FORM 10-KSB
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
X ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
- ------ 1934
For the fiscal year ended: December 31, 1998
-----------------
- ------ TRANSITION REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE
ACT OF 1934 (No Fee Required)
For the transition period from_____________to______________ Commission
file number: 33-34200
OMEGA DEVELOPMENT, INC.
-----------------------
(Name of small business issuer in its charter)
Nevada 13-3476854
------ -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
8726 S. Florence Ave.
Tulsa, OK 74137
- ------------------------------ -----
(Address of principal executive offices) (Zip Code)
Issuer(s)telephone number: (918) 299-3212
--------------
- --------------------------------------------------------------------------------
(Former name, former address or former fiscal year, if changed since last
report)
Securities registered under Section 12(b) of the Exchange Act: None
----
Securities registered under Section 12(g) of the Exchange Act: Common Stock, Par
Value, $.001
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 (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-B contained in this form, and no disclosure will be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form
10-KSB. [ X ]
State Issuer's revenues for its most recent fiscal year. $ 0 .
----
State the aggregate market value of the voting stock held by non-affiliates. The
Common Stock does not trade on any recognized stock exchange. It is estimated
that the value is $0.01 per share or less.
State the number of shares outstanding of each of the issuer's classes of common
equity as of the latest practicable date. 15,000,000 shares of common stock,
$.001 par value, as of February 1, 2000.
DOCUMENTS INCORPORATED BY REFERENCE: NONE
TRANSITIONAL SMALL BUSINESS DISCLOSURE FORMAT. YES NO X
---- ----
<PAGE>
FORM 10-KSB
OMEGA DEVELOPMENT, INC.
ANNUAL REPORT
DECEMBER 31, 1998
Table of Contents
PART I
Page
----
Item 1. Description of Business . . . . . . . . . . . . . . . . 2
Item 2. Description of Property . . . . . . . . . . . . . . . . 3
Item 3. Legal Proceedings . . . . . . . . . . . . . . . . . . . 3
Item 4. Submission of Matters to a Vote of
Security Holders . . . . . . . . . . . . . . . . . . . . 3
PART II
Item 5. Market for Common Equity and Related
Stockholder Matters. . . . . . . . . . . . . . . . . . . 4
Item 6. Management's Discussion and Analysis or
Plan of Operation. . . . . . . . . . . . . . . . . . . . 5
Item 7. Financial Statements . . . . . . . . . . . . . . . . . . 6
Item 8. Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure . . . . . . . . . 7
PART III
Item 9. Directors, Executive Officers, Promoters and
Control Persons, Compliance With Section 16(a)
of the Exchange Act. . . . . . . . . . . . . . . . . . . 8
Item 10. Executive Compensation . . . . . . . . . . . . . . . . . 9
Item 11. Security Ownership of Certain Beneficial
Owners and Management. . . . . . . . . . . . . . . . . . 9
Item 12. Certain Relationships and Related Transactions . . . . .10
Item 13. Exhibits and Reports on Form 8-K . . . . . . . . . . . .11
(i)
<PAGE>
OMEGA DEVELOPMENT, INC.
ANNUAL REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
PART I
Item 1. Description of Business
- -----------------------------------
General
Omega Development, Inc. ("Omega" or "the Company") was incorporated in the State
of Nevada on July 15, 1988 under the name of "Lewison Enterprises, Inc." Since
then the Company has experienced a series of business consolidations and
reorganizations, the most recent of which are discussed below. At present, the
Company has no ongoing business operations.
On September 27, 1996, the bank holding the mortgage on the only operating asset
of the Company, a general purpose office building (the "ABB Building") located
in Windsor, Connecticut, completed foreclosure proceedings on that building.
Since that time the Company has had no ongoing operations and minimal activity.
Plan of Operation
- -----------------
The Company's business plan at December 31, 1998 is to seek to acquire or merge
with potential businesses that may, in the opinion of management, warrant the
Company's involvement. The Company recognizes that as a result of its limited
financial, managerial or other resources, the number of suitable potential
businesses that may be available to it will be extremely limited. The Company's
principal business objective will be to seek long-term growth potential in the
business in which it participates rather than immediate, short-term earnings. As
of December 2, 1997, the Company entered into a Stock Exchange Agreement and
Plan of Reorganization (the "Agreement") to acquire Heater Specialists, Inc. and
Primenergy, Inc., however, the Agreement was subsequently terminated on August
6, 1998. See footnote 7, Merger Activity, to the Financial Statements following
on page F-8.
The Company has entered into an Agreement and Plan of Reorganization dated as of
January 31, 2000, with BBJ Environmental Solutions, Inc. ("BBJ") and certain
stockholders of BBJ. The agreement contemplates that the Company will acquire
all of the outstanding capital stock of BBJ in exchange for that number of
shares of common stock of the Company that will cause the BBJ shareholders to
own in the aggregate approximately 83% of the outstanding common stock of the
Company. It is contemplated that this will be accomplished through a combination
of common stock issuances by the Company, a reverse stock split of the Company's
outstanding common stock and the return of outstanding shares of the Company's
common stock to the treasury. BBJ develops, manufactures and markets indoor
environmental solutions with products and devices that control
2
<PAGE>
contamination and air pollution in heating, ventilation and air-conditioning
systems of homes, offices, health care facilities, food processing plants,
schools and public buildings. Completion of the transaction with BBJ is subject
to several conditions, including completion of a one-for-three reverse stock
split.
Employees
- ---------
As of December 31, 1998, the Company employed 1 person.
Item 2. Description of Property
- -----------------------------------
As of December 31, 1998, the Company neither owned nor leased any property.
Item 3. Legal Proceedings
- -----------------------------
None.
Item 4. Submission of Matters to a Vote of Security Holders
- ---------------------------------------------------------------
There were no matters submitted to the Company's stockholders during the fourth
quarter of the fiscal year ended December 31, 1998.
3
<PAGE>
PART II
Item 5. Market for Common Equity and Related Stockholder Matters
- --------------------------------------------------------------------
To date there has been no significant public market for the Company's Common
Stock. In light of the Company's lack of business operations or properties as of
December 31, 1998, it is unlikely its Common Stock had any value other than a
nominal value. Of the 15,000,000 shares of the Company's common stock presently
outstanding, approximately 14,252,130 shares or 95.0% are "restricted
securities," as the SEC's rules and regulations define such term. The holders of
these restricted shares may not sell them in the public market unless they are
first registered for sale under the Act, or are sold in compliance with Rule 144
under the Act. The holders of approximately 8,784,564 shares are "affiliates,"
as defined by the Act (See "Item 11. - Security Ownership of Certain Beneficial
Owners and Management," following).
In connection with the acquisition of HPA in 1995, the selling stockholders
received demand and "piggyback" registration rights for the Common Stock
exchanged and for the Common Stock into which the Series C Preferred Stock was
converted. Additionally, under the terms of a private offering under which
209,000 shares of Common Stock were sold, the investors were granted
registration rights within six months after the closing date of the offering.
As described above, approximately 14,252,130 shares of the Company's Common
Stock which are currently outstanding are "restricted" securities, as Rule 144
promulgated under the Act defines that term. In the future, the holders of these
shares may sell them in compliance with Rule 144. Generally under Rule 144, a
person holding restricted securities for a period of at least one year may, if
there is adequate public information available concerning the Company, every
three months sell in ordinary brokerage transactions or transactions with a
market maker an amount equal to the greater of (i) 1% of the Company's then
outstanding stock, or (ii) the average weekly volume of sales during the four
calendar weeks preceding the sale. After two years have elapsed, a person who is
not an affiliate of the Company may sell an unlimited amount of the restricted
securities. Under Rule 144, however, affiliates of the Company are subject to
these volume limitations as long as they are affiliated with the Company and for
a period of at least three months after their affiliation ends, regardless of
the length of the holding period. Sales under Rule 144 may, in the future, tend
to depress the market price of the Company's securities should a public market
develop.
At February 1, 2000, there were approximately 571 record holders of the
Company's Common Stock. The Company has not paid any cash dividends on shares of
its Common Stock since its inception and currently intends to retain earnings in
the future for the Company's operations and expansion of its business.
4
<PAGE>
Item 6. Managements' Discussion and Analysis or Plan of Operation
- -----------------------------------------------------------------
PLAN OF OPERATION
-----------------
The Company's business plan at December 31, 1998 is to seek to acquire or merge
with potential businesses that may, in the opinion of management, warrant the
Company's involvement. The Company recognizes that as a result of its limited
financial, managerial or other resources, the number of suitable potential
businesses that may be available to it will be extremely limited. The Company's
principal business objective will be to seek long-term growth potential in the
business in which it participates rather than immediate, short-term earnings. In
seeking to attain its business objectives, the Company will not restrict its
search to any particular industry. As of December 2, 1997, the Company entered
into a Stock Exchange Agreement and Plan of Reorganization (the "Agreement") to
acquire Heater Specialists, Inc. and Primenergy, Inc., however, the Agreement
was subsequently terminated on August 6, 1998. See footnote 7, Merger Activity,
to the Financial Statements following on page F-8.
Since the loss of the ABB Building through foreclosure (See Item 1, Description
of Business, above), the Company has had no ongoing operations and minimal
activity.
At present, the Company has only one employee, no office and the on going
general and administrative expenses are minimal. During 1996, the Company had a
significant working capital deficit and suffered a severe cash flow problem. The
Company has relied on equity contributions from a stockholder, small equity
placements under a private placement memorandum and loans from Directors and a
private investor to fund its current overhead. The principal shareholder of the
Company made capital contributions of $38,519 in 1998 and $18,920 in 1997 to pay
certain liabilities of the Company. The principal stockholder of the Company has
agreed to fund the operations of the Company in sufficient amounts for the
Company to meet its recorded obligations at December 31, 1998, and its continued
operations as a going concern.
In December 1996, management reached an agreement with many of its creditors and
the holders of the Preferred Stock whereby they would convert their respective
liabilities and Preferred Stock to shares of the Company's Common Stock. In
total, $1,061,666 of accounts payables and accrued liabilities were converted to
3,132,583 shares of Common Stock. The Preferred Stock was converted into 666,667
shares of Common Stock in accordance with a previous agreement.
The Company has entered into an Agreement and Plan of Reorganization dated as of
January 31, 2000, with BBJ Environmental Solutions, Inc. ("BBJ") and certain
stockholders of BBJ. The agreement contemplates that the Company will acquire
all of the outstanding capital stock of BBJ in exchange for that number of
shares of common stock of the Company that will cause the BBJ shareholders to
own in the aggregate approximately 83% of the outstanding common stock of the
Company. It is contemplated that this will be accomplished through a combination
of common stock issuances by
5
<PAGE>
the Company, a reverse stock split of the Company's outstanding common stock and
the return of outstanding shares of the Company's common stock to the treasury.
BBJ develops, manufactures and markets indoor environmental solutions with
products and devices that control contamination and air pollution in heating,
ventilation and air-conditioning systems of homes, offices, health care
facilities, food processing plants, schools and public buildings. Completion of
the transaction with BBJ is subject to several conditions, including completion
of a one-for-three reverse stock split.
RESULTS OF OPERATIONS - FISCAL 1998 VS. FISCAL 1997
---------------------------------------------------
The net loss for the year ended December 31, 1998 was $41,012 compared to a net
loss of $32,148 for the year ended December 31, 1997. Generally, the increased
net loss for the current year is attributable to an increase in the merger
activity of the Company during fiscal 1998 and resulting increases in legal and
accounting expenses.
General and administrative expenses increased approximately $5,270 (20%) in the
current year as compared to the prior year. The increase is primarily due to an
increase in the merger activity of the Company during fiscal 1998 and resulting
increases in legal and accounting expenses.
Depreciation and amortization expenses increased approximately $3,594 (66%) in
1998 as compared to 1997. This increase is primarily attributable to
accelerating the depreciation of the fixed assets somewhat due to the expected
lives of the assets.
No income tax expense or benefit has been recorded for 1998, as a valuation
allowance has been provided for the tax effects of the entire net operating loss
carry forwards and other net deductible temporary differences.
Some of the information in this report constitutes "forward looking" statements
under the Private Securities Litigation Reform Act of 1995. Although Omega
believes its expectations are based on reasonable assumptions within the bounds
of its knowledge of its businesses, there is no assurance these transactions and
financial goals will be achieved. Factors that could cause actual results to
differ from those in forward looking statements, or used as a basis for forward
looking statements, include the success in the Company's plan to acquire or
merge with potential businesses and the success of those businesses.
Item 7. Financial Statements
- ----------------------------
The information required by this Item begins at page F-1 following page 14
hereof.
6
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Item 8. Changes in and Disagreements with Accountants on Accounting and
- -----------------------------------------------------------------------
Financial Disclosure
- --------------------
At a meeting held on February 1, 2000, the Board of Directors of the Company
approved the engagement of Henderson Sutton & Co., P.C. as its independent
auditors for the fiscal year ending December 31, 1998, to replace the firm of
Ernst & Young LLP, who were dismissed as auditors of the Company effective
August 15, 1998.
The reports of Ernst & Young LLP on the Company's financial statements for 1997
did not contain an adverse opinion or a disclaimer of opinion and were not
qualified or modified as to uncertainty, audit scope, or accounting principles.
In connection with the audit of the Company's financial statements for the year
ended December 31, 1997, and in the subsequent interim period, there were no
disagreements with Ernst & Young LLP on any matters of accounting principles or
practices, financial statement disclosure, or auditing scope and procedures
which, if not resolved to the satisfaction of Ernst & Young LLP would have
caused Ernst & Young LLP to make reference to the matter in their report.
7
<PAGE>
PART III
Item 9. Directors, Executive Officers, Promoters and Control Persons, Compliance
- --------------------------------------------------------------------------------
with Section 16(a) of the Exchange Act
- --------------------------------------
DIRECTORS AND EXECUTIVE OFFICERS
The directors and executive officers of the Company are as follows. The Company
expects that these persons will serve in these offices until the next annual
meeting or until their respective successors are elected and qualified:
<TABLE>
<CAPTION>
Name Age Position
- -------------------- ------- -----------------------------
<S> <C> <C>
A. Paul Shapansky. 49 Chairman of the Board, President
and Chief Executive Officer and
Principal Financial Officer
Herbert Maxwell 79 Director
</TABLE>
A. Paul Shapansky. Mr. Shapansky joined the Company in January 1994 as Chief
Operating Officer and was appointed Chairman, President and Chief Executive
Officer in December 1994 in connection with the 1994 Reorganization. He has
served as a financial consultant to the Company through his investment banking
firm, A.G. Group Inc., since March 1993 and was responsible for the combination
with Lewison Enterprises, Inc. and Omega Development Corp. in July 1993,
arranging new funding for the Company's operations and the 1994 Reorganization
in December 1994. Mr. Shapansky has been President and owner of A.G. Group Inc.,
an investment banking firm, since 1988. He is currently the Chief Financial
Officer for eHDL, Inc., a health care services company located in south Florida.
From September 1996 to September 1997, Mr. Shapansky was a Financial Advisor for
Prudential Securities, Inc. Mr. Shapansky has a Bachelor of Commerce (Honours)
degree in Actuarial Mathematics and Finance, from the University of Manitoba in
Winnipeg, Canada.
Herbert Maxwell. Mr. Maxwell has been a director of the Company since December
1994. He has been self-employed as a crisis management consultant and investor
for over 20 years. Mr. Maxwell resides in the Manhattan district of New York
City and also serves as President and a director for Zachary Ventures, Inc. and
is a director on numerous other private companies.
8
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The Company's directors are elected for one year terms and hold office until
their successors are elected. The number of directors serving on the Board is
two. The Company's officers are elected annually by the Board of Directors.
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires the
Company's directors and executive officers, and persons who own more than ten
percent of the Company's common stock, to report their initial ownership of the
common stock and any subsequent changes in that ownership to the SEC and to
furnish the Company with a copy of each such report. SEC regulations impose
specific due dates for such reports, and the Company is required to disclose any
failure to file by these dates.
To the Company's knowledge, during and with respect to fiscal 1997, all Section
16(a) filing requirements applicable to its officers, directors and more than
ten percent stockholders were complied with.
Item 10. Executive Compensation
- -------------------------------
No executive officer of Omega received compensation in excess of $100,000 during
1998.
Compensation Of Directors
- -------------------------
Directors receive no additional compensation for service on the Board of
Directors or any committee thereof. All Directors are reimbursed by the Company
for out-of-pocket expenses incurred by them in connection with their service on
the Board of Directors and any committee thereof.
Item 11. Security Ownership of Certain Beneficial Owners and Management
- -----------------------------------------------------------------------
Principal Shareholders - Common Stock
- -------------------------------------
The following table shows the number of shares of Common Stock of the Company
beneficially owned, as of February 1, 2000, by (i) the persons known to the
Company to be the beneficial owners of more than five percent (5%) of the
outstanding shares, (ii) each of the directors of the Company, (iii) the
Company's Chief Executive Officer, and (iv) by all executive officers and
directors of the Company as a group, as follows:
9
<PAGE>
Name and Address of Number of Shares Percentage of
Beneficial Owner Beneficially Owned Outstanding Shares
- ---------------- ------------------ ------------------
A. Paul Shapansky 7,352,429 (1) 49.0%
8726 S. Florence Ave.
Tulsa, OK 74137
Herbert Maxwell 1,432,135 9.6%
1501 Broadway
Suite 1807
New York, NY 10036
Dennis W. Rendflesh 1,675,141 (2) 11.2%
508 Whiston Pl.
Edmonton, Alberta
Canada T6M2C6
RAS Investment Banking Group 1,600,000 10.7%
2 Broadway
New York, NY 10004-2801
All Executive Officers and 8,784,564 58.6%
Directors as a group (2 persons)
(1) Of these shares, 1,830,000 shares are held by Omega Investors LLC
No. 1, of which Mr. Shapansky is the Manager and Controlling
Member, 1,000,000 shares are held in trust by Mr. Shapansky's
wife and 200,000 shares are held in trust for Mr. Shapansky's
minor children.
(2) Of these shares, 200,000 shares are held in trust by Mr.
Rendflesh's wife and 30,000 shares are held in trust for Mr.
Rendflesh's minor children.
In the event the transaction with BBJ Environmental, described above, is
consummated, the persons listed above will as a group own less than 10% of the
outstanding common Stock of the Company.
Item 12. Certain Relationships and Related Transactions
- -------------------------------------------------------
Herbert Maxwell, a director of the Company, was issued 10,000 shares in March
1996 in connection with a working capital loan. Mr. Maxwell also received 90,466
shares in December 1996 in connection with the conversion of liabilities to
Common Stock. A. Paul Shapansky was issued 1,056,146 shares in December 1996 in
connection with the conversion of liabilities to Common Stock. Mr. Shapansky
contributed $38,519 to the Company in 1998 and $18,920 in 1997 to pay certain
liabilities of the Company. In December 1996, a subsidiary of the company, Home
Partners of America, Inc., was sold to the principal shareholder of the Company
(Mr. Shapansky) for a nominal amount.
10
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Item 13. Exhibits and Reports on Form 8-K
(a) Exhibits
The following documents are included as exhibits to this Form 10-KSB.
Those exhibits below incorporated by reference herein are indicated as
such by the information supplied in the parenthetical thereafter. If no
parenthetical appears after an exhibit, such exhibit is filed herewith.
Exhibits
- --------
2.1 Agreement and Plan of Reorganization by and between Lewison
Enterprises, Inc., Omega Development Corp. and the shareholders of
Omega Development Corp. dated July 13, 1993 (Filed as Exhibit 2.1 to
the Form 8-K dated July 23, 1993, previously filed with the Commission,
File No. 33-34200).
2.2 Plan and Agreement of Reorganization by and among Omega Development
Inc., Omega Development Corporation, P. Thomas Mann, Peter Allen
Dysert, the Peter Allen Dysert Trust UTI dated July 13, 1983, Kirby J.
Bourgeois, Toklan Oil & Gas Corporation, Stephen M. King Properties,
Inc., A. Paul Shapansky and Omega Investors L.L.C. No. 1 consummated on
December 22, 1994 (Filed as Exhibit 2.1 to the Form 8-K dated December
22, 1994, previously filed with the Commission, File No. 33-34200).
2.3 Stock Purchase/Exchange Agreement by and among Home Partners of
America, Inc., RAS Investment Banking Group, J. Tabs Investment and
Michael Coleman and Omega Development, Inc. dated June 2, 1995 (Filed
as Exhibit 2.1 to the Form 8-K dated June 21, 1995, previously filed
with the Commission, File No. 33-34200).
2.4 Stock Exchange Agreement and Plan of Reorganization by and between
Omega Development, Inc. And the shareholders of Heater Specialists,
Inc. and Primenergy, Inc. dated December 2, 1997.
3.1 (a) Articles of Incorporation of Lewison Enterprises, Inc. filed
with the Secretary of State of Nevada July 14, 1988
(incorporated by reference to Registration Statement on Form
S-1, File Number 33-34200, of Lewison Enterprises, Inc.);
(b) Amendment to Articles of Incorporation of the Company, as
filed with the Secretary of State of Nevada on September 22,
1989 (incorporated by reference to Form 10-K of the Company
[then known as The Postal Group, Inc.] for year ended December
31, 1989);
11
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(c) Amendment to Articles of Incorporation of the Company filed
with the Secretary of State of Nevada on October 27, 1992
(incorporated by reference to Form 10-KSB of the Company for
the year ended December 31, 1992);
(d) Amendment to Articles of Incorporation of the Company filed
with the Secretary of State of Nevada on January 19, 1994
(incorporated by reference to Form 10-KSB of the Company for
the year ended December 31, 1993).
3.2 Bylaws of the Company (incorporated by reference to Registration
Statement on Form S-1, File Number 33-34200, previously filed with the
Commission).
4.1 Specimen Form of Certificate for Common Stock (incorporated by
reference to Registration Statement of Form S-1, File Number 33-34200,
previously filed with the Commission).
4.2 Board of Directors Action dated November 8, 1993, designating
preferences of Class B Preferred Stock, pursuant to authority in
Certificate of Amendment of Exhibit 3.1(c) above (incorporated by
reference to Form 10-KSB of the Company for the year ended December 31,
1993).
4.3 Specimen Form of Certificate for Preferred Stock (incorporated by
reference to Form 10-KSB of the Company for the year ended December 31,
1993).
4.4 Certificate of Designation of Series C Convertible Preferred Stock
filed June 7, 1995 (incorporated by reference to Form 10-KSB of the
Company for the year ended December 31, 1995).
10.1 Agreement and plan of Reorganization dated June 15, 1989 among the
Company, Mail-it-Quik, Inc., and the shareholders of Mail-it-Quik, Inc.
(incorporated by reference to Form 8-K dated June 30, 1989).
10.2 Rescission and revocation of Agreement and Plan of Reorganization
(incorporated by reference to Form 8-K dated December 31, 1990).
10.3 Agreement and Plan of Reorganization by and between Lewison
Enterprises, Inc., Omega Development Corp. and the shareholders of
Omega Development Corp. dated July 13, 1993 (incorporated by reference
to Form 8-K dated July 23, 1993).
10.4 HPA Stock Purchase Agreement by and between Omega Development, Inc. and
Omega Investors LLC #1, effective December 15, 1996 (incorporated by
reference to Form 10-KSB of the Company for the year ended December 31,
1996).
12
<PAGE>
10.5 Agreement and Plan of Reorganization dated January 31, 2000, by and
among the Company, BBJ Environmental Solutions, Inc. and the
Stockholders of BBJ Environmental.
16.1 Letter dated August 17, 1995, issued by Arthur Andersen LLP addressing
Registrant disclosures in Form 8-K reporting a change in auditors
(Filed as Exhibit 1 to the Form 8-K dated August 15, 1995, previously
filed with the Commission, File No. 33-34200).
(b) Reports on Form 8-K
There were no reports on Form 8-K filed with the Securities
and Exchange Commission during the last quarter of fiscal
1998.
13
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SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the Registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
OMEGA DEVELOPMENT, INC.
Date: February 29,2000 By: /s/ A. Paul Shapansky
--------------------------
A. Paul Shapansky
Chairman of the Board, President
and Chief Executive Officer and
Principal Financial Officer
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
dates indicated:
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ A. Paul Shapansky Chairman of the Board, February 29,2000
- --------------------- President and Chief
A. Paul Shapansky Executive Officer and
Principal Financial Officer
/s/ Herbert Maxwell Director February 29,2000
- --------------------
Herbert Maxwell
/s/ James R. Flaherty Chief Accounting Officer February 29,2000
- ---------------------- and Secretary
James R. Flaherty
</TABLE>
14
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OMEGA DEVELOPMENT, INC. AND SUBSIDIARIES
CONSOLIDATED FINANCIAL STATEMENTS
AS OF DECEMBER 31, 1998 AND 1997
WITH REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Shareholders of Omega Development, Inc.:
We have audited the accompanying consolidated balance sheet of Omega
Development, Inc. and subsidiaries as of December 31, 1998 and the related
statements of operations and accumulated deficit, changes in stockholders'
deficit and cash flows for the year then ended. These financial statements are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audit. The financial
statements of Omega Development, Inc. for the year ended December 31, 1997 were
audited by other auditors, whose report, dated February 25, 1998, expressed an
unqualified opinion on those statements.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosure in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Omega Development, Inc. and
subsidiaries as of December 31, 1998, and the results of its operations and its
cash flows for the year then ended in conformity with generally accepted
accounting principles.
HENDERSON SUTTON & CO., P.C.
Tulsa, Oklahoma
February 22, 2000
<PAGE>
OMEGA DEVELOPMENT, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
ASSETS December 31,
1998
-----------
CURRENT ASSETS $ 0
OFFICE AND OTHER EQUIPMENT, net of accumulated
depreciation of $27,577 in 1998 12,131
-----------
TOTAL ASSETS $ 12,131
===========
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES:
Accounts payable and accrued liabilities $ 42,045
COMMITMENTS AND CONTINGENCIES (Note 5) --
STOCKHOLDERS' DEFICIT:
Common stock, $.001 par value; 25,000,000 shares authorized;
15,000,000 shares issued and outstanding 15,000
Additional paid in capital 4,642,653
Accumulated deficit (4,687,567)
-----------
Total stockholders' deficit (29,914)
-----------
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT $ 12,131
===========
The accompanying notes are an integral part of these financial statements.
F-2
<PAGE>
OMEGA DEVELOPMENT, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND ACCUMULATED DEFICIT
December 31,
1998 1997
------------ ------------
REVENUES:
Total revenues $ 0 $ 0
EXPENSES:
General and administrative 31,946 26,676
Depreciation and amortization 9,066 5,472
------------ ------------
Total operating expenses 41,012 32,148
------------ ------------
NET LOSS (41,012) (32,148)
ACCUMULATED DEFICIT, beginning of period (4,646,555) (4,614,407)
------------ ------------
ACCUMULATED DEFICIT, end of period ($ 4,687,567) ($ 4,646,555)
============ ============
BASIC AND DILUTED EARNINGS (LOSS) PER SHARE:
Net loss per common share $ 0.00 $ 0.00
============ ============
WEIGHTED AVERAGE SHARES OUTSTANDING 15,000,000 15,000,000
============ ============
The accompanying notes are an integral part of these financial statements.
F-3
<PAGE>
OMEGA DEVELOPMENT, INC. AND SUBSIDIARIES
STATEMENT OF CHANGES IN STOCKHOLDERS' DEFICIT
<TABLE>
<CAPTION>
Common Common Additional
Shares Stock Paid-In Accumulated
Outstanding Par Value Capital Deficit
------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
BALANCE, DECEMBER 31, 1996 15,000,000 $15,000 $4,585,214 ($4,614,407)
Capital contribution by principal
shareholder -- -- 18,920 --
Net loss for the period -- -- -- (32,148)
------------------------------------------------------------------
BALANCE, DECEMBER 31, 1997 15,000,000 15,000 4,604,134 (4,646,555)
Capital contribution by principal
shareholder -- -- 38,519 --
Net loss for the period -- -- -- (41,012)
------------------------------------------------------------------
BALANCE, DECEMBER 31, 1998 15,000,000 $15,000 $4,642,653 ($4,687,567)
==================================================================
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-4
<PAGE>
OMEGA DEVELOPMENT, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
December 31,
1998 1997
----------- ----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss ($41,012) ($32,148)
Adjustments to reconcile net loss to net cash
provided by (used in) operating activities:
Depreciation and amortization 9,066 5,472
Changes in assets and liabilities:
Prepaid expenses 492 5,130
Accounts payable and accrued liabilities (7,065) 2,506
-------- --------
Total adjustments 2,493 13,108
-------- --------
Net cash used in operating activities (38,519) (19,040)
CASH FLOWS FROM INVESTING ACTIVITIES: 0 0
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds received from capital contribution 38,519 18,920
-------- --------
NET INCREASE (DECREASE) IN CASH 0 (120)
CASH, beginning of period 0 120
-------- --------
CASH, end of period $ 0 $ 0
======== ========
Cash paid during the period for interest $ 0 $ 0
======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-5
<PAGE>
OMEGA DEVELOPMENT, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998
1. ORGANIZATION AND DESCRIPTION OF BUSINESS
- --------------------------------------------
Organization
- ------------
Omega Development, Inc. ("Omega" or "the Company") was incorporated in the State
of Nevada on July 15, 1988 under the name of "Lewison Enterprises, Inc." Since
then the Company has experienced a series of business consolidations and
reorganizations, the most recent of which are discussed below.
On September 27, 1996, the bank holding the mortgage on the Company's sole
operating asset, the ABB Building, a 142,000 square foot general purpose office
building, located in Windsor, Connecticut, a suburb of Hartford completed
foreclosure proceedings on the building.
Since the foreclosure of the ABB Building , the Company ceased all operations
and currently has one employee. Omega's current business plan is to seek to
acquire or merge with potential businesses that may, in the opinion of
management, warrant the Company's involvement. The Company recognizes that as a
result of its limited financial, managerial or other resources, the number of
suitable potential businesses that may be available to it will be extremely
limited. The Company's principal business objective will be to seek long-term
growth potential in the business in which it participates rather than immediate,
short-term earnings. As of December 2, 1997, the Company entered into a Stock
Exchange Agreement and Plan of Reorganization (the "Agreement") to merge with
Heater Specialists, Inc. and Primenergy, Inc., however, the Agreement was
subsequently terminated on August 6, 1998. See footnote 7, Merger Activity.
The principal stockholder of the Company has agreed to fund the operations of
the Company in sufficient amounts for the Company to meet its recorded
obligations at December 31, 1998, and its continued operations as a going
concern.
F-6
<PAGE>
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
- ----------------------------------------------
Consolidation
- -------------
The Company's consolidated financial statements at December 31, 1998 include the
accounts of Omega and its wholly owned subsidiary, Omega Capital Corp. All
intercompany transactions have been eliminated.
Depreciation and Amortization
- -----------------------------
Depreciation is recorded using the straight-line method over the estimated
useful lives of the office equipment.
Income Taxes
- ------------
Income taxes are accounted for in accordance with Statement of Financial
Accounting Standards No. 109, Accounting for Income Taxes (SFAS 109). Deferred
taxes are determined based on the estimated future tax effects of differences
between the financial statements and tax basis of assets and liabilities and of
net operating loss carry forwards ("NOL"). SFAS 109 requires that the tax
benefit of such NOLs be recorded as an asset to the extent that management
concludes the realization of the NOLs is "more likely than not."
Earnings per Share
- ------------------
In 1997, the Financial Accounting Standards Board issued statement No. 128,
Earnings per Share. Statement 128 replaced the calculation of primary and fully
diluted earnings per share with basic and diluted earnings per share. Unlike
primary earnings per share, basic earnings per share excludes any dilutive
effects of options, warrants and convertible securities. Diluted earnings per
share is very similar to the previously reported fully diluted earnings per
share. All earnings per share amounts for all periods have been presented, and
where appropriate, restated to conform to the Statement 128 requirements.
Use of Estimates in the Preparation of Financial Statements
- -----------------------------------------------------------
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amount of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
F-7
<PAGE>
3. STOCKHOLDERS' EQUITY
- ------------------------
The principal shareholder of the Company has agreed to fund the operations of
the Company to meet its recorded obligations at December 31, 1998, and its
continued operations as a going concern. The principal stockholder of the
Company contributed $38,519 in 1998 and $18,920 in 1997 to pay for certain
liabilities of the Company.
4. INCOME TAXES
- ---------------
The Company had certain federal income tax net operating loss carry forwards
(NOLs) at December 31, 1998. SFAS 109 requires that the tax benefit of such NOLs
be recorded as an asset to the extent that management concludes the realization
of the NOLs is "more likely than not." Realization of the future tax benefits is
dependent on the Company's ability to generate taxable income within the carry
forward periods. Management has concluded that, using the criteria of SFAS 109,
a valuation allowance should be provided for the entire balance of the net
deferred tax asset.
5. COMMITMENTS AND CONTINGENCIES
- ---------------------------------
At December 31, 1998, no lease commitments existed.
6. STATEMENT OF CASH FLOWS
- ---------------------------
For purposes of reporting cash flows, cash includes cash and money market
accounts that are due on demand. No cash payments for income taxes were made in
1998 or 1997.
7. MERGER ACTIVITY
- -------------------
On April 15, 1998, the Company executed an Agreement and Plan of Merger (the
"Agreement"), which was entered into as of December 2, 1997, by and among the
Company, Heater Specialists, Inc. ("HSI") and Primenergy, Inc. The Agreement to
merge the companies was conditioned upon Omega raising new equity of not less
then $3,000,000 on or before May 31, 1998, subject to extension by mutual
agreement. Omega was unable to provide the new equity in accordance with the
terms of the Agreement and the Agreement was terminated on August 6, 1998.
The Company has entered into an Agreement and Plan of Reorganization dated as of
January 31, 2000, with BBJ Environmental Solutions, Inc. ("BBJ") and certain
stockholders of BBJ. The agreement contemplates that the Company will acquire
all of the outstanding capital stock of BBJ
F-8
<PAGE>
in exchange for that number of shares of common stock of the Company that will
cause the BBJ shareholders to own in the aggregate approximately 83% of the
outstanding common stock of the Company. It is contemplated that this will be
accomplished through a combination of common stock issuances by the Company, a
reverse stock split of the Company's outstanding common stock and the return of
outstanding shares of the Company's common stock to the treasury. BBJ develops,
manufactures and markets indoor environmental solutions with products and
devices that control contamination and air pollution in heating, ventilation and
air-conditioning systems of homes, offices, health care facilities, food
processing plants, schools and public buildings. Completion of the transaction
with BBJ is subject to several conditions, including completion of a
one-for-three reverse stock split.
F-9
OMEGA DEVELOPMENT, INC.
EXHIBIT 10.5
AGREEMENT AND PLAN OF REORGANIZATION
<PAGE>
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION dated as of January 31, 2000,
by and among Omega Development Incorporated, a Nevada corporation ("Purchaser"
or "Omega"), BBJ Environmental Solutions, Inc. (hereinafter referred to as
"BBJ") and the Stockholders of BBJ listed to at the foot of this Agreement
(collectively referred to as the "Transferors").
W I T N E S S E T H:
WHEREAS, Transferors will immediately prior to the Closing (as
hereafter defined) be the owners and holders of 100% of BBJ's outstanding
capital stock consisting of 5,683,333 shares of BBJ Common Stock held by 24
persons, 100,000 shares of Series A Preferred Stock currently convertible into
160,000 shares of BBJ Common Stock held by 7 persons and 171,875 shares of
Series B Preferred Stock currently convertible into 275,000 shares of BBJ Common
Stock held by 6 persons; and
WHEREAS, the Omega Stockholders, consisting of 18 persons, are
currently the owners and holders of 14,219,630 shares of Purchaser's Common
Stock, $.001 par value, before giving effect to a one-for-three reverse stock
split and the return to treasury of 3,465,000 shares, leaving them with
1,274,877 shares of Purchaser's Common Stock immediately before Closing; and
WHEREAS, approximately 570 other Omega stockholders of record currently
own 780,370 shares of Purchaser's Common Stock, $.001 par value, before giving
effect to a one-for-three reverse stock split, resulting in approximately
260,123 shares of Purchaser's Common Stock to be owned by them immediately
before closing, which when added to the 1,274,877 shares referred to above will
total 1,535,000 outstanding Omega shares immediately before Closing; and
WHEREAS, Purchaser is a publicly held corporation that desires to
acquire control of a business which has growth potential; and
WHEREAS, Purchaser desires to acquire 100% of the issued and
outstanding shares of BBJ capital stock in exchange for 12,410,666 shares of
Common Stock (subject to adjustment pursuant to Article 1.03 herein) of
Purchaser (the "Omega Common Stock") in a tax free transaction pursuant to the
provisions of Section 368(a)(1)(B) of the Internal Revenue Code of 1986;
NOW, THEREFORE, for and in consideration of the mutual representations,
warranties, covenants and undertakings herein contained, and on the terms and
subject to the conditions set forth herein, the parties hereto agree as follows:
1
<PAGE>
ARTICLE I
PURCHASE AND SALE
-----------------
1.01 Sale and Purchase of Stock. Subject to and upon the terms and
conditions contained herein, at the Closing (as hereinafter defined), the
Transferors shall sell, assign, transfer, convey and deliver to Purchaser, free
and clear of any liens, claims, encumbrances and charges whatsoever, and
Purchaser shall purchase, accept and acquire from the Transferors 5,683,333
shares of the BBJ Common Stock (subject to adjustment as provided in Article
1.03 herein), 100,000 shares of Series A Preferred Stock and 171,875 shares of
Series B Preferred Stock owned by them, as referenced in the signature pages in
Tables I through III below. Purchaser shall purchase, accept and acquire from
the Transferors all the aforesaid securities.
1.02 Closing. The closing of the transaction contemplated hereby (the
"Closing") shall occur on or before March 1, 2000 or such later date to which
Purchaser and BBJ shall agree from time to time to adjourn same. The Closing
shall occur at 10:00 A.M. in the offices of BBJ or at such other time and place
as shall be mutually agreed to in writing by Purchaser and BBJ. In addition to
any other closing conditions referenced herein, it is a condition precedent to
the closing of this transaction that (i) Purchaser is current with all reports
required to be filed under the Securities Exchange Act of 1934, as amended, (ii)
Purchaser effects a one-for-three reverse stock split and a total of 3,465,000
post-split shares are sold back to the treasury of Purchaser at a purchase price
of $.0001 per share and subsequently retired to the status of authorized but
unissued shares of common Stock resulting in Purchaser having no more than
1,535,000 shares of Common Stock outstanding immediately prior to Closing, and
(iii) Paul Shapansky, Herbert Maxwell, Dennis Rendfish, Robert A. Schneider,
Lois Shapiro, Shai Sasson, Sidney Borenstein and Eric Bashford CRT shall be
responsible for the stock sale back referenced in (ii) above.
1.03 Purchase Price. In consideration of the aforesaid securities of
BBJ to be exchanged by the Transferors, Purchaser at the Closing shall deliver
to Michael J. Gordon, as agent for the Transferors, certificates representing an
aggregate of up to 12,410,666 shares of Omega Common Stock, free and clear of
any liens, claims, encumbrances or charges whatsoever, registered as provided in
the signature pages in Tables I through III below. In this respect, it is
understood and agreed as follows: (i) Common Stockholders of BBJ shall receive
two shares of Omega Common Stock in exchange for each share of BBJ Common Stock;
and (ii) Series A and Series B Preferred Stockholders shall each receive 3.84
shares of Omega Common Stock in exchange for each share of BBJ Preferred Stock,
rounded up to the nearest whole number in lieu of issuing any fractional shares
of Omega Common stock. In the event that all Transferors named below do not
execute this Agreement, a pro rata number of shares of Omega Common Stock will
be delivered to the Transferors at Closing. However, it is a condition precedent
to the closing of this Transaction that at least 90% of the BBJ Common
Stockholders and 100% of the Preferred Stockholders execute this Agreement to
become Transferors. Further, in the event that any additional shares of Common
Stock are issued by BBJ prior to Closing, whether from the exercise of options
or otherwise, it is a condition of this Transaction that such stockholders
execute this Agreement to become Transferors and, in such event, the Purchaser
will increase the number of shares of Omega's Common Stock to be issued at
2
<PAGE>
Closing by an amount equal to two shares of Omega's Common Stock for each share
of BBJ Common Stock.
1.04 Instruments of Transfer; Further Assurances. In order to
consummate the transaction contemplated hereby, the following documents and
instruments shall be delivered:
(a) Documents from Transferors. At the Closing, Transferors
shall deliver to Purchaser the BBJ stock certificates owned by them
plus a duly executed stock power or other instrument of transfer for
each such security with appropriate signature guarantees.
(b) Documents from Purchaser. Pursuant to Article 1.03,
Purchaser shall deliver to Michael J. Gordon, as agent for the
Transferors, at the Closing, Omega stock certificates to which the
Transferors are entitled to be in such denominations as shall be
requested by BBJ not less than three (3) business days prior to the
date of the Closing.
(c) Further Documents. At the Closing, and at all times
thereafter as may be necessary (i) Transferors shall execute and
deliver to Purchaser such opinion of Counsel as may be reasonably
necessary and other instruments of transfer as shall be reasonably
necessary or appropriate to vest in Purchaser good and indefeasible
title to the securities of BBJ owned by them and to comply with the
purposes and intent of this Agreement, and (ii) Purchaser shall execute
and deliver to Transferors such opinion of Counsel as may be reasonably
necessary and other instruments, certificates and documents as shall be
reasonably necessary or appropriate to convey to Transferors, the
Purchase Price and to comply with the purposes and intent of this
Agreement.
ARTICLE II
PURCHASER'S REPRESENTATIONS AND WARRANTIES
------------------------------------------
Purchaser represents, warrants and covenants that, except as otherwise
stated, the following are true and correct as of this date and will be true and
correct through the date of the Closing as if made anew on and as of that date:
2.01 Organization and Good Standing. Purchaser is a corporation duly
organized, validly existing and in good standing under the laws of the state of
Nevada with all requisite power and authority to carry on business, to own
properties, to execute and deliver this Agreement, to consummate the
transactions contemplated hereby and to take all of the other actions provided
for in or contemplated hereby. Purchaser is not presently qualified to transact
business in the State of Florida but, prior to Closing, will qualify to do
business in the State of Florida and will be in good standing at Closing.
Purchaser currently has no active business operations and it is not required to
be authorized to do business in any other jurisdiction. Purchaser has no
subsidiaries or material assets or properties.
3
<PAGE>
2.02 Authorization and Validity. The execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated hereby have been or will be prior to Closing duly authorized by the
Board of Directors of the Purchaser (and, to the extent required by applicable
law or regulation, by the shareholders; notice to non-consenting shareholders
will be given on or immediately after Closing). This Agreement constitutes (or
will not later than the Closing constitute) the legal, valid and binding
obligation of Purchaser, enforceable against Purchaser in accordance with its
terms with the exception of applicable bankruptcy and insolvency laws.
2.03 No Violation. Neither the execution, delivery or performance of
this Agreement nor the consummation of any of the transactions contemplated
hereby now or at any time in the future (whether with the giving of notice or
passage of time or both) will (a) conflict with, or result in a violation or
breach of the terms, conditions and provisions of, or constitute a default
under, the Articles of Incorporation or By-Laws of Purchaser or any agreement,
indenture or other instrument or undertaking of any kind or nature under which
Purchaser is bound or to which the assets of Purchaser are subject, or result in
the creation or imposition of any lien, claim, charge or encumbrance upon any of
such assets or upon any of the stock of Purchaser, or (b) violate or conflict
with any judgment, decree, order, statute, rule or regulation of any court or
any public, governmental or regulatory agency or body having jurisdiction over
Purchaser or the properties or assets of Purchaser. To the best of Purchaser's
knowledge, Purchaser has complied (and will through the Closing comply) in all
material respects with all applicable laws, regulations and licensing
requirements, and has filed (and will through the date of the Closing file) with
the proper authorities all necessary statements and reports, tax returns and all
other filings of any kind or nature due at any time up through the date of the
Closing.
2.04 Capitalization. The authorized capital stock of the Purchaser
consists of 25,000,000 shares of Common Stock, $.001 par value per share, of
which amount 15,000,000 shares are currently issued and outstanding, which will
be reduced to 1,535,000 shares immediately prior to the Closing through a
one-for-three reverse stock split and Paul Shapansky, Herbert Maxwell, Dennis
Rendfish, Robert A. Schneider, Lois Shapiro, Shai Sasson, Sidney Borenstein and
Eric Bashford CRT selling back to the Purchaser at a price of $.0001 per share a
total of 3,465,000 shares of Purchaser's Common Stock. All of Purchaser's issued
and outstanding shares have been validly issued and are fully paid and
non-assessable. There are and as of the date of the Closing will be, no
outstanding warrants, options, subscriptions or other rights of any kind or
nature by which any person or entity can acquire any additional shares of Common
Stock or other securities of any kind or nature of the Purchaser; no shareholder
of Purchaser or other person or entity is entitled to any preemptive rights,
rights of first refusal or other rights of any kind or nature arising out of or
relating to the issuance of shares of Omega Common Stock to be issued to the
Transferors under this Agreement; and there are (and as of the Closing will be)
no other commitments requiring the issuance of any additional shares of the
capital stock of the Purchaser except as described herein. All of the shares of
Common Stock to be issued to the Transferors at the Closing will be duly
authorized, fully paid and non-assessable shares and shall not be subject to any
lien, claim, charge, encumbrance or shareholder agreement of any kind or nature,
right of first refusal or preemptive rights.
4
<PAGE>
2.05 Corporate Records. The copies of the Articles of Incorporation and
all amendments thereto and the By-Laws, as amended, of Purchaser that will be
delivered to BBJ at or prior to the Closing will be true, correct and complete.
The minute book of Purchaser, copies of which will be delivered to BBJ at or
prior to the Closing upon request will contain minutes of all meetings of and
consents to all actions taken without meetings by the Board of Directors and the
shareholders of Purchaser since the formation of Purchaser, all of which will be
accurate in all material respects. The books and records, financial and others
of Purchaser are in all material respects complete and correct and have been
maintained in accordance with good business and accounting principles.
2.06 Financial Statements/SEC Filings. Purchaser will furnish BBJ a
copy of Purchaser's audited financial statements for the fiscal year ended
December 31, 1999 contained in its Form 10-KSB for that fiscal year; and will
furnish a copy of all reports filed under the Securities Exchange Act of 1934,
as amended, for the last three years. The information set forth in these filings
are true, correct and complete in all material respects, and the financial
statements contained therein fairly presents financial condition of the
Purchaser as of those dates, and the results of its operations for those periods
referred to in the financial statements, in accordance with generally accepted
accounting principles consistently applied. Purchaser did not have, as of the
date of each such balance sheet, except as to the extent reflected or reserved
against therein, any liabilities or obligations (absolute or contingent) which
should be reflected in the balance sheet or the notes thereto prepared in
accordance with generally accepted accounting principles. Purchaser is, or will
be as of the Closing, current in all SEC, income and franchise tax and other
reporting and filing obligations consistent with law and its contractual
undertakings (if any).
2.07 Absence of Certain Changes. Except for a $50,000 loan received
from BBJ, since December 31, 1999, Purchaser has not: (a) suffered any material
adverse change in its financial condition, assets, liabilities or business; (b)
contracted for or paid any capital expenditures; (c) incurred any indebtedness
or borrowed money, issued or sold any debt or equity securities or discharged or
incurred any liabilities or obligations except in the ordinary course of
business as heretofore conducted (as described in the Form 10-KSB for the year
ended December 31, 1999); (d) mortgaged, pledged or subjected to any lien,
lease, security interest or other charge or encumbrance any of their properties
or assets; (e) paid any material amount on any indebtedness prior to the due
date, forgiven or canceled any material debts or claims or released or waived
any material rights or claims; (f) suffered any damage or destruction to or loss
of any assets (whether or not covered by insurance); (g) acquired or disposed of
any assets or incurred any liabilities or obligations except in the ordinary
course of business; (h) made any payments to its affiliates or associates or
loaned any money to any person or entity; (i) formed or acquired or disposed of
any interest in any corporation, partnership, joint venture or other entity; (j)
entered into any employment, compensation, consulting or collective bargaining
agreement or any other agreement of any kind or nature with any person or group,
or modified or amended in any respect the terms of any such existing agreement;
(k) entered into any other commitment or transaction or experienced any other
event that relates to or affects in any way this Agreement or to the
transactions contemplated hereby, or that has affected, or may adversely affect
Purchaser's business, operations, assets, liabilities or financial condition; or
(l) amended its Certificate of Incorporation or By-Laws beyond those provided to
BBJ in accordance with Article 2.05 contained herein.
5
<PAGE>
2.08 Disclosure. No representation or warranty by Purchaser in this
Agreement nor any statement or certificate furnished or to be furnished by it
pursuant hereto or in connection with the transactions contemplated hereby
contains or will contain any untrue statement of a material fact or omits or
will omit to state a material fact necessary to make the statements contained
therein not misleading or necessary in order to provide BBJ and the Transferors
with complete and accurate information.
2.09 Consents. No authorization, consent, approval, permit or license
of, or filing with, any governmental or public body or authority, any lender or
lessor or any other person or entity is required to authorize, or is required in
connection with the execution, delivery and performance of this Agreement, the
agreements contemplated hereby, or the consummation of the transactions
contemplated hereby or thereby, on the part of Purchaser.
2.10 Compliance with Laws. There are no existing violations of any
applicable federal, state or local law or regulation involving the current or
prior property and/or business of Purchaser; there are no known, noticed or
threatened current or prior violations or any state of facts involving Purchaser
which would constitute such a violation; and this Agreement and the consummation
of the transactions contemplated hereby will not give rise to any such
violation.
2.11 Litigation. Purchaser has not had any legal action or
administrative proceeding or investigation instituted or, to the best of its
knowledge, threatened against it. Purchaser is not (a) subject to any continuing
court or administrative order, writ, injunction or decree applicable
specifically to Purchaser or to its business, assets, operations or employees,
or (b) in default with respect to any such order, writ, injunction or decree.
Purchaser knows of no basis for any such action, proceeding or investigation.
2.12 Tax and Franchise Returns. Purchaser has prepared and filed, or
has caused to be prepared and filed, with the appropriate United States, state
and local government agencies, and all political subdivisions thereof, all tax
and franchise returns required to be filed by, on behalf of or on account of the
operations of Purchaser; all such returns required to be filed prior to the
Closing will be so filed; and all taxes, assessments, interest and penalties
required to be paid in respect of all periods covered thereby have and will be
paid. The federal income tax returns of Purchaser have not been examined by the
Internal Revenue Service and the state income tax returns have not been examined
by state authorities. Purchaser has not executed or filed with the IRS or any
other taxing authority (whether domestic or foreign) any agreement extending the
period for assessments or collection of any income or other taxes. Purchaser is
not a party to a pending action or proceeding by any domestic or foreign
governmental authority for assessment or collection of taxes, nor has any
written claim for assessment or collection of taxes been asserted against it.
The federal and state income tax and franchise returns of Purchaser included in
the Omega Schedules are true and correct. Copies of all federal and state income
tax and franchise returns of Purchaser filed for all fiscal periods for the last
six years have been supplied to BBJ. Such returns accurately reflect the taxes
due for the periods covered thereby.
6
<PAGE>
2.13 Purchaser Schedules. Purchaser has delivered (or will deliver
prior to closing) to BBJ the following separate schedules, which are
collectively referred to as the "Omega Schedules," certified by an officer of
Omega to be complete and accurate:
(a) Schedule "A": a copy of Purchaser's filings for the last five
years under the Securities Exchange Act of 1934, as amended;
(b) Schedule "B": a copy of Purchaser's Registration Statement and
Prospectus pursuant to which Purchaser originally went public;
(c) Schedule "C": recent Nevada and Florida good standing
certificates;
(d) Schedule "D": Copies of Certificate of Incorporation and
By-Laws and all amendments thereto;
(e) Schedule "E": Copies for the last six years and the most
current federal, state and local income tax and/or franchise returns and any
applicable extensions relating thereto;
(f) Schedule "F": copies of all existing contracts and amendments
thereto;
(g) Schedule "G": Copies of all insurance plans; and
(h) Schedule "H": Copies of all prior payroll returns.
Purchaser will cause the schedules, instruments, and data delivered to
BBJ hereunder to be updated after the date hereof to the Closing.
2.14 Undisclosed Liabilities. Purchaser has at closing no liability
(whether known or unknown, whether asserted or unasserted, whether absolute or
contingent, whether accrued or unaccrued, whether liquidated or unliquidated,
and whether due or to become due), including any liability for taxes, except for
liabilities owed to BBJ in the principal amount of $50,000 plus interest.
7
<PAGE>
2.15 Contracts and Agreements. Purchaser has no contracts or agreements
with any party which is not cancelable upon giving not more than thirty (30)
days" notice without incurring any liability. Each of the contracts and
agreements of Purchaser listed on the Disclosure Schedule is valid and
subsisting in full force and effect as of the date hereof. Copies of all
agreements and contracts in the Disclosure Schedule have been provided to BBJ to
the extent that such contracts and agreements are written.
2.16 Insurance. The Disclosure Schedule contains a copy of any and all
policies of insurance in force with respect to Purchaser. Purchaser carries all
required public liability, workmen's compensation and other usual types of
insurance of reasonable amounts and Purchaser will deliver to BBJ copies of any
such policies and certificates of insurers showing such insurance to be in
effect as of the date of this Agreement. Purchaser has not received notice from
any existing insurance carrier of its intent to cancel any insurance policy
provided in the Disclosure Schedule and to Purchaser's knowledge, any and all
such policies are currently in full force and effect. All premiums due and
payable on such policies have been paid and Purchaser is not a co-insurer under
any term of any insurance policy.
2.17 Labor Disputes. Purchaser has no employees, employee benefit
plans, Collective Bargaining Agreement, union contract, profit sharing plan,
group life insurance, group health insurance and/or fringe benefit plan. The
Company is not currently required to file any payroll returns. Copies of all
prior payroll returns for the last six years have been supplied to BBJ at
Closing in accordance with the Purchaser Disclosure Schedules.
2.18 Broker's Fees. Purchaser has no liability or obligation to pay any
fees or commissions to any broker, finder, or agent with respect to the
transactions contemplated by this Agreement.
2.19 Interested Transactions. Purchaser is not a party to any contract,
instrument, transaction or other arrangement with any officer or director of the
Purchaser, or any member of their family, which continues on after the date
hereof.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF BBJ
-------------------------------------
BBJ represents, warrants and covenants that the following are true and
correct as of this date and will be true and correct through the date of the
Closing as if made anew on and as of that date and that parties will comply with
the provisions of Articles 3.14 and 3.15 after Closing:
3.01 Organization and Good Standing. BBJ is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Florida, with all requisite power and authority to carry on the business in
which it is engaged, to own the properties it owns, to execute and deliver this
Agreement, to consummate the transactions contemplated hereby and to take all of
the other actions provided for in or contemplated hereby. BBJ is not licensed to
transact business outside of the State of Florida and it is not
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required to do so by the nature and conduct of its business. BBJ has no active
subsidiaries.
3.02 Authorization and Validity. The execution, delivery and
performance of this Agreement by BBJ and the consummation of the transactions
contemplated hereby have been or will be prior to Closing duly authorized by
BBJ. This Agreement constitutes or will constitute legal, valid and binding
obligations of BBJ, enforceable against BBJ in accordance with its terms. This
Agreement will, at the time of the Closing, be authorized by the Board of
Directors (and stockholders, if required) of BBJ and will constitute the valid
and binding agreement of BBJ, enforceable in accordance with its terms, and
neither the execution or delivery of this Agreement nor the consummation by BBJ
of the transactions contemplated hereby (i) violates any statute or law or any
rule, regulation or order of any court or any governmental authority, or (ii)
violates or conflicts with, or constitutes a default under or will constitute a
default under, any contract, commitment, agreement, understanding, arrangement,
or restriction of any kind to which BBJ is a party or by which BBJ is bound.
3.03 No Violation. Neither the execution, delivery or performance of
this Agreement nor the consummation of any of the transactions contemplated
hereby now or at any time in the future (whether with the giving of notice or
passage of time or both) will (a) conflict with, or result in a violation or
breach of the terms, conditions and provisions of, or constitute a default
under, the Articles of Incorporation or By-Laws of BBJ or any agreement,
indenture or other instrument or undertaking of any kind or nature under which
BBJ is bound or to which the assets of BBJ are subject, or result in the
creation or imposition of any lien, claim, charge or encumbrance upon any of
such assets or upon any of the stock of BBJ, or (b) violate or conflict with any
judgment, decree, order, statute, rule or regulation of any court or any public,
governmental or regulatory agency or body having jurisdiction over BBJ or the
properties or assets of BBJ. BBJ has complied (and will through the Closing
comply) in all material respects with all applicable laws, regulations and
licensing requirements, and has filed (and will through the date of the Closing
file) with the proper authorities all necessary statements and reports, tax
returns and all other filings of any kind or nature due at any time up through
the date of the Closing. BBJ possesses all necessary licenses, franchises,
permits and governmental authorizations to conduct its business as now or
heretofore conducted and as this Agreement contemplates it will be conducted
after the Closing.
3.04 Capitalization. As of the date hereof, BBJ had an authorized
capitalization of 30,000,000 shares of Common Stock, $.0005 par value, of which
5,683,333 shares are issued and outstanding. BBJ has outstanding options and/or
warrants of BBJ to purchase a total of 3,306,343 shares of Common Stock. BBJ
also has 5,000,000 shares of Preferred Stock, $2.00 par value, authorized,
consisting of 100,000 shares of Series A Preferred Stock outstanding and 171,875
shares of Series B Preferred Stock outstanding. The record and beneficial
shareholders of at least 90% of the outstanding BBJ Common Stock, 100,000 shares
of Series A Preferred Stock and 171,875 shares of Series B Preferred Stock at
the time of the Closing will be the Transferors, which capital stock will be
owned free and clear by the Transferors of all liens, claims, encumbrances,
equities and proxies. Each outstanding share of capital stock at the time of
Closing will be legally and validly issued and fully paid and non-assessable.
There will be, at the time of the Closing, no
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other outstanding securities, obligations, rights, subscriptions, warrants,
options or other rights to purchase shares of capital stock of BBJ except for
options to purchase 2,806,343 shares of BBJ Common Stock and warrants to
purchase 500,000 shares of BBJ Common Stock. After Closing, BBJ intends to
utilize its best efforts to exchange BBJ options/warrants for Purchaser's
options/warrants on terms to be determined by the Board of Directors of
Purchaser. It also intends to complete the private placement referenced in
Article 7.02.
3.05 Corporate Records. The copies of the Articles of Incorporation and
all amendments thereto and the By-Laws of BBJ that will be delivered to
Purchaser at or prior to the Closing will be true, correct and complete. The
minute book of BBJ, copies of which will be delivered to Purchaser at or prior
to the Closing will contain minutes of all meetings of and consents to all
actions taken without meetings by the Board of Directors and the shareholders of
BBJ since the formation of BBJ, all of which will be accurate in all material
respects. The books and records, financial and others of BBJ are in all material
respects complete and correct and have been maintained in accordance with good
business and accounting principles.
3.06 Financial Statements. The unaudited financial statements of BBJ
for the nine months ended September 30, 1999 (the "BBJ Financial Statements")
fairly present the financial position of BBJ as of the balance sheet dates
included therein and the results of its operations and changes in cash flow for
the periods covered. The BBJ Financial Statements have been prepared in
accordance with generally accepted accounting principles consistently applied
throughout the periods involved. Each of such balance sheets presents fairly the
financial condition of BBJ as of its date. BBJ did not have, as of the date of
each of such balance sheet, except as and to the extent reflected or reserved
against therein, any liabilities or obligations (absolute or contingent) which
should be reflected in a balance sheet or the notes thereto prepared in
accordance with generally accepted accounting principles. Such statements of
operations and stockholders' equity present fairly the results of operations and
changes in stockholders' equity of BBJ for the periods indicated. Such
statements of changes in cash flow present fairly the information which should
be presented therein in accordance with generally accepted accounting
principles.
3.07 Absence of Certain Changes. Since December 31, 1999, BBJ has not:
(a) suffered any material adverse change in its financial condition, assets,
liabilities or business; (b) acquired or disposed of any assets or incurred any
liabilities or obligations or borrowed money, issued or sold any debt or equity
securities or discharged or incurred any liabilities or obligations except in
the ordinary course of business as heretofore conducted; (c) mortgaged, pledged
or subjected to any lien, lease, security interest or other charge or
encumbrance any of their properties or assets; (d) paid any material amount on
any indebtedness prior to the due date, forgiven or canceled any material debts
or claims or released or waived any material rights or claims; (e) suffered any
damage or destruction to or loss of any assets (whether or not covered by
insurance); (f) formed or acquired or disposed of any interest in any
corporation, partnership, joint venture or other entity; (g) entered into any
other commitment or transaction or experienced any other event that relates to
or affects in any way this Agreement or to the transactions contemplated hereby,
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or that has affected, or may adversely affect BBJ's business, operations,
assets, liabilities or financial condition; or (h) amended its Certificate of
Incorporation or By-Laws.
3.08 Disclosure. No representation or warranty by BBJ in this Agreement
nor any statement or certificate furnished or to be furnished by it pursuant
hereto or in connection with the transactions contemplated hereby contains or
will contain any untrue statement of a material fact or omits or will omit to
state a material fact necessary to make the statements contained therein not
misleading or necessary in order to provide Purchaser with complete and accurate
information.
3.09 Consents. No authorization, consent, approval, permit or license
of, or filing with, any governmental or public body or authority, any lender or
lessor or any other person or entity is required to authorize, or is required in
connection with the execution, delivery and performance of this Agreement, the
agreements contemplated hereby, or the consummation of the transactions
contemplated hereby or thereby, on the part of BBJ.
3.10 Compliance with Laws. There are no existing violations of any
applicable federal, state or local law or regulation involving the property or
business of BBJ; there are no known, noticed or threatened violations or any
state of facts involving BBJ which would constitute such a violation; and this
Agreement and the consummation of the transactions contemplated hereby will not
give rise to any such violation.
3.11 Litigation. BBJ has not had any legal action or administrative
proceeding or investigation instituted or threatened against it. BBJ is not (a)
subject to any continuing court or administrative order, writ, injunction or
decree applicable specifically to BBJ, or to its business, assets, operations or
employees, or (b) in default with respect to any such order, writ, injunction or
decree. Such persons know of no basis for any such action, proceeding or
investigation.
3.12 Tax and Franchise Returns. BBJ has prepared and filed, or has
caused to be prepared and filed, with the appropriate United States, state and
local government agencies, and all political subdivisions thereof, all tax and
franchise returns required to be filed by, on behalf of or on account of the
operations of BBJ; all such returns required to be filed prior to the Closing
will be so filed; and all taxes, assessments, interest and penalties required to
be paid in respect of all periods covered thereby have and will be paid. Such
returns accurately reflect the taxes due for the periods covered thereby, except
for amounts which, in the aggregate, are immaterial. The federal income tax
returns of BBJ have not been examined by the Internal Revenue Service and the
state income tax returns have not been examined by the applicable State
Department which audits such returns.
3.13. BBJ Schedules. BBJ has made available (and will upon request
deliver prior to closing) to Purchaser the following separate schedules, which
are collectively referred to as the "BBJ Schedules," certified by an officer of
BBJ to be complete and accurate.
(a) Schedule "A": copies of the Certificate of Incorporation and
By-Laws of BBJ, including all amendments thereto, now in effect or to be in
effect;
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(b) Schedule "B": copies of all financial statements identified in
Article 3.06;
(c) Schedule "C": copies of all material contracts , leases, and
other instruments to which BBJ is a party or is bound (other than insurance
policies).
(d) Schedule "D": a list setting forth the name and address of
each shareholder of BBJ and for each such shareholder, the number of shares of
BBJ capital stock held;
BBJ shall cause the schedules, instruments, and data delivered to
Purchaser hereunder to be updated after the date hereof to the Closing.
3.14 Information for Purchaser's Report on Form 8-K. BBJ will furnish
Purchaser with all information concerning BBJ and its affiliates required for
inclusion in the current report on Form 8-K to be filed by Purchaser pursuant to
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), to report
the consummation of this Agreement. BBJ represents and warrants to Purchaser
that all information so furnished for such report or other public release by
Purchaser shall be true and correct in all material respects without omission of
any material fact required to make the information stated not misleading.
3.15 Audited Financial Statements. On or before 75 days from the date
hereof, BBJ shall deliver to Purchaser audited financial statements for its most
recently completed fiscal year, including the notes thereto, together with the
opinion of the independent accountants of BBJ as required under Form 8-K
pursuant to the Exchange Act. All such financial statements shall be prepared in
accordance with generally accepted accounting principles consistently applied
throughout the periods involved and applicable provisions of Regulation S-B
promulgated by the Securities and Exchange Commission under the Securities
Exchange Act of 1934, as amended. The balance sheets shall present fairly the
financial condition of BBJ as of the dates required and shall contain all
liabilities or obligations (absolute or contingent) which should be reflected on
a balance sheet or the notes thereto prepared in accordance with generally
accepted accounting principles. Such statement of operations shall present
fairly the results of operations for the period(s) indicated. The statements of
cash flow and stockholders' equity shall present fairly the information, which
should be presented therein in accordance with generally accepted accounting
principles.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF TRANSFERORS
---------------------------------------------
The Transferors represent, warrant and covenant that the following are
true and correct as of this date and will be true and correct through the date
of the Closing as if made anew on and as of that date and the Transferees will
comply with the provisions of Article 4.08 after Closing:
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4.01 Organization and Good Standing. Each corporate Transferor, if any,
is a corporation duly organized, validly existing and in good standing under the
laws of its state of incorporation, with all requisite power and authority to
carry on the business in which it is and/or has been engaged, to own the
properties it owns, to execute and deliver this Agreement, to consummate the
transactions contemplated hereby and to take all of the other actions provided
for in or contemplated hereby.
4.02 Authorization and Validity. The execution, delivery and
performance of this Agreement by each non-individual Transferor and the
consummation of the transactions contemplated hereby have been or will be prior
to Closing duly authorized by each non-individual transferor. This Agreement
constitutes or will constitute legal, valid and binding obligations of the
Transferors, enforceable against the Transferors in accordance with its terms.
This Agreement will, at the time of the Closing, be authorized by the Board of
Directors or governing body of each non-individual Transferor and will
constitute the valid and binding agreement of the Transferors, enforceable in
accordance with its terms, and neither the execution or delivery of this
Agreement nor the consummation by the Transferors of the transactions
contemplated hereby (I) violates any statute or law or any rule, regulation or
order of any court or any governmental authority, or (ii) violates or conflicts
with, or constitutes a default under or will constitute a default under, any
contract, commitment, agreement, understanding, arrangement, or restriction of
any kind to which the Transferors are a party or by which the Transferors are
bound.
4.03 No Liens or Encumbrances. The record and beneficial shareholders
of up to 5,683,333 shares of BBJ Common Stock (subject to adjustment as set
forth in Article 1.03 herein), 100,000 shares of Series A Preferred Stock and
171,875 shares of Series B Preferred Stock at the time of the Closing will be
the Transferors, which capital stock will be owned free and clear by the
Transferors of all liens, claims, encumbrances, equities, proxies and other
agreements and the Transferors shall have the unqualified right to transfer the
BBJ securities to the Purchaser.
4.04 Disclosure. No representation or warranty by any Transferor in
this Agreement nor any statement or certificate furnished or to be furnished by
it pursuant hereto or in connection with the transactions contemplated hereby
contains or will contain any untrue statement of a material fact or omits or
will omit to state a material fact necessary to make the statements contained
therein not misleading or necessary in order to provide Purchaser with complete
and accurate information.
4.05 Consents. No authorization, consent, approval, permit or license
of, or filing with, any governmental or public body or authority, any lender or
lessor or any other person or entity is required to authorize, or is required in
connection with the execution, delivery and performance of this Agreement, the
agreements contemplated hereby, or the consummation of the transactions
contemplated hereby or thereby, on the part of the Transferors.
4.06 Litigation. The Transferors have not had any legal action or
administrative proceeding or investigation instituted or threatened against
them. The Transferors are not (a) subject to any continuing court or
administrative order, writ, injunction or decree applicable specifically to the
BBJ securities owned by them, or (b) in default with respect to
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any such order, writ, injunction or decree. The Transferors know of no basis for
any such action, proceeding or investigation.
4.07 Transferor Representations. Each of the Transferors will cause a
counterpart copy of this Agreement to be signed for purposes of representing and
warranting that the shares of BBJ capital stock being sold by him, her or it are
owned of record and beneficially by that Transferor, and are being sold free and
clear of any lien, claim, charge, encumbrance, equity, proxy of any kind or
other agreement.
4.08 Information for Purchaser's Report on Form 8-K. The Transferors
will furnish Purchaser with all information concerning them and their affiliates
required for inclusion in the current report on Form 8-K to be filed by
Purchaser pursuant to the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), to report the consummation of this Agreement. The Transferors
represent and warrant to Purchaser that all information so furnished for such
report or other public release by Purchaser shall be true and correct in all
material respects without omission of any material fact required to make the
information stated not misleading.
4.09 Approval of Third Parties. To the extent any consent and approvals
of third parties are necessary to effect the transactions contemplated in this
agreement, the Transferors will obtain the same.
4.10 Representation Letters. The Transferors confirm their
understanding that the Omega Common Stock to be received by them is restricted
and may not be freely resold unless the shares are registered or an exemption
from registration is available. Further, the Transferors consent to an
appropriate Securities and Exchange Commission restrictive legend to be placed
on each certificate of Purchaser to be issued and delivered to them. Such legend
shall read substantially as follows:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND
MAY NOT BE SOLD, TRANSFERRED, PLEDGED OR HYPOTHECATED IN THE
ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SHARES
UNDER SAID ACT, OR AN OPINION OF COUNSEL SATISFACTORY TO THE
CORPORATION THAT REGISTRATION IS NOT THEN REQUIRED UNDER SAID
ACT."
ARTICLE V
BBJ'S ADDITIONAL UNDERTAKINGS
-----------------------------
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Except as may be waived in writing by Purchaser, the obligations of
Purchaser hereunder are subject to the fulfillment at or prior to the Closing of
each of the following conditions:
5.01 Opinion. Counsel to BBJ shall have delivered to Purchaser its
opinion, dated the Closing Date, in form and substance reasonably satisfactory
to counsel for Purchaser, to the effect that (a) BBJ is a corporation duly
organized, validly existing and in good standing under the laws of its state of
incorporation and has duly qualified to do business and is in good standing in
the states where the nature of its business makes such qualification necessary,
(b) BBJ has full corporate power and authority to execute and perform this
Agreement, (c) this Agreement has been duly authorized by all necessary
corporate action on the part of BBJ, and has been duly executed and delivered by
BBJ and constitutes the legal, valid and binding obligation of BBJ, enforceable
in accordance with its terms, except as may be limited by bankruptcy, insolvency
or other similar laws affecting creditors' rights generally or the availability
of equitable remedies, (d) to the best of such counsel's knowledge, immediately
prior to the Closing, the authorized, issued and outstanding capital stock of
BBJ will be as set forth in Article 3.04, (e) neither the execution and
performance of this Agreement nor the consummation of the transactions
contemplated hereby by BBJ will conflict with, or result in a breach of the
terms, conditions and provisions of, or constitute a default under, the Articles
of Incorporation or By-Laws of BBJ or, to the best of such counsel's knowledge,
any agreement, indenture or other instrument of which such counsel has knowledge
under which BBJ is bound or to which any of the assets of BBJ is subject, or to
the best of such counsel's knowledge, result in the creation or imposition of
any lien, charge or encumbrance upon any such assets, and (f) to the best of
such counsel's knowledge, there are no options, warrants or other securities or
rights outstanding which are convertible into or exercisable for any shares of
capital stock of BBJ, except as described in Article 3.04.
5.02 Consents and Approvals. BBJ shall have obtained, and delivered to
Purchaser evidence thereof, all consents and approvals (if any) required to be
obtained by it in connection with the consummation of the transactions
contemplated hereby.
ARTICLE VI
ADDITIONAL UNDERTAKINGS OF PURCHASER
------------------------------------
Except as may be waived in writing by BBJ, the obligations of the
Transferors hereunder are subject to fulfillment at or prior to the Closing of
each of the following conditions in addition to those provided for in Article
1.02 hereof:
6.01 Opinion. Counsel to Purchaser shall have delivered to BBJ its
opinion, dated the Closing Date, in form and substance reasonably satisfactory
to counsel for BBJ to the effect that (a) Purchaser is a corporation duly
organized, validly existing and in good standing under the laws of the state of
Nevada and has duly qualified to do business and is in good standing in the
State of Florida which is the only state where the nature of its business makes
such qualification necessary, (b) Purchaser has full corporate power and
authority to execute and perform this Agreement, (c) this Agreement has been
duly authorized by all necessary corporate action on the part of Purchaser, and
has been duly
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executed and delivered by Purchaser and constitutes the legal, valid and binding
obligation of Purchaser enforceable in accordance with its terms, except as may
be limited by bankruptcy, insolvency or other similar laws affecting creditors'
rights generally or the availability of equitable remedies, (d) immediately
prior to the Closing, the authorized, issued and outstanding capital stock of
Purchaser will be as set forth in Article 2.04 after completing the
one-for-three reverse stock split and stock sale back to Purchaser referenced
therein, (e) neither the execution and performance of this Agreement nor the
consummation of the transactions contemplated hereby by Purchaser will conflict
with, or result in a breach of the terms, conditions and provisions of, or
constitute a default under the Articles of Incorporation or By-Laws of Purchaser
or, to the best of such counsel's knowledge, any agreement, indenture or other
instrument of which such counsel has knowledge under which Purchaser is bound or
to which any of the assets of Purchaser is subject, or to the best of such
counsel's knowledge, result in the creation or imposition of any lien, charge or
encumbrance upon any such assets, (f) to the best of such counsel's knowledge,
there are no options, warrants or other securities or rights outstanding which
are convertible into or exercisable for any shares of capital stock of
Purchaser, and (g) to the best of such counsel's knowledge, the Purchaser is
current and has filed all reports required under the securities Exchange Act of
1934, as amended, and to the best of such counsel's knowledge, the Purchaser's
Form 10-KSB for its fiscal year ended December 31, 1999 is accurate and complete
and does not contain any untrue statement(s) of a material fact or omit to state
a material fact necessary to make the statement(s) contained therein not
misleading or necessary in order to provide readers of the Form 10-KSB with
complete and accurate information.
6.02 Consents and Approvals. Purchaser shall have obtained, and
delivered to BBJ and to Michael J. Gordon as agent for the Transferors evidence
thereof, all consents and approvals (if any) required to be obtained by it in
connection with the consummation of the transactions contemplated hereby.
6.03 Filing of SEC Forms. In addition to the previously referenced
filings, a Form 8-K shall be filed by Purchaser promptly upon the Closing to
reflect these transactions.
6.04 Board Representation. At or prior to the Closing, the current
members of the Board of Directors and executive officers of Purchaser shall
resign one by one with each vacancy created thereby to be filled by a person
designated by Robert G. Baker or Jerry V. Schinella.
6.05 Delivery of Corporate Records. At or prior to the Closing,
Purchasers shall deliver to Michael J. Gordon, all the corporate and business
records of Purchasers, including, but not limited to the Minute Book, book of
accounts, all financial statements, all banking records and banking resolutions
naming new signatories covering all cash owned by Purchasers.
ARTICLE VII
ADDITIONAL UNDERTAKING BY PURCHASER AND BBJ
-------------------------------------------
7.01 Access to Corporate Records. BBJ and the Purchaser agree to allow
the other Party's professional representatives and executive officers access to
the books and
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records of the other Party at anytime prior to the Closing, after giving the
other party at least three business days prior written notice.
7.02 Cooperation of Parties. BBJ and the Purchaser will cooperate with
each other in the preparation of a $2,000,000 (i.e. 1,000,000 post-split shares
at an estimated price of $2.00 per share) Private Placement Memorandum of
Purchaser and the Purchaser's Form S-8 Registration Statement and Purchaser's
Form SB-2 Registration Statement to be filed with the Securities and Exchange
Commission. Executive officers and directors of BBJ will become executive
officers and directors of Purchaser immediately after Closing. From the
execution of this Agreement until the Closing Date, all proceeds received under
the private placement offering will be escrowed and released to Purchaser only
after Closing of this Agreement. The Form S-8 Registration Statement will cover
an employee benefit plan. After the completion of the above referenced Private
Placement Offering, it intends to file the Form SB-2 Registration Statement to
register the resale of shares of Purchaser's Common Stock issuable upon exercise
of (i) certain options of Purchaser to be granted to GunnAllen Financial, Inc.
in exchange for its BBJ options and (ii) certain warrants of Purchaser to be
granted to Titan Gulf Partners, Ltd. in exchange for its BBJ warrants, the
resale of shares of Purchaser's Common Stock sold in the private placement
offering, the Purchaser's Common Stock issuable to the January 3, 2000 private
offering Common Stockholders and to the Series A and Series B Preferred
Stockholders who are both Transferors under this Agreement and the resale of
Purchaser's Common Stock issuable to Transferors Lester Morse, Steven Morse and
Adrienne Grody as part of the consideration for Lester Morse P.C. representing
the Purchaser after closing in connection with filing of the aforesaid
Registration Statements.
ARTICLE VIII
OTHER AGREEMENTS
----------------
8.01 BBJ Loan. BBJ intends (or has loaned) $50,000 to Omega against
delivery of a demand Promissory Note payable with interest at the rate of 6% per
annum. Omega represents that such monies have been (or will be) utilized for the
payment of legal and accounting expenses in connection with this transaction and
the purpose of bringing Omega current under the Securities Exchange Act of 1934,
as amended, and retiring all debt, accounts payable and accrued expenses through
the Closing Date so that Omega will have no liabilities (other than the $50,000
owed to BBJ) or commitments (whether accrued or not) and will be (other than the
$50,000 owed to BBJ) a clean shell as of the Closing Date.
8.02 Indemnification by Herbert Maxwell and Paul Shapansky. Paul
Shapansky and Herbert Maxwell (the "Indemnitors") shall indemnify and hold
harmless BBJ and the Purchaser at all times after the date of this Agreement
against and in respect of:
(a) Undisclosed Liabilities. At closing, the Purchaser shall
present a Closing Balance Sheet which is expected to demonstrate that Purchaser
shall have no assets or liabilities except $50,000 owed to BBJ as referenced in
Article 8.01. Such indemnification shall pertain to all liabilities of the
Purchaser of any nature, whether accrued, absolute, contingent, or otherwise,
existing at the Closing Date, to the extent not
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reflected or reserved against in full in the Purchaser's Closing Balance Sheet,
including, without limitation, any tax liabilities to the extent not so
reflected or reserved against, accrued in respect of, or measured by the
Purchaser's income for any period prior to the Closing Date, or arising out of
transactions entered into, or any state of facts existing, prior to the Closing
Date;
(b) Misrepresentations. Any damage or deficiency resulting from
any misrepresentation, breach of warranty, or nonfulfillment of any agreement on
the part of the Purchaser under this Agreement, or from any misrepresentation in
or omission from any certificate or other instrument furnished or to be
furnished to BBJ and the Transferors hereunder; and
(c) Incidental Expenses. All actions, suits, proceedings, demands,
assessments, judgments, costs, attorney's fees, and expenses incident to any of
the foregoing.
The Indemnitors shall reimburse BBJ or, at is election,
the Purchaser (the "Indemnities"), on demand, for any payment(s) made by the
Indemnities at any time after the Closing Date, in respect of any liability,
claim and/or individual expenses to which the foregoing indemnity relates under
(a) and (c) above. In the event of an undisclosed liability or claim, the
Indemnitors shall be given notice in writing by the Purchaser of a prospective
claim for indemnification that has or may arise. The Indemnitors shall be given
a reasonable period of time not to exceed 30 days to clear up the matter at
their sole cost. If the Indemnitors are unsuccessful, then the Indemnities at
their sole discretion may settle the matter and charge the Indemnitors with
responsibility to promptly reimburse the Indemnities upon receipt of a demand
for payment. The Board of Directors of the Indemnities may, at its sole option
and discretion, accept cash, property and/or securities (including the return
for cancellation of Purchaser's Common Stock at the then fair market value) in
settlement of payment sought from the Indemnitors pursuant to the terms of this
Article 8.02.
8.03 Waiver of Jury Trial. All of the parties hereby waive trial by
jury in any action or proceeding of any kind with respect to, in connection with
or arising out of this Agreement, any instrument, document or Indemnification
Agreement delivered pursuant hereto, or the validity, protection,
interpretation, administration, collection or enforcement hereof or thereof.
ARTICLE IX
MISCELLANEOUS
-------------
9.01 Amendment. This Agreement may be amended, modified or supplemented
only by an instrument in writing executed by the party against which enforcement
of the amendment, modification or supplement is sought.
9.02 Parties in Interest. This Agreement shall be binding on and inure
to the benefit of and be enforceable by Transferors, BBJ, and the Purchaser,
their respective
18
<PAGE>
heirs, executors, administrators, legal representatives, successors and assigns.
The representations, warranties and other provisions hereof shall survive the
Closing.
9.03 Assignment. Neither this Agreement nor any right created hereby
shall be assignable by any party hereto.
9.04 Notice. Any notice or other communication hereunder must be in
writing and given by depositing the same in the United States mail, addressed to
the party to be notified, postage prepaid and registered or certified with
return receipt requested or by delivering the same in person against receipt.
Notice shall be deemed received on the date on which it is hand-delivered or on
the third business day following the date on which it is so mailed.
For purposes of notice, the addresses of the parties shall be:
If to BBJ and the Transferors: With a copy to:
------------------------------ ---------------
c/o Michael J. Gordon Lester Morse P.C.
BBJ Environmental Solutions, Inc. 111 Great Neck Road
6802 Citicorp Boulevard Inc. Suite 420
Suite 500 Great Neck, New York 11021
Tampa, FL 33619
If to Purchaser: With a copy to Purchaser's attorney:
---------------- ------------------------------------
Paul Shapansky Del L. Gustafson, Esq.
c/o Health Net Hall Estill Hardwick Gable Golden &
131-06 Commerce Parkway Nelson, P.C.
Merrimar, FL 33025 320 S. Boston Ave., Suite 400
Tulsa, OK 74103
And
Omega Development Incorporated
8726 South Florence Avenue
Tulsa, OK 74137
Any party may change its address or addresses for notice by written notice given
to the other parties.
9.05 Entire Agreement. This Agreement and any exhibits hereto supersede
all prior agreements and understandings between the parties relating to the
subject matter hereof, except that the obligations of any party under any
agreement executed pursuant to this Agreement shall not be affected by this
Article.
9.06 Costs, Expenses and Legal Fees. Whether or not the transactions
contemplated hereby are consummated, each party hereto shall bear its own costs
and expenses (including attorneys' and accounting fees) except that each party
hereto agrees to pay the costs and expenses, including reasonable attorneys'
fees, incurred by the other parties in successfully (i) enforcing any of the
terms of this Agreement against a party
19
<PAGE>
alleged to be in breach, or (ii) proving that the other parties breached any of
the terms of this Agreement in any material respect.
9.07 Severability. If any provision of this Agreement is held to be
illegal, invalid or unenforceable under present or future laws effective during
the term hereof, such provision shall be fully severable and this Agreement
shall be construed and enforced as if such illegal, invalid or unenforceable
provision never comprised a part hereof; and the remaining provisions hereof
shall remain in full force and effect and shall not be affected by the illegal,
invalid or unenforceable provision or by its severance hear from. Furthermore,
in lieu of such illegal, invalid or unenforceable provision, there shall be
added automatically as part of this Agreement, a provision as similar in its
terms to such illegal, invalid or unenforceable provision as may be possible and
still be legal, valid and enforceable.
9.08 Governing Law. This Agreement and the rights and obligations of
the parties hereto shall be governed, construed and enforced in accordance with
the laws of the State of Florida. The parties agree that any litigation relating
directly or indirectly to this Agreement must be brought before and determined
by a court of competent jurisdiction sitting in the State of Florida and County
of Hillsborough.
9.09 Captions. The captions in this Agreement are for convenience of
reference only and shall not limit or otherwise affect any of the terms or
provisions hereof.
9.10 Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original, and all of which
together shall constitute one and the same instrument.
9.11 Waiver. No waiver of any term or provision hereof shall be
effective unless in writing, signed by the party to be charged.
9.12 Brokerage and Finder's Fees. Each of the parties hereto represents
and warrants to the others that neither such party nor its officers or directors
have employed any broker or finder or have made arrangements for the payment of
any brokerage commissions or finder's fees in connection with the transactions
contemplated by this Agreement and are not otherwise obligated to pay any such
fee or commission, except for warrants already granted to Titan Gulf Partners,
Ltd., as described in Article 3.04, for its finder and consulting services in
connection with this Transaction and to compensate Titan for certain future
financial consulting services to be rendered by it. In the event that any claim
is asserted by any other person claiming a commission or finder's fee with
respect to this Agreement or the transactions contemplated hereby arising from
any act, representation, or promise of such person or its representatives, such
party will indemnify the other parties against and hold them harmless from any
cost or expense with respect thereto.
9.13 Press Releases and Public Announcements. No party shall issue any
press release or make any public announcement relating to the subject matter of
this Agreement without the prior written approval of the other parties or their
attorneys, provided, however, that any party may make any public disclosure it
believes in good faith is required by applicable law or any listing or trading
agreement concerning its publicly-traded securities
20
<PAGE>
(in which case the disclosing party will use its best efforts to advise the
other parties prior to making the disclosure).
IN WITNESS WHEREOF, the parties have executed this Agreement effective
as of the date first written above.
PURCHASER:
OMEGA DEVELOPMENT INCORPORATED
By: /s/ A. Paul Shapansky
------------------------
A. Paul Shapansky, President
BBJ ENVIRONMENTAL SOLUTIONS, INC.
By: /s/ Jerry V. Schinella
--------------------------
Jerry V. Schinella, President
21
<PAGE>
<TABLE>
<CAPTION>
TRANSFERORS
TABLE I
-------
Number of Shares of Omega
Development
Incorporated
Number of Shares Common Stock to be issued
of Common Stock to
of BBJ Transferors in
Environmental Exchange for all
Solutions, Inc. BBJ Common Stock owned
Name of Transferor owned immediately by them Signature
prior to closing
<S> <C> <C> <C>
Robert G. Baker 1,927,195 3,854,390
Barbara Baker Joint Tenant Joint Tenant
- -----------------------------------------------------------------------------------------------------------------
Jerry V. Schinella 1,927,195 3,854,390
Beth Schinella Joint Tenant Joint Tenant
- -----------------------------------------------------------------------------------------------------------------
Walter Arnett 9,636 19,272
Jean Arnett Joint Tenant Joint Tenant
- -----------------------------------------------------------------------------------------------------------------
Michael J. Gordon
Trustee for Robert P.
Gordon Family Trust 192,719 385,438
- -----------------------------------------------------------------------------------------------------------------
Michael J. Gordon 505,619 1,011,238
- -----------------------------------------------------------------------------------------------------------------
Donald Daley 10,000 20,000
- -----------------------------------------------------------------------------------------------------------------
Daniel T. Woodward 18,000 36,000
- -----------------------------------------------------------------------------------------------------------------
Dennis DiNardo 9,636 19,272
- -----------------------------------------------------------------------------------------------------------------
Jerry A. Black 25,000 50,000
- -----------------------------------------------------------------------------------------------------------------
Lester Morse 21,000 42,000
- -----------------------------------------------------------------------------------------------------------------
Steven Morse 21,000 42,000
- -----------------------------------------------------------------------------------------------------------------
Adrienne Grody 1,400 2,800
- -----------------------------------------------------------------------------------------------------------------
Michael J. Gordon on
behalf of Kelly Gordon,
Minor 69,134 138,267
- -----------------------------------------------------------------------------------------------------------------
Michael J. Gordon on
behalf of Mikaela
Gordon, Minor 69,133 138,267
- -----------------------------------------------------------------------------------------------------------------
22
<PAGE>
- -----------------------------------------------------------------------------------------------------------------
Lexus Partners Ltd. 183,333 366,666
- -----------------------------------------------------------------------------------------------------------------
Robert P. Gordon 333,333 666,666
Elizabeth Gordon Joint Tenant Joint Tenant
- -----------------------------------------------------------------------------------------------------------------
Kennan G. Dandar 24,000 48,000
- -----------------------------------------------------------------------------------------------------------------
Joseph K. Keegan 24,000 48,000
- -----------------------------------------------------------------------------------------------------------------
Jane Hollister 24,000 48,000
- -----------------------------------------------------------------------------------------------------------------
Richard E. Olson 24,000 48,000
- -----------------------------------------------------------------------------------------------------------------
John C. Summer 24,000 48,000
- -----------------------------------------------------------------------------------------------------------------
Joseph F. Morgan 60,000 120,000
Teresa F. Morgan Joint Tenant Joint Tenant
- -----------------------------------------------------------------------------------------------------------------
Peter Futro 60,000 120,000
- -----------------------------------------------------------------------------------------------------------------
Rebecca F. Walters 120,000 240,000
- -----------------------------------------------------------------------------------------------------------------
TOTAL 5,683,333 11,366,666
========= ==========
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
23
<PAGE>
<TABLE>
<CAPTION>
TRANSFERORS
TABLE II
--------
Number of Shares of
Common Stock of
Omega
Development
Number of Shares Incorporated
of Series A Common Stock to be
Preferred Stock issued to
of BBJ Transferors in
Environmental Exchange for all
Solutions, Inc. BBJ Common
owned Stock owned
Name of Transferor immediately by them Signature
prior to closing
<S> <C> <C> <C>
Brian Wyka 18,750 72,000
- -----------------------------------------------------------------------------------------------------------------
John Fabre 25,000 96,000
Diane Fabre Joint Tenant Joint Tenant
- -----------------------------------------------------------------------------------------------------------------
Walter J. Daniels 12,500 48,000
- -----------------------------------------------------------------------------------------------------------------
Philip Amuso 6,250 24,000
Jean Amuso Joint Tenant Joint Tenant
- -----------------------------------------------------------------------------------------------------------------
Jack Frankel 6,250 24,000
Florence Frankel Joint Tenant Joint Tenant
- -----------------------------------------------------------------------------------------------------------------
Energy Electric, Inc. 25,000 96,000
- -----------------------------------------------------------------------------------------------------------------
Thomas Fell Jr.
Pension Plan 6,250 24,000
- -----------------------------------------------------------------------------------------------------------------
TOTAL 100,000 384,000
========= ==========
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
24
<PAGE>
<TABLE>
<CAPTION>
TRANSFERORS
TABLE III
---------
Number of Shares of
Common Stock of
Omega
Development
Number of Shares Incorporated
of Series B Common Stock to be
Preferred Stock issued to
of BBJ Transferors in
Environmental Exchange for all
Solutions, Inc. BBJ Common
owned Stock owned
Name of Transferor immediately by them Signature
prior to closing
<S> <C> <C> <C>
Brian Wyka 62,500 240,000
Pamela Wyka Joint Tenant Joint Tenant
- -----------------------------------------------------------------------------------------------------------------
Charles R. Sanford 12,500 48,000
- -----------------------------------------------------------------------------------------------------------------
Richard K. Means, Jr. 50,000 192,000
- -----------------------------------------------------------------------------------------------------------------
Charles F. Sornberger 12,500 48,000
- -----------------------------------------------------------------------------------------------------------------
Shenandoah Associates LP 25,000 96,000
- -----------------------------------------------------------------------------------------------------------------
George G. Mabrey 9,375 36,000
- -----------------------------------------------------------------------------------------------------------------
TOTAL 171,875 660,000
======= ===========
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
25
