<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 17, 1996
REGISTRATION NO. 333-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM SB-2
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
APOLLO INTERNATIONAL OF DELAWARE, INC.
(Name of Small Business Issuer in Its Charter)
------------------------------
<TABLE>
<S> <C> <C>
DELAWARE 3625 59-3285046
(State or Other Jurisdiction of (Primary Standard Industrial (I.R.S. Employer
Incorporation or Organization) Classification Code Number) Identification Number)
</TABLE>
------------------------
6542 U.S. HIGHWAY 41
SUITE 215
APOLLO BEACH, FLORIDA 33572
(813) 645-7677
(Address and Telephone Number of Principal Executive Offices and Principal Place
of Business)
------------------------------
DAVID W. CLARKE
PRESIDENT
APOLLO INTERNATIONAL OF DELAWARE, INC.
6542 U.S. HIGHWAY 41
APOLLO BEACH, FLORIDA 33572
(813) 645-7677
(Name, Address and Telephone Number of Agent for Service)
------------------------------
COPIES TO:
<TABLE>
<S> <C>
RANDOLPH H. FIELDS, ESQ. JAY M. KAPLOWITZ, ESQ.
Greenberg Traurig Hoffman Gertsten, Savage,
Lipoff Rosen & Quentel, P.A. Kaplowitz & Curtin, LLP
111 North Orange Avenue, Suite 2050 575 Lexington Avenue
Orlando, Florida 32801 New York, New York 10022
Telephone: (407) 420-1000 Telephone: (212) 752-9700
Telecopier: (407) 420-5909 Telecopier: (212) 980-5192
</TABLE>
------------------------
APPROXIMATE DATE OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable after this Registration Statement becomes effective.
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box: /X/
------------------------
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant shall
file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933, as amended, or until this Registration Statement
shall become effective on such date as the Securities and Exchange Commission,
acting pursuant to said Section 8(a), may determine.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
The Exhibit Index required by Item 601 of Regulation S-B is located at page
of the sequential numbering system appearing in the manually signed copy of
this Registration Statement, totaling pages, filed with the Securities and
Exchange Commission.
<PAGE>
------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE PER UNIT AGGREGATE AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED(1) (2) OFFERING PRICE(2) REGISTRATION FEE
<S> <C> <C> <C> <C>
Common Stock, $.01 par value.......... 805,000(3) $5.00 $ 4,025,000 $ 1,220
Redeemable Common Stock Purchase
Warrants............................ 345,000(4) $.10 $ 17,250 $ 11
Common Stock, $.01 par value(5)....... 172,500(6) $5.50 $ 948,750 $ 288
Underwriters' Warrant(7).............. 1 $.0001 $ 10 $ 1
Common Stock, $.01 par value(8)....... 70,000 $6.00 $ 510,000 $ 155
Redeemable Common Stock Purchase
Warrants(9)......................... 30,000 $.12 $ 3,600 $ 1
Common Stock, $.01 par value(10)...... 30,000 $5.50 $ 165,000 $ 50
Common Stock, $.01 par value(11)...... 1,432,989 $5.00 $ 7,164,945 $ 2,172
Redeemable Class A Common Stock
Purchase Warrants(12)............... 650,000 $.10 $ 65,000 $ 20
Common Stock, $.01 par value(13)...... 650,000 $5.50 $ 3,575,000 $ 1,084
Total............................. $ 5,002
</TABLE>
(1) Pursuant to Rule 416 under the Securities Act of 1933, this Registration
Statement also covers such indeterminable additional shares of Common Stock
as may become issuable as a result of any future anti-dilution adjustment in
accordance with the terms of the Warrants.
(2) Estimated solely for the purpose of calculating the amount of the
registration fee in accordance with Rule 457 under the Securities Act of
1933.
(3) Includes 105,000 shares of Common Stock which the Underwriters have the
option to purchase to cover over-allotments, if any.
(4) Includes 45,000 Warrants which the Underwriters have the option to purchase
to cover over-allotments, if any.
(5) Issuable upon exercise of Warrants.
(6) Includes 45,000 shares of Common Stock issuable upon exercise of Warrants
subject to the Underwriters' over-allotment option.
(7) Issuable to Underwriters.
(8) Issuable upon exercise of Underwriters' Common Stock Purchase Warrant.
(9) Issuable upon exercise of Underwriters' Warrant.
(10) Issuable upon exercise of Underwriters' redeemable common stock purchase
warrants ("Underwriters' Warrants").
(11) Represents 700,000 shares of Common Stock held by private placement
investors, 299,000 shares of Common Stock issued pursuant to a consulting
agreement, 433,989 shares held by certain shareholders, and included
pursuant to registration rights agreements.
(12) Represents 400,000 Warrants issued pursuant to a consulting agreement, and
250,000 Warrants issued to private placement investors resulting from the
Company's private placement of Common Stock and Warrants.
(13) Represents 400,000 shares of Common Stock issuable upon exercise of
Warrants issued pursuant to a consulting agreement and 250,000 shares of
Common Stock issuable upon exercise of Warrants held by private placement
investors.
<PAGE>
EXPLANATORY NOTE
Two forms of Prospectus are included in this Registration Statement. The
first Prospectus will be used in connection with an underwritten offering of
securities by the Company (the "Company Prospectus"). The second Prospectus will
be used in connection with the sale of securities by certain selling
securityholders from time to time in open market transactions (the "Selling
Securityholders Prospectus"), upon release from certain lock-up agreements. The
Company Prospectus and the Selling Securityholders Prospectus are substantially
identical, except for the alternate pages for the Selling Securityholders
Prospectus included herein which are labeled "Alternate Page for Selling
Securityholders Prospectus." In addition, what is referred to as "the offering"
in the Company Prospectus will be changed to "the Company Offering" throughout
the Selling Securityholders Prospectus.
After this Registration Statement becomes effective, the Company Prospectus
will be used in its entirety in connection with the offer and sale of the
securities referenced therein; however, the Selling Securityholders Prospectus
will be used in its entirety in connection with the offer and sale of the
securities referenced therein upon expiration of or an earlier release from
certain lock-up agreements, at which time the definitive prospectus will be
filed with the Commission pursuant to Rule 424 promulgated under the Securities
Act of 1933, as amended.
<PAGE>
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
<PAGE>
SUBJECT TO COMPLETION. DATED DECEMBER 17, 1996
PROSPECTUS
APOLLO INTERNATIONAL OF DELAWARE, INC.
700,000 SHARES OF COMMON STOCK AND
300,000 REDEEMABLE COMMON STOCK PURCHASE WARRANTS
Apollo International of Delaware, Inc., a Delaware corporation, (the
"Company") hereby offers (the "Offering") 700,000 shares of common stock, $.01
par value (the "Common Stock") of the Company and 300,000 Redeemable Common
Stock Purchase Warrants (the "Public Warrants"). The Common Stock and the Public
Warrants offered hereby (sometimes hereinafter collectively referred to as the
"Securities") will be separately tradeable immediately upon issuance and may be
purchased separately. Investors will not be required to purchase shares of
Common Stock and Public Warrants together or in any particular ratio. Each
Public Warrant entitles the holder to purchase one share of Common Stock at an
exercise price of $5.50 (the "Exercise Price"), subject to adjustment,
commencing two years after the date of this Prospectus (the "Effective Date")
until the close of business on the sixth year after the Effective Date. The
Public Warrants are each redeemable by the Company for $.05 per Public Warrant
at any time after one year from the Effective Date, upon thirty days' prior
written notice to the Public Warrant holders, provided (i) the closing bid price
of the Common Stock for 20 consecutive trading days exceeds $7.50, and (ii) if
such redemption occurs during the first two years following the Effective Date,
the representative of the Underwriters (the "Representative") has consented in
writing to the redemption. See "Description of Securities".
Prior to this Offering, there has been no public market for the Company's
Common Stock or Public Warrants, and there can be no assurance that such a
public market will develop or be sustained after the completion of the Offering.
The Company has applied for the listing of the Common Stock and Public Warrants
on the NASDAQ SmallCap Market ("NASDAQ") under the symbols AIOD and AIODW,
respectively, and the Boston Stock Exchange ("BSE") under the symbols [ ]
and [ ], respectively. For discussion of the factors considered in
determining the offering prices of the Common Stock and Public Warrants, see
"Underwriting."
Concurrently with the registration of the Common Stock and Public Warrants
offered under this Prospectus, the Company registered 2,167,989 shares of Common
Stock and 665,000 Public Warrants (the "Additional Registered Securities")
representing 1,432,989 shares of Common Stock and 665,000 Public Warrants held
by certain shareholders and the Underwriters and 735,000 shares of Common Stock
issuable upon exercise of the Public Warrants and the Underwriters' Warrant. The
Additional Registered Securities are being registered for future sale by such
securityholders in a secondary offering, subject to the expiration of, or
earlier release from lock-up agreements between the Company and such
securityholders ranging from 13 to 24 months from the date of this Prospectus.
See "Concurrent Registration for Secondary Offering."
------------------------------
THE SECURITIES OFFERED HEREBY ARE SPECULATIVE AND INVOLVE A HIGH DEGREE OF
RISK AND IMMEDIATE SUBSTANTIAL DILUTION FROM THE PUBLIC OFFERING PRICE AND
SHOULD NOT BE PURCHASED BY INVESTORS WHO CANNOT AFFORD THE LOSS OF THEIR ENTIRE
INVESTMENT. PROSPECTIVE INVESTORS SHOULD CAREFULLY CONSIDER THE RISKS DESCRIBED
UNDER THE CAPTION "RISK FACTORS" WHICH APPEAR BEGINNING ON PAGE 5 OF THIS
PROSPECTUS. SEE ALSO "DILUTION."
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
UNDERWRITING DISCOUNTS
PRICE TO PUBLIC AND COMMISSIONS(1)
<S> <C> <C>
Per Share of Common Stock.............................. $5.00 $.50
Per Warrant............................................ $.10 $.01
Total(3)............................................... $3,530,000 $353,000
<CAPTION>
PROCEEDS TO COMPANY(2)
<S> <C>
Per Share of Common Stock.............................. $4.50
Per Warrant............................................ $.09
Total(3)............................................... $3,177,000
</TABLE>
(1) In addition, the Company has agreed to pay the Representative in the form
of: (i) a non-accountable expense allowance equal to 3% of the gross
proceeds of this Offering, of which $25,000 has been prepaid by the Company
and the balance of which shall be paid upon closing of the Offering and (ii)
an underwriters' warrant ("Underwriters' Warrant") for 70,000 shares of
Common Stock and/or 30,000 Public Warrants, which Underwriters' Warrant is
exercisable for a period of five years, commencing one year after the
Effective Date at an exercise price of $6.00 per share or $.12 per warrant,
subject to adjustment. The Company and the Underwriters have agreed to
indemnify each other against certain liabilities, including liabilities
under the Securities Act of 1933, as amended. See "Underwriting."
(2) Before deducting expenses, estimated at $428,000, payable by the Company,
including the Underwriters' non-accountable expense allowance
(3) The Company has granted the Underwriters an option, exercisable within 45
days form the date of this Prospectus, to purchase up to 105,000 additional
shares of Common Stock and/or 45,000 Public Warrants on the same terms and
conditions as set forth above, solely for the purpose of covering
over-allotments. If such option is exercised in full, the Price to Public,
Underwriting Discounts and Commissions and Proceeds to the Company will be a
total of $4,059,500, $405,950, and $3,653,550, respectively.
The Securities offered by this Prospectus are being offered by the
Underwriters on a "firm commitment" basis subject to prior sale, when, as and if
accepted by the Underwriters, approval of certain legal matters by counsel for
the Underwriters and certain other conditions. The Underwriters reserve the
right to withdraw, cancel or modify such offer without notice and reject any
order in whole or in part. It is expected that delivery of the certificates
representing the Securities will be made in New York, New York on or about
, 1997.
---------------------
MAY DAVIS GROUP, INC.
---------------------
THE DATE OF THIS PROSPECTUS IS , 1997
<PAGE>
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE SECURITIES AT A
LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH
TRANSACTIONS MAY BE EFFECTED ON THE BOSTON STOCK EXCHANGE, THE OVER-THE-COUNTER
MARKET OR OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY
TIME.
2
<PAGE>
PROSPECTUS SUMMARY
THE FOLLOWING IS A SUMMARY OF CERTAIN INFORMATION (INCLUDING FINANCIAL
STATEMENTS AND NOTES THERETO) CONTAINED IN THIS PROSPECTUS AND IS QUALIFIED IN
ITS ENTIRETY BY THE MORE DETAILED INFORMATION APPEARING ELSEWHERE HEREIN. UNLESS
OTHERWISE SPECIFIED, ALL REFERENCES HEREIN REFLECT THE 10.6828 FOR 1 SPLIT OF
THE COMPANY'S COMMON STOCK EFFECTED FOR SHAREHOLDERS OF RECORD ON MAY 10, 1996.
ALTHOUGH FRACTIONAL SHARES RESULTED FROM THE STOCK SPLIT, THERE ARE NO
REFERENCES TO FRACTIONAL SHARES HEREIN. FURTHER, UNLESS OTHERWISE INDICATED, THE
INFORMATION IN THIS PROSPECTUS ASSUMES THAT THE UNDERWRITERS' OVER-ALLOTMENT
OPTION IS NOT EXERCISED. EACH PROSPECTIVE INVESTOR IS URGED TO READ THIS
PROSPECTUS IN ITS ENTIRETY.
THE COMPANY
Apollo International of Delaware, Inc. (the "Company") is a development
stage company formed in Delaware in November, 1994. The Company's objective is
to integrate new computer and fiber optics technologies into electric power
protection and control products for industry and electric utilities. The Company
is developing concurrently two product lines, the first of which (designated as
"CMPR" products) is designed to monitor motors used by industrial users, and the
second of which (designated as "SOLARIS" or "NOVA" products), is designed to
monitor electric power transmission for industrial users and electric utilities.
The target market for the motor protection and control product line is
industrial end users such as steel mills, mining operations, pulp and paper
mills, and petrochemical companies. The NOVA product line is designed for the
utility substation marketplace which includes public and investor owned
utilities, cogeneration facilities, and large industrial users who operate their
own electric power substations.
The Company maintains its principal executive offices at 6542 Highway 41,
Suite 215, Apollo Beach, Florida 33592; telephone (813) 645-7677.
3
<PAGE>
THE OFFERING
<TABLE>
<S> <C>
Securities Offered........................... 700,000 shares of Common Stock, $.01 par
value.
300,000 Public Warrants. Each Public Warrant
entitles the holder, for $5.50, to purchase
one share of Common Stock for a period of
four years commencing two years after the
date of this Prospectus (the "Effective
Date"). The Public Warrants are each
redeemable by the Company for $.05 per Public
Warrant at any time after one year from the
Effective Date, upon thirty days' prior
written notice to the Public Warrant holders,
provided (i) the closing bid price of the
Common Stock for 20 consecutive trading days
exceeds $7.50, and (ii) if such redemption
occurs during the first two years following
the Effective Date, the Representative has
consented in writing to the redemption. See
"Description of Securities-- Warrants."
Securities Outstanding Prior to the
Offering................................... 2,799,786 shares of Common Stock(1)
Securities Outstanding Subsequent to the
Offering(2)................................ 3,499,786 shares of Common Stock(1)
950,000 Public Warrants(3)
Estimated Net Proceeds(4).................... $2,749,000
Use of Proceeds by Company................... The Company intends to use the net proceeds
of this Offering for product development and
engineering in the continuing design and
testing of its products; equipment
expenditures; marketing and selling costs
associated with expansion of its domestic and
international sales network; the design and
development of marketing materials, the
hiring of additional personnel; repayment of
loans from, and payment of consulting fees
to, officers, directors and/or principal
shareholders of the Company in the
approximate aggregate amount of $108,000; and
working capital and general corporate
purposes. See "Use of Proceeds."
Risk Factors................................. Investment in the securities offered hereby
are speculative and involve a high degree of
risk and immediate substantial dilution. See
"Risk Factors" and "Dilution."
Proposed NASDAQ Symbols(5)................... Common Stock--AIOD
Public Warrants--AIODW
Proposed BSE Symbols(5)...................... Common Stock--[ ]
Public Warrants--[ ]
</TABLE>
4
<PAGE>
- ------------------------
(1) Does not include (i) 246,000 shares of Common Stock reserved for future
issuance under the Company's 1996 Stock Option Plan; (ii) 254,000 shares of
Common Stock reserved for issuance upon exercise of stock options granted
under the 1996 Stock Option Plan; (iii) 1,050,000 shares of Common Stock
reserved for issuance upon exercise of outstanding warrants to purchase
Common Stock; (iv) 70,000 shares of Common Stock reserved for issuance upon
exercise of the Underwriters' Warrant; (v) 30,000 shares of Common Stock
reserved for issuance upon exercise of Public Warrants issuable upon
exercise of the Underwriters' Warrant; and (vi) 300,000 shares of Common
Stock reserved for issuance upon exercise of the Public Warrants.
(2) Does not include 105,000 additional shares of Common Stock or 45,000 Public
Warrants issuable upon exercise of the Underwriters' over-allotment option.
See "Underwriting."
(3) Includes 400,000 common stock purchase warrants issued pursuant to a
consulting agreement and 250,000 common stock purchase warrants issued
pursuant to a private placement of the Company's securities, all of which
warrants shall have the same exercise price and other terms and provisions
of the Public Warrants upon the closing of the Offering. Does not include
(i) 550,000 common stock purchase warrants issued to consultants; or (ii)
100,000 common stock purchase warrants issued to employees.
(4) After deducting expenses of this Offering payable by the Company estimated
at $781,000 (inclusive of commissions and underwriting discounts and
assuming no exercise of the Underwriters' over-allotment option).
(5) Although the Company has applied for listing the Securities for quotation on
the NASDAQ SmallCap Market and the Boston Stock Exchange ("BSE"), there can
be no assurance that the Company's securities will be accepted for listing
or that if listed it will be able to continue to meet the requirements for
continued quotation, or that a public trading market will develop or that if
such market develops, it will be sustained. See "Risk Factors--Lack of Prior
Market for Securities,
"--Possible Delisting of Securities from Nasdaq System; Risks Related to
Low-Priced Stocks."
SUMMARY FINANCIAL INFORMATION
The following table presents summary historical data of the Company for the
years ended December 31, 1994 and 1995 and the period from inception to December
31, 1995, which have ben derived from the Company's audited financial statements
and unaudited financial data for the ten months ended October 31, 1995 and 1996
and the period from inception to October 31, 1996, included elsewhere in this
Prospectus. The Company was formed in November 1994 and did not begin to have
revenue until 1996.
5
<PAGE>
The information should be read in conjunction with "Management's Plan of
Operation" and the Financial Statements and the related notes thereto.
<TABLE>
<CAPTION>
TEN MONTHS ENDED OCTOBER 31,
1996
YEARS ENDED DECEMBER 31 ---------------------------------------------
--------------------------- PRO PRO FORMA AS
1994 1995 ACTUAL FORMA(1) ADJUSTED(2)(3)
------------ ------------- ----------------- ----------- -------------
<S> <C> <C> <C> <C> <C>
SUMMARY BALANCE SHEET DATA
Working capital (deficit)................... $ 224,543 $ (33,590) $ (45,503) $ (6,353) $ 2,704,788
Total assets................................ $ 242,439 $ 356,738 $ 795,438 $ 834,588 $ 3,498,017
Total liabilities........................... $ 12,488 $ 363,949 $ 472,416 $ 469,916 $ 384,795
Shareholders' equity (deficit).............. $ 229,951 $ (7,211) $ 323,022 $ 364,672 $ 3,113,222
</TABLE>
<TABLE>
<CAPTION>
CUMULATIVE FROM
YEARS ENDED DECEMBER 31 TEN MONTHS-ENDED OCTOBER 31, INCEPTION TO
-------------------------- ------------------------------- OCTOBER 31,
1994 1995 1995 1996 1996
------------ ------------ ------------ ----------------- ---------------
<S> <C> <C> <C> <C> <C>
SUMMARY INCOME STATEMENT DATA
SALES $ 218,789 $ 218,789
Cost of sales............................. (158,426) (158,426)
Gross Profit.............................. 60,363 60,363
Research and Development.................. $ (14,988) $ (233,073) $ (206,957) (137,522) (385,583)
General and Administrative................ (5,171) (294,089) (226,573) (1,157,101 ) (1,456,361 )
Income (loss) from operations............. (20,159) (527,162) (433,530) (1,234,260 ) (1,781,581 )
Interest expenses......................... (168,055 ) (168,055 )
Extraordinary benefit from forgiveness of
indebtedness............................. 75,028 75,028
Net income (loss)......................... $ (20,159) $ (567,162) $ (433,530) $ (1,287,287 ) $ (1,874,608 )
Weighted average shares outstanding....... 1,144,579 1,398,597 1,162,525 2,262,634 1,762,587
Net income (loss) per Common.............. $ (.02) $ (.41) $ (.37) $ (.57 ) $ (1.06 )
</TABLE>
- ------------------------
(1) Reflects the conversion of accounts payable of $2,500 into 25,000 shares of
Common Stock and the issuance of 15,000 shares of Common Stock and 7,500
warrants for net proceeds of $39,150 in conjunction with the sale of the
final 1.5 units of the private placement occurring after October 31, 1996
but prior to the date of this Prospectus.
(2) Reflects the pro forma adjustments referred to in footnote (1) and gives
effect to the sale of 700,000 shares of Common Stock and 300,000 Public
Warrants of the Company in the Offering at $5 per share, and $.10 per
warrant, anticipated expenses of $781,000 and repayment of the note
payable-- stockholder. See "Use of Proceeds".
(3) Does not include up to (a) 105,000 shares and 45,000 Public Warrants subject
to issuance under the over-allotment option; (b) 70,000 shares and 30,000
Public Warrants subject to the Underwriters' Warrant; or (c) other
outstanding options or warrants.
6
<PAGE>
RISK FACTORS
THE SECURITIES OFFERED HEREBY ARE SPECULATIVE AND INVOLVE A HIGH DEGREE OF
RISK AND SUBSTANTIAL DILUTION AND SHOULD ONLY BE PURCHASED BY INVESTORS WHO CAN
AFFORD TO LOSE THEIR ENTIRE INVESTMENT. PROSPECTIVE INVESTORS, PRIOR TO MAKING
AN INVESTMENT, SHOULD CAREFULLY CONSIDER THE FOLLOWING RISKS AND SPECULATIVE
FACTORS, AS WELL AS OTHER INFORMATION SET FORTH ELSEWHERE IN THIS PROSPECTUS,
ASSOCIATED WITH THIS OFFERING, INCLUDING THE INFORMATION CONTAINED IN THE
FINANCIAL STATEMENTS HEREIN.
DEVELOPMENT STAGE COMPANY; LIMITED REVENUES. The Company is a development
stage company which was formed in November 1994 and which had an accumulated
deficit of approximately $587,321 as of December 31, 1995 and $1,844,608 as of
October 31, 1996. Potential investors should be aware that unanticipated
problems, many of which may be beyond the Company's control, are commonly
encountered by companies in the development stage. These include, but are not
limited to, unexpected product development, marketing and customer support
problems, increased competition, lack of credibility with customers and
suppliers, and technical obsolescence. Further, the Company had no revenues
prior to December 31, 1995 and has had limited revenues of approximately
$218,789 for the ten month period ended October 31, 1996. There is no assurance
that the Company will ever generate sufficient revenues to meet expenses or be
profitable. See "Management's Discussion of Plan of Operations", "Business" and
the Financial Statements hereto.
SIGNIFICANT CAPITAL REQUIREMENTS; DEPENDENCE ON OFFERING PROCEEDS; POSSIBLE
NEED FOR ADDITIONAL FINANCING. The Company's capital requirements in connection
with the design, development and commercialization of its products have been and
will continue to be significant. To date, the Company has been substantially
dependent upon loans from its principal stockholders, as well as private
placements of its debt and equity securities, to finance its working capital
requirements. The Company is dependent on the proceeds of this Offering to
commence full-scale marketing activities in connection with its products, to
complete the development of additional product and software applications, and to
fund the Company's working capital requirements. The Company anticipates, based
on currently proposed plans and assumptions relating to its operations, that the
proceeds of this Offering will be sufficient to satisfy its contemplated cash
requirements for at least twelve months following the consummation of this
Offering. In the event that the Company's plans change or prove to be inaccurate
or if the proceeds of this Offering prove to be insufficient to fund operations,
the Company could be required to seek additional financing sooner than currently
anticipated or could be required to curtail its activities. The Company has no
current arrangements with respect to, or sources of, additional financing, and
there can be no assurance that existing stockholders will provide any portion of
the Company's future financing requirements. There can be no assurance that any
additional financing will be available to the Company on acceptable terms, or at
all. Additional equity financing may involve substantial dilution to the
interests of the Company's then existing stockholders. See "Use of Proceeds" and
"Certain Transactions."
BROAD DISCRETION IN APPLICATION OF PROCEEDS. Approximately $876,000 (31.9%)
of the Offering proceeds have been allocated to working capital. In addition,
management of the Company may adjust the application and allocation of the net
proceeds of this Offering, including funds received upon exercise of the
Underwriters' over-allotment option or the exercise of any Public Warrants, if
such adjustment is determined to be in the best interests of the Company in
order to address changed circumstances and opportunities. Furthermore, to the
extent that the Company's expenditures are less than projected, the resulting
balance will be retained and used for general working capital purposes. As a
result of the foregoing, the success of the Company will be substantially
dependent upon the judgment of the management of the Company with respect to the
application and allocation of the net proceeds hereof. Pending use of such
proceeds, the net proceeds of this Offering may be invested by the Company in
interest-bearing accounts, or invested in government obligations, certificates
of deposit or similar short-term, low-risk investments. See "Use of Proceeds."
7
<PAGE>
BENEFITS TO RELATED PARTIES. Certain persons who are officers, directors
and/or principal shareholders of the Company will receive a portion of the
Offering proceeds. David W. Clarke and Christine Clewes, directors and officers
and principal shareholders of the Company, will be repaid an outstanding loan
balance of approximately $85,000, plus accrued and unpaid interest, if any.
Frank J. Mancini, a director and a shareholder, will be paid approximately
$23,000 for consulting services, plus accrued and unpaid interest. In addition,
the Company may use a portion of the proceeds of this Offering to pay salaries
of its executive officers and fees to consultants and directors to the extent
that cash flow from operations is insufficient for such purposes. See
"Management--Employment Agreements," "--Consulting Agreements," "Use of
Proceeds," and "Certain Transactions."
TECHNOLOGICAL FACTORS; UNCERTAINTY OF PRODUCT DEVELOPMENT AND
COMMERCIALIZATION. Although the Company has completed the development of the
technological aspects of certain of its products, which it believes perform the
principal functions for which they have been designed, the Company has only
commenced limited commercialization of its products for a limited number of
users. Accordingly, there can be no assurance that, upon widespread commercial
use, if any, these products or other products currently being developed by the
Company will satisfactorily perform the functions for which they have been
designed or that they will operate satisfactorily. The Company intends to use a
portion of the proceeds of this Offering in connection with product refinement
and enhancement of existing products and the development of additional products.
Product development, commercialization, and continued system refinement and
enhancement efforts remain subject to all of the risks inherent in development
of new products based on innovative technologies, including unanticipated
delays, expenses, technical problems, or difficulties, as well as the possible
insufficiency of funds to implement development efforts, which could result in
abandonment or substantial change in product commercialization. The Company's
success will be largely dependent upon its products meeting targeted cost and
performance objectives of full production and the timely introduction of its
products into the marketplace, among other things. There can be no assurance
that the Company's products will satisfy current price or performance
objectives, that unanticipated technical or other problems which would result in
increased costs or material delays in introduction and commercialization will
not occur, or that the Company's products will prove to be sufficiently reliable
or durable under actual operating conditions or otherwise be commercially
viable. Software and other technologies as complex as those incorporated into
the Company's systems may contain errors which become apparent subsequent to
widespread commercial use. Remedying such errors may delay the Company's plans
and cause it to incur additional costs, or otherwise have a material adverse
impact on the Company. See "Business--Products", "--Sales and Marketing" and
"--Patents and Copyrights."
CHANGES IN TECHNOLOGICAL CLIMATE. The high technology business in which the
Company participates is characterized by rapidly changing technology and
frequent new product introductions. The Company's success is dependent upon its
ability to develop and market its products on a timely basis. There can be no
assurance that the Company will be successful in developing or marketing such
products to take advantage of the perceived demand for such products within the
motor protection and electric utility industry. In addition, there can be no
assurance that products or technologies developed by others will not render the
Company's products or technologies non-competitive or obsolete. See
"Business--Competition" and "--Sales and Marketing."
UNCERTAINTY OF MARKET ACCEPTANCE. As is typical in the case of emerging and
evolving markets, demand and market acceptance for newly introduced products and
services is subject to a high level of uncertainty. The Company has not yet
commenced significant marketing activities relating to product commercialization
and currently has limited marketing experience and limited financial, personnel
and other resources to undertake extensive marketing activities. Acceptance of
the Company's products that are geared to the electric utility industry will
involve retrofitting electric utility substations, which potential customers may
be reluctant to do. Consequently, potential customers may elect to utilize other
products with which they are familiar or which they believe to have more
advantages over the Company's products, or may otherwise be reluctant to
purchase the Company's products. Achieving market acceptance for the
8
<PAGE>
Company's products will require substantial marketing efforts and expenditure of
significant funds to create awareness and demand by potential customers as to
the perceived benefits and distinctive characteristics of the Company's
products. There can be no assurance that the Company will have available funds
or other resources necessary to achieve such acceptance. See "Business--Sales
and Marketing" and "--Competition."
LIMITED MARKETING CAPABILITIES AND EXPERIENCE; DEPENDENCE UPON THIRD-PARTY
RESELLERS. The Company has limited marketing experience and has conducted only
limited marketing activities. The Company expects to continue to market directly
to certain accounts and to market through a network of independent
manufacturers' representatives and distributors. The Company's present
manufacturers' representatives and distributors are not subject to minimum
purchase requirements and can discontinue marketing the Company's products with
minimum notice. There can be no assurance that the Company will be able to
retain any of its present manufacturers' representatives or distributors, or
expand its existing distribution network. Loss of any such persons or the
inability to expand the existing distribution network could have a detrimental
effect on the Company's ability to carry out its intended plan of operations.
The Company, directly and through its independent sales network, also
intends to establish a network of resellers, consisting primarily of value-added
resellers ("VARS") and original equipment manufacturers ("OEMS") with
established distribution channels to market the Company's products and to
educate potential resellers to install and service its systems. The Company's
prospects will be significantly affected by its ability to successfully develop
relationships with VARS and OEMS and the marketing efforts of such resellers.
While the Company believes that independent resellers with which it enters into
such arrangements will have an economic motivation to market the Company's
products, the time and resources devoted to these activities generally will be
controlled by such entities and not by the Company. The Company will also be
dependent upon such resellers to provide installation and support services. A
decline in the financial prospects of particular resellers or of any of their
customers, or inadequate installation and support services by resellers, could
have an adverse effect on the Company. In addition, such resellers will likely
market various product lines, including, in some cases, products directly
competitive with the Company's products. There can be no assurance that the
Company will be able, for financial or other reasons, to finalize any
third-party distribution or marketing arrangements or that such arrangements, if
finalized will result in commercialization of any of the Company's products. See
"Business--Sales and Marketing."
DEPENDENCE UPON THIRD-PARTY MANUFACTURERS. The Company intends to engage
small contract manufacturers to supply its products, pursuant to purchase
orders. There can be no assurance that its products can be manufactured reliably
on a large-scale basis on commercially reasonable terms, or at all. The Company
is substantially dependent on the ability of its third-party manufacturers to,
among other things, meet the Company's design, performance and quality
specifications.
Failure by the Company's third-party manufacturers to comply with these and
other requirements could have a material adverse effect on the Company. There
can be no assurance that the Company's third-party manufacturers will dedicate
sufficient production capacity to meet the Company's scheduled delivery
requirements or that the Company's manufacturers will have sufficient production
capacity to satisfy the Company's requirements during any period of sustained
demand. Moreover, the electronics industry from time to time experiences short
supplies of certain high demand components, which may adversely affect the
Company's ability to meet its production schedules. Failure of manufacturers to
meet production demands of the Company, or allocations in the supply of certain
high demand components could adversely affect the Company's operations and
ability to meet its own delivery schedules on a timely and competitive basis.
There can be no assurance that if such problems develop at a time when the
Company is just beginning to deliver its products to the commercial marketplace,
the Company will be able to rectify such problems to avoid a material adverse
effect on its intended plan of operations or financial results. See
"Business--Manufacturing."
9
<PAGE>
NO PATENTS OR INTELLECTUAL PROPERTY REGISTRATION; POSSIBLE NON-EXCLUSIVITY
OF TECHNOLOGY; POTENTIAL LEGAL ACTION. The Company has not yet applied for
patents or copyrights on its products, nor has it applied for trademark
registration for any of its products' names. Although the Company intends to
initiate patent and intellectual property applications for registration, there
can be no assurance as to the breadth or degree of protection which patents or
copyrights, if any, may afford the Company; that any patent and intellectual
property applications will result in issued patents or registered copyrights or
trademarks; that the Company's patents, copyrights or trademarks will be upheld
if challenged; or that competitors will not develop similar or superior methods
or products outside the protection of any patent or copyright issued to the
Company. Although the Company is not aware of the infringement of its
technologies by third-parties, and does not believe (nor has any party asserted)
that the Company's products infringe on the proprietary rights of others, it is
possible that any future patent or intellectual property rights of the Company's
may not be valid, or if valid, that infringement of such proprietary rights may
occur. In the event the Company's products infringe patents, intellectual
property rights or proprietary rights of others, the Company may be required to
modify the design of its products, change the name of its products or obtain a
license for certain technology. There can be no assurance that the Company will
be able to do so in a timely manner, upon acceptable terms and conditions, or at
all. Failure to do any of the foregoing could have a material adverse effect
upon the Company. In addition, there can be no assurance that the Company will
have the financial or other resources necessary to enforce or defend a patent
infringement or proprietary rights violation action. Moreover, if the Company's
products infringe patents, trademarks or proprietary rights of others, the
Company could, under certain circumstances, become liable for damages, which
also could have a material adverse effect on the Company.
The Company also relies on confidentiality agreements with its directors,
employees, consultants, and manufacturers and employs various methods to protect
the source codes, concepts, ideas, proprietary know-how, and documentation of
its proprietary technology. However, such methods may not afford complete
protection, and there can be no assurance that others will not independently
develop similar know-how or obtain access to the Company's know-how or software
codes, concepts, ideas and documentation. See "Business--Patents and
Copyrights."
COMPETITION. The Company is introducing new high technology products into
markets that are dominated by competitors which have a significant share of the
market for microprocessor control relay products in electrical substations in
the United States. Such current competitors have substantially greater
financial, marketing and technical resources, more established manufacturing
capability and distribution channels, stronger customer support organizations
and greater name recognition than the Company. Such current or future
competitors may develop competing technologies similar or more advanced than the
Company's. There can be no assurance that the Company will be able to compete
successfully in current or future markets. See "Business--Competition."
DEPENDENCE ON KEY EXECUTIVES. The success of the Company is dependent on
the services and efforts of its existing key management personnel. The loss of
the services of one or more of its existing management personnel would have a
material adverse effect on the Company's business. The Company currently
maintains key-man life insurance policies on the lives of David W. Clarke,
Christine Clewes, Steven D. Smith and Gregory C. Hamilton. The Company's success
and plans for future growth will also depend on its ability to attract and
retain additional qualified personnel. There is no assurance that the Company
will be able to hire or retain such personnel in the future. See "Management."
IMMEDIATE AND SUBSTANTIAL DILUTION. Upon completion of this Offering, the
pro forma net tangible book value per share of the Common Stock, would be $.79,
representing an immediate dilution of $4.21 of net tangible book value per
share, or 84.2%, to the public investors and an increase of $.78 per share or
98.7% to existing shareholders. The exercise of the Public Warrants included in
the Securities offered hereby will result in further dilution to the public
investors. See "Dilution."
10
<PAGE>
NO DIVIDENDS ANTICIPATED. The Company does not intend to pay dividends in
the foreseeable future. Any earnings which the Company may realize in the
foreseeable future will be retained to finance the growth of the Company. See
"Dividend Policy."
NO PRIOR PUBLIC MARKET; ARBITRARY DETERMINATION OF OFFERING PRICES; POSSIBLE
VOLATILITY OF SECURITIES. Prior to this Offering, there has been no public
market for the Company's Securities. Accordingly, there can be no assurance that
an active trading market will develop or, if developed, that it will be
sustained upon the completion of this Offering or that the market prices of the
Securities will not decline below the initial public offering prices. The
initial public offering prices of the Securities and the terms of the Public
Warrants have been arbitrarily determined by negotiations between the Company
and the Underwriters and do not necessarily bear any relationship to the
Company's assets, book value, net earnings, net sales or other established
criteria of value, and should not be considered indicative of the actual value
of the Securities. See "Underwriting." The stock market has, from time to time,
experienced extreme price and volume fluctuations, which often have been
unrelated to the operating performance of particular companies. Regulatory
developments and economic and other external factors, as well as
period-to-period fluctuations in financial results of the Company, may have a
significant impact on market prices of the Securities.
POTENTIAL ADVERSE EFFECT OF REDEMPTION OF PUBLIC WARRANTS. The Public
Warrants are subject to redemption by the Company. Redemption of the Public
Warrants could force the holders to exercise the Public Warrants and pay the
exercise price at a time when it may be disadvantageous for the holders to do
so, to sell the Public Warrants at the current market price when they might
otherwise wish to hold the Public Warrants, or to accept the redemption price,
which may be substantially less than the market value of the Public Warrants at
the time of redemption. The holders of the Public Warrants will automatically
forfeit their rights to purchase the shares of Common Stock issuable upon
exercise of such Public Warrants unless the Public Warrants are exercised before
they are redeemed. The holders of Public Warrants will not possess any rights as
stockholders of the Company unless and until the Public Warrants are exercised.
See "Description of Securities--Warrants."
CURRENT PROSPECTUS AND STATE BLUE SKY REGISTRATION IN CONNECTION WITH
EXERCISE OF PUBLIC WARRANTS. The Company will be able to issue shares of its
Common Stock upon exercise of the Public Warrants only if there is a then
current prospectus relating to the Common Stock issuable upon the exercise of
the Public Warrants under an effective registration statement filed with the
Commission and only if such Common Stock is then qualified for sale or exempt
from qualification under applicable state securities laws of the jurisdictions
in which the various holders of Public Warrants reside. Although the Company
will use its best efforts to meet such requirements, there can be no assurance
that the Company will be able to do so. The failure of the Company to meet such
requirements may deprive the Public Warrants of any value and cause the resale
or other disposition of Common Stock issued upon the exercise of the Public
Warrants to become unlawful. See "Description of Securities."
POSSIBLE ADVERSE IMPACT ON MARKET OF WARRANT EXERCISE. In the event of the
exercise of a substantial number of Public Warrants within a reasonably short
period of time after the right to exercise commences, the resulting increase in
the amount of Common Stock of the Company in the trading market could
substantially affect the market price of the Common Stock. See "Description of
Securities--Warrants."
POSSIBLE ADVERSE IMPACT OF UNDERWRITERS' WARRANT. In connection with the
Offering, the Company will sell to the Underwriters, for nominal consideration,
an Underwriters' Warrant exercisable for 70,000 shares of Common Stock at $6.00
per share and/or 30,000 Public Warrants at $.12 per warrant. The Underwriters'
Warrant will be exercisable for a period of five years, commencing one year
after the date of this Prospectus. The Underwriters' Warrant will not be
redeemable by the Company. The holders of the Underwriters' Warrant will have
the opportunity to profit from a rise in the market price of the Securities, if
any, without assuming the risk of ownership. The Company may find it more
difficult to raise additional equity capital if it should be needed for the
business of the Company while the Underwriters' Warrant is
11
<PAGE>
outstanding. At any time when the holders thereof might be expected to exercise
them, the Company would probably be able to obtain additional capital on terms
more favorable than those provided by the Underwriters' Warrant.
The Underwriters have "piggy back" and demand registration rights with
respect to the Common Stock issuable upon exercise of the Underwriters' Warrant
(and the Public Warrants issuable thereunder). Any future exercise of these
registration rights may cause the Company to incur substantial expense and could
impair the Company's ability to raise capital through the public sale of its
securities. See "Dilution," "Shares Eligible for Future Sale" and
"Underwriting."
POSSIBLE DILUTIVE EFFECT OF OPTIONS AND WARRANTS AND ADVERSE EFFECT ON
MARKET PRICE. No assurance can be given as to the effect, if any, that future
sales of Common Stock, or the availability of shares of Common Stock for future
sales, will have on the market price of the Common Stock from time to time.
Sales of substantial amounts of Common Stock (including shares issued upon the
exercise of warrants or stock options), or the possibility that such sales could
occur, could adversely affect the market price of the Common Stock and could
also impair the Company's ability to raise capital through an offering of its
equity securities in the future. As of the date of this Prospectus, the Company
granted options for 254,000 shares of Common Stock to various employees of the
Company, 127,000 of which options are first exercisable commencing one year from
their respective dates of grant (approximately July 1, 1997 to November 21,
1997), and the balance of which are exercisable incrementally over six months
thereafter, all at an exercise price of $4.00 per share. Further, the Company
issued a total of 100,000 common stock purchase warrants to two employees, which
are exercisable at $5.50 per share commencing one year from the date of this
Prospectus until September 26, 2001. The Company also issued common stock
purchase warrants to consultants for an aggregate of 950,000 shares, 400,000 of
which shall have the same terms as the Public Warrants offered hereby; 250,000
of which are exercisable at $4.00 per share commencing June 1, 1998 until June
1, 2002, and 300,000 of which are exercisable at $5.50 per share commencing June
1, 1998 until June 1, 2002. In addition, the Company issued 250,000 common stock
purchase warrants to private placement investors which shall have the same
exercise price and terms as the Public Warrants offered hereby. Further, in
connection with this Offering, the Company will issue to the Underwriters an
Underwriters' Warrant entitling the Underwriters, for four years commencing one
year from the date of this Prospectus to purchase, for $6.00 per share, 70,000
shares of the Company's Common Stock and/or 30,000 Public Warrants at a purchase
price of $.12 per warrant. The issuance of any additional shares by the Company
in the future may result in a reduction of the book value or market price of the
then outstanding Common Stock. For the life of the Underwriters' Warrants, the
Public Warrants, non-public warrants and options, the holders thereof are given
the opportunity to profit from a rise in the market price of the Common Stock.
Any rise in the market price of the Common Stock may encourage the holders to
exercise such warrants or options, which may result in a dilution of the
interests of other stockholders. As a result, the Company may find it more
difficult to raise additional equity capital if it should be needed for the
business of the Company while such warrants and options are outstanding. See
"Description of Securities."
SHARES ELIGIBLE FOR FUTURE SALE. Sale of a substantial number of shares of
the Common Stock in the public market following this Offering could materially
adversely affect the market price of the Common Stock. In addition to the Common
Stock offered hereby, (i) approximately 799,000 shares of Common Stock and (ii)
650,000 Public Warrants which are being registered for the account of Selling
Securityholders, will be available for sale in the public market commencing 13
months after the date of this Prospectus unless released earlier by the
Underwriters, (iii) approximately 200,000 shares of Common Stock being
registered for the account of Selling Securityholders, will be available for
sale in the public market commencing 24 months after the date of this Prospectus
unless released earlier by the Representative, and (iv) approximately 433,989
additional shares of Common Stock will be available for sale in the public
market commencing 18 months after the effective date of a post-effective
amendment to the
12
<PAGE>
Company's registration statement for a secondary offering of its securities by
certain securityholders, unless released earlier by the Representative. See
"Shares Eligible For Future Sale."
Each of the Company's directors and officers, and certain shareholders (in
addition to those referenced in the preceding paragraph), holding a total of
1,260,574 shares of Common Stock and warrants and options to acquire another
322,000 shares of Common Stock, have agreed not to publicly offer, sell or
otherwise dispose of any Common Stock for a period of 24 months after the date
of this Prospectus without the prior written consent of the Underwriters. Of
such shares, 673,646 would, but for the lock-up, be available for sale as of the
date of this Prospectus, subject to certain volume limitations and other
requirements of Rule 144 under the Securities Act of 1933, as amended (the "1933
Act"), and of which another 53,414 shares would be eligible for sale under Rule
144 within six months of the date of this Prospectus. Future sales of
substantial amounts of Common Stock, or the potential for such sales, could
adversely affect prevailing market prices. See "Shares Eligible For Future
Sale."
POSSIBLE RESTRICTIONS ON MARKET MAKING ACTIVITIES IN THE
SECURITIES. Although they have no legal obligation to do so, the Underwriters
from time to time may act as market makers and otherwise effect transactions in
the Securities. Unless granted an exemption by the Commission from Rule 10b-6
under the Exchange Act, the Underwriters will be prohibited from engaging in any
market making activities or solicited brokerage activities with respect to the
Securities for the period from nine business days prior to any solicitation of
the exercise of any Warrant or nine business days prior to the exercise of any
Warrant based on a prior solicitation until the later of the termination of such
solicitation activity or the termination (by waiver or otherwise) of any right
the Underwriters may have to receive such a fee for the exercise of the Warrants
following such solicitation. As a result, the Underwriters may be unable to
continue to provide a market for the Securities during certain periods while the
Warrants are exercisable. The prices and liquidity of the Securities may be
adversely affected by the cessation of the Underwriters' market making
activities.
POSSIBLE DELISTING OF SECURITIES. Prior to this Offering, there has been no
established trading market for the Company's Securities and there is no
assurance that a trading market for such Securities will develop after the
completion of this Offering. If a trading market does in fact develop for the
Securities offered hereby, there can be no assurance that it will be sustained.
Trading in such Securities is subject to official notice of issuance that the
Common Stock and the Public Warrants have been approved for trading on the
NASDAQ SmallCap Market and the BSE. If the listings are approved, the continued
trading of the Common Stock and the Public Warrants on the NASDAQ SmallCap
Market and the BSE is conditioned upon the Company meeting certain criteria.
NASDAQ has approved rules increasing listing and maintenance criteria for the
NASDAQ SmallCap Market. If the new rules are enacted, it will be more difficult
for the Company to maintain its listing on the NASDAQ SmallCap Market. If the
Company fails to meet any of these criteria, the Common Stock and/or the Public
Warrants could be delisted from trading on the NASDAQ SmallCap Market or the
BSE, which delisting could materially adversely affect the trading market for
the Common Stock and/or the Public Warrants. There can be no assurance that the
Securities will not be delisted. See "Underwriting."
PENNY STOCK REGULATION. In the event the Common Stock is delisted from
trading on NASDAQ SmallCap Market and the trading price of the Common Stock is
less than $5.00 per share, trading in the Common Stock would also be subject to
the requirements of Rule 15g-9 promulgated under the Securities Exchange Act of
1934, as amended (the "Exchange Act"). Under such rule, broker/dealers who
recommend such low-priced securities to persons other than established customers
and accredited investors must satisfy special sales practice requirements,
including a requirement that they make an individualized written suitability
determination for the purchaser and receive the purchaser's written consent
prior to the transaction. The Securities Enforcement Remedies and Penny Stock
Reform Act of 1990 also require additional disclosure in connection with any
trades involving a stock defined as a "penny stock" (generally, according to
recent regulations adopted by the Securities and Exchange Commission (the
"Commission"), any non-NASDAQ equity security that has a market price of less
than $5.00 per share, subject to certain
13
<PAGE>
exceptions), including the delivery, prior to any penny stock transaction, of a
disclosure schedule explaining the penny stock market and the risks associated
therewith. Such requirements could severely limit the market liquidity of the
Common Stock and the ability of purchasers in this Offering to sell their
securities in the secondary market. There can be no assurance that the Common
Stock will not be treated as a penny stock.
LIMITED EXPERIENCE OF THE REPRESENTATIVE. The Representative has engaged in
a very limited number of public offering activities. There can be no assurance
that the Representative's lack of public offering experience will not affect its
ability to close this Offering or the subsequent development of a trading
market, if any. See "Underwriting."
ANTI-TAKEOVER EFFECT. Certain provisions of the Certificate of
Incorporation of the Company and Delaware law may deter or frustrate takeovers
of the Company. The Company is authorized to issue 5,000,000 shares of preferred
stock in one or more series, having terms fixed by the Board of Directors
without shareholder vote, including voting, dividend or liquidation rights that
could be greater than or senior to the rights of holders of Common Stock.
Issuance of these shares could also be used as an anti-takeover device. The
Company has no current intentions or plans to issue any such preferred stock.
See "Description of Securities--Anti-Takeover Provisions of Delaware Law;
Certain Provisions in Certificate of Incorporation."
USE OF PROCEEDS
The net proceeds to the Company from the sale of the 700,000 shares of
Common Stock and 300,000 Public Warrants offered hereby (after deducting
underwriting discounts and commissions and other expenses of the Offering) are
estimated to be $2,749,000 ($3,209,665 if the Underwriters' over-allotment
option is exercised in full). See "Underwriting." The Company expects such funds
to be utilized over the next twelve months approximately as follows:
<TABLE>
<CAPTION>
APPROXIMATE
PERCENTAGE
APPROXIMATE OF
APPLICATION OF PROCEEDS DOLLAR AMOUNT NET PROCEEDS
- ------------------------------------------------------------------------------------ -------------- ------------
<S> <C> <C>
Product Development and Engineering(1).............................................. $ 900,000 32.7%
Advertising, Marketing and Promotion(2)............................................. 540,000 19.7%
Capital Expenditures(3)............................................................. 325,000 11.8%
Repayment of Stockholder Loan and Consulting Fees(4)................................ 108,000 3.9%
Working Capital..................................................................... 876,000 31.9%
-------------- ------------
TOTAL......................................................................... $ 2,749,000 100.0%
-------------- ------------
-------------- ------------
</TABLE>
- ------------------------
(1) Includes costs associated with development of new product lines proposed to
be offered by the Company, including payment of salaries, costs and fees for
engineers and materials to be incorporated as part of the Company's
products. Also includes costs associated with development of operating
software for enhancement of existing products and implementing new products.
(2) Represents anticipated costs associated with advertising and promotion,
including trade shows and trade publications.
(3) Represents anticipated costs associated with purchasing equipment, including
computer hardware and engineering equipment.
(4) Represents repayment of existing loan of approximately $85,000 to David W.
Clarke and Christine Clewes, officers, directors and principal shareholders
of the Company and payment of consulting fees of approximately $23,000 to
Frank J. Mancini, a director and shareholder of the Company. See "Certain
Transactions."
The foregoing represents the Company's current estimate of the allocation of
the net proceeds of the Offering based upon certain assumptions relating to the
costs associated with the implementation of the
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<PAGE>
Company's proposed business operations. Future events, including problems,
delays, expenses and complications frequently encountered by companies which
seek to develop new technologies or establish new services or introduce services
to a new market, as well as changes in economic conditions, regulatory or
competitive conditions, and the success of the Company's marketing activities,
may make shifts in the allocation of funds necessary or desirable. There can be
no assurance that the Company's estimates will prove to be accurate or that
unforeseen expenses will not be incurred.
The Company believes that the net proceeds of this Offering will satisfy the
Company's capital requirements for at least twelve months. During those twelve
months, the Company's efforts will be directed at developing and implementing
its proposed business operations.
Prior to expenditures, the net proceeds of this Offering will be invested
principally in high grade short-term interest-bearing investments. Any proceeds
received upon exercise of the over-allotment option or any of the Company's
Warrants will be used for working capital.
DILUTION
The pro forma net tangible book value of the Company at October 31, 1996 was
$33,779 or $.01, per share of Common Stock. Net tangible book value per share is
determined by dividing the net tangible book value of the Company (total
tangible assets less total liabilities) by the number of shares of Common Stock
outstanding. After giving effect to the receipt of net proceeds from the sale of
the shares offered hereby, the pro forma as adjusted net tangible book value of
the Company at October 31, 1996, would have been $2,782,329 or $.79 per share of
Common Stock, representing an immediate dilution of $4.21 (or approximately
84.2%) per share to the public investors. The following table illustrates the
per share dilution:
<TABLE>
<S> <C> <C>
Initial public offering price per share....................................... $ 5.00
Pro forma net tangible book value per share before Offering(1)................ $ .01
Increase in pro forma net tangible book value per share attributable to public
investors................................................................... .78
Pro forma as adjusted net tangible book value per share after
Offering(2)(3).............................................................. .79
---------
Dilution per share to public investors........................................ $ 4.21
---------
---------
</TABLE>
The following table sets forth, as of the date of this Prospectus, the
number of shares of Common Stock purchased, the percentage of total shares
purchased, the total consideration paid, the percentage of total consideration
paid and the average price per share paid by the existing stockholders of the
Company and the investors in this Offering:
<TABLE>
<CAPTION>
SHARES PURCHASED TOTAL CONSIDERATION
----------------------- ------------------------- AVERAGE PRICE
NUMBER PERCENTAGE AMOUNT PERCENTAGE PER SHARE
---------- ----------- ------------ ----------- ---------------
<S> <C> <C> <C> <C> <C>
Existing Stockholder(1)..................... 2,799,786 80.0% $ 2,549,999 42.1% $ .91
Public Investors(3)(4)...................... 700,000 20.0% $ 3,500,000 57.9% $ 5.00
---------- ----------- ------------ -----------
Total....................................... 3,499,786 100.0% $ 6,049,999 100.0%
---------- ----------- ------------ -----------
</TABLE>
- ------------------------
(1) Reflects the conversion of accounts payable of $2,500 into 25,000 shares of
common stock and the issuance of 15,000 shares of common stock and 7,500
warrants for net proceeds of $39,150 in conjunction with the sale of the
final 1.5 units of the private placement occurring after October 31, 1996
but prior to the date of this Prospectus.
(2) Does not include up to (a) 105,000 shares and 45,000 Public Warrants subject
to issuance under the over-allotment option; (b) 70,000 shares and 30,000
Public Warrants subject to the Underwriters' Warrant; or (c) other
outstanding options or warrants. To the extent that any warrants or options
are exercised, there may be further dilution to the public investors.
(3) In the event that the Underwriters exercise their over-allotment option in
full, the pro forma as adjusted net tangible book value after this Offering
would be $.90 per share which would result in an immediate dilution of $4.10
to the public investors.
(4) Allocates no value to the Public Warrants offered hereby.
15
<PAGE>
CAPITALIZATION
The following table sets forth the debt and capitalization of the Company at
October 31, 1996, and as adjusted to give effect to the sale of 700,000 shares
of Common Stock and 300,000 Public Warrants by the Company in the Offering at
$5.00, per share and $.10, per Public Warrant and the application of the net
proceeds therefrom. This information should be read in conjunction with the
financial statements and the notes thereto, as well as "Summary Financial
Information," appearing elsewhere in this Prospectus.
<TABLE>
<CAPTION>
OCTOBER 31, 1996
----------------------------------------------
PRO FORMA
AS
ACTUAL PRO FORMA(1) ADJUSTED(2)(3)
------------- ------------- ----------------
<S> <C> <C> <C>
Note payable--stockholders....................................... $ 85,121 $ 85,121
------------- -------------
Stockholders' Equity
Preferred Stock, $.01 par value; authorized: 5,000,000 shares;
issued and outstanding: none
Common Stock, $.01 par value; authorized: 15,000,000 shares;
issued and outstanding: 2,759,786 actual, 2,799,786 pro forma,
and 3,499,786 pro forma as adjusted............................ 20,764 21,164 $ 28,164
Additional paid-in capital....................................... 2,192,977 2,234,227 4,975,777
Deficit accumulated during the development stage................. (1,874,608) (1,874,608) (1,874,608)
Prepaid rent..................................................... (16,111) (16,111) (16,111)
------------- ------------- ----------------
Total Stockholders' Equity................................. $ 323,022 $ 364,672 $ 3,113,222
------------- ------------- ----------------
------------- ------------- ----------------
Total Capitalization....................................... $ 408,143 $ 449,793 $ 3,113,222
------------- ------------- ----------------
------------- ------------- ----------------
</TABLE>
- ------------------------
(1) Reflects the conversion of accounts payable of $2,500 into 25,000 shares of
Common Stock and the issuance of 15,000 shares of common stock and 7,500
warrants for net proceeds of $39,150 in conjunction with the sale of the
final 1.5 units of the private placement occurring after October 31, 1996
but prior to the date of this Prospectus.
(2) Reflects the pro forma adjustments referred to in footnote (1) and gives
effect to the sale of 700,000 shares of Common Stock and 300,000 Public
Warrants of the Company in the Offering at $5 per share, and $.10 per
warrant, anticipated expenses of $781,000 (See "Use of Proceeds") and
repayment of the note payable--stockholder.
(3) Does not include up to (a) 105,000 shares and 45,000 Public Warrants subject
to issuance under the overallotment option; (b) 70,000 shares and 30,000
Public Warrants subject to the Underwriters' Warrant; or (c) other
outstanding options or warrants.
16
<PAGE>
DIVIDEND POLICY
The Company does not anticipate paying any dividends on its Common Stock in
the foreseeable future. Any earnings which the Company may realize in the
foreseeable future will be retained to finance the growth of the Company. Future
dividend policy will depend upon the Company's earnings, capital requirements,
financial condition and other factors considered relevant by the Company's Board
of Directors. See "Description of Securities."
MANAGEMENT'S DISCUSSION OF PLAN OF OPERATIONS
THE FOLLOWING DISCUSSION OF THE COMPANY'S PLAN OF OPERATIONS SHOULD BE READ
IN CONJUNCTION WITH THE COMPANY'S FINANCIAL STATEMENTS AND NOTES THERETO
INCLUDED ELSEWHERE IN THIS PROSPECTUS. THIS DISCUSSION CONTAINS FORWARD LOOKING
STATEMENTS THAT INVOLVE RISKS AND UNCERTAINTIES. THE COMPANY'S ACTUAL RESULTS
MAY DIFFER MATERIALLY FROM THE RESULTS DISCUSSED IN THE FORWARD LOOKING
STATEMENTS. FACTORS THAT MIGHT CAUSE SUCH A DIFFERENCE INCLUDE BUT ARE NOT
LIMITED TO THOSE DISCUSSED IN "RISK FACTORS."
OVERVIEW
The Company was incorporated in 1994 for the purpose of engaging in the
development, production and marketing of protection relays for heavy industry
and electric utilities worldwide. The Company's initial products which are
currently being marketed commercially are the CMPR2, a motor protection relay
developed to protect medium to large motors, and Solaris, a feeder protection
relay designed to protect industrial equipment and utility substations. Solaris
has recently finished beta testing and is being marketed; however, Research and
Development will continue to enhance the Solaris with features that the market
has requested.
From inception to the present, the Company's operating activities have
related primarily to recruiting personnel, raising capital, purchasing operating
assets and performing research and development.
The Company's strategy is to develop products for heavy industry that are
price competitive and have a definite edge over competitor's products both in
performance and features. The Company plans on introducing four new protection
relay products by the end of the first quarter 1997. With these additional
products, the Company will have a complete range of relay products for heavy
industry and power utilities. Each new relay is more unique and has a wider
potential customer base than its predecessor. The final product in the Solaris
protection relays, NOVA, is expected to outperform existing products and provide
a range of substation protection features that have never previously been
available in the electric power utility industry. The Company is in the process
of applying for a patent on NOVA, however, there is no guarantee that a patent
will be awarded.
RESULTS OF OPERATIONS
OPERATING EXPENSES: The Company is a development stage company and, as a
result, operating expenses have grown to about $160,000 per month as of October
1996. The increase resulted from the hiring of additional engineering personnel
and development costs incurred in connection with outside engineering
consultants. The Company believes that continued expansion of operations is
essential to achieving and maintaining market leadership.
In order to meet its cash requirements until the consummation of this
Offering, the Company arranged for factoring of its accounts receivable. Under a
factoring agreement between the Company and certain shareholders of the Company
(none of which is an officer, director or principal shareholder of the Company),
the Company agreed to sell its accounts receivable at a 6% discount, plus pay
interest on the outstanding balance at the rate of 1% per month. The maximum
amount available to the Company under the factoring agreement is $425,000, of
which as at December 1, 1996, approximately $60,000 was advanced.
17
<PAGE>
The Company believes that the foregoing arrangements will allow the Company
to have cash available to meet its operating expenses, including inventory
requirements, until the closing of this Offering.
RESEARCH AND DEVELOPMENT: Research and development expenses consist
primarily of salaries and consulting fees to support technological product
development. Costs of software to be sold, incurred after technological
feasibility has been established and until it is available for general release,
are capitalized. Salaries and other material costs are expensed. The Company
believes that continuous development will occur for new products and plans to
add up to five new engineers to replace consultants which the Company believes
will be more cost efficient.
SALES AND MARKETING: Sales and marketing expenses, which currently
represent less than 10% of expenses, will grow as more products are developed.
The Company currently develops its own marketing materials in-house to save
costs; however, since the Company is planning to penetrate a global market
place, the Company expects these costs to increase at a faster rate than other
costs.
INCOME TAXES
As of December 31, 1995, the Company had federal net operating loss carry
forwards of approximately $100,000. This net operating loss can be carried
forward for fifteen years to offset future taxable income. For the ten months
ended October 31, 1996, the additional net operating loss will be approximately
$1,600,000 which also can be used to offset income in future years for tax
purposes.
FACTORS AFFECTING OPERATING RESULTS
As a result of the Company's limited operating history, the Company does not
have historical financial data for a significant number of periods on which to
base planned operating expenses. Additionally, the Company has not yet generated
enough revenue to become profitable on a month-to-month basis. Accordingly, the
Company's expense levels are based entirely on its expectations as to future
revenues and to a large extent are variable. The Company has in the past used
outside independent contractors to support its limited number of development
personnel. However, the Company found that development schedules were difficult
to control and the Company experienced unanticipated development cost overruns.
The Company plans to hire additional personnel and to fund internal research and
development at a level sufficient to meet the Company's planned introduction of
new products. Additionally, the Company plans to increase its sales and
marketing expenses to increase potential customer awareness of its products. The
Company currently has 18 employees and anticipates hiring approximately another
18 employees within twelve months from the date of this Prospectus.
The Company distributes its products to customers directly and through
independent manufactures' representatives and distributors. The Company
anticipates that its largest customer base will be OEMS; however, the Company is
just beginning to exploit the OEM market and it is uncertain whether the Company
can timely supply products in the quantities that OEMS may require.
The Company is dependent on and intends to use the proceeds of this Offering
to implement its proposed expansion. The Company anticipates, based on currently
proposed plans and assumptions relating to its operations (including the costs
associated with, and the timetable for, its proposed expansion), that the
proceeds of this Offering, together with projected cash flow from operations,
will be sufficient to satisfy its contemplated cash requirements for at least
twelve months following the successful consummation of this Offering.
The Company expects to experience significant fluctuations to future
quarterly operating results that may be caused by many factors, including demand
for the Company's products, introduction of new technological developments, the
introduction, enhancement and market acceptance of new and existing products,
the introductions of competing products, and general economic conditions.
Further, the Company's products have long sales cycles. Occasionally, a product
may be evaluated by customers for a period of time, after which the Company may
be required to modify the product to meet the customer's needs, after which the
product is evaluated again prior to a purchase order being issued. Payment for
foreign sales
18
<PAGE>
is normally net 60 days and net 30 days for domestic sales. The Company
anticipates that a significant portion of its business will come from foreign
sales. As a result, the Company believes that period-to-period comparisons of
its results of operations will not necessarily be meaningful and should not be
relied upon as any indication of future performance.
LIQUIDITY AND CAPITAL RESOURCES:
To date, the Company has primarily financed its operations through private
sales of equity and debt securities as well as loans and capital contributions
by stockholders.
From December 1994 to December 1995, the Company raised in the aggregate
$580,000 through the sale of Common Stock. On June 3, 1995 certain stockholders
advanced $122,154 to the Company which has been partially repaid leaving a
balance at October 31, 1996 of $85,121. During January to April of 1996 a
stockholder advanced the Company $60,840 which was subsequently converted to
64,994 shares of Common Stock. During January to April of 1996, the Company
borrowed an aggregate of $178,087, which principal amount plus interest totaling
$190,703 was converted to 203,726 shares of Common Stock. During March to May
the Company sold convertible debentures for net proceeds of $54,980. These were
converted to 25,331 shares of Common Stock effective July 1, 1996. On May 15,
1996 the Company completed a bridge financing of $250,000 which was repaid from
proceeds of a subsequent private placement. Starting in June 1996 through
November 15, 1996, the Company conducted a private placement in which the
Company sold 50 units resulting in net proceeds of $1,305,000 after payments to
the placement agent. See "Certain Transactions."
The Company has generated limited revenues from the sale of CMPR2 motor
protection relays to U.S. Steel. This product is currently being modified for
the customer, and the Company expects additional orders from U.S. Steel in the
near future upon that company's satisfactory evaluation of the modified unit.
The Company is now shipping its second product, Solaris (a feeder protection
relay), on a limited basis. An initial order, shipped in October, generated
approximately $20,000 in November 1996 from the Company's factoring arrangement.
A second order for 125 units to South Africa was also factored and the Company
received approximately $40,000 in November 1996 and expects to receive an
additional $40,000 to $50,000 in December 1996 through factoring the receivable
for those 125 units.
Currently the Company has an agreement with Phasetronics, Inc., which
markets motor protection products under the label "Motortronics." Under this OEM
agreement, the Company has agreed to supply CMPR and CMPR2 motor protection
relays to Phasetronics during a term of two years, commencing February 1996. To
date, the Company has shipped 10 units under this agreement and has received a
purchase order from Phasetronics for 100 additional units, 15 of which are
scheduled for delivery in December 1996 and 15 of which are scheduled for
delivery in January 1997. Delivery of the 70 remaining units remains to be
scheduled. The Company anticipates gross proceeds of approximately $30,000 for
the December and January deliveries, which again the Company anticipates
factoring.
Prior to the closing of this Offering, the Company expects to utilize its
line of credit under the factoring agreement in order to generate cash. The
Company believes that the net proceeds from this Offering, together with
available funds will be sufficient to meet its anticipated needs for working
capital, capital expenditures, new research and development, and increased
engineering staff for at least the next 12 months. Thereafter, sales from
products that have been developed in 1996 is expected provide sufficient cash or
provide the basis for conventional bank financing for growth of accounts
receivable and inventory.
PROPOSED ACCOUNTING STANDARDS
On June 14, 1996, the American Institute of Certified Public Accountants
issued an exposure draft of a Statement of Position on Software Revenue
Recognition which may require the Company to change their method of recognizing
revenue. As of the date of this Registration Statement, the American Institute
of Certified Public Accountants has not proposed an effective date for this
Statement of Position and the Company has not analyzed or determined the effect,
if any, which may result. Management of the Company does not believe there will
be a material effect of such change and any change would be charged to
operations.
19
<PAGE>
BUSINESS
GENERAL
Apollo International of Delaware, Inc. (the "Company") is a development
stage company formed in Delaware in November, 1994 with its principal place of
business located in Apollo Beach, Florida. The Company's objective is to
integrate new computer and fiber optics technologies into electric power
protection and control products for industry and electric utilities. The Company
is developing concurrently two product lines, the first of which (designated as
"CMPR" products) is designed to monitor motors used by industrial users, and the
second of which (designated as "SOLARIS" or "NOVA" products), is designed to
monitor electric power transmission for industrial users and electric utilities.
The target market for the motor protection and control product line is
industrial end users such as steel mills, mining operations, pulp and paper
mills, and petrochemical companies. The NOVA product line is designed for the
utility substation marketplace which includes, public and investor owned
utilities, cogeneration facilities, and large industrial users who operate their
own electric power substations. The following discussion contains forward
looking statements that involve risks and uncertainties. The Company's actual
results may differ materially from the results discussed in the forward looking
statements. Factors that might cause such a difference include, but are not
limited to, those discussed in "Risk Factors."
PRODUCTS
THE CONTROL AND MOTOR PROTECTION RELAYS (CMPR).
The CMPR products are motor protection relays designed for the medium to
heavy industrial electric motor market. The CMPR is a hardware and software
package designed to provide a high level of protection to expensive electric
motors used throughout heavy industries such as mining operations, chemical and
petrochemical, steel mills, and paper manufacturing facilities. The CMPR, which
is attached to a motor directly or indirectly through a circuit breaker, is a
digital protection device (relay) similar to a circuit breaker that monitors the
motor and either shuts down the motor or sets off an alarm upon detection of
irregularities such as shorts to ground, loss of a phase of power, overheating,
failing gears, or an unbalanced rotor. The CMPR offers an advantage over other
types of motor protection devices because it contains its own "intelligence" and
as such is not required to communicate with any other "off-site" device for
instructions before making the decision to shut down a motor, sound an alarm, or
do nothing. The motor relays currently used by industry are not self-contained,
stand alone products and must communicate with another device before reacting to
a problem, thus requiring greater reaction time than the Company's CMPR relays.
The Company is currently marketing the CMPR2 relay which is designed to
protect motors with a minimum of 5000 horsepower. The Company has shipped 53
units as of October 31, 1996. The Company has purchase orders for 100 units from
an existing customer, verbal purchase orders for 3 units and a commitment to
purchase a minimum of 24 units from an existing customer (pending the approval
of a specially modified unit now being tested by the customer). The Company
expects to begin shipments of these orders in December 1996. The Company also
has delivered a number of units for evaulation by potential customers and
expects satisfactory testing to result in additional orders.
The motor protection and control products share a common technology and the
Company anticipates developing and marketing variations of the CMPR2 offering
varying degrees of motor protection (i.e., monitoring voltage, ground current,
motor temperature) and/or control (i.e., starting up and shutting down the
motors), depending on the types of motors and needs of potential customers.
Under current development and testing is the CMPR1 relay product which is
designed for small to medium motors with horsepower ranging from 100 HP to 5,000
HP. The CMPR1 products are versions of the CMPR2 in a streamlined package with
fewer features selling at a lower price. Management believes that the market is
substantially larger for the CMPR1 than for the CMPR2 due to the larger number
of lower horsepower motors used in industry. The Company expects to release the
first of such products in the first quarter of 1997. The Company also has in
development another variation of the CMPR2 which is designed for
20
<PAGE>
motors which require more control features than motor protection features. The
Company anticipates that this product will be ready for beta testing (a test on
a customer's site under normal operating conditions) in the first quarter of
1997.
THE NOVA PRODUCT FAMILY
The NOVA product line is a family of feeder breaker relays that are designed
to provide protection and control for both electric power utility substations
and heavy industrial facilities operating their own substations. The Company
believes NOVA's unique design will perform more rapidly than existing products
and provide a range of substation protection features that previously have not
been available in the Company's target markets. Ultimately, the NOVA products
will be self-contained, stand alone devices (i.e., act independently with their
own intelligence without having to communicate with a remote or off-site device
for instruction) that monitor and send communications regarding irregularities
in power transmission (i.e., loss of electric power from a transformer, an
imbalance in power, shorts to ground, etc.). The NOVA feeder breaker relays will
be installed in electric power substations (which contain transformers and
breakers). A transformer is a device that transforms variations of electric
current into variations of voltage and current and sends power to different
locations over several feeder lines, which, in turn, pass through other, smaller
down-stream substations, where power is eventually disseminated to final
destinations such as hospitals, office buildings, industrial plants and
residential areas. On each such feeder line is a feeder breaker to which relays
are attached. The relays tell the breaker to open or shut in response to
irregularities in power transmission. The relays currently used by electric
power utilities (and industries that have their own electric power substations)
do not have their own "intelligence" and therefore must first communicate with a
remote terminal unit ("RTU") or a programmable logic controller ("PLC") before
reacting. The RTU/PLC contains the information necessary to analyze the problem,
make a decision and transmit that decision to the relay, which then reacts by
either shutting off or opening up the breaker. On the other hand, NOVA relays
are designed to contain their own intelligence and therefore can respond more
quickly to a problem.
The Company is initially developing three models of its NOVA line. The first
model "Solaris", is designed primarily for use by heavy industry. Solaris is a
solid state digital tripping device for large industrial breakers. It can be
programmed to trip the breaker under certain conditions or to send an alarm
under other circumstances. The Company anticipates that the Solaris will benefit
major industrial operations where there is a multitude of motor-operated
equipment (i.e., conveyor belts, paint stations, robotics, machinery), which may
be synchronized and where precise monitoring of motor functions is critical.
When the Solaris trips a breaker, the breaker must be manually reclosed and
therefore this version of Solaris is not useable in electric utility
substations. Adding automatic reclosure capability requires more extensive
software and more heavy duty connectors. The Company is currently marketing
Solaris. It has sold 27 such units as of October 31, 1996 and has firm orders
for 125 units to be delivered in November/ December 1996 and a purchase order
for 125 units per month to begin in January 1997. The Company has also received
contracts for the purchase of additional units from distributors in Taiwan and
Brazil.
In development is another, more sophisticated version of Solaris which is
expected to be beta tested during February 1997 and, subject to successful
testing, commercially marketed during April 1997. This second model is designed
for the electric power utility industry and has automatic reclosure capability
when tripped. This second model of the Solaris will contain more information
than current feeder breaker relays, but will still communicate with the RTU or
PLC. However, it will provide more information to the RTU/PLC, thereby
shortening processing and response time by the RTU/PLC.
The Company's flagship product will be the third, most sophisticated version
of feeder breaker relays in the NOVA family and its development is scheduled to
commence during the first quarter of 1997. This NOVA design is expected to
perform more rapidly than existing products and provide a range of substation
control features that have never previously been available in the electric power
utility industry. Each feeder breaker relay will be self contained, having its
own intelligence and ability to react independently of an RTU/PLC, thus
rendering the RTU/PLC obsolete. The commercial availability of the product will
depend
21
<PAGE>
on beta testing results and any refinements that may be required. At this time
the Company expects to commence beta testing the product in the second quarter
of 1997. As with the CMPR product line, the NOVA product line will share a
common technology with variations for emphasizing different purposes.
The Company is developing and expects to offer an optional NOVA software
package that will permit the NOVA relays to communicate with each other and
directly with the power plant, avoiding the more timely substation to substation
routing. By combining self contained intelligence and communications via fiber
optics and sophisticated software, the response time to an electrical
irregularity is expected to be reduced to milliseconds from several seconds. In
addition to a faster response time, the Company anticipates that electric
utilities will save the cost of an RTU/PLC (ranging from $35,000 to $100,000 per
RTU), plus the cost of wiring. The Company estimates that wiring requirements
will be reduced by two-thirds with the NOVA flagship system.
MANUFACTURING
The Company develops and designs its products, the associated test
procedures and produces assembly and operations manuals for customers' use. The
Company contracts with third party manufacturers for the manufacture of product
components which the Company assembles at its facilities. The Company believes
that such relationships will afford the most competitive pricing and the Company
will not be dependent on one source for production. However, the Company has
limited control over the manufacturing process from the perspective of quality
control and production of a sufficient number of products to meet demand.
RESEARCH AND DEVELOPMENT
The Company plans to further expand its engineering department to focus on
research and development of additional products, including the completion of the
NOVA line of products utilizing the proceeds of this Offering. These "design
teams" will work closely with the Company's field engineers, sales and marketing
staff to evaluate additional customer needs and to further advance the state of
its substation control and motor protection product development.
PATENTS AND COPYRIGHTS
The Company is in the process of having patent applications prepared for
certain individual modules of its products. The Company has not previously
applied for patent or copyright protection for its products nor has it conducted
a patent search (other than through university library resources and the
Internet) due to a lack of sufficient working capital. Although the Company has
not determined whether various products are patentable as a whole, or even
whether it can obtain patents and copyrights on certain components, the Company
plans to obtain copyrights and patents on the various modules of the overall
system, which the Company anticipates will provide an effective barrier to
infringement by third parties. Although the Company anticipates obtaining
patents for the NOVA system and/or its various modules, the patent process is
long and complex, and there is no assurance that the Company will be successful
in obtaining patents on any or all of its products. There may be other, similar
products currently being developed or subject to superior patents or copyrights,
thereby subjecting the Company to potential liability claims based on patent or
copyright infringement.
SALES AND MARKETING
The Company has been establishing relationships with a network of
independent manufacturer's representative organizations strategically located
throughout the United States and selected international markets for the
marketing of its Solaris and NOVA products. As of the date of this Prospectus,
the Company has entered into agreements with 13 domestic and 6 international
representatives. The Company also expects to enter into agreements with domestic
and international OEMS, VARS and systems integrators. The Company also plans to
sell directly to certain customers. The Company's marketing
22
<PAGE>
strategy utilizes public relations, trade media advertising, product sales
materials and other direct distributor and customer relations support.
The Company plans to first concentrate its internal marketing efforts on
forging contractual relationships with OEMS and permit the OEM to put its own
label on certain CMPR products. In January, 1996 the Company entered into its
first OEM agreement with Phasetronics, Inc., a manufacturer and distributor of
solid state power and motor control products, some of which are distributed
under the "Motortronics" label. Under the agreement, the Company supplies its
CMPR motor protection relays to the Phasetronics, on a non-exclusive basis, who
in turn distributes the relays worldwide under its own Motortronics label. The
agreement has a term of two years and to date, the Company has sold 10 relays
under this agreement and has received a purchase order for another 100 relays,
initially 15 for delivery in each of December 1996 and January 1997. Delivery of
the remaining 70 units is yet to be scheduled.
The Company expects to enter into similar arrangements with other OEMS. The
Company believes that this marketing effort will give the Company exposure to
some of the largest users of electric motor power in the United States.
The Company entered into a second agreement with Phasetronics pursuant to
which the Company agreed to design, develop, manufacture and supply that company
with a solid state digital starter module (inclusive of communications control
software) according to specifications supplied by the OEM. The OEM expects to
use the module in the development and marketing of a digital soft start device
for motors. The module has been completed and is being tested by the customer.
The Company anticipates receiving $40,000 in February 1997, subject to
satisfactory results from the customer's testing of the product. Although the
Company does not have any current plans to enter into similar product
development arrangements with other companies, preferring instead to sell
completed products to the OEM market, in the future the Company may enter into
agreements with third parties to develop specific products for them.
COMPETITION
The Company faces competition from manufacturers of the existing low
technology products currently used by the electric power protection and control
market. Companies such as General Electric, Siemens A.G., GEC Alsthom, Inc., and
ABB Industrie A.G., are established companies which control a substantial share
of the domestic and international market for motor control and relay products
and have greater name recognition and financial resources than the Company.
Although the Company believes it has no current competitor manufacturing high
technology products similar to the CMPR or NOVA, there is no assurance that such
competitors will not emerge and further they may have more resources than the
Company for development, manufacturing and marketing their products.
EMPLOYEES
As of November 31, 1996, the Company had 18 employees, comprised of 8
engineers, 5 marketing and sales personnel and 5 administrative personnel.
PROPERTY
The Company's facilities are located at 6542 North U.S. Highway 41, Apollo
Beach, Florida 33572 where it leases its office and plant space comprising
approximately 7,230 square feet. The lease expires as to 5,630 square feet on
March 31, 1999 and expires as to approximately 1,600 square feet on October 31,
1998. The lease provides for a monthly rental of $6,873.26. However, the
landlord gave the Company a $20,000 credit toward the rent in exchange for
21,366 shares of the Company's Common Stock, which credit is being off-set
against the rent at $555.56 per month. The Company believes that the facilities
are adequate for its purposes for the foreseeable future.
LEGAL PROCEEDINGS
There are no legal proceedings pending to which the Company or any of its
property is subject, and to the knowledge of the Company, there are no such
proceedings threatened. There can be no assurance that any future legal
proceedings will not have a material adverse effect on the Company's business,
reputation or financial condition.
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MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
The directors and executive officers of the Company are as follow:
<TABLE>
<CAPTION>
NAME AGE POSITION AND OFFICE
- --------------------------------------- --- --------------------------------------------------
<S> <C> <C>
David W. Clarke........................ 48 President, Chief Executive Officer; Chairman
Christine Clewes....................... 46 Vice President, Marketing; Director
Steven D. Smith........................ 42 Vice President, Operations; Director
Gregory C. Hamilton.................... 46 Director
Matthias E. Lukens, Jr................. 46 Director (Vice Chairman)
Frank J. Mancini....................... 74 Director
Robert K. Swatland..................... 56 Vice President, Sales
Donald P. Louw......................... 40 Vice President, International Sales
</TABLE>
David W. Clarke, one of the Company's founders, has served as its President
and Chief Executive Officer since its inception in November 1994 and was elected
Chairman in September 1996. Prior to founding the Company, Mr. Clarke was a
sales representative for GF Electro, a power utility industry representative,
from April 1994 to November 1994. From April 1992 to April 1994, Mr. Clarke
co-founded and was employed by WHR Corporation, a high technology firm
specializing in data communications for multimedia firms. Mr. Clarke served as
Vice President until WHR was dissolved in April 1994. In April 1991, Mr. Clarke
co-founded and was director and Executive Vice President of Sales and Marketing
for Watch Hill Research, a high technology manufacturing firm specializing in
high speed data links and located in Providence, Rhode Island. That company's
domestic operations were sold in 1992. In November 1984, Mr. Clarke co-founded
Sequel Data Communications, a high tech data switching manufacturer based in
Raleigh, North Carolina. He served as Executive Vice President and Director
until the company was sold in August 1990. Mr. Clarke is married to Christine
Clewes, a founder, director and officer of the Company.
Christine Clewes, one of the Company's founders, has been its Vice President
of Marketing and a Director since the Company's inception in November 1994.
Prior to founding the Company, Ms. Clewes was the director of Sales and
Marketing for WHR Corporation since 1992, where she had responsibility for large
direct commercial accounts and all US Government accounts. From 1991 through
1992, Ms. Clewes managed her own firm, C2 Communications, a sole proprietorship,
located in Reston, Virginia which focused on government contracts and large
national accounts. Ms. Clewes is married to David W. Clarke, a founder, director
and officer of the Company.
Steven D. Smith joined the Company in February, 1996 as Vice President of
Operations and was elected as a Director in September 1996. Prior to joining the
Company, from 1994 to 1996, he was employed as President and CEO by Innovative
Concepts & Manufacturing Company, Boca Raton, Florida, a provider of
manufacturing and operational consulting services to various industries. Prior
to founding Innovative Concepts, from 1993 to 1994, he was employed as a
consultant to Reynolds International, Inc., a provider of environmental
consulting services. In 1978 Mr. Smith founded Manutek, Inc., an electronics
manufacturing firm where he functioned as it's President and CEO through 1993.
Gregory C. Hamilton, has been a director since September 1996. Mr. Hamilton
is currently in the process of selling his public accounting practice which he
has been conducting in Bradenton, Florida since 1983. Upon the transfer of that
practice, the Company anticipates entering into an employment agreement with Mr.
Hamilton who will serve as the Company's Chief Financial Officer and Vice
President of Finance. Mr. Hamilton has an accounting degree from the University
of South Florida in Tampa, Florida and is a Certified Public Accountant. While
operating his practice, Mr. Hamilton also served as an adjunct professor in
accounting and tax at the University of Tampa.
24
<PAGE>
Frank J. Mancini has been a director of the Company since September, 1996.
He is a shareholder, director and since March 1995 the President and Chief
Executive Officer of The Mancini Packing Company, Zolfo Springs, Florida, prior
to which he had been Vice President of that company since 1946.
Matthias E. Lukens, Jr., has been a director of the Company and its Vice
Chairman since September, 1996. Mr. Lukens has been a Vice President, director
and shareholder of Access Solutions International, Inc., North Kingston, Rhode
Island, a computer software developer since January 1996. From April 1994 to
January 1996 he was President and CEO of that company. Mr. Lukens was President
of WHR Corporation from May 1992 to April 1994. From June 1990 to March 1992 he
was President of Watch Hill Research, Providence, Rhode Island. Mr. Lukens
receives certain consulting fees and was issued 250,000 common stock purchase
warrants pursuant to a consulting agreement. See "Management--Consulting
Agreements" and "Certain Transactions."
Robert K. Swatland has been Vice President of Sales since October, 1996.
From March 1995 to October, 1996, Mr. Swatland was national sales manager for HT
Communications, Inc., Simi Valley, California, a manufacturer of wide area
communication devices. From April 1994 to March 1995, Mr. Swatland sold wide
area communications equipment as a sales representative for his own company, RKS
Enterprises, Wheaton, Illinois. Mr. Swatland served as Vice President of Sales
for Watch Hill Research from March 1992 to March 1994, Providence, Rhode Island,
a high technology manufacturing firm that specialized in high speed data links.
From April 1987 to March 1992, Mr. Swatland was employed as a regional manager
by Sequel Data Communications, Raleigh, North Carolina, a high technology data
switching manufacturer.
Donald P. Louw has been Vice President of International Sales since March
1996 and is currently working for the Company in South Africa. Prior to joining
the Company, Mr. Louw was employed by Siemens LTD South Africa in its motor
protection department from 1990 to March 1996, where he was Senior Project
Engineer. Prior to Siemens, he was employed by G E C Alstrom South Africa in its
motor protection department, where he also held the position of Senior Project
Engineer.
EXECUTIVE COMPENSATION
David W. Clarke, the Company's President and Chief Executive Officer,
received compensation of $60,000 during the fiscal year ended December 1995 for
services rendered in all capacities to the Company, of which $57,692.25 was paid
and $2,307.69 accrued in fiscal 1995. During the fiscal year ended December 31,
1995, no executive officer of the Company received or accrued cash compensation
in excess of $100,000. For information regarding current compensation paid to
the Company's executive officers, see "Employment Agreements."
DIRECTOR COMPENSATION
Directors who are employees of the Company do not receive compensation for
serving as directors. The Company anticipates compensating its independent
directors for their services in the form of fees and/ or stock options, yet to
be determined. All directors will be reimbursed for their reasonable
out-of-pocket expenses incurred in connection with attending meetings of the
Board of Directors and for other expenses incurred in their capacity as
directors of the Company.
EMPLOYMENT AGREEMENTS
The Company entered into a five year employment agreement with David W.
Clarke as the Company's President and Chief Executive Officer, commencing June
1, 1996. The term of the agreement may be automatically extended for successive
one (1) year terms, unless notice of termination is given ninety (90) days prior
to the expiration of the term or any extension period thereafter. The agreement
provides for an initial annual base salary of $150,000, subject to increases, in
addition to annual cost of living increases, based on the Company's annual gross
sales, as follows: For each $1,000,000 in annual gross sales, as calculated in
accordance with Generally Accepted Accounting Principles, in excess of
$10,000,000 but less
25
<PAGE>
than $30,000,001, Mr. Clarke shall receive an additional $5,000 in annual base
salary, commencing in the next fiscal year; PROVIDED, HOWEVER, that during the
applicable fiscal year, the Company's earnings before interest and taxes are at
least 10% of the annual gross sales. The agreement also provides that an
independent committee of Board members may award Mr. Clarke discretionary
bonuses.
Mr. Clarke's employment agreement provides for certain severance payments to
be made to him or his estate as follows: (i) in the event of death, any accrued
and unpaid salary, vacation and bonus, and one year's annual base salary then in
effect, payable in 12 equal monthly installments; (ii) in the event of permanent
disability, three years of annual base salary then in effect, and any unpaid
bonus, payable in 36 equal monthly installments (inclusive of any disability
payments paid to him from any Company-sponsored disability plan or disability
insurance), plus continued coverage, at the Company's expense, under the
Company's major medical, dental and disability plans, or the monetary
equivalent, for a period of 36 months; (iii) in the event of termination without
cause, the full compensation to which he would otherwise be entitled under the
employment agreement, payable in one lump sum upon termination, plus continued
coverage under the Company's major medical, dental and disability plans, or the
monetary equivalent, for a period of 24 months; and, (iv) in the event of
non-renewal of the employment agreement by the Company, one year's annual base
salary then in effect, payable in 12 equal monthly installments. In the event
that the Company terminates Mr. Clarke within nine months of a change in control
of the Company, Mr. Clarke will be entitled to receive in one lump sum payment,
three times his annual base salary for the remainder of the term of his
employment agreement, provided that such payment shall be based upon a minimum
period of three years.
Under the terms of his employment agreement, Mr. Clarke is subject to a
covenant not to compete with the business of the Company anywhere in the world
during the term of his employment with the Company and for a term of five years
following the expiration or termination of his employment agreement.
The Company also entered into employment agreements with Christine Clewes
(Vice President of Marketing), Steven D. Smith (Vice President of Operations),
Robert K.. Swatland (Vice President of Sales) and Donald P. Louw (Vice President
of International Sales). These employment agreements are substantially similar
and were entered into on July 1, 1996 as to Ms. Clewes and Mr. Smith, and March
22, 1996 and November 1, 1996 as to Messrs. Louw and Swatland, respectively. Mr.
Swatland's agreement is for a term of two years. The other agreements have an
initial period of four (4) years and all the agreements and are automatically
renewable for successive two (2) year terms, unless notice of termination is
given prior to the renewal period. The agreements provide for the following
annual base salaries, subject to increases for annual cost of living
adjustments: Ms. Clewes ($100,000); Mr. Hamilton ($120,000); Mr. Smith
($120,000); Mr. Swatland ($80,000); and Mr. Louw ($80,000). Except for Ms.
Clewes' employment agreement, the agreements provide that the executives will be
entitled to stock options under the Company's stock option plan, as determined
by the Board of Directors. The number and exercise prices of the options shall
be determined in accordance with such plan. See "--Employee Stock Option Plan."
Ms. Clewes is entitled to receive additional compensation pursuant to the
terms of her employment agreement in the amount of one and one-half percent of
the net sales of the Company's products within the United States. For purposes
of the agreement, net sales is defined as the gross sales price of the Company's
products, less (a) any commissions paid to the third parties by the Company with
respect to such products, (b) sales tax, if any, and shipping and handling
charges.
The agreements provide for severance payments in the event that the Company
terminates the executives without cause, or for permanent disability or death in
an amount equal to six (6) months of the executive's annual base salary. They
also be entitled to any major medical, dental and disability plans available to
employees generally for the six month period, or the monetary equivalent in the
event of termination without cause or permanent disability. The employment
agreements contain covenants not to compete with the business of the Company
during the term of employment and for a period of two years following the
expiration or termination of the employment agreements.
26
<PAGE>
The Company may enter into other employment agreements with current and
future employees on terms as deemed appropriate by the Company's Board of
Directors.
CONSULTING AGREEMENTS
The Company entered into consulting arrangements with three separate
consultants for business advice on non-operational aspects of the Company's
business. Under one such agreement, the Company issued 299,000 shares of the
Company's Common Stock and 400,000 Common Stock purchase warrants for consulting
services rendered through May 10, 1996. Upon effectiveness of this Offering, the
warrants will be modified to be identical to the Public Warrants. The consultant
has certain piggy-back registration rights for the shares and shares underlying
the warrants. See "Description of Securities--Warrants" and "-- Registration
Rights." Under the terms of the consulting agreement, David W. Clarke, President
of the Company, holds a voting proxy for the 299,000 shares of Common Stock and
any shares issued in respect of exercise of the 400,000 warrants until the
earlier of: (i) May 10, 2001, and (ii) the date of this Prospectus. The shares
and warrants are subject to a 13 month lock-up from the date of this Prospectus,
unless released earlier by the Underwriters. See "Description of
Securities--Lock-Up Agreements."
The Company is also party to a five year consulting agreement with an
independent consultant for business advice services, commencing June 1, 1996. In
respect of such services, the Company agreed to pay the consultant 250,000
Common Stock purchase warrants, exercisable at $4.00 per share commencing June
1, 1998 (unless the Company agrees to an earlier exercise) until June 1, 2002.
The consulting agreement provides for certain piggy-back registration rights for
the shares underlying the warrants. The consultant has given David W. Clarke,
President of the Company, a voting proxy for the shares issued in respect of the
exercise of the warrants, until the earlier of: (i) June 1, 2002, and (ii) the
date that the shares issuable upon exercise of the warrants are included in a
registration statement for a secondary public offering of the Company's Common
Stock. In consideration of making a short term loan in the amount of $50,000 to
the Company, which loan has been repaid, the consultant was also issued a
warrant for 50,000 shares of Common Stock on the same terms and conditions as
the other warrant, except it is exercisable at $5.50 per share. See "Description
of Securities--Warrants," and "--Registration Rights."
In addition, in November 1996, the Company entered into a consulting
agreement with Matthias E. Lukens, Jr., a director (and Vice Chairman) of the
Company, for consulting services in connection with administrative, business
development and product development matters. Pursuant to the agreement, Mr.
Lukens was issued 250,000 common stock purchase warrants, exercisable at $5.50
per share commencing June 1, 1998 (unless the Company agrees to an earlier
exercise) until June 1, 2002. The warrant contains "piggy-back" registration
provisions for the shares issuable upon exercise of the warrants. Mr. Lukens
gave David W. Clarke, President of the Company, a voting proxy for the shares
issued in respect of the exercise of the warrants, until the earlier of (i) June
1, 2002, and (ii) the date that the shares are included in a registration
statement for a secondary offering of the Company's Common Stock.
EMPLOYEE STOCK OPTION PLAN
In June 1996, the Company's Board of Directors adopted and its shareholders
approved the Company's 1996 Employee Stock Option Plan (the "Plan") under which
500,000 shares of Common Stock are currently reserved for issuance to employees
upon exercise of stock options. The purpose of the Plan is to attract and retain
key personnel, to encourage stock ownership by officers, directors and key
management of the Company, and to provide an incentive for such persons to
expand and improve the performance of the Company. The Plan provides for the
grant of both incentive stock options ("ISOs") intended to qualify as such under
Section 422 of the Internal Revenue Code (the "Code") and nonqualified stock
options to key employees (including directors and officers who are employees),
as determined in the discretion of a committee designated by the Board.
The Plan is administered by a committee, comprised of David W. Clarke,
Christine Clewes, Matthias E. Lukens and Frank Mancini. The selection of
participants, allotment of shares, and whether a grant will
27
<PAGE>
consist of incentive stock options or nonqualified stock options or a
combination thereof is discretionary with the committee. ISO's granted under the
Plan may not be granted at a price less than the fair market value of the Common
Stock on the date of grant (or 100)% of fair market value in the case of persons
holding 10% or more of the voting stock of the Company). The aggregate fair
market value of shares for which ISOs granted to any employee are exercisable
for the first time by such employee during any calendar year (under all stock
option plans of the Company) may not exceed $100,000. The exercise price of
non-qualified stock options shall be determined by the option committee, in its
discretion. Options granted under the Plan will expire not more than ten years
from the date of grant (five years in the case of ISOs granted to persons
holding 10% or more of the voting stock of the Company). All options granted
under the Plan are not transferable during an optionee's lifetime but may be
transferred by will or by the laws of descent and distribution.
The Plan contains anti-dilution provisions authorizing appropriate
adjustments in certain circumstances. Shares of Common Stock subject to options
which expire without being exercised or which are canceled as a result of
cessation of employment are available for further grants.
As of October 31, 1996, there were 254,000 ISOs granted under the Plan, all
exercisable at $4.00 per share. The options, which have ten year terms and were
granted between July 1, 1996 and November 21, 1996, are first exercisable one
year from their respective dates of grant as to one-half of the option shares,
and quarterly thereafter as to each remaining 25%. However, the optionees have
agreed not to sell the shares issuable upon exercise of their options for a
period of 24 months after the date of this Prospectus, unless released earlier
by the Underwriters.
The Company plans to grant independent directors of the Company
non-qualified stock options outside of the Plan, although at a later date the
Company may implement a stock option plan specifically for non-employee
directors.
INDEMNIFICATION, DIRECTORS AND OFFICERS
The Company's Certificate of Incorporation and Bylaws provide that the
Company shall indemnify all directors and officers of the Company to the full
extent permitted by the Delaware General Corporation Law. Under such provisions,
any director or officer, who in his capacity as such, is made or threatened to
be made, a party to any suit or proceeding, may be indemnified if the Board of
Directors determines such director or officer acted in good faith and in a
manner he or she reasonably believed to be in or not opposed to the best
interest of the Company. The Certificate of Incorporation, Bylaws and the
Delaware General Corporation Law further provide that such indemnification is
not exclusive of any other rights to which such individual may be entitled under
the Certificate of Incorporation, the Bylaws, any agreement, vote of
shareholders or disinterested directors or otherwise. The Company and the
Underwriters have agreed to indemnify each other (including officers and
directors) against certain liabilities arising under the 1933 Act. See
"Underwriting." Insofar as indemnification for liabilities arising under the
1933 Act may be permitted for directors, officers and controlling persons of the
Company pursuant to the foregoing provisions or otherwise, the Company has been
advised that in the opinion of the Securities and Exchange Commission, such
indemnification is against public policy as expressed in the 1933 Act and is,
therefore, unenforceable.
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<PAGE>
BENEFICIAL OWNERSHIP OF PRINCIPAL STOCKHOLDERS AND MANAGEMENT
The following table sets forth certain information concerning stock
ownership of all persons known by the Company to own beneficially five percent
or more of the outstanding shares of Common Stock, each Director and all
officers and Directors as a group as of the date of this Propectus, and as
adjusted to reflect the sale of the 700,000 shares of Common Stock included in
the Securities offered hereby.
<TABLE>
<CAPTION>
PERCENTAGE OF
OUTSTANDING STOCK(1)
AMOUNT AND NATURE OF ------------------------
NAME AND ADDRESS OF BENEFICIAL BENEFICIAL BEFORE AFTER
OWNER OR IDENTITY OF GROUP(2) OWNERSHIP(1) OFFERING OFFERING
- ------------------------------------------------------------- ---------------------- ----------- -----------
<S> <C> <C> <C>
David W. Clarke.............................................. 1,258,242(3) 44.94% 35.95%
Christine Clewes............................................. 705,691(4) 25.21% 20.16%
Steven D. Smith.............................................. -0-(5) -0- -0-
Gregory C. Hamilton.......................................... -0- -0- -0-
Matthias E. Lukens, Jr....................................... 26,707(6) * *
Frank J. Mancini............................................. 326,577(7) 11.66% 9.33%
c/o The Mancini Packing Company
700 Magnolia Street
Zolfo Springs, FL 32890
Robert C. Swatland........................................... -0- -0- -0-
Donald P. Louw............................................... -0-(8) -0- -0-
James Kendall................................................ 347,191 12.40% 9.92%
676 Reef Road
Vero Beach, FL 32963
All Directors and officers as a group
(eight persons)............................................ 1,611,526(3)-(9) 57.56% 46.05%
</TABLE>
- ------------------------
* Less than 1% of the issued and outstanding Common Stock.
(1) As used herein, the term beneficial ownership with respect to a security is
defined by Rule 13d-3 under the Securities Exchange Act of 1934 as
consisting of sole or shared voting power (including the power to vote or
direct the vote) and/or sole or shared investment power (including the power
to dispose or direct the disposition of) with respect to the security
through any contract, arrangement, understanding, relationship or otherwise,
including a right to acquire such power(s) during the next 60 days. Unless
otherwise noted, beneficial ownership consists of sole ownership, voting and
investment rights.
(2) Unless otherwise noted, addresses are c/o Apollo International of Delaware,
Inc., 6542 North U.S. Highway 41, Suite 215, Apollo Beach, Florida 33572
(3) Includes 705,962 shares owned jointly by Mr. Clarke and Ms. Clewes and
552,551 shares for which David W. Clarke has sole voting power pursuant to
irrevocable proxies granted to him by various shareholders; but excludes
900,000 shares issuable upon exercise of warrants for which Mr. Clarke also
holds a proxy, but which warrants are not exercisable within the next 60
days. Of the 552,551 shares of outstanding Common Stock for which Mr. Clarke
holds a proxy, the proxy as to 299,000 of these shares terminates as of the
date of this Prospectus.
(4) Represents 705,962 shares owned jointly by Ms. Clewes and Mr. Clarke.
(5) Excludes 50,000 shares issuable upon exercise of a common stock purchase
warrant and 100,000 shares issuable upon exercise of a stock option, neither
of which is exercisable within the next 60 days.
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<PAGE>
(6) Represents 26,707 shares held by Mr. Lukens as custodian for his children.
Excludes 250,000 shares issuable upon exercise of a warrant that is not
exercisable within the next 60 days.
(7) Represents 138,034 shares held individually and 188,543 shares owned
beneficially by an entity of which Mr. Mancini is sole owner.
(8) Excludes 50,000 shares issuable upon exercise of a common stock purchase
warrant and 100,000 shares issuable upon exercise of a stock option, neither
of which is exercisable within the next 60 days.
(9) Excludes 50,000 shares of Common Stock issuable upon exercise of a warrant
that is not exercisable within the next 60 days.
CERTAIN TRANSACTIONS
In December 1994, a total of 694,382 shares of Common Stock were issued to
the Company's founders for a total consideration of $110. Mr. David W. Clarke
and Ms. Christine Clewes, officers and directors of the Company, own 640,968 of
such shares.
The Company is indebted to its President and Chief Executive Officer and its
Vice President, Marketing in the total amount of approximately $85,000
represented by a promissory note dated December 15, 1995. The note bears
interest at 10.5% per annum and provides for payments of principal and interest
equal to $1,600 per month from January 15, 1996 through June 15, 1998, at which
time the entire remaining unpaid principal balance becomes due and payable along
with any accrued and unpaid interest. This obligation to Mr. Clarke and Ms.
Clewes will be repaid from the proceeds of this Offering.
In early 1996, Mr. Clarke and Ms. Clewes advanced the Company an additional
$60,840, which obligation was converted into approximately 64,994 shares of
Common Stock in June, 1996.
Pursuant to a consulting agreement with Matthias E. Lukens, Jr., a director
(Vice Chairman) of the Company, he was issued 250,000 Common Stock purchase
warrants exercisable at $5.50 per share commencing June 1, 1998 and expiring
June 1, 2002. See "Management--Consulting Agreements."
During 1995 and 1996, Frank Mancini, a director, and an affiliate, loaned
the Company an aggregate of $178,087.25. In June, 1996, pursuant to an agreement
between him and the Company, he converted the entire principal balance, plus
accrued interest of $12,617.39 into a total of 203,726 shares of the Company's
Common Stock. Mr. Mancini will be paid approximately $23,000 from the proceeds
of this Offering for consulting services previously rendered to the Company.
The Company has entered into a revolving factoring agreement with a
partnership comprised of certain shareholders of the Company (which do not
include any officers or directors of the Company) in order to obtain additional
working capital. Pursuant to the agreement, the Company sells its receivables to
the partnership at 94% of the invoice amount (face amount) of the receivables.
The Company pays interest of one percent per month on factored advances over 30
days old that are not repaid from the factored receivables. The Company is
obligated to repurchase accounts on which a customer has not made a payment for
six consecutive months. There is a maximum of $425,000 of uncollected accounts
receivable available under the Agreement of which approximately $60,000 has been
advanced to the Company as of December 1, 1996. The Company believes that the
factoring agreement will allow the Company to have cash available to meet its
operating expenses, including inventory requirements, until the closing of this
Offering.
From August 5, 1996 through November 14, 1996, the Company issued an
aggregate of 500,000 shares of Common Stock and 250,000 Common Stock purchase
warrants for gross proceeds of $1,500,000 pursuant to a private placement to
accredited investors that commenced June 25, 1996. Upon the Effective Date, the
warrants will be automatically converted to the Public Warrants and are being
registered under the Registration Statement of which this Prospectus is a part.
See "Concurrent Registration for Secondary Offering." The private placement was
conducted by the Representative, as placement agent, which was paid a commission
of 10% and a non-accountable expense allowance of 3% of the gross proceeds.
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<PAGE>
DESCRIPTION OF SECURITIES
COMMON STOCK
The Company is currently authorized to issue 15,000,000 shares of Common
Stock, $.01 par value per share, 2,799,786 of which are issued and outstanding.
Holders of Common Stock have one vote for each share held of record on all
matters to be voted upon by stockholders, including the election of directors.
Holders of Common Stock are entitled to receive dividends when, as and if
declared by the Board of Directors out of funds legally available therefor and,
upon liquidation of the Company, and to share ratably in the net assets
available for distribution. Shares of Common Stock are not redeemable and have
no preemptive, conversion or similar rights.
PREFERRED STOCK
The Company's Amended and Restated Certificate of Incorporation authorizes
the issuance of 5,000,000 shares of "blank check" preferred stock, $.01 par
value, 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 shareholder approval, to issue preferred stock with dividend,
liquidation, conversion, voting or other rights superior to those of the holders
of Common Stock. Shares of preferred stock, if and when issued, could have
voting or other rights that adversely affect the voting power of the holders of
Common Stock. Further, the issuance of preferred stock could have the effect of
delaying or preventing a change of control of the Company, which could limit
stockholders' ability to dispose of their Common Stock in such transactions. The
Company currently has not issued any shares of preferred stock.
WARRANTS
REDEEMABLE COMMON STOCK PURCHASE WARRANTS. Each redeemable common stock
purchase warrant offered hereby (the "Public Warrants") entitled the holder
thereof to purchase one share of Common Stock at a price of $5.50 per share (the
"Exercise Price"), subject to adjustment, commencing two years after the date of
this Prospectus (the "Effective Date") until the close of business on the sixth
year after the Effective Date. Each Public Warrant is redeemable, in whole or in
part, by the Company at a price of $.05 per Public Warrant, commencing one year
after the Effective Date and prior to their expiration, provided that (a) prior
written notice of not less than thirty days is given to the Public Warrant
holders, (b) the closing bid price (as defined) of the Company's Common Stock
for the twenty consecutive trading days immediately prior to the date on which
the notice of redemption is given, shall have exceeded $7.50 per share, (c)
Public Warrant holders shall have exercise rights until the close of business
the day preceding the date fixed for redemption if the Public Warrants are then
exercisable, and (d) if such redemption occurs during the first two years
following the Effective Date, the Company has received the prior written consent
of the Underwriters for such redemption. In the Warrant Agreement, the "closing
bid price" is defined as (i) the last bid price regular way as reported on the
principal national securities exchange on which the Common Stock is listed or
admitted to trading, or (ii) if the Common Stock is not listed or admitted to
trading on any national securities exchange, the last bid price regular way for
the Common stock as reported by the Nasdaq National Market System or SmallCap
Market of the Nasdaq Stock Market, Inc. ("Nasdaq"), or (iii) if the Common Stock
is not listed or admitted for trading on any national securities exchange, and
is not reported by Nasdaq, the last bid price in the over-the-counter market as
furnished by the National Quotation Bureau, Inc. or if no such quotation is
available, the fair market value of the Common Stock as determined in good faith
by the Board of Directors of the Company. Pursuant to applicable federal and
state securities laws, in the event a current prospectus is not available, the
Public Warrants may not be exercised by the holders thereof and the Company will
be precluded from redeeming the Public Warrants. There can be no assurance that
the Company will not be prevented by financial or other considerations from
maintaining a current prospectus. Any Public Warrant holder who does not
exercise prior to the redemption date, as set forth in the Company's notice of
redemption, will forfeit the right to purchase the Common Stock underlying the
Public Warrants, and after the redemption date or
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<PAGE>
upon conclusion of the exercise period any outstanding Public Warrants will
become void and be of no further force or effect, unless extended by the Board
of Directors of the Company.
The number of shares of Common Stock that may be purchased is subject to
adjustment upon the occurrence of certain events including a dividend
distribution to the Company's shareholders, or a subdivision, combination or
reclassification of the outstanding Common Stock. Further, the Public Warrant
exercise price is subject to adjustment in the event the Company issues
additional stock or rights to acquire stock at a price per share that is less
than the current market price per share of Common Stock on the record date
established for the issuance of additional stock or rights to acquire stock. The
term "current market price" is defined as the average of the daily closing
prices for the five consecutive trading days ending three days prior to the
record date. However, the Warrant exercise price will not be adjusted in the
case of the issuance or exercise of options pursuant to the Company's stock
option plans, the issuance of the Underwriters' Warrant or any other options or
warrants outstanding as of the date of this Offering. The Public Warrant
exercise price is also subject to adjustment in the event of a consolidation or
merger where a distribution by the Company is made to its stockholders of the
Company's assets or evidences of indebtedness (other than cash or stock
dividends) or pursuant to certain subscription rights or other rights to acquire
Common Stock. The Warrants are also subject to price adjustment upon the
occurrence of certain events including subdivisions or combinations of the
Common Stock.
The Company may at any time, and from time to time, extend the exercise
period of the Public Warrants, provided that written notice of such extension is
given to the Public Warrant holders prior to the expiration date then in effect.
Also, the Company may reduce the exercise price of the Public Warrants for
limited periods or through the end of the exercise period if deemed appropriate
by the Board of Directors or the Company, in addition to the adjustments to the
exercise price arising from certain events as discussed above. Any extension of
the terms and/or reduction of the exercise price of the Public Warrants will be
subject to compliance with Rule 13e-4 under the Exchange Act including the
filing of a Schedule 13E-4. Notice of any extension of the exercise period
and/or reduction of the exercise price will be given to the Public Warrant
holders. The Company does not presently contemplate any extension of the
exercise period not does it contemplate any reduction in the exercise price of
the Public Warrants.
The Public Warrants are to be issued pursuant to the terms and conditions of
a Public Warrant Agreement between the Company and American Stock Transfer &
Trust Company.
NONREDEEMABLE COMMON STOCK PURCHASE WARRANTS. The Company issued to a
consultant warrants to purchase 250,000 shares of Common Stock. It has a six
year term commencing June 1, 1996. The warrants may be exercised for four years
commencing June 1, 1998 at an exercise price of $4.00 per share, unless the
Company agrees to an earlier exercise. The warrants are subject to termination
by the Company under certain circumstances. The warrants contain certain
anti-dilution provisions with respect to stock dividends or distributions to
shareholders; and combinations, subdivisions and reclassification of shares. The
warrants contain certain piggy-back registration rights (for shares issuable
upon exercise of such warrants) with respect to a secondary public offering of
the Company's securities. In consideration of making a short term loan to the
Company, the consultant was also issued a warrant for 50,000 shares of Common
Stock on the same terms and conditions as its other warrant, except it is
exercisable at $5.50 per share. See "Management--Consulting Agreements," and
"Description of Securities--Registration Rights."
Matthias E. Lukens, Jr., a director of the Company as well as a consultant,
was issued, pursuant to a consulting agreement, a non-redeemable warrant to
purchase 250,000 shares of Common Stock exercisable at $5.50 per share from June
1, 1998 until June 1, 2002 until unless the Company agrees to an earlier
exercise. Unexercised warrants are subject to termination by the Company under
certain circumstances. The warrants contain certain anti-dilution provisions
respecting stock dividends or distributions to shareholders; and combinations,
subdivisions and reclassification of shares. The warrants also contain "piggy-
back" registration rights (for shares issuable upon exercise of the warrants)
with respect to a secondary
32
<PAGE>
public offering of the Company's securities. See "Management--Consulting
Agreements," "Descriptions of Securities--Registration Rights," and "Certain
Transactions."
The Company issued to two of its employees, Steven D. Smith and Donald Louw,
non-redeemable common stock purchase warrants, each exercisable for 50,000
shares of Common Stock at an exercise price of $5.50 per share. The warrants are
first exercisable one year from the date of this Prospectus until September 26,
2001. However, Messrs. Smith and Louw have agreed with the Company that the
shares underlying the warrants will not be sold for a period of 24 months from
the date of this Prospectus, unless released earlier by the Underwriters. The
warrants contain certain anti-dilution provisions with respect to stock
dividends or distributions to shareholders, and combinations, subdivisions and
reclassification of shares. The warrants do not provide registration rights.
REGISTRATION RIGHTS
The Underwriters have demand and piggy-back registration rights with respect
to the 70,000 shares of Common Stock underlying the Underwriters' Warrant, the
30,000 Public Warrants issuable upon exercise thereof and the 30,000 shares of
Common Stock underlying the warrants. In addition, certain securityholders
holding 1,432,989 shares of Common Stock and warrants to purchase an aggregate
of 650,000 shares of the Company's Common Stock have piggy-back registration
rights for such shares and Common Stock underlying the warrants with respect to
a secondary offering of the Company's securities. However, the holders of such
shares and warrants are subject to lock-up agreements for periods of 13 to 24
months from the date of this Prospectus and such shares may not be sold or
otherwise disposed of until expiration of the applicable lock-up period, which
may be shortened at the discretion of the Underwriters. Additionally,
consultants holding warrants to purchase a total of 550,000 shares of Common
Stock have "piggy-back" registration rights commencing June 1, 1998 in
connection with a secondary offering of the Company's securities. Any exercise
of such registration rights may result in dilution of the interest of the
Company's stockholders, hinder efforts by the Company to arrange future
financings and/or have an adverse effect on the market prices of the Securities.
ANTI-TAKEOVER PROVISIONS OF DELAWARE LAW; CERTAIN PROVISIONS IN THE CERTIFICATE
OF INCORPORATION
Unless otherwise provided in a corporation's certificate of incorporation,
Delaware law generally requires the affirmative vote of holders of a majority of
the outstanding voting stock for approval of mergers, consolidations, and
certain other transactions. The Company's Certificate of Incorporation expressly
adopts the provisions of Section 203 of the Delaware General Corporation Law
("DGCL"). In general, this statute prohibits a publicly held Delaware
corporation from engaging, under certain circumstances, in a "business
combination" with an "interested stockholder" for a period of three years after
the date of the transaction in which the person becomes an interested
stockholder, unless (i) prior to the date at which the stockholder became an
interested stockholder, the board of directors approved either the business
combination or the transaction in which the person becomes an interested
stockholder; (ii) the stockholder acquires more than 85% of the outstanding
voting stock of the corporation (excluding shares held by directors who are
officers or held in certain employee stock plans) upon consummation of the
transaction in which the stockholder becomes an interested stockholder; or (iii)
the business combination is approved by the board of directors and at least
66 2/3% of the outstanding voting stock of the corporation (excluding shares
held by the interested stockholder) at a meeting of stockholders, (and not
written consent) held on or subsequent to the date such stockholder became an
interested stockholder. However, the Company's Certificate of Incorporation
provides for the affirmative vote of 60% of the outstanding voting stock
(excluding shares held by the interested stockholder) rather than the 66 2/3%
provided in the statute. An "interested stockholder" is a person who, together
with affiliates and associates, owns (or at any time within the prior three
years did own) 15% or more of the corporation's voting stock. Section 203
defines a "business combination" to include, without limitation, mergers,
consolidations, stock sales and
33
<PAGE>
asset based transactions and other transactions resulting in a financial benefit
to the interested stockholder.
The overall effect of such anti-takeover provisions is to render more
difficult the accomplishment of mergers or the assumption of control by a
principal shareholder, and thus to make difficult the removal of management.
However, the Company believes that the advantages to the Company and its
shareholders of anti-takeover provisions would outweigh any disadvantages and
afford the Board of Directors greater flexibility in the management of the
Company.
The Certificate imposes a super-majority voting requirement (75% of the
outstanding voting shares) for certain amendments to the Company's Bylaws. The
Certificate also provides for indemnification of the Company's directors,
officers and, in the discretion of the Board of Directors, any and all other
persons whom it shall have power to indemnify under Delaware law from and
against certain liabilities. For a summary of such provisions, see
"Management--Limitation on Director's Liability." The Certificate does not
provide shareholders with any preemptive rights or cumulative voting rights.
TRANSFER AND WARRANT AGENT AND REGISTRAR
The transfer agent and registrar for the Securities and the warrant agent
for the Public Warrants is American Stock Transfer & Trust Company, 40 Wall
Street, New York, New York.
SHARES ELIGIBLE FOR FUTURE SALE
Upon consummation of this Offering, the Company will have 3,499,786 shares
of Common Stock outstanding (3,604,786 shares, if the Underwriters'
over-allotment option is exercised in full), of which 700,000 shares offered
hereby (805,000 shares, if the Underwriters' over-allotment option is exercised
in full) will be freely tradable without restriction or further registration
under the 1933 Act. The remaining 2,799,786 shares are deemed to be "restricted
securities," as that term is defined under Rule 144, in that such shares were
issued and sold by the Company in private transactions not involving a public
offering and, as such, may only be sold pursuant to an effective registration
under the 1933 Act, in compliance with the exemption provisions of Rule 144 or
pursuant to another exemption under the 1933 Act. An aggregate of 1,432,989
shares are being registered with the Commission concurrently with the Securities
offered hereby for certain selling securityholders who, upon expiration of an
earlier release from certain contractual restrictions on resale (13 and 24
months from the date of this Prospectus as to 799,000 and 200,000 shares,
respectively; and as to 433,989 shares, 18 months from the effective date of a
post-effective amendment pertaining to the secondary offering of the Company's
securities by selling securityholders), will be able to freely sell their shares
without restriction. However, sales of these shares will be subject, to the
extent held by affiliates of the Company, to certain volume limitations and
other requirements of Rule 144 under the 1933 Act. Of the remaining 1,366,797
restricted securities, 673,646 shares eligible for sale under Rule 144 as the
date of this Prospectus (subject to certain recurring three-month volume
limitations prescribed by Rule 144 and the lock-up arrangements with the
Underwriters described below), 53,414 shares will be eligible for resale under
Rule 144 within six months of the date of this Prospectus, and the balance will
become so eligible at various times commencing thereafter. Sales of such shares
in the public market, or the availability of such shares for sale, could
adversely affect the market price for the Common Stock.
The officers and directors and certain shareholders of the Company (all such
stockholders holding an aggregate of 1,260,574 shares of Common Stock, and
warrants and options to purchase an aggregate of 354,000 shares of Common
Stock), have agreed not to publicly offer, sell or otherwise dispose of any of
those shares of Common Stock for 24 months after the date of this Prospectus
without the written consent of the Representative. The Representative may, in
their sole discretion and at any time without notice, release all or any portion
of the securities subject to the lock-up agreements.
34
<PAGE>
In general, under Rule 144 as currently in effect, subject to the
satisfaction of certain other conditions, a person, including an affiliate of
the Company (or person whose shares are aggregated with an affiliate), who has
owned restricted shares of Common Stock beneficially for at least two years is
entitled to sell, within any three-month period, a number of shares that does
not exceed the greater of 1% of the then outstanding shares of Common Stock
(approximately 35,000 shares based on the number of shares expected to be
outstanding after this Offering) or, if the Common Stock is quoted on NASDAQ,
the average weekly trading volume during the four calendar weeks preceding the
sale. Sales under Rule 144 are also subject to certain requirements as to the
manner and notice of sale and the availability of public information concerning
the Company. A person who has not been an affiliate of the Company for at least
three months immediately preceding the sale and who has beneficially owned
shares of Common Stock for at least three years is entitled to sell such shares
under Rule 144 without regard to any of the limitations described above.
No prediction can be made as to the effect, if any, that public sales of
shares of Common Stock or Warrants or the availability of such securities for
sale will have on the market prices of such securities prevailing from time to
time. Nevertheless, the possibility that substantial amounts of Common Stock and
Warrants may be sold in the public market may adversely affect prevailing market
prices for the these securities and could impair the Company's ability in the
future to raise additional capital through the sale of its equity securities.
35
<PAGE>
UNDERWRITING
Subject to the terms and conditions of the Underwriting Agreement, a copy of
which is filed as an exhibit to the Registration Statement of which this
Prospectus is a part, the Company has agreed to sell to the Underwriters,
severally and not jointly, and the Underwriters have severally and not jointly
agreed to purchase from the Company, on a "firm commitment" basis, if any are
purchased, the number of Securities (exclusive of Securities issuable upon
exercise of the Underwriters' over-allotment option) set forth opposite their
respective names below:
<TABLE>
<CAPTION>
NUMBER OF
UNDERWRITERS SECURITIES
- ---------------------------------------------------------------------------------- -----------
<S> <C>
May Davis Group, Inc..............................................................
Total.........................................................................
</TABLE>
The Underwriting Agreement provides that the obligations of the several
Underwriters to pay for and accept delivery of the Securities offered hereby are
subject to approval of certain legal matters by their counsel and to certain
other conditions. The Underwriters are obligated to take and pay for all shares
of Securities offered hereby (other than those covered by the over-allotment
option described below) if any such shares are purchased.
The Underwriters, for whom May Davis Group, Inc. is acting as Representative
(the "Representative"), propose to offer the Securities directly to the public
at the public offering price set forth on the cover page of this Prospectus and
may allow certain dealers who are National Association of Securities Dealers,
Inc. ("NASD") members to offer a part of the Securities at a price which
represents a concession not in excess of $ per share and $ per
Public Warrant. The Underwriters may allow, and such dealers may reallow, a
concession not in excess of $ per share and $ per Public Warrant
to certain other dealers. Commencement of the initial public offering, the
offering price and other selling terms may be changed by the Representative.
The Company has granted to the Underwriters an option, exercisable for 45
days from the date of this Prospectus, to purchase up to an aggregate of 105,000
additional shares of Common Stock and/or up to 45,000 additional Public Warrants
at the public offering price set forth on the cover page of this Prospectus,
less the underwriting discounts and commissions. The Representative may exercise
such option solely for the purpose of covering over-allotments, if any, in
connection with the sale of the Securities offered hereby. To the extent such
option is exercised, each Underwriter will be obligated, subject to certain
conditions, to purchase approximately the same percentage of such additional
shares as the number of shares set forth opposite such Underwriter's name in the
preceding table bearing the total number of shares in such table.
The Company has agreed to sell to the Representative or its designees, for a
nominal sum, a common stock purchase warrant (the "Underwriters' Warrant")
exercisable for 70,000 shares of Common Stock at $6.00 per share and/or 30,000
Public Warrants at $.12 per warrant. The Underwriters' Warrant may not be sold,
transferred, assigned or hypothecated, except to officers and directors of the
Underwriters, and is exercisable commencing for five years commencing one year
from the date of this Prospectus (the "Exercise Term"). During the Exercise
Term, the holders of the Underwriters' Warrant are given, at nominal cost, the
opportunity to profit from a rise in the market price of the Company's Common
Stock. To the extent that the Underwriters' Warrant is exercised, dilution of
the interests of the Company's stockholders will occur. Further, the terms on
which the Company will be able to obtain additional equity capital may be
adversely affected since the holders of the Underwriters' Warrants can be
expected to exercise it any time when the Company would, in all likelihood, be
able to obtain any needed capital on terms more favorable to the Company than
those provided in the Underwriters' Warrant. Any profit realized by the
Underwriters on the sale of the shares of Common Stock underlying the
Underwriters'
36
<PAGE>
Warrant may be deemed additional underwriting compensation. The Company has also
agreed to pay the Representative a non-accountable expense allowance equal to 3%
of the gross proceeds from the sale of the Securities offered hereby of which
$25,000 has been paid.
The Company and certain of its shareholders who beneficially hold an
aggregate of 2,259,574 shares of Common Stock, have agreed that, for periods
ranging from 13 to 24 months following the date of this Prospectus, they will
not, without the prior written consent of the Representative offer, sell,
contract to sell, or otherwise dispose of any shares of Common Stock of the
Company (other than shares offered pursuant to this Prospectus) or any
securities convertible into, or exercisable or exchangeable for Common Stock of
the Company.
The Underwriting Agreement provides for reciprocal indemnification between
the Company and the Underwriters against certain liabilities in connection with
the Registration Statement, including liabilities under the Securities Act.
Insofar as indemnification for liabilities arising under the Securities Act may
be provided to officers, directors or persons controlling the Company, the
Company has been informed that in the opinion of the Securities and Exchange
Commission, such indemnification is against public policy and is therefore
unenforceable.
The Company has agreed with the Representative that the Company will pay to
the Representative a warrant solicitation fee (the "Warrant Solicitation Fee")
equal to 5% of the exercise price of the Public Warrants which are exercised
more than one year after the Effective Date and to the extent not inconsistent
with the guidelines of the NASD and the rules and regulations of the Commission
(including NASD Notice to Members 81-38). Such Warrant Solicitation Fee will be
paid to the Representative if (a) the market price of the Common Stock on the
date that any Public Warrant is exercised is greater than the exercise price of
the Public Warrant; (b) the exercise of such Public Warrant was solicited by the
Representative; (c) prior specific written approval for exercise is received
from the customer if the Public Warrant is held in a discretionary account; (d)
disclosure of this compensation agreement is made prior to or upon the exercise
of such Public Warrant; (e) solicitation of the exercise is not in violation of
Rule 10b-6 of the Exchange Act; (f) the Representative provided bona fide
services in exchange for the Public Warrant Solicitation Fee; and (g) the
Representative has been specifically designated in writing by the holders of the
Public Warrants as the broker. In addition, unless granted an exemption by the
Commission from Rule 10b-6 under the Exchange Act, the Representative will be
prohibited from engaging in any market making activities or solicited brokerage
activities with respect to the Securities for the period from nine business days
prior to any solicitation of the exercise of any Public Warrant or nine business
days prior to the exercise of any Public Warrant based on a prior solicitation
until the later of the termination of such solicitation activity or the
termination (by waiver or otherwise) of any right the Representative may have to
receive such a fee for the exercise of the Public Warrants following such
solicitation. As a result, the Representative may be unable to continue to
provide a market for the Securities during certain periods while the Public
Warrants are exercisable.
The Underwriters have been given certain "piggyback" and demand registration
rights with respect to the Common Stock underlying the Underwriters' Warrants
for a period of four years commencing one year from the date of this Prospectus.
The exercise of any of such registration rights by the Underwriters may result
in dilution to the interest of the Company's shareholders, hinder efforts by the
Company to arrange future financing of the Company and/or have an adverse effect
on the market price of the Securities.
The Company has agreed that for a period of 24 months commencing on the
Effective Date, it will not issue any shares of its Common Stock or any
warrants, options or other rights to purchase Common Stock and Public Warrants,
without the consent of the Representative, which consent shall not be
unreasonably withheld, except for issuances pursuant to (i) the public offering
of the Company's securities as described herein, (ii) the exercise of the
Underwriters' Warrant and the shares issuable thereunder, (iii) outstanding
options, warrants, convertible securities or contractual obligations disclosed
in this Prospectus and (iv) the grant of options and the issuance of shares
issued upon exercise of options granted or in the future granted
37
<PAGE>
under the Company's Stock Option Plan. The Company has granted the Underwriters
a three-year preferential right with respect to future financing relating to the
offering of the Company's securities.
The Underwriting Agreement gives the Representative the right, for a period
of three years from the Effective Date, to appoint a designee of the
Representative as an advisor to the Company's Board of Directors who shall be
reimbursed expenses incurred in connection with attendance at Board meetings and
who shall receive the same compensation as paid to non-employee directors.
Alternatively, the Representative may designate one person for election as a
director of the Company.
In addition, the Company has agreed to enter into a management and financial
consulting agreement to retain the Representative as a financial consultant for
a period of three years at an monthly fee of $1,952.78, payable in full, in
advance, at the closing of this Offering. The consulting agreement will not
require the consultant to devote a specific amount of time to the performance of
its duties thereunder
Further, the Underwriting Agreement provides the Representative with a right
of first refusal for a period of three years from the date of this Prospectus
for any public or private offering of securities to raise capital and sale of
securities to be made by the Company, its affiliates or any of its present or
future subsidiaries.
The foregoing includes a summary of certain provisions of the Underwriting
Agreement which has been filed as an exhibit to the Registration Statement.
Prior to this Offering, there has been no public market for the Securities.
The initial public offering price for the Securities and the exercise price of
the Warrants have been determined by negotiations between the Company and the
Underwriters. Among the factors considered in the negotiations were an analysis
of the areas of activity in which the Company is engaged, the present state of
the Company's business, the Company's financial condition, the Company's
prospects, an assessment of management, the general condition of the securities
markets at the time of this Offering and the demand for similar securities of
comparable companies. The public offering price of the Securities and the
exercise price of the Warrants do not necessarily bear any relationship to
assets, earnings, book value or other criteria of value applicable to the
Company.
Since its inception in , 19 , May Davis Group, Inc. has been
engaged generally in the stock brokerage business. May Davis Group, Inc. has
acted as managing underwriter in public offerings. The managing directors
of May Davis Group, Inc., however, each have over years of experience in
the investment banking industry. The managing director of May Davis Group, Inc.
overseeing the Company's proposed offering has managed as the senior corporate
finance officer more than registered public offerings over the last
years.
38
<PAGE>
CONCURRENT REGISTRATION FOR SECONDARY OFFERING
In addition to the 700,000 shares of Common Stock and the 300,000 Public
Warrants to be sold under this Prospectus, the Company has concurrently
registered 2,167,989 shares of Common Stock and 665,000 Public Warrants (the
"Additional Registered Securities") representing 1,432,989 shares of Common
Stock and 665,000 Public Warrants held by certain shareholders and the
Underwriters and 735,000 shares of Common Stock issuable upon exercise of such
Public Warrants. The Additional Registered Securities are being registered for
future sale by such security holders (the "Secondary Offering"), subject to the
expiration of or an earlier release from lock-up periods ranging from 13 to 24
months from the date of this Prospectus. The shares of Common Stock and Public
Warrants which may be offered in the Secondary Offering will, as applicable, be
offered in the over-the-counter market, in privately negotiated transactions, on
the NASDAQ SmallCap Market, on any other stock exchange or automated quotation
system on which such shares of Common Stock and Public Warrants may be listed in
the future or otherwise at prices prevailing in such market or exchange or as
may be negotiated at the time of sale.
The Additional Registered Securities are being registered pursuant to
certain registration obligations of the Company to the holders of such
securities. The Company has agreed to pay all expenses in connection with the
registration of the Additional Registered Securities with the SEC for offer and
sale under a prospectus to be updated by a post-effective amendment to the
Registration Statement, including but not limited to, legal and accounting fees,
printing and certain other costs associated with the Secondary Offering. The
Company also may incur further expenses associated with its continuing duty to
amend and supplement the registration statement and prospectus. Such additional
expenses are not capable of being estimated, but the Company does not expect
them to be material. The selling shareholders in the Secondary Offering will be
responsible for payment of transfer taxes and broker/dealer commissions, if any
are payable.
LEGAL MATTERS
The validity of the Securities being offered hereby will be passed upon for
the Company by Greenberg Traurig Hoffman Lipoff Rosen & Quentel, P.A., Orlando,
Florida. Certain matters are being passed upon for the Underwriters by Gersten,
Savage, Kaplowitz & Curtin, LLP, New York, New York.
EXPERTS
The financial statements as of December 31, 1995 included in this Prospectus
have been so included in reliance on the report of Most Horowitz & Company, LLP,
independent certified public accountants, given on the authority of said firm as
experts in auditing and accounting.
39
<PAGE>
AVAILABLE INFORMATION
The Company is not presently a reporting company and does not file reports
or other information with the Securities and Exchange Commission (the "SEC" or
"Commission"). Upon effectiveness of the Registration Statement filed with the
SEC in connection with this Offering, the Company will become a reporting
company. Further, the Company will register its securities under the Securities
Exchange Act of 1934 ("Exchange Act"). Accordingly, upon effectiveness of its
Exchange Act registration, the Company will be subject to the additional
reporting requirements of the Exchange Act and in accordance therewith will file
reports, proxy statements and other information with the Commission. In
addition, after the effective date of this Offering, the Company intends to
furnish its shareholders with annual reports containing audited financial
statements and interim reports, in each case as it may determine to furnish or
as may be required by law. The fiscal year of the Company ends on December 31 of
each year.
The Company has filed with the Washington, DC Office of the Commission a
Registration Statement on Form SB-2 (with all amendments, exhibits and schedules
thereto, the "Registration Statement") under the Securities Act of which this
Prospectus forms a part. This Prospectus does not contain all of the information
set forth in the Registration Statement, as permitted by the rules and
regulations of the Commission. For further information with respect to the
Company and the Securities offered hereby, reference is hereby made to such
Registration Statement. Statements contained in this Prospectus concerning the
provisions or contents of any contract or other document referred to herein are
not necessarily complete and in each instance reference is made to the copy of
such contract or other document filed as an exhibit to the Registration
Statement, each such statement being qualified in all respects by such
reference.
Copies of the Registration Statement may be inspected without charge at the
Commission's principal office at 450 Fifth Street, N.W, Room 1024, Washington,
D.C. 20549; and at the following Regional Offices of the Commission, except that
copies of the exhibits may not be available at certain of the Regional Offices:
Chicago Regional Office, 500 West Madison Street, Suite 1400, Chicago, Illinois
60661; and New York Regional Office, 7 World Trade Center, Suite 1300, New York,
New York 10048. Copies of all or any part of such material may be obtained from
the Commission at 450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549 upon
payment of certain fees prescribed by the Commission. The Commission maintains a
worldwide web site on the Internet at http://www.sec.gov that contains reports
and other information concerning the Company filed electronically with the
Commission.
40
<PAGE>
APOLLO INTERNATIONAL OF DELAWARE, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
FINANCIAL STATEMENTS
INDEX
<TABLE>
<S> <C>
INDEPENDENT AUDITORS' REPORT......................................................... F-2
BALANCE SHEET
December 31, 1994 and 1995 and October 31, 1996 (Unaudited)........................ F-3
STATEMENT OF OPERATIONS
Period from inception to December 31, 1994, year ended
December 31, 1995, cumulative from inception to December 31, 1995, ten months ended
October 31, 1995 and 1996 (Unaudited) and cumulative from inception to October 31,
1996 (Unaudited)................................................................... F-4
STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)
Period from inception to December 31, 1994, year ended
December 31, 1995 and ten months ended October 31, 1996 (Unaudited)................ F-5
STATEMENT OF CASH FLOWS
Period from November 30, 1994 (inception) to December 31, 1994, year ended
December 31, 1995, cumulative from inception to December 31, 1995, ten months ended
October 31, 1995 and 1996 (Unaudited) and cumulative from inception to October 31,
1996 (Unaudited)................................................................... F-6
NOTES TO FINANCIAL STATEMENTS........................................................ F-7
</TABLE>
F-1
<PAGE>
INDEPENDENT AUDITORS' REPORT
Stockholders and Board of Directors
Apollo International of Delaware, Inc.
Apollo Beach, Florida
We have audited the accompanying balance sheet of Apollo International of
Delaware, Inc., (A Development Stage Enterprise) as of December 31, 1994 and
1995, and the related statements of operations, stockholders' equity (deficit)
and cash flows for the period from inception to December 31, 1994 and for the
year ended December 31, 1995. These financial statements are the responsibility
of the Company's management. Our responsibility is to express an opinion on
these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Apollo International of
Delaware, Inc., as of December 31, 1994 and 1995, and the results of its
operations and its cash flows for the period from inception to December 31, 1994
and for the year ended December 31, 1995, in conformity with generally accepted
accounting principles.
New York, New York
June 4, 1996
F-2
<PAGE>
APOLLO INTERNATIONAL OF DELAWARE, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
BALANCE SHEET
<TABLE>
<CAPTION>
DECEMBER 31, OCTOBER 31,
---------------------- 1996
1994 1995 (UNAUDITED)
---------- ---------- ---------------
<S> <C> <C> <C>
ASSETS
CURRENT ASSETS
Cash (Note 8)......................................................... $ 212,031 $ 5,840 $ 2,186
Accounts receivable................................................... 85,154
Inventory (Note 3).................................................... 108,921 264,164
Other current assets.................................................. 25,000 4,553
---------- ---------- ---------------
TOTAL CURRENT ASSETS................................................ 237,031 119,314 351,504
DEFERRED SOFTWARE COSTS................................................. 214,941 329,592
FIXED ASSETS (Note 4)................................................... 5,408 18,940 75,641
OTHER ASSETS............................................................ 3,543 3,201
DEFERRED COSTS OF PUBLIC OFFERING (Note 9).............................. 35,500
---------- ---------- ---------------
TOTAL ASSETS........................................................ $ 242,439 $ 356,738 $ 795,438
---------- ---------- ---------------
---------- ---------- ---------------
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES
Accounts payables and accrued expenses................................ $ 12,488 $ 134,984 $ 365,246
Payroll taxes payable................................................. 10,146 19,549
Current portion of note payable--stockholders (Note 5)................ 7,774 12,212
---------- ---------- ---------------
TOTAL CURRENT LIABILITIES........................................... 12,488 152,904 397,007
ACCOUNTS PAYABLE--NONCURRENT (Note 2)................................... 66,505 2,500
NOTE PAYABLE--STOCKHOLDERS (Note 5)..................................... 104,540 72,909
DEFERRED INCOME TAXES PAYABLE (Note 7).................................. 40,000
---------- ---------- ---------------
TOTAL LIABILITIES................................................... 12,488 363,949 472,416
---------- ---------- ---------------
COMMITMENTS (Notes 6 and 9)
STOCKHOLDERS' EQUITY (DEFICIT) (Notes 2, 6 and 9)
Preferred stock, $.01 par value; authorized: 5,000,000 shares; issued
and outstanding: none
Common stock, $.01 par value; authorized: 15,000,000 shares; issued
and outstanding: 961,452 as of December 31, 1994, 1,451,526 as of
December 31, 1995 and 2,759,786 as of October 31, 1996
(Unaudited)......................................................... 2,781 7,682 20,764
Additional paid-in capital............................................ 247,329 572,428 2,192,977
Deficit accumulated during the development stage...................... (20,159) (587,321) (1,874,608)
Less prepaid rent..................................................... (16,111)
---------- ---------- ---------------
TOTAL STOCKHOLDERS' EQUITY (DEFICIT)................................ 229,951 (7,211) 323,022
---------- ---------- ---------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)................ $ 242,439 $ 356,738 $ 795,438
---------- ---------- ---------------
---------- ---------- ---------------
</TABLE>
See notes to financial statements
F-3
<PAGE>
APOLLO INTERNATIONAL OF DELAWARE, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
TEN MONTHS CUMULATIVE FROM
CUMULATIVE FROM ENDED OCTOBER 31, INCEPTION TO
INCEPTION TO YEAR ENDED INCEPTION TO ------------------------ OCTOBER 31,
DECEMBER 31, 1994 DECEMBER 31, 1995 DECEMBER 31, 1995 1995 1996 1996
----------------- ----------------- ----------------- ----------- ----------- ---------------
<S> <C> <C> <C> <C> <C> <C>
(UNAUDITED) (UNAUDITED) (UNAUDITED)
SALES........................... $ 218,789 $ 218,789
COST OF SALES................... 158,426 158,426
----------- ---------------
GROSS PROFIT................ 60,363 60,363
----------- ---------------
EXPENSES
Research and development...... $ 14,988 $ 233,073 $ 248,061 $ 206,957 137,522 385,583
General and administrative.... 5,171 294,089 299,260 226,573 1,157,101 1,456,361
----------------- ----------------- ----------------- ----------- ----------- ---------------
TOTAL EXPENSES.............. 20,159 527,162 547,321 433,530 1,294,623 1,841,944
----------------- ----------------- ----------------- ----------- ----------- ---------------
LOSS FROM OPERATIONS........ (20,159) (527,162) (547,321) (433,530) (1,234,260) (1,781,581)
INTEREST EXPENSE AND WRITE-OFF
OF DEFERED FINANCING COSTS
(Notes 5 and 9)............... 168,055 168,055
----------------- ----------------- ----------------- ----------- ----------- ---------------
LOSS BEFORE INCOME TAXES AND
EXTRAORDINARY INCOME (20,159) (527,162) (547,321) (433,530) (1,402,315) (1,949,636)
DEFERRED INCOME TAXES (Note
7)............................ (40,000) (40,000) 40,000
----------------- ----------------- ----------------- ----------- ----------- ---------------
LOSS BEFORE EXTRAORDINARY
INCOME.................... (20,159) (567,162) (587,321) (433,530) (1,362,315) (1,949,636)
EXTRAORDINARY INCOME FROM
FORGIVENESS OF INDEBTEDNESS
(Note 9)...................... 75,028 75,028
----------------- ----------------- ----------------- ----------- ----------- ---------------
NET LOSS.................... $ (20,159) $ (567,162) $ (587,321) $(433,530) ($1,287,287) $(1,874,608)
----------------- ----------------- ----------------- ----------- ----------- ---------------
----------------- ----------------- ----------------- ----------- ----------- ---------------
AVERAGE NUMBER OF COMMON SHARES
OUTSTANDING (Note 2).......... 1,144,579 1,398,597 1,378,712 1,162,525 2,262,634 1,762,587
----------------- ----------------- ----------------- ----------- ----------- ---------------
----------------- ----------------- ----------------- ----------- ----------- ---------------
LOSS PER COMMON SHARE
Loss before extraordinary
income...................... $ (.02) $ (.41) $ (.43) $ (.37) $ (.60) $ (1.10)
Extraordinary income.......... .03 .04
----------------- ----------------- ----------------- ----------- ----------- ---------------
Net loss.................... $ (.02) $ (.41) $ (.43) $ (.37) $ (.57) $ (1.06)
----------------- ----------------- ----------------- ----------- ----------- ---------------
----------------- ----------------- ----------------- ----------- ----------- ---------------
</TABLE>
See notes to financial statements
F-4
<PAGE>
APOLLO INTERNATIONAL OF DELAWARE, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)
<TABLE>
<CAPTION>
DEFICIT
COMMON STOCK ACCUMULATED
(NOTES 2 & 9) ADDITIONAL DURING THE PREPAID
-------------------- PAID-IN DEVELOPMENT RENT
SHARES AMOUNT CAPITAL STAGE (NOTE 6) TOTAL
--------- --------- ----------- ------------ --------- -----------
<S> <C> <C> <C> <C> <C> <C>
December 1, 1994, issuance of shares to
founders ($.0001, per share)............. 640,968 $ 60 $ 60
December 1, 1994, issuance of shares to
founders ($.001, per share).............. 53,414 50 50
December 13-21, 1994, issuance of shares to
investors ($.94, per share).............. 267,070 2,671 $ 247,329 250,000
Net loss for the period from inception to
December 31, 1994........................ $ (20,159) (20,159)
--------- --------- ----------- ------------ -----------
Balance--December 31, 1994............... 961,452 2,781 247,329 (20,159) 229,951
1995, issuances of shares to investors
($.75 to $.94, per share)................ 384,580 3,846 326,154 330,000
1995, issuance of anti-dilutive shares..... 105,494 1,055 (1,055)
Net loss for the year ended December 31,
1995..................................... (567,162) (567,162)
--------- --------- ----------- ------------ -----------
Balance--December 31, 1995............... 1,451,526 7,682 572,428 (587,321) (7,211)
1996, issuance of shares to investors
($.94, per share)........................ 5,343 53 4,947 5,000
April 5, 1996, issuance of shares to
landlord ($.94, per share)............... 21,366 214 19,786 $ (20,000)
May 1996, issuance of shares under bridge
financing ($.47, per share), net of
expenses of $12,220 (Unaudited).......... 200,000 2,000 79,780 81,780
June 1996, issuance of shares to consultant
($.10, per share) (Unaudited)............ 299,000 2,990 27,010 30,000
June 13, 1996, conversion of loan
payable--stockholder ($.94, per share)
(Unaudited).............................. 64,994 650 60,190 60,840
June 20, 1996, conversion of loan
payable--other ($.94, per share)
(Unaudited).............................. 203,726 2,037 188,666 190,703
July 1, 1996, conversion of debentures
($2.25, per share) (Unaudited)........... 25,331 253 56,747 57,000
August to October 1996, issuance of shares
under private placement ($3.00, per
share), net of expenses of $277,192
(Unaudited).............................. 485,000 4,850 1,172,958 1,177,808
September 1996, issuance of shares to
vendor ($3.00, per share)................ 3,500 35 10,465 10,500
Amortization of prepaid rent............... 3,889 3,889
Net loss for the ten months ended October
31, 1996 (Unaudited)..................... (1,287,287) (1,287,287)
--------- --------- ----------- ------------ --------- -----------
Balance--October 31, 1996 (Unaudited).... 2,759,786 $ 20,764 $ 2,192,977 $(1,874,608) $ (16,111) $ 323,022
--------- --------- ----------- ------------ --------- -----------
--------- --------- ----------- ------------ --------- -----------
</TABLE>
See notes to financial statements
F-5
<PAGE>
APOLLO INTERNATIONAL OF DELAWARE, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
CUMULATIVE
CUMULATIVE FROM
FROM TEN MONTHS INCEPTION
INCEPTION TO YEAR ENDED INCEPTION TO ENDED OCTOBER 31, TO
DECEMBER 31, DECEMBER 31, DECEMBER 31, ------------------------ OCTOBER 31,
1994 1995 1995 1995 1996 1996
------------ ------------ ------------ ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
(UNAUDITED) (UNAUDITED) (UNAUDITED)
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss........................................ $ (20,159) $ (567,162) $ (587,321) $(433,530) $(1,287,287) $(1,874,608)
Adjustments to reconcile net loss to net cash
used in operating activities
Deferred income taxes payable............. 40,000 40,000 (40,000)
Depreciation and amortization............. 92 4,105 4,197 1,241 11,582 15,779
Write-off and amortization of discount and
deferred financing costs................ 116,300 116,300
Amortization of software costs............ 81,654 81,654
Amortization of prepaid rent.............. 3,889 3,889
Capitalization of software costs.......... (214,941) (214,941) (205,491) (196,305) (411,246)
Forgiveness of indebtedness............... (75,028) (75,028)
Increase (decrease) in cash flows from
Accounts receivable..................... (85,154) (85,154)
Inventory............................... (108,921) (108,921) (57,694) (155,243) (264,164)
Other current assets.................... (4,553) (4,553) (10,266) 4,553
Other assets............................ (3,953) (3,953) (3,953) (3,953)
Accounts payable and accrued expenses... 12,488 189,001 201,489 154,987 294,401 495,890
Payroll taxes payable................... 10,146 10,146 10,540 9,403 19,549
------------ ------------ ------------ ----------- ----------- -----------
NET CASH USED IN OPERATING ACTIVITES (7,579) (656,278) (663,857) (544,166) (1,317,235) (1,981,092)
------------ ------------ ------------ ----------- ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of fixed assets....................... (5,500) (17,227) (22,727) (16,894) (67,941) (90,668)
------------ ------------ ------------ ----------- ----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of common stock.......... 225,110 355,000 580,110 285,000 1,264,588 1,844,698
Increase (decrease) in note
payable--stockholders......................... 112,314 112,314 119,594 (27,193) 85,121
Proceeds from loan payable--other............... 178,087 178,087
Proceeds from bridge financing.................. 135,720 135,720
Proceeds from loan payable--stockholder......... 60,840 60,840
Proceeds from convertible debentures............ 54,980 54,980
Payments of notes payable--bridge financing..... (250,000) (250,000)
Costs of proposed public offering............... (35,500) (35,500)
------------ ------------ ------------ ----------- ----------- -----------
NET CASH PROVIDED BY FINANCING
ACTIVITIES.............................. 225,110 467,314 692,424 404,594 1,381,522 2,073,946
------------ ------------ ------------ ----------- ----------- -----------
INCREASE (DECREASE) IN CASH............... 212,031 (206,191) 5,840 (156,466) (3,654) 2,186
CASH--beginning................................... 212,031 212,031 5,840
------------ ------------ ------------ ----------- ----------- -----------
CASH--ending...................................... $ 212,031 $ 5,840 $ 5,840 $ 55,565 $ 2,186 $ 2,186
------------ ------------ ------------ ----------- ----------- -----------
------------ ------------ ------------ ----------- ----------- -----------
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid for interest.......................... NONE NONE NONE NONE $28,797 $28,797
SUPPLEMENTAL DISCLOSURE OF NONCASH ACTIVITY--1996
The Company issued shares of common stock in exchange for reductions in future rent (Note 6)
Loans payable--stockholders were converted into common stock (Note 9)
Loan payable--other was converted into common stock (Note 9)
Convertible debentures were converted into common stock (Note 9)
Accounts payable to a consultant and vendor were converted into common stock (Note 9)
</TABLE>
See notes to financial statements
F-6
<PAGE>
APOLLO INTERNATIONAL OF DELAWARE, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
LINE OF BUSINESS
Apollo International of Delaware, Inc. (Company) was incorporated in
November 1994 to develop, manufacture and distribute electric power protection
and control products, utilizing computer and fiber optics technologies, for
industry and electric utilities. The Company has been in the development stage
since its inception.
USE OF ESTIMATES
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 assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
INVENTORY
Inventory was stated at the lower of cost or market, using the first-in,
first-out method.
FIXED ASSETS
Equipment and furniture and computer software were stated at cost and are
being depreciated on the straight-line method over their estimated useful lives
of five and three years, respectively.
Leasehold improvements were stated at cost and are being amortized over the
life of the lease (Note 6) or lives of the asset, whichever is less.
SOFTWARE COSTS
Costs of software to be sold, which were incurred after technological
feasibility has been established and until it is available for general release,
have been capitalized and are being amortized on the straight-line method over
the estimated economic lives of the related products or three years, whichever
is less.
DEFERRED INCOME TAXES
Deferred income taxes have been provided on timing differences between
financial statement and income tax reporting resulting from computer software
costs and net operating loss carryforwards.
DEBT ISSUANCE COSTS AND DISCOUNTS
Debt issuance costs on the bridge financing (Note 9) have been capitalized
and are being amortized on the straight-line method over the term of the related
notes payable.
Discounts on the bridge financing are being amortized on the interest method
over the term of the related notes payable.
F-7
<PAGE>
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
STOCK BASED COMPENSATION
Stock based compensation of non employees and employees have been valued on
the fair value based method and the intrinsic value based method, respectively.
RESEARCH AND DEVELOPMENT COSTS
Research and development costs have been charged to operations as incurred.
ADVERTISING COSTS
Advertising costs are expensed as incurred and are included in general and
administrative expenses. For the year ending December 31, 1995 and the ten
months ended October 31, 1995 and 1996 (Unaudited), advertising costs were
$3,869, $2,476 and $43,064, respectively.
LOSS PER COMMON SHARE
Loss per common share was computed based on the weighted average number of
common shares and common share equivalents outstanding during the year. All
shares and per share amounts have been retroactively restated to reflect the
stock split on May 10, 1996. The 299,000 shares issued in June 1996 (Note 9) and
the 105,494 shares issued under anti-dilution provisions (Note 2) have been
treated as outstanding for all periods or from date of original issuance,
respectively, in calculating loss per common share because such shares were
issued at prices below the proposed public offering price (Note 9).
Fully-dilutive loss per common share has not been presented because it was
anti-dilutive.
2. CAPITALIZATION
SHARES
In November 1994, the Company authorized 100,000 shares of $.01, par value,
common stock.
Effective October 1995, the Company issued 105,494 shares of common stock
under anti-dilution provisions of previously issued common stock.
RECAPITALIZATION AND STOCK SPLIT
Effective May 10, 1996, the Company increased their authorized common stock
to 15,000,000 shares and authorized a 10.6828 for 1 stock split, without a
change in par value. As a result of the split, the Company issued 1,339,860
additional shares of common stock and transferred $7,105 from additional paid-in
capital to common stock. All shares and per share amounts have been
retroactively restated to reflect the stock split.
RESERVED SHARES (UNAUDITED)
The values of all options and warrants have been deemed immaterial as all
were issued with exercise prices in excess of their fair values.
F-8
<PAGE>
2. CAPITALIZATION (CONTINUED)
As of October 31, 1996, common stock was reserved as follows:
<TABLE>
<S> <C>
Warrants--consultants (Note 9)................................... 700,000
Stock option plan (Note 9)....................................... 500,000
Warrants--private placement (Note 9)............................. 250,000
Warrants--employees (Note 9)..................................... 100,000
Shares to be issued in connection with the conversion of accounts
payable........................................................ 25,000
Shares to be issued in connection with the private placement
(Note 9)....................................................... 15,000
---------
1,590,000
---------
---------
</TABLE>
3. INVENTORY
As of December 31, 1995 and October 31, 1996 (Unaudited), inventory
consisted of:
<TABLE>
<CAPTION>
1995 1996
---------- ----------
<S> <C> <C>
Raw materials......................................................... $ 45,234
Work-in-progress...................................................... $ 108,921 212,842
Finished goods........................................................ 6,088
---------- ----------
$ 108,921 $ 264,164
---------- ----------
---------- ----------
</TABLE>
4. FIXED ASSETS
As of December 31, 1994 and 1995 and October 31, 1996 (Unaudited), fixed
assets consisted of:
<TABLE>
<CAPTION>
1994 1995 1996
--------- --------- ---------
<S> <C> <C> <C>
Equipment and furniture....................................... $ 5,500 $ 19,212 $ 76,838
Computer software............................................. 3,515 10,163
Leasehold improvements........................................ 3,667
--------- --------- ---------
5,500 22,727 90,668
Less accumulated depreciation and amortization................ 92 3,787 15,027
--------- --------- ---------
$ 5,408 $ 18,940 $ 75,641
--------- --------- ---------
--------- --------- ---------
</TABLE>
5. NOTE PAYABLE--STOCKHOLDERS
On June 3, 1995, certain stockholders advanced $122,154 to the Company,
payable on demand, without interest. Through December 15, 1995, the Company paid
$9,840 and converted the balance of $112,314 to a note payable in equal monthly
installments of $1,600, including interest at 10.5%, per annum, commencing
January 15, 1996, and continuing through June 15, 1998, when the balance is
payable.
On September 16, 1996 (Unaudited), the Company made a principal payment of
$20,110, which will reduce the balance due at maturity, and paid interest to the
stockholders for funds advanced during the interest free period.
For the ten months ended October 31, 1996 (Unaudited), interest expense to
shareholders was $20,197.
F-9
<PAGE>
6. COMMITMENTS
LEASE
On April 3, 1995, as amended October 27, 1995, the Company entered into a
noncancelable lease for office and research space through October 3, 1998,
requiring a monthly rent of $2,024. On April 5, 1996, the Company amended their
lease for additional space through March 31, 1999, requiring an additional
monthly rent of $3,194.
In addition, the Company issued the landlord 21,366 shares of common stock
in exchange for $20,000, payable in equal installments over 36 months by
reductions of future monthly rent.
For the year ending December 31, 1995 and the ten months ended October 31,
1996 (Unaudited), rent expense was $10,736 and $41,612, respectively.
On October 1, 1996 (Unaudited), the Company leased additional space through
October 31, 1998, for a monthly rent of $1,655.
7. INCOME TAXES
Through November 30, 1995, the Company had elected as an "S" Corporation for
Federal and state purposes and, as such, was not required to pay income taxes.
For the year ended December 31, 1995, and the ten months ended October 31,
1995 and 1996 (Unaudited), the tax effects of timing differences which gave rise
to deferred income taxes were as follows:
<TABLE>
<CAPTION>
OCTOBER 31,
DECEMBER 31, ------------------------
1995 1995 1996
------------ ----------- -----------
<S> <C> <C> <C>
Software costs................................................. $ (80,000) $ (80,000) $ (45,000)
Net operating loss carryforward................................ 40,000 245,000 535,000
Less valuation allowance....................................... (165,000) (450,000)
------------ ----------- -----------
$ (40,000) NONE $ 40,000
------------ ----------- -----------
------------ ----------- -----------
</TABLE>
As of December 31, 1995, and October 31, 1996 (Unaudited), the tax effect of
deferred income taxes payable were as follows:
<TABLE>
<CAPTION>
1995 1996
---------- -----------
<S> <C> <C>
Software costs................................................................. $ (80,000) $ (125,000)
Net operating loss carryforward................................................ 40,000 575,000
Less valuation allowance....................................................... (450,000)
---------- -----------
$ (40,000) NONE
---------- -----------
---------- -----------
</TABLE>
As of December 31, 1995, and October 31, 1996 (Unaudited), the Company had
net operating loss carryforwards available to reduce future taxable income of
approximately $100,000, through 2010, and $1,600,000 expiring through 2011,
respectively.
8. CONCENTRATION OF CASH
The Company, from time to time, had cash in financial institutions in excess
of insured limits. In assessing its risk, the Company's policy is to maintain
funds only with reputable financial institutions.
F-10
<PAGE>
9. SUBSEQUENT EVENTS
LOAN PAYABLE--STOCKHOLDER
During January to April 1996, a stockholder advanced the Company $60,840
which is convertible into common stock at approximately $.94, per share. On June
13, 1996 (Unaudited), the advances were converted into 64,994 shares of common
stock.
LOANS PAYABLE--OTHER
During January to April 1996, the Company borrowed an aggregate of $178,087,
payable on demand, with interest at 18%, per annum. The loans are convertible
into common stock at approximately $.94, per share. On June 20, 1996
(Unaudited), the loans and accrued interest thereon of $12,616 were converted
into 203,726 shares of common stock.
CONVERTIBLE DEBENTURES
During March/April and May 1996, the Company sold convertible debentures in
the aggregate face amount of $47,000 and $10,000, respectively, for proceeds of
$44,980 and $10,000, respectively. The debentures were due in March and April
2001, with interest at 11.625% to 12.625%, per annum, payable annually. The
debentures were convertible, at any time prior to either the private placement
or public offering of securities, into common stock of the Company at 75% of the
offering price, as defined. On July 1, 1996 (Unaudited), the debentures were
converted into 25,331 shares of common stock.
CONSULTING AGREEMENTS (UNAUDITED)
In May 1996, the Company entered into a business consulting agreement in
exchange for, at the Company's option: (a) $30,000 in cash or (2) 299,000 shares
of common stock and 400,000 warrants to purchase shares of common stock. Each
warrant is exercisable at $5.50, per share, commencing June 1998 through May
2001. If the Company does not close an initial public offering before June 1,
1997, the Company will be entitled to cancel the warrants and redeem the shares
for $30,000. In June 1996 (Unaudited), the Company issued 299,000 shares of
common stock to the consultant.
In June 1996, the Company entered into a business consulting agreement
through June 2001, in exchange for 250,000 warrants to purchase shares of common
stock, each exercisable to purchase one share of common stock at $4, per share,
commencing June 1998 through June 2002.
STOCK OPTION PLAN (UNAUDITED)
In June 1996, the Company adopted a stock option plan under which it may
grant both qualified and nonqualified options to purchase up to 500,000 shares
of common stock to directors, officers and key employees. Options shall be
exercisable for a period of up to ten years from the date of the grant at no
less than the fair value on the date of the grant (five years and 110% of fair
market value for stockholders owning 10% or greater).
During the period from July 1, 1996 to November 30, 1996 (Unaudited), the
Company granted options, under the plan, to purchase 254,000 shares at $4, per
share.
PREFERRED STOCK (UNAUDITED)
In June 1996, the Company authorized 5,000,000 shares of $.01, par value,
preferred stock.
F-11
<PAGE>
9. SUBSEQUENT EVENTS (CONTINUED)
EMPLOYMENT AGREEMENT (UNAUDITED)
In June 1996, the Company entered into an employment agreement with an
officer (chief executive officer and president) through June 2001, which
annually shall automatically be extended for one year beginning on the fifth
anniversary of the agreement. The agreement provides for an annual base
compensation of $150,000, with annual increases based on cost of living
increases, plus increases up to $100,000, if the Company's gross revenues are in
excess of $10,000,000 and if income before interest and income taxes are 10% of
gross revenues. Upon death, the executive or his estate shall receive an amount
equal to one year's base salary, payable over 12 months. Upon permanent
disability, the officer shall receive an amount equal to three times the base
salary, payable over 36 months, plus insurance and other benefits, etc. for
three years. Upon termination by the Company, the officer shall receive an
amount equal to the balance of the agreement, payable upon termination, plus
insurance and other benefits, etc., for two years. Upon nonrenewal of the
agreement by the Company, the officer shall receive one year's base salary
payable over 12 months. Upon a termination within nine months of a change in
control of the Company, the officer shall receive an amount equal to the balance
of the agreement, but for no less than a three year period.
During 1996, the Company also entered into employment agreements with four
additional officers for terms of four years, except one with a term of two
years, and all are automatically renewable for two year terms, unless
terminated. The agreements provided for annual base salaries of $120,000,
$100,000, $80,000 and $80,000, subject to increases for annual cost of living
adjustments.
One officer is also entitled to receive additional compensation equal to
1 1/2% of the net sales proceeds, as defined, of the Company's products within
the United States. The agreements also provided for severance payments upon
death, permanent disabilities or termination by the Company of the officer equal
to six months base salary, plus insurance and other benefits for six months.
BRIDGE FINANCING
On May 15, 1996, the Company completed a bridge financing for aggregate
proceeds of $250,000 and issued notes payable of $250,000 and 200,000 shares of
common stock. The notes were payable upon the earlier of: (1) 18 months or (2)
the closing of the minimum amount of the private placement, with interest at
12%, per annum. The notes payable and shares of common stock are redeemable by
the Company at 85% of their aggregate proceeds if an initial public offering is
not completed by February 1, 1997. The Company has allocated $.47, per share, of
the proceeds of the bridge financing to the common stock, the value of the
shares at the date of issuance.
In connection with the bridge financing, the Company paid an underwriter a
discount of $25,000 and a nonaccountable expense allowance of $7,500.
The notes payable issued with the bridge financing were repaid with proceeds
from the private placement and the unamortized discount and deferred financing
costs of $80,945 and $17,462, respectively, were written-off (Unaudited).
PRIVATE PLACEMENT
The private placement was anticipated to be for a minimum of 25 units, on a
best efforts--all or none basis, and a maximum of 50 units, on a best efforts
basis, at $30,000, per unit. Each unit consisted of 10,000 shares of common
stock and 5,000 warrants. Each warrant is exercisable to purchase one share of
common stock at a price of $5.50, per share, for a period of four years,
commencing two years from the later of (i) the closing of the private placement
or (ii) the date of the proposed public offering.
F-12
<PAGE>
9. SUBSEQUENT EVENTS (CONTINUED)
As of October 31, 1996 (Unaudited), 48.5 units have been sold and the
remaining 1.5 units were closed in November 1996. In connection with the private
placement, the Company paid the underwriter a commission of $150,000 and a
nonaccountable expense allowance of $45,000, including on the 1.5 units sold in
November, and incurred other expenses of $88,042.
FORGIVENESS OF INDEBTEDNESS (UNAUDITED)
On September 17, 1996, the Company settled an accounts payable to a vendor
of $110,528 in exchange for $25,000 in cash and the issuance of 3,500 shares of
common stock of the Company (including 1,100 shares issued directly to the
shareholder of the vendor). The Company valued the shares at $3, per share, the
value of the private placement and, as such, recorded forgiveness of
indebtedness income of $75,028.
WARRANTS (UNAUDITED)
In September 1996, the Company issued warrants to two employees, each
exercisable to purchase 50,000 shares of common stock at $5.50, per share,
commencing one year from the proposed public offering through September 26,
2001.
In November 1996, the Company entered into a business consulting agreement
with a director in exchange for 250,000 warrants. Each warrant is exercisable to
purchase one share of common stock at $5.50, per share, commencing June 1998
through June 2002.
In July 1996, the Company borrowed $50,000 from a consultant, which was
repaid in August 1996, without interest. As consideration for the loan, the
Company issued to such consultant a warrant to purchase 50,000 shares of common
stock, exercisable at $5.50 per share, commencing June 1, 1998 until June 1,
2002.
FACTORING AGREEMENT (UNAUDITED)
On October 31, 1996, the Company entered into an factoring agreement under
which the Company will sell, without notification, with full recourse and
subject to credit approval, all existing and future accounts receivable to a
finance company, owned by certain stockholders of the Company, in exchange for
94% of the invoiced amount. Upon becoming delinquent, as defined, the Company
shall repurchase the accounts receivable for 94% of the amount invoiced. The
agreement limits uncollected accounts receivable to $425,000. The Company will
also pay a fee equal to 1%, per month, of the uncollected invoiced amounts in
excess of 30 days.
PROPOSED PUBLIC OFFERING
The public offering is anticipated to be for 700,000 shares of common stock
at a price of $5, per share, plus 300,000 warrants (Public Warrants) to purchase
shares of common stock at a price of $.10, per warrant, for an aggregate of
$3,515,000. Each Public Warrant shall be exercisable for one share of common
stock at a price of $5.50, per share, for a period of four years, commencing two
years from the date of the public offering. Upon certain conditions, the
warrants will be redeemable by the Company at $.05, per warrant. The offering
will also provide for an overallotment option of 105,000 shares and 45,000
warrants.
The underwriter shall be entitled to a 10% discount and 3% nonaccountable
expense allowance, of which $10,000 and $15,000 were paid upon closing of the
bridge financing and private placement, respectively. Upon closing of the public
offering, the Company will sell to the Underwriter, for $10, a warrant to
purchase 70,000 shares of common stock at $6, per share, and 30,000 Public
Warrants at $.12, per warrant, exercisable for five years commencing one year
from the public offering. In addition, upon the
F-13
<PAGE>
9. SUBSEQUENT EVENTS (CONTINUED)
closing of the public offering, the Company will enter into a three year
consulting agreement with the underwriter for $1,953, per month, payable at
closing.
10. INTERIM FINANCIAL STATEMENT (UNAUDITED)
In the opinion of management, the interim unaudited financial statements as
of October 31, 1996, reflect all material adjustments, consisting only of normal
recurring adjustments, necessary for a fair presentation of the financial
position, the results of operations and cash flows. Interim results are not
necessarily indicative of the results of the entire year.
F-14
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NO DEALER, SALESMAN OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS IN
CONNECTION WITH THE OFFERING MADE HEREBY, AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE COMPANY, OR ANY UNDERWRITER OR BROKER/DEALER. NEITHER THE DELIVERY OF
THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES,
CREATE ANY IMPLICATION THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF
ANY DATE SUBSEQUENT TO THE DATE HEREOF OR THAT THERE HAS BEEN NO CHANGE IN THE
AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY BY ANY PERSON
IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED OR IN
WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO OR
TO ANYONE TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION IN SUCH
JURISDICTION.
------------------------
TABLE OF CONTENTS
<TABLE>
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PAGE
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<S> <C>
Prospectus Summary............................. 3
Risk Factors................................... 7
Use of Proceeds................................ 14
Dilution....................................... 15
Capitalization................................. 16
Dividend Policy................................ 17
Management's Discussion and Analysis of
Financial Condition and Results of
Operations................................... 17
Business....................................... 20
Management..................................... 24
Beneficial Ownership of Principal Stockholders
and Management............................... 29
Certain Transactions........................... 30
Description of Securities...................... 31
Shares Eligible for Future Sale................ 34
Underwriting................................... 36
Concurrent Registration for Secondary
Offering..................................... 39
Legal Matters.................................. 39
Experts........................................ 39
Available Information.......................... 40
</TABLE>
------------------------
UNTIL , 1997 (25 DAYS AFTER THE DATE OF THIS PROSPECTUS) ALL DEALERS
EFFECTING TRANSACTIONS IN THE REGISTERED SECURITIES, WHETHER OR NOT
PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS.
THIS IS IN ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS WHEN
ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR
SUBSCRIPTIONS.
700,000 SHARES OF COMMON STOCK
AND
300,000 REDEEMABLE COMMON STOCK
PURCHASE WARRANTS
APOLLO INTERNATIONAL
OF DELAWARE, INC.
---------------------
PROSPECTUS
---------------------
MAY DAVIS GROUP, INC.
, 1997
- --------------------------------------------------------------------------------
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<PAGE>
[Alternate Page for Selling Securityholders Prospectus]
SUBJECT TO COMPLETION. DATED DECEMBER 17, 1996
PROSPECTUS
APOLLO INTERNATIONAL OF DELAWARE, INC.
1,432,989 SHARES OF COMMON STOCK AND
650,000 REDEEMABLE COMMON STOCK PURCHASE WARRANTS
This Prospectus relates to the offer and sale by certain persons (the
"Selling Securityholders") of up to 1,432,989 shares of Common Stock $.01 par
value per share (the "Common Stock"), 650,000 redeemable common stock purchase
warrants to purchase one (1) share of Common Stock (the "Public Warrants") and
the 650,000 shares underlying the Public Warrants of Apollo International of
Delaware, Inc. (the "Company"), hereinafter referred to as the "Offering". Each
Public Warrant entitles the holder to purchase one share of Common Stock at an
exercise price of $5.50 (the "Exercise Price"), subject to adjustment,
commencing two years after , 1997 (the "Effective Date") until the
close of business on the sixth year after the Effective Date. The Public
Warrants are each redeemable by the Company for $.05 per Public Warrant at any
time after one year from the Effective Date, upon thirty days' prior written
notice to the Public Warrant holders, provided (i) the closing bid price of the
Common Stock for 20 consecutive trading days exceeds $7.50, and (ii) if such
redemption occurs during the first two years following the Effective Date, the
Underwriter has consented in writing to the redemption. See "Description of
Securities". The Company will not receive any of the proceeds from the sale of
such shares of Common Stock and Public Warrants, and the shares of Common Stock
underlying the Public Warrants. To the extent the Public Warrants are exercised,
the Company will receive proceeds represented by the exercise price of such
warrants. The expenses in connection with the preparation of this Prospectus and
registration of the Common Stock and Public Warrants will be paid by the
Company. The Company may also incur further expenses associated with any
continuing responsibilities to register the Common Stock and Public Warrants
(sometimes collectively referred to as the "Securities"). Such additional
expenses are not capable of being estimated, but the Company does not expect
them to be material. Selling Securityholders will be responsible for payment of
transfer taxes and broker/dealers commissions, if any are payable.
The Common Stock and Public Warrants are listed on the NASDAQ SmallCap
Market under the symbols " " and " ", respectively. On ,
1997, the high and low bid prices of the Common Stock reported on the NASDAQ
SmallCap Market were $ and $ , respectively. See "Description of
Securities," "Risk Factors."
THE SECURITIES OFFERED HEREBY ARE SPECULATIVE AND INVOLVE A HIGH DEGREE OF
RISK AND IMMEDIATE SUBSTANTIAL DILUTION FROM THE PUBLIC OFFERING PRICE AND
SHOULD NOT BE PURCHASED BY INVESTORS WHO CANNOT AFFORD THE LOSS OF THEIR ENTIRE
INVESTMENT. PROSPECTIVE INVESTORS SHOULD CAREFULLY CONSIDER THE RISKS DESCRIBED
UNDER THE CAPTION "RISK FACTORS" WHICH APPEAR BEGINNING ON PAGE 5 OF THIS
PROSPECTUS. SEE ALSO "DILUTION."
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The date of this Prospectus is , 199 .
<PAGE>
[Alternate Page for Selling Securityholders Prospectus]
PROSPECTUS SUMMARY
THE FOLLOWING IS A SUMMARY OF CERTAIN INFORMATION (INCLUDING FINANCIAL
STATEMENTS AND NOTES THERETO) CONTAINED IN THIS PROSPECTUS AND IS QUALIFIED IN
ITS ENTIRETY BY THE MORE DETAILED INFORMATION APPEARING ELSEWHERE HEREIN. UNLESS
OTHERWISE SPECIFIED, ALL REFERENCES HEREIN REFLECT THE 10.6828 FOR 1 SPLIT OF
THE COMPANY'S COMMON STOCK EFFECTED FOR SHAREHOLDERS OF RECORD ON MAY 10, 1996.
ALTHOUGH FRACTIONAL SHARES RESULTED FROM THE STOCK SPLIT, THERE ARE NO
REFERENCES TO FRACTIONAL SHARES HEREIN. EACH PROSPECTIVE INVESTOR IS URGED TO
READ THIS PROSPECTUS IN ITS ENTIRETY.
THE COMPANY
Apollo International of Delaware, Inc. (the "Company") is a development
stage company formed in Delaware in November, 1994. The Company's objective is
to integrate new computer and fiber optics technologies into electric power
protection and control products for industry and electric utilities. The Company
is developing concurrently two product lines, the first of which (designated as
"CMPR" products) is designed to monitor motors used by industrial users, and the
second of which (designated as "SOLARIS" or "NOVA" products), is designed to
monitor electric power transmission for industrial users and electric utilities.
The target market for the motor protection and control product line is
industrial end users such as steel mills, mining operations, pulp and paper
mills, and petrochemical companies. The NOVA product line is designed for the
utility substation marketplace which includes public and investor owned
utilities, cogeneration facilities, and large industrial users who operate their
own electric power substations.
In 1996, the Company raised a total of $1,700,000 in private financings
through the private placement of 700,000 shares of Common Stock and 250,000
warrants, which warrants were subsequently converted to Public Warrants, all of
which securities are being offered under this Prospectus. In , 1997, the
Company completed an initial public offering of its Common Stock and Public
Warrants and raised gross proceeds to the Company of $3,530,000.
The Company maintains its principal executive offices at 6542 Highway 41,
Suite 215, Apollo Beach, Florida 33592; telephone (813) 645-7677.
2
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[Alternate Page for Selling Securityholders Prospectus]
THE OFFERING
<TABLE>
<S> <C>
Securities Offered........................... 1,432,989 shares of Common Stock, $.01 par
value, 650,000 Public Warrants to purchase
one (1) share of Common Stock at $5.50 per
share and the 650,000 shares underlying the
Public Warrants. See "Risk Factors -Possible
Adverse Effect of Redemption of Public
Warrants" and "Description of Securities".
Securities to be Outstanding Subsequent to
the Offering (2)........................... 3,499,786 shares of Common Stock.(1) 950,000
Public Warrants.(3)
Terms of the Public Warrants................. Each Public Warrant entitles the holder, for
$5.50, to purchase one share of Common Stock
for a period of four years commencing two
years after the date of this Prospectus (the
"Effective Date"). The Public Warrants are
each redeemable by the Company for $.05 per
Public Warrant at any time after one year
from the Effective Date, upon thirty days'
prior written notice to the Public Warrant
holders, provided (i) the closing bid price
of the Common Stock for 20 consecutive
trading days exceeds $7.50, and (ii) if such
redemption occurs during the first two years
following the Effective Date, the Underwriter
has consented in writing to the redemption.
See "Description of Securities-- Warrants."
Risk Factors................................. Investment in the securities offered hereby
involves a high degree of risk and
substantial dilution. See "Risk Factors" and
"Dilution."
NASDAQ Symbols (5)........................... Common Stock--[ ]
Warrants --[ ]
</TABLE>
- ------------------------
(1) Does not include (i) 245,000 shares of Common Stock reserved for future
issuance under the Company's 1996 Stock Option Plan; (ii) 254,000 shares of
Common Stock reserved for issuance upon exercise of stock options granted
under the 1996 Stock Option Plan; (iii) 1,050,000 shares of Common Stock
reserved for issuance upon exercise of outstanding warrants to purchase
Common Stock; (iv) 70,000 shares of Common Stock reserved for issuance upon
exercise of the Underwriters' Warrant; (v) 30,000 shares of Common Stock
reserved for issuance upon exercise of Underwriters' Public Warrants
issuable upon exercise of the Underwriters' Warrant; and (vi) 300,000 shares
of Common Stock reserved for issuance upon exercise of the Public Warrants.
(2) Does not include 105,000 additional shares of Common Stock or 45,000 Public
Warrants issuable upon exercise of the Underwriters' over-allotment option.
See "Underwriting."
(3) Includes 400,000 common stock purchase warrants issued pursuant to a
consulting agreement and 250,000 common stock purchase warrants issued
pursuant to a private placement of the Company's securities, all of which
warrants shall have the same exercise price and other terms and provisions
of the Public Warrants upon the closing of the Offering. Does not include
550,000 common stock purchase warrants issued to consultants; or (ii)
100,000 common stock purchase warrants issued to employees.
3
<PAGE>
[Alternate Page for Selling Securityholders Prospectus]
RISK FACTORS
THE SECURITIES OFFERED HEREBY ARE SPECULATIVE AND INVOLVE A HIGH DEGREE OF
RISK AND SUBSTANTIAL DILUTION AND SHOULD ONLY BE PURCHASED BY INVESTORS WHO CAN
AFFORD TO LOSE THEIR ENTIRE INVESTMENT. PROSPECTIVE INVESTORS, PRIOR TO MAKING
AN INVESTMENT, SHOULD CAREFULLY CONSIDER THE FOLLOWING RISKS AND SPECULATIVE
FACTORS, AS WELL AS OTHER INFORMATION SET FORTH ELSEWHERE IN THIS PROSPECTUS,
ASSOCIATED WITH THIS OFFERING, INCLUDING THE INFORMATION CONTAINED IN THE
FINANCIAL STATEMENTS HEREIN.
DEVELOPMENT STAGE COMPANY; LIMITED REVENUES. The Company is a development
stage company which was formed in November 1994 and which had an accumulated
deficit of approximately $587,321 as of December 31, 1995 and $1,844,608 as of
October 31, 1996. Potential investors should be aware that unanticipated
problems, many of which may be beyond the Company's control, are commonly
encountered by companies in the development stage. These include, but are not
limited to, unexpected product development, marketing and customer support
problems, increased competition, lack of credibility with customers and
suppliers, and technical obsolescence. Further, the Company had no revenues
prior to December 31, 1995 and has had limited revenues of approximately
$218,789 for the ten month period ended October 31, 1996. There is no assurance
that the Company will ever generate sufficient revenues to meet expenses or be
profitable. See "Management's Discussion of Plan of Operations" and the
Financial Statements hereto.
SIGNIFICANT CAPITAL REQUIREMENTS; DEPENDENCE ON OFFERING PROCEEDS; POSSIBLE
NEED FOR ADDITIONAL FINANCING. The Company's capital requirements in connection
with the design, development and commercialization of its products have been and
will continue to be significant. To date, the Company has been substantially
dependent upon loans from its principal stockholders, as well as private
placements and a public offering of its debt and equity securities, to finance
its working capital requirements. The Company raised gross proceeds $1,700,000
in private financings in 1996 and closed its initial public offering ("IPO") in
, 1997 for gross proceeds of $3,530,000. The Company is dependent on such
proceeds to commence full scale marketing activities in connection with its
products, to complete the development of additional product and software
applications, and to fund the Company's working capital requirements. The
Company anticipates, based on currently proposed plans and assumptions relating
to its operations, that the proceeds of its IPO will be sufficient to satisfy
its contemplated cash requirements for at least twelve months following the IPO
closing. In the event that the Company's plans change or prove to be inaccurate
or if the proceeds of the IPO prove to be insufficient to fund operations, the
Company could be required to seek additional financing sooner than currently
anticipated or could be required to curtail its activities. The Company has no
current arrangements with respect to, or sources of, additional financing, and
there can be no assurance that existing stockholders will provide any portion of
the Company's future financing requirements. There can be no assurance that any
additional financing will be available to the Company on acceptable terms, or at
all. Additional equity financing may involve substantial dilution to the
interests of the Company's then existing stockholders. See "Use of Proceeds" and
"Certain Transactions."
BROAD DISCRETION IN USE OF PROCEEDS. All of the proceeds from the exercise
of the Public Warrants will be applied to working capital and general corporate
purposes. Accordingly, the Company will have broad discretion in the application
of such proceeds.
5
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[Alternate Page for Selling Securityholders Prospectus]
NO ASSURANCE OF CONTINUED MARKET FOR SECURITIES. Although the Company's
Common Stock and Public Warrants are listed on the NASDAQ SmallCap Market, there
can be no assurances that a public trading market for the Common Stock will be
sustained. If for any reason the Company fails to maintain sufficient
qualifications for continued listing on the NASDAQ SmallCap Market, purchasers
of the securities may have difficulty in selling their securities should they
desire to do so. In any event, because certain restrictions may be placed upon
the sale of securities at prices under $5, unless such securities qualify for an
exemption from the "penny stock" rules, such as a listing on the NASDAQ SmallCap
Market, some brokerage firms will not effect transactions in the securities if
they trade below $5 and it is unlikely that any bank or financial institution
will accept the securities as collateral, which could have an adverse effect in
developing or sustaining any market for the securities. See "Risk Factors
- --Possible Delisting of Securities" and "--Penny Stock Regulations."
ARBITRARY DETERMINATION OF EXERCISE PRICE; POSSIBLE VOLATILITY OF
SECURITIES. The terms of the Public Warrants were arbitrarily determined by
negotiations between the Company and the Underwriters and do not necessarily
bear any relationship to the Company's assets, book value, net earnings, net
sales or other established criteria of value, and should not be considered
indicative of the actual value of the Securities. See "Underwriting." The stock
market has, from time to time, experienced extreme price and volume
fluctuations, which often have been unrelated to the operating performance of
particular companies. Regulatory developments and economic and other external
factors, as well as period-to-period fluctuations in financial results of the
Company, may have a significant impact on market prices of the Securities.
POTENTIAL ADVERSE EFFECT OF REDEMPTION OF PUBLIC WARRANTS. The Public
Warrants are subject to redemption by the Company. Redemption of the Public
Warrants could force the holders to exercise the Public Warrants and pay the
exercise price at a time when it may be disadvantageous for the holders to do
so, to sell the Public Warrants at the current market price when they might
otherwise wish to hold the Public Warrants, or to accept the redemption price,
which may be substantially less than the market value of the Public Warrants at
the time of redemption. The holders of the Public Warrants will automatically
forfeit their rights to purchase the shares of Common Stock issuable upon
exercise of such Public Warrants unless the Public Warrants are exercised before
they are redeemed. The holders of Public Warrants will not possess any rights as
stockholders of the Company unless and until the Public Warrants are exercised.
See "Description of Securities--Warrants."
CURRENT PROSPECTUS AND STATE BLUE SKY REGISTRATION IN CONNECTION WITH
EXERCISE OF PUBLIC WARRANTS. The Company will be able to issue shares of its
Common Stock upon exercise of the Public Warrants only if there is a then
current prospectus relating to the Common Stock issuable upon the exercise of
the Public Warrants under an effective registration statement filed with the
Commission and only if such Common Stock is then qualified for sale or exempt
from qualification under applicable state securities laws of the jurisdictions
in which the various holders of Public Warrants reside. Although the Company
will use its best efforts to meet such requirements, there can be no assurance
that the Company will be able to do so. The failure of the Company to meet such
requirements may deprive the Public Warrants of any value and cause the resale
or other disposition of Common Stock issued upon the exercise of the Public
Warrants to become unlawful. See "Description of Securities--Warrants."
POSSIBLE ADVERSE IMPACT ON MARKET OF WARRANT EXERCISE. In the event of the
exercise of a substantial number of Public Warrants within a reasonably short
period of time after the right to exercise commences, the resulting increase in
the amount of Common Stock of the Company in the trading market could
substantially affect the market price of the Common Stock. See "Description of
Securities--Warrants.-- Warrants."
POSSIBLE ADVERSE IMPACT OF UNDERWRITERS' WARRANT. In connection with the
IPO, the Company sold to the Underwriters, for nominal consideration, an
Underwriters' Warrant exercisable for 70,000 shares of Common Stock at $6.00 per
share and/or 30,000 Public Warrants at $.12 per warrant. The Underwriters'
Warrant is exercisable for a period of five years, commencing , 1998. The
Underwriters' Warrant is
9
<PAGE>
[ALTERNATE PAGE FOR SELLING SECURITYHOLDERS PROSPECTUS]
not redeemable by the Company. The holders of the Underwriters' Warrant will
have the opportunity to profit from a rise in the market price of the
Securities, if any, without assuming the risk of ownership. The Company may find
it more difficult to raise additional equity capital if it should be needed for
the business of the Company while the Underwriters' Warrant is outstanding. At
any time when the holders thereof might be expected to exercise them, the
Company would probably be able to obtain additional capital on terms more
favorable than those provided by the Underwriters' Warrant.
The Underwriters have "piggy back" and demand registration rights with
respect to the Common Stock issuable upon exercise of the Underwriters' Warrant
(and the Public Warrants issuable thereunder). Any future exercise of these
registration rights may cause the Company to incur substantial expense and could
impair the Company's ability to raise capital through the public sale of its
securities. See "Dilution," "Shares Eligible for Future Sale" and "Underwriting
Agreement".
POSSIBLE DILUTIVE EFFECT OF OPTIONS AND WARRANTS AND ADVERSE EFFECT ON
MARKET PRICE. No assurance can be given as to the effect, if any, that future
sales of Common Stock, or the availability of shares of Common Stock for future
sales, will have on the market price of the Common Stock from time to time.
Sales of substantial amounts of Common Stock (including shares issued upon the
exercise of warrants or stock options), or the possibility that such sales could
occur, could adversely affect the market price of the Common Stock and could
also impair the Company's ability to raise capital through an offering of its
equity securities in the future. As of the date of this Prospectus, the Company
granted options for 254,000 shares of Common Stock to various employees of the
Company, 127,000 of which options are first exercisable commencing one year from
their respective dates of grant (approximately July 1, 1997 to November 15,
1997), and the balance of which are exercisable incrementally over six months
thereafter, all at an exercise price of $4.00 per share. Further, the Company
issued a total of 100,000 common stock purchase warrants to two employees, which
are exercisable at $5.50 per share commencing one year from the date of this
Prospectus until September 26, 2001. The Company also issued common stock
purchase warrants to consultants for an aggregate of 900,000 shares, 400,000 of
which shall have the same terms as the Public Warrants offered hereby; 300,000
of which are exercisable at $4.00 per share commencing June 1, 1998 until June
1, 2002, and 300,000 of which are exercisable at $5.50 per share commencing June
1, 1998 until June 1, 2002. In addition, the Company issued 250,000 common stock
purchase warrants to private placement investors which shall have the same
exercise price and terms as the Public Warrants offered hereby. Further, in
connection with this Offering, the Company will issue to the Underwriters an
Underwriters' Warrant entitling the Underwriters, for four years commencing one
year from the date of this Prospectus to purchase, for $6.00 per share, 70,000
shares of the Company's Common Stock and/or 30,000 Public Warrants at a purchase
price of $.12 per warrant. The issuance of any additional shares by the Company
in the future may result in a reduction of the book value or market price of the
then outstanding Common Stock. For the life of the Underwriters' Warrants, the
Public Warrants, non-public warrants and options, the holders thereof are given
the opportunity to profit from a rise in the market price of the Common Stock.
Any rise in the market price of the Common Stock may encourage the holders to
exercise such warrants or options, which may result in a dilution of the
interests of other stockholders. As a result, the Company may find it more
difficult to raise additional equity capital if it should be needed for the
business of the Company while such warrants and options are outstanding. See
"Description of Securities."
SHARES ELIGIBLE FOR FUTURE SALE. Sale of a substantial number of shares of
the Common Stock in the public market could materially adversely affect the
market price of the Common Stock. The Securities offered hereby, (i)
approximately 799,000 shares of Common Stock and (ii) 650,000 Public Warrants,
will be available for sale in the public market commencing 13 months after
, 1997 unless released earlier by the Underwriters, (iii) approximately
200,000 shares of Common Stock, will be available for sale in the public market
commencing 24 months after , 1997 unless released earlier by the
Underwriters, (iv) approximately 433,989 additional shares of Common Stock will
be available for sale in the public
10
<PAGE>
[ALTERNATE PAGE FOR SELLING SECURITYHOLDERS PROSPECTUS]
market commencing 18 months after the date of this Prospectus, unless released
earlier by the Underwriters, and (v) approximately 70,000 shares of Common Stock
being registered for the account of the Underwriters will be available for sale
in the public market commencing 12 months after , 1997, subject to
exercise of the Underwriter's Warrant. See "Shares Eligible For Future Sale."
Each of the Company's directors and officers, and certain shareholders (in
addition to those referenced in the preceding paragraph), holding a total of
1,260,574 shares of Common Stock and warrants and options to acquire another
322,000 shares of Common Stock, have agreed not to publicly offer, sell or
otherwise dispose of any Common Stock for a period of 24 months after ,
1997 without the prior written consent of the Underwriters. Of such shares,
727,060 would, but for the lock-up, be available for sale, subject to certain
volume limitations and other requirements of Rule 144 under the 1933 Act. Future
sales of substantial amounts of Common Stock, or the potential for such sales,
could adversely affect prevailing market prices. See "Shares Eligible For Future
Sale."
POSSIBLE RESTRICTIONS ON MARKET MAKING ACTIVITIES IN THE
SECURITIES. Although they have no legal obligation to do so, the Underwriters
from time to time may act as market makers and otherwise effect transactions in
the Securities. Unless granted an exemption by the Commission from Rule 10b-6
under the Exchange Act, the Underwriters will be prohibited from engaging in any
market making activities or solicited brokerage activities with respect to the
Securities for the period from nine business days prior to any solicitation of
the exercise of any Warrant or nine business days prior to the exercise of any
Warrant based on a prior solicitation until the later of the termination of such
solicitation activity or the termination (by waiver or otherwise) of any right
the Underwriters may have to receive such a fee for the exercise of the Warrants
following such solicitation. As a result, the Underwriters may be unable to
continue to provide a market for the Securities during certain periods while the
Warrants are exercisable. The prices and liquidity of the Securities may be
adversely affected by the cessation of the Underwriters' market making
activities.
POSSIBLE DELISTING OF SECURITIES. The Company's Common Stock and Public
Warrants are listed in the NASDAQ SmallCap Market and the Boston Stock Exchange
("BSE"); however, there can be no assurance that such listings can be sustained.
The continued trading of the Common Stock and the Public Warrants on the NASDAQ
SmallCap Market and the BSE is conditioned upon the Company meeting certain
criteria. If the Company fails to meet any of these criteria, the Common Stock
and/or the Public Warrants could be delisted from trading on the NASDAQ SmallCap
Market or the BSE, which delisting could materially adversely affect the trading
market for the Common Stock and/or the Public Warrants. There can be no
assurance that the Securities will not be delisted. See "Underwriting
Agreement".
PENNY STOCK REGULATION. In the event the Common Stock is delisted from
trading on NASDAQ SmallCap Market and the trading price of the Common Stock is
less than $5.00 per share, trading in the Common Stock would also be subject to
the requirements of Rule 15g-9 promulgated under the Securities Exchange Act of
1934, as amended (the "Exchange Act"). Under such rule, broker/dealers who
recommend such low-priced securities to persons other than established customers
and accredited investors must satisfy special sales practice requirements,
including a requirement that they make an individualized written suitability
determination for the purchaser and receive the purchaser's written consent
prior to the transaction. The Securities Enforcement Remedies and Penny Stock
Reform Act of 1990 also require additional disclosure in connection with any
trades involving a stock defined as a "penny stock" (generally, according to
recent regulations adopted by the Securities and Exchange Commission (the
"Commission"), any non-NASDAQ equity security that has a market price of less
than $5.00 per share, subject to certain exceptions), including the delivery,
prior to any penny stock transaction, of a disclosure schedule explaining the
penny stock market and the risks associated therewith. Such requirements could
severely limit the market liquidity of the Common Stock and the ability of
purchasers in this Offering to sell their securities in the secondary market.
There can be no assurance that the Common Stock will not be treated as a penny
stock.
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CIVIL LIABILITY OF SELLING SHAREHOLDERS. Under the Securities Act, a
purchaser of securities sold under a registration statement may recover from the
person from whom he bought the securities damages incurred as a result of
material misstatements contained in, or material information omitted from the
registration statement. The damages recoverable are the difference between the
price the purchaser paid for the security (but not more than the public offering
price) and the price at which the purchaser disposed of the security or (if he
still owns it) its value at the time of suit.
Persons subject to liability under the Securities Act are certain officers
and directors (including prospective directors) of the issuer of the securities,
certain experts, and every underwriter who sold the securities. Under the
Securities Act, the term "underwriter" is generally defined as any person who
has purchased from an issuer (or from a control person of the issuer) with a
view to, or offers or sells for an issuer in connection with, the distribution
of any security. Thus, when a person has purchased securities directly from an
issuer, and subsequently resells them, he may be deemed to have "purchased from
an issuer with a view to distribution" and may be deemed an "underwriter" for
purposes of imposing civil liability under the Securities Act. Therefore,
selling shareholders who acquired securities from the Company, and subsequently
resell those securities under this Prospectus (including the sale of common
stock resulting from a conversion or exercise of those securities), may be
deemed underwriters and therefore subject to civil liability for material
misstatements contained in, or material omissions from, this Prospectus.
ANTI-TAKEOVER EFFECT. Certain Delaware legislation applicable to the
Company may deter or frustrate takeovers of the Company. Certain provisions of
the Certificate of Incorporation of the Company may deter takeovers of the
Company. The Company is authorized to issue 5,000,000 shares of preferred stock
in one or more series, having terms fixed by the Board of Directors without
shareholder vote, including voting, dividend or liquidation rights that could be
greater than or senior to the rights of holders of Common Stock. Issuance of
these shares could also be used as an anti-takeover device. The Company has no
current intentions or plans to issue any such preferred stock. See "Description
of Securities--Anti-Takeover Provisions of Delaware Law; Certain Provisions in
Certificate of Incorporation."
USE OF PROCEEDS
On the assumption that all of the Public Warrants are exercised, the gross
proceeds that the Company will receive from such exercise $3,575,000. The
Company intends to utilize the proceeds for working capital and general
corporate purposes. To the extent that less than all of the Public Warrants are
exercised and the Company receives less than $3,575,000. such proceeds will
still be added to working capital and used for general corporate purposes.
Unless any of the Public Warrants are exercised, the Company will not receive
any proceeds from this Offering. The Company will not receive any proceeds from
the resale by the Securityholders of any of the Common Stock, Public Warrants,
or Common Stock underlying the Public Warrants.
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technological developments, the introduction, enhancement and market acceptance
of new and existing products, the introductions of competing products, and
general economic conditions. As a result, the Company believes that
period-to-period comparisons of its results of operations will not necessarily
be meaningful and should not be relied upon as any indication of future
performance. Because of the foregoing factors, it is likely that at some future
quarter, the Company's operating results will be below the expectations of
public market analysts and investors. In such event, the Company's Common Stock
would likely be materially adversely affected.
LIQUIDITY AND CAPITAL RESOURCES:
Until the initial public offering, the Company primarily financed its
operations through private sales of equity and debt securities as well as loans
and capital contributions by stockholders.
From November 1994 to December 1995 the Company effectively issued 1,451,526
shares of Common Stock in a private placement raising gross proceeds of
$580,110. On June 3, 1995 certain stockholders advanced $122,154 to the Company
which has been partially repaid to leave a balance at October 31, 1996 of
$85,121. During January to April of 1996 a stockholder advanced the Company
$60,840 which was subsequently converted to 64,994 shares of Common Stock.
During January to April of 1996, the Company borrowed an aggregate of $178,087,
which principal amount plus interest totaling $190,703 was converted to 203,726
shares of Common Stock. During March to May the Company sold convertible
debentures for net proceeds of $54,980. These were converted to 25,331 shares of
Common Stock effective July 1, 1996. On May 15, 1996 the Company completed a
bridge financing of $250,000 which was repaid from proceeds of a subsequent
private placement. Starting in June 1996 through October 31, 1996, the Company
conducted a private placement in which the Company sold 48.5 units at $30,000
per unit resulting in gross proceeds of $1,455,000. From this amount were
deducted the placement agent's 10% discount and 3% non-accountable expense
allowance. The remaining 1.5 units closed on November 14, 1996 for additional
gross proceeds of $45,000. Each unit consisted of 10,000 shares of Common Stock
and 5,000 Common Stock purchase warrants, which as of the date of this
Prospectus will be modified to be identical to the terms of the Public Warrants.
In , 1997, the Company closed its IPO and received $ in net
proceeds, after deduction for underwriting discounts and other offering
expenses.
The Company has generated limited revenues from the sale to a major steel
manufacturer of its initial product, the CMPR2, a motor protection relay. This
product is currently being modified for the customer, and the Company expects
additional orders from the customer which should generate $150,000 in cash in
December 1996. The Company is now shipping its second product, Solaris (a feeder
protection relay), on a limited basis. An initial order received in September
will generate approximately $20,000 in November 1996. A second order for 125
units to South Africa will be factored through an investment group and should
generate approximately $100,000 in November 1996. This will provide enough cash
for operating overhead and salaries until . An anticipated growth in
orders prior to the Offering may create cash requirements for increased
inventory.
The Company has generated limited revenues from the sale of CMPR2 motor
protection relays to U.S. Steel. This product is currently being modified for
the customer, and the Company expects
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the declaration of dividends and purchase or redemption of shares in violation
of the Delaware General Corporation Law); or (iv) for any transaction from which
the director derived an improper personal benefit. In addition, these provisions
do not limit the rights of the Company or its shareholders, in appropriate
circumstances, to seek equitable remedies such as injunctive or other forms of
non-monetary relief. Such remedies may not be effective in all cases.
The Company's Certificate of Incorporation and Bylaws provide that the
Company shall indemnify all directors and officers of the Company to the full
extent permitted by the Delaware General Corporation Law. Under such provisions,
any director or officer, who in his capacity as such, is made or threatened to
be made, a party to any suit or proceeding, may be indemnified if the Board of
Directors determines such director or officer acted in good faith and in a
manner he or she reasonably believed to be in or not opposed to the best
interest of the Company. The Certificate of Incorporation, Bylaws and the
Delaware General Corporation Law further provide that such indemnification is
not exclusive of any other rights to which such individual may be entitled under
the Certificate of Incorporation, the Bylaws, any agreement, vote of
shareholders or disinterested directors or otherwise.
BENEFICIAL OWNERSHIP OF PRINCIPAL STOCKHOLDERS AND MANAGMENT
The following table sets forth certain information concerning stock
ownership of all persons known by the Company to own beneficially five percent
or more of the outstanding shares of Common Stock, each Director and all
officers and Directors as a group as of the date of this Prospectus.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF PERCENTAGE OF
NAME AND ADDRESS OF BENEFICIAL BENEFICIAL OUTSTANDING
OWNER OR IDENTITY OF GROUP (2) OWNERSHIP(1) STOCK(1)
- -------------------------------------------------------------------- ---------------------- -------------------
<S> <C> <C>
David W. Clarke..................................................... 1,258,242(3) 35.95%
Christine Clewes.................................................... 705,691(4) 20.16%
Steven D. Smith..................................................... -0-(5) -0-
Gregory C. Hamilton................................................. -0- -0-
Matthias E. Lukens, Jr.............................................. 26,707(6) *
Frank J. Mancini.................................................... 326,577(7) 9.33%
c/o The Mancini Packing Company
700 Magnolia Street
Zolfo Springs, FL 32890
Robert C. Swatland.................................................. -0- -0-
Donald P. Louw...................................................... -0-(8) -0-
James Kendall....................................................... 347,191 9.92%
676 Reef Road
Vero Beach, FL 32963
All Directors and officers as a group (eight persons)............... 1,611,526(3)-(9) 46.05%
</TABLE>
- ------------------------
* Less than 1% of the issued and outstanding Common Stock..
(1) As used herein, the term beneficial ownership with respect to a security is
defined by Rule 13d-3 under the Securities Exchange Act of 1934 as
consisting of sole or shared voting power (including the power to vote or
direct the vote) and/or sole or shared investment power (including the power
to dispose or direct the disposition of) with respect to the security
through any contract, arrangement, understanding, relationship or otherwise,
including a right to acquire such power(s) during the next 60 days. Unless
otherwise noted, beneficial ownership consists of sole ownership, voting and
investment rights.
(2) Unless otherwise noted, addresses are c/o Apollo International of Delaware,
Inc., 6542 North U.S. Highway 41, Suite 215, Apollo Beach, Florida 33572
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(3) Includes 705,962 shares owned jointly by Mr. Clarke and Ms. Clewes and
552,551 shares for which David W. Clarke has sole voting power pursuant to
irrevocable proxies granted to him by various shareholders; but excludes
900,000 shares issuable upon exercise of warrants for which Mr. Clarke also
holds a proxy, but which warrants are not exercisable within the next 60
days. Of the 552,551 shares of outstanding Common Stock for which Mr. Clarke
holds a proxy, the proxy as to 299,000 of these shares terminates as of the
date of this Prospectus.
(4) Represents 705,962 shares owned jointly by Ms. Clewes and Mr. Clarke.
(5) Excludes 50,000 shares issuable upon exercise of a common stock purchase
warrant and 100,000 shares issuable upon exercise of a stock option, neither
of which is exercisable within the next 60 days.
(6) Represents 26,707 shares held by Mr. Lukens as custodian for his children.
Excludes 250,000 shares issuable upon exercise of a warrant that is not
exercisable within the next 60 days.
(7) Represents 138,034 shares held individually and 188,543 shares owned
beneficially by an entity of which Mr. Mancini is sole owner.
(8) Excludes 50,000 shares issuable upon exercise of a common stock purchase
warrant and 100,000 shares issuable upon exercise of a stock option, neither
of which is exercisable within the next 60 days.
(9) Excludes 50,000 shares of Common Stock issuable upon exercise of a warrant
that is not exercisable within the next 60 days.
CERTAIN TRANSACTIONS
The Company was indebted to its President and Chief Executive Officer and
its Vice President, Marketing in the total amount of approximately $85,000
represented by a "balloon" promissory note dated December 15, 1995 payable to
David Clarke and Christine Clewes. The note bears interest at 10.5% per annum
and calls for payments of principal and interest equal to $1,600 per month from
January 15, 1996 through June 15, 1998, at which time the entire remaining
unpaid principal balance becomes due and payable along with any accrued and
unpaid interest. This obligation to Mr. Clarke and Ms. Clewes was repaid from
the proceeds of the IPO. See "Use Of Proceeds."
In early 1996, Mr. Clarke and Ms. Clewes advanced the Company an additional
$60,840, which obligation was converted into approximately 64,994 shares of
Common Stock in June, 1996.
Pursuant to a consulting agreement with Matthias E. Lukens, Jr., a director
(Vice Chairman) of the Company, he was issued 250,000 Common Stock purchase
warrants exercisable at $5.50 per share commencing June 1, 1998 and expiring
June 1, 2002. See "Management--Consulting Agreements."
During 1995 and 1996, Frank Mancini, a director, and an affiliate, loaned
the Company an aggregate of $178,087.25. In June, 1996, pursuant to an agreement
between him and the Company, he converted the entire principal balance, plus
accrued interest of $12,617.39 into a total of 203,726 shares of the Company's
Common Stock. Mr. Mancini was paid approximately $23,000 from the proceeds of
this Offering for consulting services previously rendered to the Company.
The Company has entered into a revolving factoring agreement with a
partnership comprised of certain shareholders of the Company (which do not
include any officers or directors of the Company) in order to obtain additional
working capital. Pursuant to the agreement, the Company sells its receivables to
the partnership at 94% of the invoice amount (face amount) of the receivables.
The Company pays interest of one percent per month on factored advances over 30
days old that are not repaid from the factored receivables. The Company is
obligated to repurchase accounts on which a customer has not made a payment for
six consecutive months. There is a maximum of $425,000 available under the
Agreement of which $60,000 had been advanced to the Company as of December 1,
1996.
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DESCRIPTION OF SECURITIES
COMMON STOCK
The Company is currently authorized to issue 15,000,000 shares of Common
Stock, $.01 par value per share, 3,499,786 of which are issued and outstanding.
Holders of Common Stock have one vote for each share held of record on all
matters to be voted upon by stockholders, including the election of directors.
Holders of Common Stock are entitled to receive dividends when, as and if
declared by the Board of Directors out of funds legally available therefor and,
upon liquidation of the Company, and to share ratably in the net assets
available for distribution. Shares of Common Stock are not redeemable and have
no preemptive, conversion or similar rights.
PREFERRED STOCK
The Company's Amended and Restated Certificate of Incorporation authorizes
the issuance of 5,000,000 shares of "blank check" preferred stock, $.01 par
value, 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 shareholder approval, to issue preferred stock with dividend,
liquidation, conversion, voting or other rights superior to those of the holders
of Common Stock. Shares of preferred stock, if and when issued, could have
voting or other rights that adversely affect the voting power of the holders of
Common Stock. Further, the issuance of preferred stock could have the effect of
delaying or preventing a change of control of the Company, which could limit
stockholders' ability to dispose of their Common Stock in such transactions. The
Company currently has not issued any shares of preferred stock.
WARRANTS
REDEEMABLE COMMON STOCK PURCHASE WARRANTS. There are 950,000 redeemable
common stock purchase warrants (the "Public Warrants") issued and outstanding,
300,000 of which were sold in the Company's IPO and 650,000 of which are being
offered hereunder. Each redeemable common stock purchase warrant offered hereby
(the "Public Warrants") entitled the holder thereof to purchase one share of
Common Stock at a price of $5.50 per share (the "Exercise Price"), subject to
adjustment, commencing two years after the date of this Prospectus (the
"Effective Date") until the close of business on the sixth year after the
Effective Date. Each Public Warrant is redeemable, in whole or in part, by the
Company at a price of $.05 per Public Warrant, commencing one year after the
Effective Date and prior to their expiration, provided that (a) prior written
notice of not less than thirty days is given to the Public Warrant holders, (b)
the closing bid price (as defined) of the Company's Common Stock for the twenty
consecutive trading days immediately prior to the date on which the notice of
redemption is given, shall have exceeded $7.50 per share, (c) Public Warrant
holders shall have exercise rights until the close of business the day preceding
the date fixed for redemption if the Public Warrants are then exercisable, and
(d) if such redemption occurs during the first two years following the Effective
Date, the Company has received the prior written consent of the Underwriters for
such redemption. In the Warrant Agreement, the "closing bid price" is defined as
(i) the last bid price regular way as reported on the principal national
securities exchange on which the Common Stock is listed or admitted to trading,
or (ii) if the Common Stock is not listed or admitted to trading on any national
securities exchange, the last bid price regular way for the Common stock as
reported by the Nasdaq National Market System or SmallCap Market of the Nasdaq
Stock Market, Inc. ("Nasdaq"), or (iii) if the Common Stock is not listed or
admitted for trading on any national securities exchange, and is not reported by
Nasdaq, the last bid price in the over-the-counter market as furnished by the
National Quotation Bureau, Inc. or if no such quotation is available, the fair
market value of the Common Stock as determined in good faith by the Board of
Directors of the Company. Pursuant to applicable federal and state securities
laws, in the event a current prospectus is not available, the Public Warrants
may not be exercised by the holders thereof and the Company will be precluded
from redeeming the Public Warrants. There can be no assurance that the Company
will not be prevented by financial or other considerations from maintaining a
current prospectus. Any Public Warrant
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holder who does not exercise prior to the redemption date, as set forth in the
Company's notice of redemption, will forfeit the right to purchase the Common
Stock underlying the Public Warrants, and after the redemption date or upon
conclusion of the exercise period any outstanding Public Warrants will become
void and be of no further force or effect, unless extended by the Board of
Directors of the Company.
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[Alternate Page for Selling Securityholders Prospectus]
(ii) the stockholder acquires more than 85% of the outstanding voting stock of
the corporation (excluding shares held by directors who are officers or held in
certain employee stock plans) upon consummation of the transaction in which the
stockholder becomes an interested stockholder; or (iii) the business combination
is approved by the board of directors and at least 66 2/3% of the outstanding
voting stock of the corporation (excluding shares held by the interested
stockholder) at a meeting of stockholders, (and not written consent) held on or
subsequent to the date such stockholder became an interested stockholder.
However, the Company's Certificate of Incorporation provides for the affirmative
vote of 60% of the outstanding voting stock (excluding shares held by the
interested stockholder) rather than the 66 2/3% provided in the statute. An
"interested stockholder" is a person who, together with affiliates and
associates, owns (or at any time within the prior three years did own) 15% or
more of the corporation's voting stock. Section 203 defines a "business
combination" to include, without limitation, mergers, consolidations, stock
sales and asset based transactions and other transactions resulting in a
financial benefit to the interested stockholder.
The overall effect of such anti-takeover provisions is to render more
difficult the accomplishment of mergers or the assumption of control by a
principal shareholder, and thus to make difficult the removal of management.
However, the Company believes that the advantages to the Company and its
shareholders of anti-takeover provisions would outweigh any disadvantages and
afford the Board of Directors greater flexibility in the management of the
Company.
The Certificate imposes a super-majority voting requirement (75% of the
outstanding voting shares) for certain amendments to the Company's Bylaws. The
Certificate also provides for indemnification of the Company's directors,
officers and, in the discretion of the Board of Directors, any and all other
persons whom it shall have power to indemnify under Delaware law from and
against certain liabilities. For a summary of such provisions, see "Management -
Limitation on Director's Liability." The Certificate does not provide
shareholders with any preemptive rights or cumulative voting rights.
TRANSFER AGENT AND REGISTRAR
The transfer agent and registrar for the Securities is American Stock
Transfer & Trust Company, 40 Wall Street, New York, New York.
SHARES ELIGIBLE FOR FUTURE SALE
Upon consummation of this Offering, the Company will have 3,499,786 shares
of Common Stock outstanding of which 700,000 shares are currently freely
tradeable, and the 1,432,989 shares offered hereby will be freely tradable
without restriction or further registration under the 1933 Act. The remaining
2,799,786 shares are deemed to be "restricted securities," as that term is
defined under Rule 144, in that such shares were issued and sold by the Company
in private transactions not involving a public offering and, as such, may only
be sold pursuant to an effective registration under the 1933 Act, in compliance
with the exemption provisions of Rule 144 or pursuant to another exemption under
the 1933 Act. An aggregate of 1,432,989 shares are being registered with the
Commission concurrently with the Securities offered hereby for certain selling
securityholders who, upon expiration of an earlier release from certain
contractual restrictions on resale (13, 18 and 24 months as to 799,000, 433,989
and 200,000 shares, respectively), will be able to freely sell their shares
without restriction. However, sales of these shares will be subject, to the
extent held by affiliates of the Company, to certain volume limitations and
other requirements of Rule 144 under the 1933 Act. Of the remaining 1,366,797
restricted securities, 948,099 shares will be eligible for sale under Rule 144
as the date of this Prospectus (subject to certain recurring three-month volume
limitations prescribed by Rule 144 and the lock-up arrangements with the
Underwriters described below), and the balance will become so eligible at
various times commencing thereafter. Sales of such shares in the public market,
or the availability of such shares for sale, could adversely affect the market
price for the Common Stock.
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The officers and directors and certain shareholders of the Company (all such
stockholders holding an aggregate of 1,772,284 shares of Common Stock, and
warrants and options to purchase an aggregate of 322,000 shares of Common
Stock), have agreed not to publicly offer, sell or otherwise dispose of any of
those shares of Common Stock for 24 months after the date of this Prospectus
without the written consent of the Underwriters. The Underwriters may, in their
sole discretion and at any time without notice, release all or any portion of
the securities subject to the lock-up agreements.
In general, under Rule 144 as currently in effect, subject to the
satisfaction of certain other conditions, a person, including an affiliate of
the Company (or person whose shares are aggregated with an affiliate), who has
owned restricted shares of Common Stock beneficially for at least two years is
entitled to sell, within any three-month period, a number of shares that does
not exceed the greater of 1% of the then outstanding shares of Common Stock
(approximately 35,000 shares based on the number of shares expected to be
outstanding after this Offering) or, if the Common Stock is quoted on NASDAQ,
the average weekly trading volume during the four calendar weeks preceding the
sale. Sales under Rule 144 are also subject to certain requirements as to the
manner and notice of sale and the availability of public information concerning
the Company. A person who has not been an affiliate of the Company for at least
three months immediately preceding the sale and who has beneficially owned
shares of Common Stock for at least three years is entitled to sell such shares
under Rule 144 without regard to any of the limitations described above.
No prediction can be made as to the effect, if any, that public sales of
shares of Common Stock or Warrants or the availability of such securities for
sale will have on the market prices of such securities prevailing from time to
time. Nevertheless, the possibility that substantial amounts of Common Stock and
Warrants may be sold in the public market may adversely affect prevailing market
prices for the these securities and could impair the Company's ability in the
future to raise additional capital through the sale of its equity securities.
UNDERWRITING AGREEMENT
In connection with its IPO, the Company entered into an Underwriting
Agreement with May Davis Group, Inc., (the "Underwriters").
The Company and certain of its shareholders who beneficially hold an
aggregate of 2,799,786 shares of Common Stock, have agreed that, for periods
ranging from 13 to 24 months following the closing of the IPO, they will not,
without the prior written consent of the Representative offer, sell, contract to
sell, or otherwise dispose of any shares of Common Stock of the Company (other
than shares offered pursuant to this Prospectus) or any securities convertible
into, or exercisable or exchangeable for Common Stock of the Company.
The Underwriting Agreement provides for reciprocal indemnification between
the Company, the Selling Shareholder and the Underwriters against certain
liabilities in connection with the Registration Statement, including liabilities
under the Securities Act. Insofar as indemnification for liabilities arising
under the Securities Act may be provided to officers, directors or persons
controlling the Company, the Company has been informed that in the opinion of
the Securities and Exchange Commission, such indemnification is against public
policy and is therefore unenforceable.
The Company sold to the Underwriters for a nominal sum, a common stock
purchase warrant (the "Underwriters' Warrant") exercisable for 70,000 shares of
Common Stock at $6.00 per share and/or 30,000 Public Warrants at $.12 per
warrant. The Underwriters' Warrant may not be sold, transferred, assigned or
hypothecated, except to officers and directors of the Underwriters, and is
exercisable for five years commencing one year from , 1997 (the "Exercise
Term"). During the Exercise Term, the holders of the Underwriter's Warrants are
given, at nominal cost, the opportunity to profit from a rise in the market
price of the Company's Common Stock. To the extent that the Underwriters'
Warrant is exercised, dilution of the interests of the Company's stockholders
will occur. Further, the terms on which the Company will be
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able to obtain additional equity capital may be adversely affected since the
holders of the Underwriters' Warrant can be expected to exercise it any time
when the Company would, in all likelihood, be able to obtain any needed capital
on terms more favorable to the Company than those provided in the Underwriters'
Warrant. Any profit realized by the Underwriters on the sale of the shares of
Common Stock underlying the Underwriters' Warrant may be deemed additional
underwriting compensation
The Company has agreed with the Underwriters that the Company will pay to
the Underwriters a warrant solicitation fee (the "Warrant Solicitation Fee")
equal to 5% of the exercise price of the Warrants which are exercised more than
one year after the Effective Date and to the extent not inconsistent with the
guidelines of the NASD and the rules and regulations of the Commission
(including NASD Notice to Members 81-38). Such Warrant Solicitation Fee will be
paid to the Underwriters if (a) the market price of the Common Stock on the date
that any Warrant is exercised is greater than the exercise price of the Warrant;
(b) the exercise of such Warrant was solicited by the Underwriters; (c) prior
specific written approval for exercise is received from the customer if the
Warrant is held in a discretionary account; (d) disclosure of this compensation
agreement is made prior to or upon the exercise of such Warrant; (e)
solicitation of the exercise is not in violation of Rule 10b-6 of the Exchange
Act; (f) the Underwriter provided bona fide services in exchange for the Warrant
Solicitation Fee; and (g) the Underwriter has been specifically designated in
writing by the holders of the Warrants as the broker. In addition, unless
granted an exemption by the Commission from Rule 10b-6 under the Exchange Act,
the Underwriters will be prohibited from engaging in any market making
activities or solicited brokerage activities with respect to the Securities for
the period from nine business days prior to any solicitation of the exercise of
any Warrant or nine business days prior to the exercise of any Warrant based on
a prior solicitation until the later of the termination of such solicitation
activity or the termination (by waiver or otherwise) of any right the
Underwriters may have to receive such a fee for the exercise of the Warrants
following such solicitation. As a result, the Underwriters may be unable to
continue to provide a market for the Securities during certain periods while the
Warrants are exercisable.
The Underwriters have been given certain "piggyback" and demand registration
rights with respect to the Common Stock underlying the Underwriters' Warrants
for a period of four years commencing one year from the date of this Prospectus.
The exercise of any of such registration rights by the Underwriters may result
in dilution to the interest of the Company's shareholders, hinder efforts by the
Company to arrange future financing of the Company and/or have an adverse effect
on the market price of the Securities.
The Company has agreed that for a period of 24 months commencing on the
Effective Date, it will not issue or sell, directly or indirectly, any shares of
its capital stock, or sell or grant options, warrants or rights to purchase any
shares of its capital stock, without the written consent of the Underwriters,
except for issuances pursuant to (i) the public offering of the Company's
securities as described herein, (ii) the exercise of the Underwriters' Warrants
and the shares issuable thereunder, (iii) outstanding options, warrants,
convertible securities or contractual obligations disclosed in this Prospectus,
(iv) the grant of options and the issuance of shares issued upon exercise of
options granted or in the future granted under the Company's Stock Option Plan,
and (v) an acquisition, merger or similar transaction provided that the acquirer
of such capital stock does not receive, and will not be entitled to demand,
registered securities during such 24-month period and such issuance of shares
has the prior approval of the Underwriters. The Company has granted the
Underwriters a three-year preferential right with respect to future financing
relating to the offering of the Company's securities.
The Underwriting Agreement gives the Representative the right, for a period
of three years from the Effective Date, to engage a designee of the
Representative as an advisor to the Company's Board of Directors who shall be
reimbursed expenses incurred in connection with attendance at Board meetings and
who shall receive the same compensation as paid to non-employee directors.
Alternatively, the Representative may designate one person for election as a
director of the Company.
In addition, the Company entered into a management and financial consulting
agreement to retain the Representative as a financial consultant for a period of
three years at an monthly fee of $1,952.78,
36
<PAGE>
[ALTERNATE PAGE FOR SELLING SECURITYHOLDERS PROSPECTUS]
which was paid full at the closing of the IPO. The consulting agreement will not
require the consultant to devote a specific amount of time to the performance of
its duties thereunder. Further, the Underwriting Agreement provides the
Representative with a right of first refusal for a period of three years from
the date of this Prospectus for any public or private offering of securities to
raise capital and sale of securities to be made by the Company, its affiliates
or any of its present or future subsidiaries.
37
<PAGE>
[Alternate Page for Selling Securityholders Prospectus]
SELLING SECURITYHOLDERS AND PLAN OF DISTRIBUTION
An aggregate of up to 1,432,989 shares of Common Stock, 650,000 Public
Warrants and 650,000 shares of Common Stock issuable upon the exercise of Public
Warrants may be offered and sold pursuant to this Prospectus by the Selling
Securityholders from time to time as market conditions permit in the over-the-
counter market, or otherwise, at prices and terms then prevailing or at prices
related to the then current market price, or in negotiated transactions subject
to "lock-up" agreements (See "Shares Eligible for Future Sale"). The Company has
agreed to register such shares and warrants under the Securities Act and to pay
all expenses in connection therewith (other than brokerage commissions and fees
and expenses of counsel). Such shares and warrants have been included in the
Registration Statement of which this Prospectus forms a part. Other than James
M. Kendall, none of the Selling Securityholders beneficially owns 5% or more of
the Company's outstanding Common Stock. See "Beneficial Ownership of Principal
Stockholders and Management."
<TABLE>
<CAPTION>
BENEFICIAL
BENEFICIAL OWNERSHIP OF SHARES OWNERSHIP
OF COMMON STOCK PRIOR TO SALE BENEFICIAL OF
--------------------------------- OWNERSHIP OF WARRANTS
PUBLIC SHARES OF -----------
WARRANTS COMMON STOCK PRIOR TO
SELLING SECURITYHOLDER SHARES SHARES TOTAL AFTER SALE(1) SALE
- ---------------------------------------------------- --------- ----------- --------- --------------------- -----------
<S> <C> <C> <C> <C> <C>
James M. Kendall.................................... 347,191 0 347,191 0 0
George G. Schwenk................................... 43,399 0 43,399 0 0
Martin Gouldern..................................... 43,399 0 43,399 0 0
Perryman Corp. N.V.................................. 99,000 100,000 199,000 0 0
Cherryhill N.V...................................... 100,000 150,000 250,000 0 150,000
Richgrove N.V....................................... 100,000 150,000 250,000 0 150,000
Dennis E. Sal....................................... 110,000 30,000 140,000 0 30,000
Jasminville Corp. N.V............................... 22,500 5,000 28,000 0 5,000
The Bridge Fund N.V................................. 57,500 10,000 67,500 0 10,000
Ajax Funding Enterprises............................ 100,000 0 100,000 0 0
Richard Traversari.................................. 10,000 5,000 15,000 0 5,000
Ken Kornheiser and Anna Cinquemanie................. 10,000 5,000 15,000 0 5,000
Lon Rubackin........................................ 10,000 5,000 15,000 0 5,000
Farid Farida........................................ 30,000 15,000 45,000 0 15,000
Masoud Mammo........................................ 20,000 10,000 30,000 0 10,000
Julal Farida........................................ 20,000 10,000 30,000 0 10,000
Martin Porter and Ron Feldstein..................... 50,000 25,000 75,000 0 25,000
Salim Farida........................................ 20,000 10,000 30,000 0 10,000
Robert Sauter....................................... 80,000 40,000 120,000 0 40,000
Jane D. Trover...................................... 10,000 5,000 15,000 0 5,000
Millyridge Corp. N.V................................ 10,000 5,000 15,000 0 5,000
David Meyrowitz..................................... 5,000 2,500 7,500 0 2,500
Georgia Rogers...................................... 5,000 2,500 7,500 0 2,500
Paul M. Fornier..................................... 50,000 25,000 75,000 0 25,000
Signal Hill N.V..................................... 10,000 5,000 15,000 0 5,000
Scott Liggions...................................... 10,000 5,000 15,000 0 5,000
Davstar II Managed Invesments Corp. N.V............. 10,000 5,000 15,000 0 5,000
Mandelay Corp. N.V.................................. 20,000 10,000 30,000 0 10,000
Katharine B. Gaston................................. 5,000 2,500 7,500 0 2,500
Isaac Dweck......................................... 10,000 5,000 15,000 0 5,000
Yen Ken Sit......................................... 5,000 2,500 7,500 0 2,500
Celestial Dreams Corp. N.V.......................... 10,000 5,000 15,000 0 5,000
<CAPTION>
AFTER
SELLING SECURITYHOLDER SALE
- ---------------------------------------------------- -----
<S> <C>
James M. Kendall.................................... 0
George G. Schwenk................................... 0
Martin Gouldern..................................... 0
Perryman Corp. N.V.................................. 0
Cherryhill N.V...................................... 0
Richgrove N.V....................................... 0
Dennis E. Sal....................................... 0
Jasminville Corp. N.V............................... 0
The Bridge Fund N.V................................. 0
Ajax Funding Enterprises............................ 0
Richard Traversari.................................. 0
Ken Kornheiser and Anna Cinquemanie................. 0
Lon Rubackin........................................ 0
Farid Farida........................................ 0
Masoud Mammo........................................ 0
Julal Farida........................................ 0
Martin Porter and Ron Feldstein..................... 0
Salim Farida........................................ 0
Robert Sauter....................................... 0
Jane D. Trover...................................... 0
Millyridge Corp. N.V................................ 0
David Meyrowitz..................................... 0
Georgia Rogers...................................... 0
Paul M. Fornier..................................... 0
Signal Hill N.V..................................... 0
Scott Liggions...................................... 0
Davstar II Managed Invesments Corp. N.V............. 0
Mandelay Corp. N.V.................................. 0
Katharine B. Gaston................................. 0
Isaac Dweck......................................... 0
Yen Ken Sit......................................... 0
Celestial Dreams Corp. N.V.......................... 0
</TABLE>
- ------------------------------
(1) Assumes all of the Selling Securityholders' shares of Common Stock offered
hereby are sold and no additional shares are acquired.
38
<PAGE>
[ALTERNATE PAGE FOR SELLING SECURITYHOLDERS PROSPECTUS]
The shares, warrants, and shares underlying such warrants may be sold by one
or more of the following methods: (a) a block trade in which a broker or dealer
so engaged will attempt to sell the shares and/or warrants as agent but may
position and resell a portion of the block as principal to facilitate the
transaction; (b) purchases by a broker or dealer as principal and resale by such
broker or dealer for its account pursuant to this Prospectus; and (c)
face-to-face transactions between sellers and purchasers without a
broker/dealer. In effecting sales, brokers or dealers engaged by the Selling
Securityholders may arrange for other brokers or dealers to participate. Such
brokers or dealers may receive commissions or discounts from Selling
Securityholders in amounts to be negotiated. Such brokers and dealers and any
other participating brokers and dealers may be deemed to be "Underwriters'
within the meaning of the Securities Act in connection with such sales.
CONCURRENT REGISTRATION OF SECURITIES
The Securities offered hereby were concurrently registered with the 700,000
shares of Common Stock and 300,000 Public Warrants registered by the Company in
connection with its IPO and were included in the registration statement filed by
the Company in connection with the IPO under the Securities Act. The Common
Stock and the Public Warrants included in this Offering may not be sold prior to
lock-up periods ranging from 13 months to 24 months from , 1997, in
each case, without the prior written consent of the Underwriters.
39
<PAGE>
[ALTERNATE PAGE FOR SELLING SECURITYHOLDERS PROSPECTUS]
- -------------------------------------------
-------------------------------------------
- -------------------------------------------
-------------------------------------------
NO DEALER, SALESMAN OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS IN
CONNECTION WITH THE OFFERING MADE HEREBY, AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE COMPANY, OR ANY UNDERWRITER OR BROKER/DEALER. NEITHER THE DELIVERY OF
THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES,
CREATE ANY IMPLICATION THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF
ANY DATE SUBSEQUENT TO THE DATE HEREOF OR THAT THERE HAS BEEN NO CHANGE IN THE
AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY BY ANY PERSON
IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED OR IN
WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO OR
TO ANYONE TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION IN SUCH
JURISDICTION.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
PROSPECTUS SUMMARY............................. 1
RISK FACTORS................................... 2
USE OF PROCEEDS................................ 8
BUSINESS....................................... 8
CAPITALIZATION................................. 8
MANAGEMENT..................................... 18
BENEFICIAL OWNERSHIP OF PRINCIPAL STOCKHOLDERS
AND MANAGEMENT............................... 29
CERTAIN TRANSACTIONS........................... 30
DESCRIPTION OF SECURITIES...................... 31
SHARES ELIGIBLE FOR FUTURE SALE................ 34
UNDERWRITING AGREEMENT......................... 35
SELLING SECURITYHOLDERS AND PLAN OF
DISTRIBUTION................................. 38
CONCURRENT REGISTRATION OF SECURITIES.......... 39
ADDITIONAL INFORMATION......................... 39
LEGAL MATTERS.................................. 39
EXPERTS........................................ 39
</TABLE>
1,432,989 SHARES OF COMMON STOCK
AND
650,000 REDEEMABLE COMMON STOCK
PURCHASE WARRANTS
---------------------
PROSPECTUS
---------------------
APOLLO INTERNATIONAL
OF DELAWARE, INC.
, 1997
- -------------------------------------------
-------------------------------------------
- -------------------------------------------
-------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 24. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Article 11 of the Certificate of Incorporation of Apollo International of
Delaware, Inc. (the "Registrant") eliminates the personal liability of directors
to the Registrant or its stockholders for monetary damages for breach of
fiduciary duty as a director; provided, that such elimination of the personal
liability of a director of the Registrant does not apply to (i) any breach of
the director's duty of loyalty to the Registrant or its stockholders, (ii) acts
or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) actions prohibited under Section 174 of the
Delaware General Corporation Law (i.e., liabilities imposed upon directors who
vote for or assent to the unlawful payment of dividends, unlawful repurchases or
redemption of stock, unlawful distribution of assets of the Registrant to the
stockholders without the prior payment or discharge of the Registrant's debts or
obligations, or unlawful making or guaranteeing of loans to directors), or (iv)
any transaction from which the director derived an improper personal benefit. In
addition, Article 11 of the Registrant's Certificate of Incorporation, provides
that the Registrant shall indemnify its directors and officers to the fullest
extent permitted by the Delaware General Corporation Law, as amended from time
to time.
Section 145 of the Delaware General Corporation Law provides that a
corporation may indemnify any person who was or is a party or is threatened to
be made a party to any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative (other than
an action by or in the right of the corporation) by reason of the fact that he
is or was a director, officer, employee or agent of the corporation, or is or
was serving at the request of the corporation as a director, officer, employee
or agent of another corporation, partnership, joint venture, trust or other
enterprise, against expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by him in connection
with such action, suit or proceeding if he acted in good faith and in a manner
he reasonably believed to be in or not opposed to the best interests of the
corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. The termination of any
action, suit or proceeding by judgment, order, settlement, conviction, or upon a
plea of NOLO CONTENDERE or its equivalent, shall not, of itself, create a
presumption that the person did not act in good faith and in a manner which he
reasonably believed to be in or not opposed to the best interest of the
corporation, and with respect to any criminal action or proceeding, had
reasonable cause to believe that his conduct was unlawful.
Section 145 further provides that a corporation may indemnify a person who
was or is a party or is threatened to be made a party to any threatened, pending
or completed action or suit by or in the right of the corporation to procure a
judgment in its favor by reason of the fact that he is or was a director,
officer, employee or agent of the corporation, or is or was serving at the
request of the corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise against
expenses (including attorneys' fees) actually and reasonably incurred by him in
connection with the defense or settlement of such action or suit if he acted in
good faith and in a manner he reasonably believed to be in or not opposed to the
best interest of the corporation, and except that no indemnification shall be
made in respect of any claim, issue or matter as to which such person shall have
been adjudged to be liable to the corporation unless and only to the extent that
the Court of Chancery or the court in which such action or suit was brought
shall determine upon application that, despite the adjudication of liability but
in view of all the circumstances of the case, such person is fairly and
reasonably entitled to indemnity for such expenses which the Court of Chancery
or such other court shall deem proper. To the extent that a director, officer,
employee or agent of a corporation has been successful on the merits or
otherwise in defense of any action, suit or proceeding referred to above, or in
defense of any claim, issue or matter therein, he shall be indemnified against
expenses (including attorneys' fees) actually and reasonably incurred by him in
connection therewith. Expenses (including attorneys' fees) incurred by an
officer or
II-1
<PAGE>
director in defending any civil, criminal, administrative or investigative
action, suit or proceeding may be paid by the corporation in advance of the
final disposition of such action, suit or proceeding upon receipt of any
undertaking by or on behalf of such director or officer to repay such amount if
it shall ultimately be determined that he is not entitled to be indemnified by
the corporation as authorized in this section. Such expenses (including
attorneys' fees) incurred by other employees and agents may be so paid upon such
terms and conditions, if any, as the board of directors deems appropriate.
The indemnification and advancement of expenses provided by, or granted
pursuant to, Section 145 of the Delaware General Corporation Law shall not be
deemed exclusive of any other rights to which those seeking indemnification or
advancement of expenses may be entitled under any bylaw, agreement, vote of
stockholders or disinterested directors or otherwise, both as to action in his
official capacity and as to action in another capacity while holding such
office.
ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
<TABLE>
<S> <C>
Registration fee.................................................. 5,002
National Association of Securities Dealers, Inc................... 2,500*
NASDAQ listing fee................................................ 8,500*
Boston Stock Exchange Listing Fee................................. 15,000*
Printing and engraving expenses................................... 58,000*
Accounting fees and expenses...................................... 50,000*
Legal fees and expenses........................................... 90,000*
Blue sky fees and expenses........................................ 65,000*
Transfer agent and registrar fees................................. 7,500*
Underwriters' non-accountable expense allowance (assuming no
exercise of over-allotment option).............................. 105,900*
Miscellaneous..................................................... 20,000*
---------
Total......................................................... $ 427,402*
</TABLE>
- ------------------------
* Estimated expenses.
ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES.
Within the past three years, the Company has sold the following securities
without registration
under the Securities Act of 1933, as amended, pursuant to exemption from
registration afforded by Sections 4(2) and/or 4(6) or the rules and regulations
promulgated thereunder.
In December 1994, a total of 694,382 shares of Common Stock were issued to
the Company's founders (four individuals) for a total consideration of $110. The
founders had previous knowledge of the Company and information concerning
restrictions on transfer of the acquired securities. The Company reasonably
believed that the investors had such knowledge and experience in financial and
business matters so as to be capable of evaluating the risk of such investment.
In December 1994, a total of 240,363 shares of Common Stock were issued to
two investors for an aggregate purchase price of $225,000. The investors were
given information about the Company or had it made available and were provided
opportunities to ask questions of management about the information provided or
made available. Information concerning restrictions on transfer of the acquired
securities was also provided. The Company reasonably believed that the investors
had such knowledge and experience in financial and business matters so as to be
capable of evaluating the risk of such investment.
II-2
<PAGE>
In December, 1994, 26,707 shares of Common Stock were sold to one investor
for a total purchase price of $25,000. The investor was given information about
the Company or had it made available and was provided opportunities to ask
questions of management about the information provided or made available.
Information concerning restrictions on transfer of the acquired securities was
also provided. The Company reasonably believed that the investors had such
knowledge and experience in financial and business matters so as to be capable
of evaluating the risk of such investment.
From June through December 1995, a total of 224,339 shares of Common Stock
to six investors (three of whom were existing shareholders) for a total purchase
price of $210,000. The investors were given information about the Company or had
it made available and were provided opportunities to ask questions of management
about the information provided or made available. Information concerning
restrictions on transfer of the acquired securities was also provided. The
Company reasonably believed that the investors had such knowledge and experience
in financial and business matters so as to be capable of evaluating the risk of
such investment.
From September 1995 through November 1995, a total of 160,241 shares of
Common Stock were issued to two investors for a total purchase price of
$120,000. The investors were given information about the Company or had it made
available and were provided opportunities to ask questions of management about
the information provided or made available. Information concerning restrictions
on transfer of the acquired securities was also provided. The Company reasonably
believed that the investors had such knowledge and experience in financial and
business matters so as to be capable of evaluating the risk of such investment.
In October 1995, the Company sold to certain shareholders a total of 105,494
shares of Common Stock pursuant to anti-dilution provisions of certain
subscription agreements between those shareholders and the Company, which
anti-dilution provisions are no longer in effect. The agreements containing such
anti-dilution provisions also contain information on the restrictions on
transferability of the shares. The shareholders, at the time they subscribed for
their original shares, were given information about the Company or had it made
available and were provided opportunities to ask questions of management about
the information provided or made available. The Company reasonably believed that
the investors were accredited investors and had such knowledge and experience in
financial and business matters so as to be capable of evaluating the risk of
such investment.
In January 1996, a total of 5,343 shares of Common Stock were issued to two
investors for a total purchase price of $5,000. The investors were given
information about the Company or had it made available and were provided
opportunities to ask questions of management about the information provided or
made available. Information concerning restrictions on transfer of the acquired
securities was also provided. The Company reasonable believed that the investors
had such knowledge and experience in financial and business matters so as to be
capable of evaluating the risk of such investment.
Effective April 1996, the Company issued 21,366 shares of Common stock to
the landlord of its principal office facilities in consideration of a rent
reduction valued at $20,000 over the life of the lease. The investor was given
information about the Company or had it made available and were provided
opportunities to ask questions of management about the information provided or
made available. Information concerning restrictions on transfer of the acquired
securities was also provided. The Company reasonably believed that the investor
had such knowledge and experience in financial and business matters so as to be
capable of evaluating the risk of such investment.
In May 1996, the Company issued 299,000 shares of Common Stock and a warrant
for 400,000 shares of Common Stock, exercisable at $5.50 per share to a
consultant for services rendered to the Company valued at $30,000. The
consultant was given information about the Company or had it made available and
was provided opportunities to ask questions of management about the information
provided or made available. Information concerning restrictions on transfer of
the acquired securities was also provided. The Company reasonably believed that
the investor had such knowledge and experience in financial and
II-3
<PAGE>
business matters so as to be capable of evaluating the risk of such investment.
The warrant, upon the Effective Date, will convert to the same terms and
conditions as the Public Warrants.
In May 1996, the Company issued 200,000 shares of Common Stock to certain
accredited investors pursuant to a private placement of $250,000 in promissory
notes, which notes were repaid from the Company's private placement which
commenced in June 1996. The note offering was conducted by the May Davis Group,
Inc. as placement agent, who received a commission of 10% of the gross proceeds.
All investors were given information about the Company or had it made available
and were provided opportunities to ask questions of management about the
information provided or made available. Information concerning restrictions on
transfer of the acquired securities was also provided. The Company reasonably
believed that the investors were accredited investors and had such knowledge and
experience in financial and business matters so as to be capable of evaluating
the risk of such investment.
In June 1996, a director and shareholder of the Company, and one of his
affiliated entities, converted a total of $190,703 of debt owed by the Company
to a total of 203,726 shares of Common Stock. The investor is, by definition, an
accredited investor as such term is defined under Rule 506, and, further, had
previous knowledge of the Company. The investor was apprised of the restrictions
on transfer of the acquired securities. The Company reasonably believed that the
investor had such knowledge and experience in financial and business matters so
as to be capable of evaluating the risk of such investment.
In June 1996, an officer, director and principal shareholder of the Company
converted $60,840 of debt owed by the Company to 64,994 shares of Common Stock.
The investor is, by definition, an accredited investor as such term is defined
under Rule 506, and, further, had previous knowledge of the Company. The
investor was apprised of the restrictions on transfer of the acquired
securities. The Company reasonably believed that the investor had such knowledge
and experience in financial and business matters so as to be capable of
evaluating the risk of such investment.
In July 1996, certain shareholders of the Company holding in the aggregate
$54,836 in convertible debentures elected to convert the debentures to an
aggregate of 25,331 shares of Common Stock. The debentureholders had previous
knowledge of the Company and were given an opportunity to ask questions of
management about the Company. Information concerning restrictions on transfer of
the acquired securities was also provided. The Company reasonably believed that
the investors had such knowledge and experience in financial and business
matters so as to be capable of evaluating the risk of such investment.
In September 1996, the Company issued 3,500 shares of Common Stock to
consultants of the Company for reduction of accounts payable in the amount of
$85,528. Each consultant had previous knowledge of the Company, was given
information about the Company or had it made available, was provided
opportunities to ask questions of management about the information provided or
made available. Information containing restrictions in transfer of the acquired
securities was also provided. The Company reasonably believed that they has such
knowledge and experience in financial and business matters so as to be capable
of evaluating the risk of such investment.
From August 5, 1996 through November 14, 1996, the Company issued an
aggregate of 500,000 shares of Common Stock and 250,000 Common Stock purchase
warrants for gross proceeds of $1,500,000 pursuant to a private placement to
accredited investors that commenced June 25, 1996. The minimum offering closed
in August 1996 and the Company had subsequent closings until the maximum
offering of $1,500,000 was met on November 14, 1996. Upon the effective date of
this Registration Statement, the warrants will have the same exercise price and
terms of the Public Warrants to be offered by the Company in its initial public
offering under this Registration Statement. The private placement was conducted
by the May Davis Group, Inc. as placement agent, which was paid a commission of
10% and a non-accountable expense allowance of 3%, each of which was calculated
on the gross proceeds. All investors were given information about the Company or
had it made available and were provided opportunities to ask questions of
management about the information provided or made available. Information
concerning restrictions on transfer of the acquired securities was also
provided. The Company reasonably believed that the investors
II-4
<PAGE>
were accredited investors and had such knowledge and experience in financial and
business matters so as to be capable of evaluating the risk of such investment.
In June 1996, the Company issued to a consultant in respect of business
consulting services a warrant for 250,000 shares of Common Stock, exercisable at
$4.00 per share commencing June 1, 1998 and terminating June 1, 2002. The
consultant was given information about the Company or had it made available and
was provided opportunities to ask questions of management about the information
provided or made available. Information concerning restrictions on transfer of
the acquired securities was also provided. The Company reasonably believed that
the investor had such knowledge and experience in financial and business matters
so as to be capable of evaluating the risk of such investment.
In September 1996, the Company issued to each of two officers of the Company
in respect of their services to the Company, a warrant, each exercisable for
50,000 shares of Common Stock (for an aggregate of 100,000 shares), at an
exercise price of $5.50 per share commencing 12 months from the first to occur
of (i) the Effective Date or (ii) September 26, 1998, until September 26, 2001.
The employees had previous knowledge of the Company; they were given information
about the Company or had it made available; and they were provided opportunities
to ask questions of management about the information provided or made available.
Information concerning restrictions on transfer of the acquired securities was
also provided. The Company reasonably believed that the investors had such
knowledge and experience in financial and business matters so as to be capable
of evaluating the risk of such investment.
Between July 1, 1996 and November 21, 1996, the Company granted stock
options to certain of its employees under the Company's Stock Option Plan, which
options are exercisable at $4.00 per share for a period of 10 years from the
date of grant, commencing one year from their respective dates of grant as to
one-half of the options and incrementally during the six months thereafter. The
employees has previous knowledge of the Company, were given information about
the Company or had it made available, and they were provided opportunities to
ask questions of management about the information provided or made available.
Information concerning restrictions on transfer was also provided. The Company
reasonably believed that the investors had such knowledge and experience in
financial and business matters to as to be capable of evaluating the risk of
such investment.
In December 1996, the Company issued to a director of the Company in respect
of business consulting services a warrant for 250,000 shares of Common Stock,
exercisable at $5.50 per share commencing June 1, 1998 and terminating June 1,
1002. The consultant was given information about the Company or had it made
available and was provided opportunities to ask questions of management about
the information provided or made available. Information concerning restrictions
on transfer of the acquired securities was also provided. Further, the
consultant, as a director of the Company, had previous knowledge of the Company
and is an accredited investor. The Company reasonably believed that the investor
had such knowledge and experience in financial and business matters so as to be
capable of evaluating the risk of such investment.
II-5
<PAGE>
ITEM 27. EXHIBITS
The following exhibits are filed as part of this registration statement:
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT DESCRIPTION
- ----------- --------------------------------------------------------------------------------------------------------
<C> <S>
1.1 Form of Underwriting Agreement*
1.2 Form of Underwriters' Warrant*
3.1 Amended and Restated Articles of Incorporation
3.2 Amended and Restated ByLaws
4.1 Specimen of Common Stock Certificate*
4.2 Specimen of Warrant Certificate*
4.3 Form of Warrant Agreement between the Company and American Stock Transfer & Trust Company, as Warrant
Agent*
4.4 Form of Warrant issued to investors in the Company's private placement, dated August 5, 1996 through
November 14, 1996
4.5 Warrant dated September 26, 1996 in favor of Steven D. Smith, as amended
4.6 Warrant dated September 26, 1996 in favor of Don P. Louw, as amended
4.7 Warrant dated October 29, 1996 in favor of Perryman Corporation N.V.
4.8 Warrant dated October 29, 1996 in favor of Rickgrove, N.V.
4.9 Warrant dated October 29, 1996 in favor of Cherryhills, N.V.
4.10 Warrant dated June 25, 1996 in favor of Imagine Holdings
4.11 Warrant dated , 1996 in favor of Matthias E. Lukens, Jr.*
4.12 Form of Registration Rights Agreement between the Company and certain investors dated in May 1996
4.13 Form of Registration Rights Agreement between the Company and private placement investors dated August
5, 1996 through November 14, 1996
5 Opinion of Greenberg Traurig Hoffman Lipoff Rosen & Quentel, Counsel for the Company*
10.1 1996 Stock Option Plan
10.2 Stock Purchase Agreement between the Company and Christine Clewes, dated June 13, 1996
10.3 Stock Purchase Agreement between the Company and Frank Mancini, dated June 24, 1996
10.4 Stock Purchase Agreement between the Company and Framan, a business entity, dated June 24, 1996
10.5 Consulting Agreement between the Company and Perryman Corporation, N.V. dated May 10, 1996
10.6 Amended & Restated Consulting Agreement between the Company and Imagine Holdings, dated June 1, 1996
10.7 Lease between the Company and South Hillsborough Community Bank Office/Complex, Richard L. Phagan, dated
October 31, 1995*
10.8 Consulting Agreement between the Company and Matthias E. Lukens, Jr. dated November 30, 1996*
23.1 Consent of Most Horowitz & Company, LLP
23.3 Consent of Greenberg Traurig Hoffman Lipoff, Rosen & Quentel, P.A. (included in Exhibit 5)*
99.1 Form of Agreement Among Underwriters*
99.2 Form of Selected Dealer Agreement*
</TABLE>
- ------------------------
* To be filed by amendment.
II-6
<PAGE>
ITEM 28. UNDERTAKINGS.
(a) The small business issuer will:
(1) file, during any period in which it offers or sells securities, a
post-effective amendment to this registration statement to:
(i) Include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933, as amended (the "Act");
(ii) Reflect in the prospectus any facts or events which,
individually or together, represent a fundamental change in the
information in the registration statement. Notwithstanding the foregoing,
any increase or decrease in volume of securities offered, (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than a 20% change in the
maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement; and
(iii) Include any additional or changed material information on the
plan of distribution.
(2) For determining liability under the Act, treat each post-effective
amendment as a new registration statement of the securities offered, and the
offering of the securities at that time to be the initial bona fide
offering.
(3) File a post-effective amendment to remove from registration any of
the securities that remain unsold at the end of the offering.
(b) The small business issuer will provide to the underwriter at the closing
specified in the underwriting agreement certificates in such denominations and
registered in such names as required by the underwriter to permit prompt
delivery to each purchaser.
(c) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 (the "Act") may be permitted to directors, officers and controlling
persons of the small business issuer pursuant to the foregoing provisions, or
otherwise, the small business issuer has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public policy
as expressed in the Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the small business issuer of expenses incurred or paid by a director, officer or
controlling person of the small business issuer in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the small business
issuer will, unless in the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issue.
(d) The small business issuer will:
(1) For determining any liability under the Act, treat the information
omitted from the form of prospectus filed as part of this registration
statement in reliance upon Rule 430A and contained in a form of prospectus
filed by the small business issuer under Rule 424(b)(l) or (4) or 497(h)
under the Act as part of this registration statement as of the time the
Commission declared it effective.
(2) For determining any liability under the Act, treat each
post-effective amendment that contains a form of prospectus as a new
registration statement for the securities offered in the registration
statement, and that offering of the securities at that time as the initial
BONA FIDE offering of those securities.
II-7
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement on Form SB-2 to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Apollo
Beach, State of Florida, on December 16, 1996.
APOLLO INTERNATIONAL OF DELAWARE, INC.
By: /s/ DAVID W. CLARKE
-----------------------------------------
David W. Clarke
PRESIDENT AND CHIEF EXECUTIVE OFFICER
In accordance with the requirements of the Securities Act of 1933, this
Registration Statement was signed by the following persons in the capacities and
on the dates stated.
POWER OF ATTORNEY
Each person whose signature appears below on this Registration Statement
hereby constitutes and appoint David W. Clarke and Steven D. Smith, and each of
them, his true and lawful attorneys-in-fact and agents, with full power of
substitution and resubstitution for him and in his name, place and stead, in any
and all capacities (until revoked in writing), to sign any and all amendments
(including post-effective amendments and amendments thereto) to this
Registration Statement on Form SB-2 of Apollo International of Delaware, Inc.
and to file the same with all exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange Commission, granting unto
said attorneys-in-fact and agents, and each of them, full power and authority to
do and perform each and every act and thing requisite and necessary to be done
in and about the premises, as fully to all intents and purposes, as he might or
could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents, or either of them, or their substitute or
substitutes may lawfully do or cause to be done by virtue hereof.
II-8
<PAGE>
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement on Form SB-2 has been signed by the following persons in
the capacities and on the dates indicated.
SIGNATURES TITLE DATE
- ------------------------------ -------------------------- -------------------
/s/ DAVID W. CLARKE
- ------------------------------ President, Chief Executive December 16, 1996
David W. Clarke Officer, and Chairman
/s/ CHRISTINE CLEWES Vice President of
- ------------------------------ Marketing, Secretary and December 16, 1996
Christine Clewes Director
/s/ STEVEN D. SMITH
- ------------------------------ Vice President of December 16, 1996
Steven D. Smith Operations and Director
/s/ MATTHIAS E. LUKENS, JR.
- ------------------------------ Director December 16, 1996
Matthias E. Lukens, Jr.
/s/ FRANK J. MANCINI
- ------------------------------ Director December 16, 1996
Frank J. Mancini
/s/ GREGORY C. HAMILTON
- ------------------------------ Director December 16, 1996
Gregory C. Hamilton
II-9
<PAGE>
Exhibit 3.1
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
APOLLO INTERNATIONAL OF DELAWARE, INC.
Apollo International of Delaware,
Inc., a corporation organized and existing under the laws of the Sate of
Delaware (the "Corporation") hereby certifies as follows:
1. The name of the Corporation is Apollo International of Delaware, Inc.
The Corporation was originally incorporated under the name Apollo International
of Delaware, Inc. and the original Certificate of Incorporation of the
Corporation was filed with the Secretary of State of the State of Delaware on
November 30, 1994.
2. Pursuant to Sections 228, 242 and 245 of the Delaware General
Corporation Law, this Amended and Restated Certificate of Incorporation has been
duly adopted and restates and integrates and further amends the provisions of
the Certificate of Incorporation of the Corporation.
3. The text of the original Certificate of Incorporation is hereby
restated and further amended to read in its entirety as follows:
ARTICLE 1. NAME
-----------------
The name of this corporation is Apollo International of Delaware, Inc.
ARTICLE 2. REGISTERED OFFICE
------------------------------
The address of the registered office of the Corporation in Delaware is 1209
Orange Street, City of Wilmington, County of New Castle, and the name of its
registered agent at such address is The Corporation Trust Company.
ARTICLE 3. PURPOSE
------------------
The purpose of this corporation is to engage in any lawful act or activity
for which a corporation may be organized under the Delaware General Corporation
Law.
<PAGE>
ARTICLE 4. AUTHORIZED SHARES
-----------------------------
The aggregate number of shares which this corporation shall have authority
to issue is 20,000,000 shares of capital stock consisting of 15,000,000 common
shares with a par value of $0.01 per share, which shall be known as "Common
Stock," and 5,000,000 preferred shares with a par value of $0.01 per share,
which shall be known as "Preferred Stock."
A. Common Stock. The holders of the Common Stock shall be entitled to
receive, when and as declared by the Board of Directors, out of earnings or
surplus legally available therefor, dividends payable either in cash, in
property, or in shares of the capital stock of the corporation. Each holder of
record of the Common Stock shall have one vote for each share of Common Stock
standing in such holder's name on the books of the corporation and entitled to
vote. The Common Stock shall have no special powers, preferences, or rights, or
qualifications, limitations, or restrictions thereof.
B. Preferred Stock. Authority is hereby vested in the Board of
Directors of the Corporation to provide from time to time for the issuance of
Preferred Stock in or more series and in connection therewith to fix by
resolution providing for the issue of such series, the number of shares to be
included and such of the designations, powers, preferences, and relative
participating, optional or other special rights and the qualifications,
limitations, and restrictions of such series, including, without limitation,
rights of redemption or conversion into Common Stock, to the fullest extent now
or hereafter permitted by the Delaware General Corporation Law.
Shares of any series of Preferred Stock that shall be issued and thereafter
acquired by the Corporation through purchase, redemption (whether through the
operation of a sinking fund or otherwise), conversion, exchange, or otherwise,
shall, upon appropriate filing and recording to the extent required by law, have
the status of authorized and unissued shares of Preferred Stock and may be
reissued as part of such series or as part of any other series of Preferred
Stock. Unless otherwise provided in the resolution or resolutions of the Board
of Directors providing for the issuance thereof, the number of authorized shares
of stock of any series of Preferred Stock may be increased or decreased (but not
below the number of shares thereof then outstanding) by resolution or
resolutions of the Board of Directors and appropriate filing and recording to
the extent required by law. In case the number of shares of any such series of
Preferred Stock shall be decreased, the shares representing such decrease shall,
unless otherwise provided in the resolution or resolutions of the Board of
Directors providing for the issuance thereof, resume the status of authorized
but unissued shares of Preferred Stock, undesignated as to series.
ARTICLE 5. NO CUMULATIVE VOTING
---------------------------------
There shall be no cumulative voting by the stockholders of the Corporation.
2
<PAGE>
ARTICLE 6. NO PREEMPTIVE RIGHTS
---------------------------------
The holders of the Common Stock of the Corporation shall not have
preemptive rights to subscribe for or acquire securities or rights to purchase
securities of any kind, class or series of the Corporation.
ARTICLE 7. DIRECTORS
---------------------
The number of directors constituting the Board of Directors shall be
determined by the Board of Directors, subject to the by-laws of the Corporation.
Any vacancy in the Board of Directors, whether arising from death, resignation,
removal (with or without cause), an increase in the number of directors or any
other cause, may be filled by the vote of either a majority of the directors
then in office, though less than a quorum, or by the stockholders at the next
annual meeting thereof or at a special meeting called for such purpose.
Stockholders may not apply to request that the Delaware Court of Chancery
summarily order an election to be held to fill any vacancies in the Board of
Directors whether or not, at the time of filling any vacancy or any newly
created directorship, the directors then in office shall constitute less than a
majority of the whole Board of Directors as constituted immediately prior to any
such vacancy or increase. Each director so elected shall hold office until the
next meeting of the stockholders in which the election of directors is in the
regular order of business and until his successor shall have been elected and
qualified.
ARTICLE 8. STOCKHOLDERS' ACTIONS
----------------------------------
After the date on which a Registration Statement, filed with the U.S.
Securities and Exchange Commission under the Securities Act of 1933 for an
initial offering of its Common Stock in an underwritten public offering, becomes
effective and the shares described in such Registration Statement are sold, any
action required or permitted to be taken at any annual or special meeting of
stockholders of this Corporation may be taken only upon the vote of such
stockholders at an annual or special meeting duly called in accordance with the
terms of the Corporation's bylaws, and may not be taken by written consent of
such stockholders.
ARTICLE 9. SPECIAL MEETINGS
----------------------------
Special meetings of the stockholders of the Corporation may only be called
by the board of directors of the Corporation upon the request of any two
directors, by the holders of one-third or more of the outstanding Common Stock,
the Chairman of the Board, if one shall have been elected, or the President.
3
<PAGE>
ARTICLE 10. BYLAWS
--------------------
The Board of Directors is expressly authorized to adopt, amend or repeal
the Bylaws of the Corporation subject to the power of the stockholders to adopt,
amend, or repeal such Bylaws. Bylaws fixing the number of directors or their
classifications, qualifications, or terms of office, or prescribing procedures
for removing directors or filling vacancies in the Board of Directors may be
adopted, amended, or repealed only by (i) the Board of Directors, to the extent
permitted by law, or (ii) the affirmative vote of the holders of 75% of the
combined voting power of the then outstanding voting stock of the Corporation,
voting as a single class, or such lesser percentage of the outstanding voting
stock as may from time to time be provided in such Bylaws.
Notwithstanding any other provisions of this Certificate of Incorporation
or the Bylaws of the Corporation or the fact that a lesser percentage may be
specified by law, this Certificate of Incorporation or the Bylaws of the
corporation, the affirmative vote of the holders of at least 75% of the combined
voting power of the then outstanding voting stock, voting as a single class,
shall be required to amend, alter, adopt any provision inconsistent with or
repeal this Article 10.
ARTICLE 11. INDEMNIFICATION
-----------------------------
A. No director of the Corporation shall be liable to the Corporation or
its stockholders for monetary damages for breach of fiduciary duty as a
director, except for liability (i) for any breach of the director's duty of
loyalty to the Corporation or its stockholders, (ii) for acts or omissions not
in good faith or which involve intentional misconduct or a knowing violation of
law, (iii) under Section 174 of the Delaware General Corporation Law, or (iv)
for any transaction from which the director derived an improper personal
benefit.
B. Except as may otherwise be specifically provided in this Certificate
of Incorporation, no provision of this Certificate of Incorporation is intended
by the Corporation to be construed as limiting, prohibiting, denying or
abrogating any of the general or specific powers or rights conferred under the
Delaware General Corporation Law upon the Corporation, upon its stockholders,
bondholders and security holders, and upon its directors, officers and other
corporate personnel, including, in particular, the power of the Corporation to
furnish indemnification to directors and officers in the capacities defined and
prescribed by the Delaware General Corporation Law and the defined and
prescribed rights of said persons to indemnification as the same are conferred
under the Delaware General Corporation Law. The Corporation shall, to the
fullest extent permitted by the laws of the State of Delaware, including, but
not limited to Section 145 of the Delaware General Corporation, as the same may
be amended and supplemented, indemnify any and all directors and officers of the
Corporation and may, in the discretion of the board of directors, indemnify any
and all other persons whom it shall have power to indemnify under said Section
or otherwise under Delaware law, from and against any and all of the expenses,
liabilities or other matters referred to or covered by said Section. The
indemnification provisions contained in the Delaware General Corporation Law
shall not be deemed exclusive of any other rights to which those indemnified may
be entitled under any By-Law, agreement, resolution of stockholders or
disinterested directors, or otherwise,
4
<PAGE>
and shall continue as to a person who has ceased to be a director, officer,
employee or agent, both as to action in his official capacity and as to action
in another capacity while holding such office, and shall inure to the benefit of
the heirs, executors and administrators of such person.
ARTICLE 12. BUSINESS COMBINATIONS WITH INTERESTED STOCKHOLDERS
---------------------------------------------------------------
The Corporation expressly elects to be subject to the provisions of Section
203 of the Delaware General Corporation Law; provided, however, the
super-majority shareholder voting requirement under Section 203(a)(3) for
certain business combinations with an interested stockholder shall be 60% of the
Corporation's outstanding voting stock which is not owned by the interested
stockholder (as such term is defined in Section 203).
ARTICLE 13. AMENDMENT
-----------------------
The Corporation reserves the right to amend, alter, change or repeal any
provision contained in this Certificate of Incorporation, in the manner now or
hereafter prescribed by statute or by this Certificate of Incorporation, and all
rights conferred upon stockholders herein are granted subject to this
reservation
IN WITNESS WHEREOF, this Amended and Restated Certificate of Incorporation
is hereby executed on behalf of the corporation by the undersigned officers,
this ____ day of ________________, 1996.
APOLLO INTERNATIONAL OF DELAWARE, INC.
By: _________________________________________
-----------------------------------------
David W. Clarke, President
ATTEST:
By: ______________________________
------------------------------
Christine Clewes, Secretary
5
<PAGE>
Exhibit 3.2
AMENDED AND RESTATED BY-LAWS
OF
APOLLO INTERNATIONAL OF DELAWARE, INC.
(A Delaware Corporation)
ARTICLE I
OFFICES
-------
SECTION 1. PRINCIPAL OFFICE. The principal office of the Corporation
shall be located in Apollo Beach, Florida.
SECTION 2. REGISTERED OFFICE AND AGENT. The registered office of the
Corporation in the State of Delaware is 1209 Orange Street, City of Wilmington,
County of Newcastle, and the name of its registered agent at such address is The
Corporation Trust Company.
SECTION 3. OTHER OFFICES. The Corporation may also have an office or
offices other than said principal office at such place or places, either within
or without the State of Delaware, as the Board of Directors shall from time to
time determine or the business of the Corporation may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
------------------------
SECTION 1. PLACE OF MEETINGS. All meetings of the stockholders for the
election of directors or for any other purpose shall be held at such place as
may be fixed from time to time by the Board of Directors, or at such other
place, either within or without the State of Delaware, as shall be designated
from time to time by the Board of Directors.
SECTION 2. ANNUAL MEETING. The annual meeting of the stockholders of the
Corporation for the election of directors and for the transaction of such other
business as may properly come before the meeting, shall be designated from time
to time by the Board of Directors.
SECTION 3. SPECIAL MEETINGS. Special meetings of the stockholders may be
called at any time by the Board of Directors or the Chairman of the Board, if
one shall have been elected, or the President, by the holders of 33-1/3% or more
of the outstanding Common Stock, or upon the request of any two members of the
Board of Directors of the Corporation.
1
<PAGE>
SECTION 4. NOTICE OF MEETINGS. Notice of the place, date and hour of
holding of each annual and special meeting of the stockholders and, unless it is
the annual meeting, the purpose or purposes thereof, shall be given personally
or by mail in a postage prepaid envelope, not less than ten nor more than sixty
days before the date of such meeting, to each stockholder entitled to vote at
such meeting, and, if mailed, it shall be directed to such stockholder at his
address as it appears on the record of stockholders, unless he shall have filed
with the Secretary of the Corporation a written request that notices to him be
mailed at some other address, in which case it shall be directed to him at such
other address. Any such notice for any meeting other than the annual meeting
shall indicate that it is being issued at the direction of the Chairman of the
Board, the President, the holders of 33-1/3% or more of the outstanding Common
Stock, or upon the request of any two members of the Board of Directors of the
Corporation, whichever shall have called the meeting. Notice of any meeting of
stockholders shall not be required to be given to any stockholder who shall
attend such meeting in person or by proxy and shall not, prior to the conclusion
of such meeting, protest the lack of notice thereof, or who shall, either before
or after the meeting, submit a signed waiver of notice, in person or by proxy.
Unless the Board of Directors shall fix a new record date for an adjourned
meeting, notice of such adjourned meeting need not be given if the time and
place to which the meeting shall be adjourned were announced at the meeting at
which the adjournment is taken.
SECTION 5. QUORUM. At all meetings of the stockholders, the holders of a
majority of the shares of the Corporation issued and outstanding and entitled to
vote thereat shall be present in person or by proxy to constitute a quorum for
the transaction of business, except as otherwise provided by statute. In the
absence of a quorum, the holders of a majority of the shares present in person
or by proxy and entitled to vote may adjourn the meeting from time to time. At
any such adjourned meeting at which a quorum may be present, any business may be
transacted which might have been transacted at the meeting as originally called.
SECTION 6. ORGANIZATION. At each meeting of the stockholders, the
Chairman of the Board, if one shall have been elected, shall act as chairman of
the meeting. In the absence of the Chairman of the Board or if one shall not
have been elected, the President shall act as chairman of the meeting. The
Secretary, or in his absence or inability to act, the person whom the chairman
of the meeting shall appoint secretary of the meeting, shall act as secretary of
the meeting and keep the minutes thereof.
2
<PAGE>
SECTION 7. ORDER OF BUSINESS. The order of business at all meetings of
the stockholders shall be determined by the chairman of the meeting.
SECTION 8. VOTING. Except as otherwise provided by statute or the
Certificate of Incorporation, each holder of record of shares of the Corporation
having voting power shall be entitled at each meeting of the stockholders to one
vote for each share standing in his name on the record of stockholders of the
Corporation:
(a) on the date fixed pursuant to the provisions of Section 6 of
Article V of these By-Laws as the record date for the determination of the
stockholders who shall be entitled to notice of and to vote at such
meeting; or
(b) if no such record date shall have been so fixed, then at the
close of business on the day next preceding the day on which notice thereof
shall be given.
Each stockholder entitled to vote at any meeting of the stockholders may
authorize another person or persons to act for him by a proxy signed by such
stockholder or his attorney-in-fact. Any such proxy shall be delivered to the
secretary of such meeting at or prior to the time designated in the order of
business for so delivering such proxies. Except as otherwise provided by
statute or the Certificate of Incorporation or these By-Laws, any corporate
action to be taken by vote of the stockholders shall be authorized by a majority
of the votes cast at a meeting of stockholders by the holders of shares present
in person or represented by proxy and entitled to vote on such action. Unless
required by statute, or determined by the chairman of the meeting to be
advisable, the vote on any question need not be by ballot. On a vote by ballot,
each ballot shall be signed by the stockholder acting, or by his proxy, if there
be such proxy, and shall state the number of shares voted.
SECTION 9. LIST OF STOCKHOLDERS. A list of stockholders as of the record
date, certified by the Secretary of the Corporation or by the transfer agent for
the Corporation, shall be produced at any meeting of the stockholders upon the
request of any stockholder made at or prior to such meeting.
SECTION 10. INSPECTORS. The Board of Directors may, in advance of any
meeting of stockholders, appoint one or more inspectors to act at such meeting
or any adjournment thereof. If any of the inspectors so appointed shall fail to
appear or act or on the request of any stockholder entitled to vote at such
meeting, the chairman of the meeting shall, or if inspectors shall not have been
appointed, the chairman of the meeting may, appoint one or more inspectors.
Each inspector, before entering upon the discharge of his duties, shall take and
sign an oath faithfully
3
<PAGE>
to execute the duties of inspector at such meeting with strict impartiality and
according to the best of his ability. The inspectors shall determine the number
of shares outstanding and the voting power of each, the number of shares
represented at the meeting, the existence of a quorum, the validity and effect
of proxies, and shall receive votes, ballots or consents, hear and determine all
challenges and questions arising in connection with the right to vote, count and
tabulate all votes, ballots or consents, determine the results, and do such acts
as are proper to conduct the election or vote with fairness to all
stockholders. On request of the chairman of the meeting or any stockholder
entitled to vote thereat, the inspector shall make a report in writing of any
challenge, request or matter determined by them and shall execute a certificate
of any fact found by him. No director or candidate for the office of director
shall act as an inspector of an election of directors. Inspectors need not be
stockholders.
ARTICLE III
BOARD OF DIRECTORS
------------------
SECTION 1. GENERAL POWERS. The business and affairs of the Corporation
shall be managed under the direction of the Board of Directors. The Board of
Directors may exercise all such authority and powers of the Corporation and do
all such lawful acts and things as are not by statute or the Certificate of
Incorporation directed or required to be exercised or done by the stockholders.
SECTION 2. NUMBER, QUALIFICATIONS, ELECTION AND TERM OF OFFICE. The
number of directors constituting the Board of Directors shall be determined from
time to time by the Board of Directors, provided that no decrease in the number
of directors shall have the effect of shortening the term of any incumbent
director. Any decrease in the number of directors shall be effective at the
time of the next succeeding annual meeting of the stockholders unless there
shall be vacancies in the Board of Directors, in which case such decrease may
become effective at any time prior to the next succeeding annual meeting to the
extent of the number of such vacancies. All the directors shall be at least
eighteen years of age. Directors need not be stockholders. Except as otherwise
provided by statute or these By-Laws, the directors shall be elected at the
annual meeting of the stockholders. At each meeting of the stockholders for the
election of directors at which a quorum is present, the persons receiving a
plurality of the votes cast at such election shall be elected. Each director
shall hold office until the next annual meeting of the stockholders and until
his successor shall have been elected and qualified, or until his death, or
until he shall have resigned, or have been removed, as hereinafter provided in
these By-Laws.
4
<PAGE>
SECTION 3. PLACE OF MEETINGS. Meetings of the Board of Directors shall be
held at the principal office of the Corporation in the State of Florida or at
such other place, within or without such State, as the Board of Directors may
from time to time determine or as shall be specified in the notice of any such
meeting.
SECTION 4. REGULAR MEETINGS. Regular meetings of the Board of Directors
shall be held at such time and place as the Board of Directors may fix. If any
day fixed for a regular meeting shall be a legal holiday at the place where the
meeting is to be held, then the meeting which would otherwise be held on that
day shall be held at the same hour on the next succeeding business day. Notice
of regular meetings of the Board of Directors need not be given except as
otherwise required by statute or these By-Laws.
SECTION 5. SPECIAL MEETINGS. Special meetings of the Board of Directors
may be called by the Chairman or by a majority of the directors.
SECTION 6. NOTICE OF MEETING. Notice of each special meeting of the Board
of Directors (and of each regular meeting for which notice shall be required)
shall be given by the Secretary as hereinafter provided in this Section 6, in
which notice shall be stated the time and place of the meeting. Except as
otherwise required by these By-Laws, such notice need not state the purposes of
such meeting. Notice of each such meeting shall be mailed, postage prepaid, to
each director, addressed to him at his residence or usual place of business, by
first-class mail, at least five days before the day on which such meeting is to
be held, or shall be sent addressed to him at such place by telegraph, cable,
telex, telecopier or other similar means, or be delivered to him personally or
be given to him by telephone, or other similar means, at least forty-eight hours
before the time at which such meeting is to be held. Notice of any such meeting
need not be given to any director who shall, either before or after the meeting,
submit a signed waiver of notice or who shall attend such meeting without
protesting, prior to or at its commencement, the lack of notice to him.
SECTION 7. QUORUM AND MANNER OF ACTING. A majority of the entire Board
of Directors shall constitute a quorum for the transaction of business at any
meeting of the Board of Directors, and, except as otherwise expressly required
by statute or the Certificate of Incorporation or these By-Laws, the act of a
majority of the directors present at any meeting at which a quorum is present
shall be the act of the Board of Directors. Each director shall have one vote
on each matter for which directors are entitled to vote. In the absence of a
quorum at any meeting of the Board of Directors, a majority of the directors
present thereat may adjourn such meeting to another time and place.
5
<PAGE>
Notice of the time and place of any such adjourned meeting shall be given to the
directors unless such time and place were announced at the meeting at which the
adjournment was taken. At any adjourned meeting at which a quorum is present,
any business may be transacted which might have been transacted at the meeting
as originally called. The directors shall act only as a Board and the
individual directors shall have no power as such.
SECTION 8. ORGANIZATION. At each meeting of the Board of Directors, the
Chairman of the Board, if one shall have been elected, shall act as the Chairman
of the meeting, or in his absence, or if one shall not have been elected, the
President, if he or she is a director (or, in his absence, another director
chosen by a majority of the directors present) shall act as chairman of the
meeting and preside thereat. The Secretary (or, in his absence, any person --
who shall be an Assistant Secretary, if any of them shall be present at such
meeting -- appointed by the chairman) shall act as secretary of the meeting and
keep the minutes thereof.
SECTION 9. RESIGNATIONS. Any director of the Corporation may resign at
any time by giving written notice of his resignation to the Board of Directors
or the Chairman of the Board or the President or the Secretary. Any such
resignation shall take effect at the time specified therein or, if the time when
it shall become effective shall not be specified therein, immediately upon its
receipt. Unless otherwise specified therein, the acceptance of such resignation
shall not be necessary to make it effective.
SECTION 10. VACANCIES. Subject to any express provision of the
Certificate of Incorporation, any vacancy in the Board of Directors, whether
arising from death, resignation, removal (with or without cause), an increase in
the number of directors or any other cause, may be filled by the vote of a
majority of the directors then in office, though less than a quorum, or by the
stockholders at the next annual meeting thereof or at a special meeting
thereof. Stockholders of the Company may not apply to request that the Delaware
Court of Chancery summarily order an election to be held to fill vacancies in
the Board of Directors. Each director so elected shall hold office until the
next meeting of the stockholders in which the election of directors is in the
regular order of business and until his successor shall have been elected and
qualified.
SECTION 11. REMOVAL OF DIRECTORS. Except as otherwise provided by
statute, any director may be removed, either with or without cause, at any time,
by the stockholders at a special meeting thereof.
SECTION 12. COMPENSATION. The Board of Directors shall have authority to
fix the compensation, including fees and reimbursement of expenses, of directors
for services to the
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Corporation in any capacity.
SECTION 13. COMMITTEES. The Board of Directors may, by resolution passed
by a majority of the entire Board of Directors, designate one or more
committees, including an executive committee, each committee to consist of two
or more of the directors of the Corporation. The Board of Directors may
designate one or more directors as alternate members of any committee, who may
replace any absent member at any meeting of the committee. Except to the extent
restricted by statute or the Certificate of Incorporation, each such committee,
to the extent provided in the resolution creating it, shall have and may
exercise all the authority of the Board of Directors. Each such committee shall
serve at the pleasure of the Board of Directors and have such name as may be
determined from time to time by resolution adopted by the Board of Directors.
Each committee shall keep regular minutes of its meetings and report the same to
the Board of Directors.
SECTION 14. ACTION BY CONSENT. Unless restricted by the Certificate of
Incorporation, any action required or permitted to be taken by the Board of
Directors or any committee thereof may be taken without a meeting if all members
of the Board of Directors or such committee consent in writing to the adoption
of a resolution authorizing the action. The resolution and the written consents
thereto by the members of the Board of Directors or such committee shall be
filed with the minutes of the proceedings of the Board of Directors or such
committee.
SECTION 15. TELEPHONIC MEETING. Unless restricted by the Certificate of
Incorporation or by statute, any one or more members of the Board of Directors
or any committee thereof may participate in a meeting of the Board of Directors
or such committee by means of a conference telephone or similar communications
equipment allowing all persons participating in the meeting to hear each other
at the same time. Participation by such means shall constitute presence in
person at a meeting.
ARTICLE IV
OFFICERS
--------
SECTION 1. NUMBER AND QUALIFICATIONS. The officers of the Corporation
shall be elected by the Board of Directors and shall include the Chairman of the
Board, President, one or more Vice Presidents, the Secretary, and, if determined
by the Board of Directors, the Treasurer. If the Board of Directors wishes, it
may also elect such other officers (including one or more Assistant Treasurers
and one or more Assistant Secretaries), as may be necessary or desirable for the
business of the Corporation. Any two or more offices may be held by the same
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person. Each officer shall hold office until the first meeting of the Board of
Directors following the next annual meeting of the stockholders, and until his
successor shall have been elected and shall have qualified, or until his death,
or until he shall have resigned or have been removed, as hereinafter provided in
these By-Laws.
SECTION 2. RESIGNATIONS. Any officer of the Corporation may resign at any
time by giving written notice of his resignation to the Board of Directors or
the Chairman of the Board, if one shall be elected, or the President or the
Secretary. Any such resignation shall take effect at the time specified therein
or, if the time when it shall become effective shall not be specified therein,
immediately upon its receipt. Unless otherwise specified therein, the
acceptance of any such resignation shall not be necessary to make it effective.
SECTION 3. REMOVAL. Any officer of the Corporation may be removed, either
with or without cause, at any time, by the Board of Directors at any meeting
thereof.
SECTION 4. CHAIRMAN OF THE BOARD. The Chairman of the Board, if one shall
have been elected, shall be a member of the Board, an officer of the Corporation
and, if present, shall preside at each meeting of the Board of Directors or the
stockholders. He shall perform all duties incident to the office of Chairman,
and shall perform such other duties as may from time to time be assigned to him
by the Board of Directors.
SECTION 5. THE PRESIDENT. The President shall be the chief executive
officer of the Corporation. He shall, in the absence of the Chairman of the
Board or if one shall not have been elected, preside at each meeting of the
Board of Directors (if he is a director) or the stockholders. He shall perform
all duties incident to the office of President and chief executive officer and
such other duties as may from time to time be assigned to him by the Board of
Directors.
SECTION 6. VICE PRESIDENT. Each Vice President shall perform all such
duties as from time to time may be assigned to him by the Board of Directors or
the President. At the request of the President or in his absence or in the
event of his inability or refusal to act, the Vice President, or if there shall
be more than one, the Vice Presidents in the order determined by the Board of
Directors (or if there be no such determination, then the Vice Presidents in the
order of their election), shall perform the duties of the President, and, when
so called, shall have the power of and be subject to the restrictions placed
upon the President in respect of the performance of such duties.
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SECTION 7. TREASURER. The Treasurer, if one shall then be elected, shall
(a) have charge and custody of, and be responsible for, all the funds
and securities of the Corporation;
(b) keep full and accurate accounts of receipts and disbursements in
books belonging to the Corporation;
(c) deposit all moneys and other valuables to the credit of the
Corporation in such depositaries as may be designated by the Board of
Directors or pursuant to its direction;
(d) receive, and give receipts for, moneys due and payable to the
Corporation from any source whatsoever;
(e) disburse the funds of the Corporation and supervise the
investments of its funds, taking proper vouchers therefor;
(f) render to the Board of Directors, whenever the Board of Directors
may require, an account of the financial condition of the Corporation; and
(g) in general, perform all duties incident to the office of the
Treasurer and such other duties as from time to time may be assigned to
him by the Board of Directors.
SECTION 8. SECRETARY. The Secretary shall
(a) keep or cause to be kept in one or more books provided for the
purpose, the minutes of all meetings of the Board of Directors, the
committees of the Board of Directors and the stockholders;
(b) see that all notices are duly given in accordance with the
provisions of these By-Laws and as required by law;
(c) be custodian of the records and the seal of the Corporation and
affix and attest the seal to all certificates for shares of the Corporation
(unless the seal of the Corporation on such certificates shall be a
facsimile, as hereinafter provided) and affix and attest the seal to all
other documents to be executed on behalf of the Corporation under its seal;
(d) see that the books, reports, statements, certificates and other
documents and records required by law to be kept and filed are properly
kept and filed; and
(e) in general, perform all duties incident to the
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office of the Secretary and such other duties as from time to time may be
assigned to him by the Board of Directors.
SECTION 9. THE ASSISTANT TREASURER. The Assistant Treasurer, or if there
shall be more than one, the Assistant Treasurers in the order determined by the
Board of Directors (or if there be no such determination, then in the order of
their election), shall, in the absence of the Treasurer or in the event of his
inability or refusal to act, perform the duties and exercise the powers of the
Treasurer and shall perform such other duties as from time to time may be
assigned by the Board of Directors.
SECTION 10. THE ASSISTANT SECRETARY. The Assistant Secretary, or if there
be more than one, the Assistant Secretaries in the order determined by the Board
of Directors (or if there be no such determination, then in the order of their
election), shall, in the absence of the Secretary or in the event of his
inability or refusal to act, perform the duties and exercise the powers of the
Secretary and shall perform such other duties as from time to time may be
assigned by the Board of Directors.
SECTION 11. OFFICERS' BONDS OR OTHER SECURITY. If required by the Board
of Directors, any officer of the Corporation shall give a bond or other security
for the faithful performance of his duties, in such amount and with such surety
or sureties as the Board of Directors may require.
SECTION 12. COMPENSATION. The compensation of the officers of the
Corporation for their services as such officers shall be fixed from time to time
by the Board of Directors. An officer of the Corporation shall not be prevented
from receiving compensation by reason of the fact that he is also a director of
the Corporation.
ARTICLE V
SHARES, ETC.
------------
SECTION 1. SHARE CERTIFICATES. Each owner of shares of the Corporation
shall be entitled to have a certificate, in such form as shall be approved by
the Board of Directors, certifying the number of shares of the Corporation owned
by him. The certificates representing shares shall be signed in the name of the
Corporation by the Chairman of the Board or the President or a Vice President
and by the Secretary, an Assistant Secretary, the Treasurer or an Assistant
Treasurer, and sealed with the seal of the Corporation (which seal may be a
facsimile, engraved or printed); provided, however, that where any such
certificate is countersigned by a transfer agent, or is registered by a
registrar (other than the Corporation or one of its employees), the signatures
of the Chairman of the Board, President, Vice President, Secretary, Assistant
Secretary, Treasurer or Assistant
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Treasurer upon such certificates may be facsimiles, engraved or printed. In
case any officer who shall have signed any such certificate shall have ceased to
be such officer before such certificate shall be issued, it may nevertheless be
issued by the Corporation with the same effect as if such officer were still in
office at the date of their issue. When the Corporation is authorized to issue
shares of more than one class, there shall be set forth upon the face or back of
the certificate, (or the certificate shall have a statement that the Corporation
will furnish to any shareholder upon request and without charge) a full
statement of the designation, relative rights, preferences, and limitations of
the shares of each separate class, or of the different shares within each class,
authorized to be issued and, if the Corporation is authorized to issue any class
of preferred shares in series, the designation, relative rights, preferences and
limitations of each such series so far as the same have been fixed and the
authority of the Board of Directors to designate and fix the relative rights,
preferences and limitations of other series.
SECTION 2. BOOKS OF ACCOUNT AND RECORD OF STOCKHOLDERS. There shall be
kept correct and complete books and records of account of all the business and
transactions of the Corporation. There shall also be kept, at the office of the
Corporation, or at the office of its transfer agent, a record containing the
names and addresses of all stockholders of the Corporation, the number of shares
held by each, and the dates when they became the holders of record thereof.
SECTION 3. TRANSFER OF SHARES. Transfers of shares of the Corporation
shall be made on the records of the Corporation only upon authorization by the
registered holder thereof, or by his attorney thereunto authorized by power of
attorney duly executed and filed with the Secretary or with a transfer agent,
and on surrender of the certificate or certificates for such shares properly
endorsed or accompanied by a duly executed stock transfer power and the payment
of all taxes thereon. The person in whose name shares shall stand on the record
of stockholders of the Corporation shall be deemed the owner thereof for all
purposes as regards the Corporation. Whenever any transfer of shares shall be
made for collateral security and not absolutely and written notice thereof shall
be given to the Secretary or to a transfer agent, such fact shall be noted on
the records of the Corporation.
SECTION 4. TRANSFER AGENTS AND REGISTRARS. The Board of Directors may
appoint, or authorize any officer or officers to appoint, one or more transfer
agents and one or more registrars and may require all certificates for shares of
stock to bear the signature of any of them.
SECTION 5. REGULATIONS. The Board of Directors may make such additional
rules and regulations, not inconsistent with these
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By-Laws, as it may deem expedient concerning the issue, transfer and
registration of certificates for shares of the Corporation.
SECTION 6. FIXING OF RECORD DATE. The Board of Directors may fix, in
advance, a date not more than fifty (50) nor less than ten (10) days before the
date when fixed for the holding of any meeting of the stockholders or before the
last day on which the consent or dissent of the stockholders may be effectively
expressed for any purpose without a meeting, as the time as of which the
stockholders entitled to notice of and to vote at such meeting or whose consent
or dissent is required or may be expressed for any purpose, as the case may be,
shall be determined, and all persons who were stockholders of record of voting
shares at such time, and no others, shall be entitled to notice of and to vote
at such meeting or to express their consent or dissent, as the case may be. The
Board of Directors may fix, in advance, a date not more than fifty nor less than
ten days preceding the date fixed for the payment of any dividend or the making
of any distribution or the allotment of rights to subscribe for securities of
the Corporation, or for the delivery of evidences of rights or evidences of
interests arising out of any change, conversion or exchange of shares or other
securities, as the record date for the determination of the stockholders
entitled to receive any such dividend, distribution, allotment, rights or
interests, and in such case only the stockholders of record at the time so fixed
shall be entitled to receive such dividend, distribution, allotment, rights or
interests.
SECTION 7. LOST, DESTROYED OR MUTILATED CERTIFICATES. The holder of any
certificate representing shares of the Corporation shall immediately notify the
Corporation of any loss, destruction or mutilation of such certificate, and the
Corporation may issue a new certificate in the place of any certificate
theretofore issued by it which the owner thereof shall allege to have been lost
or destroyed or which shall have been mutilated. The Board of Directors may, in
its discretion, require such owner or his legal representatives to give to the
Corporation a bond in such sum, limited or unlimited, and in such form and with
such surety or sureties as the Board of Directors in its absolute discretion
shall determine, to indemnify the Corporation against any claim that may be made
against it on account of the alleged loss or destruction of any such
certificate, or the issuance of such new certificate.
ARTICLE VI
INDEMNIFICATION
---------------
Except as may otherwise be specifically provided in the Certificate of
Incorporation, no provision of the Certificate of Incorporation is intended by
the Corporation to be construed as limiting, prohibiting, denying or abrogating
any of the general or
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<PAGE>
specific powers or rights conferred under the General Corporation Law of the
State of Delaware (the "GCL") upon the Corporation, upon its stockholders,
bondholders and security holders, and upon its directors, officers and other
corporate personnel, including, in particular, the power of the Corporation to
furnish indemnification to directors and officers in the capacities defined and
prescribed by the General Corporation Law, as the same are conferred under the
General Corporation Law. The Corporation shall, to the fullest extent permitted
by the laws of the State of Delaware, including but not limited to Section 145
of the GCL, as the same may be amended and supplemented, indemnify any and all
persons whom it shall have power to indemnify under said Section or otherwise
under Delaware law from and against any and all of the expenses, liabilities or
other matters referred to or covered by said Section. The indemnification
provisions contained in the GCL shall not be deemed exclusive of any other
rights to which those indemnified may be entitled under any By-Law, agreement,
resolution of stockholders or disinterested directors, or otherwise, and shall
continue as to a person who has ceased to be a director, officer, employee or
agent, both as to action in his official capacity and as to action in another
capacity while holding such office, and shall inure to the benefit of the heirs,
executors and administrators of such person.
ARTICLE VII
GENERAL PROVISIONS
------------------
SECTION 1. DIVIDENDS. Subject to statute and the Certificate of
Incorporation, dividends upon the shares of the Corporation may be declared by
the Board of Directors at any regular or special meeting. Dividends may be paid
in cash, in property or in shares of the Corporation, unless otherwise provided
by statute or the Certificate of Incorporation.
SECTION 2. RESERVES. Before payment of any dividend, there may be set
aside out of any funds of the Corporation available for dividends such sum or
sums as the Board of Directors may, from time to time, in its absolute
discretion, think proper as a reserve or reserves to meet contingencies, or for
equalizing dividends, or for repairing or maintaining any property of the
Corporation or for such other purpose as the Board of Directors may think
conducive to the interests of the Corporation. The Board of Directors may
modify or abolish any such reserves in the manner in which it was created.
SECTION 3. FISCAL YEAR. The fiscal year of the Corporation shall be
fixed, and once fixed, may thereafter be changed, by resolution of the
Directors.
SECTION 4. CHECKS, NOTES, DRAFTS ETC. All checks, notes, drafts or other
orders for the payment of money of the Corporation
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<PAGE>
shall be signed, endorsed or accepted in the name of the Corporation by such
officer, officers, person or persons as from time to time may be designated by
the Board of Directors or by an officer or officers authorized by the Board of
Directors to make such designation.
SECTION 5. EXECUTION OF CONTRACTS, DEEDS, ETC. The Board of Directors may
authorize any officer or officers, agent or agents, in the name and on behalf of
the Corporation to enter into or execute and deliver any and all deeds, bonds,
mortgages, contracts and other obligations or instruments, and such authority
may be general or confined to specific instances.
SECTION 6. VOTING OF STOCKS IN OTHER CORPORATIONS. Unless otherwise
provided by resolution of the Board of Directors, the Chairman of the Board, the
President or any Vice President, from time to time, may (or may appoint one or
more attorneys or agents to) cast the votes which the Corporation may be
entitled to cast as a stockholder or otherwise in any other corporation, any of
whose shares or securities may be held by the Corporation, at meetings of the
holders of the shares or other securities of such other corporations, or to
consent in writing to any action by any such other corporation. In the event
one or more attorneys or agents are appointed, the Chairman of the Board, the
President or any Vice President may instruct the person or persons so appointed
as to the manner of casting such votes or giving such consent. The Chairman of
the Board, the President or any Vice President may, or may instruct the
attorneys or agents appointed to, execute or cause to be executed in the name
and on behalf of the Corporation and under its seal or otherwise, such written
proxies, consents, waivers or other instruments as may be necessary or proper in
the premises.
ARTICLE VIII
FORCE AND EFFECT OF BY-LAWS
---------------------------
These By-Laws are subject to the provisions of the GCL and the
Corporation's Certificate of Incorporation, as it may be amended from time to
time. If any provision in these By-Laws is inconsistent with a provision in the
GCL or the Certificate of Incorporation, the provision of the GCL or the
Certificate of Incorporation shall govern. Wherever in these By-Laws references
are made to more than one incorporator, director or stockholder, they shall, if
this is a sole incorporator, director or stockholder corporation, be construed
to mean the solitary person; and all provisions dealing with the quantum of
majorities or quorums shall be deemed to mean the action by the one person
constituting the Corporation.
ARTICLE IX
AMENDMENTS
----------
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These By-Laws may be amended or repealed or new By-Laws may be adopted at
an annual or special meeting of stockholders at which a quorum is present or
represented, by the vote of the holders of shares entitled to vote thereon
provided that notice of the proposed amendment or repeal or adoption of new
By-Laws is contained in the notice of such meeting. These By-Laws may also be
amended or repealed or new By-Laws may be adopted by the Board of Directors at
any regular or special meeting of the Board of Directors; provided that Article
VII, Section 7 of these By-Laws may only be amended or repealed, or new By-Laws
adopted which have the effect of amending or repealing Article VII, Section 7 of
these By-Laws, by the vote or written consent of the holders of a majority of
the outstanding shares of capital stock entitled to vote thereon which is held
by Disinterested Stockholders. If any By-Law regulating an impending election of
directors is adopted, amended or repealed by the Board of Directors, there shall
be set forth in the notice of the next meeting of the stockholders for the
election of directors the By-Law so adopted, amended or repealed, together with
a concise statement of the changes made. By-Laws adopted by the Board of
Directors may be amended or repealed by the stockholders.
15
<PAGE>
Exhibit 4.4
No. ______
Warrant to Purchase ________ shares of Common Stock
APOLLO INTERNATIONAL OF DELAWARE, INC.
Common Stock Purchase Warrant
_______________ 1996
NEITHER THIS WARRANT NOR THE SHARES OF COMMON STOCK ISSUABLE UPON
EXERCISE HEREOF HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, AND MAY NOT BE SOLD, TRANSFERRED, ASSIGNED, HYPOTHECATED OR OTHERWISE
DISPOSED OF UNTIL A REGISTRATION STATEMENT WITH RESPECT THERETO IS DECLARED
EFFECTIVE UNDER SUCH ACT OR THE COMPANY RECEIVES AN OPINION OF COUNSEL TO THE
COMPANY THAT AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE ACT IS
AVAILABLE.
THIS CERTIFIES THAT ________________________ (hereinafter sometimes
called the "Holder"), is entitled to purchase from Apollo International of
Delaware, Inc., a Delaware corporation (the "Company"), at the price and during
the period hereinafter specified, up to ____________ shares of the Company's
common stock, $.01 par value (the "Common Stock").
This Warrant, together with warrants of like tenor, is subject to
adjustment in accordance with Paragraph 7 of this Warrant.
1. a. The rights represented by this Warrant shall be exercisable,
at any time commencing two years from the later of: (i) the closing of this
offering, and (ii) the effective date of an initial public offering of the
Company's Common Stock, if any, until August 5, 2002 (the "Exercise Period") at
a purchase price of $5.50 per share (the "Exercise Price"), subject to
adjustment in accordance with Paragraph 7. After August 5, 2002, the Holder
shall have no right to purchase any shares of Common Stock underlying this
Warrant.
b. Notwithstanding anything herein contained to the contrary,
the Company and the Holder agree that, if the Company conducts an initial public
offering which includes warrants, and if the terms and conditions of the
warrants to be registered in the Registration Statement for the Company's
anticipated initial public offering (as described in the Confidential Private
Placement Memorandum) (the "Public Warrants") are not identical to the terms and
conditions of this Warrant, this Warrant will be modified and amended upon the
closing of such initial public offering to conform exactly to the terms and
conditions of the Public Warrants offered pursuant to such Registration
Statement including without limitation, the same Exercise Price as the Public
Warrants, which Exercise Price may exceed $5.50 per share.
2. The rights represented by this Warrant may be exercised at any
time within the Exercise Period above specified, in whole or in part, by (i) the
surrender of this Warrant (with the purchase form at
1
<PAGE>
the end hereof properly executed) at the principal executive office of the
Company (or such other office or agency of the Company as it may designate by
notice in writing to the Holder at the address of the Holder appearing on the
books of the Company); and (ii) payment to the Company of the Exercise Price
then in effect for the number of shares of Common Stock specified in the
above-mentioned purchase form together with applicable stock transfer taxes, if
any. This Warrant shall be deemed to have been exercised, in whole or in part
to the extent specified, immediately prior to the close of business on the date
this Warrant is surrendered and payment is made in accordance with the foregoing
provisions of this Paragraph 2, and the person or person in whose name or names
the certificates for shares of Common Stock shall be issuable upon such exercise
shall become the holder or holders of record of such shares of Common Stock at
that time and date. The certificate or certificates for the shares of Common
Stock so purchased shall be delivered to such person or persons within a
reasonable time, not exceeding thirty (30) days, after this Warrant shall have
been exercised.
3. Neither this Warrant nor the shares of Common Stock issuable upon
exercise hereof have been registered under the Securities Act of 1933, as
amended (the "1933 Act") nor under any state securities law and shall not be
transferred, sold, assigned or hypothecated in violation thereof. If permitted
by the foregoing, any such transfer, sale, assignment or hypothecation shall be
effected by the Holder surrendering this Warrant for cancellation at the office
or agency of the Company referred to in Paragraph 2 hereof, accompanied by an
opinion of counsel satisfactory to the Company and its counsel, stating that
such transferee is a permitted transferee under this Paragraph 3 and that such
transfer does not violate the 1933 Act or such state securities laws.
4. The Company covenants and agrees that all shares of Common Stock
which may be issued upon exercise of this Warrant will, upon issuance, be duly
and validly issued, fully paid and nonassessable and no personal liability will
attach to the Holder thereof. The Company further covenants and agrees that
during the Exercise Period, the Company will at all times have authorized and
reserved a sufficient number of shares of its Common Stock to provide for the
exercise of this Warrant.
5. The Warrant shall not entitle the Holder to any rights, including,
without limitation, voting rights, as a stockholder of the Company.
6. The Company shall be obligated to register the shares of Common
Stock underlying this Warrant in accordance with the 1933 Act, as set forth in
the Registration Rights Agreement annexed as Exhibit E to the Company's Private
Placement Memorandum.
7. The Exercise Price and Exercise Period in effect at any time and
the number and kind of securities purchaseable upon the exercise of this Warrant
shall be subject to adjustment from time to time upon the happening of certain
events as follows:
a. If the Company shall (i) declare a dividend or make a
distribution on its outstanding shares of Common Stock in shares of Common
Stock, (ii) subdivide or reclassify its outstanding shares of Common Stock into
a greater number of shares, or (iii) combine or reclassify its outstanding
shares of Common Stock into a smaller number of shares, the Exercise Price in
effect at the time of the effective date or record date, as the case may be, for
such sale, dividend or distribution or of the effective date of such
subdivision, combination or reclassification shall be adjusted so that it shall
equal the price determined by multiplying the Exercise Price by a fraction, the
denominator of which shall be the
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<PAGE>
number of shares of Common Stock outstanding after giving effect to such action,
and the numerator of which shall be the number of shares of Common Stock
outstanding immediately prior to such action.
b. Whenever the Exercise Price payable upon exercise of each
Warrant is adjusted pursuant to Paragraph 7a. above, the number of shares of
Common Stock purchasable upon exercise of this Warrant shall simultaneously be
adjusted by multiplying the number of shares of Common Stock initially issuable
upon exercise of this Warrant by the Exercise Price in effect on the date hereof
and dividing the product so obtained by the Exercise Price, as adjusted.
c. Notwithstanding any adjustment in the Exercise Price or the
number or kind of shares of Common Stock purchasable upon the exercise of this
Warrant, certificates for Warrants issued prior or subsequent to such adjustment
may continue to express the same price and number and kind of shares of Common
Stock as are initially issuable pursuant to this Warrant.
d. In addition to the modification provisions of Section 1.b.
hereof, the Company may, but under no circumstances is obligated to, modify the
terms of this Warrant to provide for an earlier commencement of the Exercise
Period, or to extend the Exercise Period or to lower the Exercise Price, at any
time prior to the expiration of this Warrant.
8. This Agreement shall be governed by and in accordance with the
laws of the State of Florida, without regard to its conflicts of laws
principles.
IN WITNESS WHEREOF, APOLLO INTERNATIONAL OF DELAWARE, INC. has caused
this Warrant to be signed by its duly authorized officer as of the date set
forth on the first page hereof.
APOLLO INTERNATIONAL OF DELAWARE, INC.
By: _______________________________
David W. Clarke
President
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<PAGE>
EXERCISE FORM
To Be Executed by the Holder
in Order to Exercise Warrant
The undersigned Holder hereby irrevocably elects to exercise this Warrant
and to purchase _____ shares of the Company's Common Stock issuable upon the
exercise of such Warrant, and requests that certificates for such securities
shall be issued in name of:
_____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
(please print or type name and address)
_____________________________________________________________________
(please insert social security or other identifying number)
and be delivered:
_____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
(please print or type name and address)
_____________________________________________________________________
(please insert social security or other identifying number)
and if such number of shares of Common Stock shall not be all the shares
evidenced by this Warrant Certificate, that a new Warrant Certificate for the
balance of such shares be registered in the name of, and delivered to, the
Holder.
<PAGE>
Warrant to Purchase 50,000 shares of Common Stock
APOLLO INTERNATIONAL OF DELAWARE, INC.
Common Stock Purchase Warrant
September 26, 1996
NEITHER THIS WARRANT NOR THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE
HEREOF HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND
MAY NOT BE SOLD, TRANSFERRED, ASSIGNED, HYPOTHECATED OR OTHERWISE DISPOSED OF
UNTIL A REGISTRATION STATEMENT WITH RESPECT THERETO IS DECLARED EFFECTIVE UNDER
SUCH ACT OR THE COMPANY RECEIVES AN OPINION OF COUNSEL TO THE COMPANY THAT AN
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE ACT IS AVAILABLE.
THIS CERTIFIES THAT Steven Smith (hereinafter sometimes called the
"Holder"), is entitled to purchase from Apollo International of Delaware, Inc.,
a Delaware corporation (the "Company"), at the price and during the period
hereinafter specified, up to 50,000 shares of the Company's common stock, $.01
par value (the "Common Stock").
This Warrant, together with warrants of like tenor, is subject to
adjustment in accordance with Paragraph 6 of this Warrant.
1. a. The rights represented by this Warrant shall be exercisable,
at any time commencing September 26, 1996 until September 26, 2001 (the
"Exercise Period") at a purchase price of $5.50 per share (the "Exercise
Price"), subject to adjustment in accordance with Paragraph 6. After 5:00 p.m.
local time, September 26, 2001, the Holder shall have no right to purchase any
shares of Common Stock underlying this Warrant.
2. The rights represented by this Warrant may be exercised at any
time within the Exercise Period above specified, in whole or in part, by (i) the
surrender of this Warrant (with the purchase form at the end hereof properly
executed) at the principal executive office of the Company (or such other office
or agency of the Company as it may designate by notice in writing to the Holder
at the address of the Holder appearing on the books of the Company); and (ii)
payment to the Company of the Exercise Price then in effect for the number of
shares of Common Stock specified in the above-mentioned purchase form together
with applicable stock transfer taxes, if any. This Warrant shall be deemed to
have been exercised, in whole or in part to the extent specified, immediately
prior to the close of business on the date this Warrant is surrendered and
payment is made in accordance with the foregoing provisions of this Paragraph 2,
and the person or person in whose name or names the certificates for shares of
Common Stock shall be issuable upon such exercise shall become the holder or
holders of record of such shares of Common Stock at that time and date. The
certificate or certificates for the shares of Common Stock so purchased shall be
1
<PAGE>
delivered to such person or persons within a reasonable time, not exceeding
thirty (30) days, after this Warrant shall have been exercised.
3. Neither this Warrant nor the shares of Common Stock issuable upon
exercise hereof have been registered under the Securities Act of 1933, as
amended (the "1933 Act") nor under any state securities law and shall not be
transferred, sold, assigned or hypothecated in violation thereof. If permitted
by the foregoing, any such transfer, sale, assignment or hypothecation shall be
effected by the Holder surrendering this Warrant for cancellation at the office
or agency of the Company referred to in Paragraph 2 hereof, accompanied by an
opinion of counsel satisfactory to the Company and its counsel, stating that
such transferee is a permitted transferee under this Paragraph 3 and that such
transfer does not violate the 1933 Act or such state securities laws.
4. The Company covenants and agrees that all shares of Common Stock
which may be issued upon exercise of this Warrant will, upon issuance, be duly
and validly issued, fully paid and nonassessable and no personal liability will
attach to the Holder thereof. The Company further covenants and agrees that
during the Exercise Period, the Company will at all times have authorized and
reserved a sufficient number of shares of its Common Stock to provide for the
exercise of this Warrant.
5. The Warrant shall not entitle the Holder to any rights, including,
without limitation, voting rights, as a stockholder of the Company.
6. The Exercise Price and Exercise Period in effect at any time and
the number and kind of securities purchasable upon the exercise of this Warrant
shall be subject to adjustment from time to time upon the happening of certain
events as follows:
a. If the Company shall (i) declare a dividend or make a
distribution on its outstanding shares of Common Stock in shares of Common
Stock, (ii) subdivide or reclassify its outstanding shares of Common Stock into
a greater number of shares, or (iii) combine or reclassify its outstanding
shares of Common Stock into a smaller number of shares, the Exercise Price in
effect at the time of the effective date or record date, as the case may be, for
such dividend or distribution or of the effective date of such subdivision,
combination or reclassification shall be adjusted so that it shall equal the
price determined by multiplying the Exercise Price by a fraction, the
denominator of which shall be the number of shares of Common Stock outstanding
after giving effect to such action, and the numerator of which shall be the
number of shares of Common Stock outstanding immediately prior to such action.
b. Whenever the Exercise Price payable upon exercise of each
Warrant is adjusted pursuant to Paragraph 6a. above, the number of shares of
Common Stock purchasable upon exercise of this Warrant shall simultaneously be
adjusted by multiplying the number of shares of Common Stock initially issuable
upon exercise of this Warrant by the Exercise Price in effect on the date hereof
and dividing the product so obtained by the Exercise Price, as adjusted.
c. Notwithstanding any adjustment in the Exercise Price or the
number or kind of shares of Common Stock purchasable upon the exercise of this
Warrant, certificates for Warrants issued prior or subsequent to such adjustment
may continue to express the same price and number and kind of shares of Common
Stock as are initially issuable pursuant to this Warrant.
2
<PAGE>
d. The Company may, but under no circumstances is obligated to,
modify the terms of this Warrant to provide for an earlier commencement of the
Exercise Period, or to extend the Exercise Period or to lower the Exercise
Price, at any time prior to the expiration of this Warrant.
7. This Agreement shall be governed by and in accordance with the
laws of the State of Florida, without regard to its conflicts of laws
principles.
IN WITNESS WHEREOF, APOLLO INTERNATIONAL OF DELAWARE, INC. has caused
this Warrant to be signed by its duly authorized officer as of the date set
forth on the first page hereof.
APOLLO INTERNATIONAL OF DELAWARE, INC.
By: /s/ David W. Clarke
-------------------------------
David W. Clarke
President
3
<PAGE>
EXERCISE FORM
To Be Executed by the Holder
in Order to Exercise Warrant
The undersigned Holder hereby irrevocably elects to exercise this Warrant
and to purchase _____ shares of the Company's Common Stock issuable upon the
exercise of such Warrant, and requests that certificates for such securities
shall be issued in name of:
------------------------------------------------------------------------
------------------------------------------------------------------------
------------------------------------------------------------------------
(please print or type name and address)
------------------------------------------------------------------------
(please insert social security or other identifying number)
and be delivered:
------------------------------------------------------------------------
------------------------------------------------------------------------
------------------------------------------------------------------------
------------------------------------------------------------------------
(please print or type name and address)
------------------------------------------------------------------------
(please insert social security or other identifying number)
and if such number of shares of Common Stock shall not be all the shares
evidenced by this Warrant Certificate, that a new Warrant Certificate for the
balance of such shares be registered in the name of, and delivered to, the
Holder.
<PAGE>
AMENDMENT TO WARRANT TO PURCHASE COMMON STOCK
APOLLO INTERNATIONAL OF DELAWARE, INC.
This amendment (the "Amendment") relates to that certain Warrant to
purchase 50,000 shares of the Common Stock, $.01 par value (the "Warrant") of
Apollo International of Delaware, Inc., a Delaware corporation (the "Company")
issued to Steven Smith (the "Holder") and dated September 26, 1996. The
Warrant is hereby amended in the following particulars:
A. Section 1 of the Warrant is hereby amended in its entirety as
follows:
"1. The rights represented by this Warrant shall be
exercisable, at any time commencing on the earlier of (i) twelve (12) months
from the date that a registration statement is declared effective by the
Securities and Exchange Commission for an initial public offering of the
Company's securities, if any (the "Effective Date"); and (ii) September 26,
1998, until September 26, 2001 (the "Exercise Period") at a purchase price of
$5.50 per share (the "Exercise Price"), subject to adjustment in accordance
with Paragraph 6. After 5:00 p.m. local time, September 26, 2001, the Holder
shall have no right to purchase any shares of Common Stock underlying this
Warrant."
B. A new Section 8 is added to the Warrant as follows:
"8. The holder of this Warrant, Steven Smith, hereby
represents and warrants to the Company and agrees that he will not sell or
otherwise publicly dispose of the shares of Common Stock issuable upon
exercise of this Warrant for a period of twenty-four (24) months from the
Effective Date."
The remaining provisions of the Warrant not amended herein shall remain
in full force and effect. This Amendment may be executed in multiple
counterparts, each of which shall be deemed an original and all of which
together shall constitute one and the same instrument. Facsimile signatures
hereto shall have the same legal force and effect as original signatures.
Dated: November 21, 1996.
Apollo International of Delaware, Inc.
By: /s/ David W. Clarke
----------------------------------
David W. Clarke, President
Holder:
/s/ Steven Smith
-------------------------------------
Steven Smith
<PAGE>
Warrant to Purchase 50,000 shares of Common Stock
APOLLO INTERNATIONAL OF DELAWARE, INC.
Common Stock Purchase Warrant
September 26, 1996
NEITHER THIS WARRANT NOR THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE
HEREOF HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND
MAY NOT BE SOLD, TRANSFERRED, ASSIGNED, HYPOTHECATED OR OTHERWISE DISPOSED OF
UNTIL A REGISTRATION STATEMENT WITH RESPECT THERETO IS DECLARED EFFECTIVE UNDER
SUCH ACT OR THE COMPANY RECEIVES AN OPINION OF COUNSEL TO THE COMPANY THAT AN
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE ACT IS AVAILABLE.
THIS CERTIFIES THAT Donald Louw (hereinafter sometimes called the
"Holder"), is entitled to purchase from Apollo International of Delaware, Inc.,
a Delaware corporation (the "Company"), at the price and during the period
hereinafter specified, up to 50,000 shares of the Company's common stock, $.01
par value (the "Common Stock").
This Warrant, together with warrants of like tenor, is subject to
adjustment in accordance with Paragraph 6 of this Warrant.
1. a. The rights represented by this Warrant shall be exercisable,
at any time commencing September 26, 1996 until September 26, 2001 (the
"Exercise Period") at a purchase price of $5.50 per share (the "Exercise
Price"), subject to adjustment in accordance with Paragraph 6. After 5:00 p.m.
local time, September 26, 2001, the Holder shall have no right to purchase any
shares of Common Stock underlying this Warrant.
2. The rights represented by this Warrant may be exercised at any
time within the Exercise Period above specified, in whole or in part, by (i) the
surrender of this Warrant (with the purchase form at the end hereof properly
executed) at the principal executive office of the Company (or such other office
or agency of the Company as it may designate by notice in writing to the Holder
at the address of the Holder appearing on the books of the Company); and (ii)
payment to the Company of the Exercise Price then in effect for the number of
shares of Common Stock specified in the above-mentioned purchase form together
with applicable stock transfer taxes, if any. This Warrant shall be deemed to
have been exercised, in whole or in part to the extent specified, immediately
prior to the close of business on the date this Warrant is surrendered and
payment is made in accordance with the foregoing provisions of this Paragraph 2,
and the person or person in whose name or names the certificates for shares of
Common Stock shall be issuable
1
<PAGE>
upon such exercise shall become the holder or holders of record of such shares
of Common Stock at that time and date. The certificate or certificates for the
shares of Common Stock so purchased shall be delivered to such person or persons
within a reasonable time, not exceeding thirty (30) days, after this Warrant
shall have been exercised.
3. Neither this Warrant nor the shares of Common Stock issuable upon
exercise hereof have been registered under the Securities Act of 1933, as
amended (the "1933 Act") nor under any state securities law and shall not be
transferred, sold, assigned or hypothecated in violation thereof. If permitted
by the foregoing, any such transfer, sale, assignment or hypothecation shall be
effected by the Holder surrendering this Warrant for cancellation at the office
or agency of the Company referred to in Paragraph 2 hereof, accompanied by an
opinion of counsel satisfactory to the Company and its counsel, stating that
such transferee is a permitted transferee under this Paragraph 3 and that such
transfer does not violate the 1933 Act or such state securities laws.
4. The Company covenants and agrees that all shares of Common Stock
which may be issued upon exercise of this Warrant will, upon issuance, be duly
and validly issued, fully paid and nonassessable and no personal liability will
attach to the Holder thereof. The Company further covenants and agrees that
during the Exercise Period, the Company will at all times have authorized and
reserved a sufficient number of shares of its Common Stock to provide for the
exercise of this Warrant.
5. The Warrant shall not entitle the Holder to any rights, including,
without limitation, voting rights, as a stockholder of the Company.
6. The Exercise Price and Exercise Period in effect at any time and
the number and kind of securities purchasable upon the exercise of this Warrant
shall be subject to adjustment from time to time upon the happening of certain
events as follows:
a. If the Company shall (i) declare a dividend or make a
distribution on its outstanding shares of Common Stock in shares of Common
Stock, (ii) subdivide or reclassify its outstanding shares of Common Stock into
a greater number of shares, or (iii) combine or reclassify its outstanding
shares of Common Stock into a smaller number of shares, the Exercise Price in
effect at the time of the effective date or record date, as the case may be, for
such dividend or distribution or of the effective date of such subdivision,
combination or reclassification shall be adjusted so that it shall equal the
price determined by multiplying the Exercise Price by a fraction, the
denominator of which shall be the number of shares of Common Stock outstanding
after giving effect to such action, and the numerator of which shall be the
number of shares of Common Stock outstanding immediately prior to such action.
b. Whenever the Exercise Price payable upon exercise of each
Warrant is adjusted pursuant to Paragraph 6a. above, the number of shares of
Common Stock purchasable upon exercise of this Warrant shall simultaneously be
adjusted by multiplying the number of shares of Common Stock initially issuable
upon exercise of this Warrant by the Exercise Price in effect on the date hereof
and dividing the product so obtained by the Exercise Price, as adjusted.
c. Notwithstanding any adjustment in the Exercise Price or the
number or kind of shares of Common Stock purchasable upon the exercise of this
Warrant, certificates for Warrants issued prior or subsequent to such adjustment
may continue to express the same price and number and kind of shares of Common
Stock as are initially issuable pursuant to this Warrant.
2
<PAGE>
d. The Company may, but under no circumstances is obligated to,
modify the terms of this Warrant to provide for an earlier commencement of the
Exercise Period, or to extend the Exercise Period or to lower the Exercise
Price, at any time prior to the expiration of this Warrant.
7. This Agreement shall be governed by and in accordance with the
laws of the State of Florida, without regard to its conflicts of laws
principles.
IN WITNESS WHEREOF, APOLLO INTERNATIONAL OF DELAWARE, INC. has caused
this Warrant to be signed by its duly authorized officer as of the date set
forth on the first page hereof.
APOLLO INTERNATIONAL OF DELAWARE, INC.
By: /s/ David W. Clarke
-------------------------------
David W. Clarke
President
3
<PAGE>
EXERCISE FORM
To Be Executed by the Holder
in Order to Exercise Warrant
The undersigned Holder hereby irrevocably elects to exercise this Warrant
and to purchase _____ shares of the Company's Common Stock issuable upon the
exercise of such Warrant, and requests that certificates for such securities
shall be issued in name of:
------------------------------------------------------------------
------------------------------------------------------------------
------------------------------------------------------------------
(please print or type name and address)
------------------------------------------------------------------
(please insert social security or other identifying number)
and be delivered:
------------------------------------------------------------------
------------------------------------------------------------------
------------------------------------------------------------------
(please print or type name and address)
------------------------------------------------------------------
(please insert social security or other identifying number)
and if such number of shares of Common Stock shall not be all the shares
evidenced by this Warrant Certificate, that a new Warrant Certificate for the
balance of such shares be registered in the name of, and delivered to, the
Holder.
<PAGE>
AMENDMENT TO WARRANT TO PURCHASE COMMON STOCK
APOLLO INTERNATIONAL OF DELAWARE, INC.
This amendment (the "Amendment") relates to that certain Warrant to
purchase 50,000 shares of the Common Stock, $.01 par value (the "Warrant") of
Apollo International of Delaware, Inc., a Delaware corporation (the "Company")
issued to Donald Louw (the "Holder") and dated September 26, 1996. The
Warrant is hereby amended in the following particulars:
A. Section 1 of the Warrant is hereby amended in its entirety as
follows:
"1. The rights represented by this Warrant shall be
exercisable, at any time commencing on the earlier of (i) twelve (12) months
from the date that a registration statement is declared effective by the
Securities and Exchange Commission for an initial public offering of the
Company's securities, if any (the "Effective Date"); and (ii) September 26,
1998, until September 26, 2001 (the "Exercise Period") at a purchase price of
$5.50 per share (the "Exercise Price"), subject to adjustment in accordance
with Paragraph 6. After 5:00 p.m. local time, September 26, 2001, the Holder
shall have no right to purchase any shares of Common Stock underlying this
Warrant."
B. A new Section 8 is added to the Warrant as follows:
"8. The holder of this Warrant, Donald Louw, hereby
represents and warrants to the Company and agrees that he will not sell or
otherwise publicly dispose of the shares of Common Stock issuable upon
exercise of this Warrant for a period of twenty-four (24) months from the
Effective Date."
The remaining provisions of the Warrant not amended herein shall remain
in full force and effect. This Amendment may be executed in multiple
counterparts, each of which shall be deemed an original and all of which
together shall constitute one and the same instrument. Facsimile signatures
hereto shall have the same legal force and effect as original signatures.
Dated: November 21, 1996.
Apollo International of Delaware, Inc.
By: /s/ David W. Clarke
----------------------------------
David W. Clarke, President
Holder:
/s/ Donald Louw
-------------------------------------
Donald Louw
<PAGE>
Exhibit 4.7
Warrant to Purchase 100,000 shares of Common Stock
APOLLO INTERNATIONAL OF DELAWARE, INC.
Common Stock Purchase Warrant
October 29, 1996
NEITHER THIS WARRANT NOR THE SHARES OF COMMON STOCK ISSUABLE UPON
EXERCISE HEREOF HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, AND MAY NOT BE SOLD, TRANSFERRED, ASSIGNED, HYPOTHECATED OR OTHERWISE
DISPOSED OF UNTIL A REGISTRATION STATEMENT WITH RESPECT THERETO IS DECLARED
EFFECTIVE UNDER SUCH ACT OR THE COMPANY RECEIVES AN OPINION OF COUNSEL TO THE
COMPANY THAT AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE ACT IS
AVAILABLE.
THIS CERTIFIES THAT Perryman Corporation N.V. (hereinafter sometimes
called the "Holder"), is entitled to purchase from Apollo International of
Delaware, Inc., a Delaware corporation (the "Company"), at the price and during
the period hereinafter specified, up to 100,000 shares of the Company's common
stock, $.01 par value (the "Common Stock").
This Warrant, together with warrants of like tenor, is subject to
adjustment in accordance with Paragraph 7 of this Warrant.
1. a. The rights represented by this Warrant shall be exercisable,
at any time commencing May 10, 1998 until May 10, 2001 (the "Exercise Period")
at a purchase price of $5.50 per share (the "Exercise Price"), subject to
adjustment in accordance with Paragraph 7. After May 10, 2001, the Holder shall
have no right to purchase any shares of Common Stock underlying this Warrant.
If the Company does not complete an initial public offering of its securities
before June 1, 1997, this Warrant will terminate on June 1, 1997; provided,
however, such Warrant termination rights shall not be exercisable by the Company
if, on or before June 1, 1997, the Company enters into an agreement with a third
party respecting an acquisition of the Company, including, without limitation, a
merger or a sale of substantially all of the assets of the Company.
b. Notwithstanding anything herein contained to the contrary,
the Company and the Holder agree that, if the Company conducts an initial public
offering which includes warrants, and if the terms and conditions of the
warrants to be registered in the Registration Statement for the Company's
anticipated initial public offering (as described in the Confidential Private
Placement Memorandum) (the "Public Warrants") are not identical to the terms and
conditions of this Warrant, this Warrant will be modified and amended upon the
closing of such initial public offering to conform exactly to the terms and
conditions of the Public Warrants offered pursuant to such Registration
Statement, which will include an increase in Exercise Price of this Warrant of
the exercise price if the Public Warrants exceed $5.50 per share.
2. The rights represented by this Warrant may be exercised at any
time within the Exercise Period above specified, in whole or in part, by (i) the
surrender of this Warrant (with the purchase form at
1
<PAGE>
the end hereof properly executed) at the principal executive office of the
Company (or such other office or agency of the Company as it may designate by
notice in writing to the Holder at the address of the Holder appearing on the
books of the Company); and (ii) payment to the Company of the Exercise Price
then in effect for the number of shares of Common Stock specified in the
above-mentioned purchase form together with applicable stock transfer taxes, if
any. This Warrant shall be deemed to have been exercised, in whole or in part
to the extent specified, immediately prior to the close of business on the date
this Warrant is surrendered and payment is made in accordance with the foregoing
provisions of this Paragraph 2, and the person or person in whose name or names
the certificates for shares of Common Stock shall be issuable upon such exercise
shall become the holder or holders of record of such shares of Common Stock at
that time and date. The certificate or certificates for the shares of Common
Stock so purchased shall be delivered to such person or persons within a
reasonable time, not exceeding thirty (30) days, after this Warrant shall have
been exercised.
3. Neither this Warrant nor the shares of Common Stock issuable upon
exercise hereof have been registered under the Securities Act of 1933, as
amended (the "1933 Act") nor under any state securities law and shall not be
transferred, sold, assigned or hypothecated in violation thereof. If permitted
by the foregoing, any such transfer, sale, assignment or hypothecation shall be
effected by the Holder surrendering this Warrant for cancellation at the office
or agency of the Company referred to in Paragraph 2 hereof, accompanied by an
opinion of counsel satisfactory to the Company and its counsel, stating that
such transferee is a permitted transferee under this Paragraph 3 and that such
transfer does not violate the 1933 Act or such state securities laws.
4. The Company covenants and agrees that all shares of Common Stock
which may be issued upon exercise of this Warrant will, upon issuance, be duly
and validly issued, fully paid and nonassessable and no personal liability will
attach to the Holder thereof. The Company further covenants and agrees that
during the Exercise Period, the Company will at all times have authorized and
reserved a sufficient number of shares of its Common Stock to provide for the
exercise of this Warrant.
5. The Warrant shall not entitle the Holder to any rights, including,
without limitation, voting rights, as a stockholder of the Company.
6. The Company shall be obligated to register the shares of Common
Stock underlying this Warrant in accordance with the 1933 Act if and when the
Company conducts an initial public offering of its Common Stock, subject to the
permission of the underwriter and any lock-up or other limitations that may be
imposed by an underwriter.
7. The Exercise Price and Exercise Period in effect at any time and
the number and kind of securities purchaseable upon the exercise of this Warrant
shall be subject to adjustment from time to time upon the happening of certain
events as follows:
a. If the Company shall (i) declare a dividend or make a
distribution on its outstanding shares of Common Stock in shares of Common
Stock, (ii) subdivide or reclassify its outstanding shares of Common Stock into
a greater number of shares, or (iii) combine or reclassify its outstanding
shares of Common Stock into a smaller number of shares, the Exercise Price in
effect at the time of the effective date or record date, as the case may be, for
such sale, dividend or distribution or of the effective date of such
subdivision, combination or reclassification shall be adjusted so that it shall
equal the price determined by multiplying the Exercise Price by a fraction, the
denominator of which shall be the
2
<PAGE>
number of shares of Common Stock outstanding after giving effect to such action,
and the numerator of which shall be the number of shares of Common Stock
outstanding immediately prior to such action.
b. Whenever the Exercise Price payable upon exercise of each
Warrant is adjusted pursuant to Paragraph 7a. above, the number of shares of
Common Stock purchasable upon exercise of this Warrant shall simultaneously be
adjusted by multiplying the number of shares of Common Stock initially issuable
upon exercise of this Warrant by the Exercise Price in effect on the date hereof
and dividing the product so obtained by the Exercise Price, as adjusted.
c. Notwithstanding any adjustment in the Exercise Price or the
number or kind of shares of Common Stock purchasable upon the exercise of this
Warrant, certificates for Warrants issued prior or subsequent to such adjustment
may continue to express the same price and number and kind of shares of Common
Stock as are initially issuable pursuant to this Warrant.
d. In addition to the modification provisions of Section 1.b.
hereof, the Company may, but under no circumstances is obligated to, modify the
terms of this Warrant to provide for an earlier commencement of the Exercise
Period, or to extend the Exercise Period or to lower the Exercise Price, at any
time prior to the expiration of this Warrant.
8. This Agreement shall be governed by and in accordance with the
laws of the State of Florida, without regard to its conflicts of laws
principles.
IN WITNESS WHEREOF, APOLLO INTERNATIONAL OF DELAWARE, INC. has caused
this Warrant to be signed by its duly authorized officer as of the date set
forth on the first page hereof.
APOLLO INTERNATIONAL OF DELAWARE, INC.
By: /s/ David W. Clarke
---------------------------------
David W. Clarke
President
3
<PAGE>
EXERCISE FORM
To Be Executed by the Holder
in Order to Exercise Warrant
The undersigned Holder hereby irrevocably elects to exercise this Warrant
and to purchase _____ shares of the Company's Common Stock issuable upon the
exercise of such Warrant, and requests that certificates for such securities
shall be issued in name of:
_____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
(please print or type name and address)
_____________________________________________________________________
(please insert social security or other identifying number)
and be delivered:
_____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
(please print or type name and address)
_____________________________________________________________________
(please insert social security or other identifying number)
and if such number of shares of Common Stock shall not be all the shares
evidenced by this Warrant Certificate, that a new Warrant Certificate for the
balance of such shares be registered in the name of, and delivered to, the
Holder.
4
<PAGE>
Warrant to Purchase 150,000 shares of Common Stock
APOLLO INTERNATIONAL OF DELAWARE, INC.
Common Stock Purchase Warrant
October 29, 1996
NEITHER THIS WARRANT NOR THE SHARES OF COMMON STOCK ISSUABLE UPON
EXERCISE HEREOF HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, AND MAY NOT BE SOLD, TRANSFERRED, ASSIGNED, HYPOTHECATED OR OTHERWISE
DISPOSED OF UNTIL A REGISTRATION STATEMENT WITH RESPECT THERETO IS DECLARED
EFFECTIVE UNDER SUCH ACT OR THE COMPANY RECEIVES AN OPINION OF COUNSEL TO THE
COMPANY THAT AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE ACT IS
AVAILABLE.
THIS CERTIFIES THAT Richgrove N.V. (hereinafter sometimes called the
"Holder"), is entitled to purchase from Apollo International of Delaware, Inc.,
a Delaware corporation (the "Company"), at the price and during the period
hereinafter specified, up to 150,000 shares of the Company's common stock, $.01
par value (the "Common Stock").
This Warrant, together with warrants of like tenor, is subject to
adjustment in accordance with Paragraph 7 of this Warrant.
1. a. The rights represented by this Warrant shall be exercisable,
at any time commencing May 10, 1998 until May 10, 2001 (the "Exercise Period")
at a purchase price of $5.50 per share (the "Exercise Price"), subject to
adjustment in accordance with Paragraph 7. After May 10, 2001, the Holder shall
have no right to purchase any shares of Common Stock underlying this Warrant.
If the Company does not complete an initial public offering of its securities
before June 1, 1997, this Warrant will terminate on June 1, 1997; PROVIDED,
HOWEVER, such Warrant termination rights shall not be exercisable by the Company
if, on or before June 1, 1997, the Company enters into an agreement with a third
party respecting an acquisition of the Company, including, without limitation, a
merger or a sale of substantially all of the assets of the Company.
b. Notwithstanding anything herein contained to the contrary,
the Company and the Holder agree that, if the Company conducts an initial public
offering which includes warrants, and if the terms and conditions of the
warrants to be registered in the Registration Statement for the Company's
anticipated initial public offering (as described in the Confidential Private
Placement Memorandum) (the "Public Warrants") are not identical to the terms and
conditions of this Warrant, this Warrant will be modified and amended upon the
closing of such initial public offering to conform exactly to the terms and
conditions of the Public Warrants offered pursuant to such Registration
Statement, which will include an increase in Exercise Price of this Warrant of
the exercise price if the Public Warrants exceed $5.50 per share.
2. The rights represented by this Warrant may be exercised at any
time within the Exercise Period above specified, in whole or in part, by (i) the
surrender of this Warrant (with the purchase form at
1
<PAGE>
the end hereof properly executed) at the principal executive office of the
Company (or such other office or agency of the Company as it may designate by
notice in writing to the Holder at the address of the Holder appearing on the
books of the Company); and (ii) payment to the Company of the Exercise Price
then in effect for the number of shares of Common Stock specified in the
above-mentioned purchase form together with applicable stock transfer taxes, if
any. This Warrant shall be deemed to have been exercised, in whole or in part
to the extent specified, immediately prior to the close of business on the date
this Warrant is surrendered and payment is made in accordance with the foregoing
provisions of this Paragraph 2, and the person or person in whose name or names
the certificates for shares of Common Stock shall be issuable upon such exercise
shall become the holder or holders of record of such shares of Common Stock at
that time and date. The certificate or certificates for the shares of Common
Stock so purchased shall be delivered to such person or persons within a
reasonable time, not exceeding thirty (30) days, after this Warrant shall have
been exercised.
3. Neither this Warrant nor the shares of Common Stock issuable upon
exercise hereof have been registered under the Securities Act of 1933, as
amended (the "1933 Act") nor under any state securities law and shall not be
transferred, sold, assigned or hypothecated in violation thereof. If permitted
by the foregoing, any such transfer, sale, assignment or hypothecation shall be
effected by the Holder surrendering this Warrant for cancellation at the office
or agency of the Company referred to in Paragraph 2 hereof, accompanied by an
opinion of counsel satisfactory to the Company and its counsel, stating that
such transferee is a permitted transferee under this Paragraph 3 and that such
transfer does not violate the 1933 Act or such state securities laws.
4. The Company covenants and agrees that all shares of Common Stock
which may be issued upon exercise of this Warrant will, upon issuance, be duly
and validly issued, fully paid and nonassessable and no personal liability will
attach to the Holder thereof. The Company further covenants and agrees that
during the Exercise Period, the Company will at all times have authorized and
reserved a sufficient number of shares of its Common Stock to provide for the
exercise of this Warrant.
5. The Warrant shall not entitle the Holder to any rights, including,
without limitation, voting rights, as a stockholder of the Company.
6. The Company shall be obligated to register the shares of Common
Stock underlying this Warrant in accordance with the 1933 Act if and when the
Company conducts an initial public offering of its Common Stock, subject to the
permission of the underwriter and any lock-up or other limitations that may be
imposed by an underwriter.
7. The Exercise Price and Exercise Period in effect at any time and
the number and kind of securities purchaseable upon the exercise of this Warrant
shall be subject to adjustment from time to time upon the happening of certain
events as follows:
a. If the Company shall (i) declare a dividend or make a
distribution on its outstanding shares of Common Stock in shares of Common
Stock, (ii) subdivide or reclassify its outstanding shares of Common Stock into
a greater number of shares, or (iii) combine or reclassify its outstanding
shares of Common Stock into a smaller number of shares, the Exercise Price in
effect at the time of the effective date or record date, as the case may be, for
such sale, dividend or distribution or of the effective date of such
subdivision, combination or reclassification shall be adjusted so that it shall
equal the price determined by multiplying the Exercise Price by a fraction, the
denominator of which shall be the
2
<PAGE>
number of shares of Common Stock outstanding after giving effect to such action,
and the numerator of which shall be the number of shares of Common Stock
outstanding immediately prior to such action.
b. Whenever the Exercise Price payable upon exercise of each
Warrant is adjusted pursuant to Paragraph 7a. above, the number of shares of
Common Stock purchasable upon exercise of this Warrant shall simultaneously be
adjusted by multiplying the number of shares of Common Stock initially issuable
upon exercise of this Warrant by the Exercise Price in effect on the date hereof
and dividing the product so obtained by the Exercise Price, as adjusted.
c. Notwithstanding any adjustment in the Exercise Price or the
number or kind of shares of Common Stock purchasable upon the exercise of this
Warrant, certificates for Warrants issued prior or subsequent to such adjustment
may continue to express the same price and number and kind of shares of Common
Stock as are initially issuable pursuant to this Warrant.
d. In addition to the modification provisions of Section 1.b.
hereof, the Company may, but under no circumstances is obligated to, modify the
terms of this Warrant to provide for an earlier commencement of the Exercise
Period, or to extend the Exercise Period or to lower the Exercise Price, at any
time prior to the expiration of this Warrant.
8. This Agreement shall be governed by and in accordance with the
laws of the State of Florida, without regard to its conflicts of laws
principles.
IN WITNESS WHEREOF, APOLLO INTERNATIONAL OF DELAWARE, INC. has caused
this Warrant to be signed by its duly authorized officer as of the date set
forth on the first page hereof.
APOLLO INTERNATIONAL OF DELAWARE, INC.
By: /s/ David W. Clarke
-------------------------------
David W. Clarke
President
3
<PAGE>
EXERCISE FORM
-------------
To Be Executed by the Holder
in Order to Exercise Warrant
The undersigned Holder hereby irrevocably elects to exercise this Warrant
and to purchase _____ shares of the Company's Common Stock issuable upon the
exercise of such Warrant, and requests that certificates for such securities
shall be issued in name of:
------------------------------------------------------------------------
------------------------------------------------------------------------
------------------------------------------------------------------------
(please print or type name and address)
------------------------------------------------------------------------
(please insert social security or other identifying number)
and be delivered:
------------------------------------------------------------------------
------------------------------------------------------------------------
------------------------------------------------------------------------
(please print or type name and address)
------------------------------------------------------------------------
(please insert social security or other identifying number)
and if such number of shares of Common Stock shall not be all the shares
evidenced by this Warrant Certificate, that a new Warrant Certificate for the
balance of such shares be registered in the name of, and delivered to, the
Holder.
<PAGE>
Warrant to Purchase 150,000 shares of Common Stock
APOLLO INTERNATIONAL OF DELAWARE, INC.
Common Stock Purchase Warrant
October 29, 1996
NEITHER THIS WARRANT NOR THE SHARES OF COMMON STOCK ISSUABLE UPON
EXERCISE HEREOF HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, AND MAY NOT BE SOLD, TRANSFERRED, ASSIGNED, HYPOTHECATED OR OTHERWISE
DISPOSED OF UNTIL A REGISTRATION STATEMENT WITH RESPECT THERETO IS DECLARED
EFFECTIVE UNDER SUCH ACT OR THE COMPANY RECEIVES AN OPINION OF COUNSEL TO THE
COMPANY THAT AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE ACT IS
AVAILABLE.
THIS CERTIFIES THAT Cherryhills N.V. (hereinafter sometimes called the
"Holder"), is entitled to purchase from Apollo International of Delaware, Inc.,
a Delaware corporation (the "Company"), at the price and during the period
hereinafter specified, up to 150,000 shares of the Company's common stock, $.01
par value (the "Common Stock").
This Warrant, together with warrants of like tenor, is subject to
adjustment in accordance with Paragraph 7 of this Warrant.
1. a. The rights represented by this Warrant shall be exercisable,
at any time commencing May 10, 1998 until May 10, 2001 (the "Exercise Period")
at a purchase price of $5.50 per share (the "Exercise Price"), subject to
adjustment in accordance with Paragraph 7. After May 10, 2001, the Holder shall
have no right to purchase any shares of Common Stock underlying this Warrant.
If the Company does not complete an initial public offering of its securities
before June 1, 1997, this Warrant will terminate on June 1, 1997; PROVIDED,
HOWEVER, such Warrant termination rights shall not be exercisable by the Company
if, on or before June 1, 1997, the Company enters into an agreement with a third
party respecting an acquisition of the Company, including, without limitation, a
merger or a sale of substantially all of the assets of the Company.
b. Notwithstanding anything herein contained to the contrary,
the Company and the Holder agree that, if the Company conducts an initial public
offering which includes warrants, and if the terms and conditions of the
warrants to be registered in the Registration Statement for the Company's
anticipated initial public offering (as described in the Confidential Private
Placement Memorandum) (the "Public Warrants") are not identical to the terms and
conditions of this Warrant, this Warrant will be modified and amended upon the
closing of such initial public offering to conform exactly to the terms and
conditions of the Public Warrants offered pursuant to such Registration
Statement, which will include an increase in Exercise Price of this Warrant of
the exercise price if the Public Warrants exceed $5.50 per share.
2. The rights represented by this Warrant may be exercised at any
time within the Exercise Period above specified, in whole or in part, by (i) the
surrender of this Warrant (with the purchase form at
1
<PAGE>
the end hereof properly executed) at the principal executive office of the
Company (or such other office or agency of the Company as it may designate by
notice in writing to the Holder at the address of the Holder appearing on the
books of the Company); and (ii) payment to the Company of the Exercise Price
then in effect for the number of shares of Common Stock specified in the
above-mentioned purchase form together with applicable stock transfer taxes, if
any. This Warrant shall be deemed to have been exercised, in whole or in part
to the extent specified, immediately prior to the close of business on the date
this Warrant is surrendered and payment is made in accordance with the foregoing
provisions of this Paragraph 2, and the person or person in whose name or names
the certificates for shares of Common Stock shall be issuable upon such exercise
shall become the holder or holders of record of such shares of Common Stock at
that time and date. The certificate or certificates for the shares of Common
Stock so purchased shall be delivered to such person or persons within a
reasonable time, not exceeding thirty (30) days, after this Warrant shall have
been exercised.
3. Neither this Warrant nor the shares of Common Stock issuable upon
exercise hereof have been registered under the Securities Act of 1933, as
amended (the "1933 Act") nor under any state securities law and shall not be
transferred, sold, assigned or hypothecated in violation thereof. If permitted
by the foregoing, any such transfer, sale, assignment or hypothecation shall be
effected by the Holder surrendering this Warrant for cancellation at the office
or agency of the Company referred to in Paragraph 2 hereof, accompanied by an
opinion of counsel satisfactory to the Company and its counsel, stating that
such transferee is a permitted transferee under this Paragraph 3 and that such
transfer does not violate the 1933 Act or such state securities laws.
4. The Company covenants and agrees that all shares of Common Stock
which may be issued upon exercise of this Warrant will, upon issuance, be duly
and validly issued, fully paid and nonassessable and no personal liability will
attach to the Holder thereof. The Company further covenants and agrees that
during the Exercise Period, the Company will at all times have authorized and
reserved a sufficient number of shares of its Common Stock to provide for the
exercise of this Warrant.
5. The Warrant shall not entitle the Holder to any rights, including,
without limitation, voting rights, as a stockholder of the Company.
6. The Company shall be obligated to register the shares of Common
Stock underlying this Warrant in accordance with the 1933 Act if and when the
Company conducts an initial public offering of its Common Stock, subject to the
permission of the underwriter and any lock-up or other limitations that may be
imposed by an underwriter.
7. The Exercise Price and Exercise Period in effect at any time and
the number and kind of securities purchaseable upon the exercise of this Warrant
shall be subject to adjustment from time to time upon the happening of certain
events as follows:
a. If the Company shall (i) declare a dividend or make a
distribution on its outstanding shares of Common Stock in shares of Common
Stock, (ii) subdivide or reclassify its outstanding shares of Common Stock into
a greater number of shares, or (iii) combine or reclassify its outstanding
shares of Common Stock into a smaller number of shares, the Exercise Price in
effect at the time of the effective date or record date, as the case may be, for
such sale, dividend or distribution or of the effective date of such
subdivision, combination or reclassification shall be adjusted so that it shall
equal the price determined by multiplying the Exercise Price by a fraction, the
denominator of which shall be
2
<PAGE>
the number of shares of Common Stock outstanding after giving effect to such
action, and the numerator of which shall be the number of shares of Common Stock
outstanding immediately prior to such action.
b. Whenever the Exercise Price payable upon exercise of each
Warrant is adjusted pursuant to Paragraph 7a. above, the number of shares of
Common Stock purchasable upon exercise of this Warrant shall simultaneously be
adjusted by multiplying the number of shares of Common Stock initially issuable
upon exercise of this Warrant by the Exercise Price in effect on the date hereof
and dividing the product so obtained by the Exercise Price, as adjusted.
c. Notwithstanding any adjustment in the Exercise Price or the
number or kind of shares of Common Stock purchasable upon the exercise of this
Warrant, certificates for Warrants issued prior or subsequent to such adjustment
may continue to express the same price and number and kind of shares of Common
Stock as are initially issuable pursuant to this Warrant.
d. In addition to the modification provisions of Section 1.b.
hereof, the Company may, but under no circumstances is obligated to, modify the
terms of this Warrant to provide for an earlier commencement of the Exercise
Period, or to extend the Exercise Period or to lower the Exercise Price, at any
time prior to the expiration of this Warrant.
8. This Agreement shall be governed by and in accordance with the
laws of the State of Florida, without regard to its conflicts of laws
principles.
IN WITNESS WHEREOF, APOLLO INTERNATIONAL OF DELAWARE, INC. has caused
this Warrant to be signed by its duly authorized officer as of the date set
forth on the first page hereof.
APOLLO INTERNATIONAL OF DELAWARE, INC.
By: /s/ David W. Clarke
-------------------------------
David W. Clarke
President
3
<PAGE>
EXERCISE FORM
To Be Executed by the Holder
in Order to Exercise Warrant
The undersigned Holder hereby irrevocably elects to exercise this Warrant
and to purchase _____ shares of the Company's Common Stock issuable upon the
exercise of such Warrant, and requests that certificates for such securities
shall be issued in name of:
--------------------------------------------------------------------
--------------------------------------------------------------------
--------------------------------------------------------------------
(please print or type name and address)
--------------------------------------------------------------------
(please insert social security or other identifying number)
and be delivered:
--------------------------------------------------------------------
--------------------------------------------------------------------
--------------------------------------------------------------------
(please print or type name and address)
--------------------------------------------------------------------
(please insert social security or other identifying number)
and if such number of shares of Common Stock shall not be all the shares
evidenced by this Warrant Certificate, that a new Warrant Certificate for the
balance of such shares be registered in the name of, and delivered to, the
Holder.
<PAGE>
No. W-02
----
Warrant to Purchase 250,000 shares of Common Stock
APOLLO INTERNATIONAL OF DELAWARE, INC.
Common Stock Purchase Warrant
June 25, 1996
NEITHER THIS WARRANT NOR THE SHARES OF COMMON STOCK ISSUABLE UPON
EXERCISE HEREOF HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, AND MAY NOT BE SOLD, TRANSFERRED, ASSIGNED, HYPOTHECATED OR OTHERWISE
DISPOSED OF UNTIL A REGISTRATION STATEMENT WITH RESPECT THERETO IS DECLARED
EFFECTIVE UNDER SUCH ACT OR THE COMPANY RECEIVES AN OPINION OF COUNSEL TO THE
COMPANY THAT AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE ACT IS
AVAILABLE.
THIS CERTIFIES THAT Imagine Holdings (hereinafter sometimes called the
"Holder"), is entitled to purchase from Apollo International of Delaware, Inc.,
a Delaware corporation (the "Company"), at the price and during the period
hereinafter specified, up to 250,000 shares of the Company's common stock, $.01
par value (the "Common Stock").
This Warrant, together with warrants of like tenor, is subject to
adjustment in accordance with Paragraph 7 of this Warrant.
1. The rights represented by this Warrant shall be exercisable, at
any time commencing two years from June 1, 1998 (unless the Company agrees to
an earlier exercise) until June 1, 2002 (the "Exercise Period") at a purchase
price of $4.00 per share (the "Exercise Price"), subject to adjustment in
accordance with Paragraph 7. After June 1, 2002 the Holder shall have no
right to purchase any shares of Common Stock underlying this Warrant.
2. The rights represented by this Warrant may be exercised at any
time within the Exercise Period above specified, in whole or in part, by (i) the
surrender of this Warrant (with the purchase form at the end hereof properly
executed) at the principal executive office of the Company (or such other office
or agency of the Company as it may designate by notice in writing to the Holder
at the address of the Holder appearing on the books of the Company); and (ii)
payment to the Company of the Exercise Price then in effect for the number of
shares of Common Stock specified in the above-mentioned purchase form together
with applicable stock transfer taxes, if any. This Warrant shall be deemed to
have been exercised, in whole or in part to the extent specified, immediately
prior to the close of business on the date this Warrant is surrendered and
payment is made in accordance with the foregoing provisions of this Paragraph 2,
and the person or person in whose name or names the certificates for shares of
Common Stock shall be issuable upon such exercise shall become the holder or
holders of record of such shares of Common Stock at that time and date. The
certificate or certificates for the shares of Common Stock so purchased shall be
delivered to such person or persons within a reasonable time, not exceeding
thirty (30) days, after this Warrant shall have been exercised.
1
<PAGE>
3. Neither this Warrant nor the shares of Common Stock issuable upon
exercise hereof have been registered under the Securities Act of 1933, as
amended (the "1933 Act") nor under any state securities law and shall not be
transferred, sold, assigned or hypothecated in violation thereof. If permitted
by the foregoing, any such transfer, sale, assignment or hypothecation shall be
effected by the Holder surrendering this Warrant for cancellation at the office
or agency of the Company referred to in Paragraph 2 hereof, accompanied by an
opinion of counsel satisfactory to the Company and its counsel, stating that
such transferee is a permitted transferee under this Paragraph 3 and that such
transfer does not violate the 1933 Act or such state securities laws.
4. The Company covenants and agrees that all shares of Common Stock
which may be issued upon exercise of this Warrant will, upon issuance, be duly
and validly issued, fully paid and nonassessable and no personal liability will
attach to the Holder thereof. The Company further covenants and agrees that
during the Exercise Period, the Company will at all times have authorized and
reserved a sufficient number of shares of its Common Stock to provide for the
exercise of this Warrant.
5. The Warrant shall not entitle the Holder to any rights, including,
without limitation, voting rights, as a stockholder of the Company.
6. If at any time after June 1, 1998 the Company couducts a
secondary offering of its Common Stock pursuant to a Registration Statement on
Form S-1 or Form SB-2, the Company shall include in such registration the
Common Stock issuable upon exercise of this Warrant, subject to any lock-up
or other limitations that may be imposed by an underwriter of such offering
is an underwritten public offering.
7. The Exercise Price and Exercise Period in effect at any time and
the number and kind of securities purchaseable upon the exercise of this Warrant
shall be subject to adjustment from time to time upon the happening of certain
events as follows:
a. If the Company shall (i) declare a dividend or make a
distribution on its outstanding shares of Common Stock in shares of Common
Stock, (ii) subdivide or reclassify its outstanding shares of Common Stock into
a greater number of shares, or (iii) combine or reclassify its outstanding
shares of Common Stock into a smaller number of shares, the Exercise Price in
effect at the time of the effective date or record date, as the case may be, for
such sale, dividend or distribution or of the effective date of such
subdivision, combination or reclassification shall be adjusted so that it shall
equal the price determined by multiplying the Exercise Price by a fraction, the
denominator of which shall be the number of shares of Common Stock outstanding
after giving effect to such action, and the numerator of which shall be the
number of shares of Common Stock outstanding immediately prior to such action.
b. Whenever the Exercise Price payable upon exercise of each
Warrant is adjusted pursuant to Paragraph 7a. above, the number of shares of
Common Stock purchaseable upon exercise of this Warrant shall simultaneously be
adjusted by multiplying the number of shares of Common Stock initially issuable
upon exercise of this Warrant by the Exercise Price in effect on the date hereof
and dividing the product so obtained by the Exercise Price, as adjusted.
c. Notwithstanding any adjustment in the Exercise Price or the
number or kind of shares of Common Stock purchaseable upon the exercise of this
Warrant, certificates for Warrants issued prior or subsequent to such adjustment
may continue to express the same price and number and kind of shares of Common
Stock as are initially issuable pursuant to this Warrant.
2
<PAGE>
d. The Company may, but under no circumstances is obligated to,
modify the terms of this Warrant to provide for an earlier commencement of the
Exercise Period, or to extend the Exercise Period or to lower the Exercise
Price, at any time prior to the expiration of this Warrant.
8. The Company in its sole discretion, may terminate this Warrant
without any further obligation to Holder, in the event the Holder breaches
that certain consulting agreement between Holder and the Company of even date
herewith or due to acts of the Holder or its agents involving dishonesty or
fraud which are injurious to the Company.
9. This Agreement shall be governed by and in accordance with the
laws of the State of Florida, without regard to its conflicts of laws
principles.
IN WITNESS WHEREOF, APOLLO INTERNATIONAL OF DELAWARE, INC. has caused
this Warrant to be signed by its duly authorized officer as of the date set
forth on the first page hereof.
APOLLO INTERNATIONAL OF DELAWARE, INC.
By: /s/ David W. Clarke
---------------------------------
David W. Clarke
President
3
<PAGE>
EXERCISE FORM
-------------
To Be Executed by the Holder
in Order to Exercise Warrant
The undersigned Holder hereby irrevocably elects to exercise this Warrant
and to purchase _____ shares of the Company's Common Stock issuable upon the
exercise of such Warrant, and requests that certificates for such securities
shall be issued in name of:
_____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
(please print or type name and address)
_____________________________________________________________________
(please insert social security or other identifying number)
and be delivered:
_____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
(please print or type name and address)
_____________________________________________________________________
(please insert social security or other identifying number)
and if such number of shares of Common Stock shall not be all the shares
evidenced by this Warrant Certificate, that a new Warrant Certificate for the
balance of such shares be registered in the name of, and delivered to, the
Holder.
4
<PAGE>
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT, dated as of May ____, 1996
by and between APOLLO INTERNATIONAL OF DELAWARE, INC., a. Delaware
corporation (the "Company"), and the person whose name appears on the
signature page attached hereto (the "Holder").
WHEREAS, pursuant to a Subscription Agreement dated as of the
date hereof, the Company has offered to the Holder in a private offering (the
"Offering") ___________ shares of Common Stock, $.01 par value, of the
Company (the "Shares"), and a twelve (12%) percent $______________ principal
amount redeemable eighteen-month promissory note (the "Note"). The foregoing
shall sometimes be referred to collectively herein as the "Securities";
WHEREAS, pursuant to the terms of and in order to induce the
Holders to enter into the Subscription Agreements to purchase the Securities,
the Company and the Holders have agreed to enter into this Agreement;
WHEREAS, it is intended by the Company and the Holders that
this Agreement shall become effective immediately upon the purchase by the
Holder of the Securities.
NOW, THEREFORE, in consideration of the premises, promises and
the mutual covenants contained herein and in the Subscription Agreement, the
Company hereby agrees as follows:
REGISTRATION RIGHTS.
1. REGISTRATION RIGHTS
(a) "PIGGYBACK REGISTRATION". If the Company at
any time after the date of this Agreement proposes to register any of its
securities under the Securities Act of 1933, as amended (the "1933 Act")
(other than in connection with a merger or pursuant to Form S-8 or other
comparable form), the Company shall request that the managing underwriter (if
any) of such underwritten offering include the Shares in the registration
statement for the underwritten offering in such registration. The Shares are
sometimes referred to collectively herein as the "Registrable Securities".
If such managing underwriter agrees to include the Registrable Securities in
the registration statement relating to the underwritten offering, the Company
shall at such time give prompt written notice to all Holders of its intention
to effect such registration and of such Holders' right under such proposed
registration, and upon the request of any such Holder delivered to the
Company within twenty (20) days after giving such notice (which request shall
specify the Registrable Securities intended
<PAGE>
to be disposed of by such Holder), the Company shall include such Registrable
Securities held by such Holder requested to be included in such registration;
provided, however, that:
(i) If, at any time after giving such written
notice of the Company's intention to register any of the Holders' Registrable
Securities and prior to the effective date of the registration statement
filed in connection with such registration, the Company shall determine for
any reason not to file the registration statement wherein the Registrable
Securities are being registered or to delay the registration of such
Registrable Securities, at its sole election, the Company may give written
notice of such determination to each Holder and thereupon shall be relieved
of its obligation to register any Registrable Securities issued or issuable
in connection with such registration (but not from its obligation to pay
registration expenses in connection therewith or to register the Registrable
Securities in a subsequent registration) ; and in the case of a determination
to delay a registration, the Company shall thereupon be permitted to delay
registering any Registrable Securities for the same period as the delay in
respect of securities being registered for the Company's own account.
(ii) If the managing underwriter in such
underwritten offering shall advise the Company that it declines to include a
portion or all of the Registrable Securities requested by the Holders to be
included in the registration statement, then distribution of all or a
specified portion of the Registrable Securities shall be excluded from such
registration statement (in case of an exclusion as to a portion of the
Registrable Securities, such portion to be excluded shall be allocated among
such holders and any affiliates of the Company including securities to be
registered in such underwritten offering in proportion to the respective
number of Registrable Securities and other securities requested to be
registered by each such Holder and affiliate). In such event the Company
shall give the applicable Holders prompt notice of the number of Registrable
Securities excluded from such registration at the request of the managing
underwriter. No such exclusion shall reduce the securities being offered by
the Company for its own account to be included in such registration statement.
(b) OPTION TO INCLUDE REGISTRABLE SECURITIES IN
OFFERING. The Holders, subject to the provisions of Section 1(a), shall have
the option to include their Registrable Securities in the registration
statement, relating to the Company's underwritten offering. The Company
shall not be required to include any of the Holders' Registrable Securities
in the registration statement relating to the underwritten offering of the
Company's securities unless such Holders accept the terms of the underwriting
as agreed upon between the Company and the underwriters selected by it
(provided such terms are usual and
2
<PAGE>
customary for selling stockholders) and the Holders agree to execute and/or
deliver such documents in connection with such registration as the Company or
the managing underwriter may reasonably request.
(c) MANDATORY REGISTRATION. In the event the
Holders of more than 50% of the Registrable Securities have not had their
Registrable Securities included in a filed registration statement pursuant to
Section 1(a), the Company shall use its best efforts on one occasion to
effect the registration of all remaining Registrable Securities as soon as
practicable, but not later than 180 days after the effective date of such
registration statement; provided, however, that such period may be extended
or delayed by the Company for one period of up to 90 days if, upon the advice
of counsel at the time such registration is required to be filed, or at the
time the Company is required to exercise its best efforts to cause such
registration statement to become effective, such delay is advisable and in
the best interests of the Company because of the existence of non-public
material information, or to allow the Company to complete any audit of its
financial statements without requiring the company to perform any audit not
otherwise necessary.
(d) COOPERATION WITH COMPANY. The Holder will
cooperate with the Company in all respects in connection with this Agreement,
including, timely supplying all information reasonably requested by the
Company and executing and returning all documents reasonably requested in
connection with the registration and sale of the Registrable Securities.
2. REGISTRATION PROCEDURES. If and whenever the Company is
required by provisions of this Agreement to use its best efforts to effect
the registration of any of the Registrable Securities under the 1933 Act, the
Company shall (except as otherwise provided in this Agreement), as
expeditiously as possible:
(a) prepare and file with the securities and
Exchange Commission (the "Commission") a registration statement and shall use
its best efforts to cause such registration statement to become effective and
remain effective until all the Registrable Securities are sold or become
capable of being publicly sold without registration under the 1933 Act;
(b) prepare and file with the Commission such
amendments and supplements to such registration statement and the prospectus
used in connection therewith as may be necessary to keep such registration
statement effective and to comply with the provisions of the 1933 Act with
respect to the sale or other disposition of all securities covered by such
registration statement whenever the Holders of more than 50% of the
Registrable Securities referred to in Paragraph 1(c) above shall
3
<PAGE>
desire to sell or otherwise dispose of the same (including prospectus
supplements with respect to the sales of securities from time to time in
connection with a registration statement pursuant to Rule 415 of the
commission);
(c) furnish to the Holders such numbers of copies
of a summary prospectus or other prospectus, including a preliminary
prospectus or any amendment or supplement to any prospectus, in conformity
with the requirements of the 1933 Act, and such other documents, as the
Holders may reasonably request in order to facilitate the public sale or
other disposition of the securities owned by the Holders;
(d) use its best efforts to register and qualify
the securities covered by such registration statement under such other
securities or blue sky laws of such jurisdictions as the Holders shall
reasonably request, and do any and all other acts and things which may be
necessary or advisable to enable such Holders to consummate the public sale
or other disposition in such jurisdictions of the securities owned by such
Holders, except that the Company shall not for any such purpose be required
to qualify to do business as a foreign corporation in any jurisdiction
wherein it is not so qualified, to file therein any general consent to
service of process or to be subject to any escrow or other similar conditions;
(e) use its best efforts to list such securities on
any securities exchange on which any securities of the Company are then
listed, if the listing of such securities is then permitted under the rules
of such exchange;
(f) enter into and perform its obligations under an
underwriting agreement, if the offering is an underwritten offering, in usual
and customary form, with the managing underwriter or underwriters of such
underwritten offering;
(g) notify the Holders of Registrable Securities
covered by such registration statement, at any time when a prospectus
relating thereto covered by such registration statement is required to be
delivered under the 1933 Act, of the happening of any event of which it has
knowledge as a result of which the prospectus included in such registration
statement, as then in effect, includes an untrue statement of a material fact
or omits to state a material fact required to be stated therein or necessary
to make the statements therein not misleading in the light of the
circumstances then existing; and
(h) take such other actions as shall be reasonably
requested by any Holders to facilitate the registration and sale of the
Registrable Securities; provided, however, that the Company shall not be
obligated to take any actions not
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specifically required elsewhere herein which in the aggregate would cost in
excess of $1,000.
3. RESTRICTIONS ON TRANSFER OF REGISTRABLE SECURITIES. The
Holder agrees that he will not sell, transfer, assign, hypothecate or
otherwise dispose of any of the Registrable Securities for a period of
twenty-four (24) months from the effective date of the registration statement
pursuant to which its Registrable Securities have been registered without the
prior written consent of the Underwriter of the Company's initial public
offering.
4. EXPENSES. All expenses incurred in any registration of
the Holder's Registrable Securities under this Agreement shall be paid by the
Company, including, without limitation, printing expenses, fees and
disbursements of counsel for the Company, expenses of any audits to which the
Company shall agree or which shall be necessary to comply with governmental
requirements in connection with any such registration, all registration and
filing fees for the Holders' Registrable Securities under federal and State
securities laws, and expenses of complying with the securities or blue sky
laws of any jurisdictions pursuant to Section 2(d); provided, however, the
Company shall not be liable for (a) any discounts or commissions to any
underwriter; (b) any stock transfer taxes incurred with respect to
Registrable Securities sold in the Offering or (c) the fees and expenses of
counsel for any Holder, provided that the Company will pay the costs and
expenses of Company counsel when the Company's counsel is representing any or
all selling security holders.
5. INDEMNIFICATION. In the event any Registrable Securities
are included in a registration statement pursuant to this Agreement:
(a) COMPANY INDEMNITY. Without limitation of any
other indemnity provided to any Holder, either in connection with the
Offering or otherwise, to the extent permitted by law, the Company shall
indemnify and hold harmless each Holder, the affiliates, officers, directors
and partners of each Holder, any underwriter (as defined in the 1933 Act) for
such Holder, and each person, if any, who controls such Holder or underwriter
(within the meaning of the 1933 Act or the Securities Exchange Act of 1934
(the "Exchange Act"), against any losses, claims, damages or liabilities
(joint or several) to which they may become subject under the 1933 Act, the
Exchange Act or other federal or state law, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are
based upon any of the following statements, omissions or violations
(collectively a "VIOLATION"): (i) any untrue statement or alleged untrue
statement of a material fact contained in such registration statement
including any preliminary prospectus or final prospectus contained therein or
any amendments or
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supplements thereto, (ii) the omission or alleged omission to state therein 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, (iii) any violation or alleged violation by the Company of
the 1933 Act, the Exchange Act, or any state securities law or any rule or
regulation promulgated under the 1933 Act, the Exchange Act or any state
securities law, and in each case, the Company shall reimburse the Holder,
affiliate, officer or director or partner, underwriter or controlling person
for any legal or other expenses reasonably incurred by them in connection
with investigating or defending any such loss, claim, damage, liability or
action; provided, however, that the Company shall not be liable to any Holder
in any such case for any such loss, claim, damage, liability or action to the
extent that it arises out of or is based upon a Violation which occurs in
reliance upon and in conformity with written information furnished expressly
for use in connection with such registration by the Holder or any other
officer, director or controlling person thereof.
(b) HOLDER INDEMNITY. The Holder shall indemnify
and hold harmless the Company, its affiliates, its counsel, officers,
directors, shareholders and representatives, any underwriter (as defined in
the 1933 Act) and each person, if any, who controls the Company or the
underwriter (within the meaning of the 1933 Act or the Exchange Act) ,
against any losses, claims, damages, or liabilities (joint or several) to
which they may become subject under the 1933 Act, the Exchange Act or any
state securities law, and in each case the Holder shall reimburse the
Company, affiliate, officer or director or shareholder, underwriter or
controlling person for any legal or other expenses reasonably incurred by
them in connection with investigating or defending any such loss, claim,
damage, liability or action; insofar as such losses, claims, damages or
liabilities (or actions and respect thereof) arise out of or are based upon a
Violation which occurs in reliance upon and in conformity with written
information furnished expressly by such Holder or any other officer, director
or controlling person thereof to the Company in connection with the
registration of Registrable Securities. Notwithstanding the above, the
Holder's indemnification shall be limited to the dollar value of the
securities being registered for the account of the Holder.
(c) NOTICE; RIGHT TO DEFEND. Promptly after
receipt by an indemnified party under this Section 5 of notice of the
commencement of any action (including any governmental action), such
indemnified party shall, if a claim in respect thereof is to be made against
any indemnifying party under this Section 5, deliver to the indemnifying
party a written notice of the commencement thereof and the indemnifying party
shall have the right to participate in and if the indemnifying party agrees
in writing that it will be responsible for any costs, expenses
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judgments, damages and losses incurred by the indemnified party with respect
to such claim, jointly with any other indemnifying party similarly noticed,
to assume the defense thereof with counsel mutually satisfactory to the
parties; provided, however, that an indemnified party shall have the right to
retain its own counsel in combination with other parties who have entered
into substantially identical agreements, with the fees and expenses to be
paid by the indemnifying party, if the indemnified party based upon advice of
counsel reasonably believes that representation of such indemnified party by
the counsel retained by the indemnifying party would be inappropriate due to
actual or potential differing interests between such indemnified party and
any other party represented by such counsel in such proceeding. The failure
to deliver written notice to the indemnifying party within a reasonable time
of the commencement of any such action shall relieve such indemnifying party
of any liability to the indemnified party under this Agreement only if and to
the extent that such failure is prejudicial to its ability to defend such
action, and the omission so to deliver written notice to the indemnifying
party will not relieve it of any liability that it may have to any
indemnified party otherwise than under this Agreement. There can be no
settlement without the indemnifyng party's prior consent.
(d) CONTRIBUTION. If the indemnification provided
for in this Agreement is held by a court of competent jurisdiction to be
unavailable to an indemnified party with respect to any loss,, liability,
claim, damage or expense referred to therein, then the indemnifying party, in
lieu of indemnifying such indemnified party thereunder, shall contribute to
the amount paid or payable by such indemnified party as a result of such
loss, liability, claim, damage or expense in such proportion as is
appropriate to reflect the relative fault of the indemnifying party on the
one hand and of the indemnified party on the other hand in connection with
the statements or omissions which resulted in such loss, liability, claim,
damage or expense as well as any other relevant equitable considerations.
The relevant fault of the indemnifying party and the indemnified party shall
be determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission to state a
material fact relates to information supplied by the indemnifying party or by
the indemnified party and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
Notwithstanding the foregoing, the amount the Holder shall be obligated to
contribute pursuant to the Agreement shall be limited to an amount equal to
the proceeds to the Holder of the Registrable Securities sold pursuant to the
registration statement which gives rise to such obligation to contribute
(less the aggregate amount of any
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damages which the Holder has otherwise been required to pay in respect of
such loss, claim, damage, liability or action or any substantially similar
loss, claim, damage, liability or action arising from the sale of such
Registrable Securities).
(e) SURVIVAL OF INDEMNITY. The indemnification
provided by this Agreement shall be a continuing right to indemnification and
shall survive the registration and sale of any Registrable Securities by any
person entitled to indemnification hereunder and the expiration or
termination of this Agreement.
6. ASSIGNMENT OF REGISTRATION RIGHTS. The rights of the
Holder under this Agreement, including the rights to cause the Company to
register Registrable Securities may not be assigned without the written prior
consent of the Company. In the event of any transfer, the transfer will only
be permitted if the transferee agrees to be bound by the provisions of this
Agreement.
7. REMEDIES.
(a) TIME IS OF THE ESSENCE. The Company agrees
that time is of the essence of each of the covenants contained herein and
that, in the event of a dispute hereunder, this Agreement is to be
interpreted and construed in a manner that will enable the Holder to sell its
Registrable Securities as quickly as possible after such Holders have
indicated to the Company that they desire their Registrable Securities to be
registered. Any delay on the part of the Company not expressly permitted
under this Agreement, shall be deemed a material breach of this Agreement.
(b) REMEDIES UPON DEFAULT OR DELAY. The Company
acknowledges the breach of any part of this Agreement may cause irreparable
harm to the Holder and that monetary damages alone may be inadequate. The
Company therefore agrees that the Holder shall be entitled to injunctive
relief or such other applicable remedy as a court of competent jurisdiction
may provide. Nothing contained herein will be construed to limit a Holder's
right to any remedies at law, including recovery of damages f or breach of
any part of this Agreement.
8. NOTICES.
(a) All communications under this Agreement shall
be in writing and shall be mailed by certified mail return receipt requested,
postage prepaid, or telegraphed or telexed with confirmation of receipt or
delivered by hand or by overnight delivery service,
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(i) If to the Company, at:
Apollo International of Delaware, Inc.
6542 N. U.S. Highway 41, Suite 215
Apollo Beach, Florida 33572
Attention: David W. Clarke
or at such other address as it may have furnished in writing to the Holder of
Registrable Securities at the time outstanding, or
(ii) if to the Holder of any Registrable
Securities, to the address of such Holder as it appears in the stock ledger
of the Company.
(b) Any notice so addressed, when mailed by
certified mail return receipt requested shall be deemed to be given three
days after so mailed, when telegraphed or telexed shall be deemed to be given
when transmitted, or when delivered by hand or overnight delivery service
shall be deemed to be given when delivered.
9. SUCCESSORS AND ASSIGNS. Except as otherwise expressly
provided herein, this Agreement shall inure to the benefit of and be binding
upon the successors and permitted assigns of the Company and the Holder.
10. AMENDMENT, WAIVER AND TERMINATION. This Agreement may be
amended, and the observance of any term of this Agreement may be waived, but
only with the written consent of the Company and the Holder. No delay on the
part of any party in the exercise of any right, power or remedy shall operate
as a waiver thereof, nor shall any single or partial exercise by any party of
any right, power or remedy preclude any other or further exercise thereof, or
the exercise of any other right, power or remedy. Upon the conversion of the
Warrants offered in the offering into identical warrants as are included in
any registration statement pursuant to paragraph 1(a) hereof, this Agreement
shall terminate and be null and void. Thereafter, the Warrants shall be
governed by the public warrant agreement relating to such warrants.
11. COUNTERPARTS. One or more counterparts of this Agreement
may be signed by the parties, each of which shall be an original but all of
which together shall constitute one and the same instrument.
12. GOVERNING LAW. This Agreement shall be construed in
accordance with and governed by the internal laws of the State of Florida,
without giving effect to conflicts of law principles.
13. INVALIDITY OF PROVISIONS. If any provision of this
Agreement is or becomes invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the
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remaining provisions contained herein shall not be affected thereby.
14. HEADINGS. The headings in this Agreement are for
convenience of reference only and shall not be deemed to alter or affect the
meaning or interpretation of any provisions hereof.
IN WITNESS WHEREOF, the undersigned have executed this
Agreement as of the date first set forth above.
APOLLO INTERNATIONAL OF DELAWARE, INC.
By:
----------------------- ----------------------------
Name: David W. Clarke Signature of Holder
Position: President
--------------------------------
Print Name of Holder
--------------------------------
--------------------------------
Print Address of Holder
<PAGE>
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (the "Agreement") dated as of ,
1996, by and between Apollo International of Delaware, Inc., a Delaware
corporation (the "Company"), and the person whose name appears on the signature
page attached hereto (individually a "Holder", and together with the holders of
other Units issued in the private placement offering hereinafter described, the
"Holders").
WHEREAS, pursuant to a Confidential Private Placement Memorandum dated June
25, 1996 (the "Confidential Memorandum") and a subscription agreement annexed as
an exhibit thereto (the "Subscription Agreement"), the Company is offering (the
"Offering") a minimum of 25 units (the "Minimum Offering") and a maximum of 50
units (the "Maximum Offering") (the "Units"), each Unit consisting of (i) 10,000
shares of the Company's Common Stock, $.01 par value per share (the "Shares"),
and (ii) Common Stock Purchase Warrants (the "Warrants") exercisable to purchase
up to 5,000 shares of Common Stock at a purchase price of $5.50 per share (the
"Warrant Shares"), such Offering being exempt from the registration requirements
of the Securities Act of 1933, as amended (the "1933 Act") ;
WHEREAS, pursuant to the terms of and in order to induce the Holders to
enter into the Subscription Agreement to purchase the Units, the Company and the
Holders have agreed to enter into this Agreement;
WHEREAS, it is intended by the Company and the Holders that this Agreement
shall become effective immediately upon the acquisition by the Holder of the
Unit(s);
NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained herein and in the Subscription Agreement, the Company hereby agrees as
follows:
REGISTRATION RIGHTS.
1. REGISTRATION RIGHTS
a. "PIGGYBACK REGISTRATION". If the Company at any time proposes to
register any of its Common Stock under the 1933 Act (other than in connection
with a merger or pursuant to Form S-8 or other comparable form), the Company
shall request that the managing underwriter (if any) of such underwritten
offering include the Shares, and if warrants are being offered in the
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public offering, the Warrants, and the Warrant Shares (together with the Shares
and Warrants, the "Registrable Securities") in such registration. If such
managing underwriter agrees to include the Registrable Securities in the
underwritten offering, the Company shall at such time give prompt written notice
to all Holders of its intention to effect such registration and of such Holders'
rights under such proposed registration, and upon the request of any such Holder
delivered to the Company within twenty (20) days after giving such notice (which
request shall specify the Registrable Securities intended to be disposed of by
such Holder and the intended method of disposition thereof), the Company shall
include such Registrable Securities held by such Holder requested to be included
in such registration; provided, however, that:
(i) If, at any time after giving such written notice of the Company's
intention to register any of the Holders' Registrable Securities and prior to
the effective date of the registration statement filed in connection with such
registration, the Company shall determine for any reason not to register or to
delay the registration of such Registrable Securities, at its sole election, the
Company may give written notice of such determination to each Holder and
thereupon shall be relieved of its obligation to register any Registrable
Securities issued or issuable in connection with such registration (but not from
its obligation to pay registration expenses in connection therewith or to
register the Registrable Securities in a subsequent registration); and in the
case of a determination to delay a registration shall thereupon be permitted to
delay registering any Registrable Securities for the same period as the delay in
respect of securities being registered for the Company's own account.
(ii) If the managing underwriter in such underwritten offering shall
advise the Company that it declines to include a portion or all of the
Registrable Securities requested by the Holders to be included in the
registration statement, then distribution of all or a specified portion of the
Registrable Securities shall be excluded from such registration statement (in
case of an exclusion as to a portion of the Registrable Securities, such portion
to be excluded shall be allocated among such holders and any affiliates of the
Company including securities to be registered in such underwritten offering in
proportion to the respective number of Registrable Securities and other
securities requested to be registered by each such Holder and affiliate). In
such event the Company shall give the applicable Holders prompt notice of the
number of Registrable Securities excluded from such registration at the request
of the managing underwriter. No such exclusion shall reduce the securities
being offered by the Company for its own account to be included in such
registration statement.
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(b) OPTION TO INCLUDE REGISTRABLE SECURITIES IN OFFERING. The
Holders, subject to the provisions of Section 1, shall have the option to
include their Registrable Securities in the Company's underwritten offering.
The Company shall not be required to include any of the Holders' Registrable
Securities in an underwritten offering of the Company's securities unless such
Holders accept the terms of the underwriting as agreed upon between the Company
and the underwriters selected by it (provided such terms are usual and customary
for selling stockholders) and the Holders agree to execute and/or deliver such
documents in connection with such registration as the Company or the managing
underwriter may reasonably request.
(c) MANDATORY REGISTRATION. In the event the Holders have not had
their Registrable Securities included in a registration statement pursuant to
Section 1(a), the Company shall use its best efforts to effect the registration
of all remaining Registrable Securities as soon as practicable, but not later
than 180 days after the effective date of such registration statement; provided,
however, that such period may be extended or delayed by the Company for one
period of up to 90 days if, upon the advice of counsel at the time such
registration is required to be filed, or at the time the Company is required to
exercise its best efforts to cause such registration statement to become
effective, such delay is advisable and in the best interests of the Company
because of the existence of non-public material information, or to allow the
Company to complete any pending audit of its financial statements, without
requiring the Company to perform any audit not otherwise necessary.
(d) COOPERATION WITH COMPANY. The Holder will cooperate with the
Company in all respects in connection with this Agreement, including, timely
supplying all information reasonably requested by the Company and executing and
returning all documents reasonably requested in connection with the registration
and sale of the Registrable Securities.
2. REGISTRATION PROCEDURES. If and whenever the Company is required by
any of the provisions of this Agreement to use its best efforts to effect the
registration of any of the Registrable Securities under the 1933 Act, the
Company shall (except as otherwise provided in this Agreement), as expeditiously
as possible:
(a) prepare and file with the Securities and Exchange Commission (the
"Commission") a registration statement and shall use its best efforts to cause
such registration statement to become effective and remain effective until all
the Registrable Securities are sold or become capable of being publicly sold
without registration under the 1933 Act.
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(b) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in connection
therewith as may be necessary to keep such registration statement effective and
to comply with the provisions of the 1933 Act with respect to the sale or other
disposition of all securities covered by such registration statement whenever
the Holders of more than 50% of the Registrable Securities referred to in
paragraph 1(c) above shall desire to sell or otherwise dispose of the same
(including prospectus supplements with respect to the sales of securities or the
exercise of Warrants from time to time in connection with a registration
statement pursuant to Rule 415 of the Commission);
(c) furnish to the Holders such numbers of copies of a summary
prospectus or other prospectus, including a preliminary prospectus or any
amendment or supplement to any prospectus, in conformity with the requirements
of the 1933 Act, and such other documents, as the Holder may reasonably request
in order to facilitate the public sale or other disposition of the securities
owned by the Holder;
(d) use its best efforts to register and qualify the securities
covered by such registration statement under such other securities or blue sky
laws of such jurisdictions as the Holders shall reasonably request, and do any
and all other acts and things which may be necessary or advisable to enable such
Holder to consummate the public sale or other disposition in such jurisdictions
of the securities owned by such Holders, except that the Company shall not for
any such purpose be required to qualify to do business as a foreign corporation
in any jurisdiction wherein it is not so qualified or to file therein any
general consent to service of process or to be subject to any escrow or other
similar conditions;
(e) use its best efforts to list such securities on any securities
exchange on which any securities of the Company is then listed, if the listing
of such securities is then permitted under the rules of such exchange;
(f) enter into and perform its obligations under an underwriting
agreement, if the offering is an underwritten offering, in usual and customary
form, with the managing underwriter or underwriters of such underwritten
offering;
(g) notify the Holders of Registrable Securities covered by such
registration statement, at any time when a prospectus relating thereto covered
by such registration statement is required to be delivered under the 1933 Act,
of the happening of any event of which it has knowledge as a result of which the
prospectus included in such registration statement, as then in effect, includes
an untrue statement of a material fact or omits to state a material fact
required to be stated therein or
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necessary to make the statements therein not misleading in the light of the
circumstances then existing; and
(h) furnish, at the request of the Holders on the date such
Registrable Securities are delivered to the underwriters for sale pursuant to
such registration or, if such Registrable Securities are not being sold through
underwriters, on the date the registration statement with respect to such
Registrable Securities becomes effective, (i) an opinion, dated such date, of
the counsel representing the Company for the purpose of such registration,
addressed to the underwriters, if any, and to the Holder making such request,
covering such legal matters with respect to the registration in respect of which
such opinion is being given as the Holder of such Registrable Securities may
reasonably request and are customarily included in such an opinion and (ii)
letters, dated, respectively, (1) the effective date of the registration
statement and (2) the date such Registrable Securities are delivered to the
underwriters, if any, for sale pursuant to such registration, from a firm of
independent certified public accountants of recognized standing selected by the
Company, addressed to the underwriters, if any, and to the Holder making such
request, covering such financial, statistical and accounting matters with
respect to the registration in respect of which such letters are being given as
the Holder of such Registrable Securities may reasonably request and are
customarily included in such letters; and
(i) take such other actions as shall be reasonably requested by any
Holders to facilitate the registration and sale of the Registrable Securities;
provided, however, that the Company shall not be obligated to take any actions
not specifically required elsewhere herein which in the aggregate would cost in
excess of $2,000.
3. RESTRICTIONS ON TRANSFER OF REGISTRABLE SECURITIES. The Holder agrees
that he will not sell or transfer any of the Registrable Securities for a period
of thirteen (13) months from the effective date (the "Effective Date") of the
registration statement pursuant to which its Registrable Securities have been
registered in an offering (i) without the prior written consent of the Placement
Agent if the Placement Agent is a member firm of the National Association of
Securities Dealers, Inc. (the "NASD") or another self-regulatory organization at
the time of the Effective Date, or (ii) without the prior written consent of the
underwriter of such offering if the Placement Agent is not a member firm of the
NASD or another self-regulatory organization at the time of the Effective Date.
4. EXPENSES. All expenses incurred in any registration of the Holder's
Registrable Securities under this Agreement shall be paid by the Company,
including, without limitation, printing expenses, fees and disbursements of
counsel for the Company,
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<PAGE>
expenses of any audits to which the Company shall agree or which shall be
necessary to comply with governmental requirements in connection with any such
registration, all registration and filing fees for the Holders' Registrable
Securities under federal and State securities laws, and expenses of complying
with the securities or blue sky laws of any jurisdictions pursuant to Section
2(d); provided, however, the Company shall not be liable for (a) any discounts
or commissions to any underwriter; (b) any stock transfer taxes incurred with
respect to Registrable Securities sold in the Offering or (c) the fees and
expenses of counsel for any Holder, provided that the Company will pay the costs
and expenses of Company counsel when the Company's counsel is representing any
or all selling security holders.
5. INDEMNIFICATION. In the event any Registrable Securities are included
in a registration statement pursuant to this Agreement:
(a) COMPANY INDEMNITY. Without limitation of any other indemnity
provided to any Holder, either in connection with the Offering or otherwise, to
the extent permitted by law, the Company shall indemnify and hold harmless each
Holder, the affiliates, officers, directors and partners of each Holder, any
underwriter (as defined in the 1933 Act) for such Holder, and each person, if
any, who controls such Holder or underwriter (within the meaning of the 1933 Act
or the Securities Exchange Act of 1934 (the "Exchange Act"), against any losses,
claims, damages or liabilities (joint or several) to which they may become
subject under the 1933 Act, the Exchange Act or other federal or state law,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon any of the following statements,
omissions or violations (collectively a "VIOLATION"): (i) any untrue statement
or alleged untrue statement of a material fact contained in such registration
statements including any preliminary prospectus or final prospectus contained
therein or any amendments or supplements thereto, (ii) the omission or alleged
omission to state therein 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, (iii) any violation or alleged violation
by the Company of the 1933 Act, the Exchange Act, or any state securities law or
any rule or regulation promulgated under the 1933 Act, the Exchange Act or any
state securities law, and in each case, the Company shall reimburse the Holder,
affiliate, officer or director or partner, underwriter or controlling person for
any legal or other expenses incurred by them in connection with investigating
or defending any such loss, claim, damage, liability or action; provided,
however, that the Company shall not be liable to any Holder in any such case for
any such loss, claim, damage, liability or action to the extent that it arises
out of or is based upon a Violation which occurs in reliance upon and in
conformity with written information furnished expressly for use in
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connection with such registration by the Holder or any other officer, director
or controlling person thereof.
(b) HOLDER INDEMNITY. The Holder shall indemnify and hold harmless
the Company, its affiliates, its counsel, officers, directors, shareholders and
representatives, any underwriter (as defined in the 1933 Act) and each person,
if any, who controls the Company or the underwriter (within the meaning of the
1933 Act or the Exchange Act), against any losses, claims, damages, or
liabilities (joint or several) to which they may become subject under the 1933
Act, the Exchange Act or any state securities law, and the Holder shall
reimburse the Company, affiliate, officer or director or partner, underwriter or
controlling person for any legal or other expenses incurred by them in
connection with investigating or defending any such loss, claim, damage,
liability or action; insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon any statements or
information provided by such Holder to the Company in connection with the offer
or sale of Registrable Securities.
(c) NOTICE; RIGHT TO DEFEND. Promptly after receipt by an
indemnified party under this Section 5 of notice of the commencement of any
action (including any governmental action), such indemnified party shall, if a
claim in respect thereof is to be made against any indemnifying party under this
Section 5, deliver to the indemnifying party a written notice of the
commencement thereof and the indemnifying party shall have the right to
participate in and if the indemnifying party agrees in writing that it will be
responsible for any costs, expenses, judgments, damages and losses incurred by
the indemnified party with respect to such claim, jointly with any other
indemnifying party similarly noticed, to assume the defense thereof with counsel
mutually satisfactory to the parties; provided, however, that an indemnified
party shall have the right to retain its own counsel, with the fees and expenses
to be paid by the indemnifying party, if the indemnified party reasonably
believes that representation of such indemnified party by the counsel retained
by the indemnifying party would be inappropriate due to actual or potential
differing interests between such indemnified party and any other party
represented by such counsel in such proceeding. The failure to deliver written
notice to the indemnifying party within a reasonable time of the commencement of
any such action shall relieve such indemnifying party of any liability to the
indemnified party under this Agreement only if and to the extent that such
failure is prejudicial to its ability to defend such action, and the omission so
to deliver written notice to the indemnifying party will not relieve it of any
liability that it may have to any indemnified party otherwise than under this
Agreement. There can be no settlement without the indemnifying party's prior
consent.
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(d) CONTRIBUTION. If the indemnification provided for in this
Agreement is held by a court of competent jurisdiction to be unavailable to an
indemnified party with respect to any loss, liability, claim, damage or expense
referred to therein, then the indemnifying party, in lieu of indemnifying such
indemnified party thereunder, shall contribute to the amount paid or payable by
such indemnified party as a result of such loss, liability, claim, damage or
expense in such proportion as is appropriate to reflect the relative fault of
the indemnifying party on the one hand and of the indemnified party on the other
hand in connection with the statements or omissions which resulted in such loss,
liability, claim, damage or expense as well as any other relevant equitable
considerations. The relevant fault of the indemnifying party and the
indemnified party shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission to state a material fact relates to information supplied by the
indemnifying party or by the indemnified party and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. Notwithstanding the foregoing, the amount the Holder
shall be obligated to contribute pursuant to the Agreement shall be limited to
an amount equal to the proceeds to the Holder of the Registrable Securities sold
pursuant to the registration statement which gives rise to such obligation to
contribute (less the aggregate amount of any damages which the Holder has
otherwise been required to pay in respect of such loss, claim, damage, liability
or action or any substantially similar loss, claim, damage, liability or action
arising from the sale of such Registrable Securities).
(e) SURVIVAL OF INDEMNITY. The indemnification provided by this
Agreement shall be a continuing right to indemnification and shall survive the
registration and sale of any Registrable Securities by any person entitled to
indemnification hereunder and the expiration or termination of this Agreement.
6. ASSIGNMENT OF REGISTRATION RIGHTS. The rights of the Holder under
this Agreement, including the rights to cause the Company to register
Registrable Securities may not be assigned without the written prior consent of
the Company.
7. LIMITATIONS ON OTHER REGISTRATION RIGHTS. Except as otherwise set
forth in this Agreement, the Company shall not, without the prior written
consent of the Holder of Registrable Securities, file any registration statement
filed on behalf of any person (including the Company) other than the Holder to
become effective during any period when the Company is not in compliance with
this Agreement.
8
<PAGE>
8. REMEDIES.
(a) TIME IS OF THE ESSENCE. The Company agrees that time is of the
essence of each of the covenants contained herein and that, in the event of a
dispute hereunder, this Agreement is to be interpreted and construed in a manner
that will enable the Holder to sell its Registrable Securities as quickly as
possible after such Holders have indicated to the Company that they desire their
Registrable Securities to be registered. Any delay on the part of the Company
not expressly permitted under this Agreement, whether material or not, shall be
deemed a material breach of this Agreement.
(b) REMEDIES UPON DEFAULT OR DELAY. The Company acknowledges the
breach of any part of this Agreement may cause irreparable harm to the Holder
and that monetary damages alone may be inadequate. The Company therefore agrees
that the Holder shall be entitled to injunctive relief or such other applicable
remedy as a court of competent jurisdiction may provide. Nothing contained
herein will be construed to limit a Holder's right to any remedies at law,
including recovery of damages for breach of any part of this Agreement.
9. NOTICES.
(a) All communications under this Agreement shall be in writing and
shall be mailed by first class mail, postage prepaid, or telegraphed or telexed
with confirmation of receipt or delivered by hand or by overnight delivery
service,
i. If to the Company, at:
Apollo International of Delaware, Inc.
6542 U.S. Highway 41
Suite 215
Apollo Beach, Florida 33572
Attn: President
or at such other address as it may have furnished in writing to the Holder of
Registrable Securities at the time outstanding, or
ii. if to the Holder of any Registrable Securities, to the address of
such Holder as it appears in the stock ledger of the Company.
(b) Any notice so addressed, when mailed by registered or certified
mail shall be deemed to be given three days after so mailed, when telegraphed or
telexed shall be deemed to be given when transmitted, or when delivered by hand
or overnight shall be deemed to be given when delivered.
9
<PAGE>
10. SUCCESSORS AND ASSIGNS. Except as otherwise expressly provided
herein, this Agreement shall inure to the benefit of and be binding upon the
successors and permitted assigns of the Company and the Holder.
11. AMENDMENT AND WAIVER. This Agreement may be amended, and the
observance of any term of this Agreement may be waived, but only with the
written consent of the Company and the Holder; provided, however, that no such
amendment or waiver shall take away any registration right of the Holder of
Registrable Securities or reduce the amount of reimbursable costs to the Holder
of Registrable Securities in connection with any registration hereunder without
the consent of the Holder. No delay on the part of any party in the exercise of
any right, power or remedy shall operate as a waiver thereof, nor shall any
single or partial exercise by any party of any right, power or remedy preclude
any other or further exercise thereof, or the exercise of any other right, power
or remedy.
12. COUNTERPARTS. One or more counterparts of this Agreement may be
signed by the parties, each of which shall be an original but all of which
together shall constitute one and the same instrument.
13. GOVERNING LAW. This Agreement shall be construed in accordance with
and governed by the internal laws of the State of New York, without giving
effect to conflicts of law principles.
14. INVALIDITY OF PROVISIONS. If any provision of this Agreement is or
becomes invalid, illegal or unenforceable in any respect, the validity, legality
and enforceability of the remaining provisions contained herein shall not be
affected thereby.
15. HEADINGS. The headings in this Agreement are for convenience of
reference only and shall not be deemed to alter or affect the meaning or
interpretation of any provisions hereof.
10
<PAGE>
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the
date first set forth above.
APOLLO INTERNATIONAL OF DELAWARE, INC.
-------------------------
Signature of Holder
By:
----------------------------- -------------------------
David W. Clarke, Print Name of Holder
President and Chief Executive
Officer
-------------------------
-------------------------
Print Address of Holder
11
<PAGE>
Exhibit 10.1
APOLLO INTERNATIONAL OF DELAWARE, INC.
1996 STOCK OPTION PLAN
Adopted: June 21, 1996
Effective Date: June 21, 1996
Approved by Stockholders: June 21, 1996
<PAGE>
TABLE OF CONTENTS
-----------------
Section Subject Page
- ------- ------- ----
1. Title....................................... 1
2. Purpose..................................... 1
3. Definitions................................. 1
4. Stock Reserved for Options.................. 2
5. Eligibility................................. 3
6. Grants of Options........................... 3
7. Purchase Price.............................. 4
8. Term of Options............................. 5
9. Exercise of Options......................... 5
10. Payment for Option Shares................... 7
11. Administration of Plan...................... 8
12. Transferability of Options.................. 9
13. No Rights as Shareholder.................... 9
14. Adjustment Upon Changes in Capitalization
and the Like................................ 9
15. Amendment and Termination................... 10
16. Effectiveness of the Plan................... 11
17. General Provisions.......................... 11
18. Governing Law............................... 12
<PAGE>
APOLLO INTERNATIONAL OF DELAWARE, INC.
--------------------------------------
1996 STOCK OPTION PLAN
----------------------
Section 1.
TITLE
-----
This plan shall be known as the "Apollo International of
Delaware, Inc. 1996 Stock Option Plan."
Section 2.
PURPOSE
-------
The Apollo International of Delaware, Inc. 1996 Stock Option Plan
establishes a method of granting options to purchase the Common Stock of the
Corporation in order to encourage stock ownership by officers, directors and key
management employees of the Corporation, to provide an incentive for such
persons to expand and improve the profits and prosperity of the Corporation, and
to assist the Corporation in attracting key personnel.
Section 3.
DEFINITIONS
-----------
3.1 "Board" means the Board of Directors of the Corporation.
3.2 "Committee" means the committee appointed by the Board
pursuant to Section 11.1 of the Plan.
3.3 "Common Stock" means shares of the capital common stock
of the Corporation, $.01 par value.
3.4 "Corporation" means Apollo International of Delaware, Inc.,
a Delaware corporation.
3.5 "Disability" means inability to engage in any substantial
gainful activity by reason of any medically determinable physical or mental
impairment that can be expected to result in death or that has lasted or can
be expected to last for a continuous period of not less than twelve months,
as determined pursuant to Section 22(e)(3) of the Internal Revenue Code.
3.6 "Disinterested Person" shall mean a Director who is not,
during the one year prior to his or her service as an administrator of this
Plan, or during such service, granted or awarded equity securities pursuant
to this Plan or any other plan of the Company or any of its affiliates,
except that:
(a) participation in a formula plan meeting the conditions
in paragraph (c)(2)(ii) of Rule 16b-3
<PAGE>
promulgated under the Securities Exchange Act shall not
disqualify a Director from being a Disinterested Person;
(b) participation in an ongoing securities acquisition plan
meeting the conditions in paragraph (d)(2)(i) of Rule 16b-3
promulgated under the Securities Exchange Act shall not
disqualify a Director from being a Disinterested Person; and
(c) an election to receive an annual retainer fee in either
cash or an equivalent amount of securities, or partly in cash and
partly in securities, shall not disqualify a Director from being
a Disinterested Person.
3.7 "Employee" means a full time, salaried employee of any
Participating Corporation, including an employee-officer or employee-director
of any Participating Corporation. The payment of a director's fee by a
Participation Corporation shall not be sufficient to constitute "employment"
by the Participating Corporation.
3.8 "Incentive Stock Option" means an Option that is an
"incentive stock option" as defined in Section 422(b) of the Internal Revenue
Code.
3.9 "Internal Revenue Code" means the United States Internal
Revenue Code of 1986, or any of its successors, and applicable rules and
regulations promulgated thereunder, each as amended through the date of
adoption of the Plan, or as each may in the future be amended and applicable
to the Plan.
3.10 "Non-qualified Stock Option" means an Option that is
not an Incentive Stock Option.
3.11 "Option" means any option granted under the Plan,
including both Incentive Stock Options and Non-qualified Stock Options.
3.12 "Option"Agreement" means any agreement pursuant to
the Plan between the Corporation and an Employee regarding any Option.
3.13 "Optionee" means an Employee to whom an Option has been
granted and who has delivered to the Corporation or a Participating
Corporation a signed Option Agreement pursuant to SECTION 6.6 of the Plan.
3.14 "Option Shares" means shares of stock of the Corporation
that are issued or may be required to be issued upon exercise of an Option
and shares that are issued
<PAGE>
thereafter with respect to such shares, including shares issued by reason of a
stock split, consolidation, dividend, stock exchange, recapitalization,
reclassification or the like.
3.15 "Participating Corporation" means the Corporation and any
present or future parent or subsidiary of the Corporation that: (a) the Board
elects to treat as a Participating Corporation and (b) agrees to be a
Participating Corporation.
3.16 "Plan" means this Apollo International of Delaware, Inc.
1996 Stock Option Plan.
3.17 "Securities Exchange Act" means the Securities Exchange
Act of 1934.
Section 4.
STOCK RESERVED FOR OPTIONS
--------------------------
4.1 Subject to adjustment in accordance with the provisions of
SECTION 14.1 of the Plan, 350,000 shares of Common Stock, shall be reserved for
issuance upon the exercise of Options granted under the Plan.
4.2 Any or all of the shares subject to Options under the
Plan may be authorized but unissued shares of Common Stock, or issued shares
of Common Stock that have been or shall have been reacquired by the
Corporation, as the Board shall from time to time determine.
4.3 If any Option shall expire or terminate for any reason
without having been exercised in full, the unpurchased shares of Common Stock
previously subject to the Option shall again be available for the purposes of
the Plan.
Section 5.
ELIGIBILITY
-----------
5.1 The Committee may grant Incentive Stock Options only to
individuals determined by the Board to be Employees who are key personnel of
a Participating Corporation and who are in a position to contribute
materially to the a Participating Corporation's continued growth and
development and to its future financial success.
5.2 The Committee may grant Non-qualified Stock Options to
such Employees of any Participating Corporation, or to such other persons, as
the Committee deems appropriate in its sole and exclusive discretion, without
regard to the provisions of SECTION 5.1.
<PAGE>
Section 6.
GRANTS OF OPTIONS
-----------------
6.1 The Committee shall clearly designate and identify each
Option at the time it is granted as either an Incentive Stock Option or a
Non-qualified Stock Option, as the case may be.
6.2 The Committee may grant both Incentive Stock Options and
Non-qualified Stock Options to the same Employee, provided that the exercise
of one such Option does not in any way affect the Employee's right to
exercise the other.
6.3 Nothing contained in the Plan shall be construed to limit
the right of a Participating Corporation to grant options otherwise than
under the Plan for any corporate purpose, including the acquisition, by
purchase, lease, merger, consolidation or otherwise, of the business or
assets of any corporation or other entity.
6.4 The date of granting of an Option shall be the date that
the Committee shall have granted the Option or such other date as the
Committee, in its discretion, may specify at the time that it grants such
Option.
6.5 Upon granting an Option, the Committee shall notify the
Employee to whom the Option shall have been granted and shall deliver to such
Employee a written Option Agreement.
6.6 An Option shall expire thirty (30) days after delivery to
the Employee of the Option Agreement unless an Option Agreement shall have
been signed by the Employee to whom the Option is granted and returned to the
Corporation within such period.
6.7 Notwithstanding any other provision of this Plan, and in
addition to any other requirements of this Plan, Options may not be granted
to an Officer or Employee Director unless the grant of such Options is
authorized by, and all of the terms of such Options are determined by, a
Committee that is appointed in accordance with SECTION 11.1 of this Plan and
all of whose members are Disinterested Persons.
Section 7.
PURCHASE PRICE
--------------
7.1 Subject to SECTION 7.2 of the Plan, the purchase price of
Option Shares granted under an Incentive Stock Option shall be one hundred
(100%) percent of the fair market value of the Option Shares at the time of
granting of the Incentive Stock Option, or such greater amount as
- -4-
<PAGE>
the Committee, in its discretion, may fix. If shares of Common Stock shall
then be traded on a national securities exchange or "over the counter", such
fair market value shall not be less than the mean of the highest and lowest
sales prices or of the Common Stock upon such exchange or quoted by a
recognized specialist of the Common Stock on the day on which the Incentive
Stock Option shall have been granted, or if no sale shall have been made on
such day, upon the next preceding day upon which such a sale shall have been
made. If no sale shall have been made within one month prior or after the
day on which the Incentive Stock Option shall have been granted, such fair
market value shall not be less than the mean between the dealer "bid" and
"ask" prices quoted by a recognized specialist of the Common Stock on the
date upon which the Incentive Stock Option shall have been granted, or if no
such quotation shall have been made on such day, on the next preceding day on
which such a quotation shall have been made. If the shares of Common Stock
are not traded either over-the-counter or on a national securities exchange
at the time that an Incentive Stock Option is granted, the Committee shall
determine such fair market value. In so determining the fair market value of
Common Stock, the Committee shall disregard any restrictions other than a
restriction that, by its terms, will never lapse.
7.2 The purchase price of Option Shares granted under an
Incentive Stock Option granted to an Employee who owns, immediately prior to
the grant to such Employee of an Incentive Stock Option, stock possessing
more than ten (10%) percent of the total combined voting power of all classes
of stock of the Participating Corporation by which he is employed, or any
parent or subsidiary or corporation, shall be at least one hundred ten (110%)
percent of the fair market value of the Common Stock (determined in
accordance with the provisions of SECTION 7.1) at the time that such
Incentive Stock Option is granted. The provisions of section 424(d) of the
Internal Revenue Code shall control determination of the percentage of stock
ownership for the purpose of this SECTION 7.2.
7.3 The purchase price of Option Shares granted under a
Non-qualified Stock Option shall be determined by the Committee, operating in
its sole and exclusive discretion, without regard to the provisions of
SECTIONS 7.1 AND 7.2.
7.4 No variable price Options shall be permitted.
Section 8.
TERM OF OPTIONS
8.1 The Committee, in its discretion, may prescribe in the
Option Agreement the period during which Options may be exercised, provided,
that an Option shall not be
- -5-
<PAGE>
exercisable more than ten years from the date upon which it is granted, and,
provided further, that an Incentive Stock Option granted to an Employee
described in SECTION 7.2 above shall not be exercisable more than five years
from the date upon which it is granted.
8.2 In the Option Agreement, the Committee, in its
discretion, may prescribe any conditions or events upon which the period
during which an Option may be exercised may be shortened or terminated.
Section 9.
EXERCISE OF OPTIONS
9.1 Subject to the provisions of SECTION 9.3 and section 9.9,
the Committee, in its discretion, may prescribe in the Option Agreement the
manner in which, the number and size of the installments (which need not be
equal) for which, and the contingencies upon which an Option may be exercised
during its term.
9.2 No Option or installment thereof shall be exercisable
except in respect of whole shares. Fractional share interests shall be
disregarded, except that they may be accumulated. If an Optionee does not
purchase all the shares that the Optionee shall be entitled to purchase in
any given installment period, or if a fractional share interest shall remain,
then the Optionee's right to purchase the remaining shares or fractional
shares shall continue until expiration of such Option. No less than five
hundred (500) shares may be purchased at one time unless the number purchased
is the total number that may then be purchased under the Option.
9.3 During any calendar year, to the extent that the
aggregate fair market value of the Common Stock (determined in accordance
with the provisions of SECTION 7.1 of the Plan as of the time of the grant of
the incentive stock option) with respect to which incentive stock options are
exercisable for the first time by the Optionee during such calendar year
(under this Plan and all similar plans of the Participating Corporation by
which the Optionee is employed and its parent or subsidiary corporations)
exceeds One Hundred Thousand ($100,000) Dollars, then such option shall be
treated as Non-Qualified Stock Options. In making such determination,
options shall be taken into account in the order in which they are granted.
9.4 Except as otherwise provided in SECTIONS 9.5, 9.6 AND
9.7, no Incentive Stock Option may be exercised unless the Optionee is an
Employee at the time of exercise or the Optionee ceased to be an Employee
within three (3) months prior to the time of exercise. Incentive Stock
Options granted under the Plan shall not be affected by any change
- -6-
<PAGE>
of nature of the Optionee's employment so long as the Optionee continues to
be an Employee. Option Agreements may contain such provisions as the
Committee may approve with reference to the effect of approved leaves of
absence. Nothing in the Plan, or in any Option Agreement, or any Option,
shall confer upon any individual any right to continue in the employ of any
Participating Corporation, or shall interfere in any way with the right of
any Participating Corporation to terminate the employment of any person at
any time.
9.5 If the holder of an Incentive Stock Option retires at the
normal retirement date as prescribed from time to time under any policy of
the Participating Corporation by which he is employed then in force, or at
any other date with the consent of such Participating Corporation or under
any policy of such Participating Corporation then in force, he may exercise
his Incentive Stock Option at any time within three months after such
retirement, to the extent of the number of shares that shall have been
purchasable by him on the date of his retirement.
9.6 If the holder of an Incentive Stock Option ceases to be
employed by a Participating Corporation because of Disability, he may
exercise his Incentive Stock Option within twelve months from the date of
such termination of his employment, to the extent of the number of shares
that shall have been purchasable by him on the date his employment terminated.
9.7 If the holder of an Incentive Stock Option dies (a) while
he is an Employee, (b) within three months after termination of his
employment on account of his retirement (other than by death), or (c) within
twelve months after termination of his employment on account of Disability,
his legatee or legatees or his personal representatives or distributees
(collectively, "legal representatives") may exercise his Incentive Stock
Option to the extent of the number of shares that shall have been purchasable
by the Optionee on the date of death.
9.8 The Committee, in its discretion, shall determine the
extent, if any, to which the holder of a Non-qualified Stock Option may
exercise said Option upon his retirement or Disability, or to which a legal
representative of a deceased holder of a Non-qualified Stock Option may
exercise said Option after the death of the holder.
9.9 Notwithstanding the foregoing, unless otherwise provided
in any Option, each outstanding Option shall become immediately fully
exercisable:
(a) if there occurs any transaction (which shall
include a series of transactions occurring within 60
- -7-
<PAGE>
days or occurring pursuant to a plan), that has the result that
shareholders of the Company immediately before such transaction
cease to own at least 51 percent of the voting stock of the
Company or of any entity that results from the participation of
the Company in a reorganization, consolidation, merger,
liquidation or any other form of corporate transaction;
(b) if the shareholders of the Company shall approve a
plan of merger, consolidation, reorganization, liquidation
or dissolution in which the Company does not survive (unless
the approved merger, consolidation, reorganization,
liquidation or dissolution is subsequently abandoned); or
(c) if the shareholders of the Company shall approve a
plan for the sale, lease, exchange or other disposition of
all or substantially all the property and assets of the
Company (unless such plan is subsequently abandoned).
Section 10.
PAYMENT FOR OPTION SHARES
10.1. Upon exercise of an Incentive Stock Option, the
purchase price of the Common Stock subject to such Incentive Stock Option
shall be paid in full in cash or by certified or bank cashier's check, or by
transfer to the Corporation by the Optionee of stock of the Corporation owned
by the Optionee having a fair market value, on the date of such a transfer,
equal to the purchase price of the Common Stock subject to the Incentive
Stock Option.
10.2 The means of payment for Option Shares purchased under a
Non-qualified Stock Option shall be determined by the Committee, operating in
its sole discretion.
10.3 The proceeds received from a sale of Option Shares
pursuant to exercise of Options shall be added to the general funds of the
Corporation and used for such of its corporate purposes as the Committee
shall determine.
Section 11.
ADMINISTRATION OF THE PLAN
11.1 The Plan shall be administered by a committee appointed
by the Board ("the Committee"), which shall consist of two or more members of
the Board, each of whom shall be Disinterested Persons to the extent required
by SECTION 6.7 The membership of the Committee shall be constituted so as to
comply at all times with the applicable requirements of Rule 16b-3
promulgated under the Securities Exchange Act. The Committee shall serve at
the pleasure of the Board and shall have the powers designated
- -8-
<PAGE>
herein and such other powers as the Board may from time to time confer upon it.
11.2 Subject to the express provisions of the Plan, the
Committee shall have the plenary authority in its discretion to: (a) grant or
refrain from granting Options; (b) determine the individuals to whom, and the
time or times at which, Options shall be granted; the type of Option to be
granted; the number of shares of Common Stock to be subject to each Option;
the class of shares of Common Stock to be subject to each Option; and the
purchase price of the Common Stock subject to each Option; (c) interpret the
Plan; (d) prescribe, amend and rescind rules and regulations relating to the
Plan; (e) determine the terms, conditions and provisions of all Option
Agreements entered into pursuant to the Plan (which need not be identical);
and (f) make all other determinations necessary or advisable for
administration of the Plan.
11.3 The Committee's determinations of all matters referred
to the Committee's discretion shall be final and conclusive. In making such
determinations, the Committee may take into account such factors as the
Committee, in its discretion, may deem relevant, including the nature of the
services rendered by the individuals involved and the present and potential
contributions of such individuals to the success of the Corporation.
11.4 No member of the Committee shall be entitled to
participate in the Plan.
11.5 Except as the Board may otherwise determine, the
Committee may make rules for the conduct of its business, but, unless
otherwise provided by the Board or in such rules, its business shall, to the
greatest extent possible, be conducted in the same manner as is provided by
the By-Laws of the Corporation for the Board.
11.6 No member of the Board or the Committee, nor of the
board of directors of any Participating Corporation, nor any officer,
director, employee or agent of the Corporation or any Participating
Corporation, shall be liable for any action or determination made, or other
action taken, in good faith with respect to the Plan or any Option.
Section 12.
TRANSFERABILITY OF OPTIONS
12.1 No Incentive Stock Option granted under the Plan shall be
transferable otherwise than by will or the laws of descent and distribution, and
an Incentive Stock Option may be exercised, during the lifetime of the Optionee,
only by him.
- -9-
<PAGE>
12.2 The Committee, operating in its sole and exclusive
discretion, shall determine the restrictions, if any, on transferability of
Non-qualified Stock Options without regard to the provisions of SECTION 12.1.
12.3 Each Option Agreement shall contain a warranty and
representation by the Optionee that the Optionee is taking the Option for his
own account and not with a view to its resale, distribution or division among
others.
12.4 Each Option Agreement may contain such provisions
consistent with this Plan as the Committee, in its discretion, may determine
to be appropriate for redemption by the Corporation, or other disposition, of
all Option Shares received by the Optionee (or his legal representatives),
notwithstanding any tax consequences to the Optionee of such redemption or
other disposition.
Section 13.
NO RIGHTS AS SHAREHOLDER
The holder of an Option shall have none of the rights of a
shareholder with respect to the Option Shares until such shares shall have
been issued to him upon exercise of his Option in accordance with the terms
of the Plan.
Section 14.
ADJUSTMENTS UPON CHANGES IN CAPITALIZATION AND THE LIKE
14.1 If any change in the outstanding Common Stock of the
Corporation by reason of stock dividends, stock splits, subdivisions,
exchanges of shares, or recapitalizations, is effected after the effective
date of the Plan without receipt of consideration by the Corporation, then
the aggregate number of shares reserved for issuance upon the exercise of
Options granted under the Plan shall be appropriately adjusted by the Board,
whose determination shall be conclusive. Each Option Agreement may contain
such provisions as the Committee, in its discretion, shall determine to be
appropriate for adjustment of the number of Option Shares and of the purchase
price provided for in such Option. Any such adjustments may provide for
elimination of any fractional shares that might otherwise become subject to
any Option.
14.2 Each Option Agreement may contain such provisions as the
Committee, in its discretion, shall determine to be appropriate for the
termination of, adjustment in or vesting or repurchase of shares and Options,
in the event of the dissolution or liquidation of the Corporation, or upon
any consolidation or merger involving the Corporation, or upon sale or
transfer of all or substantially all of the assets of the Corporation, or
upon exchange by the
- -10-
<PAGE>
stockholders of the Corporation of 80% or more of the shares of the Corporation
for securities of another entity.
14.3 Existence of any Option shall not in any way prevent any
Participating Corporation from engaging in any of the transactions described in
this SECTION 14, nor shall it confer any rights upon the holder of any such
Option to participate in any such transaction, except those expressly conferred
by the Plan and the Option Agreement pursuant to which such Option shall have
been granted.
14.4 Nothing contained in this Plan shall prevent the
assumption of an Option, or the substitution of a new option for an Option,
by any corporation, or the parent or subsidiary of any corporation, that
becomes the employer of an Optionee by reason of a merger, consolidation,
acquisition, reorganization or liquidation; provided, however, that with
respect to an Incentive Stock Option, the following additional conditions are
applicable:
(a) the excess of the aggregate fair market value of
the shares subject to the option immediately after the
substitution or assumption over the aggregate option price
of such shares is not more than the excess of the aggregate
fair market value of the Option Shares immediately before
such substitution or assumption over the aggregate purchase
price of the Option Shares; and
(b) the new option or the assumption of the old Option
does not give the Optionee additional benefits that the
Optionee did not have under the old Option.
Section 15.
AMENDMENT AND TERMINATION
15.1 Unless the Plan shall have been terminated sooner, the
Plan shall terminate on, and no Option shall be granted after the earlier of
the tenth (10th) anniversary of: (a) the date upon or as of which the Plan is
adopted, or (b) the date upon which the Plan is approved by the shareholders
of the Corporation.
15.2 The shareholders of the Corporation may terminate,
modify or amend the Plan at any time.
15.3 The Board also may terminate, modify or amend the Plan
at any time, provided that, without the approval of the shareholders of the
Corporation, the Board shall not (a) materially increase the maximum number
of shares as to which Options may be granted under the Plan (except as the
number provided in SECTION 4.1 may be adjusted from time to time in
accordance with SECTION 14.1), (b) materially increase the benefits accruing
to participants under the
- -11-
<PAGE>
Plan, or (c) materially modify the eligibility requirements for participation
in the Plan.
15.4 Except as may be set forth in a Plan Agreement, no
termination, modification or amendment of the Plan shall adversely affect the
rights of any Optionee under an Option Agreement without such Optionee's
consent.
Section 16.
EFFECTIVENESS OF THE PLAN
The Plan shall become effective only upon adoption by the
Board and approval by the shareholders of the Corporation within twelve (12)
months before or after the date of such adoption by the Board.
Section 17.
GENERAL PROVISIONS
17.1 As it is the intent of the Company that the Plan comply
in all respects with Rule 16b-3 promulgated under the Securities Exchange Act
("Rule 16b-3"), any ambiguities or inconsistencies in construction of the
Plan shall be interpreted to give effect to such intention, and if any
provision of the Plan is found not to be in compliance with Rule 16b-3, such
provision shall be deemed null and void to the extent required to permit the
Plan to comply with Rule 16b-3. The Committee may from time to time adopt
rules and regulations under, and amend, the Plan in furtherance of the intent
of the foregoing.
17.2 The Plan shall be administered and interpreted so that
all Incentive Stock Options granted under the Plan will qualify as Incentive
Stock Options under Section 422 of the Code. If any provision of the Plan
should be held invalid for the granting of Incentive Stock Options or illegal
for any reason, such determination shall not affect the remaining provisions
hereof, but instead the Plan shall be construed and enforced as if such
provision had never been included in the Plan.
17.3 No Option Shares shall be issued hereunder unless
counsel for the Corporation shall be satisfied that such issuance will be in
compliance with applicable federal, state and other securities laws and
regulations.
17.4 It shall be a condition to the obligation of the
Corporation to issue Option Shares upon exercise of an Option, that the
Optionee (or any beneficiary or person entitled to act under SECTIONS 9.2 OR
9.2) pay to the Corporation, upon its demand, such amount as may be requested
by the Corporation for the purpose of satisfying
- -12-
<PAGE>
any liability to withhold federal, state, local or foreign income or other
taxes. If the amount requested is not paid, the Corporation may refuse to issue
Option Shares.
17.5 The expense of the Plan shall be borne by the Corporation.
17.6 The Plan shall be unfunded. The Corporation shall not be
required to establish any special or separate fund or to make any other
segregation of assets to assure the issuance of shares upon exercise of any
Option under the Plan and issuance of shares upon exercise of Options shall
be subordinate to the claims of the Corporation's general creditors.
17.7 By accepting any Option or other benefit under the Plan,
each Optionee and each person claiming under or through such person shall be
conclusively deemed to have indicated his acceptance and ratification of, and
consent to, any action taken under the Plan by the Corporation or the
Committee.
Section 18.
GOVERNING LAW
This Plan shall be governed by and construed under the laws of
the State of Florida.
<PAGE>
STOCK PURCHASE AGREEMENT
THIS AGREEMENT is made and entered into the 13th day of June, 1996 by and
between Christine Clewes ("Subscriber") and Apollo International of Delaware,
Inc., a Delaware corporation ("Corporation").
W I T N E S S E T H:
WHEREAS, during the course of the Corporation's history, Subscriber has
advanced the Corporation the aggregate sum of $60,840; and
WHEREAS, Subscriber wishes to convert the $60,840 to the Corporation's
Common Stock.
NOW, THEREFORE, in consideration of the mutual covenants and agreements set
forth herein, the parties hereto agree as follows:
1. CONVERSION OF OBLIGATION. The parties hereto agree that the $60,840
in aggregate advances made by Subscriber shall be converted into 64,994.1552
shares of the Corporation's Common Stock as calculated by dividing an effective
pre-split price of $10.00 per share and giving effect for the 10.6828 for 1
stock split occurring in May 1996, as follows:
$60,840 divided by $10.00 = 60,804 pre-split shares
6,804 x 10.6828 = 64,994.1552 post-split shares
2. REPRESENTATIONS AND WARRANTIES. Subscriber hereby represents,
warrants and covenants to the Corporation that in connection herewith:
(a) PURCHASER'S FINANCIAL EXPERIENCE. Subscriber is sufficiently
experienced in financial and business matters to be capable of evaluating the
merits and risks of her investment in the Shares. Subscriber is familiar with
the nature and risks attending investments in privately offered securities, and
he has determined that a purchase of Shares is consistent with her forecasted
income and investment objectives.
(b) SUITABILITY OF INVESTMENT. Subscriber understands that the
Shares are speculative investments and involve a high degree of risk, including
but not limited to: there is no guarantee of success of the business of the
Corporation; he may not receive any return (economic or otherwise) on her
investment, and management has extreme latitude and generally, the sole
discretion, to determine the financial picture, operations and
<PAGE>
potential dissolution of the Corporation. Subscriber has evaluated the merits
and risks of Subscriber's proposed investment in the Shares, including those
risks particular to Subscriber's personal situation, and he has determined that
this investment is suitable for Subscriber. Subscriber had adequate financial
resources for an investment of this character, and at this time Subscriber could
bear a complete loss of her investment. Further Subscriber will continue to
have, after making her investment in the Shares adequate means of providing for
her current needs, the needs of those dependent on him, and possible personal
contingencies.
(c) INVESTMENT INTENT. Subscriber is purchasing the Shares for
investment purposes only and for her own account, and has no present commitment,
agreement or intention to sell, distribute or otherwise dispose of any of them
or enter into any such commitment or agreement.
(d) UNREGISTERED SECURITIES; LIMITATIONS ON DISPOSITION. Subscriber
understands that the Shares are being sold without registration under federal or
any state securities laws ("Securities Laws") by reason of specific exemptions
from registration and that the Corporation is relying on the information given
herein in its determination of whether such specific exemptions are available.
Subscriber understands that because the Shares have not been and will not be
registered under the Securities Laws, they cannot be sold unless and until they
are subsequently registered or an exemption from registration is available.
Subscriber may have to bear the economic risk of holding the Shares for an
indefinite period of time since there is no public market for the Shares and
none is likely to develop. Subscriber represents that he can afford to hold the
Shares for an indefinite period of time.
(e) NON-RELIANCE. Subscriber is not relying on the Corporation or
any representation contained herein with respect to the tax effect of her
investment in the Corporation.
(f) RESIDENCY. Subscriber is a bona fide resident of the State of
Florida, or if an entity, its principal place of business is located in Florida.
3. INDEMNIFICATION. Subscriber shall indemnify and hold harmless the
Corporation and its agents and counsel against any and all loss, damage,
liability or expense (including attorney's fees and costs) which may be suffered
by reason of any breach of her representations, warranties or covenants
contained in Section 2 hereof.
<PAGE>
4. GOVERNING LAW: JURISDICTION. This Agreement will be governed by,
construed and enforced in accordance with the laws of the state of Florida.
5. ENTIRE AGREEMENT; AMENDMENT. This Agreement constitutes the entire
agreement between the parties hereto with respect to the subject matter hereof
and supersedes and terminates any prior communication, agreement or
understanding, whether written or oral. This Agreement may only be modified by
a writing signed by all parties.
6. SEVERABILITY. In the event that any of the provisions of this
Agreement, or portions thereof, are held to be unenforceable or invalid by any
court of competent jurisdiction, the validity and enforceability of the
remaining provisions, or portions thereof, shall not be affected thereby.
IN WITNESS WHEREOF, the parties hereto have executed this Stock Purchase
Agreement as of the date and year first written above.
/s/ Christine Clewes
-------------------------------
Christine Clewes
APOLLO INTERNATIONAL OF DELAWARE,
INC.
BY: /s/ David W. Clarke
-------------------------------
David W. Clarke, President
<PAGE>
STOCK PURCHASE AGREEMENT
THIS AGREEMENT is made and entered into the 24th day of June, 1996 by and
between Frank Mancini, an individual ("Subscriber") and Apollo International of
Delaware, Inc., a Delaware corporation ("Corporation").
W I T N E S S E T H:
WHEREAS, Subscriber has advanced the Corporation the aggregate sum of
$13,271.65 and
WHEREAS, Subscriber wishes to convert the $13,271.65, plus accrued unpaid
interest of $940.29 (calculated at 18% per annum from and including January 31,
1996 to and including June 21, 1996) to the Corporation's Common Stock.
NOW, THEREFORE, in consideration of the mutual covenants and agreements set
forth herein, the parties hereto agree as follows:
1. CONVERSION OF OBLIGATION. The parties hereto agree that the amount of
$14,211.94 (representing the total of advances made by Subscriber and accrued
interest) shall be converted into 15,182.3313 shares of the Corporation's Common
Stock (the "Shares") as calculated by dividing an effective pre-split price of
$10.00 per share and giving effect for the 10.6828 for 1 stock split occurring
in May 1996, as follows:
$14,211.94 divided by $10.00 = 1,421.1940 pre-split shares
1,421.1940 x 10.6828 = 15,182.3313 post-split shares
2. REPRESENTATIONS AND WARRANTIES. Subscriber hereby represents,
warrants and covenants to the Corporation that in connection herewith:
(a) REVIEW AND EVALUATION OF INFORMATION REGARDING THE COMPANY:
Subscriber has had an opportunity to examine the governing instruments and the
material documents and records of the Corporation, to ask questions and receive
answers from the representatives of the Corporation concerning the Corporation's
financial condition and business, and to obtain such other information that he
has deemed necessary to make a fully informed decision.
(b) PURCHASER'S FINANCIAL EXPERIENCE. Subscriber is sufficiently
experienced in financial and business matters to be
<PAGE>
capable of evaluating the merits and risks of his investment in the Shares.
Subscriber is familiar with the nature and risks attending investments in
privately offered securities, and he has determined that a purchase of Shares is
consistent with his forecasted income and investment objectives.
(c) SUITABILITY OF INVESTMENT. Subscriber understands that the
Shares are speculative investments and involve a high degree of risk, including
but not limited to: there is no guarantee of success of the business of the
Corporation; he may not receive any return (economic or otherwise) on his
investment, and management has extreme latitude and generally, the sole
discretion, to determine the financial picture, operations and potential
dissolution of the Corporation. Subscriber has evaluated the merits and risks
of Subscriber's proposed investment in the Shares, including those risks
particular to Subscriber's personal situation, and he has determined that this
investment is suitable for Subscriber. Subscriber had adequate financial
resources for an investment of this character, and at this time Subscriber could
bear a complete loss of his investment. Further Subscriber will continue to
have, after making his investment in the Shares adequate means of providing for
his current needs, the needs of those dependent on him, and possible personal
contingencies.
(d) INVESTMENT INTENT. Subscriber is purchasing the Shares for
investment purposes only and for his own account, and has no present commitment,
agreement or intention to sell, distribute or otherwise dispose of any of them
or enter into any such commitment or agreement.
(e) UNREGISTERED SECURITIES; LIMITATIONS ON DISPOSITION. Subscriber
understands that the Shares are being sold without registration under federal or
any state securities laws ("Securities Laws") by reason of specific exemptions
from registration and that the Corporation is relying on the information given
herein in its determination of whether such specific exemptions are available.
Subscriber understands that because the Shares have not been and will not be
registered under the Securities Laws, they cannot be sold unless and until they
are subsequently registered or an exemption from registration is available.
Subscriber may have to bear the economic risk of holding the Shares for an
indefinite period of time since there is no public market for the Shares and
none is likely to develop. Subscriber represents that he can afford to hold the
Shares for an indefinite period of time.
(f) NON-RELIANCE. Subscriber is not relying on the Corporation or
any representation contained herein with respect to the tax effect of his
investment in the Corporation.
<PAGE>
(g) ACCREDITED INVESTOR. Subscriber is an accredited investor as
that term is defined in Section 501(a) of Regulation D as promulgated under the
Securities Act of 1933, as amended, a copy of which is attached hereto as
EXHIBIT A.
(h) RESIDENCY. Subscriber is a bona fide resident of the State of
Florida, or if an entity, its principal place of business is located in Florida.
3. INDEMNIFICATION. Subscriber shall indemnify and hold harmless the
Corporation and its agents and counsel against any and all loss, damage,
liability or expense (including attorney's fees and costs) which may be suffered
by reason of any breach of his representations, warranties or covenants
contained in Section 2 hereof.
4. GOVERNING LAW: JURISDICTION. This Agreement will be governed by,
construed and enforced in accordance with the laws of the state of Florida.
5. ENTIRE AGREEMENT; AMENDMENT. This Agreement constitutes the entire
agreement between the parties hereto with respect to the subject matter hereof
and supersedes and terminates any prior communication, agreement or
understanding, whether written or oral. This Agreement may only be modified by
a writing signed by all parties.
6. SEVERABILITY. In the event that any of the provisions of this
Agreement, or portions thereof, are held to be unenforceable or invalid by any
court of competent jurisdiction, the validity and enforceability of the
remaining provisions, or portions thereof, shall not be affected thereby.
IN WITNESS WHEREOF, the parties hereto have executed this Stock Purchase
Agreement as of the date and year first written above.
/s/ Frank Mancini
-------------------------
Frank Mancini, Subscriber
APOLLO INTERNATIONAL OF DELAWARE,
INC.
BY: /s/ David W. Clarke
-------------------------------
David W. Clarke, President
<PAGE>
STOCK PURCHASE AGREEMENT
THIS AGREEMENT is made and entered into the 24th day of June, 1996 by and
between FRAMAN, a business entity ("Subscriber") and Apollo International of
Delaware, Inc., a Delaware corporation ("Corporation").
W I T N E S S E T H:
WHEREAS, Subscriber has advanced the Corporation the aggregate sum of
$164,815.60 and
WHEREAS, Subscriber wishes to convert the $164,815.60, plus accrued unpaid
interest of $11,677.11 (calculated at 18% per annum from and including January
31, 1996 to and including June 21, 1996) to the Corporation's Common Stock.
NOW, THEREFORE, in consideration of the mutual covenants and agreements set
forth herein, the parties hereto agree as follows:
1. CONVERSION OF OBLIGATION. The parties hereto agree that the amount of
$176,492.71 (representing the total of advances made by Subscriber and accrued
interest) shall be converted into 188,543.6323 shares of the Corporation's
Common Stock (the "Shares") as calculated by dividing an effective pre-split
price of $10.00 per share and giving effect for the 10.6828 for 1 stock split
occurring in May 1996, as follows:
$176,492.71 divided by $10.00 = 17,649.2710 pre-split shares
17,649.2710 x 10.6828 = 188,543.6323 post-split shares
2. REPRESENTATIONS AND WARRANTIES. Subscriber hereby represents,
warrants and covenants to the Corporation that in connection herewith:
(a) REVIEW AND EVALUATION OF INFORMATION REGARDING THE COMPANY:
Subscriber has had an opportunity to examine the governing instruments and the
material documents and records of the Corporation, to ask questions and receive
answers from the representatives of the Corporation concerning the Corporation's
financial condition and business, and to obtain such other information that he
has deemed necessary to make a fully informed decision.
(b) PURCHASER'S FINANCIAL EXPERIENCE. Subscriber is sufficiently
experienced in financial and business matters to be
<PAGE>
capable of evaluating the merits and risks of his investment in the Shares.
Subscriber is familiar with the nature and risks attending investments in
privately offered securities, and he has determined that a purchase of Shares is
consistent with his forecasted income and investment objectives.
(c) SUITABILITY OF INVESTMENT. Subscriber understands that the
Shares are speculative investments and involve a high degree of risk, including
but not limited to: there is no guarantee of success of the business of the
Corporation; he may not receive any return (economic or otherwise) on his
investment, and management has extreme latitude and generally, the sole
discretion, to determine the financial picture, operations and potential
dissolution of the Corporation. Subscriber has evaluated the merits and risks
of Subscriber's proposed investment in the Shares, including those risks
particular to Subscriber's personal situation, and he has determined that this
investment is suitable for Subscriber. Subscriber had adequate financial
resources for an investment of this character, and at this time Subscriber could
bear a complete loss of his investment. Further Subscriber will continue to
have, after making his investment in the Shares adequate means of providing for
his current needs, the needs of those dependent on him, and possible personal
contingencies.
(d) INVESTMENT INTENT. Subscriber is purchasing the Shares for
investment purposes only and for his own account, and has no present commitment,
agreement or intention to sell, distribute or otherwise dispose of any of them
or enter into any such commitment or agreement.
(e) UNREGISTERED SECURITIES; LIMITATIONS ON DISPOSITION. Subscriber
understands that the Shares are being sold without registration under federal or
any state securities laws ("Securities Laws") by reason of specific exemptions
from registration and that the Corporation is relying on the information given
herein in its determination of whether such specific exemptions are available.
Subscriber understands that because the Shares have not been and will not be
registered under the Securities Laws, they cannot be sold unless and until they
are subsequently registered or an exemption from registration is available.
Subscriber may have to bear the economic risk of holding the Shares for an
indefinite period of time since there is no public market for the Shares and
none is likely to develop. Subscriber represents that he can afford to hold the
Shares for an indefinite period of time.
(f) NON-RELIANCE. Subscriber is not relying on the Corporation or
any representation contained herein with respect to the tax effect of his
investment in the Corporation.
<PAGE>
(g) ACCREDITED INVESTOR. Subscriber is an accredited investor as
that term is defined in Section 501(a) of Regulation D as promulgated under the
Securities Act of 1933, as amended, a copy of which is attached hereto as
EXHIBIT A.
(h) RESIDENCY. Subscriber is a bona fide resident of the State of
Florida, or if an entity, its principal place of business is located in Florida.
3. INDEMNIFICATION. Subscriber shall indemnify and hold harmless the
Corporation and its agents and counsel against any and all loss, damage,
liability or expense (including attorney's fees and costs) which may be suffered
by reason of any breach of his representations, warranties or covenants
contained in Section 2 hereof.
4. GOVERNING LAW: JURISDICTION. This Agreement will be governed by,
construed and enforced in accordance with the laws of the state of Florida.
5. ENTIRE AGREEMENT; AMENDMENT. This Agreement constitutes the entire
agreement between the parties hereto with respect to the subject matter hereof
and supersedes and terminates any prior communication, agreement or
understanding, whether written or oral. This Agreement may only be modified by
a writing signed by all parties.
6. SEVERABILITY. In the event that any of the provisions of this
Agreement, or portions thereof, are held to be unenforceable or invalid by any
court of competent jurisdiction, the validity and enforceability of the
remaining provisions, or portions thereof, shall not be affected thereby.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Stock Purchase
Agreement as of the date and year first written above.
FRAMAN, a business entity
By: /s/ Frank Mancini
-----------------------
Frank Mancini, Principal
APOLLO INTERNATIONAL OF DELAWARE,
INC.
BY: /s/ David W. Clarke
-------------------------------
David W. Clarke, President
<PAGE>
Exhibit 10.5
May 10, 1996
Perryman Corporation N.V.
c/o Capital Holdings
4900 Woodway Drive
Houston, Texas 77056
Gentlemen:
This letter will serve to memorialize the agreement previously reached
between us regarding consulting services rendered by you to Apollo International
of Delaware, Inc. (the "Company") and the compensation payable therefor. In
particular, you have rendered services in connection with non-operational
aspects of the Company's business.
1. As full payment for all services rendered by you through the date
hereof, the Company, at the Company's option, shall (i) pay you
$30,000 within ten (10) business days from the date hereof, or
alternatively (ii) issue to you 299,000 shares of the Company's Common
Stock (the "Shares") and 400,000 Common Stock Purchase Warrants (the
"Warrants") (such Shares and Warrants sometimes referred to
collectively as "Securities"). Each Warrant shall entitle the holder
to purchase one share of the Company's Common Stock for a purchase
price of $5.50 per share, for a period of three years commencing May
10, 1998. The Warrants shall expire on May 10, 2001, at which time
any unexercised Warrants shall terminate. In the event the Company
sells warrants in an initial public offering of its securities, the
Warrants issued to you will automatically convert to warrants having
the same terms as the warrants sold to the public, which will include
an increase in exercise price if the exercise price of the warrants
sold to the public exceeds $5.50 per share. Your retention of the
Shares and the exercisability of the Warrants is conditioned upon the
completion by the Company of an initial public offering before June 1,
1997, and if an initial public offering is not completed before June
1,
<PAGE>
1997, the Warrants will terminate as of such date and the Company, at
its sole discretion, may redeem all the Shares for a total redemption
price of $1.00; provided, however, such Warrant termination and stock
redemption rights shall not be exercisable by the Company if: (i) the
parties hereto otherwise agree in writing; or (ii) on or before June
1, 1997, the Company enters into an agreement with a third party
respecting an acquisition of the Company, including without
limitation, a merger or a sale of substantially all of the assets of
the Company.
2. Concurrently herewith, you shall execute the attached Shareholders
Voting Agreement (Exhibit A) and Proxy (Exhibit B) pursuant to which
you will grant to David W. Clarke an irrevocable proxy to vote your
Shares and the Shares issuable upon exercise of the Warrants, which
proxy shall expire on the earlier to occur of: (i) May 10, 2001, and
(ii) the effective date of the Company's anticipated initial public
offering.
3. If requested by the Underwriter of any public offering, your
Securities will be subject to a "lock-up" agreement equal to the
shortest lock up granted to any other shareholders of the Company. If
permitted by the Underwriter, your Securities will be registered in
any such offering; provided if any such offering is not underwritten,
only the Shares and Shares issuable upon exercise of the Warrants will
be registered in such offering.
4. This letter will confirm that all services required to be rendered by
you have been rendered as of May 10, 1996 at which time you had fully
earned your right for compensation described in this letter. You
acknowledge that the Securities which may be issued to you are not
registered under the Securities Act of 1933, as amended, (the "Act")
and may not be sold or otherwise transferred except pursuant to
registration under the Act or pursuant to an exemption therefrom.
This will also confirm that should the Company elect to pay your
consulting fee in Shares and Warrants, you may direct such securities
to be issued to you or up to 3 additional persons or entities, subject
to the provisions of the Act; provided, however, such other persons or
entities
<PAGE>
shall execute a Shareholder's Voting Agreement and Proxy in accordance
with Section 2 hereof.
5. By execution of this letter below, you are hereby representing and
warranting to the Company, that you are acquiring the Securities for
investment purposes only without a view to distribution of the
Securities and that you have no present intent to dispose of or
otherwise transfer the Securities nor are you a party to any agreement
for disposition of the Securities.
6. This letter may be executed in multiple counterparts, each of which
shall be deemed an original and all of which together shall be deemed
one and the same instrument.
Very truly yours,
Apollo International of Delaware, Inc.
By: /s/ David W. Clarke
-----------------------------------
David W. Clarke, President
AGREED AND ACCEPTED:
Perryman Corporation N.V.
By: /s/ Gregory E. Elias
-------------------------
Name: Gregory E. Elias
-------------------------
As: Managing Director of
Intertrust (Curacao) N.V.
The Managing Director
--------------------------
<PAGE>
Exhibit 10.6
Amended and Restated
CONSULTING AGREEMENT
--------------------
This Consulting Agreement (the "Agreement") is entered into as of the 1st
day of June, 1996 by and between Imagine Holdings, a business entity
("Consultant") and Apollo International of Delaware, Inc., a Delaware
corporation ("Company").
W I T N E S S E T H:
WHEREAS, Company is engaged in the business of owning and operating a high
technology design and manufacturing company; and
WHEREAS, Consultant is a business consultant providing services with
respect to certain non-operational matters such as sales and marketing and
general administration, and has significant knowledge and expertise which the
Company deems of great value to its continued operations; and
WHEREAS, Company desires to engage Consultant as an independent contractor
on the terms and subject to the conditions hereinafter set forth; and
WHEREAS, Consultant is desirous of providing services to the Company as
specified herein in consideration of the compensation hereinafter set forth.
NOW, THEREFORE, the parties hereto hereby agree as follows:
1. ENGAGEMENT.
(a) Company hereby engages Consultant, and Consultant hereby accepts
such engagement by Company to provide business advice from time to time to
Company.
(b) Consultant will furnish Consultant's service as an independent
contractor and not as an employee of Company or of any affiliate with Company.
2. TERM. The term of this Agreement shall commence on June 1, 1996 (the
"Commencement Date") and shall expire on the date that is five (5) years after
the Commencement Date.
1
<PAGE>
3. COMPENSATION.
(a) Company agrees to pay Consultant during the term, and Consultant
agrees to accept for Consultant's services hereunder, compensation in the form
of 250,000 common stock purchase warrants ("Warrants"). Each Warrant shall
entitle Consultant to acquire one share of the Company's Common Stock at an
exercise price of $4.00 per share commencing June 1, 1998 and terminating June
1, 2002. The Warrants shall provide Consultant with piggy-back registration
rights in the event the Company conducts a secondary offering of its Common
Stock pursuant to a Form S-1 or Form SB-2 registration statement, subject to any
lock-up or other limitations that may be imposed by an underwriter if such
offering is an underwritten public offering. Any such piggy-back registration
rights shall not be exercisable by Consultant until June 1, 1998. Upon issuance
of any shares of Common Stock pursuant to Consultant's exercise of the Warrants,
and as a condition to the issuance of any such shares, Consultant shall enter
into a Shareholders Voting Agreement with David W. Clarke in substantially the
form attached hereto as EXHIBIT A and grant David W. Clarke an irrevocable proxy
to vote such shares in substantially the form attached hereto as EXHIBIT B,
which proxy shall be effective until the earlier of: (i) June 1, 2002, and (ii)
such time as such shares are included in a registration statement pursuant to
Consultant's piggy-back registration rights hereunder.
The Company may terminate any unexercized Warrants, at any time, in its
sole discretion, upon the occurrence of any of the following: (a) Consultant's
breach of this Agreement, or (b) Consultant's (or Consultant's agent's)
dishonesty or fraud resulting in damages to the Company.
(b) Company will reimburse Consultant for all expenses reasonably
incurred by Consultant in connection with the performance by Consultant of his
duties hereunder.
2
<PAGE>
4. INDEMNITY. The Consultant shall indemnify and hold Company harmless
from and against any and all liability, loss, damage, cost or expense (including
reasonable attorney fees) arising out of or relating to Consultant's performance
of his services or which Company may incur or sustain by reason of any
malpractice, negligence or other legal liability of Consultant.
5. NATURE OF RELATIONSHIP. Consultant herein is an independent
contractor and will not act as Company's agent, nor shall be deemed an employee
of Company for the purposes of any employee benefit programs, or be deemed an
employee of Company for purposes of income tax withholding, FICA taxes,
unemployment benefits, workers compensation benefits, or otherwise. The
Consultant shall not enter into any agreement or incur any obligations on
Company's behalf, or commit Company in any manner without Company's prior
written consent. As an independent contractor, the Consultant understands and
agrees that Consultant is solely responsible for the control and supervision of
the means by which Consultant's services are performed.
6. NONDISCLOSURE COVENANTS. Except as permitted or directed by Company,
neither Consultant nor its principals or agents shall, during the term of
Consultant's retention or thereafter divulge, furnish or make accessible to
anyone or use in any way any confidential, trade secret or proprietary
information of Company which Consultant has acquired or become acquainted with
during any period of the retention of the Consultant by Company, whether
developed by the Consultant or by others. The Consultant acknowledges that the
above-described knowledge or information constitutes a unique and valuable asset
of Company and represents a substantial investment by Company, and that any
disclosure or other use of such knowledge or information, other than for the
sole benefit of Company, would be wrongful and would cause irreparable harm to
Company. The Consultant will refrain from any acts or omissions that would
reduce the value of such knowledge or information to Company. The foregoing
obligations of confidentiality shall not apply to any knowledge or information
the entirety of which is now published or subsequently becomes generally
publicly known, other than as a direct or indirect result of the breach of this
Agreement by the Consultant or a breach of a confidentiality obligation owed to
Company by any third party. Consultant further agrees that upon completion or
termination of this Agreement, Consultant will turn over to Company or make such
disposition thereof as may be directed or approved by Company, any notebook,
data, information or
3
<PAGE>
other material acquired or compiled by Consultant in carrying out the terms of
this Agreement.
7. NON-COMPETITION. During the term hereof and for a period of three (3)
years following the termination or expiration hereof, consultant agrees that
neither Consultant nor its principals or agents will, directly or indirectly, in
any country in which the Company then operates either directly or through
distributors, sales representatives, or original equipment manufacturers, own,
manage, work for, consult to, operate, or control, in each case directly or
indirectly, any business that is in the same line of business as the Company.
8. INJUNCTIVE RELIEF. The Consultant agrees that it would be difficult
to compensate Company fully for damages for any violation of the provisions of
Section 6 or Section 7 of this Agreement. Accordingly, the Consultant
specifically agrees that Company shall be entitled to temporary and permanent
injunctive relief to enforce Section 6 or Section 7 of this Agreement and that
such relief may be granted without the necessity of proving actual damages.
This provision with respect to injunctive relief shall not, however, diminish
the right of Company to claim and recover damages in addition to injunctive
relief. The provisions of Section 6, Section 7 and this Section 8 shall survive
the termination or expiration of this Agreement.
9. INVESTMENT INTENT. Consultant hereby represents and warrants to the
Company that Consultant is acquiring the Warrants (and Common Stock issuable
upon exercise of said Warrants) (collectively, the "Securities") for investment
purposes only without a view to distribution of the Securities and that
Consultant has no present intent to dispose of or otherwise transfer the
Securities nor is Consultant a party to any agreement for disposition of the
Securities.
10. GENERAL PROVISIONS.
(a) In the event of a merger or consolidation where Company is not
the surviving or consolidated corporation, or in the event of a transfer of all
or substantially all of the assets of Company, the transferee of Company's
assets shall have the benefit of and be bound by the provisions of this
Agreement.
(b) It is agreed that the invalidity or unenforceability of any
paragraph, section or provision (or any part of any thereof) of this Agreement
shall not affect
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the validity or enforceability of any one or more of the other paragraphs,
sections or provisions (or other parts of any such paragraph, section or
provision) of this Agreement.
(c) This Agreement constitutes the entire agreement between the
parties concerning the subject matter hereof, and supersedes any other or prior
agreement between the parties. This Agreement may not be amended, modified or
renewed, nor may any of these provisions hereof be waived, except by a writing
signed by the parties hereto. A waiver by either party of any of the terms or
conditions of this Agreement, or of any breach thereof, shall not be deemed a
waiver of such term or condition for the future or of any term or condition, or
of any subsequent breach thereof.
(d) This Agreement is a personal contract and may not be assigned or
transferred by Consultant.
(e) Headings herein are for convenience only and shall in any way
define, limit or affect this Agreement.
(f) Any notice required or desired to be given under this Agreement
shall be deemed given if in writing and sent by certified mail, return receipt
requested, to the Consultant's residence or to the Company's principal office,
as the case may be.
(g) This Agreement may be executed in two or more counterparts, each
of which shall be deemed an original but all of which together shall constitute
one and the same instrument.
(h) This Agreement shall be governed by and construed in accordance
with Florida law and the parties hereby submit to the jurisdiction and venue of
the state and federal courts located in Orange County, Florida.
IN WITNESS WHEREOF, the parties hereto have executed this instrument the
day and year first above written.
Consultant:
IMAGINE HOLDINGS
By: /s/ David W. Clarke
---------------------------
Its: President
--------------------------
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Company:
APOLLO INTERNATIONAL OF DELAWARE, INC.
By: /s/ David W. Clarke
---------------------------
David W. Clarke
Its: President
<PAGE>
EXHIBIT 23.1
MOST HOROWITZ & COMPANY, LLP
Certified Public Accountants
1133 Avenue of the Americas
New York, NY 10036
Tel (212) 764-4910
Fax (212) 575-2017
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We hereby consent the use in this Registration Statement on Form SB-2 of our
report dated June 4, 1996, relating to the financial statements of Apollo
International of Delaware, Inc. and the reference to our Firm under the caption
"Experts" in the prospectus.
/s/_Most Horowitz & Company, LLP
Most Horowitz & Company, LLP
New York, New York
December 17, 1996
