ATLANTIC CENTRAL ENTERPRISES, LTD.
Hamilton, Bermuda
TERM SHEET BETWEEN
WSM CONSULTANTS, LTD. (WSM)
AND
THE ATLANTIC CENTRAL ENTERPRISES, LTD. (ACE)
(the parties)
1. Ace will form a company to be called xxx.xxx Ltd. (Bermuda) (x.xxx)
which will be 100% owned by ACE.
2. x.xxx will agree to fund WSM for the following amounts.
(i) $15,000 in the month of August, 1997
and
(ii) The lower of (a) or (b) below:
(a) A maximum of $15,000 per month for 4 months, September 1997 to
December 1997
or
(b) the cash flow shortfall from operations for September, October,
November and December.
(iii) x.xxx will have the right to continue to fund WSM for the six month
period January 1 through June 30, 1998 on the same basis as 2(ii) above.
X.xxx will give WSM notice by 11/30/97 if it is going to exercise this
option. The provisions of item 7 below concerning the non-cancellable
right of x.xxx to force a merger of WSM into x.xxx will be extended
through 6/30/98 under this scenario.
3. The investment will be witnessed by 10% secured note in WSM and will be
collaterallized by 100% of all assets, current and future, and 100% of
the stock position of WSM owned by Xxxxxx Xxxxxxx (WS), the major
shareholder of WSM.
4. The notes will be payable in one year in amounts equal to the funding
plus 10% due on the 12 month anniversary of each monthly funding.
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48 Par La Ville, Suite 615, Xxxxxxxx XX 11, Bermuda
5. x.xxx will receive 300,000 warrants to acquire WSM Consultants, Ltd.
shares exercisable at .25 on July 2, 1998 or any date whether pre or
post 7/2/98 if a merger has been consummated under the provisions of
items 7 or 8 below then exerciseable simultaneously with the merger.
After July 2 and assuming no merger exercisable at 50 cents a share. The
exercise period at 50 cents will extend through 6/30/2000.
The 300,000 warrants will have an antidilution clause which will protect
x.xxx against dilution for the period, i.e., number of warrants and
exercise price will be adjusted by dividing $75,000 by the lowest price
that shares are sold for, or issued for in lieu of services or options
granted or warrants issued and with the quotient increasing the number
of warrants issued to x.xxx. The exercise price will then be adjusted to
that price, if lower.
6. x.xxx will own and maintain all equipment which it acquires and places
on the premises of WSM operations and will have the right to remove the
same at their discretion.
7. x.xxx will have the non-cancellable right until January 31, 1998 to
request and cause WSM to trade all of its net assets and operations
(exclusive of any personal or related party liabilities due to current
WSM principals) for 25% of the x.xxx equity if x.xxx and/or ACE has
caused at least $750,000 of new funding including the amounts funded in
item 3 to be infused into WSM and/or x.xxx on a combined basis. If the
option of x.xxx as outlined in 2(iii) above is exercised, the provisions
of item 7 will be extended through 6/30/1998.
8. Conversely, WSM will have the non-cancellable right until January 31,
1998 to trade all of its net assets and operations (exclusive of any
personal liabilities due to current WSM principals) which right will not
be contingent upon performance criteria. The right of WSM will be
extended through 7/31/98 if x.xxx exercises its option as outlined in
2(iii).
9. Xxxxxx Xxxxxxx and Xxx Xxxxxx will take no salary for either WSM or
x.xxx except out of profits of these operations or after full funding
and/or merger as herein described.
10. WSM and x.xxx will perform all intercompany work for each other using
existing personnel at no additional cost. X.xxx will fund on a current
basis the additional personnel necessary to create new business acquired
by x.xxx and pay WSM 20% over that cost. The definition of cost will be
negotiated on a project by project basis. The intent of the parties is
for cost to represent actual out of pocket expenses.
11. Upon the merger of WSM and x.xxx, x.xxx will give to WSM an option to
acquire 300,000 shares of the newly merged company for $75,000. The
option will have an exercise period through 6/30/2000.
12. WSM has agreed that it would issue an option to X. Xxxxxx for 101,600
shares of its common stock exercisable $101.60 through 6/30/2000.
X.xxx has agreed that it will issue an option to X. Xxxxxx for 80,000
shares of its common stock exercisable at 25 cents per share through
6/30/2000.
Both options set will be issued or granted only if a merger of WSM and
x.xxx is consummated.
13. The transaction herein contemplated will cause the following
capitalizations to result for WSM and x.xxx.
NAME WSM XXX.xxx ADJUSTMENTS %
--------- -------- --------- -----
Xxxxxx Xxxxxxx 1,518,400 +300,000 1,818,400 22.3
Employee and Investors 80,500 80,500 1.0
---------
1,580,500
Option to Tobias 101,600 +80,000 181,600 2.5
---------
1,700,500
Option to XXX.xxx 300,000 (300,000)
---------
2,000,000 2,000,000
Shares of XXX.xxx
owned by ACE 6,000,000 (80,000) 5,920,000 74%
--------- -------- --------- ----
8,000,000 0 8,000,000 100%
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The conditions herein presented represent the understanding of the parties.
Any changes shall be made and acknowledged by the parties in writing.
Xxxxxx and accepted Xxxxxx and accepted
/s/ Xxxxxx Xxxxxxx /s/ Xxxxxxx X. Xxxxxx
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WSM, Consultants Atlantic Central Enterprises, Ltd.
Xxxxxx Xxxxxxx Xxxxxxx X. Xxxxxx
CEO CEO
8/18/97 8/18/97
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Date Date
