-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, LGx0oyf72OFxeCwWUmCJgIiu0pSCUb61QZ/jzUDVdGCZjucNTjwFWBi7NoHX5wIE eZpGNvwlSf/+7BYk/3lMkw== 0001005477-99-001866.txt : 19990419 0001005477-99-001866.hdr.sgml : 19990419 ACCESSION NUMBER: 0001005477-99-001866 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 6 CONFORMED PERIOD OF REPORT: 19990402 ITEM INFORMATION: ITEM INFORMATION: ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 19990416 FILER: COMPANY DATA: COMPANY CONFORMED NAME: D-VINE LTD CENTRAL INDEX KEY: 0000783454 STANDARD INDUSTRIAL CLASSIFICATION: BLANK CHECKS [6770] IRS NUMBER: 222732163 STATE OF INCORPORATION: DE FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 033-01599 FILM NUMBER: 99596217 BUSINESS ADDRESS: STREET 1: 712 FIFTH AVENUE STREET 2: 7TH FLOOR CITY: NEW YORK STATE: NY ZIP: 10019 BUSINESS PHONE: 8015219020 MAIL ADDRESS: STREET 1: 712 FIFTH AVENUE STREET 2: 7TH FLOOR CITY: NEW YORK STATE: NY ZIP: 10019 FORMER COMPANY: FORMER CONFORMED NAME: TRANS WEST INC DATE OF NAME CHANGE: 19960522 8-K 1 FORM 8-K SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report (Date of earliest event reported): April 2, 1999 MONSTERDAATA.COM, INC. ---------------------- (Exact Name of Registrant as Specified in Charter) Delaware 033-01599 22-2732163 - -------- --------- ---------- (State or Other (Commission (IRS Employer Jurisdiction of File No.) Identification No.) Incorporation) 115 Stevens Avenue, Valhalla, NY 10595 -------------------------------------- (Address of Principal Executive Offices) Registrant's telephone number, including area code: (914) 747-9100 ------------------------------------------------------------------ D-Vine, Ltd., 712 Fifth Avenue, Fifth Floor, New York, NY 10019 --------------------------------------------------------------- (Former Name or Former Address, if Changed Since Last Report) ITEM 1. CHANGES IN CONTROL OF REGISTRANT. On March 30, 1999, prior to the exercise of the warrant described in Item 5 below (the "Warrant"), and prior to the acquisition described in Item 2 below (the "Acquisition"), D-Vine Investment Partners, a partnership between Edward J. Tobin and Christopher F. Brown, owned 19,500 shares of Registrant's common stock, representing approximately 79.2% of the total issued and outstanding shares of Registrant's common stock. Accordingly, D-Vine Investment partners controlled the Registrant. In connection with the exercise of the Warrant, Registrant issued an aggregate of 1,000,000 shares of its common stock to the Warrant holder and its designees. Separately, in connection with the Acquisition, Registrant issued an aggregate of 6,000,000 shares of its common stock on April 2, 1999 to former shareholders of Taconic Data Corp., a New York corporation ("Taconic"), in exchange for the shares of stock such shareholders then held in Taconic. None of the recipients of Registrant's shares in connection with the exercise of the Warrant or in connection with the Acquisition owns 10% or more of the Registrant's total issued and outstanding shares of common stock, except for Mitchell Deutsch, who owns 3,079,054 shares of Registrant's common stock (approximately 44.0% of the total outstanding) and James Garfinkel, who owns 1,315,496 shares of Registrant's common stock (approximately 18.8% of the total outstanding). As a result of the exercise of the Warrant and the completion of the Acquisition, D-Vine Investment Partner's percentage ownership of the Registrant was reduced to less than 1% of the total issued and outstanding shares of Registrant's common stock, and D-Vine Investment Partners therefore no longer controls Registrant. See Item 2 below. In connection with the Acquisition, the following changes occurred in the directors and officers of Registrant: Edward J. Tobin, Christopher F. Brown and Thomas Tuttle resigned as directors, Edward J. Tobin resigned as Chief Executive Officer and President, Steven A. Saide resigned as Secretary, Mitchell Deutsch, James Garfinkel and Thomas Ingegneri were elected directors, Mr. Deutsch was elected Chief Executive Officer and President and Mr. Garfinkel was elected Vice-President, Secretary and Treasurer. ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS. On April 2, 1999, pursuant to an Acquisition Agreement and Plan of Reorganization dated as of March 26, 1999, between Taconic, Registrant and certain shareholders of Taconic and Registrant (the "Acquisition Agreement"), Registrant acquired 99.2% of the issued and outstanding capital stock of Taconic, a privately-held corporation, in exchange for the issuance of an aggregate of 6,000,000 shares of Registrant's common stock. Taconic, which was formed in 1992, provides database information services directly to consumers, real estate professionals and other businesses over the Internet and through member organizations and industry trade groups. Taconic provides an integrated data service comprising real estate transaction due diligence, risk assessment and valuation information. In addition to business-to-business data services, Taconic's products also include consumer information such as neighborhood profiles containing school, town and community, crime, culture, affordability, -2- demographic and lifestyle characteristic data for every community in the United States (by zip code). ITEM 5. OTHER EVENTS On April 5, 1999, Registrant filed a Certificate of Amendment to its Certificate of Incorporation, changing its corporate name from "D-Vine, Ltd." to "MonsterDaata.com, Inc." On August 1, 1997, Registrant issued to Ocean Strategic Holdings Limited, a Guernsey corporation ("OSHL"), a warrant to purchase 1,000,000 shares of its common stock for cash consideration of $50,000. The exercise price of the Warrant, which was originally $.01 per share, was increased to $1.00 per share in connection with the issuance of a new warrant to OSHL described below. On April 2, 1999, OSHL exercised its rights under the Warrant to purchase 1,000,000 shares of Registrant's common stock for $1,000,000. The Warrant and the shares issued upon exercise thereof were issued pursuant to the provisions of Regulation S. On March 31, 1999, in consideration for the modification of the exercise price of the Warrant (from $0.01 per share to $1.00 per share), Registrant issued to OSHL a warrant (the "New Warrant") to purchase 500,000 shares of its common stock at an exercise price of $3.00 per share. The New Warrant expires on March 31, 2004, and is not exercisable until March 31, 2000. The New Warrant was issued pursuant to the provisions of Regulation S. ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS (a) FINANCIAL STATEMENTS. It is impracticable to provide the required financial statements concurrently with the filing of this report. Registrant expects to file the required financial statements as soon as practicable, but in no event later than sixty (60) days after the due date of this Current Report on Form 8-K. In the interim, unaudited financial statements of Taconic as of December 31, 1997 and December 31, 1996, and for the periods then ended, are attached as Exhibit (c)(3). (b) PRO-FORMA FINANCIAL INFORMATION. It is impracticable to provide the required pro-forma financial information concurrently with the filing of this report. Registrant expects to file the required pro-forma financial information as soon as practicable, but in no event later than sixty (60) days after the due date of this Current Report on Form 8-K. -3- (c) EXHIBITS. (c)(1) - Acquisition Agreement (c)(2) - New Warrant (c)(3) - 1997 Unaudited Financial Statement of Taconic (c)(4) - Press Release (c)(5) - Risk Factors -4- SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. MONSTERDAATA.COM, INC. By: /s/ James Garfinkel ---------------------------------------- James Garfinkel Vice-President, Secretary and Treasurer Date: April 15, 1999 -5- EX-99.(C)(1) 2 ACQUISITION AGREEMENT AND PLAN OF REORGANIZATION Exhibit (c)(1) ACQUISITION AGREEMENT AND PLAN OF REORGANIZATION THIS ACQUISITION AGREEMENT AND PLAN OF REORGANIZATION, (hereinafter referred to as this "Agreement") is made and entered into this 26th day of March by and between D-VINE, LTD., a Delaware corporation (hereinafter referred to as "DVL"), the stockholders of DVL listed on the signature page (collectively, the "Principal Stockholders"), TACONIC DATA CORP., a New York corporation (hereinafter referred to as "TDC"), and the stockholders of TDC listed on the signature page (collectively, the "TDC Sellers"). RECITALS WHEREAS, DVL desires to acquire the majority of all the issued and outstanding shares of TDL common stock, $.01 par value in exchange solely for Six Million (6,000,000) shares of the authorized but unissued DVL common stock, $.01 par value per share (post-split as per Section 1.3 below), pursuant to the terms and conditions set forth herein (the "Acquisition"), and whereby the transaction shall qualify as a tax free exchange pursuant to Section 351 of the Internal Revenue Code ("IRC"); WHEREAS, in furtherance of such Acquisition, the Board of Directors of DVL approved the Acquisition, upon the terms and subject to the conditions set forth herein and in accordance with the applicable provisions of the Delaware General Corporation Law ("DGCL"). WHEREAS, the TDC Sellers desire to exchange all of their share ownership interest in TDC for shares of DVL common stock, in the respective amounts set forth in Schedule 1.2 hereto, as a tax free exchange pursuant to Section 351 of the IRC; WHEREAS, the parties hereto desire to reorganize, pursuant to Section 368(a)(1)(B) of the IRC, the management and operations of DVL as set forth herein (in order to more closely conform the management and operations of DVL to the current management and operations of TDC). NOW, THEREFORE, in consideration of the premises and mutual representations, warranties and covenants herein contained, the parties hereby agree as follows: ARTICLE I THE ACQUISITION SECTION 1.1 (a) Acquisition and Plan of Reorganization. The parties agree that DVL shall acquire 99.2% of the issued and outstanding shares of TDC common stock from the TDC Sellers, in exchange for Six Million (6,000,000) shares of authorized but previously unissued DVL common stock, par value $.01 per share (post-split as per Section 1.3 below). It is also agreed to by the parties hereto that by acquiring the majority of the shares of TDC common stock, DVL will acquire all rights, titles and interest to all assets and property presently owned by TDC. Said assets and property may be subject to certain interests, liens and/or encumbrances. The parties hereby further agree that at the Closing, hereinafter defined, TDC shall become a majority-owned subsidiary of DVL. As soon as practicable after the Closing, DVL"s corporate name will be changed from "D-Vine, Ltd." to "MonsterDaata.com, Inc." As promptly as practicable after the Closing, the necessary steps be shall be taken in order to reflect the relocation of DVL"s principal place of business to TDC's current principal place of business and the management and operations of DVL will be organized to become engaged in the current business endeavors of TDC. SECTION 1.2 Issuance of Shares. (a) Upon the Closing of the Agreement, DVL shall cause to be issued and delivered to the TDC Sellers or their designees, stock certificates representing an aggregate of Six Million (6,000,000) shares (the "Acquisition Shares") of DVL common Stock (post-split as per Section 1.3 below) in the amounts set forth in Schedule 1.2 hereto. (b) The Acquisition Shares to be issued hereunder are deemed "restricted securities" as defined by Rule 144 promulgated by the Securities and Exchange Commission (the "Commission") under the Securities Act of 1933, as amended (the "Securities Act"), and the recipients shall represent that they are acquiring the Acquisition Shares for investment purposes only and without the intent to make a further distribution of the Acquisition Shares. All Acquisition Shares to be issued under the terms of this Agreement shall be issued pursuant to exemptions from the registration requirements of the Securities Act and the rules and regulations promulgated thereunder. Certificates representing the restricted Acquisition Shares shall bear the following, or similar legend: THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE OFFERED FOR SALE, SOLD OR OTHERWISE TRANSFERRED EXCEPT IN COMPLIANCE WITH THE REGISTRATION PROVISIONS OF SUCH ACT OR PURSUANT TO AN EXEMPTION FROM SUCH REGISTRATION PROVISIONS, THE AVAILABILITY OF WHICH IS TO BE ESTABLISHED TO THE SATISFACTION OF THE COMPANY. SECTION 1.3 Consent of Shareholders. In anticipation of this Agreement and as a condition precedent to the consummation of the Acquisition, DVL (i) has, concurrently with the execution of this Agreement, obtained the written consent of the majority of its shareholders in accordance with the DGCL and with the Securities Act and all other applicable federal securities laws and (ii) has heretofore taken all necessary and requisite action to obtain the consent of its Directors in order to transact the following business: (i) To amend the Certificate of Incorporation of DVL to change the name of DVL to "MonsterDaata.com, Inc.", in order to more accurately describe the new business of the Company (which amendment will be filed promptly after the Closing); and 2 (ii) To amend the Certificate of Incorporation of DVL to reorganize the share capital of DVL whereby the then issued and outstanding shares of DVL common stock will be reverse split on a one (1) share for one thousand shares (1,000) share basis (which amendment will be filed promptly after the date hereof and prior to the Closing). In addition, immediately after the filing referred to in clause (ii) above, DVL will accept the resignations of Thomas Tuttle and Christopher F. Brown as directors of DVL, and will report such resignations, and the items described in clause (ii) above, on a duly filed Form 8-K. As required pursuant to the DGCL, DVL will also promptly (and prior to the Closing Date) notify all shareholders of the consent to the items referred to in clauses (i) and (ii) above given by less than unanimous consent of stockholders. SECTION 1.4 Closing. Subject to the satisfaction or waiver, if permissible, of the conditions set forth in Articles VII, VIII and IX, the closing of the transactions contemplated by this Agreement (the "Closing") shall take place (i) at the offices of Kaplan Gottbetter & Levenson, LLP, as promptly as practicable (and in any event within two business days) after satisfaction or waiver, if permissible, of the conditions set forth in Articles VII, VIII and IX or (ii) at such other time, date or place as TDC, the TDC Sellers and DVL may mutually agree (the date of either (i) or (ii) shall be referred to hereinafter as the "Closing Date"). At the Closing: (a) The TDC Sellers shall deliver to DVL all stock certificates representing 99.2% of the issued and outstanding shares of TDC common stock, so as to make DVL the majority holder thereof, free and clear of all claims and encumbrances; (b) DVL shall deliver to those persons listed in Schedule 1.2 stock certificates representing an aggregate of 6,000,000 shares of DVL common stock, which shall all bear the restrictive legend as set forth in Section 1.2(b) above; ARTICLE II REPRESENTATIONS AND WARRANTIES OF DVL As an inducement for TDC and the TDC Sellers to enter into this Agreement, DVL and each Principal Stockholder hereby makes, jointly and severally as of the date hereof and as of the Closing Date, the following representations and warranties: SECTION 2.1 Organization of DVL. (a) DVL is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware, is duly qualified and in good standing as a foreign corporation in every jurisdiction in which such qualification is necessary, and has the corporate power and authority to own its properties and assets and to transact the business in which it is engaged. There are no corporations or other entities with respect to which (i) DVL owns any of the outstanding stock or other interests, or (ii) DVL may be deemed to be in control. DVL and the Principal Stockholders have all requisite power and authority to execute and deliver this Agreement and to consummate the transactions contemplated hereby and thereby, and have taken all corporate or other action necessary to 3 consummate the transactions contemplated hereby and thereby and to perform their obligations hereunder and thereunder. This Agreement upon its execution and delivery, is the legal, valid and binding obligation of DVL and the Principal Stockholders, enforceable against DVL and the Principal Stockholders in accordance with its terms except to the extent that such enforcement may be limited by applicable bankruptcy, insolvency and other similar laws affecting creditors' rights generally. SECTION 2.2 Capitalization of DVL. (a) The authorized capital stock of DVL on the date hereof consists of Fifty Million (50,000,000) shares of common stock, par value $.01 per share (the "Common Stock"), of which Twenty-Four Million Six Hundred Seven Thousand Seven Hundred Thirty-one (24,607,731) shares of Common Stock are issued and outstanding, and Ten Million (10,000,000) shares of preferred stock, par value $.01 per share, with such rights, privileges, preferences and other terms and conditions as shall be approved by DVL's Board of Directors pursuant to a duly adopted resolution thereof ("Preferred Stock"), of which no shares of Preferred Stock are issued and outstanding. (b) All shares of Common Stock currently issued and outstanding have been duly authorized and validly issued and are fully paid and non-assessable, and have been issued in compliance with any and all applicable laws, contractual requirements and other legal requirements (including federal and state securities laws or pursuant to appropriate exemptions therefrom). There are no options, warrants, rights, calls, commitments or agreements of any character obligating DVL to issue any shares of its capital stock or other securities or any security representing the right to purchase or otherwise receive any such stock or other securities except (i) the warrant (the "Warrant") for 1,000,000 shares of Common Stock, dated August 1, 1997, issued to Ocean Strategic Holdings, Limited, a Guernsey corporation (the "Warrant Holder") and (ii) the warrant (the "Additional Warrant") for 500,000 shares of Common Stock, dated March 31, 1999, issued to the Warrant Holder. The Acquisition Shares, when issued, will be duly authorized, validly issued, fully paid and non-assessable. (c) After giving effect to the amendment to the Certificate of Incorporation described in Section 1.3(ii), the authorized capital stock of DVL will consists of Fifty Million (50,000,000) shares of Common Stock and Ten Million (10,000,000) shares of Preferred Stock, of which Twenty-Four Thousand Six Hundred Eighty Eight (24,688) shares of Common Stock and no shares of Preferred Stock will be issued and outstanding. (d) Prior to the date hereof, or roughly concurrent with the execution of this Agreement, DVL and the Warrant Holder amended the Warrant to provide for (i) the purchase thereunder of 1,000,000 common shares of DVL for a purchase price of $1.00 per share and (ii) the issuance of the Additional Warrant. DVL has informed TDC that the New Warrant Holders will exercise the Warrant and, prior to the Closing Date, DVL will receive $1,000,000 in proceeds pursuant to such exercise (free and clear of any fees, commissions, deductions or expenses). The exercise of the Warrant and the issuance of 1,000,000 shares thereunder will each be made in compliance with any and all applicable laws, contractual requirements and other legal requirements (including federal and state securities laws or pursuant to appropriate exemptions therefrom). The amendment and exercise of the Warrant will be duly reported by DVL on Form 8-K prior to the Closing. 4 (e) Other than the transactions contemplated by this Agreement, there is no outstanding vote, plan, pending proposal or right of any person to cause any redemption of Common Stock or the merger or consolidation of DVL with or into any other entity. DVL is not under any obligation under any agreement to register any of its securities under federal or state securities laws. (f) There are no agreements among stockholders of DVL, or otherwise, voting trusts, proxies or other agreements or understanding of any character, whether written or oral, with respect to or concerning the purchase, sale, transfer or voting of the Common Stock or any other security of DVL. (g) None of DVL or any Principal Stockholders have any legal obligations, absolute or contingent, to any other Person to sell any assets or to sell any capital stock or any other security of DVL or to effect any merger, consolidation or other reorganization of DVL or to enter into any agreement with respect thereto, except pursuant to this Agreement. SECTION 2.3 Charter Documents. Certified copies of the DVL Articles of Incorporation and By-Laws, as amended to date, have been or will be delivered to TDC prior to the Closing and are or will be true, correct and complete copies thereof. SECTION 2.4 Corporate Documents. The DVL shareholders' list previously delivered to TDC and DVL's corporate minute books are complete and accurate as of the date hereof and such corporate minute books contain the recorded minutes of all corporate meetings or the written consents of shareholders and directors through the date hereof. SECTION 2.5 Financial Statements. (a) DVL's audited financial statements (the "DVL Financial Statements") for the years ended September 31, 1997 and 1998, copies of which have been delivered to TDC, are true and complete in all material respects, having been prepared in accordance with generally accepted accounting principles ("GAAP") applied on a consistent basis for the period covered by such statements, and fairly present, in accordance with GAAP, the financial condition of DVL, and results of its operations for the periods covered thereby. DVL maintains a system of internal accounting controls sufficient to provide reasonable assurance that (i) transactions are executed with management"s authorizations, (ii) transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP and to maintain accountability for assets, (iii) access to assets is permitted only in accordance with management"s authorizations and (iv) the recorded accountability for assets is compared with existing assets at reasonable intervals and appropriate action is taken with respect to any difference. Neither DVL nor any of its subsidiaries has engaged in any transaction, maintained any bank account or used any corporate funds except for transactions, bank accounts or funds which have been and are reflected in the normally maintained books and records. Except as otherwise disclosed to TDC in writing and as set forth herein, there has been no material adverse change in the business operations, assets, properties, prospects or condition (financial or otherwise) of DVL taken as a whole from that reflected in the financial statements referred to in this Section 2.5. 5 (b) SEC Documents. DVL has furnished TDC with a true and complete copy of each report and schedule filed by DVL with the SEC since September 25, 1996 (as such documents have since the time of their filing been amended, the "DVL SEC Documents"), and since that date DVL has filed with the SEC all documents required to be filed pursuant to Section 15(d) of the Exchange Act of 1934, as amended (the "Exchange Act"). As of their respective dates, the DVL SEC Documents complied in all material respects with the requirements of the Securities Act, or the Exchange Act, as the case may be, and the rules and regulations of the SEC thereunder applicable to such DVL SEC Documents, and none of the DVL SEC Documents contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. The financial statements of DVL included in the DVL SEC Documents (i) comply as to form in all material respects with applicable accounting requirements and with the published rules and regulations of the SEC with respect thereto, (ii) are accurate, complete and in accordance with the books and records of DVL, (iii) have been prepared in accordance with GAAP applied on a consistent basis during the periods involved (except as may be indicated in the notes thereto or, in the case of the unaudited statements, as permitted by Form 10-QSB of the SEC) and (iv) fairly present (subject, in the case of the unaudited statements, to normal, recurring audit adjustments) the consolidated financial position of DVL as at the dates thereof and the consolidated results of its operations and cash flows for the periods then ended. SECTION 2.6 Absence of Certain Changes or Events. Since the date of the latest DVL financial statement and except as disclosed otherwise herein, DVL has not (i) issued or sold any promissory note, stock, bond, option or other security of which it was an issuer or other obligor, (ii) discharged or satisfied any lien or encumbrance or paid any obligation or liability, absolute or contingent, direct or indirect, (iii) incurred or suffered to be incurred any liability or obligation whatsoever, (iv) caused or permitted any lien, encumbrance or security interest to be created or arise on or in any of its properties or assets, (v) declared or made any dividend, payment or distribution to stockholders or purchased or redeemed or agreed to purchase or redeem any shares of its capital stock, (vi) reclassified its shares of capital stock, (vii) amended its Certificate of Incorporation or Bylaws, (viii) acquired any equity interest in any other Person, or (ix) entered into any agreement or transaction except in connection with the execution and performance of this Agreement. DVL has not entered into any agreement to do any of the foregoing actions described in this Section 2.6. SECTION 2.7 Assets and Liabilities. DVL has good and marketable title to all of its assets and property, free and clear of any and all liens, claims and encumbrances. As of the date hereof, DVL does not have any debts, liabilities or obligations of any nature whatsoever, whether accrued, absolute, contingent, or otherwise, whether due or to become due. SECTION 2.8 Tax Returns and Payments. All of DVL's tax returns (federal, state, city, county or foreign) which are required by law to be filed on or before the date of this Agreement, have been duly filed and are complete and accurate in all respects. DVL has paid all taxes due on said returns, any assessments made against DVL and all other taxes, fees and similar charges imposed on DVL by any governmental authority (other than those, the amount or validity of which is being contested in good faith by appropriate proceedings). No tax liens have 6 been filed and no claims are being assessed with respect to any such taxes, fees or other similar charges. DVL knows of (i) no other tax returns or reports which are required to be filed which have not been so filed and (ii) no unpaid assessment for additional taxes for any fiscal period or any basis thereof. SECTION 2.9 Required Authorizations. There have been or will be timely filed, given, obtained or taken, all applications, notices, consents, approvals, orders, registrations, qualifications waivers or other actions of any kind required by virtue of execution and delivery of this Agreement by DVL or the consummation by it of the transactions contemplated hereby. Without limiting the generality of the foregoing, all necessary director and shareholder actions and consents have been obtained for the transactions described in Sections 1.3 and 2.2, and all notices to shareholders of consents given by stockholders to such transactions described in Section 1.3 by less than unanimous consent have been sent in accordance with the DGCL. SECTION 2.10 Compliance with Law and Government Regulations. DVL is in compliance with and is not in violation of applicable federal, state, local or foreign statutes, laws or regulations (including without limitation, any applicable building, zoning or other law, ordinance or regulation) affecting DVL, its properties or the operation of its businesses. DVL is not subject to any order, decree, judgment or other sanction of any court, administrative agency or other tribunal. SECTION 2.11 Litigation. Except as set forth on Schedule 2.11, there is no litigation, arbitration, proceeding or investigation pending, threatened or anticipated to which DVL is a party or which may result in any material change in the business or condition, financial or otherwise, of DVL or in any of its properties or assets, or which might result in any liability on the part of DVL, or which questions the validity of this Agreement or of any action taken or to be taken pursuant to or in connection with the provisions of this Agreement, and to the best knowledge of DVL, there is no basis for any such litigation, arbitration, proceeding or investigation. There are presently no outstanding judgments, decrees or orders of any court or any governmental or administrative agency against or affecting DVL or any of its assets that is not disclosed herein. Schedule 2.11 contains a complete and accurate description of all claims, suits, litigations, proceedings, investigations, disputes, writs, injunctions, judgments and decrees since December 31, 1996 to which DVL has been a party. SECTION 2.12 Governmental Consent. No consent, approval, authorization or order of, or registration, qualification, designation, declaration or filing with, any governmental authority on the part of DVL is required in connection with the execution and delivery of this Agreement or the carrying out of any transactions contemplated hereby with the exception of the necessary corporate filings with the State of Delaware relating to the transactions described in Section 1.3 and the filings with the SEC described elsewhere herein. 7 SECTION 2.13 No Disqualifying Orders. Neither DVL, the Principal Stockholders nor any of its affiliates, directors, officers or principals is subject to any disqualifying order under the "Bad Boy" provisions of the federal or any state"s securities law. As used herein, "Bad Boy" provisions include Rule 262 of Regulation A, Rule 507 of Regulation D and other similar disqualifying provisions of federal and state securities laws. SECTION 2.14 Business. DVL (i) does not own or lease any real property or personal property, (ii) is not a party to any contract, (iii) has no employees or anyone who acts as an employee, (iv) has only the bank accounts listed on Schedule 2.14 hereto and (v) is not required to have any Permits. SECTION 2.15 Authority. The Board of Directors of DVL and the general partner of the Principal Stockholders have approved this Agreement and duly authorized the execution hereof. DVL and the Principal Stockholders have full power, authority and legal right to enter into this Agreement and to consummate the transactions contemplated hereby, and all action necessary to authorize the execution and delivery of this Agreement and the consummation of the transactions contemplated hereby has been duly and validly taken. The execution and delivery of this Agreement, the consummation of the transactions contemplated hereby and compliance by DVL and the Principal Stockholders with the provisions hereof will not (a) conflict with or result in a breach of any provisions of, or constitute a default (or an event which, with notice or lapse of time or both, would constitute a default) under, or result in the creation of any lien, security interest, charge or encumbrance upon any of the properties or assets of DVL under, any of the terms, conditions or provisions of the Certificate of Incorporation of DVL, the partnership agreement of the Principal Stockholders, or any note, bond, mortgage, indenture, license, agreement or any instrument or obligation to which DVL and the Principal Stockholders are a party or by which they are bound; or (b) violate any order, writ, injunction, decree, law, statute, rule or regulation applicable to DVL or the Principal Stockholders or any of their properties or assets. SECTION 2.16 Full Disclosure. None of the representations and warranties made by DVL herein, or in any exhibit, certificate or memorandum furnished or to be furnished by DVL on its behalf pursuant hereto, contains or will contain any untrue statement of material fact, or omits any material fact, the omission of which would be misleading. The information with respect to DVL and TDC which is to be included in any notice to be sent to the shareholders of DVL will not contain any untrue statement of material fact, or omit to state any material fact necessary to make the statement or fact contained herein not misleading. SECTION 2.17 Brokerage. No broker, finder or investment banker is entitled to any brokerage, finder"s or other fee or commission in connection with the Acquisition based upon arrangements made by or on behalf of DVL. SECTION 2.18 Transactions with Affiliates. No director or officer of DVL or any member of his or her immediate family, is a party to any contract or other business arrangement or relationship of any kind with DVL, has an ownership interest in any business, corporate or otherwise, which is a party to, or in any property which is the subject of, business arrangements or relationships of any kind with DVL. 8 ARTICLE III COVENANTS OF DVL AND THE PRINCIPAL STOCKHOLDERS SECTION 3.1 Conduct Prior to the Closing. Between the date hereof and the Closing, other than actions or transactions referred to herein: (a) DVL will not enter into any material agreement, contract or commitment, whether written or oral, or engage in any transaction, without the prior written consent of TDC; (b) DVL will not pay, incur or declare any dividends or distributions with respect to its capital stock or amend its Articles of Incorporation or By-Laws, without the prior written consent of TDC; (c) DVL will not authorize, issue, sell, purchase or redeem any shares of its capital stock or any options or other rights to acquire its capital stock, without the prior written consent of TDC; (d) DVL will comply with all requirements which federal or state law may impose on it with respect to this Agreement and the transactions contemplated hereby, and will promptly cooperate with and furnish written information to TDC in connection with any such requirements imposed upon the parties hereto in connection therewith and will provide TDC with the opportunity to review and approve any mailing or proxy to be delivered to stockholders of DVL; (e) DVL will not incur any indebtedness for money borrowed, or issue or sell any debt securities, incur or suffer to be incurred any liability or obligation of any nature whatsoever, or cause or permit any lien, encumbrance or security interest to be created or arise on or in any of its properties or assets, acquire or dispose of fixed assets change employment terms, enter into any material or long-term contract, guarantee obligations of any third party, settle or discharge any balance sheet receivable for less than its stated amount or enter into any other transaction other than in the regular course of business, except to comply with the terms of this Agreement, without the prior written consent of TDC. (f) DVL will not make any investment of capital nature either buy purchased stock or securities, contribution to capital, property transfer or otherwise, or by the purchase of any property or assets of any other Person. (g) DVL will not enter into any contract whatsoever, including any employment contract or any other compensation arrangement. (h) DVL will not do any other act which would cause representation or warranty of DVL in this Agreement to be or become untrue in any material respect or that is not in the ordinary course of business consistent with past practice. 9 (i) Neither DVL nor any Principal Stockholder shall directly or indirectly (a) solicit any inquiry or proposals or enter into or continue any discussions, negotiation or agreements relating to (i) the sale or exchange of DVL"s capital stock or (ii) the merger of DVL with any Person or (b) provide any assistance or any information to other otherwise cooperate with any Person in connection with any such inquiry, proposal or transaction. (j) DVL shall grant to TDC and its counsel, accountants and other representatives, full access during normal business hours during the period prior to the Closing to all of its respective properties, books, contracts, commitments and records and, during such period, furnish promptly to TDC and such representatives all information relating to DVL as TDC may reasonably request, and shall extend to TDC the opportunity to meet with DVL's accountants and attorneys to discuss the financial condition of DVL; and (k) Except for the transactions contemplated by this Agreement, DVL will conduct its business in the normal course, and shall not sell, pledge or assign any of its assets without the prior written consent of TDC. SECTION 3.2 Affirmative Covenants. Prior to Closing, DVL will do the following: (a) Use its best efforts to accomplish all actions necessary to consummate this Agreement, including satisfaction of all conditions contained in this Agreement; (b) Promptly notify TDC in writing of any material adverse change in the financial condition, business, operations or key personnel of DVL, any threatened material litigation or investigation, any breach of its representations or warranties contained herein, and any material contract, agreement, license or other agreement which, if in effect on the date of this Agreement, should have been included in this Agreement or in an exhibit annexed hereto and made a part hereof; (c) Satisfy all consents of or notices to its shareholders under federal and state securities laws and state corporate law. (d) Obtain written resignations and general releases from its existing officers and directors other than Ed Tobin (who will remain as a director and the President of DVL for 10 days after the Closing) and, concurrent with the Closing, nominate (by action of its sole remaining director) the nominees listed in Section 9.5. (e) Obtain financing from the exercise of all outstanding warrants as contemplated by Section 2.2(c). (f) Reserve, and promptly after the Closing, issue and delivered to TDC or its designees the number of shares of DVL common stock required hereunder. (g) Complete the share reorganization of DVL as contemplated by Section 1.3(ii). 10 (h) Take all other necessary corporate actions to accomplish those items in Section 1.3 hereof and the other items herein that are to be completed promptly or prior to Closing. ARTICLE IV REPRESENTATIONS AND WARRANTIES OF TDC TDC hereby represents, warrants and agrees that: SECTION 4.1 Organization of TDC. TDC is a corporation duly organized, validly existing and in good standing under the laws of the State of New York, is duly qualified or will become duly qualified and in good standing in every jurisdiction in which such qualification is necessary. There are no corporations or other entities with respect to which (i) TDC owns any of the outstanding stock or other interests, or (ii) TDC may be deemed to be in control except as otherwise disclosed in Schedule 4.1 annexed hereto and by this reference made a part hereof. SECTION 4.2 Shareholders. TDC has nineteen (19) shareholders. The 18 TDC Sellers own 3,789,981 of the 3,854,218 issued and outstanding shares of common stock of TDC. All 3,854,218 issued and outstanding shares of common stock were validly issued, and are fully paid and non-assessable. There are no options, warrants, rights, calls, commitments or agreements of any character obligating TDC to issue any additional shares of its common stock except as otherwise disclosed in Schedule 4.2 annexed hereto and by this reference made a part hereof. SECTION 4.3 Charter Documents. Complete and correct copies of the Certificate of Incorporation of TDC, and all amendments thereto, have been or will be delivered to DVL prior to the Closing. SECTION 4.4 Financial Statements, Assets and Liabilities. TDC's audited financial statements (the "TDC Financial Statements") for the years ended December 31, 1996 and 1997, copies of which have been delivered to DVL, are true and complete in all material respects, having been prepared in accordance with GAAP applied on a consistent basis for the period covered by such statements, and fairly present, in accordance with GAAP, the financial condition of TDC, and results of its operations for the periods covered thereby. TDC has good and marketable title to all of its assets and property to be delivered to DVL hereunder free and clear of any and all liens, claims and encumbrances, except as may be otherwise set forth herein and in its financial statements. TDC and each of its Subsidiaries maintains a system of internal accounting controls sufficient to provide reasonable assurance that (i) transactions are executed with management's authorizations, (ii) transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP and to maintain accountability for assets, (iii) access to assets is permitted only in accordance with management's authorizations and (iv) the recorded accountability for assets if compared with existing assets at reasonable intervals and appropriate action is taken with respect to any difference. Neither TDC nor any of its Subsidiaries has engaged in any transaction, maintained any bank account or used any corporate funds except for transactions, bank accounts or funds which have been and are reflected in the normally maintained books and records. 11 SECTION 4.5 Absence of Certain Changes or Events. Since December 31, 1998, except as disclosed otherwise herein, TDC has not (i) issued or sold any promissory note, unit of ownership, bond, option or other security of which it was an issuer or other obligor, (ii) discharged or satisfied any lien or encumbrance or paid any obligation or liability, absolute or contingent, direct or indirect, except in the ordinary course of its business, (iii) incurred or suffered to be incurred any liability or obligation whatsoever, except in the ordinary course of its business, (iv) cause or permitted any lien, encumbrance or security interest to be created or arise on or in any of its properties or assets, (v) declared or made any dividend, payment or distribution to stockholders or purchased or redeemed or agreed to purchase or redeem any stockholder"s ownership rights, or (vi) reclassified its shares of capital stock, or (vii) entered into by agreement or transaction not in the ordinary course of business. SECTION 4.6 Tax Returns and Payments. All of TDC's tax returns (federal, state, city, county or foreign) which are required by law to be filed on or before the date of this Agreement, have been duly filed or extended with the appropriate governmental authority and are complete and accurate in all respects. TDC has paid all taxes to be due on said returns, on any assessments made against TDC and on all other taxes, fees and similar charges imposed on TDC by any governmental authority (other than those, the amount or validity of which is being contested in good faith by appropriate proceedings). No tax liens have been filed and no claims are being assessed with respect to any such taxes, fees or other similar charges. TDC knows of (i) no other tax returns or reports which are required to be filed which have not been so filed and (ii) no unpaid assessment for additional taxes for any fiscal period or any basis thereof. SECTION 4.7 Required Authorizations. There have been or will be timely filed, given, obtained or taken, all applications, notices, consents, approvals, orders, registrations, qualifications waivers or other actions of any kind required by virtue of execution and delivery of this Agreement by TDC or the consummation by it of the transactions contemplated hereby. SECTION 4.8 Compliance with Law and Government Regulations. TDC is, to the best of its knowledge, in compliance with all applicable statutes, regulations, decrees, orders, restrictions, guidelines and standard affecting its properties and operations, imposed by the United States of America or any state to which TDC is subject, the failure to comply with which would, either individually or in the aggregate, have a material adverse effect on the business, finances or prospects of TDC. SECTION 4.9 Litigation. There is no litigation, arbitration, proceeding or investigation pending or threatened to which TDC is a party or which may result in any material change in the business condition, financial or otherwise, of TDC or in any of its properties or assets, or which questions the validity of this Agreement or of any action taken or to be taken pursuant to or in connection with the provisions of this Agreement, and to the best knowledge of TDC, there is no basis for any such litigation, arbitration, proceeding or investigation, except as otherwise set forth in Schedule 4.9. There are presently no outstanding judgments, decrees or orders of any court or any governmental or administrative agency against or affecting TDC or any of its assets that is not disclosed herein. 12 SECTION 4.10 Governmental Consent. No consent, approval, authorization or order of, or registration, qualification, designation, declaration or filing with, any governmental authority on the part of TDC is required in connection with the execution and delivery of this Agreement or the carrying out of any transactions contemplated herein. SECTION 4.11 Authority. The Board of Directors of TDC has approved this Agreement and duly authorized the execution hereof. TDC and each of the corporate TDC Sellers has full power, authority and legal right to enter into this Agreement and to consummate the transactions contemplated hereby, and all corporate action necessary to authorize the execution and delivery of this Agreement and the consummation of the transactions contemplated hereby has been duly and validly taken. The execution and delivery of this Agreement, the consummation of the transactions contemplated hereby and compliance by TDC with the provisions hereof will not (a) conflict with or result in a breach of any provisions of, or constitute a default (or an event which, with notice or lapse of time or both, would constitute a default) under, or result in the creation of any lien, security interest, charge or encumbrance upon any of the properties or assets of TDC under, any of the terms, conditions or provisions of the Certificate of Incorporation of TDC, or any note, bond, mortgage, indenture, license, agreement or any instrument or obligation to which TDC is a party or by which it is bound; or (b) violate any order, writ, injunction, decree, statute, rule or regulation applicable to TDC or any of its properties or assets. SECTION 4.12 Ownership of Shares. TDC has received representations from the TDC Sellers that the holders of 99.2% of the TDC common stock currently issued and outstanding (which stock is to be transferred to DVL under this Agreement) have full power and authority transfer such shares of TDC common stock to DVL hereunder, and that such shares are free and clear of any liens, charges, mortgages, pledges or encumbrances and that such shares are not subject to any claims as to the ownership thereof, or any rights, powers or interest therein, by any third party. SECTION 4.13. Investment Purpose. TDC has received or shall receive representations from its stockholders that the recipients of the restricted DVL Shares hereunder are acquiring the shares for investment purposes only and acknowledges that the DVL Shares issued hereunder are "restricted securities" and may not be sold, traded or otherwise transferred without registration under the Securities Act or exemption therefrom. SECTION 4.14 Nonexistence of Disqualifying Orders. Neither TDC nor any of its affiliates, directors, officers or principals is subject to any disqualifying order under the "Bad Boy" provisions of the federal or any state"s securities law as defined in Section 2.15. SECTION 4.15 Full Disclosure. None of the representations and warranties made by TDC herein, or in any exhibit, certificate or memorandum furnished or to be furnished by, on its behalf pursuant hereto, contains or will contain any untrue statement of material fact, or omits any material fact, the omission of which would be misleading. SECTION 4.16 Transactions and Affiliates. No officer or director of TDC or any member of his or her immediate family, is a party to any material contract or other business 13 arrangement or relationship of any kind with TDC or has an ownership interest in any material business, corporate or otherwise, which is a party to, or in any property which is the subject of, business arrangements or relationships of any kind with TDC. ARTICLE V COVENANTS OF TDC SECTION 5.1 Conduct Prior to the Closing. Between the date hereof and the Closing: (a) Except within the regular course of business, TDC will not enter into any material agreement, contract or commitment, whether written or oral, without the prior written consent of DVL; (b) TDC will not pay, incur or declare any dividends or distributions with respect to its stockholders or amend its Certificate of Incorporation, without the prior written consent of DVL; (c) TDC will not authorize, issue, sell, purchase, or redeem any shares of its common stock or any options or other rights to acquire shares of its common stock without the prior written consent of DVL. (d) Except within the regular course of business and in its financing activities previously disclosed to DVL, TDC will not incur any indebtedness for money borrowed or issue any debt securities, or incur or suffer to be incurred any liability or obligation of any nature whatsoever, or cause or permit any lien, encumbrance or security interest to be created or arise on or in any of its properties or assets, without the prior written consent of DVL; (e) TDC will not make any investment of capital nature either buy purchased stock or securities, contribution to capital, property transfer or otherwise, or by the purchase of any property or assets of any other Person. (f) TDC will not do any other act which would cause representation or warranty of DVL in this Agreement to be or become untrue in any material respect or that is not in the ordinary course of business consistent with past practice. (g) TDC shall not directly or indirectly (a) solicit any inquiry or proposals or enter into or continue any discussions, negotiation or agreements relating to (i) the sale or exchange of TDC"s capital stock, or (ii) the Acquisition of TDC with any Person other than DVL; or (b) provide any assistance or any information to, or other otherwise cooperate with, any Person in connection with any such inquiry, proposal or transaction. (h) TDC will comply with all requirements which federal or state law may impose on 14 it with respect to this Agreement and the transactions contemplated hereby, and will promptly cooperate with and furnish written information to DVL in connection with any such requirements imposed upon the parties hereto in connection therewith; (i) TDC shall grant to DVL and its counsel, accountants and other representatives, full access during normal business hours during the period prior to the Closing to all its respective properties, books, contracts, commitments and records and, during such period, furnish promptly to DVL and such representatives all information relating to TDC as DVL may reasonably request, and shall extend to DVL the opportunity to meet with TDC's accountants and attorneys to discuss the financial condition of TDC. SECTION 5.2 Affirmative Covenants. Prior to Closing, TDC will do the following: (a) Use its best efforts to accomplish all actions necessary to consummate this Agreement, including satisfaction of all conditions contained in this Agreement; and (b) Promptly notify DVL in writing of any material adverse change in the financial condition, business, operations or key personnel of TDC, any threatened material litigation or investigation, any breach of its representations or warranties contained herein, and any material contract, agreement, license or other agreement which, if in effect on the date of this Agreement, should have been included in this Agreement. ARTICLE VI ADDITIONAL AGREEMENTS SECTION 6.1 Expenses. All costs and expenses incurred in connection with this Agreement and the transactions contemplated hereby shall be paid by the party incurring such expense, except as provided for in Section 11.1. SECTION 6.2. Brokers and Finders. Each of the parties hereto represents, as to itself, that no agent, broker, investment banker or firm or person is or will be entitled to any broker's or finder's fee or any other commission or similar fee in connection with any of the transactions contemplated by this Agreement. SECTION 6.3 Necessary Actions. Subject to the terms and conditions herein provided, each of the parties hereto agrees to use all reasonable efforts to take, or cause to be taken, all action, and to do or cause to be done, all things necessary, proper or advisable under applicable laws and regulations to consummate and make effective the transactions contemplated by this Agreement. In the event at any time after the Closing, any further action is necessary or desirable to carry out the purpose of this Agreement, the proper managers, officers and/or directors of DVL or TDC, as the case may be, shall take all such necessary action. 15 SECTION 6.4 Indemnification. (a) General. (i) Subsequent to the Closing, DVL and the Principal Stockholders shall, jointly and severally, indemnify TDC, the TDC Sellers, and the TDC Officers and directors, ("TDC Indemnified Parties") against, and hold each of the TDC Indemnified Parties harmless from any damage, claim, loss, cost, fine, liability, obligation or expense, including without limitation, interest, penalties, reasonable attorneys" fees and expenses of investigation, diminution of value, response action, removal action or remedial action (collectively "Damages") incurred by any such TDC Indemnified Party, that are incident to, arise out of, in connection with, or related to, whether directly or indirectly, the breach of any warranty, representation, covenant or agreement of DVL or the Principal Stockholders contained in this Agreement or any schedule hereto or in any certificate or instrument of conveyance (including, without limitation, any notice to be delivered to the shareholders of DVL) delivered by or on behalf of DVL or the Principal Stockholders pursuant to this Agreement or in connection with the transaction contemplated hereby. (ii) Subsequent to the Closing, TDC and the TDC Sellers shall indemnify DVL and the Principal Stockholders ("DVL Indemnified Parties") against, and hold each of the DVL Indemnified Parties harmless from, any Damages incurred by such DVL Indemnified Party, that are incident to, arise out of, in connection with, or related to, whether directly or indirectly, the breach of any warranty, representation, covenant or agreement of TDC contained in this Agreement, any schedule or in any certificate or instrument of conveyance delivered by or on behalf of TDC pursuant to this Agreement or in connection with the transactions contemplated hereby. The term "Damages" as used in this Section 6.4 is not limited to matters asserted by third parties against TDC Indemnified Parties or DVL Indemnified Parties, but includes Damages incurred or sustained by such persons in the absence of third party claims. (b) Procedure for Claims. If a claim for Damages (a "Claim") is to be made by a person entitled to indemnification hereunder, the person claiming such indemnification (the "Indemnified Party"), subject to clause (ii) below, shall give written notice (a "Claim Notice") to the indemnifying person (the "Indemnifying Party") as soon as practicable after the Indemnified Party becomes aware of any fact, condition or event which may give rise to Damages for which indemnification may be sought under this Section 6.4. The failure of any Indemnified Party to give timely notice hereunder shall not affect rights to indemnification hereunder, except and only to the extent that, the Indemnifying Party demonstrates actual material damage caused by such failure. Failure by the Indemnifying Party to respond within 30 days of delivery of a Claim Notice shall constitute acceptance by the Indemnifying Party of responsibility to make payment pursuant thereto. In the case of a Claim involving the assertion of a claim by a third party (whether pursuant to a lawsuit or other legal action or otherwise, a "Third-Party Claim"), if the Indemnifying Party shall acknowledge in writing to the Indemnified 16 Party under the terms of its indemnity hereunder in connection with such Third-Party Claim, then (A) the Indemnifying party shall be entitled and, if it so elects, shall be obligated at its own cost, risk and expense, (1) to take control of the defense and investigation of such Third-Party Claim and (2) to pursue the defense thereof in good faith by appropriate actions or proceedings promptly taken or instituted and diligently pursued, including, without limitation, to employ and engage attorneys of its own choice reasonably acceptable to the Indemnified Party to handle and defend the same, and (B) the Indemnifying Party shall be entitled (but not obligated), if it so elects, to compromise or settle such claim, which compromise or settlement shall be made only with the prior written consent of the Indemnified Party, such consent not to be unreasonably withheld. In the event the Indemnifying Party elects to assume control of the defense and investigation of such lawsuit or other legal action in accordance with this Section 6.4, the Indemnified Party may, at its own cost and expense, participate in the investigation, trial and defense of such Third-Party Claim; provided that, if the named persons to a lawsuit or other legal action include both the Indemnifying Party and the Indemnified Party and the Indemnified Party has been advised in writing by counsel that there may be one or more legal defenses available to such Indemnified Party that are different from or additional to those available to the Indemnifying Party, the Indemnified Party shall be entitled, at the Indemnifying Party"s cost, risk and expense, to separate counsel of its own choosing. If the Indemnifying Party fails to assume the defense of such Third-Party Claim in accordance with this Section 6.4 within 10 calendar days after receipt of the Claim Notice, the Indemnified Party against which such Third-Party Claim has been asserted shall upon delivering notice to such effect to the Indemnifying Party have the right to undertake, at the Indemnifying Party"s cost, risk and expense, the defense, compromise and settlement of such Third-Party Claim on behalf of and for the account of the Indemnifying Party; provided that such Third-Party Claim shall not be compromised or settled without the prior written consent of the Indemnifying Party, which consent shall not be unreasonably withheld. In the event the Indemnifying Party assumes the defense of the claim, the Indemnifying Party shall keep the Indemnified Party reasonably informed of the progress of any such defense, compromise or settlement, and in the event the Indemnified Party assumes the defense of the claim, the Indemnified Party shall keep the Indemnifying Party reasonably informed of the progress of any such defense, compromise or settlement. The Indemnifying Party shall be liable for any settlement of any Third-party Claim effected pursuant to and in accordance with this Section 6.4 and for any final judgment (subject to any right of appeal), and the Indemnifying Party agrees to indemnify and hold harmless each Indemnified Party from and against any and all Damages by reason of such settlement or judgment. (c) No Right of Contribution. After the Closing, no Principal Stockholder shall have any right of contribution or other recourse against DVL for any breach of any representation, warranty, covenant or agreement of DVL. TDC and DVL shall be entitled to specific performance and injunctive relief, without posting bond or other security, for the purpose of asserting their respective rights under this Section 6.4. The remedies described in this Section 6.4 shall be in addition to, and not in lieu of, and any other remedies at law or in equity that the parties may elect to pursue. 17 ARTICLE VII CONDITIONS TO OBLIGATIONS OF THE PARTIES The obligations of the parties under this Agreement are subject to the fulfillment and satisfaction of each of the following conditions: SECTION 7.1 Legal Action. No preliminary or permanent injunction or other order by any federal or state court which prevents the consummation of this Agreement or any of the transactions contemplated by this Agreement shall have been issued and remain in effect. SECTION 7.2 Absence of Termination. The obligations to consummate the transactions contemplated hereby shall not have been canceled pursuant to Article X hereof. SECTION 7.3 Required Approvals. DVL and TDC shall have received all such approvals, consents, authorizations or modifications as may be required to permit the performance by DVL and TDC of their respective obligations under this Agreement and the consummation of the transactions herein contemplated, whether from governmental authorities or other persons, and DVL and TDC shall each have received any and all permits and approvals from any regulatory authority having jurisdiction required for the lawful consummation of this Agreement. SECTION 7.4 "Blue Sky" Compliance. There shall have been obtained any and all permits, approvals and consents of the appropriate state securities commissions of any jurisdictions, and of any other governmental body or agency, which counsel for DVL or TDC may reasonably deem necessary or appropriate so that consummation of the transactions contemplated by this Agreement may be in compliance with all applicable laws. ARTICLE VIII CONDITIONS PRECEDENT TO OBLIGATIONS OF DVL AND THE PRINCIPAL STOCKHOLDERS All obligations of DVL under this Agreement are subject to the fulfillment and satisfaction by TDC prior to or at the time for Closing, of each of the following conditions, any one or more of which may be waived by DVL. SECTION 8.1 Representations and Warranties True at Closing. All representations and warranties of TDC contained in this Agreement will be true and correct at and as of the time of the Closing, TDC shall have delivered to DVL an Officer"s Certificate dated the Closing Date, and signed by a duly authorized officer, in each case to such effect and in form and substance satisfactory to DVL. 18 SECTION 8.2 Performance. The obligations of TDC to be performed on or before the Closing pursuant to the terms of this Agreement shall be duly performed at such time. SECTION 8.3 Absence of Certain Changes or Events. There shall not have occurred, since the date hereof, any adverse change in the business, condition (financial or otherwise), assets or liabilities of TDC or any event or condition of any character adversely affecting TDC. SECTION 8.4 Closing Documents. TDC shall have delivered to DVL the documents and other items described in Section 10.2 and such other documents and items as DVL shall reasonably request. ARTICLE IX CONDITIONS TO OBLIGATIONS OF TDC All obligations of TDC and the TDC Sellers under this Agreement are subject to the fulfillment and satisfaction by DVL and the Principal Stockholders prior to or at the time of Closing, of each of the following conditions, any one or more of which may be waived by TDC. SECTION 9.1 Representations and Warranties True at Closing. All representations and warranties of DVL and the Principal Stockholders contained in this Agreement will be true and correct at and as of the time of the Closing, and DVL and the Principal Stockholders shall have delivered to TDC an Officer"s Certificate dated the Closing Date, to such effect and in the form and substance satisfactory to TDC. SECTION 9.2 Performance. The obligations of DVL and the Principal Stockholders to be performed on or before the Closing pursuant to the terms of this Agreement shall have been duly performed at such time. SECTION 9.3 Absence of Certain Changes or Events. There shall not have occurred, since the date hereof, any adverse change in the business, condition (financial or otherwise), assets or liabilities of DVL or any event or condition of any character adversely affecting DVL. SECTION 9.4 Resignations and Releases. Prior to the Closing of this Agreement, the current directors and officers of DVL shall have submitted their resignations as directors and officers of DVL, and general releases in favor of DVL, effective as of the time set forth in Section 1.3 (except in the case of Ed Tobin, whose resignation and release delivered at Closing shall be effective as of the 10th day following the Closing Date). 19 SECTION 9.5 Appointment of New Officers and Directors. At Closing, the remaining director of DVL will appoint the following TDC designees as officers and directors of DVL: Mitchell Deutsch (Director), Vice President James Garfinkel, (Director), Secretary and Treasurer SECTION 9.6 Opinion of Counsel. DVL shall deliver to TDC an opinion of counsel substantially in the form previously provided to DVL's counsel. SECTION 9.7 Closing Documents. DVL and the Principal Stockholders, as the case may be, shall have delivered to TDC the documents and other items described in Section 10.1 and such other documents and items as TDC may reasonably require. SECTION 9.8 Exemption Under Federal and State Securities Laws. The issuance of shares of DVL in the Acquisition shall not violate any federal or state securities laws. SECTION 9.9 Charter Amendment. The Amendment to the Certificate of Incorporation of DVL as described in Section 1.3 shall have occurred and the notice to shareholders referred to in such Section shall have been duly sent in accordance with the DGCL. SECTION 9.10 Exercise of Warrant. The Warrant shall have been exercised and DVL shall have received proceeds of $1,000,000 as described in Section 2.2(d). ARTICLE X CLOSING On the Closing Date: SECTION 10.1 Deliveries by DVL. DVL shall deliver (or cause to be delivered) to TDC: (a) any Consents required to be obtained by DVL and the Principal Stockholders; (b) an Officer's Certificate as described in Section 9.1 hereof, dated the Closing Date, that confirms the satisfaction of the conditions set forth in Sections 9.1, 9.2 and 9.3; (c) all DVL company books and records; (d) an opinion of legal counsel to DVL dated as of the Closing Date, in a form reasonably satisfactory to TDC; 20 (e) the Acquisition Shares to be issued to the TDC shareholders in accordance with Section 1.2; (f) evidence that this Agreement and the transactions contemplated hereby have been approved by the stockholders owning a majority of the issued and outstanding common stock of DVL; (g) certificates of good standing from Delaware and any other state in which DVL is required to be qualified to do business; (h) a Secretary"s Certificate of DVL, in the form and substance satisfactory to TDC, attaching thereto the current Certificate of Incorporation of DVL, bylaws of DVL and meeting minutes from all Board and shareholder meetings for the last five years as well as verifying that no other director or stockholder minutes exist and no other director or stockholder meetings took place; (i) such other documents and certificates duly executed as may reasonably be requested by TDC prior to the Closing Date; SECTION 10.2 Delivered by TDC. TDC shall deliver to DVL: (a) any Consents required to be obtained by TDC; (b) TDC shall deliver a Officer"s Certificate as described in Section 8.1 hereof, dated the Closing Date, that confirms the satisfaction of the conditions set forth in Sections 8.1, 8.2 and 8.3; (c) certificates of good standing from New York and any other state in which TDC is required to be qualified to do business. (d) such other documents and certificates duly executed as may reasonably be requested by DVL prior to the Closing Date. SECTION 10.3 Termination. Notwithstanding anything herein or elsewhere to the contrary, this Agreement may be terminated: (a) By mutual agreement of the parties hereto at any time prior to the Closing; (b) By DVL at any time prior to the Closing, if: (i) a condition to performance by DVL under this Agreement or a covenant of TDC contained herein shall not be fulfilled on or before the date of the Closing or at such other time and date specified in this Agreement for the 21 fulfillment of such covenant or condition; or (ii) a material default or breach of this Agreement shall be made by TDC; (c) By TDC at any time prior to the Closing, if: (i) a condition to TDC 's performance under this Agreement or a covenant of DVL contained herein shall not be fulfilled on or before the date of the Closing or at such other time and date specified in this Agreement for the fulfillment of such covenant or condition; or (ii) a material default or breach of this Agreement shall be made by DVL or a Principal Stockholder. SECTION 10.4 Effect of Termination. If this Agreement is terminated, this Agreement, except as to Section 11.1 and Section 11.2, shall no longer be of any force or effect and there shall be no liability on the part of any party or its respective directors, officers or stockholders; provided however, that in the case of a termination pursuant to Section 10.1 (b)(ii) or 10.1(c)(ii) hereof because of a prior material default under or a material breach of this Agreement by another party, the damages which the aggrieved party or parties may recover from the defaulting party or parties shall in no event exceed the amount of out-of-pocket costs and expenses incurred by such aggravated party or parties in connection with this Agreement, and no party to this Agreement shall be entitled to any injunctive relief. ARTICLE XI MISCELLANEOUS SECTION 11.1 Cost and Expenses. In the event of any termination of this Agreement pursuant to Section 10.3, subject to the provisions of Section 10.4, DVL and TDC will each bear their own respective expenses. SECTION 11.2 Extension of time: Waivers. At any time prior to the Closing: (a) DVL may in its sole discretion (i) extend the time for the performance of any of the obligations or other acts of TDC, (ii) waive any inaccuracies in the representations and warranties of TDC contained herein or in any documents delivered pursuant hereto by TDC and (iii) waive compliance with any of the agreements or conditions contained herein to be performed by TDC. Any agreement on the part of DVL to any such extension or waiver shall be valid only if set forth in an instrument, in writing, signed on behalf of DVL and shall only be effective in the specific instance. No waiver or any condition or provision shall be deemed to be a subsequent waiver of such condition or provision or a waiver of any condition or provision other than the one specifically waived. 22 (b) TDC may in its sole discretion (i) extend the time for the performance of any of the obligations or other acts of DVL, (ii) waive any inaccuracies in the representations and warranties of DVL contained herein or in any documents delivered pursuant hereto by DVL and (iii) waive compliance with any of the agreements or conditions contained herein to be performed by DVL. Any agreement on the part of TDC to any such extension or waiver shall be valid only if set forth in an instrument, in writing, signed on behalf of TDC and shall only be effective in the specific instance. No waiver or any condition or provision shall be deemed to be a subsequent waiver of such condition or provision or a waiver of any condition or provision other than the one specifically waived. SECTION 11.3 Notices. Any notice to any party hereto pursuant to this Agreement shall be in writing and given by Certified or Registered Mail, Fedex or by facsimile, addressed as follows: TACONIC DATA CORP. D-VINE LTD. 115 Stevens Avenue 712 Fifth Avenue Valhalla, NY 10595 7th Floor Attn.: James Garfinkel New York, NY 10019 Fax: (914) 747-9198 Attn.: Ed Tobin Fax: (212) 265-4035 Any notice to any TDC Seller shall be valid if it is delivered to TDC at the address set forth above. Each TDC Seller hereby irrevocably appoints TDC as its agent and attorney-in-fact with respect to notices to be provided under this Section 11.3 and all other matters and actions to be taken by the TDC Sellers in or contemplated by this Agreement. Any notice to any Principal Stockholder shall be valid if it is delivered to DVL at the address set forth above. Each Principal Stockholder hereby irrevocably appoints DVL as its agent and attorney-in-fact with respect to notices to be provided under this Section 11.3 and all other matters and actions to be taken by the Principal Stockholders in or contemplated by this Agreement. Additional notices are to be given as to each party, at such other address as should be designated in writing complying as to delivery with the terms of this Section 11.3. All such notices shall be effective when sent, addressed as aforesaid. SECTION 11.4 Parties in Interest. This Agreement shall inure to the benefit of and be binding upon the parties hereto and the respective successors and assigns. Nothing in this Agreement is intended to confer, expressly or by implication, upon any other person any rights or remedies under or by reason of this Agreement. SECTION 11.5 Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original and together shall constitute one document. The delivery by facsimile of an executed counterpart of this Agreement shall be deemed to be an original and shall have the full force and effect of an original executed copy. 23 SECTION 11.6 Severability. The parties hereto agree and affirm that none of the provisions herein is dependent upon the validity of any other provision, and if any part of this Agreement is deemed to be unenforceable, the remainder of the Agreement shall remain in full force and effect. SECTION 11.7 Headings. The "Article" and "Section" headings are provided herein for convenience of reference only and do not constitute a part of this Agreement. SECTION 11.8 Survival of Representations and Warranties. All terms, conditions, representations and warranties set forth in this Agreement or in any instrument, certificate, opinion, or other writing providing for in it, shall survive the Closing and the delivery of the DVL Shares issued hereunder at the Closing, for a period of one year from the Closing regardless of any investigation made by or on behalf of any of the parties hereto. SECTION 11.9 Assignability. This Agreement shall not be assigned by any of the parties hereto without the prior written consent of the other parties. SECTION 11.10 Amendment. This Agreement may be amended with the approval of the Boards of Directors of DVL and TDC at any time before or after approval thereof by stockholders of DVL, if required, and TDC; but after such approval by the DVL shareholders, no amendment shall be made which substantially and adversely changes the terms hereof. This Agreement may not be amended except by an instrument, in writing, signed on behalf of each of the parties hereto. SECTION 11.11 Choice of Law. This Agreement shall be construed, interpreted and the rights of the parties determined in accordance with the laws of the State of New York except with respect to matters of law concerning the internal corporate affairs of any corporate entity which is a party to or the subject of this Agreement, and as to those matters the law of the jurisdiction under which the respective entity derives its powers shall govern. SECTION 11.12 Publicity; Confidentiality. (a) Except as required by law or on advice of counsel, neither party shall issue any press release or make any public statement regarding the transactions contemplated hereby without the prior approval of the other parties, and the parties hereto shall issue a mutually acceptable press release as soon as practicable after the date hereof and after the Closing Date. (b) The parties hereto acknowledge that in the course of doing their respective due diligence investigations or otherwise that they, or their agents, attorneys, accountants, or other personnel may become privy to confidential information, and the parties hereby agree that they shall keep such information confidential unless the prior, express written consent of the other party has been obtained. 24 SECTION 11.13 Definitions. "Permits" means all licenses, permits, franchises, approvals, authorizations, consents or order of, or filing with, any governmental authority, whether foreign, federal, state or local, necessary or desirable for the past, present or anticipated conduct or operation of the business or ownership of the assets of such person. "Person" means any person or entity, whether an individual, trustee, corporation, limited liability company, general partnership, limited partnership, trust, unincorporated organization, business association, firm, joint venture, governmental agency or authority or any similar entity. [ SIGNATURE PAGES FOLLOW ] 25 IN WITNESS WHEREOF, the parties hereto have executed and delivered this Agreement in a manner legally binding upon them as of the date first above written. D-VINE, LTD. By: ____________________________ President PRINCIPAL STOCKHOLDERS OF D-VINE, LTD. D-VINE INVESTMENT PARTNERS By: _______________________ Ed Tobin, General Partner TACONIC DATA CORP. By: ____________________________ President ________________________________ David Backman ________________________________ Sherrie Christopher ________________________________ Jesse Deutsch ________________________________ Julia Deutsch 26 ________________________________ Mitchell Deutsch ________________________________ Noah Deutsch ________________________________ Barry H. Garfinkel ________________________________ David A. Garfinkel ________________________________ Elior Garfinkel ________________________________ James Garfinkel ________________________________ Barry Hartheimer ________________________________ Sol Kiperman ________________________________ Daniel V. Klein ________________________________ Paul Marsh 27 GOLDMAN-SONNENFELDT FOUNDATION By: ____________________________ THOMAS ASSOCIATES By: ____________________________ TRUSTEES OF HAMILTON COLLEGE By: ____________________________ WHAT ABOUT ME, INC. By: ____________________________ 28 SCHEDULE 1.2 ACQUISITION SHARES TO BE DELIVERED TDC Sellers Amounts ----------- ------- David Backman 2,102 Sherrie Christopher 2,102 Jesse Deutsch 23,040 Julia Deutsch 23,040 Mitchell Deutsch 3,079,054 Noah Deutsch 23,040 Barry H. Garfinkel 352,622 David A. Garfinkel 283,050 Elior Garfinkel 23,040 James Garfinkel 1,315,496 Barry Hartheimer 100,000 Sol Kiperman 160,344 Daniel V. Klein 4,265 Paul Marsh 11,675 Goldman-Sonnenfeld Foundation 1,557 Thomas Associates 99,764 Trustees Of Hamilton College 2,880 What About Me, Inc. 492,929 SCHEDULE 2.11 LEGAL PROCEEDINGS None SCHEDULE 2.14 BANK ACCOUNTS DVL has an account at the Bank of New York under account #6301833995. SCHEDULE 4.1 ENTITIES CONTROLLED BY TDC None SCHEDULE 4.2 WARRANTS, RIGHTS, CALLS, COMMITMENTS, ETC. None SCHEDULE 4.9 TDC LITIGATION, ETC. TDC is a plaintiff in two separate actions against Realization Services, Inc. arising out of a consulting arrangement between TDC and Realization Services, Inc. One such action by TDC is being disputed in arbitration in Westchester County, New York and seeks approximately $600,000. The other action by TDC seeks approximately $40,000 from Realization Services, Inc. in New York State Supreme Court. EX-99.(C)(2) 3 WARRANT TO PURCHASE COMMON STOCK Void after 5:00 p.m., New York Time on March 31, 2004 Warrant to Purchase 500,000 Shares of Common Stock --------------------------------- WARRANT TO PURCHASE COMMON STOCK OF D-VINE, LTD. --------------------------------- THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE PURSUANT TO THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND MAY NOT BE SOLD, PLEDGED OR OTHERWISE TRANSFERRED UNLESS PURSUANT TO THE REGISTERED UNDER THE ACT OR PURSUANT TO AN EXEMPTION FROM REGISTRATION PROVISIONS OF REGULATION S PROMULGATED UNDER THE ACT. IN ANY EVENT, UNTIL MARCH 31, 2000 THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUED OR TO BE ISSUED UPON EXERCISE THEREOF MAY NOT BE SOLD OR OFFERED FOR SALE BY THE HOLDER OR DELIVERED TO ANY U.S. PERSON OR FOR THE ACCOUNT OR BENEFIT OF A U.S. PERSON. IN CONSIDERATION OF MODIFICATION OF EXISTING WARRANT IN ACCORDANCE WITH A CERTAIN AGREEMENT DATED MARCH ___, 1999, D-Vine, Ltd., a Delaware corporation (the "Company"), grants the following rights to Ocean Strategic Holdings Limited, a Guernsey corporation ("Holder"): ARTICLE 1. DEFINITIONS. As used herein, the following terms shall have the following meanings, unless the context shall otherwise require: (a) "Common Stock" shall mean the common stock, par value $0.01 per share, of the Company. (b) "Corporate Office" shall mean the office of the Company (or its successor) at which at any particular time its principal business shall be administered. (c) "Exercise Date" shall mean any date upon which the Holder shall give the Company a Notice of Exercise. (d) "Exercise Price" shall mean the price to be paid to the Company for each share of Common Stock to be purchased upon exercise of this Warrant in accordance with the terms hereof which shall be $3.00 per share. (e) "Expiration Date" shall mean 5:00 p.m. (New York time) on March 31, 2004. (f) "Regulation S" shall mean Regulation S as promulgated under the Act. (g) "SEC" shall mean the United States Securities and Exchange Commission. (h) "Transfer Agent" shall mean American Securities Transfer, as the Company's transfer agent, or its authorized successor, as such. (i) "Underlying Shares" shall mean the shares of the Common Stock issuable upon exercise of the Warrant. ARTICLE 2. EXERCISE AND AGREEMENTS. 2.1 Exercise of Warrant. This Warrant shall entitle Holder to purchase up to 500,000 shares of Common Stock (the "Shares") at the Exercise Price. This Warrant shall be exercisable at any time after March 31, 2004 and from time to time prior to the Expiration Date (the "Exercise Period"). This Warrant and the right to purchase Shares hereunder shall expire and become void at the Expiration Date. 2.2 Manner of Exercise. (a) Holder may exercise this Warrant at any time and from time to time during the Exercise Period, in whole or in part (but not in denominations of fewer than 10,000 Shares, except upon an exercise of this Warrant with respect to the remaining balance of Shares purchasable hereunder at the time of exercise), by delivering to the Escrow Agent (as defined in an escrow agreement dated the date of the existing warrant referred to above) (i) a duly executed Notice of Exercise in substantially the form attached as Appendix 1 hereto and (ii) a bank cashier's or certified check for the aggregate Exercise Price of the Shares being purchased. (b) From time to time upon exercise of this Warrant, in whole or part, in accordance with its terms, the Escrow Agent will deliver stock certificates to the Holder representing the number of Shares being purchased pursuant to such exercise, subject to adjustment as described herein. (c) Promptly following any exercise of this Warrant, if the Warrant has not been fully exercised and has not expired, the Company will deliver to the Holder a new Warrant for the balance of the Shares covered hereby. 2.3 Termination. All rights of the Holder in this Warrant, to the extent they have not been exercised, shall terminate on the Expiration Date. 2.4 No Rights Prior to Exercise. Prior to its exercise pursuant to Section 2.2 above, this Warrant shall not entitle the Holder to any voting or other rights as holder of Shares. 2.5 Adjustments. In case of any reclassification, capital reorganization, stock dividend or other change of outstanding shares of Common Stock, or in case of any consolidation or merger of the Company with or into another corporation (other than a consolidation or merger in which the Company is the continuing corporation and which does not result in any reclassification, capital reorganization, stock dividend or other change of outstanding shares or Common Stock), or in case of any sale or conveyance to another corporation of the property of the Company as, or substantially as, an entirety (other than a sale/leaseback, mortgage or other financing transaction), the Company shall cause effective provision to be made so that the Holder shall have the right thereafter, by exercising this Warrant, to purchase the kind and number of shares of stock or other securities or property (including cash) receivable upon such reclassification, capital reorganization, stock dividend or other change, consolidation, merger, sale or conveyance as the Holder would have been entitled to receive had the Holder exercised this Warrant in full immediately before such reclassification, capital reorganization, stock dividend or other change, consolidation, merger, sale or conveyance. Any such provision shall include provision for adjustments that shall be as nearly equivalent as may be practicable to the adjustments provided for in this Section 2.5. The foregoing provisions shall similarly apply to successive reclassifications, capital reorganizations, stock dividends and other changes of outstanding shares of Common Stock and to successive consolidations, mergers, sales or conveyances. Notwithstanding anything to the contrary contained herein, if the Company shall complete a "reverse split" of its shares into a smaller number of outstanding shares, the number of shares issuable upon exercise of this Warrant, and the Exercise Price, shall remain unchanged. 2.6 Fractional Shares. No fractional Shares shall be issuable upon exercise or conversion of this Warrant and the number of Shares to be issued shall be rounded down to the nearest whole Share. If a fractional Share interest arises upon any exercise or conversion of the Warrant, the Company shall eliminate such fractional Share interest by paying Holder the amount computed by multiplying the fractional interest by the closing bid price of a full Share on the date of the Notice of Exercise. 2.7 Limitation on Exercise. In no event shall Holder be entitled to exercise any portion of this Warrant such that upon giving effect to such exercise, the aggregate number of shares of Common Stock beneficially owned by the Holder and its affiliates would exceed 4.9% of the outstanding shares of the Common Stock following such exercise. For purposes of the foregoing proviso, the aggregate number of shares of Common Stock beneficially owned by the Holder and its affiliates shall include the number of shares of Common Stock issuable upon exercise of the Warrant with respect to which the determination of such proviso is being made, but shall exclude the number of shares of Common Stock which would be issuable upon (i) exercise of the remaining Warrant beneficially owned by the holder and its affiliates and (ii) exercise or conversion of the unexercised or unconverted portion of any other securities of the Company (including, without limitation, any warrants) subject to a limitation on conversion or exercise analogous to the limitation contained herein beneficially owned by the holder and its affiliates. Except as set forth in the preceding sentence, for purposes of this paragraph, beneficial ownership shall be calculated in accordance with Section 13(d) of the Securities Exchange Act of 1934, as amended. The Holder may waive the foregoing limitations by written notice to the Company upon not less than 61 days prior notice (with such waiver taking effect only upon the expiration of such 61 day notice period). ARTICLE 3. REPRESENTATIONS AND COVENANTS OF THE COMPANY. 3.1 Representations and Warranties. The Company hereby represents and warrants to the Holder as follows: (a) All Shares which may be issued upon the exercise of the purchase right represented by this Warrant shall, upon issuance, be duly authorized, validly issued, fully-paid and nonassessable, and free of any liens and encumbrances except for restrictions on transfer provided for herein or under applicable federal and state securities laws, and not subject to any pre-emptive rights. (b) The Company is a corporation duly organized and validly existing under the laws of the State of Delaware, and has the full power and authority to issue this Warrant and to comply with the terms hereof. The execution, delivery and performance by the Company of its obligations under this Warrant, including, without limitation, the issuance of the Shares upon any exercise of the Warrant have been duly authorized by all necessary corporate action. This Warrant has been duly executed and delivered by the Company and is a valid and binding obligation of the Company, enforceable in accordance with its terms, except as enforcement may be limited by applicable bankruptcy, insolvency, reorganization or similar laws affecting enforceability of creditors' rights generally and except as the availability of the remedy of specific enforcement, injunctive relief or other equitable relief is subject to the discretion of the court before which any proceeding therefor may be brought. (c) The Company is not subject to or bound by any provision of any certificate or articles of incorporation or by-laws, mortgage, deed of trust, lease, note, bond, indenture, other instrument or agreement, license, permit, trust, custodianship, other restriction or any applicable provision of any law, statute, rule, regulation, judgment, order, writ, injunction or decree of any court, governmental body, administrative agency or arbitrator which could prevent or be violated by or under which there would be a default (or right of termination) as a result of the execution, delivery and performance by the Company of this Warrant. (d) The Company is eligible to issue securities exempt from registration pursuant to Regulation S promulgated under the Securities Act. ARTICLE 4. REPRESENTATIONS OF THE HOLDER. 4.1 Representations and Warrants. The Holder hereby represents and warrants to the Holder as follows: (a) The Holder is not a "U.S. person" within the meaning of Regulation S. In general, "U.S. person" means (A) any natural person resident in the United States; (B) any partnership or corporation organized or incorporated under the laws of the United States; (C) any estate of which any executor or administrator is a U.S. person; (D) any trust of which any trustee is a U.S. person; (E) any agency or branch of a foreign entity located in the United States; (F) any non-discretionary or similar account (other than an estate or trust) held by a dealer or other fiduciary for the benefit or account of a U.S. person; (G) any partnership or corporation if (i) organized or incorporated under the laws of any foreign jurisdiction, and (ii) formed by a U.S. person principally for the purpose of investing in securities not registered under the Act, unless it is organized or incorporated, and owned, by accredited investors (as defined in Rule 501(a) promulgated under the Act who are not natural persons, estates or trusts. For purposes of this Agreement, the United States includes the United States of America, its territories and possessions, any state of the United States and the district of Columbia. (b) The Holder is not organized under the laws of any jurisdiction within the United States, its territories or possessions, and was not formed for the purpose of investing in Regulation S securities; (ii) at the time this Warrant was acquired by Holder and the time this Warrant was executed and any offer to purchase this Warrant or the Underlying Shares hereunder was made, the Holder was physically outside the United States; (iii) the Holder has acquired this Warrant and the Underlying Shares (the Warrant and the Underlying Shares are herein collectively referred to as the "Securities") for its own account and not on behalf of or for the benefit of any U.S. person and the sale of the Securities has not been prearranged with any buyer in the United States; (iv) the Holder hereby agrees that to its knowledge all offers and sales of the Securities prior to the expiration of a period commencing on the date hereof and ending forty days thereafter (the "Restricted Period") shall not be made to U.S. persons or for the account or benefit of U.S. Persons and shall otherwise be made in compliance with the provisions of Regulation S. The Holder is not a distributor or dealer. (c) The Holder is acquiring this Warrant and the Underlying Shares for its own account for investment and not as a nominee and not with a view to the distribution thereof. Holder represents and warrants to the Company that it has no preexisting plan to sell the Warrant or the Underlying Shares in the United States at any particular time following the expiration of the Restricted Period. Holder covenants that neither Holder nor its affiliates nor any person acting on its or their behalf has the intention of entering, or will enter, during the Restricted Period, into any put option, short position or other similar instrument or position with respect to the Underlying Shares or securities of the same class as the Underlying Shares and neither Holder nor any of its affiliates nor any person acting on its or their behalf will use at any time Underlying Shares acquired pursuant to this Agreement or upon conversion of the shares to settle any put option, short position or other similar instrument or position that may have been entered into prior to the execution of this Agreement. ARTICLE 5. MISCELLANEOUS. 5.1 Transfer. This Warrant may not be transferred or assigned, in whole or in part, at any time, except in compliance with applicable federal and state securities laws by the transferor and the transferee (including, without limitation, the delivery of an investment representation letter and a legal opinion reasonably satisfactory to the Company) and the Company will refuse to register any transfer of this Warrant or the Underlying Shares not made in accordance with the provisions of Regulation S. This Warrant may not be transferred or assigned such that either the Holder or any transferee will, following such transfer or assignment, hold a Warrant for the right to purchase fewer than 5,000 Shares. 5.2 Transfer Procedure. Subject to the provisions of Section 5.1, Holder may transfer or assign this Warrant by giving the Company notice setting forth the name, address and taxpayer identification number of the transferee or assignee, if applicable (the "Transferee") and surrendering this Warrant to the Company for reissuance to the Transferee (and the Holder, in the event of a transfer or assignment of this Warrant in part). (Each of the persons or entities in whose name any such new Warrant shall be issued are herein referred to as a Holder"). 5.3 Loss, Theft, Destruction or Mutilation. If this Warrant shall become mutilated or defaced or be destroyed, lost or stolen, the Company shall execute and deliver a new Warrant in exchange for and upon surrender and cancellation of such mutilated or defaced Warrant or, in lieu of and in substitution for such Warrant so destroyed, lost or stolen, upon the Holder filing with the Company evidence satisfactory to it that such Warrant has been so mutilated, defaced, destroyed, lost or stolen. However, the Company shall be entitled, as a condition to the execution and delivery of such new Warrant, to demand indemnity satisfactory to it and payment of the expenses and charges incurred in connection with the delivery of such new Warrant. Any Warrant so surrendered to the Company shall be canceled. 5.4 Notices. All notices and other communications from the Company to the Holder or vice versa shall be deemed delivered and effective when given personally, by facsimile transmission and confirmed in writing or mailed by first-class registered or certified mail, postage prepaid at such address and/or facsimile number as may have been furnished to the Company or the Holder, as the case may be, in writing by the Company or the Holder from time to time. 5.5 Waiver. This Warrant and any term hereof may be changed, waived, or terminated only by an instrument in writing signed by the party against which enforcement of such change, waiver, discharge or termination is sought. 5.6 Governing Law. This Warrant shall be governed by and construed in accordance with the laws of the State of New York, without giving effect to its principles regarding conflicts of law. Dated: March 31, 1999 D-Vine, Ltd. By: ____________________________________ Name: Title: APPENDIX 1 NOTICE OF EXERCISE 1. The undersigned hereby elects to purchase ______ shares of the Common Stock of D-Vine, Ltd. pursuant to the terms of the attached Warrant, and tenders herewith payment of the purchase price of such shares in full. 2. Please issue a certificate or certificates representing said shares in the name of the undersigned or in such other name as is specified below: 3. The undersigned (the "Holder") hereby represents that: (a) The Holder is not a "U.S. person" within the meaning of Regulation S. In general, "U.S. person" means (A) any natural person resident in the United States; (B) any partnership or corporation organized or incorporated under the laws of the United States; (C) any estate of which any executor or administrator is a U.S. person; (D) any trust of which any trustee is a U.S. person; (E) any agency or branch of a foreign entity located in the United States; (F) any non-discretionary or similar account (other than an estate or trust) held by a dealer or other fiduciary for the benefit or account of a U.S. person; (G) any partnership or corporation if (i) organized or incorporated under the laws of any foreign jurisdiction, and (ii) formed by a U.S. person principally for the purpose of investing in securities not registered under the Act, unless it is organized or incorporated, and owned, by accredited investors (as defined in Rule 501(a) promulgated under the Act who are not natural persons, estates or trusts. For purposes of this Agreement, the United States includes the United States of America, its territories and possessions, any state of the United States and the district of Columbia. (b) The Holder is not organized under the laws of any jurisdiction within the United States, its territories or possessions, and was not formed for the purpose of investing in Regulation S securities; (ii) at the time this Warrant was acquired by Holder and the time this Warrant was executed and any offer to purchase this Warrant or the Underlying Shares hereunder was made, the Holder was physically outside the United States; (iii) the Holder has acquired this Warrant and the Underlying Shares (the Warrant and the Underlying Shares are herein collectively referred to as the "Securities") for its own account and not on behalf of or for the benefit of any U.S. person and the sale of the Securities has not been prearranged with any buyer in the United States; (iv) the Holder hereby agrees that to its knowledge all offers and sales of the Securities prior to the expiration of a period commencing on the date hereof and ending one year thereafter (the "Restricted Period") shall not be made to U.S. persons or for the account or benefit of U.S. Persons and shall otherwise be made in compliance with the provisions of Regulation S. The Holder is not a distributor or dealer. (c) The Holder is acquiring this Warrant and the Underlying Shares for its own account for investment and not as a nominee and not with a view to the distribution thereof. Holder represents and warrants to the Company that it has no preexisting plan to sell the Warrant or the Underlying Shares in the United States at any particular time following the expiration of the Restricted Period. Holder covenants that neither Holder nor its affiliates nor any person acting on its or their behalf has the intention of entering, or will enter, during the Restricted Period, into any put option, short position or other similar instrument or position with respect to the Underlying Shares or securities of the same class as the Underlying Shares and neither Holder nor any of its affiliates nor any person acting on its or their behalf will use at any time Underlying Shares acquired pursuant to this Agreement or upon conversion of the shares to settle any put option, short position or other similar instrument or position that may have been entered into prior to the execution of this Agreement. (d) it is acquiring the shares solely for its own account and not as a nominee for any other party and not with a view toward the resale or distribution thereof except in compliance with applicable securities laws. ________________________________________ (Signature) _____________________ (Date) EX-99.(C)(3) 4 TACONIC DATA CORP. FINANCIAL STATEMENTS TACONIC DATA CORP. FINANCIAL STATEMENTS For the Years Ended December 31, 1997 and 1996 TACONIC DATA CORP. BALANCE SHEETS December 31, 1997 and 1996 ASSETS 1997 1996 -------- -------- CURRENT ASSETS Cash $ 33,570 $ 4,733 Accounts receivable 317,665 343,901 Investment in Assetrac -0- 14,395 Prepaid expense and other current assets 45 489 -------- -------- Total Current Assets 351,280 363,518 PROPERTY AND EQUIPMENT, Net 168,983 277,978 OTHER ASSETS 8,333 8,333 -------- -------- TOTAL ASSETS $528,596 $649,829 ======== ======== The accompanying notes are an integral part of these financial statements. TACONIC DATA CORP. BALANCE SHEETS December 31, 1997 and 1996 LIABILITIES AND STOCKHOLDERS' DEFICIENCY 1997 1996 ----------- ----------- CURRENT LIABILITIES Accounts payable and accrued expenses $ 412,856 $ 1,050,555 Deferred revenue 317,506 663,875 Current maturities of capital lease obligations 105,385 20,176 Note payable, bank -0- 250,000 ----------- ----------- Total Current Liabilities 835,747 1,984,606 ----------- ----------- OTHER LIABILITIES Capital lease obligations, less current maturities 37,842 225,490 Notes payable 234,902 -0- Notes payable, stockholders 216,958 -0- Notes payable, related parties 472,459 -0- ----------- ----------- Total Other Liabilities 962,161 225,490 ----------- ----------- TOTAL LIABILITIES 1,797,908 2,210,096 ----------- ----------- COMMITMENTS AND CONTINGENCIES STOCKHOLDERS' DEFICIENCY Common stock - no par value; 200 shares authorized, issued and outstanding 2,000 2,000 Accumulated deficit (1,271,312) (1,562,267) ----------- ----------- TOTAL STOCKHOLDERS' DEFICIENCY (1,269,312) (1,560,267) ----------- ----------- TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIENCY $ 528,596 $ 649,829 =========== =========== The accompanying notes are an integral part of these financial statements. TACONIC DATA CORP. STATEMENTS OF OPERATIONS For the Years Ended December 31, 1997 and 1996 1997 1996 ----------- ----------- SALES $ 3,099,139 $ 3,813,407 COST OF SALES 1,610,853 2,817,344 ----------- ----------- GROSS PROFIT 1,488,286 996,063 SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 1,109,736 1,612,483 ----------- ----------- OPERATING INCOME (LOSS) 378,550 (616,420) ----------- ----------- OTHER INCOME (EXPENSE) Interest expense, net of interest income of $161 and $2,517, respectively (104,205) (24,272) Equity in earnings (loss) of Assetrac 4,083 (110,090) Other income 14,527 41,046 ----------- ----------- TOTAL OTHER EXPENSE (85,595) (93,316) ----------- ----------- NET INCOME (LOSS) BEFORE INCOME TAXES 292,955 (709,736) INCOME TAXES 2,000 -0- ----------- ----------- NET INCOME (LOSS) $ 290,955 $ (709,736) =========== =========== The accompanying notes are an integral part of these financial statements. TACONIC DATA CORP. STATEMENTS OF ACCUMULATED DEFICIT For the Years Ended December 31, 1997 and 1996 1997 1996 ----------- ----------- (ACCUMULATED DEFICIT) RETAINED EARNINGS - Beginning, as originally reported $(1,562,267) $ 365,618 Prior Period Adjustments -0- (1,218,149) ----------- ----------- ACCUMULATED DEFICIT - Beginning, as restated (1,562,267) (852,531) Net Income (Loss) 290,955 (709,736) ----------- ----------- ACCUMULATED DEFICIT - Ending $(1,271,312) $(1,562,267) =========== =========== The accompanying notes are an integral part of these financial statements. TACONIC DATA CORP. STATEMENTS OF CASH FLOWS For the Years Ended December 31, 1997 and 1996 1997 1996 --------- --------- CASH FLOWS FROM OPERATING ACTIVITIES Net income (loss) $ 290,955 $(709,736) --------- --------- Adjustments to reconcile net income (loss) to net cash used in operating activities: Depreciation 127,861 120,352 Equity in (earnings) loss of Assetrac (4,083) 110,090 Decrease (increase) in accounts receivable 26,236 (237,898) Decrease in prepaid expense and other current assets 444 4,918 Decrease in other assets -0- 13,946 (Decrease) increase in accounts payable and accrued expenses (465,033) 616,205 Decrease in deferred revenue (346,369) (119,704) --------- --------- TOTAL ADJUSTMENTS (660,944) 507,909 --------- --------- NET CASH USED IN OPERATING ACTIVITIES (369,989) (201,827) --------- --------- CASH FLOWS FROM INVESTING ACTIVITIES Purchases of property and equipment (18,867) (69,807) Investment in Assetrac (331,522) (124,485) Proceeds from sale of Assetrac 350,000 -0- --------- --------- NET CASH USED IN INVESTING ACTIVITIES (389) (194,292) --------- --------- CASH FLOWS FROM FINANCING ACTIVITIES (Repayments) proceeds of note payable, bank (250,000) 250,000 Proceeds from notes payable 62,236 -0- Proceeds from notes payable, related parties 472,459 -0- Proceeds from notes payable, stockholders 216,958 -0- Principal repayments of capital lease obligations (102,438) (91,158) --------- --------- NET CASH PROVIDED BY FINANCING ACTIVITIES 399,215 158,842 --------- --------- NET INCREASE (DECREASE) IN CASH 28,837 (237,277) CASH - Beginning 4,733 242,010 --------- --------- CASH - Ending $ 33,570 $ 4,733 ========= ========= The accompanying notes are an integral part of these financial statements. TACONIC DATA CORP. STATEMENTS OF CASH FLOWS, Continued For the Years Ended December 31, 1997 and 1996 SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: Cash paid during the years for: 1997 1996 ---------- ---------- Interest $ 72,267 $ 26,790 Noncash activities: During 1997, the Company converted certain trade accounts payable to a note payable in the amount of $172,666. During 1996, property and equipment value at $120,474 was obtained through capital lease obligations. During 1996, a prior period adjustment was made affecting the following accounts: Deferred revenue $ 783,579 Property and equipment 145,911 Due from stockholder 288,659 ---------- $1,218,149 ========== The accompanying notes are an integral part of these financial statements. TACONIC DATA CORP. NOTES TO FINANCIAL STATEMENTS NOTE 1 - Summary of Significant Accounting Policies Nature of Business Taconic Data Corp. (the "Company") is a professional business information company with a specialty in real estate, public records data and newspapers. It develops and manages complex real estate and marketing information data bases under long-term service contracts to multiple listing services, realtor associations, newspapers, and other information companies located primarily in the eastern United States. Revenue Recognition The Company utilizes long-term contracts and recognizes revenue for financial statement purposes under the percentage of completion method and, therefore, takes into account the costs, estimated earnings and revenue-to-date on contracts not yet completed. The amount of revenue recognized at the financial statement date is the portion of the total contract price that the costs expended to date bears to the anticipated total costs, based on current estimates of costs to complete. Contract costs include all direct labor and benefits, materials unique to or installed in the project, subcontract costs and allocated indirect costs. Revisions in estimates of costs and earnings during the life of the contracts are reflected in the accounting period in which such revisions become known. At the time a loss on a contract becomes known, the entire amount of the estimated loss is recognized in the financial statements. The unearned revenue represents billings in excess of costs and estimated earnings on uncompleted contracts. Property and Equipment and Depreciation Property and equipment is stated at cost and is depreciated using accelerated methods over the estimated useful lives of the respective assets. Routine maintenance, repairs and replacement costs are expensed as incurred and improvements that extend the useful life of the assets are capitalized. When property and equipment is sold or otherwise disposed of, the cost and related accumulated depreciation are eliminated from the accounts and any resulting gain or loss is recognized in income. Income Taxes The Company with the consent of their stockholders, has elected under the Internal Revenue Code to be an 'S' corporation. In lieu of corporate income taxes, the stockholders of an 'S' corporation are taxed on their proportionate share of the corporation's taxable income. Accordingly, no provision for federal and state income taxes has been included in the accompanying financial statements. TACONIC DATA CORP. NOTES TO FINANCIAL STATEMENTS NOTE 1 - Summary of Significant Accounting Policies Advertising Costs Advertising costs are expensed as incurred. Use of Estimates in the Financial Statements The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent asset and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. NOTE 2 - Investment in Assetrac During 1996 the Company entered into a joint venture with an unrelated party to form Assetrac Data Corporation (Assetrac) to compile information regarding the real estate industry into various database products. The Company accounts for this investment in Assetrac under the equity method of accounting. On November 11, 1998, the assets and liabilities of Assetrac were sold to an unrelated third party for a purchase price of $415,288. As a result of this transaction, the Company has recorded a gain on investment of $4,083 at December 31, 1997. NOTE 3 - Property and Equipment Property and equipment at December 31, 1997 and 1996 consists of the following: Estimated 1997 1996 Useful Lives --------- --------- ------------ Furniture and fixtures $ 73,790 $ 73,790 5-7 years Computer equipment 552,621 533,755 3-5 years --------- --------- 626,411 607,545 Less: accumulated depreciation (457,428) (329,567) --------- --------- Property and Equipment, Net $ 168,983 $ 277,978 ========= ========= Depreciation expense for the years ended December 31, 1997 and 1996 was $127,861 and $120,352, respectively. TACONIC DATA CORP. NOTES TO FINANCIAL STATEMENTS NOTE 4 - Capitalized Lease Obligations The Company is the lessee of equipment under four capital leases expiring through the year 2000. The assets and liabilities are recorded at fair-market value. The assets are being depreciated over their estimated useful lives. Depreciation of assets under capital leases charged to expense for the years ended December 31, 1997 and 1996 was $80,955 and $73,768, respectively. The following is a summary of property held under capital leases included in equipment: 1997 1996 --------- --------- Equipment $ 355,009 $ 355,009 Less: accumulated depreciation (235,901) (167,495) --------- --------- $ 119,108 $ 187,514 ========= ========= Minimum future lease payments under capital leases as of December 31, 1997 for each of the next three years, and in the aggregate, are as follows: For the Year Ending December 31, Amount -------------------- -------- 1998 $123,041 1999 32,769 2000 5,416 -------- Total minimum lease payments 161,226 Less: amount representing interest 17,999 -------- Present value of net minimum lease payments $143,227 ======== Current portion $105,385 Long-term portion 37,842 -------- Total $143,227 ======== Interest rates on capitalized leases vary from 5.43% to 17.43% and are imputed based on the lessor's implicit rate of return. TACONIC DATA CORP. NOTES TO FINANCIAL STATEMENTS NOTE 5 - Notes Payable Notes payable at December 31, 1997 and 1996 consists of the following: 1997 1996 -------- -------- Note payable - principal due on April 9, 1999 bearing interest at 10% per annum $105,000 $ -0- Note payable, with interest at 11% and principal due on July 24, 1999. (1) 62,236 -0- Note payable, with interest at 11% and principal due on October 31, 1999. (1) (2) 67,666 -0- -------- ---- Total Notes Payable $234,902 $ -0- ======== ==== (1) If the Company offers to repay the outstanding principal and interest prior to maturity date, the lender has the option to convert any or all of the outstanding amount into an equity investment in the Company. If the Repayment Option is chosen by the lender, the Company shall pay the lender cash for the unconverted portion. In addition, the Company shall issue warrants to the lender for one-fourth (') of the shares the lender will receive should the Conversion Option be chosen. If the Conversion Option is chosen, the Company shall provide an equity interest in the form of common stock in the Company for the unconverted portion as defined in the Agreement. If a majority interest in the Company is purchased prior to maturity date, the Company shall provide the lender shares equal to a percentage of ownership as defined in the Agreement. (2) Subsequent to December 31, 1997, the above note was converted to equity (see Note 12). TACONIC DATA CORP. NOTES TO FINANCIAL STATEMENTS NOTE 6 - Notes Payable, Stockholders Notes payable, stockholders at December 31, 1997 and 1996 consists of the following: 1997 1996 -------- -------- Note payable, stockholder (J. Garfinkle), with interest at 11% and principal due on August 12, 1999 $ 53,087 $ -0- Note payable, stockholder (J. Garfinkle), with interest at 11% and principal due on September 4, 1999 55,451 -0- Note payable, stockholder (M. Deutsch), with interest at 11% and principal due on August 12, 1999 53,059 -0- Note payable, stockholder (M. Deutsch), with interest at 11% and principal due on September 4, 1999 55,361 -0- -------- -------- Notes Payable, Stockholders $216,958 $-0- ======== ======== Subsequent to December 31, 1997, the above notes were converted to equity (see Note 12). NOTE 7 - Notes Payable, Bank The Company had a $250,000 line of credit with a bank with interest payable monthly at 1.5% above prime. The line of credit was secured by substantially all of the assets of the Company. The line expired in 1997. NOTE 8 - Notes Payable, Related Parties Notes payable, related parties at December 31, 1997 and 1996 consists of the following: 1997 1996 -------- -------- Note payable - David Garfinkle, with interest at 11% and principal due on May 20, 1999 (including accrued interest of $5,844) $ 80,844 $ -0- Note payable - David Garfinkle, with interest at 11% and principal due on June 25, 1999 (including accrued interest of $7,219) 132,219 -0- -------- ----- (Forward) $213,063 $ -0- -------- ----- TACONIC DATA CORP. NOTES TO FINANCIAL STATEMENTS NOTE 8 - Notes Payable, Related Parties, continued 1997 1996 -------- -------- (Forward) $213,063 $ -0- Note payable - Barry Garfinkle, with interest at 11% and principal due on June 24, 1999 (including accrued interest of $9,396) 259,396 -0- -------- ----- Notes Payable, Related Parties $472,459 $ -0- ======== ===== The above note holders are related to one of the stockholders of the Company and are subject to the same provisions of the notes payable as described in Note 5. Subsequent to December 31, 1997, the above notes were converted to equity (see Note 12). NOTE 9 - Commitments and Contingencies Lease Arrangement The Company leases office space under a five (5) year noncancelable lease expiring December 31, 2000. The Company pays property taxes, insurance, and other related expenses to the leased properties. Rent expense was $68,054 and $67,665 for the years ended December 31, 1997 and 1996, respectively. Future minimum rental payments required under the above non-cancelable operating lease at December 31, 1997 are as follows: Year Ending December 31, Amount ------------ -------- 1998 $ 76,000 1999 76,500 2000 76,500 -------- Total $229,000 ======== License Agreement The Company is obligated to pay a license fee for the use of software and the maintenance of the software through October 1998. The future commitment for the year ending December 31, 1998 is $24,135. TACONIC DATA CORP. NOTES TO FINANCIAL STATEMENTS NOTE 9 - Commitments and Contingencies, continued Litigation The Company is involved in litigation through the normal course of business. The Company believes that the resolution of these matters will not have a material adverse effect on the financial position of the Company. NOTE 10 - Major Customers The Company sells a substantial portion (greater than 10% of sales) of its product to four major customers. During the years ended December 31, 1997 and 1996, sales to these customers totaled $2,358,982 (76%) and $2,238,155 (59%), respectively. As of December 31, 1997 and 1996, the amounts due from these customers included in accounts receivable were $245,670 and $197,453, respectively. During and subsequent to December 31, 1997, three of the above major customers terminated their contracts. Each contract was settled subsequent to December 31, 1997. The Company will be paid approximately $310,000 in aggregate based upon the respective settlement agreements. During the years ended December 31, 1997 and 1996, sales to these three terminated customers amounted to $1,972,510 (64%) and $1,851,683 (49%), respectively. NOTE 11 - Prior Period Adjustments Certain errors resulting in the overstatement of previously reported assets and the understatement of previously reported liabilities were corrected in 1996, resulting in the following changes to retained earnings as of December 31, 1995: Retained Earnings - as previously reported $ 365,618 Deferred income on contracts $(783,579) Property, plant and equipment (145,911) Loans receivable (288,659) --------- Total Adjustments (1,218,149) ----------- Accumulated Deficit - as adjusted $ (852,531) ----------- TACONIC DATA CORP. NOTES TO FINANCIAL STATEMENTS NOTE 12 - Subsequent Events Employment Agreements On April 14, 1998 the Company entered into employment agreements with two stockholders of the Company, expiring on April 15, 2000 (the 'Initial Period'). After the Initial Period employment will continue for successive one-year periods if the agreement is not terminated with at least ninety (90) days notice. Such agreements provide for minimum salary levels, adjusted annually for cost of living changes, as well as for incentive bonuses if specific management goals are attained. The agreements also provide for all benefits generally available to the Company's managerial employees. The aggregate commitment for future salaries at December 31, 1997 are as follows: Year Ending December 31, Amount ------------ -------- 1998 $137,500 1999 220,000 2000 85,000 -------- Total $442,500 ======== Purchase Commitment During each twenty-four (24) successive months beginning April 1998, the majority stockholder of the Company has the option to sell back to the Company up to 3,350 shares of common stock per month at $2.00 per share. Business Acquisition On June 3, 1998, the Company entered into a stock purchase agreement, as amended, with What About Me, Inc. (the 'Seller'), whereby the Company acquired a 51% interest in Technosoft, Inc. for $123,000 in cash and 162,143 in the Company's common stock. The purchase method of accounting will be used for this transaction. Conversion of Debt On June 8, 1998, the Company converted certain notes payable (see Note 4, 5 and 6) to common stock. The aggregate notes payable including accrued interest through April 15, 1998 was $790,729. Each $1.3999 of debt was converted into one (1) share of common stock, par value $.01. The total shares issued for this conversion was 567,666 shares. Stock Split On June 12, 1998, the Board of Directors authorized a 14,018.75 for 1 stock split, thereby increasing the number of issued and outstanding shares to 2,803,750, and increasing par value to $.01 per share. In addition, the Board of Directors amended the certificate of incorporation to increase the number of common shares authorized to 6,000,000, par value $.01. EX-99.(C)(4) 5 PRESS RELEASE FOR IMMEDIATE RELEASE Contact: James Garfinkel Vice President and Corporate Secretary 914-747-9100 Ext.209 D-VINE ANNOUNCES ACQUISITION OF INTERNET COMPANY AND ANNOUNCES NAME CHANGE TO "MONSTERDAATA.COM" April 2, 1999 (New York) -- D-Vine Ltd. (OTC:DVNL) announced today that it has completed the acquisition of 99.2% of the outstanding common stock of Taconic Data Corp., a New York-based privately-held provider of real estate due diligence data delivered to consumers over the Internet and to businesses through industry member organizations and trade groups. Following the completion of the acquisition, D-Vine changed its name to "MonsterDaata.com, Inc." to better reflect its business activities. D-Vine issued 6 million shares of its common stock to former holders of Taconic Data stock to complete the acquisition. D-Vine previously announced the completion of a 1,000 to 1 reverse stock split, with a record date for affected stockholders of March 26, 1999. Subsequent to the completion of this reverse stock split, an existing warrant holder was issued 1 million shares of D-Vine common stock, upon exercise of the warrant, and D-Vine received $1 million in proceeds from the exercise of this warrant. In connection with the completion of the acquisition of Taconic Data, directors of Taconic Data assumed control of the Board of Directors of D-Vine. MonsterDaata.com intends to use the proceeds of the warrant exercise to enhance sales and marketing, target acquisitions, and further develop the www.MonsterDaata.com web site. MonsterDaata.com recently hired John Evans as Senior VP of Corporate Development to develop and oversee the company's acquisition and internal growth efforts. "This is just the beginning," said Mitchell Deutsch, the company's co-founder and CEO. "The business to business and consumer web content sector is fast growing and quickly consolidating. We intend to take advantage of this situation through additional acquisitions and our internal expansion initiatives." Taconic Data was incorporated in 1992, and is the leading provider of due diligence, transaction valuation, target marketing, and competitive intelligence data to consumers, realtors, and real estate professionals. "We like to think of ourselves as a Bloomberg of the real estate due diligence world" said James Garfinkel, a principal and co-founder. The company's DaataSuperstore(TM) will be offered to Internet portals throughout the real estate, mortgage & lending, title, insurance, and other related industries. Its Neighborhood Place(TM) database of school, demographics, lifestyle characteristics, crime, and local area information is currently an integral component of the Realtor.com web site, which is the largest consumer real estate portal in the country. (MonsterDaata.com is not affiliated with Realtor.com; the data provided by MonsterDaata.com to Realtor.com and other Internet portals is licensed by MonsterDaata.com to such portals on arms-length terms). Except for statements that are historical, the statements in this release are "forward-looking" statements that are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and Section 27A of the securities Act of 1933 and Section 21E of the Securities Exchange act of 1934. Forward-looking statements involve significant risks and uncertainties, and in light of the significant uncertainties inherent in such statements, the inclusion of such information should not be regarded as a representation that the objectives, assumptions or plans described in such statements will be achieved; in fact, actual results could differ materially from those contemplated by such forward looking statements. The Company does not undertake any obligation to publicly release any revisions to these forward-looking statements or to reflect the occurrence of unanticipated events. EX-99.(C)(5) 6 RISK FACTORS RISK FACTORS An investment in MonsterDaata.com involves a high degree of risk. The achievement of our business objectives is subject to a number of market and other factors beyond our control, and our future prospects are speculative. If we make any forward-looking statements or assumptions concerning our future business activities, revenues, profits or financial condition, or if we make any forward-looking statements concerning our industry, the economy, technological changes or our competitors, you should recognize that our predictions and assumptions are subject to a great deal of uncertainty. Actual results could differ materially from our predictions and assumptions, particularly given the highly speculative nature of our business and that of other Internet-related businesses in our industry. If our predictions prove to be too optimistic, the value of our business could be adversely impacted and our shareholders will probably lose money. Our shareholders could find that there is nobody willing to purchase their shares when they want to sell, and it is possible that our shareholders could lose their entire investment in our stock. Our stock should only be purchased by speculators who understand the high level of risk that a purchase of our stock entails and who are willing and able if necessary to hold our stock for an extended period of time, or indefinitely, and to risk the loss of their entire investment in our stock. If you are a suitable investor for MonsterDaata.com, you should fully understand the following material risk factors: Developing Internet Market We expect a substantial portion of our revenue to come from the continued development of products and services to be distributed over Internet. Our revenue models are based primarily on: o fees paid for the item-by-item use of our information products database by consumers and businesses over the Internet; o bulk licensing fees for the use of our information products database by Internet portals, such as Realtor.com, or industry trade groups and member organizations, such as regional real estate multiple listing services, for redistribution to consumers and businesses; and o revenues from advertisers and other third parties that are generated from the number and type of visitors we attract to our Web site. The business use of the Internet is still in its infancy, and it is possible that the Internet may not prove to be a viable commercial marketplace. Known issues in this regard include inadequate development of Internet infrastructure to date, competing technology, delays in the development of new standards and protocols required to handle increased Internet activity, and the possibility of significant government regulation (locally, nationally and internationally). Moreover, concerns over the security of Internet transactions and the privacy of users may inhibit the growth of the Internet, particularly as a means of conducting commercial transactions. To the extent that our activities involve the storage and transmission of proprietary information, such as credit card numbers, security breaches could expose us to a risk of loss or litigation and possible liability. We cannot assure you that contractual provisions attempting to limit our liability in such areas will be adequately implemented or enforceable, or that other parties will accept such contractual provisions as part of our agreements. We have not fully resolved some other critical issues concerning our use of the Internet, including reliability, cost, ease of deployment, administration and quality of service. This may affect our ability to maintain our business, expand product marketing, improve communications and increase business efficiencies. Rapid Technological Change Business on the Internet is characterized by: o rapid technological change; o frequent changes in user requirements and preferences; o frequent new product and service introductions embodying new processes and technologies; and o evolving industry standards and practices that could render our information delivery practices obsolete. Our success will depend partly on our ability to improve our existing services, develop new product offerings and respond to technological advances, emerging industry standards and competitive offerings. We cannot assure you that we will be successful in these endeavors. Evolving Internet technology and standards increase the risk that system interruptions will occur. Our Internet operations are also vulnerable to interruption by fire, power loss, telecommunications failure and other events beyond our control. System interruptions that result in the unavailability of our Web site, or slower response times for users, could reduce the number of advertisements delivered, and our revenues earned from advertisers, as well as the fees we collect from consumers and businesses using our database information products over the Internet. We have experienced periodic system interruptions in the past and expect that such interruptions could continue to occur from time to time in the future. Additionally, any substantial increase in traffic on our Web site could require us to expand and adapt our network infrastructure. We cannot assure you that we will be able to expand our network infrastructure on a timely basis to meet increased demand. Competition The market for Internet data services is relatively new, intensely competitive and rapidly evolving. Our Internet operations compete against a variety of firms that provide information products through one or more media, including print, broadcast, television and the Internet. Within our targeted niche of information products and the Internet, we compete with Experian Corporation, Public Priority Systems, Inc. (School Match) and Online Data Services (CrimeCheck). Each of these competitors offers one or more Internet sites with information products similar to individual items we provide over the Internet; and each of these competitors, in particular Experian, may have greater financial resources than we do. These financial resources could be deployed to more aggressively compete on the Internet or through more traditional media, to our disadvantage, at any time. We expect competition to persist and intensify. There are relatively low barriers to entry into our business, and competitors using other media to deliver information products could adapt their businesses to include the Internet as a medium for delivering their products. Competitors could develop or offer services that provide significant performance, price, creative or other advantages over those offered by us, and any competitor or group of competitors could have a material adverse effect on our business, financial condition, results of operations and prospects. Government Regulation Due to the increasing popularity of the Internet, it is likely that a number of laws and regulations related to the Internet will be adopted at the local, state, national and international levels. These laws would cover issues such as user privacy, freedom of expression, pricing of products and services, taxation, advertising, intellectual property rights, information security and the convergence of traditional communication services with Internet communications. Because of the growth in the electronic commerce market, Congress has held hearings on whether to regulate providers of services and transactions in the electronic commerce market. These laws could have an adverse impact on client demand and decrease growth of the Internet, which could in turn decrease the demand for our services or increase our cost of doing business over the Internet. Acquisitions We intend to acquire businesses complementary to ours in order to expand our services, diversify our business and lead the consolidation trend among Internet information products providers. We cannot assure you that we will be able to make any acquisitions in the future on favorable terms or that such acquisitions will ultimately prove advantageous to us. We may encounter substantial costs, delays or other problems as we integrate our acquisitions. Such costs could include severance payments to employees of acquired companies, systems integration costs, restructuring charges and other expenses associated with a change of control, as well as non-recurring acquisition costs including accounting, legal and investment banking fees and transaction-related obligations. Increased competition for acquisition candidates may develop in our targeted industries, in which case there may be fewer acquisition opportunities available to us and higher acquisition costs for the opportunities that are available. Moreover, it is possible that neither our management nor management of any of the acquired companies will have the necessary skills to manage a company with substantial internal growth opportunities and plans for further growth through acquisitions or strategic alliances. We may seek to recruit additional managers to supplement the management of the acquired companies, but we may not have the ability to recruit additional managers with the skills necessary to enhance the management of the acquired companies. Dependence On Key Managers, Employees and Outsource Vendors Our success depends heavily on the continued service of our executive officers and our managers. Should one or more of these individuals leave before acceptable replacements are found, there could be a material adverse effect on our business and prospects. We do not presently maintain key-man life insurance on any of our executives or employees. Competition for employee candidates with the technical skills we require is intense. We have not experienced any significant difficulties in attracting and retaining qualified personnel to date, although there can be no assurance that we will not encounter such problems in the future. We also use the services of a data entry and data conversion facility in the Philippines, a CD-ROM software company, and Internet site development and hosting companies. Should the service of those facilities become unavailable or unreasonably priced, we may experience an interruption in our business activities until we identify other suitable outsource vendors. Dependence on Availability of Information Our collection of data from primary sources is subject to Federal Freedom of Information Act laws and regulations and local, county and state interpretations of that Act. A change in these laws and regulations, or additional such laws and regulations, could have an adverse effect on our business by limiting our ability to collect data. We also collect data from external providers, but we cannot assure you that our license agreements will continue to allow us to do so, nor can we assure you that, in cases where providers can no longer serve us, alternative sources of data will be available. Concentration of Customers Although we have relatively diversified customer base, our business could be materially and adversely affected by the loss of any one or more large multiple listing service customers. On a pro forma basis, our top ten multiple listing service customers accounted for approximately 80% of our total sales and the single largest customer accounted for 10% of our total sales in 1998. The loss or insolvency of one or more major customers, or a material reduction in the sales to such customers, would have a material adverse effect on our results of operations. Intellectual Property Rights It is uncertain how intellectual property laws will apply to the Internet, and we cannot assure you that existing laws will provide adequate protection for our proprietary database offerings or our Internet domain names. Our success and ability to compete partly depends on the protection of our proprietary database offerings on the Internet and on the goodwill associated with our trademarks, trade names, and Internet domain names. We rely on copyright laws to protect the original content that we develop for the Internet. We rely on trade secret and copyright laws to protect the proprietary technologies that we have developed to manage and improve our Web site, but we cannot assure you that these laws will sufficiently protect us, that others will not develop technologies similar or superior ours, or that others will not obtain or use our technologies without our authorization. In addition, we rely on certain technology licensed from others, and we may be required to license additional technology, for use in managing our Web site and providing related services to users and advertising customers. Our ability to generate revenues from Internet commerce may also depend on data encryption and authentication technologies that we may be required to license from others. We cannot assure you that these third party technology licenses will be available to us on acceptable commercial terms, or at all. The inability to enter into and maintain any of these technology licenses could have a material adverse effect on our business, prospects, financial condition and operating results. We also cannot assure you that others will not bring claims of copyright or trademark infringement against us or claim that our use of certain technologies violates the intellectual property rights of others. Any claims of infringement could be time consuming to defend, result in costly litigation, divert management attention, require us to enter into costly royalty or licensing arrangements and prevent us from using important technologies. Any of these could have a material adverse effect on our business, prospects, financial condition and operating results. Potential Adverse Effect of Shares Eligible for Future Sale As of April 5, 1999, 7,024,688 shares of our common stock were issued and outstanding. Of these shares we believe that 6,000,000 are "restricted securities" which under certain circumstances may be sold in compliance with Rule 144 or other exemptions under the Securities Act. Assuming that Rule 144 is available, we believe that, subject to certain volume limitations and "manner of sale" requirements, these "restricted securities" would be eligible for resale in April 2000; however, if we were to file a registration statement with the SEC covering some or all of these shares, they could become eligible for resale even sooner. In addition, we have issued warrants for the purchase of an aggregate of 560,000 shares of our common stock for $3.00 per share. These warrants are not exercisable until March 31, 2000, and will expire on March 31, 2004 if not exercised after March 31, 2000. The shares that would be issued if the warrants were exercised would be "restricted securities," as described above. No prediction can be made regarding the effect that the availability of these "restricted securities" will have on the market prices of our shares from time to time. The possibility that substantial amounts of our shares may be sold in the public market may adversely effect the prevailing market prices for shares and could impair our ability to raise capital in the future by selling new shares. No "Established Trading Market"; No Dividends Although our shares are eligible for the OTC Bulletin Board of the NASD, there is currently no "established trading market" for our shares, and we cannot assure you that any such market will ever develop or be maintained. The absence of an active trading market would reduce or eliminate the liquidity of an investment in our shares. If and to the extent that brokerage firms act as market makers for our shares on the OTC Bulletin Board, they may be a dominating influence in any market that might develop, and the degree of participation by such firms may significantly affect the price and liquidity of our shares. These firms may discontinue their market making activities at any time. The prices at which our shares may be offered in the market will be determined by these firms and by the purchasers and sellers of our shares, but such prices may not necessarily relate to our assets, book value, results of operations or other established and quantifiable criteria of value. Any market price for our shares is likely to be very volatile, and numerous factors beyond our control may have a significant adverse effect on prices. We have never paid cash dividends on our capital stock and do not anticipate paying any cash dividends for the foreseeable future. Possible Effect of "Penny Stock" Rules On Liquidity The Exchange Act requires additional disclosure relating to the market for "penny stocks." A penny stock is generally defined to be any equity security not listed on NASDAQ or a national securities exchange that has a market price of less than $5.00 per share, subject to certain exceptions. Among these exceptions are shares issued by companies that have: o net tangible assets of at least $2 million, if the issuer has been in continuous operation for three years; o net tangible assets of at least $5 million, if the issuer has been in continuous operation for less than three years; or o average annual revenue of at least $6 million for each of the last three years. We do not currently meet the requirements of these exceptions and, therefore, our shares would be deemed penny stocks for purposes of the Exchange Act if our market price falls below $5.00 per share. In such case, trading in our shares would be regulated pursuant to Rules 15-g-1 through 15-g-6 and 15-g-9 of the Exchange Act. Under these rules, brokers or dealers recommending our shares to prospective buyers would be required, unless an exemption is available, to: o deliver a lengthy disclosure statement in a form designated by the SEC relating to the penny stock market to any potential buyers, and obtain a written acknowledgement from each buyer that such disclosure statement has been received by the buyer prior to any transaction involving our shares; o provide detailed written disclosure to buyers of current price quotations for our shares, and of any sales commissions or other compensation payable to any broker or dealer, or any other related person, involved in the transaction; o send monthly statements to buyers disclosing updated price information for any penny stocks held in their accounts, and these monthly statements must include specified information on the limited market for penny stocks. In addition, if we are subject to the penny stock rules, all brokers or dealers involved in a transaction in which our shares are sold to any buyer, other than an established customer or "accredited investor," must make a special written determination that our shares would be a suitable investment for the buyer, and the brokers or dealers must receive the buyer's written agreement to purchase our shares, as well as the buyer's written acknowledgement that the suitability determination made by the broker or dealer accurately reflects the buyer's financial situation, investment experience and investment objectives, prior to completing any transaction in our shares. These Exchange Act rules may limit the ability or willingness of brokers and other market participants to make a market in our shares and may limit the ability of our shareholders to sell in the secondary market, through brokers, dealers or otherwise. We also understand that many brokerage firms will discourage their customers from trading in shares falling within the "penny stock" definition due to the added regulatory and disclosure burdens imposed by these Exchange Act rules. Our shares also could also be subject to Section 15(b)(6) of the Exchange Act, which gives the SEC the authority to prohibit any person that engages in unlawful conduct while participating in a distribution of penny stock from associating with a broker or dealer, or participating in a distribution of penny stock, if the SEC finds that such a restriction would be in the public interest. Such a restriction, if any were imposed, could materially and adversely affect the market liquidity for our shares. The SEC from time to time proposes even more stringent regulatory or disclosure requirements on shares not listed on NASDAQ or on a national securities exchange. For example, changes are currently proposed to Rule 15c2-11 of the Exchange Act. The adoption of the proposed changes to Rule 15c2-11, or any other regulatory changes that may be made in the future, could have an adverse effect on the trading market for our shares. Control by Principal Stockholders; Other Antitakeover Provisions As of April 5, 1999, Mitchell Deutsch, together with his children, owned about 45% of our outstanding common stock, and James Garfinkel, together with his children, owned about 28% of our outstanding common stock. As a result, Mitchell Deutsch, James Garfinkel and their families together are able to elect a majority of the Board of Directors and otherwise continue to influence our policies and any other matter requiring shareholder approval (including mergers, consolidations and the sale of all or substantially all of our assets). They can also, together with others, prevent or cause a change in control in our company. Our Certificate of Incorporation authorizes the issuance of up to 10,000,000 shares of "blank check" preferred stock with such designation, rights and preferences as may be determined from time to time by the Board of Directors. Accordingly, the Board of Directors is empowered, without stockholder approval, to issue a new series of preferred stock with dividend, liquidation, conversion, voting or other rights which could hamper the voting power or other rights of our common stockholders. The issuance of a new series of preferred stock could be used in certain circumstances as a method of discouraging, delaying or preventing a change in control in our company. Although we do not presently intend to issue any additional shares of preferred stock, we cannot assure you that we will not do so in the future. We are subject to Section 203 of the General Corporation Law of the State of Delaware. Subject to certain exceptions, Section 203 prohibits a Delaware corporation from engaging in any business combination with any interested stockholder for a period of three years following the date that such stockholder became an interested stockholder unless the proposed business combination was approved by the Board of Directors before the stockholder became an interested stockholder. In general, Section 203 defines an interested stockholder as any shareholder directly or indirectly owning 15% or more of the outstanding voting stock of a Delaware corporation. Section 203 could have the effect of discouraging others from making tender offers for our shares, and also may have the effect of preventing changes in our management. Litigation We may potentially be liable in the course of our business for defamation, negligence, copyright, patent or trademark infringement and other claims based on the materials that we publish or distribute over the Internet. In addition, we could be exposed to liability with respect to material that is indexed or offered on our sites. Although we carry general liability insurance, our insurance may not cover potential claims of this type or may not be adequate to indemnify us for all possible liability. The successful assertion of one or more large claims against us that exceeds available insurance coverage, if any, or results in changes to any insurance policies we may obtain (including premium increases or the imposition of a large deductible or co-insurance requirements) could adversely affect our business, results of operations and financial condition. Future Capital Needs; Uncertainty of Additional Financing We anticipate a need to raise additional funds in order to conduct our operations and take advantage of acquisition and expansion opportunities. Our liquidity and capital requirements will depend on numerous factors, including the success of our new product offerings, the growth of our Internet-related revenues, and competing technological and market developments. We will be required to raise additional funds through public or private financing, strategic relationships or other arrangements, particularly as our acquisition strategy matures. We cannot assure you that such additional funding, if needed, will be available on terms acceptable to us, or at all. Furthermore, any additional equity financing may dilute existing shareholders. In addition, any new shares issued may have rights, preferences or privileges senior to those of the existing shareholders. Debt financing, if available, may involve restrictive covenants which may limit our operating flexibility. Strategic arrangements, if necessary, may require us to relinquish our rights to some of our intellectual property or some business opportunities. Any of these occurrences could have a material adverse effect on our business, financial condition, results of operations and prospects. Effect of the Year 2000 Many computer chips and computer software programs use two digits rather than four to define the applicable year and, as a result, are incapable of properly recognizing or processing information with dates beyond December 31, 1999. Upon arrival of the year 2000, any computer programs that have date sensitive software may: o interpret the year as "00" and refuse to accept any date entry for years past 1999; o interpret "00" as connoting the year 1900; and/or o erroneously assume that the year 2000 is not a leap year. We are checking all of our internal systems to ensure they are year 2000 compliant. We cannot assure you, however, that the year 2000 problem will not affect us or any entities with whom we conduct business. -----END PRIVACY-ENHANCED MESSAGE-----