without cause at any time. In the event of such
termination the Company shall pay to Executive the salary due Executive pursuant
to Paragraph 2.1 through the Employment Term as provided in Section 3.1.
Notwithstanding such termination, the provisions of paragraph 4 shall survive.
3.5 The Company, by notice to Executive, may terminate this
Agreement for cause. As used herein, "cause" shall include, but not be limited
to: (a) the refusal or failure by Executive to carry out specific directions of
the Board of Directors which are of a material nature, or the refusal or failure
by Executive to perform a material part of Executive's duties hereunder; (b) the
commission by Executive of a material breach of any of the provisions of this
Agreement; (c) common law fraud or dishonest action by Executive in his
relations with the Company or any of its subsidiaries or affiliates, or with any
customer or business contact of the Company or any of its subsidiaries or
affiliates ("dishonest" for these purposes shall mean Executive's knowingly or
recklessly making of a material misstatement or omission for his personal
benefit); or (d) the conviction of Executive of any crime involving an act of
moral turpitude. Notwithstanding the foregoing, no "cause" for termination shall
be deemed to exist with respect to Executive's acts described in clauses (a) or
(b) above, unless the Company shall have given written notice to Executive
specifying the "cause" with reasonable particularity and, within ten business
days after such notice, Executive shall not have cured or eliminated the problem
or thing giving rise to such "cause;" provided, however,
3
<PAGE>
that a breach of any provision of clauses (a) or (b) above, involving the same
or substantially similar actions or conduct for which the Company previously
gave notice of termination and with respect to which, Executive satisfactorily
cured, shall be grounds for termination for cause without any additional notice
from the Company. Notwithstanding such termination, the provisions of paragraph
4 shall survive.
3.6 The Executive, by notice to the Company, may terminate
this Agreement if the Company materially breaches any of the provisions of this
Agreement. Notwithstanding the foregoing, the Executive shall not have grounds
for termination unless Executive shall have given written notice to the Company
specifying the breach with reasonable particularity and, within ten days after
such notice, the Company shall not have cured or eliminated the problem or thing
giving rise to such breach; provided, however, that a breach of any provision of
this Agreement involving the same or substantially similar actions or conduct
for which the Executive previously gave notice of termination and with respect
to which, the Company satisfactorily cured, shall be grounds for termination for
cause without any additional notice from the Executive. In the event of
termination by Executive under this Section 3.6, the Company shall pay to
Executive the Salary due Executive pursuant to paragraph 2.1 hereof through the
Employment Term. Notwithstanding such termination, the provisions of paragraph 4
shall survive termination if the Company continues to pay Executive the Salary
as provided in the immediately preceding sentence.
4. Protection of Confidential Information; Non-Competition.
4.1 Executive acknowledges that:
(a) As a result of his employment with the Company,
Executive will obtain secret and confidential information concerning the
business of the Company and/or its subsidiaries and affiliates (referred to
collectively in this paragraph 4 as the "Company"), including, without
limitation, financial information, designs and other proprietary rights, trade
secrets and "know-how," customers and sources ("Confidential Information").
(b) The Company will suffer substantial damage which
will be difficult to compute if, during the period of his employment with the
Company or thereafter, Executive should divulge Confidential Information.
(c) The provisions of this Agreement are reasonable
and necessary for the protection of the business of the Company.
4
<PAGE>
4.2 Executive agrees that he will not at any time, either
during the term of this Agreement or thereafter, divulge to any person or entity
any Confidential Information obtained or learned by him as a result of his
employment with, or prior retention by, the Company, except (i) in the course of
performing his duties hereunder; (ii) with the Company's express written
consent; (iii) to the extent that any such information is in the public domain
other than as a result of Executive's breach of any of his obligations
hereunder; or (iv) where required to be disclosed by court order, subpoena or
other government process. If Executive shall be required to make disclosure
pursuant to the provisions of clause (iv) of the preceding sentence, Executive
promptly, but in no event more than 72 hours after learning of such subpoena,
court order, or other government process, shall notify, by personal delivery or
by electronic means, confirmed by mail, the Company and, at the Company's
expense, Executive shall: (a) take all reasonably necessary and lawful steps
required by the Company to defend against the enforcement of such subpoena,
court order or other government process, and (b) permit the Company to intervene
and participate with counsel of its choice in any proceeding relating to the
enforcement thereof.
4.3 Upon termination of his employment with the Company,
Executive will promptly deliver to the Company all memoranda, notes, records,
reports, manuals, drawings, blueprints and other documents (and all copies
thereof) relating to the business of the Company and all property associated
therewith, which he may then possess or have under his control; provided,
however, subject to Executive's obligations under this Section 4, that Executive
shall be entitled to retain copies of such documents reasonably necessary to
document his financial relationship (both past and future) with the Company.
4.4 If Executive commits a breach, or threatens to commit a
breach, of any of the provisions of Sections 4.2, the Company shall have the
right and remedy:
(a) to have the provisions of this Agreement
specifically enforced by any court having equity jurisdiction, it being
acknowledged and agreed by Executive that any such breach or threatened breach
will cause irreparable injury to the Company and that money damages will not
provide an adequate remedy to the Company; and
(b) to require Executive to account for and pay over
to the Company all monetary damages suffered by the Company as the result of any
transactions constituting a breach of any of the provisions of Sections 4.2, and
Executive hereby agrees to account for and pay over such damages to the Company.
5
<PAGE>
Each of the rights and remedies enumerated in this Section 4.4
shall be independent of the other, and shall be severally enforceable, and such
rights and remedies shall be in addition to, and not in lieu of, any other
rights and remedies available to the Company under law or equity.
In connection with any legal action or proceeding arising out
of Section 4.4, the prevailing party in such action or proceeding shall be
entitled to be reimbursed by the other party for the reasonable attorneys' fees
and costs incurred by the prevailing party.
4.5 If Executive shall violate any covenant contained in
Section 4 the duration of such covenant so violated shall be automatically
extended for a period of time equal to the period of such violation.
4.6 The provisions of this paragraph 4 shall survive the
termination of this Agreement for any reason.
5. Definitions.
As used in this Agreement:
5.1 "Affiliate" shall mean any entity that, directly or
indirectly, is controlled by, controlling, or under common control with the
Company.
6. Miscellaneous Provisions.
6.1 All notices provided for in this Agreement shall be in
writing, and shall be deemed to have been duly given when delivered personally
to the party to receive the same, when transmitted by electronic means, or when
delivered by reputable overnight courier, postage prepaid, addressed to the
party to receive the same at his or its address set forth below, or such other
address as the party to receive the same shall have specified by written notice
given in the manner provided for in this Section 6.1. All notices shall be
deemed to have been given upon actual receipt.
If to Executive:
Thomas E. Biddix
688 Carriage Hill Road
Melbourne, Fl, 32940
If to the Company:
Pre-Cell Solutions, Inc.
255 East Drive, Suite C
Melbourne, Florida 33326
Attention: Chairman of the Board
6
<PAGE>
6.2 This Agreement sets forth the entire agreement of the
parties relating to the employment of Executive and are intended to supersede
all prior negotiations, understandings and agreements. No provisions of this
Agreement may be waived or changed except by a writing by the party against whom
such waiver or change is sought to be enforced. The failure of any party to
require performance of any provision hereof or thereof shall in no manner affect
the right at a later time to enforce such provision.
6.3 All questions with respect to the construction of this
Agreement, and the rights and obligations of the parties hereunder, shall be
determined in accordance with the law of the State of Florida applicable to
agreements made and to be performed entirely in Florida.
6.4 This Agreement shall inure to the benefit of and be
binding upon the successors and assigns of the Company. This Agreement shall not
be assignable by Executive, but shall inure to the benefit of and be binding
upon Executive's heirs and legal representatives.
6.5 Should any provision of this Agreement become legally
unenforceable, no other provision of this Agreement shall be affected, and this
Agreement shall continue as if the Agreement had been executed absent the
unenforceable provision.
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first above written.
EXECUTIVE
/s/ Thomas E. Biddix
-----------------------------------
Thomas E. Biddix
PRE-CELL SOLUTIONS, INC.
By: /s/ Timothy F. McWilliams
---------------------------------
Printed name: Timothy F. McWilliams
Title: COO
7
STOCK OPTION AGREEMENT
Agreement, made as of December 1, 1998, by and between Pre-Cell
Solutions, Inc., a Colorado corporation (the "Company"), and Thomas E. Biddix
(the "Employee").
WHEREAS, on December 1, 1998 (the "Grant Date"), the board of directors
authorized the employment of the employee pursuant to the terms of an employment
agreement dated as of December 1, 1998, and the grant to the employee of an
option (the "Option") to purchase an aggregate of 4,000,000 shares of the
authorized but unissued common stock of the company, $.01 par value ("Common
Stock"), conditioned upon the Employee's acceptance thereof upon the terms and
conditions set forth in this Agreement; and
WHEREAS, the Employee desires to acquire the option on the terms and
conditions set forth in this Agreement;
IT IS AGREED:
1. Grant of Stock Option. The Company hereby grants to the Employee the
right and option ("Option") to purchase all or any part of an aggregate of
4,000,000 shares of Common Stock ("Option Shares") on the terms and conditions
set forth herein. The Option represented hereby is a non-qualified stock option
not intended to qualify under any section of the Internal Revenue Code of 1986,
as amended, and is not granted under any plan.
Certain terms used herein, however, are defined under the Plan.
2. Exercise Price. The exercise price ("Exercise Price") of the Option
shall be $0.04 per share.
3. Exercisability. This Option is exercisable, subject to the terms and
conditions of this Agreement, one year after the Grant Date. After the Option
vests, it shall remain exercisable for a period of five years from the date of
vesting, except as otherwise set forth in this Agreement (the "Exercise
Period").
4. Effect of Termination of Employment.
<PAGE>
4.1 Termination Due to Death. If Employee's employment by the
Company terminates by reason of death, the Option shall become fully vested and
exercisable and may thereafter be exercised by the legal representative of the
estate or by the legatee of the Employee under the will of the Employee, for a
period of six months from the date of such death or until the expiration of the
Exercise Period, whichever period is shorter.
4.2 Termination Due to Disability. If Employee's employment by
the Company terminates by reason of Disability (as such term is defined under
the Plan), the Option shall become fully vested and exercisable and may
thereafter be exercised by the Employee for a period of six months from the date
of such termination or until the expiration of the Exercise Period, whichever
period is shorter.
4.3 Termination by the Company Without Cause and/or Due to
Retirement. If Employee's employment is terminated by the Company without cause
or due to Normal Retirement (as such term is defined under the Plan), then (i)
the portion of the Option which has vested by the date of termination of
employment may be exercised by the Employee until the expiration of the Exercise
Period and (ii) the portion of the Option that will vest within one year of the
date of termination of employment shall become fully vested and may be exercised
by the Employee until the expiration of the Exercise Period. The portion of the
Option not exercisable within one year of the date of termination of employment
shall immediately expire.
4.4 Other Termination.
(1) If Employee's employment is terminated for any
reason other than (i) death, (ii) Disability, (iii) Normal Retirement, or (iv)
without cause by the Company, the Option shall expire on the date of termination
of employment.
(2) The Board of Directors, in the event the
Employee's employment is terminated for cause, may require the Employee to
return to the Company the economic benefit of any Option Shares purchased
hereunder by the Employee within the six month period prior to the date of
termination. In such event, the Employee hereby agrees to remit to the
2
<PAGE>
Company, in cash, an amount equal to the difference between the Fair Market
Value (as such term is defined under the Plan) of the Option Shares on the date
of termination (or the sales price of such Shares if the Option Shares were sold
during such six month period) and the Exercise Price of such Shares.
5. Withholding Tax. Not later than the date as of which an amount first
must be included in the gross income of the Employee for Federal income tax
purposes with respect to the Option, the Employee shall pay to the Company, or
make arrangements satisfactory to the Committee regarding the payment of, any
Federal, state and local taxes of any kind required by law to be withheld or
paid with respect to such amount ("Withholding Tax"). The obligations of the
Company under the Plan and pursuant to this Agreement shall be conditioned upon
such payment or arrangements with the Company and the Company shall, to the
extent permitted by law, have the right to deduct any Withholding Taxes from any
payment of any kind otherwise due to the Employee from the Company.
6. Adjustments. In the event of any change in the number of outstanding
shares of Common Stock of the Company occurring as the result of a stock split,
reverse stock split or stock dividend on the Common Stock, after the Grant Date,
the Company shall proportionately adjust the number of Option Shares and the
Exercise Price of the Option. Any right to acquire a fractional Option Share
resulting from adjustments will be rounded to the nearest whole Option Share. If
the Company shall be the surviving corporation in any merger, combination or
consolidation, this Option shall pertain and apply to the Option Shares to which
the Employee is entitled hereunder, without adjustment. In the event of a change
in the par value of the shares of Common Stock which are subject to this Option,
this Option will be deemed to pertain to the shares resulting from any such
change. To the extent that the foregoing adjustments relate to Common Stock, the
adjustments will be made by the Board of Directors whose determination will be
final, binding and conclusive.
7. Method of Exercise.
3
<PAGE>
7.1 Notice to the Company. The Option may be exercised in
whole or in part by written notice in the form attached hereto as Exhibit A
directed to the Company at its principal place of business accompanied by full
payment as hereinafter provided of the exercise price for the number of Option
Shares specified in the notice and of the Withholding Taxes, if any.
7.2 Delivery of Option Shares. The Company shall deliver a
certificate for the Option Shares to the Employee as soon as practicable after
payment therefor.
7.3 Payment of Purchase Price.
7.3.1 Cash Payment. The Employee shall make cash
payments by wire transfer, certified or bank check or personal check, in each
case payable to the order of the Company; the Company shall not be required to
deliver certificates for Option Shares until the Company has confirmed the
receipt of good and available funds in payment of the purchase price thereof.
7.3.2 Stock Payment. The Board of Directors, in its
sole discretion, may allow Employee to use Common Stock of the Company owned by
him to make any required payments by delivery of stock certificates in
negotiable form which are effective to transfer good and valid title thereto to
the Company, free of any liens or encumbrances. Shares of Common Stock used for
this purpose shall be valued at the Fair Market Value. Notwithstanding the
foregoing, the Company shall have the right to reject payment in the form of
Common Stock if in the opinion of counsel for the Company, (i) it could result
in an event of "recapture" under Section 16(b) of the Securities Exchange Act of
1934; (ii) such shares of Common Stock may not be sold or transferred to the
Company; or (iii) such transfer could create legal difficulties for the Company.
8. Nonassignability. The Option shall not be assignable or
transferable, except by will or by the laws of descent and distribution in the
event of the death of the Employee. No transfer of the Option by the Employee by
will or by the laws of descent and distribution shall be effective to bind the
Company unless the Company shall have been furnished with written notice
4
<PAGE>
thereof and a copy of the will and/or such other evidence as the Company may
deem necessary to establish the validity of the transfer and the acceptance by
the transferee or transferees of the terms and conditions of the Option.
9. Accelerated Vesting and Exercisability. If (i) any person or entity
other than the Company and/or any officer, director or principal stockholder
(i.e., a holder [beneficially or of record] of more than ten percent of the
Company's voting stock) of the Company acquires securities of the Company (in
one or more transactions) having 25% or more of the total voting power of all
the Company's securities then outstanding and (ii) the Board of Directors of the
Company does not authorize or otherwise approve such acquisition, then the
vesting periods of the Option shall be accelerated and the Option shall
immediately and entirely vest. In such event, Employee shall have the immediate
right to purchase all the Option Shares, subject to the provisions of this
Agreement.
10. Company Representations. The Company hereby represents and warrants
to the Employee that:
(1) the Company, by appropriate and all required
action, is duly authorized to enter into this Agreement and consummate
all of the transactions contemplated hereunder; and
(2) the Option Shares, when issued and delivered by
the Company to the Employee in accordance with the terms and conditions
hereof, will be duly and validly issued and fully paid and
non-assessable.
11. Employee Representations. The Employee hereby represents and
warrants to the Company that:
(1) he is acquiring the Option and shall acquire the
Option Shares for his own account and not with a view towards the
distribution thereof;
(2) he has received a copy of all reports and
documents required to be filed by the Company with the Securities and
Exchange Commission pursuant to the Securities Exchange Act of 1934, as
amended, within the last 24 months and all reports issued by the
Company to its stockholders;
5
<PAGE>
(3) he understands that he must bear the economic
risk of the investment in the Option Shares, which cannot be sold by
him unless they are registered under the Securities Act of 1933 (the
"1933 Act") or an exemption therefrom is available thereunder and that
the Company is under no obligation to register the Option Shares for
sale under the 1933 Act;
(4) in his position with the Company, he has had both
the opportunity to ask questions and receive answers from the officers
and directors of the Company and all persons acting on its behalf
concerning the terms and conditions of the offer made hereunder and to
obtain any additional information to the extent the Company possesses
or may possess such information or can acquire it without unreasonable
effort or expense necessary to verify the accuracy of the information
obtained pursuant to clause (ii) above;
(5) he is aware that the Company shall place stop
transfer orders with its transfer agent against the transfer of the
Option Shares in the absence of registration under the 1933 Act or an
exemption therefrom as provided herein; and
(6) if, at the time of issuance of the Option Shares,
the issuance of such shares have not been registered under the 1933
Act, the certificates evidencing the Option Shares shall bear the
following legend:
"The shares represented by this certificate have been
acquired for investment and have not been registered under
the Securities Act of 1933. The shares may not be sold or
transferred in the absence of such registration or an
exemption therefrom under said Act."
12. Restriction on Transfer of Option Shares.
12.1 Anything in this Agreement to the contrary
notwithstanding, Employee hereby agrees that he shall not sell, transfer by any
means or otherwise dispose of the Option Shares acquired by him without
registration under the 1933 Act, or in the event that they are not so
registered, unless (i) an exemption from the 1933 Act registration requirements
is available thereunder, and (ii) the Employee has furnished the Company with
notice of such proposed transfer and the Company's legal counsel, in its
reasonable opinion, shall deem such proposed transfer to be so exempt.
12.2 Anything in this Agreement to the contrary
notwithstanding, Employee hereby agrees that he shall not sell, transfer by any
means or otherwise dispose of the Option Shares acquired by him (i) prior to six
months after the Grant Date and (ii) except in accordance with Company's policy,
if any, regarding the sale and disposition of securities owned by employees
and/or directors of the Company.
13. Miscellaneous.
13.1 Notices. All notices, requests, deliveries, payments,
demands and other communications which are required or permitted to be given
under this Agreement shall be in writing and shall be either delivered
personally, transmitted by electronic means or sent by a nationally recognized
next-day courier to the parties at their respective addresses set forth herein,
or to such other address as either shall have specified by notice in writing to
the other. Notice shall be deemed duly given hereunder when delivered or
transmitted as provided herein.
13.2 Employee and Stockholder Rights. The Employee shall not
have any of the rights of a stockholder with respect to the Option Shares until
such shares have been issued after the due exercise of the Option. Nothing
contained in this Agreement shall be deemed to confer upon Employee any right to
continued employment with the Company or any subsidiary thereof, nor shall it
interfere in any way with the right of the Company to terminate Employee in
6
<PAGE>
accordance with the provisions regarding such termination set forth in
Employee's written employment agreement with the Company, or if there exists no
such agreement, to terminate Employee at will.
13.3 Waiver. The waiver by any party hereto of a breach of any
provision of this Agreement shall not operate or be construed as a waiver of any
other or subsequent breach.
13.4 Entire Agreement. This Agreement constitutes the entire
agreement between the parties with respect to the subject matter hereof. This
Agreement may not be amended except by writing executed by the Employee and the
Company.
13.5 Binding Effect; SUCCESSORS. This Agreement shall inure to
the benefit of and be binding upon the parties hereto and, to the extent not
prohibited herein, their respective heirs, successors, assigns and
representatives. Nothing in this Agreement, expressed or implied, is intended to
confer on any person other than the parties hereto and as provided above, their
respective heirs, successors, assigns and representatives any rights, remedies,
obligations or liabilities.
13.6 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Florida (without regard to
choice of law provisions).
13.7 Headings. The headings contained herein are for the sole
purpose of convenience of reference, and shall not in any way limit or affect
the meaning or interpretation of any of the terms or provisions of this
Agreement.
IN WITNESS WHEREOF, the parties hereto have signed this Agreement as of
the day and year first above:
PRE-CELL SOLUTIONS, Address: 255 East Drive, Suite C
INC. Melbourne, Florida 33326
7
<PAGE>
BY:
EMPLOYEE: Address: 688 Carriage Hill Road
Melbourne, Florida 32940
/s/ Thomas E. Biddix
- ----------------------------
Thomas E. Biddix
8
<PAGE>
EXHIBIT A
FORM OF NOTICE OF EXERCISE OF OPTION
- --------------------
DATE
PRE-CELL SOLUTIONS, INC.
255 East Drive, Suite C
Melbourne, Florida 33326
Attention: Stock Option Committee of the Board of Directors
RE: Purchase of Option Shares
Gentlemen:
In accordance with my Stock Option Agreement dated as of December 1,
1998 with Pre-Cell solutions, Inc. (the "Company"), I hereby irrevocably elect
to exercise the right to purchase _________ shares of the Company's common
stock, par value $.01 per share ("Common Stock").
As payment for my shares, enclosed is (check and complete applicable
box[es]):
[ ] a [personal check] [certified check] [bank check] payable to
the order of "Global Telecommunication Solutions, Inc." in the
sum of $_________;
[ ] confirmation of wire transfer in the amount of $_____________;
and/or
[ ] with the consent of the Company, a certificate for
__________ shares of the Company's Common Stock, free and
clear of any encumbrances, duly endorsed, having a fair market
value of
$------------.
I hereby represent and warrant to, and agree with, the Company that:
(i) I have acquired the Option and shall acquire the Option
Shares for my own account, for investment, and not with a view towards
the distribution thereof;
(ii) I have received a copy of all reports and documents
required to be filed by the Company with the Commission pursuant to the
Exchange Act within the last 24 months and all reports issued by the
Company to its stockholders;
(iii) I understand that I must bear the economic risk of the
investment in the Option Shares, which cannot be sold by me unless they
are registered under the Securities Act of 1933 (the "1933 Act") or an
exemption therefrom is available thereunder and that the Company is
under no obligation to register the Option Shares for sale under the
1933 Act;
(iv) I agree that I will not sell, transfer by any means or
otherwise dispose of the Option Shares acquired by me hereby except in
accordance with Company's policy, if any, regarding the sale and
disposition of securities owned by employees and/or directors of the
Company;
9
<PAGE>
[PG NUMBER]
(v) in my position with the Company, I have had both the
opportunity to ask questions and receive answers from the officers and
directors of the Company and all persons acting on its behalf
concerning the terms and conditions of the offer made hereunder and to
obtain any additional information to the extent the Company possesses
or may possess such information or can acquire it without unreasonable
effort or expense necessary to verify the accuracy of the information
obtained pursuant to clause (ii) above;
(vi) I am aware that the Company shall place stop transfer
orders with its transfer agent against the transfer of the Option
Shares in the absence of registration under the 1933 Act or an
exemption therefrom as provided herein; and
(vii) if, at the time of issuance of the Option Shares, the
issuance of such shares have not been registered under the 1933 Act,
the certificates evidencing the Option Shares shall bear the following
legend:
"The shares represented by this certificate have been
acquired for investment and have not been registered under
the Securities Act of 1933. The shares may not be sold or
transferred in the absence of such registration or an
exemption therefrom under said Act."
Kindly forward to me my certificate at your earliest convenience.
Very truly yours,
- ------------------------------ -----------------------------------
(Signature) (Address)
- ------------------------------ -----------------------------------
(Print Name)
-----------------------------------
(Social Security Number)
10
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement"), dated as of December 1,
1998 is entered into between TIMOTHY F. MCWILLIAMS, residing at 7035 S. Tropical
Trail, Merritt Island, Fl. 32952 ("Executive"), and PRE-CELL SOLUTIONS, INC., a
Colorado corporation having its principal office at 255 East Drive, Suite C,
Melbourne, Florida 33326 ("Company").
WHEREAS, the Company and Executive desire to provide for the employment
of Executive by the Company on the terms set forth herein;
IT IS AGREED:
1. Employment, Duties and Acceptance.
1.1 The Company hereby employs Executive as its Chief
Operating Officer to supervise and control the day to day operations of the
Company's business. All of Executive's powers and authority in any capacity
shall at all times be subject to the reasonable direction and control of the
Company's President and board of directors (the "Board").
1.2 The President may assign to Executive such other executive
duties for the Company or any Affiliate (as defined in Section 5.1) as are
consistent with Executive's status as Chief Operating Officer.
1.3 Executive accepts such employment and agrees to devote a
sufficient portion of his business time, energies and attention to the
performance of his duties. Executive shall perform his duties primarily in and
from the Company's offices located in Melbourne, Florida.
2. Compensation and Benefits.
2.1 The Company shall pay to Executive a base salary
("Salary") at the aggregate rate of $95,000 per annum during the Employment Term
(as such term is defined in Section 3.1, below). Executive's Salary shall be
paid in equal, periodic installments, in accordance with
<PAGE>
the Company's normal payroll procedures and shall be subject to withholding
taxes and other normal payroll deductions.
2.2 The Company may award Executive a bonus (the "Bonus") at
the sole discretion of the Board, which Bonus shall be determined based upon
Executive's performance and the Company's performance generally. Notwithstanding
the foregoing, Executive understands that the Company is not obligated under any
circumstances, to award any such Bonus.
2.3 The Company shall annually review Executive's performance.
Based upon such review and such other factors as the Company may consider, the
Company may determine to increase Executive's salary. Notwithstanding the
foregoing, Executive understands that the Company is not obligated under any
circumstances, to award any such increase in salary.
2.4 Executive shall be entitled to such medical, dental and
disability insurance which is no less favorable than generally afforded to other
senior executives of the Company, subject to applicable waiting periods and
other conditions. Executive shall be entitled to four weeks of vacation in each
employment year and to a reasonable number of other days off for religious and
personal reasons. Executive acknowledges that the Company may, from time to
time, apply for and take out in its own name and at its expense, life, health,
disability, accident or other insurance, including key man insurance, upon
Executive that the Company may deem necessary and advisable to protect its
interests hereunder; and Executive agrees to submit to any medical or other
reasonable examination necessary for such purpose and to assist and cooperate
with the Company in procuring such insurance; and Executive acknowledges that he
shall have no right, title or interest in or to such insurance.
2.5 The Company will pay or reimburse Executive for all
transportation, hotel and other expenses reasonably incurred by Executive on
business trips and for all other ordinary and reasonable out-of-pocket expenses
actually incurred by him in the conduct of the business of the Company against
itemized vouchers submitted with respect to any such expenses approved in
accordance with customary procedures.
2.6 Simultaneous with the execution of This Agreement, The
Company will grant Executive the option to purchase 3,000,000 shares of the
Company's common stock, par value $.01 per share, at an exercise price of $.04
per share (the "Option"). The Option shall fully vest one year after the grant
date and shall remain exercisable for a period of five years after vesting. The
2
<PAGE>
Option shall be evidenced by a Stock Option Agreement entered into between the
Company and Executive of even date herewith.
3. Term and Termination.
3.1 The term of this Agreement commences as of December 1,
1998 and shall continue until December 1, 2001 (the "Employment Term"), unless
sooner terminated or extended as herein provided.
3.2 If Executive dies during the term of this Agreement, this
Agreement shall thereupon terminate.
3.3 The Company, by notice to Executive, may terminate this
Agreement if Executive shall fail because of illness or incapacity to render,
for six consecutive months, services of the character contemplated by this
Agreement.
3.4 The Company, by not less than 30 days notice to Executive,
may terminate this Agreement without cause at any time. In the event of such
termination the Company shall pay to Executive the salary due Executive pursuant
to Paragraph 2.1 through the Employment Term as provided in Section 3.1.
Notwithstanding such termination, the provisions of paragraph 4 shall survive.
3.5 The Company, by notice to Executive, may terminate this
Agreement for cause. As used herein, "cause" shall include, but not be limited
to: (a) the refusal or failure by Executive to carry out specific directions of
the Chief Executive Officer which are of a material nature, or the refusal or
failure by Executive to perform a material part of Executive's duties hereunder;
(b) the commission by Executive of a material breach of any of the provisions of
this Agreement; (c) common law fraud or dishonest action by Executive in his
relations with the Company or any of its subsidiaries or affiliates, or with any
customer or business contact of the Company or any of its subsidiaries or
affiliates ("dishonest" for these purposes shall mean Executive's knowingly or
recklessly making of a material misstatement or omission for his personal
benefit); or (d) the conviction of Executive of any crime involving an act of
moral turpitude. Notwithstanding the foregoing, no "cause" for termination shall
be deemed to exist with respect to Executive's acts described in clauses (a) or
(b) above, unless the Company shall have given written notice to Executive
specifying the "cause" with reasonable particularity and, within ten business
days after such notice, Executive shall not have cured or eliminated the problem
or thing giving rise to
3
<PAGE>
such "cause;" provided, however, that a breach of any provision of clauses (a)
or (b) above, involving the same or substantially similar actions or conduct for
which the Company previously gave notice of termination and with respect to
which, Executive satisfactorily cured, shall be grounds for termination for
cause without any additional notice from the Company. Notwithstanding such
termination, the provisions of paragraph 4 shall survive.
3.6 The Executive, by notice to the Company, may terminate
this Agreement if the Company materially breaches any of the provisions of this
Agreement. Notwithstanding the foregoing, the Executive shall not have grounds
for termination unless Executive shall have given written notice to the Company
specifying the breach with reasonable particularity and, within ten days after
such notice, the Company shall not have cured or eliminated the problem or thing
giving rise to such breach; provided, however, that a breach of any provision of
this Agreement involving the same or substantially similar actions or conduct
for which the Executive previously gave notice of termination and with respect
to which, the Company satisfactorily cured, shall be grounds for termination for
cause without any additional notice from the Executive. In the event of
termination by Executive under this Section 3.6, the Company shall pay to
Executive the Salary due Executive pursuant to paragraph 2.1 hereof through the
Employment Term. Notwithstanding such termination, the provisions of paragraph 4
shall survive termination if the Company continues to pay Executive the Salary
as provided in the immediately preceding sentence.
4. Protection of Confidential Information; Non-Competition.
4.1 Executive acknowledges that:
(a) As a result of his employment with the Company,
Executive will obtain secret and confidential information concerning the
business of the Company and/or its subsidiaries and affiliates (referred to
collectively in this paragraph 4 as the "Company"), including, without
limitation, financial information, designs and other proprietary rights, trade
secrets and "know-how," customers and sources ("Confidential Information").
(b) The Company will suffer substantial damage which
will be difficult to compute if, during the period of his employment with the
Company or thereafter, Executive should divulge Confidential Information.
(c) The provisions of this Agreement are reasonable
and necessary for the protection of the business of the Company.
4
<PAGE>
4.2 Executive agrees that he will not at any time, either
during the term of this Agreement or thereafter, divulge to any person or entity
any Confidential Information obtained or learned by him as a result of his
employment with, or prior retention by, the Company, except (i) in the course of
performing his duties hereunder; (ii) with the Company's express written
consent; (iii) to the extent that any such information is in the public domain
other than as a result of Executive's breach of any of his obligations
hereunder; or (iv) where required to be disclosed by court order, subpoena or
other government process. If Executive shall be required to make disclosure
pursuant to the provisions of clause (iv) of the preceding sentence, Executive
promptly, but in no event more than 72 hours after learning of such subpoena,
court order, or other government process, shall notify, by personal delivery or
by electronic means, confirmed by mail, the Company and, at the Company's
expense, Executive shall: (a) take all reasonably necessary and lawful steps
required by the Company to defend against the enforcement of such subpoena,
court order or other government process, and (b) permit the Company to intervene
and participate with counsel of its choice in any proceeding relating to the
enforcement thereof.
4.3 Upon termination of his employment with the Company,
Executive will promptly deliver to the Company all memoranda, notes, records,
reports, manuals, drawings, blueprints and other documents (and all copies
thereof) relating to the business of the Company and all property associated
therewith, which he may then possess or have under his control; provided,
however, subject to Executive's obligations under this Section 4, that Executive
shall be entitled to retain copies of such documents reasonably necessary to
document his financial relationship (both past and future) with the Company.
4.4 If Executive commits a breach, or threatens to commit a
breach, of any of the provisions of Sections 4.2, the Company shall have the
right and remedy:
(a) to have the provisions of this Agreement
specifically enforced by any court having equity jurisdiction, it being
acknowledged and agreed by Executive that any such breach or threatened breach
will cause irreparable injury to the Company and that money damages will not
provide an adequate remedy to the Company; and
(b) to require Executive to account for and pay over
to the Company all monetary damages suffered by the Company as the result of any
transactions constituting a breach of any of the provisions of Sections 4.2, and
Executive hereby agrees to account for and pay over such damages to the Company.
5
<PAGE>
Each of the rights and remedies enumerated in this Section 4.4
shall be independent of the other, and shall be severally enforceable, and such
rights and remedies shall be in addition to, and not in lieu of, any other
rights and remedies available to the Company under law or equity.
In connection with any legal action or proceeding arising out
of Section 4.4, the prevailing party in such action or proceeding shall be
entitled to be reimbursed by the other party for the reasonable attorneys' fees
and costs incurred by the prevailing party.
4.5 If Executive shall violate any covenant contained in
Section 4 the duration of such covenant so violated shall be automatically
extended for a period of time equal to the period of such violation.
4.6 The provisions of this paragraph 4 shall survive the
termination of this Agreement for any reason.
5. Definitions.
As used in this Agreement:
5.1 "Affiliate" shall mean any entity that, directly or
indirectly, is controlled by, controlling, or under common control with the
Company.
6. Miscellaneous Provisions.
6.1 All notices provided for in this Agreement shall be in
writing, and shall be deemed to have been duly given when delivered personally
to the party to receive the same, when transmitted by electronic means, or when
delivered by reputable overnight courier, postage prepaid, addressed to the
party to receive the same at his or its address set forth below, or such other
address as the party to receive the same shall have specified by written notice
given in the manner provided for in this Section 6.1. All notices shall be
deemed to have been given upon actual receipt.
If to Executive:
Timothy F. McWilliams
7035 S. Tropical Trail
Merritt Island, Fl 32952
6
<PAGE>
If to the Company:
Pre-Cell Solutions, Inc.
255 East Drive, Suite C
Melbourne, Florida 33326
Attention: President
6.2 This Agreement sets forth the entire agreement of the
parties relating to the employment of Executive and are intended to supersede
all prior negotiations, understandings and agreements. No provisions of this
Agreement may be waived or changed except by a writing by the party against whom
such waiver or change is sought to be enforced. The failure of any party to
require performance of any provision hereof or thereof shall in no manner affect
the right at a later time to enforce such provision.
6.3 All questions with respect to the construction of this
Agreement, and the rights and obligations of the parties hereunder, shall be
determined in accordance with the law of the State of Florida applicable to
agreements made and to be performed entirely in Florida.
6.4 This Agreement shall inure to the benefit of and be
binding upon the successors and assigns of the Company. This Agreement shall not
be assignable by Executive, but shall inure to the benefit of and be binding
upon Executive's heirs and legal representatives.
6.5 Should any provision of this Agreement become legally
unenforceable, no other provision of this Agreement shall be affected, and this
Agreement shall continue as if the Agreement had been executed absent the
unenforceable provision.
7
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
EXECUTIVE
/s/ Timothy F. McWilliams
-----------------------------------
Timothy F. McWilliams
PRE-CELL SOLUTIONS, INC.
By: /s/ Thomas E. Biddix
-----------------------------------
Printed name: Thomas E. Biddix
Title: CEO
8
STOCK OPTION AGREEMENT
AGREEMENT, made as of December 1, 1998, by and between PRE-CELL
SOLUTIONS, INC., a Colorado corporation (the "Company"), and Timothy F.
McWilliams (The "Employee").
WHEREAS, on December 1, 1998 (the "Grant Date"), the board of directors
authorized the employment of the employee pursuant to the terms of an employment
agreement dated as of December 1, 1998, and the grant to the employee of an
option (The "Option") to purchase an aggregate of 3,000,000 shares of the
authorized but unissued common stock of the company, $.01 par value ("Common
Stock"), conditioned upon the employee's acceptance thereof upon the terms and
conditions set forth in this agreement; and
WHEREAS, the employee desires to acquire the option on the terms and
conditions set forth in this Agreement;
IT IS AGREED:
1. Grant of Stock Option. The Company hereby grants to the Employee the
right and option ("Option") to purchase all or any part of an aggregate of
3,000,000 shares of Common Stock ("Option Shares") on the terms and conditions
set forth herein. The Option represented hereby is a non-qualified stock option
not intended to qualify under any section of the Internal Revenue Code of 1986,
as amended, and is not granted under any plan.
Certain terms used herein, however, are defined under the Plan.
2. Exercise Price. The exercise price ("Exercise Price") of the Option
shall be $0.04 per share.
3. Exercisability. This Option is exercisable, subject to the terms and
conditions of this Agreement, one year after the Grant Date. After the Option
vests, it shall remain exercisable for a period of five years from the date of
vesting, except as otherwise set forth in this Agreement (the "Exercise
Period").
4. Effect of Termination of Employment.
<PAGE>
4.1 Termination Due to Death If Employee's employment by the
Company terminates by reason of death, the Option shall become fully vested and
exercisable and may thereafter be exercised by the legal representative of the
estate or by the legatee of the Employee under the will of the Employee, for a
period of six months from the date of such death or until the expiration of the
Exercise Period, whichever period is shorter.
4.2 Termination Due to Disability. If Employee's employment by
the Company terminates by reason of Disability (as such term is defined under
the Plan), the Option shall become fully vested and exercisable and may
thereafter be exercised by the Employee for a period of six months from the date
of such termination or until the expiration of the Exercise Period, whichever
period is shorter.
4.3 Termination by the Company Without Cause and/or Due to
Retirement. If Employee's employment is terminated by the Company without cause
or due to Normal Retirement (as such term is defined under the Plan), then (i)
the portion of the Option which has vested by the date of termination of
employment may be exercised by the Employee until the expiration of the Exercise
Period and (ii) the portion of the Option that will vest within one year of the
date of termination of employment shall become fully vested and may be exercised
by the Employee until the expiration of the Exercise Period. The portion of the
Option not exercisable within one year of the date of termination of employment
shall immediately expire.
4.4 Other Termination.
(1) If Employee's employment is terminated for any
reason other than (i) death, (ii) Disability, (iii) Normal Retirement, or (iv)
without cause by the Company, the Option shall expire on the date of termination
of employment.
(2) The Board of Directors, in the event the
Employee's employment is terminated for cause, may require the Employee to
return to the Company the economic benefit of any Option Shares purchased
hereunder by the Employee within the six month period prior to the date of
termination. In such event, the Employee hereby agrees to remit to
<PAGE>
the Company, in cash, an amount equal to the difference between the Fair Market
Value (as such term is defined under the Plan) of the Option Shares on the date
of termination (or the sales price of such Shares if the Option Shares were sold
during such six month period) and the Exercise Price of such Shares.
5. Withholding Tax. Not later than the date as of which an amount first
must be included in the gross income of the Employee for Federal income tax
purposes with respect to the Option, the Employee shall pay to the Company, or
make arrangements satisfactory to the Committee regarding the payment of, any
Federal, state and local taxes of any kind required by law to be withheld or
paid with respect to such amount ("Withholding Tax"). The obligations of the
Company under the Plan and pursuant to this Agreement shall be conditioned upon
such payment or arrangements with the Company and the Company shall, to the
extent permitted by law, have the right to deduct any Withholding Taxes from any
payment of any kind otherwise due to the Employee from the Company.
<PAGE>
6. Adjustments. In the event of any change in the number of outstanding
shares of Common Stock of the Company occurring as the result of a stock split,
reverse stock split or stock dividend on the Common Stock, after the Grant Date,
the Company shall proportionately adjust the number of Option Shares and the
Exercise Price of the Option. Any right to acquire a fractional Option Share
resulting from adjustments will be rounded to the nearest whole Option Share. If
the Company shall be the surviving corporation in any merger, combination or
consolidation, this Option shall pertain and apply to the Option Shares to which
the Employee is entitled hereunder, without adjustment. In the event of a change
in the par value of the shares of Common Stock which are subject to this Option,
this Option will be deemed to pertain to the shares resulting from any such
change. To the extent that the foregoing adjustments relate to Common Stock, the
adjustments will be made by the Board of Directors whose determination will be
final, binding and conclusive.
7. Method of Exercise.
<PAGE>
7.1 Notice to the Company. The Option may be exercised in
whole or in part by written notice in the form attached hereto as Exhibit A
directed to the Company at its principal place of business accompanied by full
payment as hereinafter provided of the exercise price for the number of Option
Shares specified in the notice and of the Withholding Taxes, if any.
7.2 Delivery of Option Shares. The Company shall deliver a
certificate for the Option Shares to the Employee as soon as practicable after
payment therefor.
7.3 Payment of Purchase Price.
7.3.1 Cash Payment. The Employee shall make cash
payments by wire transfer, certified or bank check or personal check, in each
case payable to the order of the Company; the Company shall not be required to
deliver certificates for Option Shares until the Company has confirmed the
receipt of good and available funds in payment of the purchase price thereof.
7.3.2 Stock Payment. The Board of Directors, in its
sole discretion, may allow Employee to use Common Stock of the Company owned by
him to make any required payments by delivery of stock certificates in
negotiable form which are effective to transfer good and valid title thereto to
the Company, free of any liens or encumbrances. Shares of Common Stock used for
this purpose shall be valued at the Fair Market Value. Notwithstanding the
foregoing, the Company shall have the right to reject payment in the form of
Common Stock if in the opinion of counsel for the Company, (i) it could result
in an event of "recapture" under Section 16(b) of the Securities Exchange Act of
1934; (ii) such shares of Common Stock may not be sold or transferred to the
Company; or (iii) such transfer could create legal difficulties for the Company.
8. Nonassignability. The Option shall not be assignable or
transferable, except by will or by the laws of descent and distribution in the
event of the death of the Employee. No transfer of the Option by the Employee by
will or by the laws of descent and distribution shall be effective to bind the
Company unless the Company shall have been furnished with written notice
<PAGE>
thereof and a copy of the will and/or such other evidence as the Company may
deem necessary to establish the validity of the transfer and the acceptance by
the transferee or transferees of the terms and conditions of the Option.
9. Accelerated Vesting and Exercisability. If (i) any person or entity
other than the Company and/or any officer, director or principal stockholder
(i.e., a holder [beneficially or of record] of more than ten percent of the
Company's voting stock) of the Company acquires securities of the Company (in
one or more transactions) having 25% or more of the total voting power of all
the Company's securities then outstanding and (ii) the Board of Directors of the
Company does not authorize or otherwise approve such acquisition, then the
vesting periods of the Option shall be accelerated and the Option shall
immediately and entirely vest. In such event, Employee shall have the immediate
right to purchase all the Option Shares, subject to the provisions of this
Agreement.
10. Company Representations. The Company hereby represents and warrants
to the Employee that:
(1) the Company, by appropriate and all required action, is
duly authorized to enter into this Agreement and consummate all of the
transactions contemplated hereunder; and
(2) the Option Shares, when issued and delivered by the
Company to the Employee in accordance with the terms and conditions
hereof, will be duly and validly issued and fully paid and
non-assessable.
11. Employee Representations. The Employee hereby represents and
warrants to the Company that:
(1) he is acquiring the Option and shall acquire the Option
Shares for his own account and not with a view towards the distribution
thereof;
<PAGE>
(2) he has received a copy of all reports and documents
required to be filed by the Company with the Securities and Exchange
Commission pursuant to the Securities Exchange Act of 1934, as amended,
within the last 24 months and all reports issued by the Company to its
stockholders;
(3) he understands that he must bear the economic risk of the
investment in the Option Shares, which cannot be sold by him unless
they are registered under the Securities Act of 1933 (the "1933 Act")
or an exemption therefrom is available thereunder and that the Company
is under no obligation to register the Option Shares for sale under the
1933 Act;
(4) in his position with the Company, he has had both the
opportunity to ask questions and receive answers from the officers and
directors of the Company and all persons acting on its behalf
concerning the terms and conditions of the offer made hereunder and to
obtain any additional information to the extent the Company possesses
or may possess such information or can acquire it without unreasonable
effort or expense necessary to verify the accuracy of the information
obtained pursuant to clause (ii) above;
(5) he is aware that the Company shall place stop transfer
orders with its transfer agent against the transfer of the Option
Shares in the absence of registration under the 1933 Act or an
exemption therefrom as provided herein; and
(6) if, at the time of issuance of the Option Shares, the
issuance of such shares have not been registered under the 1933 Act,
the certificates evidencing the Option Shares shall bear the following
legend:
"The shares represented by this certificate have been acquired
for investment and have not been registered under the Securities
Act of 1933. The shares may not be sold or transferred in the
absence of such registration or an exemption therefrom under said
Act."
<PAGE>
12. Restriction on Transfer of Option Shares.
12.1 Anything in this Agreement to the contrary
notwithstanding, Employee hereby agrees that he shall not sell, transfer by any
means or otherwise dispose of the Option Shares acquired by him without
registration under the 1933 Act, or in the event that they are not so
registered, unless (i) an exemption from the 1933 Act registration requirements
is available thereunder, and (ii) the Employee has furnished the Company with
notice of such proposed transfer and the Company's legal counsel, in its
reasonable opinion, shall deem such proposed transfer to be so exempt.
12.2 Anything in this Agreement to the contrary
notwithstanding, Employee hereby agrees that he shall not sell, transfer by any
means or otherwise dispose of the Option Shares acquired by him (i) prior to six
months after the Grant Date and (ii) except in accordance with Company's policy,
if any, regarding the sale and disposition of securities owned by employees
and/or directors of the Company.
13. Miscellaneous.
13.1 Notices. All notices, requests, deliveries, payments,
demands and other communications which are required or permitted to be given
under this Agreement shall be in writing and shall be either delivered
personally, transmitted by electronic means or sent by a nationally recognized
next-day courier to the parties at their respective addresses set forth herein,
or to such other address as either shall have specified by notice in writing to
the other. Notice shall be deemed duly given hereunder when delivered or
transmitted as provided herein.
13.2 Employee and Stockholder Rights. The Employee shall not
have any of the rights of a stockholder with respect to the Option Shares until
such shares have been issued after the due exercise of the Option. Nothing
contained in this Agreement shall be deemed to confer upon Employee any right to
continued employment with the Company or any subsidiary thereof, nor shall it
interfere in any way with the right of the Company to terminate Employee in
<PAGE>
accordance with the provisions regarding such termination set forth in
Employee's written employment agreement with the Company, or if there exists no
such agreement, to terminate Employee at will.
13.3 Waiver. The waiver by any party hereto of a breach of any
provision of this Agreement shall not operate or be construed as a waiver of any
other or subsequent breach.
13.4 Entire Agreement. This Agreement constitutes the entire
agreement between the parties with respect to the subject matter hereof. This
Agreement may not be amended except by writing executed by the Employee and the
Company.
13.5 Binding Effect; Successors. This Agreement shall inure to
the benefit of and be binding upon the parties hereto and, to the extent not
prohibited herein, their respective heirs, successors, assigns and
representatives. Nothing in this Agreement, expressed or implied, is intended to
confer on any person other than the parties hereto and as provided above, their
respective heirs, successors, assigns and representatives any rights, remedies,
obligations or liabilities.
13.6 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Florida (without regard to
choice of law provisions).
13.7 Headings. The headings contained herein are for the sole
purpose of convenience of reference, and shall not in any way limit or affect
the meaning or interpretation of any of the terms or provisions of this
Agreement.
IN WITNESS WHEREOF, the parties hereto have signed this Agreement as of
the day and year first above:
PRE-CELL SOLUTIONS, Address: 255 East Drive, Suite C
INC. Melbourne, Florida 33326
<PAGE>
BY:
EMPLOYEE: ADDRESS: 7035 S. TROPICAL TRAIL
Merritt Island, Florida 32952
/s/ Timothy F. McWilliams
- ----------------------------
TIMOTHY F. MCWILLIAMS
<PAGE>
EXHIBIT A
FORM OF NOTICE OF EXERCISE OF OPTION
- --------------------
DATE
PRE-CELL SOLUTIONS, INC.
255 EAST DRIVE, SUITE C
MELBOURNE, FLORIDA 33326
ATTENTION: STOCK OPTION COMMITTEE OF THE BOARD OF DIRECTORS
RE: Purchase of Option Shares
GENTLEMEN:
In accordance with my stock option agreement dated as of December 1,
1998 with Pre-Cell Solutions, Inc. (the "Company"), I hereby irrevocably elect
to exercise the right to purchase _________ shares of the Company's common
stock, par value $.01 per share ("Common Stock").
As payment for my shares, enclosed is (check and complete applicable
box[es]):
[ ] a [personal check] [certified check] [bank check] payable to
the order of "Global Telecommunication Solutions, Inc." in the
sum of $_________;
[ ] confirmation of wire transfer in the amount of $_____________;
and/or
[ ] with the consent of the company, a certificate for
__________ shares of the Company's common stock, free and
clear of any encumbrances, duly endorsed, having a fair market
value of
$-----------.
I hereby represent and warrant to, and agree with, the company that:
(i) I have acquired the option and shall acquire the option
shares for my own account, for investment, and not with a view towards
the distribution thereof;
(ii) I have received a copy of all reports and documents
required to be filed by the company with the commission pursuant to the
exchange act within the last 24 months and all reports issued by the
Company to its stockholders;
(iii) I understand that I must bear the economic risk of the
investment in the option shares, which cannot be sold by me unless they
are registered under the securities act of 1933 (the "1933 Act") or an
exemption therefrom is available thereunder and that the Company is
under no obligation to register the option shares for sale under the
1933 Act;
(iv) I agree that I will not sell, transfer by any means or
otherwise dispose of the option shares acquired by me hereby except in
accordance with Company's policy, if any, regarding the sale and
disposition of securities owned by employees and/or directors of the
Company;
<PAGE>
(v) in my position with the Company, I have had both the
opportunity to ask questions and receive answers from the officers and
directors of the Company and all persons acting on its behalf
concerning the terms and conditions of the offer made hereunder and to
obtain any additional information to the extent the Company possesses
or may possess such information or can acquire it without unreasonable
effort or expense necessary to verify the accuracy of the information
obtained pursuant to clause (ii) above;
(vi) I am aware that the Company shall place stop transfer
orders with its transfer agent against the transfer of the option
shares in the absence of registration under the 1933 Act of an
exemption therefrom as provided herein; and
(vii) if, at the time of issuance of the option shares, the
issuance of such shares have not been registered under the 1933 Act,
the certificates evidencing the option shares shall bear the following
legend:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE
BEEN ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933. THE
SHARES MAY NOT BE SOLD OR TRANSFERRED IN THE
ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION
THEREFROM UNDER SAID ACT."
Kindly forward to me my cerfificate at your earliest convenience.
Very Truly Yours,
- ------------------------------ ----------------------------------
(SIGNATURE) (ADDRESS)
- ------------------------------ ----------------------------------
(PRINT NAME)
----------------------------------
(SOCIAL SECURITY NUMBER)
2
ADMINISTRATIVE SERVICES AGREEMENT
BY AND BETWEEN
PRE-PAID SOLUTIONS, INC.
AND
PRE-CELL SOLUTIONS, INC.
DATED AS OF SEPTEMBER 1, 1998.
<PAGE>
ADMINISTRATIVE SERVICES
THIS ADMINISTRATIVE SERVICES AGREEMENT (THE "AGREEMENT") IS MADE AND
ENTERED INTO AS OF SEPTEMBER 1, 1998 BY and between PRE-PAID SOLUTIONS, INC., a
Florida corporation ("Pre-Paid") and PRE-CELL SOLUTIONS, INC., a Florida
corporation ("Pre-Cell").
WITNESSETH:
WHEREAS, PRE-PAID HAS THE administrative personnel available to assist
Pre-Cell in the conduct of its businesses; and
WHEREAS, Pre-Cell desires to utilize the services and experience of
Pre-Paid in connection with the conduct of their operations; and
NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained herein the parties hereto agree as follows:
ARTICLE I
APPOINTMENT OF ADMINISTRATIVE SERVICES PROVIDER
1.1 APPOINTMENT. Pre-Cell hereby appoints Pre-Paid as its administrative
services provider, and Pre-Paid hereby accepts such appointment by
Pre-Cell to administer its specific business operations and affairs in
accordance with the terms of this Agreement.
1.2 TERM. The term of this Agreement shall begin as of the date hereof and
continue until terminated by written notice from one party to any other
party. Either party to this Agreement may terminate this Agreement by
providing 30 days advanced written notice the other party.
ARTICLE II
POWERS AND DUTIES OF ADMINISTRATIVE SERVICES PROVIDER
2.1 POWERS OF ADMINISTRATIVE SERVICES PROVIDER. Subject to such limitations
as may be imposed by law or this Agreement, Pre-Paid is hereby
authorized to:
(a) provide administrative services and service support for all
operations relating to banking, accounting, legal, financial
controls, corporate tax compliance, tax and regulatory filings
and personnel activities for Pre-Cell, except as specifically
precluded by the terms of this Agreement;
(b) make tax, regulatory and other filings, and to render periodic
and other reports to governmental agencies or bodies having
jurisdiction over the assets or business of Pre-Cell;
(c) open and close all bank accounts, reconcile all accounts of
Pre-Cell, and prepare monthly financial statements of Pre-Cell;
<PAGE>
(d) purchase and maintain insurance coverages covering such risks in
such amounts for the benefit of Pre-Cell as Pre-Paid determines
are, from time to time, necessary or appropriate;
(e) conduct litigation and incur legal expenses and, except as set
forth herein, otherwise deal with or settle claims or disputes;
and controversies for and on behalf of Pre-Cell;
(f) take such other action in the ordinary course of Pre-Cell's
businesses not inconsistent with the grant of authority set forth
herein. Pre-Paid shall exercise the authority granted hereunder,
in each case at such times and upon such terms and conditions, as
Pre-Paid deems necessary or appropriate.
2.2 LIMITATION ON POWERS. Notwithstanding the above, without the prior
written authority of the officers or authorized executives of Pre-Cell,
Pre-Paid shall not have the authority or take any action to cause
Pre-Cell to:
(a) sell, lease or otherwise dispose of all or substantially all of
its assets or property;
(b) borrow money, assume, guarantee, or otherwise cause Pre-Cell to
become liable for indebtedness, other than indebtedness to trade
creditors in the ordinary course of business and indebtedness to
Pre-Paid hereunder;
(c) form, contribute or loan cash or property to, any limited or
general partnerships, joint ventures, corporations or similar
arrangements;
(d) expand the business activities in which Pre-Cell is engaged by
acquisition or internal development; or
(e) take any other extraordinary corporate action on behalf of
Pre-Cell.
2.3 DUTIES OF ADMINISTRATIVE SERVICES PROVIDER. Pre-Paid shall manage the
business and affairs of Pre-Cell in the manner in which Pre-Paid deems
necessary or appropriate. Without limiting the generality of the
foregoing, Pre-Paid's duties shall include the following:
(a) to provide, from time to time, executive consultants who will
consult with management of Pre-Cell and Pre-Paid concerning all
aspects of Pre-Cell's business;
(b) to administer the day-to-day business activities of the Pre-Cell
relating to matters concerning personnel, banking, accounting,
legal, financial, corporate tax compliance, tax and regulatory
filings, and such other matters as may be necessary or
appropriate in connection with the day-to-day conduct of
Pre-Cell's Operations;
(c) to render or cause to be rendered accounting, financial controls,
corporate tax compliance, legal, technical, and other services
and perform or cause to be performed other accounting, logistical
and administrative functions for Pre-Cell;
(d) to maintain records of the assets owned by Pre-Cell and books of
account, and to make such records and books of account available
for inspection by the Board of Directors of Pre-Cell during
regular business hours at the principal office of Pre-Cell;
2
<PAGE>
(e) to prepare, on an annual, quarterly and monthly basis, financial
statements of Pre-Cell and to furnish to the officers, directors
or authorized executives of Pre-Cell such other information and
reports concerning the conduct of the business and affairs of
Pre-Cell as the officers, directors or authorized executives
shall reasonably request;
(f) to render such reports and make such periodic and other filings
as may be required under applicable federal, state and local
laws, rules and regulations; and
(g) to conduct the operations of Pre-Cell in compliance with all
applicable laws, rules and regulations and in accordance with the
terms of this Agreement, and any other applicable agreement,
indenture or other instrument to which Pre-Cell is bound or may
be subject.
2.4 ACTIVITIES. Pre-Cell hereby acknowledges that Pre-Paid has, and shall
be entitled to continue to have, business interests, and engage in
business activities, in addition to those relating to the operations of
Pre-Cell. Pre-Cell further acknowledges and agrees that during and
subsequent to the term hereof, Pre-Paid shall be entitled to have
business interests and conduct business activities which may be in
direct competition with Pre-Cell for its own account and for the
account of others, without having or incurring any obligation to offer
any interest in such businesses, activities or opportunities to
Pre-Cell. Pre-Cell shall not have any rights by virtue of this
Agreement or the relationship created hereby in any such business
interests, activities or opportunities.
ARTICLE III
REIMBURSEMENT; PURCHASES FROM PRE-CELL
3.1 COMPENSATION. In consideration of the performance of the duties set
forth herein, Pre-Cell shall pay to Pre-Paid an administrative service
fee equal to One Thousand Dollars ($1,000) per month. The
administrative service fee shall include all indirect expenses
associated with Pre-Paid's provision of administrative services,
including, without limitation, wages, employee benefits, general and
administrative expenses. Pre-Cell shall pay the administrative service
fee to Pre-Paid, in arrears, no later than the 10th day of each month
during the term of this Agreement.
3.2 DIRECT EXPENSES. Pre-Cell shall reimburse Pre-Paid for all direct
expenses incurred by Pre-Paid on behalf of Pre-Cell in connection with
Pre-Cell's operations under this Agreement. Pre-Cell shall reimburse
Pre-Paid such amounts within 10 days after request from Pre-Paid.
Pre-Cell acknowledges and agrees that Pre-Paid may mark-up the cost of
such products, equipment and other items provided that the prices
charged are competitive with prices Pre-Cell could obtain such products
and equipment from third party vendors.
3
<PAGE>
ARTICLE IV
LIABILITY OF PRE-PAID; INDEMNIFICATION
4.1 JUDGMENTS IN GOOD FAITH PROPER. Notwithstanding any other provisions
contained herein to the contrary, in no event shall Pre-Cell, nor any
director, officer, employee or shareholder of Pre-Cell make any claim
against Pre-Paid on account of any alleged errors of judgment made in
good faith in connection with the conduct of Pre-Cell's operations
hereunder by Pre-Paid, nor shall Pre-Cell object to any expenditure
made by Pre-Paid in good faith in the course of its or Pre-Cell'
operations or in the settlement of any claim, arising out of the
conduct of Pre-Cell' operations.
4.2 INDEMNIFICATION. Pre-Cell agrees to indemnify and hold harmless
Pre-Paid and its employees, officers, directors, agents and
shareholders (the "Indemnitees") from and against any and all
liabilities, losses, damages, costs and expenses (including, without
limitation, reasonable attorneys' and accountants' fees and costs),
deficiencies, judgments, actions, causes of action, proceedings,
demands or claims of whatever nature (collectively, "Damages") arising
from or in any way related to (i) services provided by Pre-Paid
pursuant to this Agreement, or (ii) any accident, injury or damage
whatsoever during the conduct of operations caused to any person or to
the property of any person, occurring on or after the date hereof and
prior to the termination of this Agreement, except to the extent such
Damages are caused by or result from the gross negligence of, or any
willful misconduct or reckless act by Pre-Paid, or its employees,
officers, directors, agents or shareholders. The termination of a
proceeding by judgment, order, settlement or conviction, or upon a plea
of nolo contendere or its equivalent, shall not, of itself, create a
presumption that an action or of inaction involves bad faith or willful
misconduct or a reckless act.
4.3 LIMITATION LIABILITY. PRE-PAID SHALL NOT BE LIABLE TO PRE-CELL NOR ANY
PERSON OR ORGANIZATION FOR ANY DEBT, LIABILITY OR OBLIGATION OF
PRE-CELL INCURRED OR CREATED PURSUANT TO THE AUTHORITY GRANTED IN THIS
AGREEMENT OR BY REASON OF ITS DIRECTION OR THE CONDUCT OF PRE-CELL'S
OPERATIONS UNLESS PRE-PAID, BY WRITTEN AGREEMENT, EXPRESSLY ASSUMES OR
GUARANTEES ANY SUCH LIABILITY. PRE-PAID SHALL NOT BE REQUIRED, UNDER
ANY CIRCUMSTANCES, TO GUARANTEE OR ASSUME ANY OBLIGATION OR LIABILITY
OF PRE-CELL. THE BOARD OF DIRECTORS OF PRE-CELL SHALL BE DEEMED TO
CONTROL ALL ASPECTS OF THE MANNER IN WHICH PRE-CELL'S BUSINESS IS
CONDUCTED. PRE-PAID SHALL NOT BE LIABLE, BY VIRTUE OF THE PERFORMANCE
OF ITS DUTIES HEREUNDER, FOR ANY BREACH OF ANY LICENSING OR OTHER
AGREEMENT BETWEEN THE COMPANIES AND ANY OTHER PARTY, OR FOR ANY
LIABILITY FOR ANY TRADEMARK INFRINGEMENT, UNFAIR COMPETITION, PATENT
INFRINGEMENT OR OTHER VIOLATION OF THE INTELLECTUAL PROPERTY RIGHTS OF
ANOTHER PERSON OR ENTITY AS A RESULT OF THE MANNER IN WHICH PRE-CELL'S
BUSINESS IS CONDUCTED, EXCEPT TO THE EXTENT SUCH VIOLATION IS THE
RESULT OF THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF PRE-PAID.
4
<PAGE>
ARTICLE V
MISCELLANEOUS
5.1 INDEPENDENT CONTRACTOR. Nothing herein shall be construed or deemed to
create a joint venture, contract of employment or partnership. All
debts and liabilities to and contracts or agreements with any person or
entity incurred or entered into by Pre-Cell in the operation or conduct
of Pre-Cell's business shall be the debt and liability of Pre-Cell, and
be binding upon, Pre-Cell.
5.2 NOTICES. Any notice, request, consent or communication (collectively a
"Notice") under this Agreement shall be effective only if it is in
writing and (a) personally delivered, (b) sent by a nationally
recognized overnight delivery service, with delivery confirmed, or (d)
telexed or telecopied, with receipt confirmed, addressed to the
addresses indicated on the signature page of this Agreement or to such
other address or addresses as shall be furnished in writing by any
party to the other party. A Notice shall be deemed to have been given
as of the date when (i) personally delivered, (ii) the next day when
delivered during business hours to said overnight delivery service,
properly addressed and prior to such delivery service's cutoff time for
next day delivery, or (iii) when receipt of the telex or telecopy is
confirmed, as the case may be, unless the sending party has actual
knowledge that a Notice was not received by the intended recipient.
5.3 ASSIGNMENT. Either party hereto shall have the right to assign this
Agreement only to (i) any successor assignee of such party that may
result from any merger, consolidation or reorganization, or (ii)
another corporation that acquires all or substantially all of such
party's assets, business and liabilities.
5.4 HEADINGS. Section headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
5.5 ENTIRE AGREEMENT; MODIFICATION. This Agreement contains the complete
expression of the agreement between the parties and there are no
promises, representations, or inducements except as herein provided.
The terms and provisions of this Agreement may not be modified,
supplemented or amended except in writing signed by both parties
hereto. All terms and provisions of this Agreement shall be binding
upon and inure to the benefit of and be enforceable by the respective
successors and permitted assigns of the parties hereto.
5.6 NO WAIVER. Failure by either party hereto to enforce at any time or for
any period of time any provision or right hereunder shall not
constitute a waiver of such provision or of the right of such party
thereafter to enforce each and every such provision.
5.7 GOVERNING LAW; ATTORNEYS' FEES. This Agreement shall be governed by and
construed and enforced in accordance with the laws of Florida. The
prevailing party in any litigation concerning this Agreement shall be
entitled to reimbursement of its reasonable costs, including legal and
accounting fees, incurred in connection with any such matter.
5
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
the day and year first above written.
PRE-PAID SOLUTIONS, INC.
BY: /s/ Thomas E. Biddix
----------------------------
NAME: Thomas E. Biddix
TITLE: CEO
PRE-CELL SOLUTIONS, INC.
BY: /s/ Timothy F. McWilliams
----------------------------
NAME: Timothy F. McWilliams
TITLE: COO
6
SUBLEASE
This sublease entered into this 1st day of September, 1998 between
Pre-Paid Solutions, Inc., a Florida corporation, hereinafter called the
Sublessor, and Pre-Cell Solutions, Inc., a Florida corporation, hereinafter
called the Sublessee and/or Tenant:
Witnesseth, that Sublessor has leased the premises which are the
subject of this sublease from Louis LeBlanc-Moriniere, Trustee ("LBM") pursuant
to the Lease Agreement entered into on June 15, 1998, a copy of which is
attached hereto as exhibit "A" (the "Underlying Lease").
Witnesseth, that the said Sublessor does this day sublease unto said
Sublessee, and said Sublessee does hereby hire and take as Tenant under said
Sublessor the premises described on Exhibit A, situated in Brevard County, State
of Florida, to be used and occupied by the Sublessee for the purpose of "General
Office" and for no other purposes or uses whatsoever inconsistent with those
purposes, for the term of nine and one-half months, subject and conditioned on
the provisions of clause 23 of this Sublease, beginning as of September 1, 1998,
and ending June 14, 1999 at and for the agreed total rental of $4,405.63,
inclusive of applicable sales tax, payable as follows:
Months 1-9.5: $463.75 per month, inclusive of applicable sales tax
All payments to be made payable to Sublessor on the first day of each
and every month in advance without demand, at the office of Sublessor at 255
East Drive, Suite C, Melbourne, Florida 32904, or at such other place and to
such other person, as the Sublessor may from time to time designate in writing.
The following express stipulations and conditions are made a part of
this sublease and are hereby agreed to by the Sublessee:
FIRST: The Sublessee shall not assign this sublease, nor sublet the
premises, or any part thereof, nor use the same, or any part thereof, nor permit
the same, or any part thereof, to be used for any other purpose inconsistent
with the purposes set forth above, nor make any material alterations to the
premises without the written consent of the Sublessor, which consent shall not
be reasonably withheld.
SECOND: All personal property placed or moved in the premises above
described shall be at the risk of the Sublessee or owner thereof.
THIRD: That the Sublessee shall promptly execute and comply with all
statutes, ordinances, rules, orders, regulations and requirements of the
applicable federal, state and city government and of any and all their
departments and bureaus applicable to said premises, for the correction,
prevention, and abatement of nuisances or other grievances,
<PAGE>
in, upon, or connected with said premises during said term.
FOURTH: In the event the premises shall be destroyed or so damaged or
injured by fire or other casualty during the term of this agreement, whereby the
same shall be rendered untenantable, in whole or in part, then the Sublessor
shall have the right to render said premises tenantable by repairs within ninety
days therefrom. If said premises are not rendered completely tenantable within
said time, either party shall have the option to cancel this sublease, and in
the event of such cancellation, the rent shall be paid only to the date of such
fire or other casualty. The cancellation herein mentioned shall be evidenced in
writing.
FIFTH: The prompt payment of the rent for said premises upon the dates
named, and the faithful observance of the provisions of this sublease, and of
such other and further rules and regulations as attached to this sublease are
the conditions upon which this sublease is made and accepted. Any failure on the
part of the Sublessee to comply with the terms of said lease, or any of said
rules and regulations which continues for five (5) business days after
Sublessee's receipt of written notice from Sublessor indicating same, shall, at
the option of the Sublessor, constitute a default of this sublease.
SIXTH: If the Sublessee shall fail to pay any rent when due hereunder
and such failure continues for a period of five (5) business days after
Sublessee's receipt of written notice from Sublessor indicating same, the
Sublessor may, at its option, forthwith cancel this sublease.
SEVENTH: Sublessee agrees to pay the cost of collection and ten percent
attorneys' fee on any part of said rental that may be collected by suit or by
attorney, after the same is past due.
EIGHTH: The Sublessee agrees that it will pay all charges for rent,
gas, electricity, or other illumination, and for all water used on said
premises, and should said charges for rent, light, or water herein provided for
at any time remain due and unpaid for sixty (60) days after the same shall have
become due, Sublessor may at its option, pay such charges and any charges so
paid shall be paid by Sublessee to Sublessor as additional rent hereunder.
NINTH: The Sublessor, or any of his agents, shall have the right to
enter said premises during normal business hours to make such repairs,
additions, or alterations as may be deemed reasonably necessary for the safety,
comfort, or preservation thereof, or of said building, or to exhibit said
premises, and to put or keep upon the doors or windows thereof a notice AFOR
RENT@ at any time within thirty (30) days before the expiration of this
sublease. Additionally, the Sublessor shall have the right to enter said
premises during normal business hours for the purpose of testing personal
watercraft; provided, however, in the event Sublessor's testing of personal
watercraft interferes with Sublessee's operation of its business, the parties
shall cooperate with one another to
2
<PAGE>
prepare a mutually agreeable schedule for Sublessor's use of the premises to
test its personal watercraft.
TENTH: Sublessee hereby accepts the premises in the condition they are
in at the beginning of this sublease and agrees to maintain said premises in the
same condition, order and repair as they are at the commencement of said term,
excepting only reasonable wear and tear arising from the use thereof under this
agreement, and to make good to said Sublessor immediately upon written demand,
any damage to water apparatus, or electric lights or any fixture, appliances, or
appurtenances of said premises, or of the building, caused by any act or neglect
of Sublessee, or of any person or persons in the employ or under the control of
the Sublessee.
ELEVENTH: If the Sublessee shall become insolvent or if bankruptcy
proceedings shall be begun by or against the Sublessee, before the end of said
term the Sublessor is hereby irrevocably authorized, at its option, to forthwith
cancel this sublease, as for a default. Sublessor may elect to accept rent from
such receiver, trustee, or other judicial officer during the term of their
occupancy in their fiduciary capacity without affecting Sublessor's rights as
contained in this contract, but no receiver, trustee, or other judicial officer
shall ever have any right, title, or interest in or to the above described
property by virtue of this contract.
TWELFTH: Sublessee hereby waives and renounces for himself and family
and all homestead and exemption rights he may now have, or hereafter, under or
by virtue of the constitution and laws of this State, or any other State, or of
the United States, as against the payment of said rental or any portion hereof,
or any other obligation or damage that may accrue under the terms of this
agreement.
THIRTEENTH: This contract shall bind the parties and their respective
successors and assigns.
FOURTEENTH: It is understood and agreed between the parties hereto that
time is of the essence of this contract and this applies to all terms and
conditions contained herein.
FIFTEENTH: It is understood and agreed between the parties hereto that
written notice hand delivered or sent by reputable overnight courier to the
premises subleased hereunder shall constitute sufficient notice to the Sublessee
and written notice hand delivered or sent by reputable overnight courier to the
office of the Sublessor where rent is paid hereunder shall constitute sufficient
notice to the Sublessor.
SIXTEENTH: The rights of the parties under the foregoing shall be
cumulative, and failure to exercise promptly any rights given hereunder shall
not operate to forfeit any of the said rights.
3
<PAGE>
SEVENTEENTH: It is further understood and agreed between the parties
hereto that any charges against the Sublessee by the Sublessor for services or
for work done on the premises by order of the Sublessee or otherwise accruing
under this contract shall be considered as rent due and shall be included in any
lien for rent due and unpaid.
EIGHTEENTH: It is hereby understood and agreed that any signs or
advertising to be used, including awnings, in connection with the premises
subleased hereunder shall be first submitted to the Sublessor for approval
before installation of same.
NINETEENTH: RADON GAS NOTIFICATION (the following notification may be
required in some states): Radon is a naturally occurring radioactive gas that,
when it has accumulated in a building in sufficient quantities, may present
health risks to persons who are exposed to it over time. Levels of radon that
exceed federal and state guidelines have been found in buildings. Additional
information regarding radon and radon testing may be obtained from your county
public health unit.
TWENTIETH: Sublessee agrees that the Sublessor shall in no way be
responsible for the inventory of the Sublessee. The Sublessee further agrees to
obtain and pay for a Public Liability and Liability Insurance Policy in the
amount of $1,000,000.00 and Property Damage policy in the amount of $3000,000
naming the Sublessor as an additional insured and shall furnish a copy of said
policy to the Sublessor on each anniversary date of this sublease.
TWENTY-FIRST: The use of the subleased property and the part of the
lake abutting the demised premises, is exclusive with the exception of other
tenants access by land to and from their leased land and buildings thereon. The
use of the Parking Area shall be a non-exclusive use to be shared in common with
all other tenants of M&B, their guests and invitees with the exception of 4
parking spaces in front of the food store which shall be for the exclusive use
of the leased food store.
TWENTY-SECOND: Sublessee may make changes and improvements to the
subleased premises herein with the prior written consent of the Sublessor, which
approval shall not be unreasonably withheld.
TWENTY-THIRD: Notwithstanding any other provisions in this sublease,
the parties expressly acknowledge that all promises and convenants made by
Sublessor to Sublessee are contingent on the status of the Underlying Lease. In
the event that performance of this sublease becomes impossible due to
termination of the referenced Underlying Lease, Sublessor shall immediately
advise Sublessee of same in writing and Sublessee shall be given a reasonable
time to vacate premises, and it is understood between the parties that this time
period shall not exceed the time period when Sublessor's Underlying Lease with
LBM has concluded. Any monthly installment of rent either payable or owed under
this agreement in the event of said early termination due to impossibility shall
be paid or returned on a daily prorated rate accordingly. Further, in the event
Sublessee is obligated to vacate the premises as provided herein, this
4
<PAGE>
sublease shall automatically terminate and Sublessee shall have no further
obligations hereunder.
TWENTY-FOURTH: Sublessee shall have the right to renew this Sublease
for two consecutive option periods as follows: (i) for the period beginning June
15, 1999 and ending June 14, 2000 at the monthly rental rate of $486.94,
including applicable taxes; and (ii) for the period beginning on June 15, 2000
and ending on June 14, 2001 at the monthly rental rate of $511.26, including
applicable sales taxes. In the event Sublessee desires to exercise its option,
Sublessee shall provide Sublessor with written notice of its intent to exercise
within sixty (60) days prior to the expiration of the term of this sublease.
IN WITNESS WHEREOF, the parties hereto have executed this instrument
for the purpose herein expressed, the day and year above written.
Signed, sealed and delivered in the presence of:
Pre-Paid Solutions, Inc.
BY: /s/ Thomas E. Biddix
------------------------
Witness Signature (as to Sublessor) Printed name: Thomas E. Biddix
Title: CEO
Printed Name
Pre-Cell Solutions, Inc.
BY: /s/ Timothy F. McWilliams
------------------------
Witness Signature (as to Sublessee) Printed name: Timothy F. McWilliams
Title: COO
Printed Name
5
<PAGE>
State of Florida
County of Brevard
I HEREBY CERTIFY that on this day, before me, an officer duly
authorized in the State aforesaid and in the county aforesaid to take
acknowledgments, personally appeared, personally known to me to be the person
described or who produced as identification, and who executed the foregoing
instrument on behalf of Pre-Paid Solutions, Inc. and acknowledged before me that
he executed same.
WITNESS my hand and official seal in the County and State last
aforesaid this ________ day of __________________________, 1999.
--------------------------
Notary Signature
Printed Notary Signature
My Commission Expires:
State of Florida
County of Brevard
I HEREBY CERTIFY that on this day, before me, an officer duly
authorized in the State aforesaid and in the county aforesaid to take
acknowledgments, personally appeared, personally known to me to be the person
described or who produced as identification, and who executed the foregoing
instrument on behalf of Pre-Cell Solutions, Inc. and acknowledged before me that
he executed same.
WITNESS my hand and official seal in the County and State last
aforesaid this ________ day of __________________________, 1999.
--------------------------
Notary Signature
Printed Notary Signature
My Commission Expires:
6
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<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> APR-30-1999
<PERIOD-START> MAY-01-1998
<PERIOD-END> APR-30-1999
<CASH> 507
<SECURITIES> 3,000
<RECEIVABLES> 0
<ALLOWANCES> 0
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<CURRENT-ASSETS> 11,507
<PP&E> 1,863
<DEPRECIATION> 150
<TOTAL-ASSETS> 1,493,522
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<BONDS> 0
0
0
<COMMON> 338,484
<OTHER-SE> 801,390
<TOTAL-LIABILITY-AND-EQUITY> 1,493,522
<SALES> 22,936
<TOTAL-REVENUES> 22,936
<CGS> 17,340
<TOTAL-COSTS> 169,302
<OTHER-EXPENSES> 0
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<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (146,366)
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<CHANGES> 0
<NET-INCOME> (146,366)
<EPS-BASIC> (.01)
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