SHARE EXCHANGE AGREEMENT
THIS AGREEMENT made the 9th day of April, 2002
AMONG:
KYOMEDIX CORPORATION a
corporation duly formed under
the laws of the State of
Delaware. ("KYOMEDIX")
- and -
FIRST DELTAVISION INC. a
corporation duly formed under
the laws of the State of
Nevada. ("FIRST")
- and -
Atlantic Capital Partners Inc.and Health Sciences
International Inc. (the
"Shareholders")
BACKGROUND
(1) FIRST desires to purchase from the KYOMEDIX Shareholders and the KYOMEDIX
Shareholders desire to sell to FIRST all their shares in the capital of
KYOMEDIX ("the KYOMEDIX Shares").
(2) FIRST and the KYOMEDIX Shareholders desire to effect the purchase and
sale of the KYOMEDIX Shares pursuant to a share exchange in accordance with
the terms and conditions of this Agreement.
FOR GOOD AND VALUABLE CONSIDERATION (the receipt and sufficiency of which is
hereby acknowledged by the Parties), the Parties agree as follows:
ARTICLE I - INTERPRETATION
1.1 Definitions. In this Agreement, unless the context otherwise requires,
the terms set forth in Schedule 1.1 shall have the meanings set forth therein.
1.2 Entire Agreement. This Agreement, together with the agreements and other
documents to be delivered pursuant to this Agreement, constitute the entire
agreement between the Parties pertaining to the Share Exchange and supersedes
all prior agreements, understandings, negotiations and discussions, whether
oral or written and there are no warranties, representations and other
agreements between the Parties in connection with the subject matter hereof
except as specifically set forth in this Agreement or any other agreement or
document to be delivered pursuant to this Agreement.
1.3 Extended Meanings. In this Agreement, words importing the singular
number include the plural and vice versa; words importing the masculine gender
include the feminine and neuter genders.
1.4 Headings. The division of this Agreement into articles, sections,
subsections and paragraphs and the insertion of headings are for convenience
of reference only and shall not affect the construction or interpretation of
this Agreement.
1.5 References. References to an article, section, subsection, paragraph,
schedule or exhibit shall be construed as references to an article, section,
subsection, paragraph of or schedule or exhibit to this Agreement, unless the
context otherwise requires.
1.6 Governing Law. This Agreement shall be governed and construed in
accordance with the laws of the State of Nevada and the laws of United States
of America applicable therein, save and except for the conflict of laws rules
which might refer the matters to the laws of a different jurisdiction.
1.7 Currency. Unless otherwise specified, the word "dollar" and "$" sign
refer to US currency.
1.8 Schedules. The following is a list of schedules attached to and
incorporated into this Agreement by reference and deemed to be a part of this
Agreement: "1.1" Definitions, "A" Promissory Note to ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, "B"
FIRST's Employee Stock Option Plan, "C" KYOMEDIX Employee Options, "D"
KYOMEDIX's Financial Statements, and "E" FIRST's Financial Statements
ARTICLE II - SHARE EXCHANGE
2.1 Agreement to Purchase. Upon the terms and subject to the conditions
contained in this Agreement, the KYOMEDIX Shareholders shall sell and FIRST
shall purchase, as of the 8th of April, 2002 and with effect from the
opening of business on the Closing Date, the KYOMEDIX Shares.
2.2 Share Exchange. The purchase and sale of the KYOMEDIX Shares shall
be effected by the issue of up to 15,166,550 common shares, which are
"restricted securities", of FIRST to the KYOMEDIX Shareholders, on a
share-for-share basis (if all such KYOMEDIX Shares are tendered), pursuant to
the exemption from registration and prospectus delivery requirements, as
contained in Sections 3b and 4(2) of the US Securities Act of 1933 as amended,
including the rules and regulations promulgated there under.
Name of KYOMEDIX Shares of FIRST to be
Shareholder KYOMEDIX Shares held issued on Share Exchange
Atlantic Capital
Partners Inc. 9,550,000 9,550,000
Health Sciences
International Inc.
(in Trust) 5,616,000 5,616,000
2.3 Subject to the consent of the KYOMEDIX Shareholders who have been granted
options under the KYOMEDIX Employee Stock Option Plan, such options shall be
exchanged for like options of FIRST, on the Closing.
2.4 Prior to the Closing, FIRST shall have effected a dividend of four
shares for one on each outstanding share, with a mandatory exchange of stock
certificates required to receive the dividend; and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, FIRST's
President, shall have delivered to FIRST for cancellation 186,648 shares of
pre-dividend common stock of FIRST.
2.5 ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ shall indemnify and hold First and KYOMEDIX and the
KYOMEDIX Shareholders harmless from and against any and all liabilities of
any type or nature whatsoever of First existing immediately prior to Closing
in consideration of the execution, delivery and payment of the Promissory Note
in the amount of $250,000 that is part of the schedules to this Agreement and
his cancellation of shares that are outlined in Section 2.4 hereof.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF MAJOR SHAREHOLDERS
3.1 Representations and Warranties of the Major Shareholders. Each of the
Major Shareholders jointly and severally (except as the context otherwise
requires) represents and warrants to FIRST as follows and acknowledges that
FIRST is relying on these representations and warranties in connection with
the completion of the Share Exchange and the transactions contemplated herein:
(i) No S-8 Registration Statement. Without prior consent of the
current members of the Board of Directors of FIRST, no
registration statements on Form S-8 of the Securities and Exchange
Commission will be filed on FIRST's behalf, following the Closing,
for a period of 12 months, other than Employee Stock Option Plan
(ESOP) as per Schedule "B", attached and stock to be issued for
the services performed for a maximum of US$150,000.
(ii) Limitation on Reverse Splits. Without the prior written consent of
the current members of the Board of Directors of FIRST, no reverse
split of the outstanding voting securities of FIRST shall be
effected following the Closing for a period of 6 months. In the
event of any reverse splits in violation of this Agreement and at
the Closing, FIRST stockholders who still own shares of FIRST at
that time will be issued such additional shares without further
consideration so that such reverse split will have no effect on
their FIRST stockholdings.
(a) Capacity to Enter Agreement. Each of the Major
Shareholders, represents and warrants that they have full
power, right and authority to enter into this Agreement and
to perform their obligations under it. KYOMEDIX has full
corporate power and authority to enter into this Agreement
and to perform its obligations under it.
(b) Binding Obligation. Each of the Major Shareholders
represents and warrants that it has duly executed and
delivered this Agreement, and that KYOMEDIX has duly
executed and delivered this Agreement and that it
constitutes a legal, valid and binding obligation of each of
them, except that:
(i) enforceability may be limited by bankruptcy,
insolvency and other laws affecting the enforcement of
creditors' rights generally; and
(ii) equitable remedies, including the remedies of specific
performance and injunctive relief, are available only
in the discretion of a court of competent
jurisdiction.
(c) Absence of Conflict. None of the Major Shareholders, nor
KYOMEDIX is a party to, bound or affected by any agreement
which would be violated, breached or terminated by, or which
would result in the creation or imposition of any
Encumbrance upon any of the KYOMEDIX Shares to be sold by
any of them as a consequence of the execution and delivery
of this Agreement or the consummation of the transactions
contemplated in this Agreement.
(d) Title to KYOMEDIX Shares. Each of the Major Shareholders
represents and warrants that it is the legal and beneficial
owners of those KYOMEDIX Shares registered in their name,
with good and marketable title, free and clear of any
Encumbrances.
(e) No Bankruptcy. No proceedings have been taken or authorised
by any Major Shareholder, KYOMEDIX or by any other person in
respect of the bankruptcy, insolvency, liquidation,
dissolution or winding up, as applicable, of any Major
Shareholder or KYOMEDIX.
(f) No Option. No Person, other than FIRST under this
Agreement, has any agreement, option, understanding or
commitment or any right or privilege capable of becoming an
agreement for the purchase of any of the KYOMEDIX Shares
owned by the Major Shareholders.
(g) Due Incorporation. KYOMEDIX is a corporation duly
incorporated and validly existing under the laws of State of
Delaware.
(i) Non-Violation. The entering into of this Agreement and the
consummation of transactions contemplated herein do not and
will not conflict with, or result in a breach of, or
constitute a default under the terms or conditions of any
constating document of KYOMEDIX, any by-laws, any court or
administrative order or process, any agreement or instrument
to which KYOMEDIX or any of the Major Shareholders is a
party or by which any of them are bound.
(j) Due Authorisation. The execution and delivery of this
Agreement and the consummation of the transactions
contemplated under it have been duly authorised by all
necessary corporate action on the part of KYOMEDIX and Major
Shareholders.
(k) Approvals. Except for the approval of the parties hereto
for the transactions contemplated herein, no governmental or
regulatory authorisation, approval, order, consent or filing
is required on the part of KYOMEDIX or any of the Major
Shareholders, in connection with the execution, delivery and
performance of this Agreement and the performance of their
respective obligations under this Agreement.
(l) Authorised and Issued Capital. The authorised capital of
KYOMEDIX consists of 50,000,000 common shares, of which
15,166,000 common shares are currently issued and
outstanding. Such common shares are duly and validly issued
and outstanding as fully paid and non-assessable shares of
KYOMEDIX. There is no option or other right of
any kind in existence, authorised or agreed to which could
result in any further shares or other securities of KYOMEDIX
being allotted or issued or becoming outstanding, other than
the employee options which are outlined in Schedule "C".
(m) KYOMEDIX's Capacity and Power. KYOMEDIX has full corporate
right, power and authority to own or lease its assets as now
owned or leased and to carry on the KYOMEDIX Business.
(n) Business. The only business carried on by KYOMEDIX is the
KYOMEDIX Business.
(o) No Guarantees etc. KYOMEDIX is not a party to or bound by
any agreement of guarantee, indemnification, assumption or
endorsement or any like commitment of the obligations,
liabilities (contingent or otherwise) or indebtedness of any
Person.
(p) Tax Matters Regarding KYOMEDIX.
(i) KYOMEDIX has made true and timely filings of all
federal, state and local tax returns respecting taxes
to which it is subject.
(ii) Subject to an alternative final determination at the
instance of applicable taxing authorities, the tax
liability of KYOMEDIX is as indicated in its tax
returns and KYOMEDIX has made timely payment of the
taxes (including interest and penalties thereon) shown
in those returns and any subsequent assessments,
reassessments or determinations thereof.
(iii) Subject to an alternative final determination at the
instance of applicable taxing authorities, KYOMEDIX
has no liability, contingent or otherwise, for any
taxes except for taxes not now due and payable with
respect to ordinary operations of KYOMEDIX during the
current fiscal period. KYOMEDIX will pay, in full,
all instalments of taxes in respect of the current
fiscal period. KYOMEDIX has adequate reserves for
taxes payable for the current period for which tax
returns are not yet required to be filed.
(iv) KYOMEDIX has paid all applicable property and business
taxes and has collected and remitted all sales, use or
consumption taxes. KYOMEDIX has withheld and
remitted, as required by law, all payments made to
non-residents and applicable payroll taxes and
deductions including without limitation local state
and Federal tax filings, and any interest or penalties
related thereto.
(v) There are no agreements, waivers or other arrangements
with any tax authority providing for an extension of
time with respect to the filing of any return,
election or designation by, or any payment of any
amount by or governmental charge against KYOMEDIX with
respect to the issuance of any assessment or
reassessment of any tax.
(q) Shareholders' Agreements etc. There are no shareholders'
agreements, voting trusts or other similar agreements with
respect to the ownership or voting of any of the KYOMEDIX
Shares.
(r) Litigation. There are no judgements, decrees, injunctions,
rulings or orders of any court, Governmental Authority or
arbitration, tribunal or any actions, suits, grievances or
proceedings (whether or not on behalf of KYOMEDIX) and,
after investigation and to the best of knowledge of the
Major Shareholders and KYOMEDIX, pending or threatened or
involving KYOMEDIX, or the KYOMEDIX Business which may
materially adversely affect the KYOMEDIX Business or
KYOMEDIX's assets.
(s) Ownership of Assets. KYOMEDIX is the owner with a good and
marketable title, free and clear of all liens, charges,
encumbrances and any other rights of others, of all assets
used in the conduct of the KYOMEDIX Business, other than
operating leases of certain fixed assets.
(t) Absence of Options etc. There is no agreement, option,
understanding or commitment, or any right or privilege
capable of becoming an agreement, for the purchase from
KYOMEDIX of its business or any of its assets other than in
the usual and ordinary course of business.
(u) Employee Claims. Except as accrued in the KYOMEDIX
financial statements, no employee, consultant or agent has
made or after investigation and to the best of the knowledge
of the Major Shareholders and KYOMEDIX, has any basis for
making any claim (whether under law, any employment or
consulting agreement, or otherwise) on account of or for (1)
overtime pay, other than overtime for the current payroll
period, (2) wages or salary for any period other than the
current payroll period, (3) vacation, time off, sick time or
pay in lieu of any of the foregoing, other than that earned
in respect of the current fiscal period, or (4) any
violation of any statute, ordinance or regulation relating
to minimum wages or the maximum hours of work.
(v) Compliance with Laws. To the best of the knowledge of the
Major Shareholders, KYOMEDIX is conducting its business in
material compliance with all applicable rules and
regulations of United States and of the State of Delaware
and all municipalities thereof in which its business is
carried on and is duly licensed, registered or qualified in
the State of Delaware and all municipalities thereof
in which KYOMEDIX carries on its business to enable its
business to be carried on as now conducted and its assets to
be owned, leased and operated, and all such licenses,
registrations and qualifications are valid and subsisting
and in good standing and none of the same contains any term,
provision, condition or limitation which has or may have a
material adverse effect on the operation of its business or
which may be affected by the completion of the transactions
contemplated hereby.
(w) KYOMEDIX Financial Statements. KYOMEDIX Financial
Statements consisting of: (1) the Balance Sheet as at
November 27, 2001 (audited) and; (2) the Statement of
Changes in Financial Position for the three month ending
November 27, 2001, (audited) attached hereto as "D"
(A) have been prepared in accordance with generally
accepted auditing standards applied on a basis
consistent with those of preceding fiscal periods; and
(B) present fully, fairly and correctly: (i) with respect
to the KYOMEDIX Financial Statements referred to in
(1) and (2) above, the assets, liabilities (whether
accrued, absolute contingent or otherwise) and
financial condition of KYOMEDIX as at the date
thereof; and (ii) with respect to all of the
KYOMEDIX Financial Statements, the results of its
operations and the changes in its financial position
for the periods then ended.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF FIRST
4.1 Representations and Warranties of FIRST. FIRST hereby represents
andwarrants to the KYOMEDIX Shareholders as follows and acknowledges that
theKYOMEDIX Shareholders are relying on these representations and warranties
inconnection with the Share Exchange and the transactions contemplated herein:
(a) Due Incorporation. FIRST is a corporation duly incorporated
and validly existing under the laws of the State of Nevada.
(b) Capacity to Enter Agreement. FIRST has full power, right
and authority to enter into this Agreement and to perform
the obligations under it.
(c) Due Corporate Authorisation. The execution and delivery of
this Agreement and the consummation of the transactions
contemplated under it have been duly authorised by all
necessary corporate action on the part of FIRST.
(d) Binding Obligation. This Agreement has been duly executed
and delivered by FIRST and constitutes a legal, valid and
binding obligation of FIRST, except that:
(i) enforceability may be limited by bankruptcy,
insolvency and other laws affecting the enforcement of
creditors' rights generally; and
(ii) equitable remedies, including the remedies of specific
performance and injunctive relief, are available only
in the discretion of a court of competent
jurisdiction.
(e) Absence of Conflict. FIRST is not a party to, bound or
affected by or subject to any agreement which would be
violated, breached or terminated by, or which would result
in the creation or imposition of any Encumbrance upon any of
the FIRST Shares as a consequence of the execution and
delivery of this Agreement or the consummation of
the transactions contemplated in this Agreement.
(f) Approvals. Except for the approval of the parties hereto
for the transactions contemplated herein, no governmental or
regulatory authorisation, approval, order, consent or filing
is required on the part of FIRST, in connection with the
execution, delivery and performance of this Agreement and
the performance of FIRST's obligations under this Agreement.
(g) No Bankruptcy. No proceedings have been taken, are pending
or authorised by FIRST or by any other person in respect of
the bankruptcy, insolvency, liquidation, dissolution or
winding up of FIRST.
(h) Authorised and Issued Capital. On the date of this
Agreement, the authorised capital of FIRST consists of a
50,000,000 common shares, of which 335,500 are validly
issued and outstanding as fully paid and non-assessable.
Other than this Agreement, there is no option or
other right of any kind in existence, authorised or agreed
to which could result in any further shares or other
securities of FIRST being allotted or issued or becoming
outstanding. FIRST will cancel 186,648 of ▇▇▇▇▇ ▇▇▇▇▇▇▇'▇
shares and complete a 4 for 1 forward split to be declared
as a dividend to all shareholders of record as of April 4,
2002. The final number of issued shares of First will be
595,408 on closing.
(i) No Subsidiaries. FIRST does not own any shares in or
securities of any corporate body and is not a partner of any
partnerships or a member of any joint ventures.
(j) Public Company Status. FIRST is a reporting issuer pursuant
to the Securities and Exchange Act of 1934, as amended.
(k) FIRST Financial Statements. FIRST Financial Statements
consisting of: (1) the Balance Sheets as at June 30, 2001,
(audited) and; (2) the Statements of Operations and Deficit
for period ending June 30, 2001, (audited); and (3) the
Statements of Changes in the Financial Position for the
period ending June 30, 2001 (audited), attached hereto as
Schedule "E" have been prepared in accordance with
generally accepted auditing standards applied on a basis
consistent with those of preceding fiscal periods; and
(A) present fully, fairly and correctly: (i) with respect
to the FIRST Financial Statements referred to in (1),
(2) and (3) above, the assets, liabilities (whether
accrued, absolute contingent or otherwise) and
financial condition of FIRST as at the date thereof;
and (ii) with respect to all of the FIRST
Financial Statements, the results of its operations
and the changes in its financial position for the
periods then ended.
(l) Employees. No employee has made any claim or has any basis
for any action or proceeding against FIRST arising out of
any statute, ordinance or regulation relating to
discrimination in employment or employment practices,
harassment, occupational health and safety
standards or worker's compensation. No employee, consultant
or agent has made or has any basis for making any claim
(whether under law, any employment or consulting agreement,
or otherwise) on account of or for (1) overtime pay, other
than overtime for the current payroll period, (2) wages or
salary for any period other than the current payroll period,
(3) vacation, time off, sick time or pay in lieu of
any of the foregoing, other than that earned in respect of
the current fiscal period, or (4) any violation of any
statute, ordinance or regulation relating to minimum wages
or the maximum hours of work.
(m) Litigation. There are no judgements, decrees, injunctions,
rulings or orders of any court, Governmental Authority or
arbitration, or any actions, suits, grievances or
proceedings (whether or not on behalf of FIRST) involving
FIRST or its directors or to the knowledge of FIRST or its
directors pending or threatened which may materially
adversely affect FIRST's assets.
(n) Absence of Material Changes.
(i) no changes have been made in the accounting methods,
practices, or policies followed by FIRST;
(ii) FIRST has not made or authorised any Capital
Expenditures;
(iii) FIRST has not increased, incurred or guaranteed any
material debt, obligation, or liability (whether
absolute or contingent and whether or not currently
due and payable) other than current liabilities for
trade or business obligations incurred in the ordinary
course of business;
(iv) there has been no damage, destruction or loss, or
other event, development or condition of any character
(whether or not covered by insurance) which adversely
affects, or, may adversely affect, the assets or
prospects of FIRST;
(v) FIRST has not paid any amount or dividend, declared
any dividend or otherwise made any distribution or
other payment of any kind or nature whatsoever to any
Person; and
(vi) FIRST's business has been carried on in the ordinary
and customary course. FIRST has used its best efforts
to preserve the goodwill associated with it and its
assets, both tangible and intangible.
(o) Compliance with Laws. FIRST is conducting its business in
material compliance with all applicable laws, rules and
regulations of the United States of America and of the State
of Nevada and all municipalities thereof in which its
business is carried on, is not in material breach of any
such laws, rules or regulations and is duly licensed,
registered or qualified in the State of Nevada and
all municipalities thereof in which FIRST carries on its
business to enable its business to be carried on as now
conducted and its assets to be owned, leased and operated,
and all such licenses, registrations and qualifications are
valid and subsisting and in good standing and none of the
same contains any term, provision, condition or limitation
which has or may have a material adverse effect on the
operation of its business or which may be affected by the
completion of the transactions contemplated hereby.
(p) No Guarantees etc. FIRST is not a party to or bound by any
agreement of guarantee, indemnification, assumption or
endorsement or any like commitment of the obligations,
liabilities (contingent or otherwise) or indebtedness of any
Person.
(q) Tax Matters Regarding FIRST.
(i) FIRST has made true and timely filings of all federal,
state and local tax returns respecting taxes to which
it is subject.
(ii) Subject to an alternative final determination at the
instance of applicable taxing authorities, the tax
liability of Nevada is as indicated in its tax returns
and FIRST has made timely payment of the taxes
(including interest and penalties thereon) shown in
those returns and any subsequent assessments,
reassessments or determinations thereof.
(iii) Subject to an alternative final determination at the
instance of applicable taxing authorities, FIRST has
no liability, contingent or otherwise, for any taxes
except for taxes not now due and payable with respect
to ordinary operations of FIRST during the current
fiscal period. FIRST will pay, in full, all
instalments of taxes in respect of the current fiscal
period. FIRST has adequate reserves for taxes
payable for the current period for which tax returns
are not yet required to be filed.
(iv) FIRST has paid all applicable property and business
taxes and has collected and remitted all sales, use or
consumption taxes. FIRST has withheld and remitted,
as required by law, all payments made to non-residents
and applicable payroll taxes and deductions including
without limitation local state and Federal tax
filings, and any interest or penalties related
thereto.
(v) There are no agreements, waivers or other arrangements
with any tax authority providing for an extension of
time with respect to the filing of any return,
election or designation by, or any payment of any
amount by or governmental charge against FIRST with
respect to the issuance of any assessment
or reassessment of any tax.
(r) Non-Violation. The entering into of this Agreement and the
consummation of transactions contemplated herein do not and
will not conflict with, or result in a breach of, or
constitute a default under the terms or conditions of any
constating document of FIRST, any by-laws, any court or
administrative order or process, any agreement or instrument
to which FIRST is a party or by which it is bound.
(s) Benefits. FIRST does not have, and is not subject to any
present or future obligation or liability under, any pension
plan, deferred compensation plan, retirement income plan,
stock option or stock purchase plan, profit sharing plan,
bonus plan or policy, employee group insurance plan,
hospitalisation plan, disability plan or other employee
benefit plan, program, policy or practice, formal or
informal, with respect to any of its employees.
(s) Disclosure. The representations and warranties of FIRST in
this Agreement are true, complete and correct in all
material respects and do not contain any untrue or
misleading statement of a material fact.
ARTICLE V - NATURE AND SURVIVAL OF
REPRESENTATIONS AND WARRANTIES
5.1 All representations and warranties contained in this Agreement on the
part of each of the Parties shall survive the Closing for a period of eighteen
(18)months from the Closing Date, after which time, if no claim shall have
been made against a Party with respect to any incorrectness in or breach of
any representation or warranty, that Party shall have no further liability
under this Agreement with respect to the representation or warranty.
5.2 All statements contained in any certificate or other instrument delivered
by or on behalf of any Party pursuant to or in connection with the
transactions contemplated by this Agreement shall be deemed to have been
made by such Party under this Agreement.
ARTICLE VI - COVENANTS
6.1 Conduct of KYOMEDIX Business Prior to Closing. During the Interim
Period, KYOMEDIX and the Major Shareholders shall:
(a) Conduct Business in Ordinary Course. Except as otherwise
contemplated or permitted by this Agreement, conduct the
KYOMEDIX Business diligently and prudently and shall not,
without the prior written consent of FIRST, such consent not
to be unreasonably withheld, enter into any contracts,
agreements, commitments or leases, or undertake any activity
(including the allotment or issuance of any further shares
or securities of KYOMEDIX except in the ordinary course of
the KYOMEDIX Business;
(b) Continue Insurance. Continue in full force all existing
insurance policies;
(c) Comply with Laws. Comply with all laws applicable to
KYOMEDIX and the KYOMEDIX Business;
(d) Corporate Existence. Make all requisite filings to
continue its existence.
(e) Maintain Permits. Apply for, maintain in good standing and
renew all Permits, licenses and registrations necessary to
enable it to carry on the KYOMEDIX Business as now
conducted; and
(f) Distributions. Not pay any amount or dividend or otherwise
make any distribution to its shareholders or any non-arm's
length Person without the prior written consent of FIRST.
6.2 Conduct of FIRST Prior to Closing. During the Interim Period, FIRST
shall:
(a) Comply with laws. Comply with all laws applicable to FIRST;
(b) Distributions. Not pay any amount or dividend or otherwise
make any distribution to its shareholders or any non-arm's
length Person without the prior written consent of KYOMEDIX,
(c) Issuer Status and Corporate Existence. Make all
requisite filings with the NASD Regulation and the
Securities and Exchange Commission and maintain issuer
status within the State of Nevada; and
(d) Maintain Permits. Apply for, maintain in good standing and
renew all Permits, licenses and registrations necessary to
enable it to carry on its business as now conducted.
6.3 Access for Investigation. FIRST and KYOMEDIX shall permit the other's
Authorised Representatives, until the Closing Date, to have reasonable access
during normal business hours to their respective premises and their respective
Records to enable confirmation of the accuracy of the Records and the matters
represented and warranted in Articles III and IV.
6.4 Confidentiality. Until the Closing Date and, in the event of the
termination of this Agreement without the completion of the transactions
contemplated hereby, each of the Parties shall thereafter, use its best
efforts to keep confidential and not use for its own purpose (other than as
contemplated by this Agreement) any information obtained from the other Party
with respect to the other Party's affairs. If this Agreement is terminated,
all documents, working papers and other written material obtained by the Party
from the other Party in connection with this Agreement and not previously made
public (and all copies thereof) shall be returned to the other Party promptly
after such termination.
The obligation of each of the Parties to keep confidential and not use any
information shall not apply to information which:
(i) becomes generally available to the public other than as a result
of disclosure by the Party or its representatives in violation of
this Agreement;
(ii) was available to the Party on a non-confidential basis prior to
its disclosure by that Party or its Authorised Representatives;
or
(iii) the Party is required by law to disclose.
6.5 Closing Documents. The Ancillary Agreements and the Conveyance Documents
shall be executed and delivered by the Parties thereto at the Closing Time.
6.6 Corporate Proceedings. On or before the Closing Date, each Party (which
is a corporation) shall provide to the other Parties certified copies of all
necessary proceedings and resolutions, corporate or otherwise, and all other
necessary actions, corporate or otherwise, authorising the execution and
delivery of this Agreement and the matters contemplated in it.
6.7 Actions to Satisfy Closing Conditions. Each Party shall take all such
actions as are within its power to control, and shall use reasonable
commercial efforts to cause other actions to be taken which are not within
its power to control, so as to ensure compliance with any conditions set
forth in this Agreement which are for the benefit of itself or any other
Party.
ARTICLE VII - NEVADA BOARD OF DIRECTORS
7.1 On the Closing Date, the FIRST directors and executive officers will
resign, in seriatim, appointing new directors as designated by the KYOMEDIX
Shareholders who will elect new officers.
ARTICLE VIII - CONDITIONS OF CLOSING
8.1 Conditions for FIRST's Benefit. FIRST shall not be obliged to complete
the Share Exchange unless, on the Closing Date, each of the following
conditions shall have been satisfied:
(a) Accuracy of Representations. The representations and
warranties of the KYOMEDIX Shareholders set forth in Article
III shall be true and correct in all material respects at
the Closing, except as those representations and warranties
may be affected by the occurrence of events or transactions
expressly contemplated and permitted by this Agreement,
including, without limitation, those in the ordinary
course of business, and FIRST shall have received a
certificate from the KYOMEDIX Shareholders confirming the
foregoing;
(b) Performance of Obligations. KYOMEDIX and the KYOMEDIX
Shareholders shall have performed all of the obligations
hereunder to be performed by them at or prior to the Closing
and KYOMEDIX and the KYOMEDIX Shareholders shall not be in
breach of any agreement on their part contained herein;
(c) Deliveries. KYOMEDIX and the KYOMEDIX Shareholders shall
have delivered or caused to be delivered to FIRST the
Conveyance Documents, and shall deliver up to KYOMEDIX
possession of not less than 90% of the KYOMEDIX Shares, free
and clear of any Encumbrances;
(d) Regulatory Approval. The Regulatory Approval shall have
been obtained or given, as the case may be, on or before the
Closing Time;
(e) Completion of Investigations. The investigations and
assessments contemplated in section 6.3 shall have been
completed and Nevada shall be satisfied with the results of
such investigations and assessments including, without
limitation, the accuracy of the Records and matters
represented and warranted in Article III. Regardless of the
foregoing, any such investigation does not alter
representation unless actual knowledge to the contrary is
conveyed to FIRST prior to Closing;
(f) Consents, Authorisations and Registrations. All consents,
approvals, orders and authorisations of, from or
notifications to any Persons or Governmental Authorities
required in connection with the completion of any of the
transactions contemplated by this Agreement, the execution
of this Agreement, the Closing or the performance of any of
the terms and conditions of this Agreement shall have been
obtained on or before the Closing Date;
(g) No Adverse Litigation. There shall be no injunction or
order issued preventing, and no pending or threatened claim,
action, litigation or proceeding, judicial or
administrative, or investigation against any Party by any
Governmental Authority or Person for the purpose of
enjoining or preventing the consummation of this Agreement,
or otherwise claiming that this Agreement or the
consummation thereof is improper or would give rise to
proceedings under any statute or rule of law;
(h) Issuer Certificate. KYOMEDIX shall have delivered to FIRST
a Certificate from the Secretary of State of the State of
Nevada evidencing KYOMEDIX's good standing as a corporation
incorporated in the State of Nevada;
(i) No Loss. During the Interim Period, there has been no
material damage to the assets of KYOMEDIX or the KYOMEDIX
Business by fire or other peril, whether or not such damage
is covered by insurance; and
(j) No Material Changes. There shall have been no material
adverse changes in the KYOMEDIX Business, assets or
financial condition of KYOMEDIX during the Interim Period;
If any one or more of the foregoing conditions shall not have been
fulfilled on or before the Closing Date, FIRST may terminate this Agreement by
notice in writing to the other Parties in which event FIRST shall be released
from all obligations under this Agreement and (unless Nevada can show that the
condition relied upon could reasonably have been performed by the other
Parties)the other Parties shall also be released from all obligations
hereunder; provided, however, that FIRST shall be entitled to waive compliance
with anyone or more of such conditions in whole or in part if it shall see fit
to do so, without prejudice to its rights of termination in the event of the
non-fulfilment of any other condition in whole or in part.
8.2 Conditions for the Benefit of the KYOMEDIX Shareholders. The KYOMEDIX
Shareholders shall not be obliged to complete the Share Exchange unless, on
the Closing Date, each of the following conditions shall have been satisfied:
(a) Accuracy of Representations. The representations and
warranties of FIRST set forth in Article V shall be true and
correct in all material respects at the Closing, except as
those representations and warranties may be affected by the
occurrence of events or transactions expressly contemplated
and permitted by this Agreement and the KYOMEDIX
Shareholders shall have received a certificate from
FIRST a confirming the foregoing;
(b) Performance of Obligations. FIRST a shall have performed
all of the obligations hereunder to be performed by them at
or prior to the Closing including, without limitation, the
covenants contained in Section 6.2 hereof and FIRST shall
not be in breach of any agreement on their part contained
herein;
(c) Deliveries. FIRST shall have delivered or caused to be
delivered to KYOMEDIX Shareholders possession of the FIRST
Shares, free and clear of any Encumbrances;
(d) Shareholders Approval and Regulatory Approval. The
Shareholder Approval and the Regulatory Approval shall have
been obtained, completed or given, as the case may be, on or
before the Closing Time;
(e) Completion of Investigations. The investigations and
assessments contemplated in section 6.3 shall have been
completed and the KYOMEDIX Shareholders shall be satisfied
with the results of such investigations and assessments
including, without limitation, the accuracy of the Records
and matters represented and warranted in Article IV.
Regardless of the foregoing, any such investigation
does not alter representation unless actual knowledge to the
contrary is conveyed to KYOMEDIX prior to Closing;
(f) No Loss. During the Interim Period, there has been no
material damage to the assets of FIRST by fire or other
peril, whether or not such damage is covered by insurance;
(g) Consents, Authorisations and Registrations. All consents,
approvals, orders and authorisations of, from or
notifications to any Persons or Governmental Authorities
required in connection with the completion of any of the
transactions contemplated by this Agreement, the execution
of this Agreement, the Closing or the performance of any of
the terms and conditions of this Agreement shall have been
obtained on or before the Closing Date.
(h) No Adverse Litigation. There shall be no injunction or
order issued preventing, and no pending or threatened claim,
action, litigation or proceeding, judicial or
administrative, or investigation against any Party by any
Governmental Authority or Person for the purpose of
enjoining or preventing the consummation of this Agreement,
or otherwise claiming that this Agreement or the
consummation thereof is improper or would give rise to
proceedings under any statute or rule of law.
(i) Issuer Certificate. FIRST shall have delivered to KYOMEDIX
a Certificate from the Secretary of State of the State of
Nevada evidencing FIRST's good standing as a corporation
incorporated in the State of Nevada; and
(j) No Material Changes. There shall have been, in the
reasonable opinion of the KYOMEDIX Shareholders, no material
adverse changes in the assets or financial condition of
FIRST during the Interim Period. For the purposes of this
subsection, the term "material adverse change" shall mean
any change in the assets, liabilities or financial condition
of FIRST that may, in the reasonable opinion of
KYOMEDIX Shareholders involve material reduction, damage,
risk to or destruction of the assets, whether or not the
change is covered by insurance.
If any one or more of the foregoing conditions shall not have been
fulfilled on or before the Closing Date, the KYOMEDIX Shareholders may
terminate this Agreement by notice in writing to FIRST in which event the
KYOMEDIX Shareholders shall be released from all obligations under this
Agreement and(unless the KYOMEDIX Shareholders can show that the condition
relied upon could reasonably have been performed by FIRST) FIRST shall also be
released from all obligations hereunder; provided, however, that the KYOMEDIX
Shareholders shall be entitled to waive compliance with any one or more of
such conditions in whole or in part if they shall see fit to do so, without
prejudice to their rights of termination in the event of the non-fulfilment of
any other condition in whole or in part.
ARTICLE IX - INDEMNIFICATION
9.1 Mutual Indemnification's for Breaches of Warranty, etc. Subject to
Section 9.2, FIRST hereby covenants and agrees with KYOMEDIX and the KYOMEDIX
Shareholders and KYOMEDIX and the KYOMEDIX Shareholders hereby covenant and
agree with FIRST (the parties covenanting and agreeing to indemnify another
party under this Article 9.1 are hereinafter individually referred to as an
"Indemnifying Party" and the parties that are being indemnified by another
Party under this Article 9.1 are hereinafter individually referred to as an
"Indemnified Party")to indemnify and save harmless the Indemnified Party,
effective as and from the Closing Time, from and against any Claims which may
be made or brought against the Indemnified Party and/or which it may suffer or
incur as a result of, or arising out of any non-fulfilment of any covenant or
agreement on the part of the Indemnifying Party under this Agreement or any
Ancillary Agreement or any incorrectness in or breach of any representation or
warranty of the Indemnifying Party contained in this Agreement or any
Ancillary Agreement. For greater certainty the parties hereto agree that they
shall not in any event look to the Major Shareholders for indemnification, in
whole or in part, in respect of any claims which may be made or brought
against the Indemnified Party and or which it may suffer or incur as a result
of or arising out of any non-fulfilment of any covenant or agreement hereunder
or in any Ancillary Agreement or incorrectness in or breach of any
representation and warranty contained in this Agreement or any Ancillary
Agreement.
9.2 Limitation on Mutual Indemnification. The indemnification obligations
of each of the Parties pursuant to section 9.1 shall be subject to the
following:
(a) the applicable limitation mentioned in Article V respecting
the survival of the representations and warranties of the
Parties;
(b) the indemnity obligations under section 9.1 shall survive
for a period of (18) eighteen months from the Closing Date;
and
(c) there shall be no limit as to amount in respect of breaches
of the representations and warranties of the Parties other
than as specifically limited by the provisions of this
section; an Indemnifying Party shall not be required to
indemnify an Indemnified Party until the aggregate Claims
sustained by that Indemnified Party exceeds a value of
$20,000.
9.3 Procedure for Indemnification. The following provisions shall apply to
any Claims for which an Indemnifying Party may be obligated to indemnity an
Indemnified Party pursuant to this Agreement:
(a) upon receipt from a third party by the Indemnified Party of
notice of a Claim or the Indemnified Party becoming aware of
a Claim in respect of which the Indemnified Party proposes
to demand indemnification from the Indemnifying Party, the
Indemnified Party shall give notice to that effect to the
Indemnifying Party with reasonable promptness, provided that
failure to give such notice shall not relieve the
Indemnifying Party from any liability it may have to the
Indemnified Party except to the extent that the Indemnifying
Party is prejudiced thereby;
(b) in the case of Claims arising from third parties, the
Indemnifying Party shall have the right by notice to the
Indemnified Party not later than 30 days after receipt of
the notice described in paragraph (a) above to assume the
control of the defence, compromise or settlement of the
Claims, provided that such assumption shall, by its terms,
be without costs to the Indemnified Party and the
Indemnifying Party shall at the Indemnified Party's request
furnish it with reasonable security against any costs or
other liabilities to which it may be or become exposed by
reason of such defence, compromise or settlement;
(c) upon the assumption of control by the Indemnifying Party as
aforesaid, the Indemnifying Party shall diligently proceed
with the defence, compromise or settlement of the Claims at
its sole expense, including employment of counsel and, in
connection therewith, the Indemnified Party shall co-
operate fully, but at the expense of the Indemnifying Party,
to make available to the Indemnifying Party all pertinent
information and witnesses under the Indemnified Party's
control, make such assignments and take such other steps as
in the opinion of counsel for the Indemnifying Party are
necessary to enable the Indemnifying Party to conduct such
defence; provided always that the Indemnified Party shall be
entitled to reasonable security from the Indemnifying Party
for any expense, costs or other liabilities to which it may
be or may become exposed by reason of such co-operation;
and,
(d) should the Indemnifying Party fail to give notice to the
Indemnified Party as provided in paragraph (b) above, the
Indemnified Party shall be entitled to make such settlement
of the Claims as in its sole discretion may appear
advisable, and such settlement or any other final
determination of the Claims shall be binding upon the
Indemnifying Party.
ARTICLE X - CLOSING ARRANGEMENTS
10.1 Closing. The Closing shall take place at the offices of ▇▇▇▇▇ ▇▇▇▇ LLP
at ▇▇▇▇ ▇▇▇▇ ▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ at the Closing Time on the
Closing Date.
10.2 Closing Procedures. At the Closing Time:
(a) FIRST shall issue and deliver to the KYOMEDIX Shareholders
possession of the shares of FIRST as set forth in section
2.2;
(b) the KYOMEDIX Shareholders shall deliver up to FIRST the
KYOMEDIX Shares; and
(c) the Parties shall take or shall have taken, as the case may
be, the other actions contemplated to be taken by them at or
before the Closing contemplated in this Agreement, such as
cancellation of the control block and change of the board of
directors of FIRST.
10.3 No Broker. Each of the Parties represents and warrants to the other that
all negotiations relating to this Agreement and the transactions contemplated
by this Agreement have been carried on between them directly, without the
intervention of any other party in such manner as to give rise to any valid
claim against any of the Parties for a brokerage commission, finder's fee or
other like payment.
10.4 Non-Waiver. No investigations made by or on behalf of Nevada and the
KYOMEDIX Shareholders at any time shall have the effect of waiving or
diminishing the scope of or otherwise affecting any representation, warranty
or indemnity made by or imposed upon the Parties pursuant to this Agreement.
ARTICLE XI GENERAL
11.1 Termination.
(a) This Agreement may be terminated at any time prior to the
Closing Date:
(i) by the mutual agreement of the Parties; or,
(ii) by either Party if:
(a) the Share Exchange shall not have been completed
by April 15, 2002 (or such other date, if any,
as the Parties shall have agreed in writing), if
the failure to complete such purchase and sale
on or before such date is not caused by any
breach of this Agreement by the Party electing
to terminate; or,
(b) the Share Exchange would violate any
non-appealable final order, decree or judgement
of any court or governmental body having
competent jurisdiction.
(b) If this Agreement is terminated by a Party under subsection
11.1(a), such termination shall be without liability of any
of the Parties to the other Parties, or to any of their
shareholders, directors, officers, employees, agents,
consultants or representatives provided that if such
termination shall result from the wilful failure of the
Party to fulfil a condition to the performance of the other
Parties or to perform a covenant of this Agreement or from a
wilful breach by the Party to this Agreement, the Party
shall be fully liable for any and all damages, costs and
expenses (including, but not limited to, reasonable counsel
fees and disbursements) sustained or incurred by the other
Parties.
11.2 Expenses. Except as otherwise specified herein, all costs and
expenses(including the fees and disbursements of accountants and legal
counsel)incurred in connection with this Agreement and completion of the
transactions contemplated by this Agreement shall be paid by the Party
incurring those expenses.
11.3 Time of Essence. Time shall be of the essence in all respects of this
Agreement.
11.4 Notices. Any notice or other communication which is required or
permitted to be given or made by one Party to the others hereunder shall be in
writing and shall be either:
(a) personally delivered to such Parties; or
(b) sent by facsimile.
Any notice shall be sent to the intended recipient at its address as
follows:
to FIRST at: ▇▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Hermes Building
Suite 205, 455 East ▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Fax: (▇▇▇)▇▇▇-▇▇▇▇
to KYOMEDIX at: Mr. ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇ ▇▇., ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
or at such other address as any Party may from time to time advise the others
by notice in writing. Any notice given by personal delivery shall be deemed
to have been received on the date of delivery. Any notice sent by facsimile or
similar method of recorded communication shall be deemed to have been received
on the next Business Day following the date of its transmission.
11.5 Further Assurances. The Parties shall with reasonable diligence do all
things and provide all reasonable assurances as may be required to complete
the transactions contemplated by this Agreement, and each Party shall provide
such further documents or instruments required by any other Party as may be
reasonably necessary or desirable to give effect to this Agreement and carry
out its provisions, whether before or after the Closing.
11.6 Public Notice. All public notices to third parties and all other
publicity concerning the transactions contemplated by this Agreement shall be
jointly planned and co-ordinated by the Parties and no Party shall act
unilaterally in this regard without the prior written approval of the other
Parties, such approval not to be unreasonably withheld.
11.7 Amendment and Waiver. No supplement, modification, waiver or termination
of this Agreement shall be binding unless executed in writing by the party to
be bound. No waiver of any of the provisions of this Agreement shall
constitute a waiver of any other provision (whether or not similar) nor shall
such waiver constitute a continuing waiver unless otherwise expressly
provided.
11.8 Assignment. This Agreement and the rights or obligations hereunder or
thereunder are not assignable by any Party without the prior written consent
of the other Parties, which consent shall not be unreasonably withheld. This
Agreement shall enure to the benefit of and be binding upon the Parties and
their respective successors and permitted assigns.
11.9 Severability. Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction shall not invalidate the remaining
provisions hereof. Any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in
any other jurisdiction.
11.10 Counterparts. This Agreement may be executed by the Parties in one
or more counterparts, including by facsimile, each of which when so executed
and delivered shall be an original and such counterparts shall together
constitute one and the same instrument.
11.11 Default. In the event of default the prevailing party shall be
entitled to reasonable attorney's fees and related costs of court.
11.12 Waiver of Right to Contest Validity of Outstanding Stock of
KYOMEDIX. KYOMEDIX and KYOMEDIX shareholders agree not to challenge the
validity or legality of any of FIRST's outstanding shares that are issued and
outstanding immediately prior to the Closing of this Agreement, except to the
extent that such issuance is inconsistent with representations set forth in
Section 4.1(h) hereof
IN WITNESS WHEREOF this Agreement has been executed by the Parties
each as of the day and year first before written.
DATED as of the 9th day of April, 2002.
KYOMEDIX Corp.
Per:
Authorised Signing Officer
FIRST DELTAVISION INC.
Per: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Authorised Signing Officer
MAJOR SHAREHOLDERS;
Atlantic Capital Partners Inc. Health Sciences International
Per:_____________________________ Per:_________________________
SCHEDULE 1.1
DEFINITIONS
"Affiliate" and "Associate" means an "affiliate" and "associate",
respectively, as those terms are defined in Chapter 86 of the Nevada Revised
Statutes as amended on the date hereof.
"Agreement" means this Agreement and any instrument supplemental or ancillary
to it.
"Ancillary Agreements" means all documents, agreements, certificates and
instruments to be executed or delivered by any Person under this Agreement
including the Conveyance Documents.
"Authorised Representatives" means employees, agents, counsel, accountants and
other representatives.
"Business Day" means any day other than a Saturday, Sunday or statutory
holiday in the State of Nevada.
"Capital Expenditures" means expenditures which, in accordance with United
States generally accepted accounting principles consistently applied, are
chargeable to capital or fixed assets accounts and includes expenditures in
connection with the acquisition by purchase, erection or construction of
lands, fixed assets, plant, machinery and/or equipment, whether fixed or
moveable.
"Claims" means claims, demands, actions, causes of action, damages, losses,
costs, fines, penalties, interest, liabilities and expenses, including,
without limitation, reasonable legal fees.
"Closing," means the completion of the Share Exchange pursuant to this
Agreement.
"Closing Date" means such dates and times as the parties hereto may mutually
agree, but in no event later than April 15, 2002.
"Closing Time" means 10:00 a.m. (Los Angeles Time) on the Closing Date or such
other time on the Closing Date as may be agreed to by the Parties.
"Conveyance Documents" means all bills of sale, assignments, instruments of
transfer, assurances, consents, and other documents as shall be necessary to
effectively transfer to FIRST the KYOMEDIX Shares.
"Encumbrances" means any mortgage, charge, pledge, hypothec, lien,
encumbrance, restriction, option, right of others or security interest of any
kind.
"Governmental Authorities" means any applicable US, state and regional agency,
ministry, department, inspector and official.
"Interim Period" means the period commencing on the date of this Agreement and
ending immediately before the opening of business on the Closing Date.
"FIRST Financial Statements" means the financial statements of FIRST attached
as Schedule "E"
"FIRST Records" means FIRST books, records, files including business and
financial records, documentation and information, whether in writing or stored
in any retrieval system or database.
"FIRST Shares" means the issued and outstanding common shares of FIRST.
"KYOMEDIX Business" means KYOMEDIX's business of research and development in
the area of sound wave, radio wave, and sonic and acoustic technology for
medical and industrial applications.
"KYOMEDIX " means KYOMEDIX Corp.
"KYOMEDIX Records" means KYOMEDIX's books, records, files, including business
and financial records, documentation and information, whether in writing or
stored in any retrieval system or database.
"KYOMEDIX Shares" means the issued and outstanding common shares of KYOMEDIX.
"Parties" means the parties to this Agreement and "Party" means any one of
them.
"Permits" means authorisations, registrations, permits, approvals or licenses
that can be issued or granted by Governmental Authorities.
"Person" means an individual, body corporate, partnership, trustee, trust,
unincorporated association, executor, administrator or legal representative.
"Records" means the business and financial records of KYOMEDIX and business
and financial records of FIRST.
"Regulatory Approval" means the approvals and consents of NASD Regulation and
any other approvals or consents of Governmental Authorities that are required
to complete the Share Exchange.
"Restricted Securities" means securities that fall under Rule 144 of the
United States Securities and Exchange Commission.
"Share Exchange" has the meaning attributed to it in section 2.2.
"Shareholder Approval" means the concurrence by the shareholders of FIRST to
approve any resolution required to complete the transaction contemplated
herein.
SCHEDULE A
PROMISSORY NOTE
The undersigned promises to pay to the order of ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ at ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, or at such other place as the holder
hereof may designate in writing, the sum of TWO HUNDRED AND FIFTY THOUSAND
DOLLARS ($250,000), payable in full in ninety days from the date hereof,
without interest.
Prepayment of this note with interest to date of payment may be made at
any time without penalty. All amounts due under this note after such 90 day
due date shall bear interest at the rate of 10% per annum.
If the holder deems itself insecure or if default be made in payment of
the whole or any part of any installment at the time when or the place where
the same becomes due and payable as aforesaid, then the entire unpaid balance,
with interest as aforesaid, shall, at the election of the holder hereof and
without notice of said election at once become due and payable. In event of
any such default or acceleration, the undersigned, jointly and severally,
agree to pay to the holder hereof reasonable attorney's fees, legal expenses
and lawful collection costs in addition to all other sums due hereunder.
Presentment, demand, protest, notice of dishonor and extension of time
without notice are hereby waived and the undersigned consent to the release of
any security, or any part thereof, with or without substitution.
This note shall be secured by 13,916,000 post-dividend shares of First
Deltavision, Inc., a Nevada corporation ("First Deltavision"), 9,550,000 of
which shall be issued to Atlantic Capital Partners Inc. pursuant to this Share
Exchange Agreement (the "Agreement") between First Deltavision and Kyomedix
Corporation, a Delaware corporation ("Kyomedix"); and 4,336,000 of the
5,616,000 post-dividend shares of First Deltavision to be issued to Health
Sciences International Inc. (in Trust) pursuant to that Agreement. These
shares will be held in escrow pending payment of this note or foreclosure in
the event of default by ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, Esq; provided, however, that
the pledgors of these securities have reserved all voting rights attendant to
the pledged securities, without qualification. The stock certificates to
represent these shares shall be imprinted with a notation of the security
interest granted herein, and the stock transfer records of First Deltavision
shall also be duly noted in this respect.
Any action on this note shall be brought in the courts of Salt Lake
County, Utah, only, and the makers and pledgors submit to the jurisdiction of
such courts for all purposes hereunder.
FIRST DELTAVISION, INC.
a Nevada corporation
Dated: April 9, 2002 By s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇, President
PLEDGORS:
ATLANTIC CAPITAL PARTNERS, INC.
Dated: April 9, 2002 By/s/▇▇▇▇▇ ▇▇▇▇▇
Its _________________________________
HEALTH SCIENCES INTERNATIONAL, INC.
Dated: April 9, 2002 By/s/▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Its__________________________________
SCHEDULE "B"
EMPLOYEE STOCK OPTION PLAN
KYOMEDIX CORP.
This Schedule "B" contains the Employee Stock Option Plan for KYOMEDIX. filed
or to be filed with the Securities and Exchange Commission on behalf of
KYOMEDIX.
KyoMedix, Inc.
2002 Stock Plan
1. Purpose. The purpose of this 2002 Stock Plan (the "Plan") is to
advance the interests of KyoMedix, Inc., a Nevada corporation
("KyoMedix"), and its stockholders by offering to those employees and
directors of KyoMedix and its subsidiaries who will be responsible for
the long-term growth of KyoMedix's earnings the opportunity to acquire
or increase their equity interests in KyoMedix, thereby achieving a
greater commonality of interest between stockholders, employees and
directors, enhancing KyoMedix's ability to retain and attract both
highly qualified employees and directors and providing an additional
incentive to such employees to achieve KyoMedix's long-term business
plans and objectives.
2. Award Opportunities. Awards (individually, an "Award";
collectively, the "Awards") under the Plan may be granted in the form of
(a) incentive stock options to acquire shares of common stock, no par
value per share of KyoMedix (the "Common Stock"), as provided in Section
422 of the Internal Revenue Code of 1986, as amended (the "Code"), (b)
nonqualified stock options to acquire Common Stock, (c) Common Stock
that is restricted and must be purchased by the employee or director
(the "Restricted Common Stock") and (d) stock appreciation rights
("SARs").
Incentive and nonqualified stock options shall hereinafter be
referred to individually as an "Option" and collectively as "Options" in
the Plan.
3. Administration.
(A) Committee. The Plan shall be administered by KyoMedix's
Board of Directors (the "Board") or by a committee (the
"Committee") of the Board authorized by the Board. The Committee
shall consist of no less than three directors of KyoMedix who
shall be appointed, from time to time, by the Board. At any time
that KyoMedix has a class of equity securities registered under
Section 12 of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), (i) only directors who, at the time of service,
qualify as "disinterested persons" within the meaning of Rule 16b-
3 under the Exchange Act shall be members of the Committee and
(ii) all references in the Plan to the Board shall refer only to
the Committee.
(B) Authority. The Board, or the Committee, to the extent the
Board has delegated such authority to the Committee, shall have
full and final authority with respect to the Plan (i) to interpret
all provisions of the Plan consistent with law; (ii) to determine
the individuals who will receive Awards; (iii) to determine the
frequency of grant of Awards; (iv) to determine the type of, the
number of shares of Common Stock subject to, and the exercise
period and price of each Option to be granted to each eligible
individual; (v) to determine the number and the purchase price of
shares of Restricted Common Stock to be granted to each
individual; (vi) to prescribe the form and terms of instruments
evidencing any Award granted under the Plan; (vii) to determine
when SARs may be exercised or; (viii) to determine the term of the
restricted period and other conditions applicable to Restricted
Common Stock; (ix) to adopt, amend and rescind general and special
rules and regulations for the Plan's administration; and (x) to
make all other determinations necessary or advisable for the
administration of the Plan. The Board may, with the consent of
the person who has been granted an Award under the Plan, amend the
instrument regarding such Award consistent with the provisions of
the Plan.
(C) Indemnification. No member of the Board or the Committee
shall be liable for any action taken or determination made in good
faith. The members of the Board and the Committee shall be
indemnified by KyoMedix for any acts or omissions in connection
with the Plan to the full extent permitted by Federal or Nevada
laws.
4. Eligibility. Participation in the Plan shall be determined by the
Board and shall be limited to employees or non-employee advisors,
consultants, and directors of KyoMedix and its subsidiaries
(individually, a "Participant"; collectively, the "Participants").
5. Stock Subject to Plan. Subject to adjustments as provided in
Section 9(A) hereof, the aggregate amount of Common Stock as to
which Awards may be granted under the Plan shall not exceed
3,750,000 shares and may be authorized but un-issued shares or
treasury shares.
The Board shall maintain records showing the cumulative number of
shares of Common Stock underlying outstanding Options, the number
of shares of Restricted Common Stock and the applicable restricted
periods under the Plan, and the number of shares of Common Stock
delivered in settlement of any other Award under the Plan.
If an Option granted hereunder shall expire or terminate for any
reason without having been fully exercised, if any shares of
Common Stock to be issued pursuant to an Award are not issued for
any reason, of if any shares of Restricted Common Stock granted
under the Plan are forfeited to KyoMedix, then the shares of
Common Stock underlying the unexercised portion of such expired or
terminated Option and by the un-issued portion of such Award and
the shares of forfeited Restricted Common Stock shall again become
available for the purposes of the Plan. In addition, any shares
of Common Stock that are used as full or partial payment by a
Participant of the exercise price of an Option shall be available
for Awards under the Plan as shall any shares of Common Stock that
are withheld in payment of tax withholding obligations of a
Participant (as provided in Section 9(E)).
6. Options.
(A) Allotment of Shares. The Board may, in its sole discretion
and subject to the provisions of the Plan, grant to Participants
at such times as it deems appropriate following adoption of the
Plan by the Board, Options to purchase Common Stock, subject to
approval of the Plan by KyoMedix stockholders, but in no event may
any Participant be granted an Option to purchase more than
1,000,000 shares of Common Stock.
Options may be allotted to Participants in such amounts,
subject to the limitations specified in this Section, as the
Board, in its sole discretion, may from time to time determine.
Notwithstanding the foregoing, a non-employee advisor, or director
shall not be eligible to be granted an incentive stock option
pursuant to the Plan, but shall be eligible to be granted any
other form of Award available under the Plan.
(B) Exercise Price. The price per share at which each non-
qualified option granted under the Plan may be exercised shall
not, as to any particular nonqualified option, be less than
eighty-five percent (85%) nor more than one hundred percent (100%)
of the fair market value of one share of Common Stock at the time
such non-qualified option is granted; provided, however, that the
exercise price for any share of Common Stock underlying any Option
that is intended to qualify as an incentive stock option within
the meaning of Section 422 of the Code shall be not less than one
hundred percent (100%) of the fair market value of one share of
Common Stock at the time such Option is granted. In the case of a
Participant who owns Common Stock representing more than ten
percent (10%) of the total combined voting power of all classes of
capital stock of KyoMedix or of its parent or its subsidiaries (as
determined under Section 424(d) of the Code) at the time the
incentive stock option is granted, such exercise price shall not
be less than one hundred ten percent (110%) of the fair market
value of one share of Common Stock at the time such Option is
granted.
If the Common Stock listed on a national securities exchange
or the high and low selling prices thereof are reported on Nasdaq
at the time an Option is granted, then the fair market value of
one share of Common Stock shall be the average of the highest and
lowest selling prices of the Common stock as reported by such
exchange or as reported on Nasdaq on the date such Option is
granted or, if there were no sales of Common Stock on said date,
then on the next prior business day on which there were sales of
Common Stock. If the Common Stock is traded other than on a
national securities exchange or the high and low selling prices
thereof are not reported on Nasdaq at the time an Option is
granted, then the fair market value of one share of Common Stock
shall be the average between the bid and asked price of a share of
Common Stock on the date the Option is granted as reported on
NASDAQ or, if there is no bid and asked price on said date, then
on the next prior business day on which there was a bid and asked
price. If no such bid and asked price is available, then the
Board shall make a good faith determination of the fair market
value of one share of Common Stock using any reasonable method of
valuation. Unless another date is specified by the Board, the
date on which the Board approves the granting of an Option shall
be deemed the date on which the Option is granted.
(C) Option Period. An Option granted under the Plan shall
terminate, and the right of the Participant (or the Participant's
estate, personal representative, or beneficiary) to exercise the
Option shall expire, on the date determined by the Board at the
time the Option is granted (the "Termination Date"). No incentive
stock option shall be exercisable more than five (5) years after
the date on which it was granted, and no nonqualified stock option
shall be exercisable more than five (5) years and one (1) day
after the date on which it was granted. In the case of a
Participant who owns Common Stock representing more than ten
percent (10%) of the total combined voting power of all classes of
KyoMedix's capital stock, no incentive stock option shall be
exercisable more than five (5) years after the date on which it is
granted.
(D) Vesting Schedule; Termination. An Option granted under the
Plan shall be considered terminated in whole or in part, to the
extent that, in accordance with the provisions of the Plan, it can
no longer be exercised for the Common Stock originally subject to
the Option.
(1) Vesting Schedule. All Options granted hereunder shall
be subject to the following vesting schedule: at the end of
the first quarter following the first date of grant, 25% of
the Options, authorized for that year shall vest and, at the
end of each quarter, unless otherwise provided herein, be
then exercisable. Options shall vest and, unless otherwise
provided herein, be then exercisable. Notwithstanding the
above, the Board or the Committee, as relevant, may modify
or waive any such vesting schedule.
(2) Termination for Any Reason Except Cause, Death, or
Disability. If the Participant is Terminated for any
reason, except cause (as the same is provided in the
relevant Nevada Codes as to directors, or for malfeasance,
theft, harassment, or breach of employment agreement or a
term of the Company's employment manual as to employees or
consultants), death, or disability, the Option, to the
extent (and only to the extent) that it would have been
exercisable by the Participant on the date of Termination,
may be exercised by the Participant no later than ninety
(90) days after the date of Termination, but in any event no
later than the Expiration Date.
(3) Termination For Cause. If the Participant is
Terminated for cause, the Option, to the extent (and only to
the extent) that it would have been exercisable by the
Participant on the date of Termination, may be exercised by
the Participant no later than ten (10) days after the date
of Termination, but in any event no later than the
Expiration Date.
(4) Termination Because of Death or Disability. If the
Participant is Terminated because of death or Disability of
the Participant, the Option, to the extent that it is
exercisable by the Participant on the date of Termination,
may be exercised by the Participant (or the Participant's
legal representative) no later than twelve (12) months after
the date of Termination, but in any event no later than the
Expiration Date.
(5) No Obligation to Employ. Nothing in the Plan or this
Agreement shall confer on the Participant any right to
continue in the employ of, or other relationship with, the
Company or any Parent, Subsidiary, or Affiliate of the
Company, or limit in any way the right of the Company or any
Parent, Subsidiary or Affiliate of the Company to terminate
the Participant's employment or other relationship at any
time, with cause.
(E) Manner of Exercise and Payment.
(1) Exercise.
Each option granted under the Plan shall be deemed
exercised to the extent that the Participant shall deliver
to KyoMedix written notice of the number of full shares of
Common Stock underlying the whole or that portion of the
Option then being exercised. The Participant shall at the
same time tender to KyoMedix payment in full for such
shares, which payment may be in cash or, subject to Section
6(E)(2), in previously issued shares of Common Stock or
partly in cash and partly in previously issued shares of
Common Stock, and shall comply with such other reasonable
requirements as the Board may establish, pursuant to Section
9(C). These provisions shall not preclude exercise of an
Option, or payment of the exercise price thereunder, by any
other proper legal method specifically approved by the
Board.
Subject to relevant state law, no person, estate, or
other entity shall have any of the rights of a stockholder
with reference to Shares subject to an Option until a
certificate representing the shares of Common Stock has been
delivered.
An Option granted under the Plan may be exercised for
any lesser number of whole Shares than the full amount for
which it could then be exercised; provided, however, that
the Board may require, in the agreement evidencing an
Option, any partial exercise to be with respect to a
specified minimum number of shares of Common Stock. Such a
partial exercise of an Option shall not affect the right to
exercise the Option from time to time in accordance with the
Plan for the remaining shares of Common Stock underlying the
Option.
(2) Payment in Shares of Common Stock.
The value of shares of Common Stock delivered for
payment of the exercise price of an Option shall be the fair
market value of the Common Stock determined as provided in
Section 6(B) on the date the Option is exercised. If
certificates representing shares of Common Stock are used to
pay all or part of the exercise price of an Option, separate
certificates shall be delivered to KyoMedix representing the
number of shares of Common Stock so used, and an additional
certificate or certificates shall be delivered to the
Participant representing the additional shares of Common
Stock to which the Participant is entitled as a result of
exercise of the Option. Notwithstanding the foregoing and
the provisions of Section 6(E)(1), the Board, in its sole
discretion, may refuse to accept shares of Common Stock
delivered for payment of the exercise price, in which event
any certificates representing such shares of Common Stock
that were actually received by KyoMedix with the written
notice of exercise shall be returned to the exercising
Participant, together with notice by KyoMedix of the refusal
of KyoMedix to accept such shares of Common Stock as partial
or full payment of the exercise price.
In the event Shares are delivered for payment of the
exercise price of such Option as herein provided, then, at
the discretion of the Board, the Participant may be granted
an Option to purchase that quantity of Common Stock equal to
the quantity of Common Stock delivered in partial or full
payment of the exercise price, with an exercise price equal
to the current fair market value of such Common Stock, and
with a term of such Option extending to the expiration date
of the Option for which partial or full payment of the
exercise price thereof was accomplished by delivery of
previously issued shares of Common Stock.
(3) Loans.
KyoMedix may make loans to Participants or their
respective lawful successors as the Board, in its
discretion, may determine (including a grantee who is a
director or officer of KyoMedix) in connection with the
exercise of Options granted under the Plan; provided,
however, that the Board shall not authorize the making of
any loan where the possession of such discretion or the
making of such loan would result in a "modification" (as
defined in Section 424 of the Code) of any incentive stock
option. Such loans shall be subject to the following terms
and conditions and such other terms and conditions as the
Board shall determine at the time the loan is made as are
not inconsistent with the Plan. Such loans shall bear
interest at such rates as the Board shall determine from
time to time, which rates may be below then current market
rates (except in the case of incentive stock options). In
no event may any such loan exceed the fair market value, at
the date of exercise, of the shares of Common Stock
underlying the Option, or portion thereof, exercised by the
Participant. No loan shall have an initial term exceeding
five (5) years, but any such loan may be renewable at the
discretion of the Board. At the time a loan is made, Common
stock having a fair market value at least equal to the
principal amount of the loan shall be pledged by the Holder
to KyoMedix as security for payment of the unpaid balance of
the loan. Every loan shall comply with all applicable laws,
regulations, and rules of the Board of Governors of the
Federal Reserve System and any other governmental agency
having jurisdiction.
(4) Award of Cash or Shares of Common Stock in Lieu of
Exercise.
The Board may elect, in lieu of accepting payment of
the exercise price of an Option and delivering any or all
shares of Common Stock as to which an Option has been
exercised, to pay the Participant an amount in cash or
shares of Common Stock, or a combination of cash and shares
of Common Stock, equal to the amount by which the fair
market value (determined as provided in Section 6(B)) on the
date of exercise of the Option the exercise price that would
otherwise be payable by the Participant for such shares of
Common Stock. Subject to any then-current agreements with
any third parties, the Board may also permit a Participant
simultaneously to exercise an Option and sell the shares of
Common Stock acquired upon exercise, pursuant to a brokerage
arrangement, approved in advance by the Board, and use the
proceeds from such a sale as payment of the exercise price
of such Option.
(5) Persons Subject to Section 16 of the Exchange Act.
Participants who are subject to Section 16 of the
Exchange Act are hereby advised that reliance on Rule 16b-3
may require that any equity security of KyoMedix acquired
upon exercise of an Option by such person be held at least
until the date six months after the date of grant of the
Option.
(F) Limitations on Exercise. In the case of Options intended to
be incentive stock options, the aggregate fair market value,
determined as of the date of grant, of the shares of Common Stock
underlying such Options that are exercisable for the first time by
a Participant shall be limited to $500,000 per calendar year.
Nonqualified stock options may be exercised by a Participant
without regard to the foregoing limitation, but subject to the
requirement of Section 6(D).
7. Stock Appreciation Rights.
(A) Granting of Stock Appreciation Rights. The Board may, in
its sole discretion and subject to the provisions of the Plan,
grant to eligible employees or non-employee advisors, consultants,
or directors at such times as it deems appropriate following
adoption of the Plan by the Board, SARs, subject to approval of
the Plan by KyoMedix Stockholders.
(B) Stock Appreciation Rights. An SAR is a right to receive the
following amount of appreciation an amount equal to (or if the
Board shall determine at the time of grant, less than) the excess
of the fair market value of one share of Common Stock on the
exercise date over the fair market value of one share of Common
Stock on the date of grant of the SAR, or such other price as set
by the Board, multiplied by the number of shares of Common Stock
with respect to which the SAR shall have been exercised.
(C) Terms of Grants. An SAR may be granted in tandem with, in
addition to, or completely independent of an Option or any other
Award under the Plan.
(D) Manner of Exercise. An SAR may be exercised by a
Participant in accordance with procedures established by the
Board, and an SAR shall be exercisable as provided by the Board on
the date of grant. The Board may also provide that an SAR shall
be automatically exercised on one or more specified dates.
Notwithstanding the foregoing, all SARs shall be automatically
exercised as of the end of the month in which the Participant's
employment terminates or services as a non-employee advisor,
consultant, or a director cease due to death, permanent, and total
disability or retirement.
(E) Form of Payment. Payment upon exercise of an SAR may be
made in cash or in shares of Common Stock, or any combination
thereof, as the Board shall determine.
(F) Persons Subject to Section 16 of the Exchange Act.
Participants who are subject to Section 16 of the Exchange Act are
hereby advised that, unless the date of exercise of an SAR is
automatic or fixed in advance under the Plan and is outside the
control of the Participant, reliance on Rule 16b-3 with respect to
cash settlements of SARs requires that (1) KyoMedix on a regular
basis publicly releases for publication quarterly and annual
summary statements of sales and earnings and (2) exercises of SARs
resulting in full or partial cash settlements must occur only
during the period beginning with the third business day and ending
on the twelfth (12th) business day following release of such
information.
8. Restricted Common Stock.
(A) Granting of Restricted Common Stock. The Board may, in its
sole discretion and subject to the provisions of the Plan, grant
to eligible employees or non-employee advisors, consultants, or
directors at such times as it deems appropriate following adoption
of the Plan by the Board, the right to purchase shares of
Restricted Common Stock, subject to approval of the Plan by
KyoMedix stockholders.
(B) Price of Restricted Common Stock. The price at which
Restricted Common Stock may be purchased by a Participant under
the Plan shall be determined by the Board and shall not be less
than fair market value on the date of grant. If the Board
determines that the price per Share shall be the fair market value
of a Share, fair market value shall be determined as provided in
Section 6(B) hereof. The purchase price per share of Restricted
Common Stock as to any particular Restricted Common Stock grant
shall also be known as the "Initial Price Per Share."
(C) Terms of Restricted Common Stock. At the time of a
Restricted Common Stock grant, the Board shall establish a period
of time (the "Restricted Period") applicable to the Restricted
Common Stock, which shall not be more than ten (10) years from the
date of grant. Each grant of Restricted Common Stock may have a
different Restricted Period. The Board may in its sole
discretion, at the time of the grant of Restricted Common Stock is
made, prescribe conditions for the incremental lapse of
restrictions during the Restricted Period and for the lapse of
termination of restrictions upon the satisfaction of other
conditions with respect to all or any portion of the Restricted
Common Stock. The Board may also, in its sole discretion, at any
time shorten or terminate the Restricted Period or waive any
conditions for the lapse or termination of restrictions with
respect to all or any portion of the shares of Restricted Common
Stock.
Unless another date is specified, the date on which the
Board approves the grant of Restricted Common Stock shall be
deemed the date on which the Restricted Common Stock is granted.
In order for Participant to exercise his right to purchase
shares of Restricted Common Stock under a grant (unless that
payment date is further extended by the Board), within thirty (30)
days after the date of grant, such Participant shall execute,
retroactive to the date of such grant, an agreement reflecting the
number of shares the Participant is purchasing and the conditions
imposed upon the purchase of such shares as determined by the
Board.
As payment for the purchase price of the Restricted Common
Stock, the Participant may tender to KyoMedix payment in cash, in
previously issued shares of Common Stock (taken at their fair
market value on the date the Restricted Common Stock is granted
determined as provided in Section 6(B)) or partly in cash and
partly in previously issued shares of Common Stock and shall
comply with such other reasonable requirements as the Board may
establish, pursuant to this Section 8(C). Notwithstanding the
foregoing, the Board, in its sole discretion, may refuse to accept
shares of Common Stock in payment of the purchase price, in which
event any certificates representing such shares of Common Stock
that were actually received by KyoMedix as attempted payment for
the Restricted Common Stock shall be returned to the Participant,
together with notice by KyoMedix of the refusal of KyoMedix to
accept such shares of Common Stock as partial or full payment for
the Restricted Common Stock.
A stock certificate representing the number of shares of
Restricted Common Stock granted to and purchased by a Participant
shall be registered in the Participant's name but shall be held in
custody by KyoMedix for the Participant's account. The
Participant shall have the rights and privileges of a stockholder
as to such shares of Restricted Common Stock, including the right
to vote such shares, except that (i) the Participant shall not be
entitled to delivery of such certificate until the expiration or
termination of the Restricted Period and the satisfaction of any
other conditions prescribed by the Board, (ii) none of the Shares
may be sold, transferred, assigned, pledged, or otherwise
encumbered or disposed of during the Restricted Period and until
the satisfaction of any other conditions prescribed by the Board,
and (iii) all of the Restricted Common Stock shall be forfeited
and all rights of the Participant to such Restricted Common Stock
shall terminate without further obligation on the part of KyoMedix
(except for the obligation of KyoMedix to purchase the Restricted
Common Stock from the Participant at the Initial Price Per Share)
in the event the Participant has not remained in the continuous
employment of KyoMedix or a subsidiary or in continuous service as
a non-employee advisor, consultant, or a director until the
expiration or termination of the Restricted Period and the
satisfaction of any other conditions prescribed by the Board
applicable to such Restricted Common Stock. The Board shall
decide in each case to what extent leaves of absence for
government or military service, illness, temporary disability or
other reasons shall not, for this purpose, be deemed interruption
of continuous employment or service as a non-employee advisor,
consultant, or director. If the Participant's continuous
employment or service as a non-employee advisor, consultant, or
director should be terminated or cease because of death,
permanent, and total disability or retirement, the provisions
contained in Section 8(D) shall apply.
At the discretion of the Board, cash and stock dividends may
be either currently paid or withheld by KyoMedix for the
Participant's account, and interest may be paid on the amount of
cash dividends withheld at a rate and subject to such terms as
determined by the Board.
Each certificate evidencing shares of Restricted Common
Stock shall be inscribed with a legend substantially as follows:
"The shares of common stock of KyoMedix, Inc.,
evidenced by this certificate are subject to the terms
and restrictions of the KyoMedix, Inc., 2002 Stock
Plan. Such shares are subject to forfeiture or
cancellation under the terms of said Plan and shall
not be sold, transferred, assigned, pledged,
encumbered, or otherwise alienated or hypothecated
except pursuant to the provisions of said Plan, a copy
of which is available from KyoMedix, Inc., upon
request."
Upon the expiration or termination of the Restricted Period
and the satisfaction of any other conditions prescribed by the
Board or at such earlier time as provided for in Section 9(D), the
restrictions applicable to the shares of Restricted Common Stock
shall lapse and a stock certificate for the number of shares of
Restricted Common Stock with respect to which the restrictions
have lapsed shall be delivered, free of all such restrictions,
except any that may be imposed by law, to the Participant or the
Participant's beneficiary or estate, as the case may be. KyoMedix
shall not be required to deliver any fractional shares but will
pay, in lieu thereof, the fair market value (determined in
accordance with Section 6(B) as of the date the restrictions
lapse) of such fractional shares to the Participant.
(D) Termination of Employment. All rights to the shares of
Restricted Common Stock shall be forfeited if the Participant
terminates employment with KyoMedix and its subsidiaries or ceases
to serve on the Board for any reason except for death, permanent
and total disability or retirement prior to the expiration of the
restrictions on such Shares and such forfeited shares shall be
purchased by KyoMedix at the Initial Price Per Share within a
reasonable time period established by the Board. Any attempt to
dispose of any such shares in contravention of the foregoing
restrictions shall be null and void and without effect.
If a Participant who has been in the continuous employ of
KyoMedix or a subsidiary since the date on which the Restricted
Common Stock was granted dies, becomes permanently and totally
disabled, or retires while in such employment and prior to the
lapse of the restrictions on the Restricted Common Stock, all such
restrictions shall lapse and cease to be effective as of the end
of the month in which the Participant's employment terminates due
to death, permanent and total disability, or retirement.
(E) Persons Subject to Section 16 of the Exchange Act.
Participants who are subject to Section 16 of the Exchange Act are
hereby advised that reliance on Rule 16b-3 may require that any
equity security of KyoMedix acquired upon exercise of Restricted
Common Stock by such person be held at least until the date six
months after the date of grant of the Restricted Common Stock.
9. Other Provisions.
(A) Adjustment of Shares. In the event that the outstanding
Shares are changed into or exchanged for a different number or
kind of shares of KyoMedix or other securities of KyoMedix by
reason of merger, consolidation, recapitalization,
reclassification, stock split-up, stock dividend or combination of
Shares, or issuance or exorcise of warrants or rights, the Board
shall make an appropriate and equitable adjustment in the number
and kind of Common Stock subject to outstanding Awards, or
portions thereof then unexercised, and the number and kind of
Common Stock subject to the Plan to the end that after such event
the Common Stock subject to the Plan and the Participant's right
to a proportionate interest in KyoMedix shall be maintained as
before the occurrence of such event. Such adjustment in an
outstanding Award shall be made without change in the total price
applicable to the Award or the unexercised portion of any Award
(except for any change in the total price resulting from rounding
off quantities or prices of Common Stock) and with any necessary
corresponding adjustment in exercise price. Any such adjustment
made by the Board shall be final and binding upon all
Participants, KyoMedix and all other interested persons. Any
adjustment of an incentive stock option under this paragraph shall
be made in such manner so as not to constitute a "modification"
within the meaning of Section 424(h)(3) of the Code. The Board,
in its sole discretion may at any time make or provide for such
adjustments to the Plan or any Award granted thereunder as it
shall deem appropriate to prevent the reduction or enlargement of
rights, including adjustments in the event of changes in the
outstanding common stock by reason of mergers, consolidations,
combinations, exchanges of shares, separations, reorganizations,
liquidations, issuance, or exercise of warrants or rights and the
like in which KyoMedix is not the sole surviving successor to the
assets or business of KyoMedix immediately prior thereto. In the
event of any offer to stockholders of KyoMedix generally relating
to the acquisition of their shares of Common Stock, the Board may
make such adjustments as it deems equitable in respect of
outstanding Awards. Any such determination of the Board shall be
conclusive.
(B) Non-Transferability. No Award granted to a Participant
under the Plan shall be transferable other than by will or the
laws of descent and distribution or pursuant to a qualified
domestic relations order as defined in the Code; provided that
transfer pursuant to a qualified domestic relations order shall
not be permitted with respect to incentive stock options or in
circumstances where such transfer would cause a lapse of
restriction for purposes of Section 83 of the Code. Any attempt
to transfer, assign, pledge, hypothecate, or otherwise dispose of,
or to subject to execution, attachment, or similar process, any
Award other than as permitted in the preceding sentence shall give
no right to the purported transferee.
(C) Compliance with Law and Approval of Regulatory Bodies. No
Option shall be exercisable and no Shares shall be delivered in
settlement of any Award and no unrestricted Common Stock shall be
issued for Restricted Common Stock under the Plan except in
compliance with all applicable Federal and state laws and
regulations including, without limitation, compliance with the
rules of all domestic stock exchanges on which KyoMedix's shares
may be listed. Any certificate issued to evidence shares of
Common Stock for which an Award is exercised or with respect to
which Restricted Common Stock restrictions lapse, shall bear such
legends and statements as the Board deems advisable in order to
assure compliance with Federal and state laws and regulations. No
Award shall be exercisable and no Common Stock shall be delivered
and no Restricted Common Stock shall be issued under the Plan
until KyoMedix has obtained consent or approval from such
regulatory bodies, Federal or state, having jurisdiction over such
matters as the Board may deem advisable.
In the case of the exercise of an Award by a person or
estate acquiring the right to exercise such Award by bequest or
inheritance or in the case of a person or estate acquiring by
bequest or inheritance the right to receive Restricted Common
Stock because of the lapse of the restrictions, the Board may
require reasonable evidence as to the ownership of the Award, may
require such consents and releases of taxing authorities as it may
deem advisable.
(D) No Right to Employment. Neither the adoption of the Plan
nor its operation, nor any document describing or referring to the
Plan, or any part thereof, shall confer upon any Participant under
the Plan any right to continue in the employ of KyoMedix or a
subsidiary or shall in any way affect the right and power of
KyoMedix or a subsidiary to terminate the employment of any
Participant under the Plan at any time with or without assigning a
reason therefor.
(E) Tax Withholding. The Board shall have the right to deduct
from any settlement of an Award, including without limitation the
delivery or vesting of Common Stock, made under the Plan any
Federal, state, or local taxes of any kind required by law to be
withheld with respect to such payments or to take any such other
action as may be necessary in the opinion of the Board to satisfy
all obligations for payment of such taxes. If Common Stock that
would otherwise be delivered in settlement of the Award are used
to satisfy tax withholding, such Common Stock shall be valued
based on their Fair Market Value determined in accordance with
section 6(B) when the tax withholding is required to be made.
Participants who are subject to Section 16 of the Exchange Act are
hereby advised that pursuant to Rule 16b-3 thereunder the use of
shares to satisfy tax withholding will be treated as the exercise
of a Stock Appreciation Right.
(F) Amendment and Termination. The Board may at any time
suspend, amend, or terminate the Plan, and, without limiting the
foregoing, the Board shall have the express authority to amend the
Plan from time to time, with or without approval by the
stockholders, in the manner and to the extent that the Board
believes is necessary or appropriate in order to cause the Plan to
conform to provisions of Rule 16b-3 under the Exchange Act and any
other rules under Section 16 of the Exchange Act, as any of such
rules may be amended, supplemented, or superseded from time to
time. Except for adjustments made in accordance with Section
9(A), the Board may not, without the consent of the grantee of the
Award, alter or impair any Award previously granted under the
Plan. No Award may be granted during any suspension of the Plan
or after termination thereof.
In addition to Board approval of an amendment, if the
amendment would: (i) materially increase the benefits accruing to
Participants; (ii) increase the number of shares of Common Stock
deliverable under the Plan (other than in accordance with the
provisions of Section 9(A); or (iii) materially modify the
requirements as to eligibility for participation in the Plan, then
such amendment shall be approved by the holders of a majority of
KyoMedix's outstanding capital stock represented and entitled to
vote at a meeting held for the purpose of approving such amendment
to the extent required by Rule 16b-3 of the Exchange Act.
(H) Effective Date of the Plan. The Plan was adopted by the
Board and the stockholders holding a majority of KyoMedix's
outstanding shares entitled to vote thereon on April __, 2002.
(I) Duration of the Plan. Unless previously terminated by the
Board, the Plan shall terminate at the close of business on April
__, 2012, and no Award shall be granted under it thereafter, but
such termination shall not affect any Award theretofore granted.
(J) Use of Certain Terms. The terms "parent" and "subsidiary"
shall have the meanings ascribed to them in Section 424 of the
Code and unless the context otherwise requires, the other terms
defined in Section 421, 422, and 424, inclusive, of the Code and
regulations and revenue rulings applicable thereto, shall have the
meanings attributed to them therein.
SCHEDULE "C"
KYOMEDIX Corp.
EMPLOYEE OPTIONS
This Schedule "B" describes all stock options issued to employees of
KYOMEDIX Corp.:
NAME Year 1 Year 2 Year 3
1. ▇▇▇▇▇ ▇▇▇▇▇ 50,000 65,000 95,000
2. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ 50,000 65,000 95,000
3. ▇▇▇▇▇ ▇▇▇▇▇▇▇ 100,000 100,000 100,000
5. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ 50,000 50,000 50,000
6. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ 25,000 30,000 40,000
7. ▇▇ ▇▇▇▇▇▇ 20,000 20,000 20,000
8. ▇▇▇▇▇ ▇▇▇▇▇▇ 20,000 20,000 20,000
SCHEDULE "D"
KYOMEDIX INC.
FINANCIAL STATEMENTS
▇▇▇▇▇ & Partners LLP
Chartered Accountants
INDEPENDENT AUDITORS' REPORT
To the Shareholders of
Kyomedix Corporation
We have audited the accompanying balance sheet of Kyomedix Corporation as of
November 27, 2001. This financial statement is the responsibility of the
company's management. Our responsibility is to express an opinion on this
financial statement based on our audit.
We conducted our audit in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan ad
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on
a test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audit provides
a reasonable basis for our opinion.
In our opinion, the financial statement referred to above presents fairly, in
all material respects, the financial position of Kyomedix Corporation as of
November 27, 2001 in conformity with accounting principles generally accepted
in the United States.
▇▇▇▇▇ & Partners LLP
Chartered Accountants
Toronto, Ontario
December 4, 2001
KYOMEDIX CORPORATION
BALANCE SHEET
As at November 27, 2001
ASSETS
Sundry receivable $ 1
SHAREHOLDERS' EQUITY
Common stock, par value $0.0001 per share
Authorized, 20,000,000 shares
Issued, 100 shares $ 1
See Accompanying Note
KYOMEDIX CORPORATION
NOTE TO FINANCIAL STATEMENT
AS AT NOVEMBER 27, 2001
1. NATURE OF ORGANIZATION
The company was incorporated in the state of Delaware, U.S.A., on
November 27, 2001, for the purpose of eventually developing and
marketing medical devices. It plans to merge with a public company as
soon as it is feasible. All amounts are stated in U.S. dollars.
SCHEDULE "E"
FIRST DELTAVISION, INC.
[A Development Stage Company]
FINANCIAL STATEMENTS
JUNE 30, 2001
FIRST DELTAVISION, INC.
[A Development Stage Company]
CONTENTS
PAGE
Independent Auditors' Report 1
Balance Sheet, June 30, 2001 2
Statements of Operations, for the years ended 3
June 30, 2001 and 2000 and from inception
on July 31, 1984 through June 30, 2001
Statement of Stockholders' (Deficit), from
inception on July 31, 1984 through June 30, 2001 4 - 5
Statements of Cash Flows, for the years ended 6
June 30, 2001 and 2000 and from inception on
July 31, 1984 through June 30, 2001
Notes to Financial Statements 7 - 10
INDEPENDENT AUDITORS' REPORT
Board of Directors
FIRST DELTAVISION, INC.
Salt Lake City, Utah
We have audited the accompanying balance sheet of First Deltavision, Inc. [a
development stage company] at June 30, 2001, and the related statements of
operations, stockholders' (deficit) and cash flows for the years ended June
30, 2001 and 2000 and for the period from inception on July 31, 1984 through
June 30, 2001. 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 First
Deltavision, Inc. for the period from inception on July 31, 1984 to June 30,
1999 were audited by other auditors whose report dated September 28, 1999
expressed an unqualified opinion on those statements and included an
explanatory paragraph regarding the Company's ability to continue as a going
concern. The financial statements for the period from inception (July 31,
1984) to June 30, 1999 reflect a net loss of $129,168 of the total inception
to date net loss of $159,456. Our opinion, insofar as it relates to the
amounts included for such prior periods, is based solely on the report of such
other auditors.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, based on our audit and the reports of other auditors for the
cumulative information for the period from inception on July 31, 1984 to June
30, 1999, the financial statements audited by us present fairly, in all
material respects, the financial position of First Deltavision, Inc. [a
development stage company] as of June 30, 2001 and the results of its
operations and its cash flows for the years ended June 30, 2001 and 2000 and
for the period from inception on July 31, 1984 through June 30, 2001, in
conformity with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming the Company
will continue as a going concern. As discussed in Note 5 to the financial
statements, the company has no on-going operations, has incurred substantial
losses since its inception, has current liabilities in excess of assets and
has no working capital. These factors raise substantial doubt about its
ability to continue as a going concern. Management's plans in regards to
these matters are also described in Note 5. The financial statements do not
include any adjustments that might result from the outcome of these
uncertainties.
/S/▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ & ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ & ▇▇▇▇▇, P.C.
August 1, 2001
Salt Lake City, Utah
FIRST DELTAVISION, INC.
[A Development Stage Company]
BALANCE SHEET
ASSETS
June 30,
2001
___________
CURRENT ASSETS $ -
___________
Total Current Assets -
___________
$ -
___________
LIABILITIES AND STOCKHOLDERS' (DEFICIT)
CURRENT LIABILITIES:
Accounts payable $ 500
Accounts payable related party 32,678
Due to officers 23,667
___________
Total Current Liabilities 56,845
___________
STOCKHOLDERS' (DEFICIT):
Common stock, $.001 par value, 50,000,000
shares authorized, 335,500 shares issued
and outstanding 335
Capital in excess of par value 102,276
Deficit accumulated during the development stage (159,456)
___________
Total Stockholders' (Deficit) (56,845)
___________
$ -
___________
The accompanying notes are an integral part of this financial statement.
FIRST DELTAVISION, INC.
[A Development Stage Company]
STATEMENTS OF OPERATIONS
From Inception
For the Years Ended on July 31,
June 30, 1984 Through
__________________ June 30,
2001 2000 2001
___________________________________
REVENUE:
Sales $ - $ - $ -
_________ _________ ________
Total Revenue - - -
_________ _________ ________
EXPENSES:
General and administrative 17,244 13,044 159,456
_________ _________ ________
Total Expenses (17,244) (13,044) (159,456)
_________ _________ ________
LOSS FROM OPERATIONS
BEFORE INCOME TAXES (17,244) (13,044) (159,456)
CURRENT INCOME TAXES - - -
DEFERRED INCOME TAX - - -
_________ _________ ________
NET LOSS $ (17,244) (13,044) $(159,456)
_________ _________ _________
LOSS PER SHARE $ (.05)$ (.06) $ (1.55)
_________ _________ _________
The accompanying notes are an integral part of these financial statements.
FIRST DELTAVISION, INC.
[A Development Stage Company]
STATEMENT OF STOCKHOLDERS' (DEFICIT)
FROM INCEPTION ON JULY 31, 1984 THROUGH JUNE 30, 2001
Deficit
Accumulated
Common Stock Capital in During the
______________________ Excess of Retained Development
Shares Amount Par Deficit Stage
__________ ___________ ___________ ________ __________
BALANCE,
July 31,
1984 - $ - $ - - $ -
Shares issued
to incorporators
for cash 22,863 23 57,553 - -
Net loss for
the year
ended
June 30,
1985 - - - - (39,661)
__________ ___________ ___________ ________ __________
BALANCE,
June 30,
1985 22,863 23 57,553 - (39,661)
Capital
contributed
by shareholder - - 2,536 - -
Net loss for
year ended
June 30, 1986 - - - - (20,451)
__________ ___________ ___________ ________ __________
BALANCE,
June 30,
1986 22,863 23 60,089 - (60,112)
Net loss
for the
year ended
June 30, 1987 - - - - -
__________ ___________ ___________ ________ __________
BALANCE,
June 30,
1987 22,863 23 60,089 - (60,112)
Net loss
for the
year ended
June 30,
1988 - - - - -
__________ ___________ ___________ ________ __________
BALANCE,
June 30,
1988 22,863 23 60,089 - -
Capital
contributed
by shareholder - - 1,044 - -
Shares issued
for cash at
$.0002
per share 24,160 24 1,176 - -
Net loss for
the year
ended
June 30,
1989 - - - - (2,107)
__________ ___________ ___________ ________ __________
BALANCE,
June 30,
1989 47,023 47 62,309 - (62,219)
Net loss
for the
year ended
June 30,
1990 - - - - (183)
__________ ___________ ___________ ________ __________
BALANCE,
June 30,
1990 47,023 47 62,309 - (62,402)
Net loss
for year
ended
June 30,
1991 - - - - (183)
BALANCE,
June 30,
1991 47,023 $ 47 $ 62,309 $ - $ (62,585)
Net loss
for year
ended
June 30,
1992 - - - - (183)
[Continued]
FIRST DELTAVISION, INC.
[A Development Stage Company]
STATEMENT OF STOCKHOLDERS' (DEFICIT)
FROM INCEPTION ON JULY 31, 1984 THROUGH JUNE 30, 2001
[Continued]
Earnings
Accumulated
Common Stock Capital in During the
______________________ Excess of Retained Development
Shares Amount Par Deficit Stage
__________ ___________ ___________ ________ __________
BALANCE,
June 30,
1992 47,023 47 62,309 - (62,768)
Net loss
for year
ended
June 30,
1993 - - - - (183)
__________ ___________ ___________ ________ __________
BALANCE,
June 30,
1993 47,023 47 62,309 - (62,951)
Net loss
for year
ended
June 30,
1994 - - - - (119)
__________ ___________ ___________ ________ __________
BALANCE,
June 30,
1994 47,023 47 62,309 - (63,070)
Net loss
for year
ended
June 30,
1995 - - - - (118)
__________ ___________ ___________ ________ __________
BALANCE,
June 30,
1995 47,023 47 62,309 - (63,188)
Shares issued
for services
rendered
valued at
$.25 per
share 152,977 153 37,847 - -
Net loss
for the
year ended
June 30,
1995 - - - - (38,118)
__________ ___________ ___________ ________ __________
BALANCE,
June 30,
1996 200,000 200 100,156 - (101,306)
Net loss
for the
year ended
June 30,
1997 - - - - (7,940)
__________ ___________ ___________ ________ __________
BALANCE,
June 30,
1997 200,000 200 100,156 - (109,246)
Shares issued
for services
valued at
$.04 per
share 35,500 35 1,220 - -
Net loss for
the year
ended
June 30,
1998 - - - - (12,857)
__________ ___________ ___________ ________ __________
BALANCE,
June 30,
1998 235,500 235 101,376 - (122,103)
Net loss
for the
year ended
June 30,
1999 - - - - (7,065)
__________ ___________ ___________ ________ __________
BALANCE,
June 30,
1999 235,500 235 101,376 - (129,168)
Net income
for the
year ended
June 30,
2000 - - - - (13,044)
__________ ___________ ___________ ________ __________
BALANCE,
June 30,
2000 235,500 $ 235 $ 101,376 $ - $ (142,212)
__________ ___________ ___________ ________ __________
Shares
issued for
debt relief
valued at
$.01 per
share 100,000 100 900 -
Net income
for the year
ended - - - - (17,244)
June 30, 2001 _________ __________ __________ _______ __________
BALANCE,
June 30, 2001 335,500 $ 335 $ 102,276 $ - $ (159,456)
_________ __________ __________ _______ __________
The accompanying notes are an integral part of this financial statement .
FIRST DELTAVISION, INC.
[A Development Stage Company]
STATEMENTS OF CASH FLOWS
From Inception
For the Years Ended on July 31,
June 30, 1984 Through
__________________ June 30,
2001 2000 2001
___________________________________
Cash Flows From Operating Activities:
Net loss $ (17,244) $ (13,044) $ (159,456)
Adjustments to reconcile net loss to
net cash used by operating activities:
Non cash expense - - 39,255
Stock issued for relief of debt 1,000 - 1,000
Changes in assets and liabilities:
(Decrease) in accounts payable (24,138) 8,235 500
Increase in accounts payable
related party 32,678 - 32,678
Increase in due to officers 8,704 3,809 23,667
Increase (decrease) in accrued
expenses (1,000) 1,000 -
________ ________ ________
Net Cash (Used) by Operating
Activities - - (62,356)
________ ________ ________
Cash Flows From Investing Activities:
- - -
________ ________ ________
Net Cash (Used) by Investing
Activities - - -
________ ________ ________
Cash Flows From Financing Activities:
Proceeds from issuance of common stock - - 58,776
Capital contributions - - 3,580
________ ________ ________
Net Cash Provided by Financing
Activities - - 62,356
________ ________ ________
Net Increase in Cash - - -
Cash at Beginning of the Year - - -
________ ________ ________
Cash at End of the Year $ - $ - $ -
________ ________ ________
Supplemental Disclosures of Cash Flow Information:
Cash paid during the period for:
Interest $ - $ - $ -
Income taxes $ - $ - $ -
Supplemental Schedule of Noncash Investing and Financing Activities:
For the year ended June 30, 2001:
During August 2000, the Company issued 100,000 shares of common stock
for relief of debt.
For the year ended June 30, 2000:
None
The accompanying notes are an integral part of these financial statements.
FIRST DELTAVISION, INC.
[A Development Stage Company]
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization First Deltavision, Inc. (the Company) was organized
under the laws of the State of Utah on July 31, 1984 under the name of
Aquachlor Marketing. The Company never engaged in business activities and was
suspended for failure to file annual reports and tax returns. In
December 1988, all required reports and tax returns were filed and the Company
was reinstated by the State of Utah.
On December 23, 1988, the Company merged with Aquachlor, Inc., a Nevada
Corporation, incorporated on December 20, 1988. The Nevada Corporation became
the surviving corporation and changed its name to Deltavision, Inc.
On March 25, 1997, the Company received a Certificate of Revival from
the State of Nevada using the name First Deltavision, Inc.
The purpose of the Company as established by its Articles of
Incorporation is to engage in any lawful activity. The Company has not
engaged in any business activities that have produced significant revenues and
therefore remains a development stage company as defined in SFAS No. 7.
Development Stage The Company is considered a development stage
company as defined in SFAS no. 7.
Loss Per Share - The computation of loss per share of common stock is
based on the weighted average number of shares outstanding during the periods
presented, in accordance with Statement of Financial Accounting Standards No.
128, "Earnings Per Share" [See Note 6].
Cash and Cash Equivalents - For purposes of the statement of cash
flows, the Company considers all highly liquid debt investments purchased with
a maturity of three months or less to be cash equivalents.
Accounting Estimates - The preparation of financial statements in
conformity with generally accepted accounting principles required management
to make estimates and assumptions that effect the reported amounts of assets
and liabilities, the disclosures 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
estimated by management.
Recently Enacted Accounting Standards Statement of Financial
Accounting Standards ("SFAS") No. 140, "Accounting for Transfers and Servicing
of Financial Assets and Extinguishments of Liabilities a replacement of
FASB Statement No. 125", SFAS No. 141, "Business Combinations", SFAS No.
142, "Goodwill and Other Intangible Assets", and SFAS No. 143, "Accounting
for Asset Retirement Obligations", were recently issued. SFAS No. 140,
141, 142, and 143 have no current applicability to the Company or their
effect on the financial statements would not have been significant.
Restatement The financial statements have been restated for all
periods presented to reflect a 248.399 for 1 reverse stock split on April 23,
1997 and a 5 for 1 forward stock split on December 9, 1988.
FIRST DELTAVISION, INC.
[A Development Stage Company]
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Continued]
Reclassification - The financial statements for years prior to June
30, 2001 have been reclassified to conform with the headings and a
classifications used in the June 30, 2001 financial statements.
NOTE 2 COMMON STOCK
The Company issued 22,863 shares of stock upon incorporation for
$57,576.
During the year ended June 30, 1989 the Company issued 24,160 shares of
common stock for $1,200.
During 1996, the Company issued 152,977 shares of its previously
authorized but unissued common stock in lieu of cash for consulting fees
valued at $38,000 (or $.25 per share). This issuance resulted in a change in
control of the Company.
During the year ended June 30, 1998, the Company issued 35,500 shares
of common stock for services rendered. Total proceeds amounted to $1,255
(or $.04 per share). The Company previously reported the issuance as
35,000 shares of common stock. The financial statements have been restated
for the years ended June 30, 1999 and 1998 to reflect the issuance of an
additional 500 shares of common stock related to services previously rendered.
Compensation Agreement In January 2000, the board of directors
approved a compensation agreement that included the issuance of a total of
100,000 shares of common stock to two shareholders, 50,000 to each, for
services rendered which were valued at $1,000. The shares were issued in
August 2000 for $.01 per share.
Stock Split On December 9, 1988 the Company effected a 5 for 1
forward stock split. On April 23, 1997 the Company effected a 248.399 for 1
reverse stock split. The financial statements for all periods
presented have been restated to reflect these stock splits.
NOTE 3 - RELATED PARTY TRANSACTIONS
Management Compensation During the years ended June 30, 2001and 2000,
the Company did not pay any cash compensation to its officers and directors.
Stock Compensation During the year ended June 30, 2000, the Company
approved the issuance of 100,000 shares of common stock for legal and
professional services rendered pursuant to a compensation agreement [See
Note 2]. The services rendered were valued at $1,000 ( or $.01 per share).
The shares were issued in August 2000.
Office Space - The Company has not had a need to rent office space. An
officer/shareholder of the Company is allowing the Company to use his home
as a mailing address, as needed, at no expense to the Company.
Expenses Paid The Company's president has made advances to the
Company to pay current costs. These advances total $23,667 at June 30, 2001,
bear no interest and are due to the President when funds become available.
Accounts Payable A shareholder of the Company has provided legal
services for the Company. At June 30, 2001, the account payable to the
related party is $32,678. This amount bears no interest and is due to the
shareholder when funds become available. Of this amount, $24,638 was
reclassified from accounts payable when the Attorney became a related
party during the year ended June 30, 2001.
FIRST DELTAVISION, INC.
[A Development Stage Company]
NOTES TO FINANCIAL STATEMENTS
NOTE 4 - INCOME TAXES
The Company accounts for income taxes in accordance with Statement of
Financial Accounting Standards No. 109 "Accounting for Income Taxes" which
requires the liability approach for the effect of income taxes.
The Company has available at June 30, 2001, unused operating loss
carryforwards of approximately $96,000, which may be applied against future
taxable income and which expire in various years through 2020. If certain
substantial changes in the Company's ownership should occur, there could be
an annual limitation on the amount of net operating loss carryforward, which
can be utilized. The amount of and ultimate realization of the benefits from
the operating loss carryforwards for income tax purposes is dependent, in
part, upon the tax laws in effect, the future earnings of the Company and
other future events, the effects of which cannot be determined. Because of
the uncertainty surrounding the realization of the loss carryforwards the
Company has established a valuation allowance equal to the tax effect of the
loss carryforwards (approximately $33,000) at June 30, 2001 and, therefore, no
deferred tax asset has been recognized for the loss carryforwards. The change
in the valuation allowance is approximately $6,000 for the year ended June 30,
2001.
NOTE 5 GOING CONCERN
The accompanying financial statements have been prepared in conformity
with generally accepted accounting principles, which contemplate continuation
of the Company as a going concern. However, the Company has no on-going
operations and has incurred losses since its inception. Further, the Company
has current liabilities in excess of assets and has no working capital to pay
its expenses. These factors raise substantial doubt about the ability of the
Company to continue as a going concern. In this regard, management is
proposing to raise any necessary additional funds not provided by operations
through loans or through sales of its common stock or through a possible
business combination with another company. There is no assurance that the
Company will be successful in raising this additional capital or achieving
profitable operations. The financial statements do not include any
adjustments that might result from the outcome of these uncertainties.
FIRST DELTAVISION, INC.
[A Development Stage Company]
NOTES TO FINANCIAL STATEMENTS
NOTE 6 LOSS PER SHARE
The following data show the amounts used in computing income (loss) per
share and the effect on income and the weighted average number of shares of
dilutive potential common stock for the years ended June 30, 2001 and 2000
and for the period from inception on July 31, 1984 through June 30, 2001:
From Inception
For the Years Ended on July 31,
June 30, 1984, Through
_____________________ June 30,
2001 2000 2001
__________ __________ ____________
Loss from continuing operations
available to common stockholders
(numerator) $ (17,244) $ (13,044) $ (159,456)
__________ __________ ____________
Weighted average number of
common shares outstanding
used in earnings per share
during the period (denominator) 322,623 235,500 102,997
__________ __________ ____________
Dilutive earnings per share was not presented, as the Company had no
common equivalent shares for all periods presented that would effect the
computation of diluted earnings per share.