AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 10, 1998
REGISTRATION NO. 333-
===============================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM SB-2
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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RENAISSANCE DESIGNER GALLERY PRODUCTS, INC.
(NAME OF SMALL BUSINESS ISSUER IN ITS CHARTER)
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NEVADA 9999 48-1170767
(STATE OR OTHER (PRIMARY STANDARD (I.R.S. EMPLOYER
JURISDICTION OF INDUSTRIAL CLASSIFICATION IDENTIFICATION NO.)
INCORPORATION OR CODE NUMBER)
ORGANIZATION)
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1001 S.W. GAGE BLVD.
TOPEKA, KANSAS 66606
(785) 273-2244
(ADDRESS AND TELEPHONE NUMBER OF PRINCIPAL EXECUTIVE
OFFICES AND PRINCIPAL PLACE OF BUSINESS)
--------------------
MICHAEL C. COOPER
1001 S.W. GAGE BLVD.
TOPEKA, KANSAS 66606
(785) 273-2244
(NAME, ADDRESS AND TELEPHONE NUMBER OF AGENT FOR SERVICE)
COPIES TO:
MICHAEL G. QUINN, ESQ.
5120 EAST CENTRAL, SUITE B.
WICHITA, KANSAS 67208
(316) 652-0940
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APPROXIMATE DATE OF PROPOSED SALE TO THE PUBLIC: As soon as practicable
after this Registration Statement becomes effective.
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering.
-----
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, check the following box. X
-----
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering.
-----
If delivery of the prospectus is expected to be made pursuant to
Rule 434, please check the following box.
-----
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
========================================================================================================
PROPOSED PROPOSED
TITLE OF EACH AMOUNT MAXIMUM MAXIMUM AMOUNT OF
CLASS OF SECURITIES TO BE OFFERING PRICE AGGREGATE REGISTRATION
TO BE REGISTERED REGISTERED PER UNIT(1) OFFERING PRICE FEE
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, $.01 par value ..... 50,000,000 $.10 $5,000,000 $1,475
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<FN>
(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(a) under the Securities Act of 1933, as amended.
</TABLE>
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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 OR UNTIL THE REGISTRATION
STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
===============================================================================
<PAGE>
<TABLE>
<CAPTION>
RENAISSANCE DESIGNER GALLERY PRODUCTS, INC.
CROSS-REFERENCE SHEET
PURSUANT TO PART I OF FORM SB-2
FORM SB-2 ITEM AND CAPTION PROSPECTUS CAPTION
- ---------------------------------------------------- -------------------------------------------------------
<S> <C>
1. Front of Registration Statement and Outside
Front Cover Page of Prospectus . . . . . . . . Front of Registration Statement; Outside Front
Cover Page
2. Inside Front and Outside Back Cover Pages of
Prospectus . . . . . . . . . . . . . . . . . . Inside Front and Outside Back Cover Pages
3. Summary Information and Risk Factors . . . . . Prospectus Summary; Risk Factors
4. Use of Proceeds . . . . . . . . . . . . . . . Prospectus Summary; Use of Proceeds
5. Determination of Offering Price . . . . . . . Outside Front Cover Page; Risk Factors;
Plan of Distribution
6. Dilution . . . . . . . . . . . . . . . . . . . Dilution
7. Principal Shareholders . . . . . . . . . . . . Principal Shareholders; Plan of Distribution
8. Plan of Distribution . . . . . . . . . . . . . Outside Front Cover Page; Prospectus Summary;
Plan of Distribution
9. Legal Proceedings . . . . . . . . . . . . . . Business -- Management
10. Directors, Executive Officers, Promoters and
Control Persons . . . . . . . . . . . . . . . Management
11. Security Ownership of Certain Beneficial
Owners and Management . . . . . . . . . . . . Principal Shareholders
12. Description of Securities . . . . . . . . . . Description of Capital Stock
13. Interest of Named Experts and Counsel . . . . Legal Matters; Experts
14. Disclosure of Commission Position on
Indemnification for Securities Act Liabilities Not Applicable
15. Organization within Last Five Years . . . . . Prospectus Summary; Business
16. Description of Business . . . . . . . . . . . Prospectus Summary; Risk Factors;
Use of Proceeds; Dividend Policy;
Capitalization; Dilution; Selected Financial and
Operating Data; Financial and Operating Data;
Business; Management; Certain Transactions;
Principal Shareholders; Description of Capital
Stock; Shares Eligible for Future Sale; Plan of
Distribution, Financial Statements
17. Management's Discussion and Analysis or Plan
of Operation . . . . . . . . . . . . . . . . . Management's Discussion and Analysis of Financial
Condition and Results of Operations
18. Description of Property . . . . . . . . . . . Business -- Facilities
19. Certain Relationships and Related Transactions Management; Certain Transactions
20. Market for Common Equity and Related
Stockholder Matters . . . . . . . . . . . . . Outside Front Cover Page; Risk Factors; Dividend
Policy; Description of Capital Stock; Plan of
Distribution
21. Executive Compensation . . . . . . . . . . . . Management -- Executive Compensation --
Officer and Director Compensation
22. Financial Statements . . . . . . . . . . . . . Financial Statements
23. Changes in and Disagreements with
Accountants on Accounting and Financial
Disclosure . . . . . . . . . . . . . . . . . . Not Applicable
</TABLE>
(i)
<PAGE>
[LOGO]
RENAISSANCE DESIGNER GALLERY PRODUCTS, INC.
UP TO 50,000,000 SHARES OF COMMON STOCK
Renaissance Designer Gallery Products, Inc., a Nevada corporation (the
"Company"), is offering (the "Offering") up to 50,000,000 shares of Common
Stock, $0.01 par value (the "Common Stock") at a price of $0.10 per share.
The Common Stock is offered by the Company through certain of its officers,
who will receive no compensation or reimbursement for expenses attributable to
the sale of the Common Stock. The Common Stock may also be offered by
broker/dealers which are members of the National Association of Securities
Dealers, Inc., and which enter into a Selling Agreement for the Common Stock
with the Company. The Common Stock will be offered on a "best efforts, all or
none" basis with respect to the first 30,000,000 Shares (the "Minimum Offering")
and on a "best efforts" basis with respect to the remaining 20,000,000 Shares
(the "Maximum Offering") for a period of 90 days from the date of this
Prospectus (the "Offering Period") (which may be extended for an additional 90
day period at the sole discretion of the Company). Pending the sale of the
Minimum Offering, all proceeds will be deposited into an escrow account at
Mesquite State Bank , Mesquite, Nevada (the "Escrow Agent"). In the event that
the Minimum Offering is not sold within the Offering Period, or any extension
thereof, this Offering will terminate and all funds will be promptly returned to
subscribers by the Escrow Agent, without deduction for commissions or expenses.
THESE SECURITIES ARE SPECULATIVE AND INVOLVE A HIGH DEGREE OF RISK AND
IMMEDIATE SUBSTANTIAL DILUTION FROM THE PUBLIC OFFERING PRICE. PROSPECTIVE
INVESTORS SHOULD CAREFULLY CONSIDER THE SECTION ENTITLED "RISK FACTORS"
(BEGINNING AT PAGE 6 OF THIS PROSPECTUS) AND "DILUTION" CONCERNING THE COMPANY
AND THIS OFFERING.
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>
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Underwriting
Discounts and Proceeds to
Price to Public and Commissions (1) Company (2)
=======================================================================================
<S> <C> <C> <C>
Per Share $0.10 $0.009 $0.091
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Minimum Per Share Total $3,000,000 $270,000 $2,730,000
- ---------------------------------------------------------------------------------------
Maximum Per Share Total $5,000,000 $450,000 $4,550,000
=======================================================================================
<FN>
(1) Assumes that all sales of shares are made by broker/dealers which
are members of the National Association of Securities Dealers, Inc., which
receive a commission equal to nine percent (9%) per share of the amount of
shares sold and that no purchasers were introduced by the Company to the
broker/dealers and accepted by the broker/dealers for sale of shares, in
which case such commission to the broker/dealers would equal six and one-
half percent (6.5%) of the amount of shares sold. The Company has also
agreed to indemnify any broker/dealer which has entered into a Selling
Agreement with the Company against certain liabilities, including
liabilities under the Securities Act of 1933, as amended (the "Securities
Act"). See "Plan of Distribution" for arrangements with participating
broker/dealers in this Offering.
(2) Before deducting expenses of this Offering payable by the
Company, estimated at $100,000. See "Plan of Distribution."
--------------------
</TABLE>
The Common Stock is being offered, by the Company and by participating
broker/dealers as agent for the Company, and subject to prior sale, acceptance
of offers to purchase, and to approval of certain legal matters by counsel for
the Company. The Company reserves the right to reject any order, in whole or in
part, and to withdraw, cancel, or modify the offering without notice. The
Company expects to have certificates of shares of Common Stock ready for
delivery within ten (10) days following the completion of the Offering.
THE DATE OF THIS PROSPECTUS IS ________, 1998.
(front inside cover)
<PAGE>
[LOGO: RENAISSANCE] [LOGO: AiM]
[PHOTOGRAPH: Corporate Headquarters]
The Company intends to furnish to its shareholders annual reports containing
audited financial statements.
<PAGE>
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PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more detailed
information, including Risk Factors, Financial Statements and notes thereto
appearing elsewhere in this Prospectus. Unless otherwise indicated, the
information in this Prospectus reflects a 10,063.0878197 for 1 stock split as
effected on March 13, 1998.
THE COMPANY
The Company is a national network marketing company that recruits direct
sales persons to offer its multiple products for sale to the general public and
to market the Company's home based business program, which adopts tax and
business strategies for its owners. All sales personnel are independent
contractors under agreement with the Company. At March 31, 1998, the Company
has entered into 20,933 contracts with independent sales representatives or
marketing associates (IMAs) located in all 50 states.
For the Company's product lines, the Company negotiates with manufacturers
and distributors of a wide variety of products which are privately labeled or
sold exclusively to the Company and offered through its IMAs. The Company
attempts to continuously provide products that meet certain market trends or are
innovative product breakthroughs. The Company offers its products at the lowest
prices possible with timely delivery, customer service and incentives for its
sales personnel.
The Company's home based business plan incorporates tax and business
strategies for persons desiring an independent business opportunity, regardless
of other full time employment. The Company has contracted with tax and business
consultants to formulate and keep current its program for the home based
business operator.
The Company commenced business in 1995 with the introduction of a fine
jewelry product line which by 1996 included over 3,000 items, together with a
collectibles gallery, which includes limited edition fine art, memorabilia and
collectible items, including sports and entertainment industry personalities.
By 1997, The Company has developed and maintained full-line catalogs for
automotive accessory parts, golf equipment, specialty gifts, houseware items
and clothing. The Company intends to continue its "product-line-after-product-
line" concept by continuing to offer various products to the general public
based on the extremely attractive pricing of the products.
In late 1997, the Company introduced its home based business program as
Advantage International Marketing ("AIM") and operates this concept as an
unincorporated division of the Company. AIM offers a complete home based
business program generally to individuals seeking a second source of income and
includes a prepared business plan, a comprehensive home based business tax
system, unlimited access to tax and business consultants through weekly
conference calls, tax preparation advice and discounted rates, and tax audit
assistance. Purchasers of the program have complete access to the Company's
products. Persons becoming independent sales representatives of AIM are
automatically sales representatives for the Company's products.
Product information and training is available to all IMAs through product
catalogs, an interactive telephone system, "fax on demand," and on the "One-
Minute Networker," which provides a series of training messages on a daily
basis. The "One-Minute Networker" is a formatted series of training messages
available through a 1-800 voicemail system that automatically delivers daily
training messages to each IMA. The AIM program incorporates additional
telephone facilities for specific tax and business advice. The Company's
product information and training is designed to take the new IMA through each
stage of development and product knowledge, marketing plan understanding, and
sales organization. For existing IMAs, product information and training is
currently updated and immediately available.
3
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<PAGE>
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The Company's strategy is to mass market its home based business program
through its IMAs who will then market an unlimited number of universally
appealing products with extremely attractive pricing within the IMA network as
well as to the retail customers of the IMAs.
To attract its marketing representatives, the Company has developed a
compensation program, the "Trilogy Compensation Plan," which pays commissions
and bonuses on a daily, weekly, and monthly basis. The Company believes that
this plan gives it a distinct advantage over other direct sales and network
marketing companies in the recruitment and retention of marketing
representatives. This compensation program does not require the IMA to
inventory or purchase the various products but pays the IMA commissions and
bonuses based on direct, trinary, and matrix sales. The Company's computer
software can effectively post commissions from thousands of transactions
throughout its entire IMA network at the close of each business day. It
automatically validates the compensation program, complete data entry, prints
customer service letters, welcome letters, shipping invoices, purchase orders,
daily deposit reconciliations, and daily payment of all commissions and bonuses
generated from that day's sales activity on a daily basis.
The Company's executive offices are located at the historical mansion
"Fleming Place," located at 1001 S.W. Gage Boulevard, Topeka, Kansas 66604 and
its telephone number is (913)273-2244.
<TABLE>
<CAPTION>
THE OFFERING
<S> <C>
Common Stock offered by the Company:
Minimum.................................................... 30,000,000 Shares
Maximum.................................................... 50,000,000 Shares
Common Stock to be outstanding after the Offering(1):
Minimum.................................................... 158,943,376 Shares
Maximum.................................................... 178,943,376 Shares
Use of proceeds:................................................ To acquire inventory, develop sales and marketing, purchase
equipment, and for general corporate purposes. See "Use of
Proceeds."
<FN>
- --------------------
(1) Excludes 5,000,000 shares of Common Stock subject to outstanding options to
directors of which 1,000,000 are currently exercisable at $0.02 per share.
</TABLE>
RISK FACTORS
The Common Stock offered hereby involves a high degree of risk. See "Risk
Factors" beginning on page 6.
4
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<PAGE>
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<TABLE>
<CAPTION>
SUMMARY FINANCIAL AND OPERATING DATA
Period From
June 17, 1995
(Date of Three Months Ended
Inception) to Year Ended Year Ended -------------------------
December 31, December 31, December 31, March 31, March 31,
1995 1996 1997 1997 1998
-------------- ----------- ----------- ----------- -----------
(Unaudited)
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATION DATA:
Revenue............................... $ 340,108 $ 3,730,220 $ 1,217,835 $ 276,711 $ 889,147
Net income (loss)..................... 14,947 117,054 (517,725) (198,953) 193,868
Income (loss) per share:
Basic............................ .0001 .0011 (.0043) (.0017) .0015
Diluted.......................... .0001 .0011 (.0043) (.0017) .0015
Weighted average common shares
outstanding:
Basic............................ 100,630,878 108,123,686 120,173,814 117,513,385 128.943,376
Diluted.......................... 100,630,878 108,123,686 121,507,147 117,513,385 132,943,376
</TABLE>
<TABLE>
<CAPTION>
March 31, 1998 (Unaudited)
-------------------------------------------------------
Adjusted Adjusted
Actual (Minimum)(1) (Manimum)(2)
---------------- ---------------- ---------------
<S> <C> <C> <C>
BALANCE SHEET DATA:
Working capital............................................... $ 465,319 $ 3,095,319 $ 4,915,319
Total assets.................................................. 751,079 3,381,079 5,201,679
Total debt.................................................... 140,235 140,235 140,235
Stockholders' equity.......................................... 610,844 3,240,844 5,060,844
<FN>
(1) As adjusted to reflect the sale of 30,000,000 shares of Common Stock
offered by the Company hereby and the application of the estimated net
proceeds therefrom. See "Use of Proceeds" and "Capitalization."
(2) As adjusted to reflect the sale of 50,000,000 shares of Common Stock
offered by the Company hereby and the application of the estimated net
proceeds therefrom. See "Use of Proceeds" and "Capitalization"
</TABLE>
5
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<PAGE>
RISK FACTORS
In addition to other information in this Prospectus, the following factors
should be considered carefully in evaluating an investment in the shares of
Common Stock offered by this Prospectus. An investment in the shares involves a
high degree of risk. Certain of these risks are set forth below and should be
considered by investors, among others, as part of their overall evaluation
before making a decision to purchase shares.
Ability to Manage Growth. The Company has recently experienced a period of
rapid growth that has resulted in new and increased responsibilities for
management personnel and has placed and continues to place increased demands on
the Company's management, operational and financial systems and resources. To
accommodate this recent growth and to compete effectively and manage future
growth, the Company will be required to continue to implement and improve its
operational, financial and management information systems, and to expand, train,
motivate and manage its sales force. There can be no assurance that the
Company's personnel, systems, procedures and controls will be adequate to
support the Company's existing and future operations. Any failure to implement
and improve the Company's operational, financial and management systems or to
expand, train, motivate or manage its sales personnel could have a material
adverse effect on the Company's business condition and results of operations.
Part of the Company's strategy for growth includes the introduction of new
products to its sales force. In the introduction of new products, the Company
experiences substantial expense associated with sales literature, catalog data,
design and art preparation, and additional costs associated with the
introduction of the products and the training of its sales force. There is no
assurance that any new products introduced by the Company will result in profits
to the Company.
Dependence on Independent Sales Representatives. The Company's success
depends in significant part upon its ability to attract, maintain, and motivate
a large base of IMAs, who, in turn, recruit additional IMAs for the sale of the
Company's products. The Company expects significant turnover among IMAs from
year to year, which the Company believes is typical of direct selling and
requires the sponsoring of new IMAs by existing IMAs in order to maintain or
increase the overall IMA force. Because the Company has a "no-cost" policy
relating to its independent sales representatives' contracts with the IMAs,
there is a small amount of terminations of such agreements. The Company, based
upon commissions paid to IMAs, believes that approximately 25% of IMAs actively
promote sales of the Company's products. The activities of the IMAs in the sale
of the Company's products and the recruitment of additional IMAs are
particularly impacted by the changes in the level of their motivation, which in
turn can be positively or negatively affected by general economic conditions,
modifications by the Company in commissions and products and in the Company's
marketing plan, and a number of intangible factors. The ability of the Company
to attract IMAs could be negatively affected by adverse publicity relating to
the Company or its services or its operations, including its network marketing
system. Because of the number of factors that impact the recruiting of IMAs,
the Company cannot predict when or to what extent any increases or decreases in
the level of IMA retention will occur. In addition, the number of IMAs as a
percentage of the population may reach levels that become difficult to exceed
due to the finite number of persons inclined to pursue an independent direct
selling business opportunity. There can be no assurance that the number or
productivity of IMAs will be sustained at current levels or will increase in the
future.
The Company is subject to competition in the recruiting of IMAs from other
network marketing organizations, including those that market products similar to
those offered by the Company. Most of such competitors have far greater
resources and a longer history of operations than that of the Company.
Regulation and Management of Independent Sales Representatives. Because
the independent sales representatives are classified as independent contractors,
and not as employees of the Company, the Company is unable to provide them the
same level of direction and oversight as Company employees. While the Company
has policies and rules in place governing the conduct of IMAs and periodically
reviews the sales tactics of the IMAs, it is difficult to enforce such policies
6
<PAGE>
and rules for the IMAs. Violations of these policies and rules could reflect
negatively on the Company and may lead to complaints by various federal and
state regulatory agencies. The Company has not received any complaints
regarding its sales activities.
The Company's network marketing system is or may be subject or affected by
extensive government regulation including, without limitation, federal and state
regulation of the offer and sale of business franchises, business opportunities,
and securities. Various governmental agencies monitor direct selling
activities. Although the Company believes that its network marketing system is
in substantial compliance with the laws and regulations relating to direct
selling activities, there is no assurance that legislation and regulations
adopted in particular jurisdictions in the future would not adversely affect the
Company's operations. The Company also could be found to be in non-compliance
with existing statutes or regulations as a result of, among other things,
misconduct by IMAs, who are independent contractors over whom the Company has
limited control, the ambiguous nature of certain regulations, and the
considerable interpretive and enforcement discretion given to regulators. Any
assertion or determination that the Company or the IMAs are not in compliance
with existing statutes and regulations could have a material adverse effect on
the Company. Furthermore, an adverse determination by any one state could
influence the decisions of regulatory authorities in other jurisdictions.
Competition. The products and programs offered by the Company are not
exclusive to the Company and the same or similar products and programs may be
offered and sold by others including other network marketing organizations,
discount department stores, and directly by manufacturers, distributors, or
designers of such products and programs. The Company expects that such
competitors are larger, better known and have substantially greater marketing,
financial, personnel and other resources, including established reputations and
working relationships than the Company. The Company anticipates intense
competition in all aspects of its business.
Industry Conditions and Cyclically. The Company's operations are dependent
largely upon retail sales of its products. Each product has a separate identity
for consumer use or consumption but the variety of products offered by the
Company including the products that may be offered in the future may best be
compared to discount department stores where the economy has a direct bearing
upon retail sales. Although national retail chains have in the past continued
expansion during recessions, particularly in areas of the nation that are less
affected by recession, a weak economy could depress the demand for the Company's
products and, from time to time, the prices for the Company's products could
fluctuate widely. The market for the Company's products are cyclical and are
affected by the same economic factors that affect the retail sales industry, in
general, including the availability of credit, changes in interest rates, market
demand and general economic conditions, all of which are beyond the Company's
control. Any deterioration in retail sales could have a material adverse effect
on the Company's business, financial condition and results of operations.
The Company's home based business program is founded on the premise that a
market exists for persons who desire a second income and the advantages
associated with self-employment. This program is not novel and has been offered
by network marketing companies, distributorships, and licensees for many years.
A program of this type is subject to dramatic change as a result of changes in
legislation affecting taxation and business opportunities for self-employed
persons. The program is also dependent upon the Company's ability to seek out
qualified tax and business consultants to develop its programs and to keep such
programs current. Though the Company believes that such consultants are readily
available, profitability in offering such program will be highly dependent upon
the costs the Company will incur associated with such consultants.
Dependence on Key Personnel. The success of the Company will depend upon
the continued service of its President, Michael C. Cooper. None of the
Company's officers or directors has entered into an employment agreement with
The Company. The loss of services of Mr. Cooper would be particularly
detrimental to the Company because of his experience in network marketing. The
Company has purchased key man life insurance on the life of Michael C. Cooper in
the amount of $500,000.
7
<PAGE>
Arbitrary Determination of Offering Price. The public offering price for
the Common Stock offered hereby was determined arbitrarily by the Company and
should not be assumed to bear any relationship to the Company's assets, net
worth or other generally accepted criteria of value. Recent history relating to
market prices of newly public companies indicates that the market price, if any,
of the securities following this Offering may be highly volatile. See "Plan of
Distribution."
Disclosure Relating to Low-Price Stocks. The Company intends to apply for
quotation of its Common Stock with the Over The Counter-Bulletin Board (OTC-BB).
The Company's Common Stock will be subject to the "Penny Stock Rules" adopted
pursuant to Section 15(g) of the Securities Exchange Act of 1934, as amended.
The "Penny Stock Rules" apply to non-NASDAQ companies whose common stock trades
at less than $5.00 per share or which have a tangible net worth of less than
$5,000,000 ($2,000,000 if the company has an operating history for three or more
years). Such rules require, among other things, that brokers which trade "Penny
Stocks" to persons other than "established customers" complete certain
documentation, make suitability inquiries of investors and provide investors
with certain information concerning trading in the security, including a risk
disclosure document and quote information, under certain circumstances. Many
brokers have decided not to trade "Penny Stocks" because of the requirements of
the "Penny Stock Rules" and, as a result, the number of broker/dealers willing
to act as market markers in such securities is limited. While the Company's
securities are subject to "Penny Stock Rules" there may develop an adverse
reaction on the market of the Company's securities. See "Plan of Distribution."
Concentration of Ownership - Anti-Takeover Provision. Michael C. Cooper,
the Company's President, and Director, is its principal shareholder and
controls, in the aggregate and prior to the Offering, 64.04% of the outstanding
stock. Subsequent to the Offering, assuming the Minimum Offering , Mr. Cooper
will control 52.03% of the Company and assuming the Maximum Offering, will
control 46.25% of the Company. As a result, Mr. Cooper will be able to have a
significant influence in the election of the board of directors of the Company
and the direction of the Company's business.
Certain provisions of the Company's Restated Articles of Incorporation and
Bylaws could make more difficult the acquisition of the Company by means of a
tender offer, proxy contest or the removal of officers and directors. See
"Description of Capital Stock."
Limitations on Director Liability. The Company's Restated Articles of
Incorporation provide, as permitted by governing Nevada law, that a director of
the Company shall not be personally liable to the Company or its stockholders
for monetary damages for breach of fiduciary duty as a director, with certain
exceptions. These provisions may discourage stockholders from bringing suit
against a director for breach of fiduciary duty and may reduce the likelihood of
derivative litigation brought by stockholders on behalf of the Company against a
director. In addition, the Company's Restated Articles of Incorporation and
Bylaws provide for mandatory indemnification of directors and officers to the
fullest extent permitted by Nevada law.
No Commitment to Purchase Common Stock; Deposits of Subscriptions. The
Company will attempt to sell the Common Stock through its own officers and
broker/dealers which elect to participate in the sale of the Common Stock as
agents of the Company. The Common Stock will be offered on a "best efforts"
basis and there is no firm commitment by anyone to purchase any of the shares of
Common Stock. The Company will not receive any proceeds if shares subject to
the Minimum Offering are not sold. If the Minimum Offering is not sold,
potential investors will lose the use of their funds for the Offering Period,
and any extension thereof, without receiving any consideration therefor,
although the funds invested by them will be returned. All subscriptions for the
common stock will be held in escrow with the Escrow Agent.
Trademarks, Copyrights and Other Proprietary Information. The Company has
potential trademark rights and copyrights for some of its products, but not for
all of its products. The Company relies upon certain suppliers of products
granting a company a "private label" for the distribution of such products.
Except to the extent of the Company's potential trademark rights and copyrights,
there is no assurance that any competitor could not offer the products for
8
<PAGE>
distribution the same as the Company and the Company has no protection against
competitors from developing similar brand names or promotional materials or
developing products or programs similar to those of the Company.
Shares Eligible for Future Sale. An aggregate of 117,647,560 Restricted
Shares of the Company's currently outstanding Common Stock are eligible for sale
pursuant to Rule 144 of the Securities Act of 1933, as amended; except that
111,295,227 of such shares are held by three persons (including officers and
directors) and are under a contractual limitation for one hundred and eighty
(180) days against the sale of shares held by such persons. If sales of any of
the Restricted Shares were to occur in substantial amounts, they could have an
adverse impact on the trading price of the Company's stock.
Dilution. Purchasers of shares offered hereby will experience an immediate
and substantial dilution in net tangible book value per share. To the extent
that outstanding options to purchase the Company's Common Stock are exercised,
the dilution in the net tangible book value per share will increase. See
"Dilution."
[REMAINDER OF PAGE INTENTIONALLY BLANK]
9
<PAGE>
USE OF PROCEEDS
Net proceeds to the Company will be approximately $4,450,000, assuming all
shares of Common Stock (50,000,000) offered hereby are sold, and after deducting
a maximum of $450,000 for commissions and an estimated $100,000 for Offering
expenses. (See "Plan of Distribution.") If only the minimum number of shares of
Common Stock (30,000,000) offered are sold, net proceeds to the Company will be
approximately $2,630,000, after payment of a maximum of $270,000 for commissions
and an estimated $100,000 for Offering expenses. The Company intends to use the
net proceeds for the purposes as set forth in the table below; however, actual
expenditures may vary substantially therefrom.
<TABLE>
<CAPTION>
MINIMUM MAXIMUM
APPLICATION AMOUNT PERCENTAGE AMOUNT PERCENTAGE
--------------------------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Sales Training and
Development (1) $ 650,000 25% $ 850,000 19%
Inventory of Products for
Retail(2) 400,000 15% 450,000 10%
Employee and Field
Management Expense(3) 250,000 9% 450,000 10%
Information Systems(4) 100,000 4% 175,000 4%
Promotional Items and
Expenses(5) 250,000 9% 400,000 9%
General Corporate Purposes
and Working Capital(6) 980,000 38% 2,125,000 48%
---------- ---- ---------- ----
TOTALS $2,630,000 100% $4,450,000 100%
========== ==== ========== ====
<FN>
- --------------------
(1) Sales training and development expense includes training materials, 1-800
voicemail systems and costs associated with training and sales seminars,
catalogs, video tapes, and other materials.
(2) The Company will continue to acquire certain products from suppliers and
manufacturers, inventory such items for shipment through sales orders, and
store such products at its warehouse facility.
(3) The Company anticipates that during the ensuing 12 months it will hire
additional clerical and service personnel, a national sales director, and
at least six regional sales directors. Additionally, the Company will bear
certain expense associated with the activities sponsored by key IMAs in the
various regions.
(4) Information systems include costs associated with upgrading the Company's
existing phone system to include digital PBX switch, voice mailbox,
selective pager and station messages. The Company intends to acquire
additional computers and software equipment to enhance its national
operations.
(5) Promotional items include sales brochures, awards, travel expense, costs
associated with the introduction of new products, trade shows, news
letters, and advertising.
(6) The Company's working capital requirements cannot be specifically
determined as of the date of this Prospectus. Generally, the Company
expects that working capital may be necessary for its current operations
and to offset unanticipated expenditures that may be incurred in the
development of its sales force and including additional administrative
personnel.
</TABLE>
Projected expenditures in the foregoing table represent estimates of the
Company's present intentions. Changes in allocations of such funds may be made
at the discretion of the Board of Directors. Any amounts not expended as
indicated may be added to the general working capital of the Company.
10
<PAGE>
The Company may in the future find it necessary or advisable to change the
allocation of net proceeds due to the availability of other business
opportunities, including joint ventures and the acquisition of businesses in
areas related to the Company's business, or other factors. The Company is not
engaged in any negotiations nor does it have any commitments with respect to any
joint ventures or acquisitions at this time and there can be no assurance that
any such transactions will occur. While the Company has not entered into any
negotiations, management believes that it can substantially increase the
revenues of the Company through the acquisition of existing sales forces
associated with other network marketing companies in some of its primary market
areas. The Company intends to utilize a portion of the net proceeds of this
Offering to affect such acquisitions if such acquisitions are obtainable on
terms the Company considers advantageous.
Pending application of proceeds of this Offering, the Company will make
temporary investments in interest-bearing savings accounts, certificates of
deposit, United States government obligations, money market accounts or short-
term interest-bearing securities.
DIVIDEND POLICY
The Company has never declared or paid a cash dividend on its Common Stock
and does not anticipate paying any cash dividends or other distributions on its
Common Stock in the foreseeable future. The current policy of the Company's
Board of Directors is to reinvest earnings to finance the expansion of the
Company's business.
[REMAINDER OF PAGE INTENTIONALLY BLANK]
11
<PAGE>
CAPITALIZATION
The following table sets forth the capitalization of the Company as of
March 31, 1998, (1) on an actual basis, and (2) as adjusted to reflect the
receipt of estimated net proceeds from the sale by the Company of 30,000,000
shares of Common Stock pursuant to this Offering at the minimum level and
50,000,000 shares of Common Stock at the maximum level at an assumed initial
public offering price of $0.10 per share and after deducting underwriting
discounts and commissions and estimated offering expenses and the application of
the estimated net proceeds therefrom. See "Use of Proceeds."
<TABLE>
<CAPTION>
March 31, 1998
----------------------------------------
As Adjusted
-------------------------
Actual(1) Minimum Maximum
---------- ---------- ----------
<S> <C> <C> <C>
Long-Term debt $ -0- $ -0- $ -0-
Stockholders' equity: ---------- ---------- ----------
Common Stock, $0.01 par value; 500,000,000 shares authorized;
130,000,000 shares issued and outstanding, actual;
150,000,000 shares issued and outstanding as
adjusted at the minimum level; 180,000,000
shares issued and outstanding, as adjusted
at the maximum level $1,300,000 $1,600,000 $1,800,000
Additional paid-in capital (deficit) (476,300) 1,853,700 3,473,700
Retained earnings (deficit) (191,856) (191,856) (191,856)
---------- ---------- ----------
$ 631,844 $3,261,844 $5,081,844
Less treasury stock - at cost (21,000) (21,000) (21,000)
---------- ---------- ----------
Total stockholders' equity 610,844 3,240,844 5,060,844
---------- ---------- ----------
Total Capitalization $ 610,844 $3,240.844 $5,060,844
========== ========== ==========
<FN>
- --------------------
(1) Derived from the Company's unaudited financial statements included elsewhere
in this Prospectus. See "Financial Statements."
</TABLE>
DILUTION
The net tangible book value (deficit) of the Company's Common Stock as of
March 31, 1998 and as adjusted for an approximate 10,063.0878197 for 1 stock
split ("stock split") effective as of March 13, 1998, was approximately $575,114
or approximately $0.004460 per share. "Net tangible book value" per share
represents the amount of the Company's tangible assets less total liabilities,
divided by 128,943,376 shares of Common Stock outstanding.
Net tangible book value dilution per share represents the difference
between the amount per share paid by purchasers of shares of Common Stock in the
Offering made hereby and the adjusted net tangible book value per share of
Common Stock immediately after completion of the Offering. After giving effect
to the sale of 30,000,000 shares of Common Stock in this Offering at an assumed
12
<PAGE>
offering price of $0.10 per share and the application of the estimated net
proceeds therefrom, the adjusted net tangible book value of the Company as of
March 31, 1998, (giving effect to the stock split at March 13, 1998) would have
been $3,240,844, or $0.0204 per share. This represents an immediate increase in
net tangible book value of $0.015663 to existing shareholders, and an immediate
dilution in net tangible book value of $0.0796 per share to purchasers of Common
Stock in the Offering as illustrated in the following table:
<TABLE>
<S> <C> <C>
Assumed initial public offering price per share $0.10
net tangible book value per share at March 31, 1998 $0.004460
Increase per share to existing shareholders attributable
to sale of shares to new investors $0.015940
---------
As adjusted net tangible book value per share after the Offering $0.0204
-------
Net tangible book value dilution per share to new investors $0.0796
=======
</TABLE>
The following tables set forth, on an adjusted basis as of March 31, 1998,
and giving effect to the stock split, the difference between the existing
shareholders and the purchasers of shares in the Offering (at an assumed
Offering price of $0.10 per share) with respect to the number of shares of
Common Stock purchased from the Company, the total consideration paid and the
average price per share paid:
<TABLE>
<CAPTION>
MINIMUM OFFERING
SHARES PURCHASED TOTAL CONSIDERATION AVERAGE PRICE
-------------------------- ------------------------
NUMBER PERCENT AMOUNT PERCENT PER SHARE
----------- ------- ----------- ------- -------------
<S> <C> <C> <C> <C> <C>
Existing shareholders 128,943,376 86.57% $ 802,700 21.11% $0.007
New investors 30,000,000 13.43% 3,000,000 78.89% $0.10
----------- ------- ----------- -------
Total 158,943,376 100% $ 3,802,700 100%
=========== ======= =========== =======
</TABLE>
<TABLE>
<CAPTION>
MAXIMUM OFFERING
SHARES PURCHASED TOTAL CONSIDERATION AVERAGE PRICE
-------------------------- ------------------------
NUMBER PERCENT AMOUNT PERCENT PER SHARE
----------- ------- ----------- ------- -------------
<S> <C> <C> <C> <C> <C>
Existing shareholders 128,943,376 72.06% $ 802,700 13.83% $0.007
New investors 50,000,000 27.94% 5,000,000 86.17% $0.10
----------- ------- ----------- -------
Total 178,943,376 100% $ 5,802,700 100%
=========== ======= =========== =======
</TABLE>
13
<PAGE>
SELECTED FINANCIAL AND OPERATING DATA
The following selected financial data should be read in conjunction with
"Management's Discussion and Analysis of Financial Condition and results of
Operations" and the financial statements and notes thereto included elsewhere in
this Prospectus. The statement of operations data set forth below with respect
to the period from June 17, 1995 (Date of Inception) to December 31, 1995, and
the years ended December 31, 1996 and 1997, and the balance sheet data as of
such dates are derived from the financial statements and the notes thereto of
the Company, which have been audited by Berberich Trahan & Co., P.A.,
independent certified public accountants. The statement of operations data for
the three months ended March 31, 1997 and 1998, and the balance sheet data as of
March 31, 1998, are derived from unaudited financial statements and, in the
opinion of management, include all adjustments (consisting solely of normal
recurring adjustments) necessary for a fair presentation of the financial
position and the results of operations of the Company for such periods. The
results of operations for any interim period are not necessarily indicative of
results of operations for the full year.
<TABLE>
<CAPTION>
Period From
June 17, 1995
(Date of Three Months Ended
Inception) to Year Ended Year Ended -------------------------------
December 31, December 31, December 31, March 31, March 31,
1995 1996 1997 1997 1998
-------------- ----------- ----------- ------------- -------------
(Unaudited)
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATION DATA:
Revenue.................................... $ 340,108 $ 3,730,220 $ 1,217,835 $ 276,711 $ 889,147
Cost of goods sold......................... 92,384 709,675 413,809 115,312 90,929
Commissions expense........................ 119,874 1,315,368 460,885 115,277 306,982
Other operating, selling and
administration expenses................ 113,010 1,482,756 929,437 313,439 299,116
Other income (expense)..................... 107 (22,367) 1,571 1,364 1,748
Income taxes refund (expense).............. - (83,000) 67,000 67,000 -
Net income (loss).......................... 14,947 117,054 (517,725) (198,953) 193,868
Income (loss) per share:
Basic................................. .0001 .0011 (.0043) (.0017) .0015
Diluted............................... .0001 .0011 (.0043) (.0017) .0015
Weighted average common shares
outstanding:
Basic................................. 100,630,878 108,123,686 120,173,814 117,513,385 128.943,376
Diluted............................... 100,630,878 108,123,686 121,507,147 117,513,385 132,943,376
</TABLE>
<TABLE>
<CAPTION>
December 31, December 31, March 31,
1996 1997 1998
---------------- ----------------- --------------
<S> <C> <C> <C>
BALANCE SHEET DATA:
Working capital......................................... $ 198,579 $ 328,547 $ 465,319
Total assets............................................ 543,592 544.983 751,079
Total debt.............................................. 230,891 128,007 140,235
Stockholders' equity.................................... 312,701 416,976 610,844
</TABLE>
14
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
INTRODUCTION
The Company was incorporated on June 17, 1995. They adopted a calendar
year end for financial and tax reporting purposes. The Company began marketing
fine jewelry, art and collectibles. During 1996, the Company expanded its
product line to include gourmet foods and other consumable items. By March 31,
1997, the Company had 14,485 independent sales representatives located in 50
states.
In 1997, the Company shifted the marketing focus and began the research and
development of the Tax Advantage System that was to be introduced to the
independent sales representatives during the last quarter of 1997. By the end
of 1997, the Company had 19,285 independent sales representatives. Management
estimates that 16,000 of these independent sales representatives would be
considered actively participating in the business.
In November, 1997, the Company began marketing the Tax Advantage System
through their Advantage International Marketing (AIM) division. The Company
markets the Tax Advantage System through its independent marketing associates.
At the end of 1997, the Company had 489 independent marketing associates in
their AIM division. As of March 31, 1998, the Company had expanded its
independent marketing representatives to 1,648, of which the management
estimates 1,500 can be considered actively participating in the business. As of
March 31, 1998, the Company had a total of 20,933 independent marketing
representatives enrolled in the Company.
The Company intends to continue to expand its independent sales
representatives network and its product sales through their AIM division and
the marketing of the Tax Advantage System. Expanding the AIM division should
also account for increased product sales for the Company. The Company believes
that this strategy, which calls for continued penetration nationally, will allow
for the appropriate focus of management resources.
The Company does not manufacture any products though it does some
repackaging in its Topeka, Kansas warehouse. Products are either shipped from
the warehouse or shipped from the suppliers.
RESULTS OF OPERATIONS
The following table sets forth information derived from the Company's
statements of operations expressed as a percentage of revenues:
<TABLE>
<CAPTION>
Period From
June 17, 1995
(Date of Three Months Ended
Inception) to Year Ended Year Ended -----------------------
December 31, December 31, December 31, March 31, March 31,
1995 1996 1997 1997 1998
------------- ----------- ----------- -------- ---------
(Unaudited)
<S> <C> <C> <C> <C> <C>
Revenue.................................... 100.00% 100.00% 100.00% 100.00% 100.00%
Cost of goods sold......................... 27.16% 19.03% 33.98% 41.67% 10.23%
Commissions expense........................ 35.25% 35.26% 37.84% 41.66% 34.53%
Other operating, selling and
administration expenses................ 33.23% 39.75% 76.32% 113.27% 33.64%
Other income (expense)..................... 0.03% -0.60% 0.13% 0.49% 0.20%
Income taxes refund (expense).............. 0.00% -2.23% 5.50% 24.21% 0.00%
Net income (loss).......................... 4.39% 3.14% -42.51% -71.90% 21.80%
</TABLE>
15
<PAGE>
PERIOD ENDING MARCH 31, 1998, COMPARED TO PERIOD ENDING MARCH 31, 1997
REVENUES
The Company at March 31, 1998, had sales of $889,147 compared to $276,711
for the same period in 1997, an increase of $612,436. Management accounts for
the increased sales to the introduction of AIM and the rolling out of the AIM
products. Management believes that 90% of the sales for the period ending March
31, 1998, are attributable to the creation of AIM and the products introduced
through that division. The Company at March 31, 1998, had 20,933 sales
representatives compared to 14,485 in the same period in 1997.
COST OF GOODS SOLD
Cost of goods sold decreased from $115,312 to $90,929 for the period ending
in 1997 as compared with the same period in 1998, a decrease of $24,383.
Management accounts for the decrease as the AIM division is selling information
and services thus is less expensive to produce the proprietary AIM products.
Cost of sales was 10.23% of revenues for period ending in 1998 versus 41.67% for
period ending 1997. This decrease also points to the selling of information and
services instead of the tangible products. Management estimates that, while the
costs of sales will increase in the future with expanded growth, a percentage of
sales remain constant due to operational efficiencies.
COMMISSIONS
Commissions increased from $115,277 for the period ending March 31, 1997,
to $306,982 for the same period in 1998, an increase of $191,705 for the period.
The increase in commissions is due to the introduction of AIM products to the
field.
As a percent of revenue, commission expense decreased from 41.67% for the
period ending March 31, 1997, to 34.53% for the same period in 1998. Commission
expense decreased as a percent of revenue due to the AIM division being new to
the sales field. Most representatives had not produced sufficient number of
sales or did not have enough sales volume to qualify for additional bonuses and
incentives. Management foresees commission expense as a percent of revenues to
increase as more sales representatives do more business to qualify for bonuses
and upper level incentives.
OTHER OPERATING, SELLING AND ADMINISTRATIVE EXPENSES
Other operating, selling and administrative expenses decreased $14,323 for
the period ending March 31, 1998, compared to the same period in 1997 due to
employee reductions and operational efficiencies that were started during
calendar year 1997 due to the declining sales volume through the first three
quarters of 1997. For the three months ending March 31, 1998, the Company
incurred approximately $125,000 in salaries and wages, $40,000 in bank and
credit card fees, $33,000 in home office and warehouse rents, $17,000 in
utilities and telephones, $8,000 in travel costs, primarily to recruit
independent sales representatives, $11,000 in taxes and licenses, and $15,000
for shipping and supply costs. It is anticipated that other operating, selling,
and administrative expenses will be higher in 1998 if the level of operation
continues to expand.
INCOME TAXES
No income taxes were provided for the three months ended March 31, 1998, as
the Company utilized previously reserved net operating loss carryforwards to
offset taxes which would have been provided based on income before income tax.
(See Note 2 of the financial statements.) An income tax refund of $67,000 was
provided for the three months ended March 31, 1997, due to the carryback of this
quarter's losses against 1996 income.
16
<PAGE>
YEAR ENDED DECEMBER 31, 1997, COMPARED TO YEAR ENDED DECEMBER 31, 1996
REVENUES
Revenues decreased $2,512,385. The decline in revenues was due to the
Company shifting focus from the Renaissance product line to research and
development of the new AIM division. While the Company sacrificed a significant
amount of sales due to the development of the new products, it was management's
philosophy that AIM could far exceed the potential of Renaissance in revenues
generated. For most of 1997, the Company did not actively market or even
attempt to increase its sales representatives. By the end of 1997, the Company
had 19,285 independent sales representatives of which the Company estimates that
16,000 of those representatives were active in the business.
COST OF GOODS SOLD
Cost of goods sold decreased from $709,675 for the year ended December 31,
1996 to $413,809 for the year ending December 31, 1997, a decrease of $295,866.
The decrease in the cost of goods sold is attributed to the reduced sales during
1997.
As a percent of revenues, cost of goods sold increased from 19.03% for the
year ended December 31, 1996 to 33.98% for the year ended December 31, 1997.
The increase was due to increased inventory, specifically the DeLiteFull Cookie,
to satisfy the demand that was anticipated to grow in late 1996 into 1997.
Instead, demand steadied and eventually declined as the Company did not
aggressively market to expand its sales force during most of 1997.
COMMISSIONS
Commission expense decreased $854,483 for the year ended December 31, 1996
to the year ended December 31, 1997. Commission decrease can be explained by
the declining sales in 1997. As a percent of revenues, commission expense was
comparable at 35.26% for the year ended December 31, 1996, and at 37.84% for the
year ended December 31, 1997.
OTHER OPERATING, SELLING AND ADMINISTRATIVE EXPENSES
Other operating, selling and administrative expenses decreased $553,319.
The Company began implementing cost cutting measures due to the decline in
sales. In addition, the Company started to experience some savings due, in
part, to operational efficiencies. For the year ended December 31, 1997, the
Company incurred approximately $287,000 in labor costs, $45,000 in utilities and
telephone, $47,000 in shipping and postage, $89,000 in home office and warehouse
rents, $27,000 in bank and credit card fees, $60,000 in travel costs associated
to recruiting new independent sales representatives, and $39,000 in legal fees.
The Company also incurred $20,100 for leasing software for part of the year in
1997 from its Chief Executive Officer, this lease arrangement was terminated
during 1997.
INCOME TAXES
In 1997, the Company reflected an income tax refund of $67,000,
representing the amount it is able to carryback operating losses to 1996. At
December 31, 1997, the Company reserved the potential tax benefit of
approximately $115,000 relating to operating loss carryforwards because the
likelihood of realization could not be established. (See Note 2 to the
financial statements.)
17
<PAGE>
YEAR ENDED DECEMBER 31, 1996, COMPARED TO PERIOD FROM JUNE 17, 1995, (DATE OF
INCEPTION) TO DECEMBER 31, 1995
REVENUES
The Company was incorporated on June 17, 1995, and started with several
jewelry and fine art products which were sold through independent sales
representatives. The Company expanded rapidly, particularly in the latter half
of 1996. Revenues were up $3,390,112 for the full year 1996 as compared to the
period June 17, 1995 (Date of Inception) to December 31, 1995. At December 31,
1996, the Company had expanded its jewelry and fine art collectibles base of
products and added gourmet food products and high fiber, low-fat cookies. At
December 31, 1996, the Company's independent sales representatives totaled
13,840 in 50 states.
COST OF GOODS SOLD
Cost of goods sold increased $617,291 for the full year 1996 as compared to
the period June 17, 1995 (Date of Inception) to December 31, 1995, due to the
increase in product sales. Cost of goods sold was 19% of revenues in 1996
versus 27% of revenues in 1995. The decrease in the percentage is attributed to
operational efficiencies associated with the increased volume.
COMMISSIONS
Commissions expense increased $1,195,494 for the full year 1996 as compared
to the period June 17, 1995 (Date of Inception) to December 31, 1995, due to the
increase in product sales. As a percent of revenue, commission expense was
comparable at approximately 35%.
OTHER OPERATING, SELLING AND ADMINISTRATIVE EXPENSES
Other operating, selling and administrative expenses increased $1,369,746
due to the expansion of the business and establishment of an employee base. In
1996, the Company incurred approximately $430,000 in labor costs, $180,000 in
printing costs associated with product catalogs, $190,000 in shipping and supply
costs, $130,000 in travel costs, primarily to recruit independent sales
representatives, $100,000 in taxes and licenses, $80,000 in home office and
warehouse rentals, $60,000 for software rental, $55,000 for utilities and
telephone, and $50,000 in credit card servicing. A substantial part of the
growth in these expenses occurred in the last six months of 1996.
OTHER EXPENSE
Other expense in 1996 includes a $25,928 writedown to market of an
investment in precious metals. This investment was sold in 1997 at
approximately book value.
INCOME TAXES
The 1996 provisions for income taxes was computed based on pre-tax income
at statutory tax rates.
LIQUIDITY AND CAPITAL RESOURCES
Historically, the Company has satisfied its need for liquidity and capital
through issuance of common stock and cash flow from operations. At March 31,
1998, the Company had no long-term debt. The Company has no trade receivables
as products are paid for prior to shipment. The Company has had to increase
inventory, particularly the Tax Advantage System, to meet the demand of the
products. At March 31, 1998, the Company had working capital of $465,319. At
December 31, 1997 and 1996, the Company had working capital of $328,547 and
18
<PAGE>
$198,579. During 1996, 1997 and the three months ended March 31, 1998, the
Company had captial expenditures for furniture, equipment, and vehicles of
$116,217, $12,653, and $28,872, respectively.
The Company's primary cash requirements following the Offering will be to
acquire inventory, develop sales and marketing, purchase equipment, and for
general corporate purposes. The Company anticipates that the proceeds from this
Offering will be sufficient to fund its planned expansion and other operating
cash requirements through the end of the second quarter of 1999.
IMPACT OF ACCOUNTING STANDARDS
In 1997, the Financial Accounting Standards Board (FASB) issued SFAS No.
131, Disclosure About Segments of an Enterprise and Related Information, in
1997. This statement will have no impact on the Company.
The Company has used Macintosh networking, data base, and bookeeping
system. Macintosh systems and software sold after 1984 have provided for change
of year from 1999 to 2000. Management is confident that there will be no
problems with their management information system in the year 2000.
INFLATION
The Company does not believe that inflation has materially affected results
of operation from inception to date. Substantial increases in costs,
particularly product, commissions, labor and employee benefits, could have a
significant impact on the Company.
BUSINESS
GENERAL
The Company was formed in June, 1995, and began developing a national
network marketing sales organization through the recruitment of independent
sales representatives throughout the country. The Company first introduced its
line of fine jewelry and collectible items as its major products. By mid-1996,
the Company had introduced various products on a "product-line-after-product-
line" concept. In November, 1997, the Company developed a home based business
program entitled "Advantage International Marketing" ("AIM) directed to
individuals with interest in establishing a second income. The AIM plan is
intended for the home based business to offer the products of the Company,
though such marketing is not mandatory. The Company's strategy is to build a
successful mass market for an unlimited number of universally appealing products
to be sold to the general public based solely on extremely attractive pricing
through its representatives and others operating their own business for such
purposes. The Company is highly dependent upon its national network of IMAs,
who are uniquely compensated by the Company and are provided training and sales
support by the Company. The Company intends to continue to introduce new
products on a continuous basis and will utilize its mass marketing ability to
obtain such products at reduced prices from manufacturers and suppliers, and to
develop other programs for marketing in the future.
From proceeds received as a result of this Offering, the Company will be
able to inventory products without borrowing, strengthen its support and
services to its sales force and, promote its products and services.
COMPANY'S STRATEGY
The Company's goal is to be a provider of a wide range of products and
services through a national sales organization of IMAs which will be able to
sell such products and services at the most favorable prices. The Company
19
<PAGE>
intends to increase revenues from the sales, increase its IMA network, and
provide additional revenue opportunities for its IMA network. The Company
intends to achieve this goal by pursuing the following strategy:
* maintain and expand its product base by continuing to offer
high quality, competitively-priced products with careful
customer care through a highly motivated and growing network
of IMAs.
* expand its product line by researching and introducing new
products that can be acquired by the Company through its
mass marketing sales power at reduced prices and offering
such products to its customers at favorable prices.
* continue to update and provide additional services under the
Company's home based business program and enhance the
program by updating tax and business techniques associated
with a home business and provide incentive compensation,
advertising and promotion.
* grow and develop its network of independent sales
representatives by enhancing the recruiting and training
services offered to IMAs, continuing to support the
marketing efforts of IMAs, and introducing new income
opportunities for IMAs.
PRODUCTS
The Company offers a variety of products. Products are selected when the
Company's research indicates a high consumer acceptance and an easily
identifiable product for the consumer. Therefore, the Company's products are
not novelty-type or products that are "first initiated" for sale. The selection
of the Company's products also includes the Company's ability to easily
introduce such products to its IMAs who, in turn, can retail such products to
their customers. Most products offered by the Company are introduced through a
catalog, sales brochure or other document that can easily be displayed to the
customer with simplified order forms.
The following are the products currently being offered by the Company:
* Fine Jewelry. The Company offers a wide variety of gold
jewelry, precious gemstones, sterling silver, and cubic
zirconia jewelry identified in an approximate 3,000 item
catalog. Supplementing the catalog is a pre-owned Rolex
watch program. All 14KT gold jewelry is plumb. "A" quality
diamonds are industry standard VS-2/SI-1 and "B" quality
diamonds are industry standard SI-2/I-1. Cubic Zirconia is
of the highest quality and all sterling silver jewelry is no
less than .925 purity (unless otherwise identified in
specific terms in the catalog).
* Fine Art and Collectibles. The Company, through its
Designer Gallery Fine Art Catalog, offers a selection of
sculptures and a gallery of animation and collectible items
such as historical memorabilia, antique replicas, sports and
entertainment pictures and guaranteed signatures, and other
notables.
* The Vision Catalog. This catalog offers thousands of
products denoting the "something for everyone" introduction
of items ranging from cookware to camping equipment and gift
items to tool sets.
* Vision 2000 Telephone Program. The Company's Vision 2000
program features traditional 1-plus dialing from home or
business at reduced rates, 1- plus 800 services, the Vision
2000 phone card, and pre-paid calling cards.
20
<PAGE>
* Gourmet Foods. Through the Company's "A Taste of
Renaissance" gourmet food line, the Company features jams,
jellies, syrups, salsas, mixes and dips. Each product can
be purchased individually or in a gift package. This 80-
item product line offers a wide variety of selection and is
designed by the Company to work as a fund raising program
for churches, schools and other not-for-profit
organizations.
* Truck/Utility Sport Vehicle Accessories. The Company offers
a full line catalog of truck accessories and sports utility
performance parts. This product line was specifically
developed to participate in the increase in the popularity
of utility sport vehicles and trucks.
* Golf and Clothing. The Company offers golf equipment
through a major manufacturer of golf equipment, including
Axiom irons, titanium oversized drivers, and golf bags and
shoes. The Company offers jeans, shirts and sport clothes
manufactured by a popular brand company.
The Company offers gift certificates for all of its products. All products are
accompanied by guarantees or warranties provided by the manufacturer or
distributor of the product.
AIM
The Company formed Advantage International Marketing ("AIM") in November,
1997 as a division
of the Company in order to separate the product and program marketing. AIM is
specifically marketed to individuals desiring to establish a home based
business. This "second income" strategy guides the customer through the
operations of a home based business, including a business plan, medical
reimbursement plans, tax manuals, and various ledgers and logs associated with
business expense. Ideally, these home based business customers will choose the
Company's products for their business opportunity. The following are the
services being offered by the Company through its AIM division:
* Tax Advantage System. This is a complete "turn-key" home
based business system, including IMA status in offering the
Company's products at wholesale pricing. The Tax Advantage
System provides a complete business plan and break-even
budget analysis documenting the profit intent of the
business, business contracts required for tax deduction
validation, vehicle logs, simplified receipt filing system,
training manuals, and audio training tapes. The Tax
Advantage System may be purchased by the IMA for $300.
* Prepaid Tax Advantage. The Prepaid Tax Advantage (PTA) is a
comprehensive monthly business, tax, and accounting
consulting service provided by the Company in association
with independent tax and business consultants. The service
includes unlimited access to these independent tax and
business consultants via conference calls, individual e-
mail, toll-free-one-on-one tax advice, free 1040 return
preparation with supporting schedules at discounted rates,
as well as free audit assistance. All PTA services are
provided free to any IMA once they earn a minimum of $300 in
commissions. The PTA retails for $100 per month.
In order to implement the AIM program, the Company retains, on a
contractual basis, tax and business consultants who are compensated based on the
number of participants in the program and, to some extent, overrides on written
materials that are produced by such consultants.
21
<PAGE>
MARKETING/COMPENSATION
The Company is highly dependent on the management, training and development
of its direct network marketing sales organization organized through the
recruitment of independent sales representatives (IMAs). These IMAs retail the
various product lines offered by the Company and the Company's other programs.
Any person, partnership or corporation may elect to become an IMA of the Company
upon completing the appropriate Application and Agreement form supplied by the
Company. Each IMA is authorized to order all of the Company's products at the
Company's IMA cost and then retail the products to their customers at a profit.
The AIM program is retailed at set costs per program acquired. The Company
prepares suggested price lists for each of its products, though such prices may
change from various areas of the country and pricing to the Company's customer
is left with the IMA. The Company has adopted a recruitment program of
"friends telling friends" concept which attempts to achieve a high number of
independent representatives which in turn can enhance the distribution of the
Company's products. The Company does not require IMAs to make monthly purchases
or inventory any products to qualify for commissions, bonuses, awards or other
compensation offered by the Company. All IMAs can earn a retail profit through
retail sales, earn an override commission, and qualify to participate in the
national percentage of revenue generated by the Company.
The Company tracks each IMA's personal sales as well as accumultating down
line sales volumes qualifying the "Trilogy Comprehensive Plan" within the
accounting field for each IMA, called a "business center." Once an IMA
qualifies the business center with a minimum of $300 of retail product sales,
the IMA may begin to recruit and sponsor other IMAs for a sales group. Sales
made anywhere within the sales group are posted to both the selling IMA's
business center and to the up line business center of the sponsor, who may
qualify for the various overrides and bonuses on total group sales.
The "Trilogy Compensation Plan" provides for the payment of commissions and
bonuses on a daily, weekly, and monthly basis and is designed to generate
potential income to the IMA on any one sales group or any one or all of three
legs within a sales group under a business center. An IMA may earn a direct
sales bonus on each product or system personally sold and be paid daily. Once
the IMA down line sales group has generated a minimum of three to nine sales in
all of its three legs, or nine sales in any two legs, the IMA earns the right to
participate in an additional bonus, which is computed daily and paid weekly.
The Company has introduced decremental posting where all excess sales
volume is carried over to benefit the next pay period for the IMA, until the IMA
reaches the maximum daily bonus of $900. Decremental posting eliminates the
industry practice of "breakage" where undedicated revenues, such as excess sales
volumes, become the property of the Company. Additionally, the system was
designed to avoid a practice where, once a bonus is paid, the marketing
representative is forced to go to the next additional pay period ("flushing")
without any credit for the excess sales volume associated with product and
program sales.
For sales of the Company's PTA, the Company provides a monthly residual
bonus to each IMA based upon the number of customers within the IMA's sales
group, through twelve levels, plus the right to participate in 15% of the total
nationwide revenues from the prepaid Tax Advantage System pooled from all
qualifying IMAs. The monthly residual bonus plan is designed for customer and
IMA retention through a generous revenue sharing program.
CUSTOMER CARE
All products distributed by the Company carry certain warranties and
guarantees. It is the policy of the Company to pass through to the consumer the
warranties that the Company's suppliers and manufacturers have provided and the
Company offers customers the right to return any product within fifteen (15)
days after receipt for a full refund or exchange, less any shipping and handling
charges. Products, literature, and sales materials purchased by IMAs may be
22
<PAGE>
returned to the Company within fifteen (15) days at a full refund. The Company
has experienced minimal refunds and returns on products and materials.
The Company maintains a Customer Service Department to assist and support
any requests for refunds and/or returns of its product lines. This department
also provides all IMAs assistance in answering questions regarding applications,
order forms, sales literature, and other related matters.
SUPPLIERS
All of the Company's products are manufactured or distributed by others.
Normally, the Company negotiates with such suppliers the price of the products
based upon its anticipated sales, credit arrangements, and amounts that will
initially be purchased in inventory. On occasion, the Company will negotiate an
"exclusive" product but normally such products are low selling items of
suppliers. Supplier agreements are not under contract and are subject to
cancellation by either party at any time. The volume of purchases made by the
Company of products from suppliers dictates the relationship between the
parties. The Company has experienced no problems with any of its suppliers and
believes that there is an abundance of manufacturers and distributors for the
products that it may choose to offer and sell.
For its AIM division, the Company contracts with independent tax and
business consultants to provide tax and business advice for its program and for
written materials authored by such consultants to accompany the program.
Generally, these persons are compensated on the basis of the number of sales of
their written product, the number of program users, and expenses associated with
travel, conferences and incidental services. The Company believes that the loss
of any tax or business consultant that it uses may be easily replaced because
of the number of such consultants available.
MANAGEMENT OF IMAS
Each IMA receives a procedures manual which contains policies and
procedures which must be followed in order to maintain the IMA's status in the
Company. IMAs are expressly forbidden from making any representation as to the
possible earnings of any IMA from the Company, other than material prepared by
the Company demonstrating the commissions and overrides paid by the Company to
all IMAs. IMAs are prohibited from creating any marketing literature that has
not been pre-approved by the Company. To date, the Company has experienced no
complaints regarding any of its IMAs but intends to enforce its policies and
procedures by either suspending or terminating any violator. Because IMAs are
classified as independent contractors, the Company is unable to provide them the
same level of direction and oversight as Company employees. While the Company
has these policies and procedures in place governing the conduct of IMAs, it is
difficult to enforce such policies and procedures for the IMAs. Any violations
of the Company's policies and procedures could reflect negatively on the Company
and may lead to informal complaints by various state regulatory authorities and
could have a material adverse effect upon the Company's results of operations.
IMA TRAINING AND MARKETING SUPPORT
The Company provides all IMAs with live, interactive training on a daily
basis from the home office staff with nationwide conference calls at various
times each day, as well as local and regional training workshops on a periodic
basis.
Conference calls provide an overview of the Company's products to enhance
customer retail sales, provide an outline of the Trilogy compensation program
for prospective IMAs, and contain question and answer sessions for prospective
customers and the IMAs. Each Sunday evening the Company's president, Michael C.
Cooper, hosts a conference call addressed to all IMAs for new products and
services, meeting locations, updates, and questions and answers from the IMAs.
23
<PAGE>
The Company publishes a full color bi-monthly newsletter providing
corporate information, tax updates, product updates, motivational articles, and
sales achievement recognition. In addition, the Company's tax and business
consultants provide tax and informational bulletins in association with the
Company to all IMAs.
The Company maintains a state-of-the-art facsimile available 24 hours per
day, seven days a week. This system also provides a voice-on-demand menu on
which callers can hear audio overviews of the Company, its products and
compensation plan, and other promotional items.
The Company sponsors two Web sites on the Internet (www.takingAIM.com and
www.RENABC.com), which provide information on the Company, its products,
marketing, customer service and lead generation. The Company maintains the Web
site from its own offices. The Company operates a call center staff by its
marketing support personnel who have automated systems to answer questions of
customers and IMAs.
At the date of this Offering, the Company has independent sales
representatives contracts in excess of 20,000 (including approximately 2,300
through its AIM division) throughout the United States. Because the Company has
a no-cost policy relating to such agreements with its IMAs, there is a small
amount of terminations of such agreements. The Company, based upon compensation
paid to IMAs, believes that approximately 40% of the IMAs actively promote the
Company's business.
REGULATION
The Company's network marketing system is or maybe subject to or effected
by extensive government regulation, including, without limitation, state
regulation of marketing practices and federal and state regulation of the offer
and sale of business franchises, business opportunities, and securities. In
addition, the Internal Revenue Service and state taxing authorities in any state
where the Company has IMAs could classify the IMAs as employees of the Company
(as opposed to independent contractors). Any assertion or determination that
the Company's business is not in compliance with government requirements could
have a material adverse effect upon the Company's results of operations.
While the regulations governing network marketing are complex and vary from
state to state, the Company believes that it is in compliance with and has from
time to time modified its network marketing system to comply with various
regulatory authorities. The failure to comply in any one state could cause the
Company to pay fines as well as to stop doing business in that state, which
could influence the decisions of regulatory authorities in other states and
could have a material adverse effect upon the Company's results of operations.
FACILITIES/COMPUTER SYSTEM
The Company maintains its corporate headquarters at 1001 S.W. Gage
Boulevard in Topeka, Kansas. Its headquarters are located in the historical
mansion locally known as "Fleming Place." This Georgian colonial mansion was
built between 1924 and 1926 and has been a local landmark and focal point of the
City of Topeka for many years. The mansion is a three-story facility of
approximately 6,000 square feet. The Company leases its home office for a
monthly rental of $5,856. The lease expires December 31, 1998. The Company
anticipates the renewal of this lease.
The Company maintains a warehouse facility at 304 S.E. 21st Street in the
city of Topeka. This facility of approximately 10,000 square feet warehouse
space contains facilities for shipping and receiving and limited office space.
The warehouse facility is under lease for $1,000 per month, plus utilities, with
taxes shared with the landlord. The warehouse lease is on a month to month
basis.
The Company maintains a state-of-the-art computer network with the
capabilities for database management, accounting, purchasing, and full color
graphics production. The network server is new generation and can be updated
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<PAGE>
for higher speed processors as developed. Each home office staff member
maintains a workstation with a fully capable PC to be able to provide better
service to the IMAs and customers.
The Company's software for the "Trilogy Compensation Plan," was developed
by Michael C. Cooper. This system processes orders daily, computes commissions
and bonuses for thousands of IMAs and then generates daily bonus checks or daily
payments to the IMAs. This software was specifically developed for the Company.
The program allows the Company the ability to adapt, add product lines,
incentive programs, and other marketing requirements without delay associated
with outside programming services. The daily payment of commissions has been a
prominent recruiting tool of IMAs by the Company and its IMAs. The Company's
computer and software system are not affected by the "Year 2000" concerns.
EMPLOYEES
As of May 15, 1998, the Company has 15 full-time employees and 2 part-time
employees. Currently, 5 full-time employees maintain the customer service
department and the product ordering department and are supported by 1 full-time
and 1 part-time employee in the warehouse and distribution facility of the
Company. The remaining full-time employees provide administrative, accounting,
clerical, and graphic services for the Company. None of the Company's employees
are covered by a collective bargaining agreement and the Company has no
employment agreement with any of its employees. The Company pays 75% of the
cost of health and dental insurance for all employees.
MANAGEMENT
EXECUTIVE OFFICERS AND DIRECTORS
The directors of the Company currently have terms which will last until the
next annual meeting of the stockholders of the Company or until their successors
are elected and qualified, subject to their prior death, resignation or removal.
Officers serve at the discretion of the Board of Directors. There are no family
relationships among any of the Company's directors and executive officers.
The executive officers and directors of the Company are as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
James H. Carter 70 Chairman of the Board of Directors
Michael C. Cooper 43 President, Chief Executive Officer and
Director
Sheryl Tasker 48 Secretary and Treasurer
Robert N. Kelly 55 Director
Richard W. Dahms 66 Director
Michael Muscatella 39 Director
</TABLE>
Mr. Carter became Chairman of the Board of Directors of the Company on
April 1, 1997. Mr. Carter has served as a consultant to the Company for the
past two years. Mr. Carter has served as Vice President, Marketing for the
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<PAGE>
State of Washington for TVC Marketing Company, which offered pre-paid legal
services. Mr. Carter was a co-founder of American Investors Life Insurance
Company in Topeka, Kansas, and served as it first president from 1965 to 1974.
Mr. Carter is a graduate of Central Missouri State University, Warrensburg,
Missouri, receiving his B.S. degree in 1952.
Mr. Cooper founded the Company in June, 1995. He is currently President
and Chief Executive Officer of the Company. Mr. Cooper is an experienced sales
trainer, author and motivational speaker on direct sales with network marketing
techniques. Prior to the formation of the Company, he served in various
capacities with network marketing companies, as follows: 1994, President of
Truly Special, Inc.; 1993, Executive Vice President of TeleFriend, Inc.; 1992,
President of Network Institute, Inc.; 1991, National Director of Training of
American Gold Eagle, Inc., and 1989, Executive Vice President and founder of
National Energy Specialists Association. Mr. Cooper is the Kansas co-chairman
of the U.S. Speaker of the House Business Advisory Council for Tax Reform and
was selected, in 1998, as one of the National Republican Congressional
Businessmen of the Year. Mr. Cooper has been a director of the Company since
its organization in 1995.
Dr. Kelly is the Executive Director of the Kansas Independent College
Association, a position he has held since 1976. Dr. Kelly is an author of
various publications regarding higher education and student financial aid. Dr.
Kelly is currently a member of the National Advisory Committee on Student
Financial Assistance (U.S. Senate Appointee) for the U.S. Department of
Education; Chairman NAICU Commission on Financing Higher Education; Vice
Chairman, NAICU Task Force on Reauthorization. Dr. Kelly received his Ph.D.
from the University of Kansas in 1974.
Mr. Dahms is engaged in the private practice of law in Andrew County,
Missouri. Mr. Dahms has been engaged in the practice of law in Missouri since
1956, and has served as the Assistant Attorney General of Missouri, Assistant
City Counselor of the City of St. Joseph, Missouri, Assistant Prosecuting
Attorney Buchanan County, Missouri, Judge of the Probate Court of Buchanan
County, Missouri, Public Defender for the Fifth Judicial Circuit of Missouri.
Mr. Dahms is a graduate of Central Missouri State University in Warrensburg,
Missouri, receiving his Business Administration degree in 1953, and is a
graduate and received his Juris Doctorate degree from the University of
Missouri, Columbia, Missouri in 1956.
Dr. Muscatella is a practicing doctor of podiatric medicine in Champaign,
Illinois. Dr. Muscatella is a diplomat of the American Board of Podiatric
Surgery and a fellow of the American College of Foot Surgeons. He has served on
the faculty at the University of Illinois, College of Medicine, as past medical
director of the Innman, Champaign, Illinois, and was on the attending staff of
Covenant Medical Center, Urbana, Illinois and Kirby Hospital, Monticello,
Illinois. Dr. Muscatella is a member of the American Podiatric Medical
Association, the Illinois Podiatric Medical Association, and has received the
Williams & Wilkins Award for Academic & Clinical Excellence in Surgery. Dr.
Muscatella is listed in Who's Who among physicians. Dr. Muscatella is a Board
member of Champaign County Public Health Board and a member of the financial
committee of the Development Services Center. Dr. Muscatella received his
Doctorate of Podiatric Medicine - Cum Laude from the Dr. W. M. Sholl College of
Podiatric Medicine in 1987, and served his residency at Central Community
Hospital of Chicago.
COMMITTEES OF THE BOARD OF DIRECTORS
The Company's Board of Directors has established an Audit Committee and a
Compensation Committee. Messrs. Kelly and Muscatella serve on the Audit
Committee and Messrs. Kelly and Dahms serve on the Compensation Committee.
James H. Carter, Chairman of the Board, serves as a member of each committee.
The duties of the Audit Committee will be to recommend to the entire Board of
Directors the selection of independent certified public accountants to perform
an audit of the financial statements of the Company, to review the activities
and report of the independent certified public accountants, and to report the
results of such review to the entire Board of Directors. The Audit Committee
will also monitor the internal controls of the Company. The duties of the
Compensation Committee will be to provide a general review of the Company's
26
<PAGE>
compensation and benefit plans to ensure they meet the corporate objectives and
to administer or oversee the Company's stock option plan, if adopted. In
addition, the Compensation Committee will review the compensation of the
officers of the Company and the recommendations of the President on (i)
compensation of all employees of the Company and (ii) adopting and changing
major Company compensation policies and practices. The Compensation Committee
will report its recommendations to the entire Board of Directors for approval.
PROCEEDINGS INVOLVING DIRECTORS AND EXECUTIVE OFFICERS
Mr. Cooper and Melvin McCall, a former President and Director of the
Company, were associated with Truly Special, Inc., a network sales organization,
whose officers, affiliates and others were subject to proceedings brought by the
Securities Commissioner for the State of Kansas and by the Attorney General of
the State of Kansas. Messrs. Cooper and McCall were named as individual
respondents in both of these actions.
On December 21, 1994, under Docket No. 95E044, the Securities Commissioner
of Kansas issued an Emergency Cease and Desist Order against Truly Special,
Inc., its officers and its affiliates and certain officers and employees,
including Messrs. Cooper and McCall, ordering that all of the respondents
immediately cease and desist in affecting or transacting sales of securities of
Truly Special, Inc., certain of its affiliates or the securities of any other
person or issuer unless and until such securities have been registered under the
Kansas Securities Act or unless such securities are specifically exempt from the
registration requirements of the Kansas Securities Act. The Order also demands
that such persons be duly licensed as broker/dealers or agents in the sale of
such securities, if applicable. The Order allowed for a request of hearing on
the allegations for a 30-day period of time. Messrs. Cooper and McCall did not
contest the issuance of the Order of the Securities Commissioner of Kansas and
such Order remains in effect as regards any activities in the offer and sale of
securities in the State of Kansas.
On April 30, 1996, Messrs. Cooper and McCall entered into a Journal Entry
of Consent Judgment in Case No. 94-CV-1429, filed in the District Court of
Shawnee County, Kansas, styled "State of Kansas, ex rel. , Carla J. Stovall,
Attorney General, Plaintiffs v. Truly Special, Inc. et al., Defendants."
Pursuant to the consent judgment, Messrs. Cooper and McCall and the Attorney
General, in lieu of further investigating or continuing the action, acquiesced
and accepted the consent judgment with respect to acts and practices alleged in
the lawsuit of the violations of the Kansas Consumer Protection Act. The
consent judgment entered does not deem the consenting defendants to admit a
violation of the Kansas Consumer Protection Act. Pursuant to the Order, the
Attorney General of Kansas and Messrs. Cooper and McCall agreed and stipulated
that (i) the promotion and implementation of a referral sales scheme employed by
Truly Special, Inc. constituted deceptive acts in violation of the Kansas
Consumer Protection Act; (ii) the failure to explain market saturation and its
impact on future earnings in oral or written presentations by Truly Special,
Inc.'s sales scheme constituted deceptive acts in violation of the Consumer
Protection Act; (iii) Messrs. Cooper and McCall agreed to refrain from and be
permanently enjoined from engaging in such acts and practices in violation of
the Kansas Consumer Protection Act; (iv) Messrs. Cooper and McCall agreed to pay
reasonable expenses and investigation fees to the Office of the Attorney General
in the amount of $1,500 each and to pay a civil penalty in the amount of $1,000
each; and, (v) Messrs. Cooper and McCall agreed to disclose the consent judgment
to current and future employees, agents and representatives for a period of two
(2) years from the date of its execution.
Messrs. Cooper and McCall entered into the consent judgment separate and
distinct from any other defendants in the case.
As a result of these proceedings, Mr. Cooper has agreed with the Company
that prior to any activity which may involve the offer or sale of a security
and, as it relates to the Company's business, regarding all materials, business
plans, marketing and other concepts of the Company's business, such transactions
will be reviewed by competent legal counsel, knowledgeable in securities and
consumer protection laws.
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<PAGE>
INDEMNIFICATION OF OFFICERS AND DIRECTORS
The Company's Restated Articles of Incorporation and Bylaws designate
relative duties and responsibilities of the Company's officers, establish
procedures for actions by directors and stockholders and includes other items.
The Company's of Restated Articles of Incorporation and Bylaws also contain
extensive indemnification provisions, which permit the Company to indemnify its
officers and directors to the maximum extent provided by Nevada law.
RESTRICTED TRANSACTIONS
The Company's Restated Articles of Incorporation provide that, except by
resolution of the Board of Directors having approved a memorandum of
understanding with respect to and substantially consistent with such
transactions, no major stockholder (a major stockholder being a corporation,
person or other entity which is the beneficial owner, directly or indirectly, of
more than ten percent (10%) of the outstanding shares of the stock of the
Company normally entitled to vote in the election of directors) may be a party
to a (i) merger or consolidation of the Company; (ii) issuance of any securities
of the Company; (iii) the sale lease or exchange of all or a substantial part of
the assets of the Company (except assets having an aggregate fair market value
of less than $1,000,000); (iv) the sale, lease or exchange to the Company in
exchange for securities of the Company of any assets of a major stockholder
(except assets having an aggregate fair market value of less than $1,000,000);
(v) a loan from the Company or a guarantee by the Company; and (vi) the use of
any assets of the Company as collateral or compensating balances, unless
approved by an eighty percent (80%) vote of all the outstanding shares of each
class of stock of the Company normally entitled to vote in election of
directors. This restrictive provision in the Restated Articles of Incorporation
of the Company cannot be changed without an eighty percent (80%) vote of the
outstanding shares of each class of stock of the Company normally entitled to
vote in election of directors.
EXECUTIVE COMPENSATION
The following table sets forth certain information concerning the
compensation of the President and Chief Executive Officer of the Company for the
fiscal year ended December 31, 1997. No executive officer of the Company
received a total annual salary and bonus exceeding $100,000 during such period.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION
-----------------------------
OTHER ANNUAL ALL OTHER
NAME SALARY COMPENSATION COMPENSATION
---- ------- ------------ ------------
<S> <C> <C> <C>
Michael C. Cooper $28,662 $55,773(1) $ 5,509(2)
<FN>
- --------------------
(1) Consists of commissions paid during 1997.
(2) Consists of amounts paid for health insurance during 1997.
</TABLE>
OFFICER AND DIRECTOR COMPENSATION
The directors of the Company are entitled to receive from the Company
reimbursement of expenses for their services as directors. Under the Company's
standard arrangement for compensation for directors, outside directors are
entitled to receive a fee for each board meeting which amount is determined at
that board meeting. Directors serving on committees will be entitled to expense
reimbursement and a fee as determined by the Board of Directors. Directors of
the Company, whether or not employees of the Company, will also be entitled to
receive options to acquire shares of Common Stock under a resolution in effect
by the Board of Directors. See "Benefit Plans."
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<PAGE>
BENEFIT PLANS
Directors' Options. The Company, by resolution of its Board of Directors
on April 1, 1997, authorized stock options to persons serving as members of the
Board of Directors of the Company. Such stock options are available to existing
directors or to persons who may become members of the Board of Directors of the
Company in the future and so long as said resolution is in effect. Under the
terms of the resolution, each director is authorized to purchase 1,000,000
shares of the Common Stock of the Company at a price of $0.02 per share. The
stock options may be exercised for 200,000 shares of Common Stock during each
year and stock options will vest in the amount of 200,000 shares of Common Stock
per year for each year that a person serves as a director of the Company. Such
options must be exercised within five years from the date the director first
took office.
CERTAIN TRANSACTIONS
During 1995, Michael C. Cooper, the Company's President, Chief Executive
Officer and Director, loaned the Company $55,652 at an interest rate of ten
percent (10%). This loan was repaid from operating funds of the Company, with
interest, in March, 1996.
PRINCIPAL STOCKHOLDERS
The following table sets forth, as of March 31, 1998 and after giving
affect to the transactions contemplated by this Offering, and the 10,063.0878197
for 1 stock split effective March 13, 1998, the beneficial ownership of Common
Stock by: (i) each person known by the Company to be the beneficial owner of
more than five percent (5%) of the Company's Common Stock; (ii) each director
of the Company; and (iii) all directors and executive officers as a group. Each
stockholder identified in the table possesses sole voting and investment power
with respect to his shares:
<TABLE>
<CAPTION>
SHARES BENEFICIALLY
OWNED PERCENTAGE AFTER PERCENTAGE AFTER
PRIOR TO OFFERING MINIMUM OFFERING MAXIMUM OFFERING
NAME AND ADDRESS -------------------------- ----------------- ----------------
OF BENEFICIAL OWNER NUMBER PERCENT
------------------- ---------- ---------
<S> <C> <C> <C> <C>
Michael C. Cooper(1)(7) 83,220,474 64.04% 52.03% 46.25%
James H. Carter(2)(7) 10,263,088 7.90% 6.42% 5.70%
Robert N. Kelly(3)(7) 200,000 --------- ---------- --------
Richard Dahms (4) (7) 200,000 --------- ---------- --------
Michael Muscatella(5)(7) 200,000 --------- ---------- --------
Don W. John Living Trust (6) 17,811,665 13.71% 11.14% 9.90%
All executive officers and
directors as a group
(5 persons) 94,083,562 72.40% 58.82% 52.29%
</TABLE>
- --------------------
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<PAGE>
(1) Mr. Cooper's address is 2635 N.W. 86th Street, Topeka, Kansas 66618.
(2) Mr. Carter's address is 6630 S.W. Hamptonshire, Topeka, Kansas 66614.
(3) Dr. Kelly's address is 1501 S.W. College Avenue, Topeka, Kansas 66604.
(4) Richard Dahms' address is 12128 Walden View, St. Joseph, Missouri 64505.
(5) Dr. Muscatella's address is 2613 Worthington Drive, Champaign, Illinois
61821. Does not include 503,154 shares held by the Laura L.
Muscatella Trust, which Dr. Muscatella's wife possesses sole voting and
investment power.
(6) Don W. John Living Trust address is 7209 N. W. Sprucewood, Lawton, Oklahoma
73505.
(7) Includes the currently exercisable portion of Director's Stock Options held
by such person amounting to 200,000 shares of Common Stock each.
DESCRIPTION OF CAPITAL STOCK
The following summary of certain provisions of the capital stock of the
Company does not purport to be complete and is subject to, and qualified in its
entirety by, the Company's Restated Articles of Incorporation and Bylaws, which
are included as exhibits to the Registration Statement of which this Prospectus
is a part, and by the provisions of applicable law.
The total amount of authorized capital stock of the Company consists of
500,000,000 of Common Stock, par value $0.01 per share, and 10,000,000 shares of
preferred stock of the par value of $0.01 per share.
COMMON STOCK
The holders of Common Stock are entitled to one vote per share on all
matters to be voted upon by shareholders. There is no cumulative voting. The
shares of Common Stock are neither redeemable nor convertible and the holders
thereof have no preemptive or subscription rights to purchase any securities of
the Company. In the event of the liquidation, dissolution or winding-up of the
Company, the holders of Common Stock are entitled ratably in all assets
remaining after payment of liabilities, subject to prior liquidation rights of
holders of preferred stock then outstanding, if any. Holders of shares of
Common Stock are entitled to receive such dividends as the Board of Directors
may declare in its discretion out of funds legally available therefor.
As of May 1, 1998, there were 128,943,376 shares of Common Stock
outstanding, which were held of record by 22 shareholders. The issued and
outstanding shares of Common Stock are, and all of the shares of Common Stock
being offered will be upon payment therefor, validly issued, fully paid and
nonassessable.
PREFERRED STOCK
The Company's Board of Directors may, without further action by the
Company's shareholders, from time to time, direct the issuance of shares of
preferred stock in series and may, at the time of issuance, determine the
rights, preferences and limitations of each series. Satisfaction of any
dividend preferences of outstanding shares of preferred stock would reduce the
amount of funds available for the payment of dividends on shares of Common
Stock. Holders of shares of preferred stock may be entitled to receive a
preference payment in the event of any liquidation, dissolution or winding-up of
the Company before any payment is made to the holders of shares of Common Stock.
Under certain circumstances, the issuance of shares of preferred stock may
render more difficult or tend to discourage a merger, tender offer or proxy
contest, the assumption of control by a holder of a large block of the Company's
securities, or the removal of incumbent management. The Board of Directors of
the Company, without shareholder approval, may issue shares of preferred stock
with voting and conversion rights which could adversely affect the holders of
shares of Common Stock. There are no shares of preferred stock outstanding in
the Company.
30
<PAGE>
LIMITATIONS ON CHANGE OF CONTROL
Certain provisions of the Restated Articles of Incorporation and Bylaws
could make more difficult the acquisition of the Company be means of a tender
offer, a proxy contest or otherwise and the removal of incumbent officers and
directors. These provisions are expected to discourage certain types of
coercive takeover practices and inadequate takeover bids and to encourage
persons seeking to acquire control of the Company to first negotiate with the
Company. The Company believes that the benefits of increased protection of the
Company's potential ability to negotiate with the proponent of an unfriendly or
unsolicited proposal to acquire or restructure the Company outweigh the
disadvantages of discouraging such proposals because, among other things,
negotiation of such proposals could result in an improvement of their terms.
EIGHTY PERCENT (80%) VOTE REQUIREMENT
The Company's Restated Articles of Incorporation provide that unless the
Board of Directors of the Company shall by resolution approve a Memorandum of
Understanding with a major stockholder (a major stockholder being a corporation,
person or other entity which is the beneficial owner, directly or indirectly, of
more than ten percent (10%) of the outstanding shares of the stock of the
Company normally entitled to vote in the election of directors), certain
transactions with a major stockholder will require the affirmative vote of
eighty percent (80%) of the outstanding shares of each class of stock of the
Company normally entitled to vote in elections of directors. Such transactions
covered by this requirement are (i) the merger or consolidation of the Company
or any subsidiary of the Company with or into any major stockholder; (ii) the
issuance of any securities of the Company to a major stockholder for cash; (iii)
the sale, lease or exchange of all or any substantial part of the assets of the
Company to any major stockholder (except assets having an aggregate fair market
value of less than $1,000,000); (iv) the sale, lease or exchange to the Company
or any subsidiary thereof, in exchange for securities of the Company, of any
assets of any major stockholder (except assets having an aggregate fair market
value of less than $1,000,000); (v) a loan from the Company or any subsidiary
thereof to a major stockholder or a guarantee by the Company or any subsidiary
of any obligation of a major stockholder; and (vi) the use of any assets of the
Company or any subsidiary thereof as collateral or compensating balances,
directly or indirectly, for any obligation of a major stockholder.
LIMITATIONS ON LIABILITY AND INDEMNIFICATION OF OFFICERS AND DIRECTORS
The Restated Articles of Incorporation limits the liability of directors to
the full extent permitted by the general corporation law of the State of Nevada.
In addition, the Restated Articles of Incorporation provide that the Company
shall indemnify directors and officers of the Company to the full extent
permitted by such law.
TRANSFER AGENT AND REGISTRAR
The transfer agent and registrar for the Common Stock is American
Securities Transfer & Trust, Inc., Denver, Colorado.
REPORTS TO SHAREHOLDERS
The Company intends to furnish its shareholders with annual reports
containing audited financial statements and such other periodic reports as the
Company may determine to be appropriate or as may be required by law.
The Company will, subject to the sale of the Common Stock offered hereby,
register its Common Stock under the provisions of Section 12(b) of the Exchange
Act, and that it will use its best efforts to continue to maintain such
registration. Such registration will require the Company to comply with
periodic reporting, proxy solicitation, and certain other requirements of the
Exchange Act.
31
<PAGE>
SHARES ELIGIBLE FOR FUTURE SALE
Upon completion of this Offering, assuming that the Maximum Offering of
shares are sold, the Company will have outstanding 178,943,376 shares of Common
Stock, assuming no exercise of outstanding stock options. Of these shares, the
shares of Common Stock sold in this Offering to persons other than "affiliates"
of the Company, as that term is defined in Rule 144 of the Securities Act of
1933, as amended (the "Securities Act"), will be freely tradable. The remaining
128,943,376 shares of Common Stock (the "Restricted Shares") were acquired in
transactions exempt from registration under the Securities Act and may not be
resold unless they are registered under the Securities Act or are sold pursuant
to an applicable exemption from registration, such as Rule 144 of the Securities
Act. Of these Restricted Shares, 117,647,560 shares will have been held by
their owners for more than one year on or before the closing of this Offering
and thus will have satisfied the holding period under Rule 144. Sales of
Restricted Shares in the public market, or the availability of such shares for
sale, could adversely affect the market price of the Common Stock.
SALES OF RESTRICTED SHARES
In general, under Rule 144, as currently in effect, a person who has
beneficially owned restricted securities for at least one year, or any person
who may be deemed an affiliate of the Company, is entitled, subject to certain
conditions, to sell within any three-month period a number of shares which does
not exceed the greater of (i) 1% of the Company's then outstanding shares of
Common Stock (approximately 1,789,433 shares immediately after consummation of
the Offering, assuming the sale of all of the shares offered hereby and assuming
no exercise of outstanding stock options) or (ii) the average weekly trading
volume of the Common Stock in the over-the-counter market during the four
calendar weeks preceding such sale. Sales under Rule 144 are also subject to
certain manner-of-sale provisions, notice requirements and the availability of
public information about the Company.
LOCK-UP AGREEMENTS
Michael C. Cooper, James H. Carter, and the Don W. John Living Trust,
together controlling approximately 62% of the Company's outstanding Common Stock
Offering, assuming the maximum offering of shares are sold, have agreed with the
Company not to sell any of their shares for at least 180 days following the
closing of the Offering.
LIMITED PUBLIC TRADING
Prior to this Offering, there has been no public market for the Common
Stock, and no prediction can be made as to the effect, if any, that market sales
of shares of Common Stock or the availability of such shares for sale in the
public will have on the market price prevailing from time to time. No
broker/dealer has made any commitment to make a market in the shares of Common
Stock. Sales of substantial amounts of Common Stock following the Offering
could adversely affect the market price of the Common Stock. (See "Risk
Factors" and "Underwriting.")
PLAN OF DISTRIBUTION
SALE OF COMMON STOCK
The Common Stock will be offered by the Company through certain of its
officers who will receive no commission for the sale of the shares. The Company
anticipates that in certain states where it wishes to sell its Common Stock the
shares will have to be sold through broker/dealers registered in those states.
32
<PAGE>
Subject to the terms and conditions of a Selling Agreement (the "Selling
Agreement"), a copy of which is filed as an exhibit to the Registration
Statement of which this Prospectus is a part, the Company will agree with
participating broker/dealers, which are members of the National Association of
Securities Dealers, Inc., to offer and sell the Common Stock offered hereby on a
"best efforts" basis at the public offering price of $0.10 per shares. The
Offering Period will extend for a period of 90 days from the date of the
Prospectus, unless the Company, at its own discretion, extends the Offering
Period for an additional period of 90 days. All proceeds from the sale of
shares of Common Stock will be transmitted promptly to an escrow account at
Mesquite State Bank, Mesquite, Nevada. In the event that 30,000,000 shares of
Common Stock are not sold within the time provided herein, all funds will be
promptly returned to subscribers without interest and without any deduction for
commissions or expenses. The purchasers will not receive stock certificates
until the termination of the Offering. During the selling period, the
subscribers will have no right to demand the return of their subscriptions.
Contingent upon the sale of 30,000,000 shares of the Company's Common
Stock, the Company will pay any participating broker/dealer a discounted
commission of nine percent of the public offering price, and a commission of six
and one-half percent on sales of the Company's Common Stock to a purchaser
introduced by the Company to the participating broker/dealer and accepted by it
for sale of shares.
The Company will pay all expenses in connection with qualifying the shares
of Common Stock for sale under such jurisdictions as participating
broker/dealers may designate. The Selling Agreement provides for reciprocal
agreements of indemnity between the Company and the participating broker/dealer
as to certain liabilities, including liabilities under the Securities Act of
1933, as amended.
Broker/dealers participating in this Offering through the Selling Agreement
will confirm that sales will not be made to any account over which they exercise
discretionary authority.
Holders of 111,295,227 shares of Common Stock of the Company, held by
certain executive officers, directors, and a major shareholder, have agreed not,
directly or indirectly, to offer, sell, or grant any option to purchase or
otherwise dispose of any such Common Stock for a period of 180 days after the
closing of the Offering. See "Shares Eligible for Future Sale.")
DETERMINATION OF OFFERING PRICE
Prior to this Offering, there has been no public market for the Common
Stock of the Company. The initial public offering price for the Common Stock
has been determined arbitrarily by the Company and bears no relationship to its
assets, capitalization, or other criteria of value. Among the factors
considered in determining the public offering price were prevailing market
conditions, the results of operations of the Company in recent periods,
estimates of the business potential of the Company, the number of IMAs likely to
purchase shares of its Common Stock, and the present state of the Company's
development, and other factors deemed relevant.
LEGAL MATTERS
The validity of the shares of Common Stock offered hereby will be passed
upon for the Company by Michael G. Quinn, Esq., Wichita, Kansas.
33
<PAGE>
EXPERTS
The financial statements for the years ended December 31, 1997 and 1996 and
the period of June 17, 1995 (date of inception) to December 31, 1995 have been
included herein in reliance upon the report of Berberich Trahan & Co., P.A.,
independent certified public accountants, appearing elsewhere herein, and upon
the authority of said firm as experts in accounting and auditing.
ADDITIONAL INFORMATION
The Company has filed with the Securities and Exchange Commission (the
"Commission"), Washington, D.C. 20549, a Registration Statement (which term
shall include all amendments, exhibits and schedules thereto) on Form SB-2 under
the Securities Act with respect to the shares of Common Stock offered hereby.
This Prospectus, which constitutes a part of the Registration Statement, omits
certain of the information contained in the Registration Statement and the
exhibits and financial schedules thereto. Reference is hereby made to the
Registration Statement and related exhibits and schedules for further
information with respect to the Company and the Common Stock offered hereby.
Any statements contained herein concerning the provisions of any document are
not necessarily complete, and in each such instance reference is made to the
copy of such document filed as an exhibit to the Registration Statement. Each
such statement is qualified in its entirety by such reference. For further
information with respect to the Company and the Common Stock, reference is made
to the Registration Statement and such exhibits and schedules, copies of which
may be examined or copied at the Public Reference Section of the Commission at
Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, and at the
regional offices of the Commission located at 7 World Trade Center, Suite 1300,
New York, New York 10048 and at CitiCorp Center, 500 West Madison Street, Suite
1400, Chicago, Illinois 60661-2511.
[REMAINDER OF PAGE INTENTIONALLY BLANK]
34
<PAGE>
RENAISSANCE DESIGNER GALLERY PRODUCTS, INC.
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Independent Auditors' Report F-2
Financial Statements:
Balance Sheets at December 31, 1996 and 1997, and
March 31, 1998 (unaudited) F-3
Statements of Operations for Period From June 17, 1995 (Date of
Inception) to December 31, 1995, Years Ended December 31
1996 and 1997, and Three Months Ended March 31, 1997
and 1998 (Unaudited) F-4
Statements of Changes in Stockholders' Equity for Period From
June 17, 1995 (Date of Inception) to December 31, 1995,
Years Ended December 31, 1996 and 1997, and Three
Months Ended March 31, 1997 and 1998 (Unaudited) F-5
Statements of Cash Flows for Period From June 17, 1995 (Date of
Inception) to December 31, 1995, Years Ended December 31,
1996 and 1997, and Three Months Ended March 31, 1997
and 1998 (Unaudited) F-6
Notes to Financial Statements F-7 - F-12
</TABLE>
F-1
<PAGE>
INDEPENDENT AUDITORS' REPORT
----------------------------
Board of Directors
Renaissance Designer Gallery Products, Inc.:
We have audited the accompanying balance sheets of Renaissance Designer Gallery
Products, Inc. as of December 31, 1997 and 1996, and the related statements of
operations, stockholders' equity and cash flows for the years ended December 31,
1997 and 1996 and for the period from June 17, 1995 (Date of Inception) to
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 audits.
We conducted our audits 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 audits provide 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 Renaissance Designer Gallery
Products, Inc. as of December 31, 1997 and 1996, and the results of its
operations and its cash flows for the years ended December 31, 1997 and 1996 and
for the period from June 17, 1995 (Date of Inception) to December 31, 1995 in
conformity with generally accepted accounting principles.
BERBERICH TRAHAN & CO., P.A.
Topeka, Kansas
February 3, 1998 (except for Note 7, which is dated March 13, 1998)
F-2
<PAGE>
RENAISSANCE DESIGNER GALLERY PRODUCTS, INC.
BALANCE SHEETS
<TABLE>
<CAPTION>
December 31, December 31, March 31,
1996 1997 1998
----------- ----------- -----------
(Unaudited)
<S> <C> <C> <C>
ASSETS
- ------
Current assets:
Cash $ 150,336 $ 193,333 $ 317,959
Inventory 261,319 182,247 210,914
Income tax receivable (Note 2) - 67,000 58,655
Investment in precious metals 17,815 - -
Other receivable - 13,974 18,026
----------- ----------- -----------
Total current assets 429,470 456,554 605,554
----------- ----------- -----------
Property and equipment:
Vehicles 39,384 24,882 24,882
Office furniture and equipment 92,617 105,270 134,142
----------- ----------- -----------
132,001 130,152 159,024
Less accumulated depreciation and amortization 18,579 42,225 (49,681)
----------- ----------- -----------
113,422 87,927 109,343
Deferred registration costs - - 35,730
Other assets 700 502 452
----------- ----------- -----------
$ 543,592 $ 544,983 $ 751,079
=========== =========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
Current liabilities:
Accounts payable $ 147,891 $ 103,480 $ 94,526
Accrued expenses - 24,527 45,709
Accrued income taxes (Note 2) 83,000 - -
----------- ----------- -----------
Total current liabilities 230,891 128,007 140,235
----------- ----------- -----------
Stockholders' equity (Note 5):
Preferred stock, $ .01 par value, 10,000,000 shares
authorized; -0- shares issued and outstanding - - -
Common stock, $ .01 par value, 500,000,000 shares
authorized, 109,672,563 issued and outstanding
at December 31, 1996, and 130,000,000 issued
and outstanding, of which 1,056,624 are held
as treasury stock at December 31, 1997, and
March 31, 1998 1,096,726 1,300,000 1,300,000
Additional paid-in capital (deficit) (916,026) (476,300) (476,300)
Retained earnings (deficit) 132,001 (385,724) (191,856)
----------- ----------- -----------
312,701 437,976 631,844
----------- ----------- -----------
Less treasury stock - at cost - (21,000) (21,000)
----------- ----------- -----------
Total stockholders' equity 312,701 416,976 610,844
----------- ----------- -----------
Commitments and contingencies (Notes 3 and 5)
----------- ----------- -----------
$ 543,592 $ 544,983 $ 751,079
=========== =========== ===========
<FN>
See accompanying notes to financial statements.
</TABLE>
F-3
<PAGE>
RENAISSANCE DESIGNER GALLERY PRODUCTS, INC.
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Period From
June 17, 1995
(Date of Year Ended Three Months Ended
Inception) to --------------------------- ---------------------------
December 31, December 31, December 31, March 31, March 31,
1995 1996 1997 1997 1998
----------- ----------- ----------- ----------- -----------
(Unaudited)
<S> <C> <C> <C> <C> <C>
Sales, net of returns and allowances $ 340,108 $ 3,730,220 $ 1,217,835 $ 276,711 $ 889,147
----------- ----------- ----------- ----------- -----------
Operating costs and expenses:
Cost of goods sold 92,384 709,675 413,809 115,312 90,929
Commissions expense 119,874 1,315,368 460,885 115,277 306,982
Other operating, selling and
administrative expenses 113,010 1,482,756 929,437 313,439 299,116
----------- ----------- ----------- ----------- -----------
Total operating costs and expenses 325,268 3,507,799 1,804,131 544,028 697,027
----------- ----------- ----------- ----------- -----------
Income (loss) from operations 14,840 222,421 (586,296) (267,317) 192,120
Other income (expense):
Interest income, net 107 3,561 1,571 1,364 1,748
Unrealized loss on investments - (25,928) - - -
----------- ----------- ----------- ----------- -----------
107 (22,367) 1,571 1,364 1,748
----------- ----------- ----------- ----------- -----------
Income (loss) before income tax 14,947 200,054 (584,725) (265,953) 193,868
Income tax refund (expense) (Note 2) - (83,000) 67,000 67,000 -
----------- ----------- ----------- ----------- -----------
Net income (loss) $ 14,947 $ 117,054 $ (517,725) $ (198,953) $ 193,868
=========== =========== =========== =========== ===========
Income (loss) per share:
Basic $ .0001 $ .0011 $ (.0043) $ (.0017) $ .0015
=========== =========== =========== =========== ===========
Diluted $ .0001 $ .0011 $ (.0043) $ (.0017) $ .0015
=========== =========== =========== =========== ===========
<FN>
See accompanying notes to financial statements.
</TABLE>
F-4
<PAGE>
RENAISSANCE DESIGNER GALLERY PRODUCTS, INC.
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
Additional
Paid-In Retained
Common Stock Capital Earnings Treasury
Shares Amount (Deficit) (Deficit) Stock Total
----------- ----------- ----------- ----------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Balance, June 17, 1995 - $ - $ - $ - $ - $ -
Issuance of common stock 100,630,878 1,006,309 (1,005,309) - - 1,000
Net income - - - 14,947 - 14,947
----------- ----------- ----------- ----------- ------------ ------------
Balance, December 31, 1995 100,630,878 1,006,309 (1,005,309) 14,947 - 15,947
Issuance of common stock 9,041,684 90,417 89,283 - - 179,700
Net income - - - 117,054 - 117,054
----------- ----------- ----------- ----------- ------------ ------------
Balance, December 31, 1996 109,672,562 1,096,726 (916,026) 132,001 - 312,701
Issuance of common stock 27,170,338 271,703 407,297 - - 679,000
Common stock repurchased
and reissued (6,842,900) (68,429) 32,429 - - (36,000)
Purchase of 1,056,624 shares
of common stock - - - - (21,000) (21,000)
Net loss - - - (517,725) - (517,725)
----------- ----------- ----------- ----------- ------------ ------------
Balance, December 31, 1997 130,000,000 1,300,000 (476,300) (385,724) (21,000) 416,976
Net income (unaudited) - - - 193,868 - 193,868
----------- ----------- ----------- ----------- ------------ ------------
Balance, March 31, 1998
(unaudited) 130,000,000 $ 1,300,000 $ (476,300) $ (191,856) $ (21,000) $ 610,844
=========== =========== =========== =========== ============ ============
<FN>
See accompanying notes to financial statements.
</TABLE>
F-5
<PAGE>
RENAISSANCE DESIGNER GALLERY PRODUCTS, INC.
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Period From
June 17, 1995
(Date of Year Ended Three Months Ended
Inception) to ------------------------- -------------------------
December 31, December 31, December 31, March 31, March 31,
1995 1996 1997 1997 1998
(Unaudited)
----------- ----------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Cash flows from operating activities:
Net income (loss) $ 14,947 $ 117,054 $(517,725) $(198,953) $ 193,868
Adjustments to reconcile net income (loss) to
net cash provided by (used in) operating
activities:
Depreciation and amortization 1,449 17,430 27,227 7,058 7,506
Unrealized loss on investments - 25,928 - - -
Loss on sale of vehicle - - 3,619 - -
Changes in assets and liabilities:
Inventories (32,204) (229,115) 79,072 80,229 (28,667)
Other receivable - - (13,974) - (4,052)
Income tax receivable - - (67,000) (54,000) 8,345
Accounts payable 2,074 145,817 (44,411) (121,000) (8,954)
Accrued expenses - - 24,527 - 21,182
Accrued income taxes - 83,000 (83,000) (83,000) -
----------- ----------- ----------- ---------- ----------
Net cash provided by (used in)
operating activities (13,734) 160,114 (591,665) (369,666) 189,228
Cash flows used for investing activities:
Purchase of vehicles and office equipment (15,784) (116,217) (12,653) (8,152) (28,872)
Proceeds from sale of vehicle - - 7,500 - -
Organization cost (1,000) - - - -
Decrease (increase) in investment - (43,743) 17,815 (927) -
----------- ----------- ----------- ---------- ----------
Net cash provided by (used in)
investing activities (16,784) (159,960) 12,662 (9,079) (28,872)
----------- ----------- ----------- ---------- ----------
Cash flows from financing activities:
Issuance of common stock 1,000 179,700 643,000 320,000 -
Purchase of treasury stock - - (21,000) - -
Increase (decrease) in due to officer 55,052 (55,052) - - -
Deferred registration costs - - - - (35,730)
----------- ----------- ----------- ---------- ----------
Net cash provided by (used in)
financing activities 56,052 124,648 622,000 320,000 (35,000)
----------- ----------- ----------- ---------- ----------
Net increase in cash 25,534 124,802 42,997 (58,745) 124,626
Cash, beginning of period - 25,534 150,336 150,336 193,333
----------- ----------- ----------- ---------- ----------
Cash, end of period $ 25,534 $ 150,336 $ 193,333 $ 91,591 $ 317,959
=========== =========== ========== ========== ==========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for interest $ 131 $ 3,345 $ 1,893 $ - $ 50
=========== =========== ========== ========== ==========
Cash paid (refunded) during the period for
income taxes $ 14,947 $ - $ 70,000 $ - $ (8,345)
=========== =========== ========== ========== ==========
<FN>
See accompanying notes to financial statements.
</TABLE>
F-6
<PAGE>
RENAISSANCE DESIGNER GALLERY PRODUCTS, INC.
NOTES TO FINANCIAL STATEMENTS
1 - Summary of Significant Accounting Policies
------------------------------------------
Organization
------------
Renaissance Designer Gallery Products, Inc. (the Company) was formed on
June 17, 1995 and began developing a national network marketing sales
organization through the recruitment of independent sales representatives
throughout the country. The Company's products include fine jewelry, fine
art and collectibles, gourmet food, high fiber, low fat cookies, and
truck/utility sport vehicle accessories. In November 1997, the Company
formed a new marketing division called Advantage International Marking
(AIM). AIM's sole purpose is to market the Tax Advantage System, which is
designed to identify and maximize income tax deductions for anyone involved
in a home-based business. The Company is highly dependent upon its
national network of independent sales representatives for product sales.
The Company's national headquarters and inventory warehouse are located in
Topeka, Kansas.
Interim Financial Information (Unaudited)
-----------------------------------------
The accompanying balance sheet at March 31, 1998 and the accompanying
unaudited statements of income and cash flows for the three month periods
ended March 31,1998 and March 31, 1997 have been prepared by the Company
without an audit. In the opinion of management, all adjustments considered
necessary for a fair presentation of the results for the interim periods
have been included. All adjustments were of a normal and recurring nature.
Results for interim periods are not necessarily indicative of the results
that may be expected for a full year.
Inventories
-----------
Inventories are valued at the lower of cost or market. Cost is determined
by the first-in, first-out (FIFO) method. Inventories consist of finished
goods.
Investments
-----------
Investments in precious metals are valued at market and are net of amounts
borrowed against the precious metals. These investments were sold in 1997
at approximately the December 31, 1996 book value.
F-7
<PAGE>
RENAISSANCE DESIGNER GALLERY PRODUCTS, INC.
NOTES TO FINANCIAL STATEMENTS
(Continued)
1 - Summary of Significant Accounting Policies (Continued)
------------------------------------------------------
Property and Equipment
----------------------
Property and equipment are carried at cost. Depreciation is computed using
the straight-line method over the estimated useful lives of five years.
When assets are retired or otherwise disposed of, the cost and related
accumulated depreciation are removed from the accounts and any resulting
gain or loss is included in income for the period. The cost of maintenance
and repairs is charged to expense as incurred; significant renewals and
betterments are capitalized. Depreciation charged to expense for the
period from June 17, 1995 (Date of Inception) to December 31, 1995 and for
the years ended December 31, 1996 and 1997 was $ 1,349, $ 17,230 and
$ 27,029, respectively.
Revenue Recognition
-------------------
Revenues are recognized at the time the sale is made.
Income (Loss) Per Share - Basic and Diluted
-------------------------------------------
In February 1997, the Financial Accounting Standards Board issued FAS No.
128, Earnings Per Share, effective for the Company in the 1997 calendar
year. FAS 128 simplified income (loss) per share calculations and requires
the reporting of "basic" and "diluted" income (loss) per share to replace
the former primary and fully diluted income (loss) per share, respectively.
The Company has adopted FAS 128 for 1997 annual results and restated all
previously reported income (loss) per share. There was no change in
diluted income (loss) per share compared to fully diluted income (loss) per
share.
Basic income (loss) per share is based on the weighted average number of
shares of common stock outstanding, as adjusted for the stock split
described in Note 7. Diluted income (loss) per share is based on the
weighted average number of shares of common stock and common stock
equivalents (stock options) outstanding during the year, as adjusted for
the stock split in Note 7.
F-8
<PAGE>
RENAISSANCE DESIGNER GALLERY PRODUCTS, INC.
NOTES TO FINANCIAL STATEMENTS
(Continued)
1 - Summary of Significant Accounting Policies (Continued)
Income (Loss) Per Share - Basic and Diluted (Continued)
A reconciliation of the numerators and the denominators of the basic and
diluted per-share computations is as follows:
<TABLE>
<CAPTION>
Period from June 17, 1995
(Date of Inception) to Year Ended Year Ended
December 31, 1995 December 31, 1996 December 31, 1997
Per- Per- Per
Earnings Shares Share Earnings Shares Share Earnings Shares Share
(Numerator) (Denominator) Amount (Numerator) (Denominator) Amount (Numerator) (Denominator) Amount
--------- ----------- ------ --------- ----------- ------ --------- ----------- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Basic income
(loss) per share
Income available
to common stock-
holders $14,947 100,630,878 .0001 $117,054 108,123,686 .0011 $(517,725) 120,173,814 .0043
Effect of dilutive
securities
Stock options - - - - - - - 1,333,333 -
--------- ----------- ------ --------- ----------- ------ --------- ----------- ------
Diluted earnings
per share
Income available to
common stock-
holders$ 14,947 100,630,878 .0001 $117,054 108,123,686 .0011 $(517,725) 121,507,147 .0043
========= =========== ====== ========= =========== ====== ========= =========== ======
</TABLE>
Statement of Cash Flows
-----------------------
For purposes of the statement of cash flows, the Company considers all
highly liquid debt instruments purchased with a maturity of three months or
less to be a cash equivalent. At the balance sheet date, cash and cash
equivalents consist of checking and savings accounts at financial
institutions.
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.
F-9
<PAGE>
RENAISSANCE DESIGNER GALLERY PRODUCTS, INC.
NOTES TO FINANCIAL STATEMENTS
(Continued)
2 - Provision for Income Tax
------------------------
For the period June 17, 1995 to December 31, 1995, no taxes were provided
because of the limited amount of income. For the year ended December 31,
1996, $ 83,000 of current income taxes were provided.
A reconciliation of income tax expense and the amount computed by applying
the statutory federal income tax rate (34%) to income before income taxes
is as follows:
<TABLE>
<CAPTION>
Year Ended
December 31,
1996
-----------
<S> <C>
Taxes computed at federal statutory rate $ 70,000
State and local income taxes - net of Federal tax benefit 15,000
Other - net (2,000)
-----------
$ 83,000
===========
</TABLE>
In 1997, the Company has reflected, in the statement of operations, an
income tax refund of $ 67,000 representing the amount it is able to
carryback operating losses to 1996. At December 31, 1997, the Company has
reserved the potential tax benefit of approximately $ 115,000 relating to
operating loss carryforwards because the likelihood of realization could
not be established.
3 - Operating Leases
----------------
The Company leases office and warehouse space in Topeka, Kansas for $ 5,856
and $ 1,000 per month, respectively. The leases qualify as operating
leases. The office and warehouse space is leased on a month-to-month
basis. Rental expense was $ 25,527, $ 81,228 and $ 89,833 for the period
from June 17, 1995 (Date of Inception) to December 31, 1995, and years
ended December 31, 1996 and 1997, respectively.
4 - Related Party Transactions
--------------------------
Starting in 1996, the Company leased certain software for $ 5,000 per month
from another company that is owned by the chief executive officer of the
Company. For the year ended December 31, 1996, the software rental expense
was $ 60,000. During 1997, the Company paid $ 20,100 before terminating
the lease, and is utilizing the software without cost since that time.
F-10
<PAGE>
RENAISSANCE DESIGNER GALLERY PRODUCTS, INC.
NOTES TO FINANCIAL STATEMENTS
(Continued)
5 - Stock Option Plan
-----------------
The Company, by resolution of its Board of Directors on September 27, 1997,
authorized stock options to persons serving as members of the Board of
Directors of the Company. Such stock options are available to existing
directors or to persons who may become members of the Board of Directors of
the Company in the future and so long as said resolution is in effect.
Under the terms of the resolution, each current director is authorized to
purchase 1,000,000 shares of the common stock of the Company at a price of
$ .02 per share. Such stock options will vest in the amount of 200,000
shares of common stock per year for each year that a person serves as a
director of the Company. Such options must be exercised within five years
from the date the director first took office. At December 31, 1997,
5,000,000 options were outstanding of which 1,000,000 are exercisable at
December 31, 1997. However, none were exercised at December 31, 1997.
The Company accounts for stock options in accordance with the provisions of
Accounting Principles Board (APB) Opinion No. 25, Accounting for Stock
Issued to Employees, and related interpretations. As such, compensation
expense is recorded on the date of grant only if the current market price
of the underlying stock exceeds the exercise price. On December 31, 1995,
the Company adopted Statement of Financial Accounting Standards No. 123,
Accounting for Stock-Based Compensation (FAS 123), which permits entities
to recognize as expense over the vesting period the fair value of all stock
based awards on the date of grant. Alternatively, FAS 123 allows entities
to continue to apply the provisions of APB Opinion No. 25 and provide pro
forma net earnings and pro forma earnings per share disclosures for
employee stock option grants made in 1995 and future years as if the fair-
value-based method defined in FAS 123 had been applied. The Company has
elected to continue to apply the provisions of APB Opinion No. 25 and
provide the pro forma disclosure provisions of FAS 123.
Since the Company applies APB Opinion No. 25 in accounting for its plans,
no compensation cost has been recognized for its stock options issued to
employees in the financial statements. Had the Company recorded
compensation expense based on the fair value at the grant date for its
stock options under FAS 123, the Company's net earnings and earnings per
share on a diluted basis would have been reduced by approximately $ 2,500
with no effect on loss per share in 1997.
6 - Litigation
----------
In 1997, a lawsuit was filed against the Company alleging wrongful
termination under employment contracts. The plaintiff seeks declatory
judgment, compensatory and punitive damages in excess of $ 10,000. As of
February 15, 1998, the Company plans to settle the lawsuit for a nominal
amount and has accrued a liability for that amount.
F-11
<PAGE>
RENAISSANCE DESIGNER GALLERY PRODUCTS, INC.
NOTES TO FINANCIAL STATEMENTS
(Continued)
7 - Stock Split
-----------
Through Board resolution, the Company effected a 10063.0878197 for 1 stock
split of the Company's common stock effective March 13, 1998. This stock
split has been reflected retroactively for all periods presented in the
accompanying financial statements and, accordingly, all applicable shares
and per share amounts have been restated to reflect the stock split. The
application of the stock split produces a deficit in the additional paid in
capital account since the Company retained the $ .01 par value for common
stock.
F-12
<PAGE>
==========================================================
- ----------------------------------------------------------
NO PERSON HAS BEEN AUTHORIZED IN CONNECTION WITH THE
OFFERING MADE HEREBY TO GIVE ANY INFORMATION OR TO
MAKE ANY REPRESENTATION NOT CONTAINED IN THIS
PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY OR ANY PARTICIPATING
BROKER/DEALER. THIS PROSPECTUS DOES NOT CONSTITUTE
AN OFFER TO SELL OR A SOLICITATION OF ANY OFFER TO BUY ANY
OF THE SECURITIES OFFERED HEREBY TO ANY PERSON OR BY
ANYONE IN ANY JURISDICTION IN WHICH IT IS UNLAWFUL TO
MAKE SUCH OFFER OR SOLICITATION. 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.
-------------------
TABLE OF CONTENTS
PAGE
----
Prospectus Summary 3
Risk Factors 6
Use of Proceeds 10
Dividend Policy 11
Capitalization 12
Dilution 12
Selected Financial and Operating Data 14
Management Discussion and Analysis
of Financial Condition and Results
of Operations 15
Business 19
Management 25
Certain Transactions 29
Principal Stockholders 29
Description of Capital Stock 30
Shares Eligible for Future Sale 32
Plan of Distribution 32
Legal Matters 33
Experts 34
Additional Information 34
Index of Financial Statement F-1
-------------------
UNTIL , 1998 (90 DAYS AFTER THE DATE OF THIS
PROSPECTUS), ALL DEALERS EFFECTING TRANSACTIONS IN THE
COMMON STOCK OFFERED HEREBY, 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.
- ----------------------------------------------------------
==========================================================
<PAGE>
==========================================================
- ----------------------------------------------------------
UP TO 50,000,000 SHARES
OF COMMON STOCK
RENAISSANCE DESIGNER
GALLERY PRODUCTS, INC.
[LOGO]
----------
PROSPECTUS
----------
JUNE , 1998
- ----------------------------------------------------------
==========================================================
<PAGE>
PRODUCT LINE AFTER PRODUCT LINE
[PICTURE: TAX ADVANTAGE SYSTEM
TAX ADVANTAGE SYSTEM] - Workbook, Audio Tape Set (ref. to IRS Code)
Vehicle Log, Binder, Portfolio
Simple Recordkeeping System
- Renaissance Membership
Wholesale Product Catalogs, forms, etc.
- Personalized Business Plan
- Medical Reimbursement Contract
- Employment Contract
- Independent Contractor Agreement
FINE JEWELRY & WATCHES [PICTURE:
- - Rolex, Nobel & Croton Watches FINE JEWELRY & WATCHES]
- - Diamond Engagement Rings
- - 14K Italian Gold Chains
- - Tennis Braclets
[PICTURE: HOUSEHOLD ITEMS
HOUSEHOLD ITEMS] - Quality Stainless Steel Cookware
- Heavy Gauge Cutlery Sets
- Luggage, Brief Cases, Pen Sets
- Gold & Silver Plated Tea Sets & Serving Ware
TOOLS, ETC. [PICTURE:
- - Tool Kits TOOLS, ETC.]
- - Emergency Kits
- - Multi-Function Tools and Knives
- - Camping Gear and Cameras
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 24. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Nevada General Corporation Code confers broad powers upon corporations
incorporated in Nevada with respect to indemnification of any person against
liabilities incurred by reason of the fact that such person is or was an officer
or director against liability incurred in his official capacity with the
corporation including expenses and attorneys fees. Article TENTH of the
Restated Articles of Incorporation provides as follows:
"A. The Corporation shall have power to indemnify any person who
was or is a party or is threatened to 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 or is or was serving at the request of the
Corporation as a director, officer, trustee, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise,
against expenses (including attorney fees), judgments, fines, and amounts
paid in settlement, actually and reasonably incurred by him in connection
with such action, suit or proceeding, if such person 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, with respect to any criminal
action or proceedings had no reasonable cause to believe his conduct
was unlawful. The termination of any action, suit or proceeding by
judgment, order, settlement, or conviction, or on 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.
B. The Corporation shall have power to indemnify any 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 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, trustee, agent or employee of another
corporation, partnership, joint venture, trust or other enterprise,
against expenses (including attorney 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
to any claim, issue or manner as to which such person shall have been
adjudged to be liable for negligence or misconduct in the performance
of his duty to the Corporation unless and only to the extent that the
court in which such action or suite was brought shall determine upon
II-1
<PAGE>
application that despite the adjudication of liabilities but in view
of all the circumstances of the case, such persons is fairly and
reasonably entitled to indemnity for such expenses which the court shall
deem proper.
C. To the extent that a director, officer, employee or agent of the
Corporation has been successful on the merits or otherwise in defense of
any action, suit or proceeding referred to in subsections A and B, or in
defense of any claim, issue or matter therein he shall be indemnified
against expenses (including attorney fees) actually and reasonably
incurred by him in connection therewith.
D. Expenses incurred in defending a civil or criminal action, suit
or proceeding may be paid by the Corporation in advance of the final
disposition of such action, suit or proceeding as authorized by the
Board of Directors.
E. The indemnification provided by this section shall not be deemed
exclusive of any other right to which those seeking indemnification may
be entitled under any by-law, agreement, vote of stockholders or
disinterested directors, or otherwise, both as to action in his official
capacity and as to his action in other capacities while holding such
office and shall continue as to a person who has ceased to be a
director, officer, trustee, employee or agent and shall inure to the
benefit of the heirs, executors and administrators of such a person.
F. The Corporation shall have power to purchase and maintain
insurance on behalf of any person who 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, trustee, employee
or agent of another corporation, partnership, joint venture, trust
or other enterprise against any liability asserted against him and
incurred by him in any such capacity or arising out of his status as
such whether or not the Corporation would have the power to indemnify
him against such liability under the provisions of this section."
The Selling Agreement, filed as Exhibit 1(a) to this Registration
Statement, provides for the indemnification by the Company to any participating
broker/dealer in the sale of the Common Stock, and each person, if any, who
controls the broker/dealer against certain liabilities and expenses, as stated
therein, which may include liabilities under the Securities Act of 1933, as
amended. The Selling Agreement also provides that the broker/dealer similarly
indemnify the Company, its directors, officers and controlling persons, as set
forth therein.
ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following is a list of the estimated expenses in connection with the
issuance and distribution of the securities being registered, other than
underwriting discounts and commissions, all of which is to be paid by the
Registrant:
II-2
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
SEC Registration Fee $ 1,475
NASD Registration Fees 1,000
OTC-BB 2,500
Printing and Engraving Expenses 10,000
Legal Fees and Expenses 45,000
Accounting Fees and Expenses 25,000
Blue Sky Qualification Fees and Expenses 6,000
Transfer Agent and Registrar's Fees 1,500
Miscellaneous 7,.525
--------
Total $100,000
========
</TABLE>
- --------------------
ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES
The following tables set forth the Company's sales of unregistered
securities since its inception in June, 1995. No underwriters were involved in
any of such sales nor were any commissions or similar fees paid by the
registrant with respect thereto. The number of shares set forth below have been
adjusted to reflect a stock split effected on March 13, 1998.
The following shares of Common Stock were sold on the date indicated to the
persons indicated on the formation of the Company in June, 1995, for a total
consideration of $1,000. The Company claims exemption from registration for
these issuances under Section 4(2) of the Securities Act of 1933, as amended.
<TABLE>
<CAPTION>
TITLE OF AMOUNT OF
DATE OF SECURITIES SECURITIES
SALE SOLD SOLD IDENTITY OF PURCHASER
- -------- ---------- ---------- ---------------------
<S> <C> <C> <C>
8/4/95 Common 5,031.544 John Meadows
8/4/95 Common 5,031.544 Melvin McCall
8/4/95 Common 2,515,722 Joe Boiros
8/4/95 Common 88,052,018 Michael C. Cooper
</TABLE>
The following shares of the Company's Common Stock were purchased by the
individuals named hereafter, who acted as independent sales representatives of
the Company, on the dates indicated, at a price of approximately $0.02 per
share. The Company claims exemption from registration for these issuances under
Section 4(2) of the Securities Act of 1933, as amended. Purchasers:
II-3
<PAGE>
<TABLE>
<CAPTION>
TITLE OF AMOUNT OF
DATE OF SECURITIES SECURITIES
SALE SOLD SOLD IDENTITY OF PURCHASER
- --------- ---------- ---------- ---------------------
<S> <C> <C> <C>
5/23/96 Common 503,154 Kenneth Ray and Frieda Jo Buster
5/23/96 Common 503,154 Carolyn L. and Danny L. Strand
5/23/96 Common 503,154 Rex E. Gomillion
5/23/96 Common 503,154 F. Dale Curry
5/23/96 Common 503,154 L. Brian and Allison W. Cagle
5/23/96 Common 805,047 Patricia R. Discenza
5/23/96 Common 754,732 Rande S. Gray
5/23/96 Common 1,257,886 Summa Lending & Leasing, Inc.
5/23/96 Common 503,154 Curtis L. Burgess
5/23/96 Common The Cheng H. Hsu and Yao L. Hsu
503,154 Revocable Living Trust
5/23/96 Common 1,444,053 Jimmie B. Estes
5/23/96 Common 503,154 Laura L. Muscatella Trust
5/23/96 Common 503,154 Cox and Waldnep, A Corporation
5/23/96 Common 251,577 Randy Hughes Trust
</TABLE>
The following persons purchased Common Stock of the Company on the dates
indicated at a price of approximately $0.04 per share, except that Mr. Flitner
purchased his shares for approximately $0.02 per share and the sale to the Don
W. John Living Trust on 12/08/97 was at a price of approximately $0.02 per
share. The Company claims exemption from registration for these issuances under
Section 4(2) of the Securities Act of 1933, as amended.
<TABLE>
<CAPTION>
TITLE OF AMOUNT OF
DATE OF SECURITIES SECURITIES
SALE SOLD SOLD IDENTITY OF PURCHASER
- --------- ---------- ---------- ---------------------
<S> <C> <C> <C>
01/27/97 Common 6,289,430 Don W. John Living Trust
07/16/97 Common 3,773,658 Don W. John Living Trust
09/29/97 Common 1,358,517 Don W. John Living Trust
12/08/97 Common 5,031,544 Don W. John Living Trust
01/29/97 Common 628,943 F. Dale and Beverly J. Curry
02/13/97 Common 1,257,886 John M. Giesecke
04/01/97 Common 251,577 Jim L. Flitner
09/19/97 Common 251,577 Chuck Siffa
12/30/97 Common 251,577 David Ostrander
12/31/97 Common 628,943 David Weatherford
</TABLE>
ITEM 27. EXHIBITS
The following exhibits are filed herewith:
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<S> <C>
1(a) Form of Selling Agreement
1(b) Form of Company's Subscription Agreement
1(c) Form of Proceeds Escrow Agreement
3(a) Restated Articles of Incorporation
3(b) Bylaws
*4 Specimen of Common Stock Certificate
5 Opinion of Michael G. Quinn, Esq.
II-4
<PAGE>
10(a)(i) Company's Agreement with FAR, Inc. (consulting)
10(a)(ii) Company's Agreement with A&T, Inc. (consulting)
10(a)(iii) Company's Agreement with My Tax Man, Inc. (consulting)
10(a)(iv) Form of Independent Contractors Agreement (product)
10(a)(v) Form of Independent Marketing Associate Agreement (AIM)
10(a)(vi) Sublease Agreement for Company's Office
10(a)(vii) Letter Agreement for Company's Warehouse
10(b)(i) Resolution of Board of Directors for Directors Stock Option
23(a) Consent of Berberich Trahan & Co., P.A.
23(b) Consent of Michael G. Quinn, Esq. (contained in Exhibit 5)
<FN>
- --------------------
* To be filed by Amendment
</TABLE>
ITEM 28. UNDERTAKINGS
Insofar as indemnification for liabilities arising under the Securities Act
of 1933, as amended (the "Act"), may be permitted to directors, officers and
controlling persons of the Registrant pursuant to the foregoing provisions, or
otherwise, the Registrant 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 Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant 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 Registrant 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.
The undersigned Registrant hereby undertakes that:
(1) For purposes of determining any liability under the
Securities Act of 1933, 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 Registrant
pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall
be deemed to be part of this Registration Statement as of the time it was
declared effective.
(2) For the purpose of determining any liability under the
Securities Act of 1933, each post-effective amendment that contains a
form of prospectus shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide
offering thereof.
(3) It will 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 Act;
(ii) Reflect in the prospectus any facts or events which,
individually or together, represent a fundamental change in the
II-5
<PAGE>
information in the registration statement; and notwithstanding the
foregoing, any increase or decrease in volume of securities offered
(if the total 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 242(b) if, in
the aggregate, the changes in the 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.
(4) File a post-effective amendment to remove from registration
any of the securities that remain unsold at the end of the offering.
II-6
<PAGE>
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, the
Registrant, Renaissance Designer Gallery Products, Inc., certifies that it has
reasonable grounds to believe that it meets all of the requirements for filing
on Form SB-2 and authorized this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Topeka,
State of Kansas, on this 10th day of June, 1998
RENAISSANCE DESIGNER GALLERY
PRODUCTS, INC.
By: /s/ Michael C. Cooper
-----------------------------
Michael C. Cooper
President, Treasurer
and Chief Executive Officer
In accordance with the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities indicated on June 10, 1998.
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<S> <C>
/s/ Michael C. Cooper President, Treasurer and Director
- --------------------------
Michael C. Cooper (Principal Executive and Financial Officer)
/s/ James H. Carter Chairman of the Board and Director
- ------------------------
James H. Carter
/s/ Sheryl S. Tasker Secretary /Treasurer (Chief Financial Officer)
- -------------------------
Sheryl S. Tasker
/s/ Robert N. Kelly Director
- ------------------------
Robert N. Kelly
/s/ Richard W. Dahms Director
- -------------------------
Richard W. Dahms
/s/ Michael Muscatella Director
- ---------------------------
Michael Muscatella
</TABLE>
II-7
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT SEQUENTIALLY
NUMBER DESCRIPTION NUMBERICAL PAGE
------- ----------- ---------------
<S> <C> <C>
1(a) Form of Selling Agreement
1(b) Form of Company's Subscription Agreement
1(c) Form of Proceeds Escrow Agreement
3(a) Restated Articles of Incorporation
3(b) Bylaws
*4 Specimen of Common Stock Certificate
5 Opinion of Michael G. Quinn, Esq.
10(a)(i) Company's Agreement with FAR, Inc.
10(a)(ii) Company's Agreement with A&T, Inc.
10(a)(iii) Company's Agreement with My Tax Man, Inc.
10(a)(iv) Form of Independent Contractors Agreement
10(a)(v) Form of Independent Marketing Associate Agreement
10(a)(vi) Sublease Agreement for Company's Office
10(a)(vii) Letter Agreement for Company's Warehouse
10(b)(i) Resolution of Board of Directors for Directors Stock
Option
23(a) Consent of Berberich Trahan & Co., P.A.
23(b) Consent of Michael G. Quinn, Esq.
(to be contained in Exhibit 5)
<FN>
- --------------------
* To be filed by Amendment
</TABLE>
II-8
___________, 1998
Up to 50,000,000 Shares of Common Stock
RENAISSANCE DESIGNER GALLERY PRODUCTS, INC.
Price: $0.10 Per Share
-----------------------
SELLING AGREEMENT
(Name of Broker/Dealer)
Gentlemen:
RENAISSANCE DESIGNER GALLERY PRODUCTS, INC., a Kansas corporation organized
under the laws of the state of Nevada, (the "Company"), hereby confirms its
agreement with you as follows:
1. INTRODUCTORY.
-------------
The Company is offering to the general public its Common Stock of a
par value of $0.01 per share at the public price of $0.10 per share.
The minimum amount of Common Stock offered will equal 30,000,000
shares aggregating $3,000,000 and the maximum amount of Common Stock
offered will be 50,000,000 shares aggregating $5,000,000. Until
subscription are received for the minimum amount of shares offered and
continuing thereafter until the Offering is terminated, all funds paid
in respect to subscriptions will be held in an Escrow Account with
Mesquite State Bank, Mesquite, Nevada.
The subscription period for the Offering will terminate ninety (90)
days from the date of the Prospectus unless the Company, at its sole
discretion, extends such Offering for an additional ninety (90) days.
The Company hereby confirms its agreement with you, that you will act
as our Selling Agent for the offering of the Common Stock on a "best
efforts" basis as agent for the Company.
2. REPRESENTATIONS AND WARRANTIES.
-------------------------------
The Company represents and warrants to you that:
(a) The Company has prepared and filed with the United States
Securities and Exchange Commission and a Registration Statement
under Form SB-2, which the Prospectus is a part, in form and
<PAGE>
substance so as to comply with Section 5 of the Securities Act of
1933, as amended (the "Act"). Such Prospectus, as amended from
time to time, (including financial statements, exhibits and all
other documents as a part thereof, or referred to therein or
incorporated therein) is herein called the "Prospectus".
(b) As of the date of this Agreement, the Prospectus, and at all
times subsequent thereto through the termination of the offering
of all of the Common Stock, as set forth above in Paragraph 1,
the Prospectus (as amended or as supplemented) will contain all
statements which are required to be stated therein in accordance
with the Act and the applicable rules and regulations thereunder
(the "Regulations"), will conform to the requirements thereof in
all material respects, and will not include any untrue statement
of a material fact or omit to state any material fact required to
be stated therein or necessary to make the statements therein not
misleading.
(c) The Common Stock conforms to the descriptions thereof contained
in the Prospectus.
(d) The Company is validly existing and in good standing as a
corporation under the laws of the state of Nevada and has the
power and authority to act as described in the Prospectus.
(e) The Company will cooperate with you to ensure that the offering
and sale of the Common Stock complies with the requirements of
Rules of the National Association of Securities Dealers, Inc.
("NASD").
(f) There are no contracts or other documents which are required to
be summarized in the Prospectus which have not been summarized
therein.
(g) Except as set forth in the Prospectus, there is no litigation or
governmental proceeding pending or, to the knowledge of the
Company, threatened which involves the Company and is of a
character which,
(i) might result in a judgment or decree having a material
adverse effect on the business or condition (financial or
otherwise) of the Company or materially affecting its
properties or assets, or
(ii) is required to be disclosed in the Prospectus.
(h) Except as contemplated by this Agreement or as set forth in the
Prospectus, subsequent to the time as of which information is
given in the Prospectus and Supplements thereto and until the
offering is terminated, as set forth in Paragraph 1 above,
2
<PAGE>
(i) the Company has not and will not have incurred any material
liabilities or obligations, direct or contingent, and
(ii) there has not and will not have been any change in the
management or capital structure or any material adverse
change in the financial or other condition, net worth or
results of operations of the Company, other than as set
forth in the Prospectus.
(i) The Company has full power and authority to execute, deliver and
perform all agreements referred to in the Prospectus and such
agreements have been duly and validly authorized, executed and
delivered by the Company and are valid and legally binding
agreements of the Company, as the case may be, enforceable in
accordance with their terms.
(j) The execution, delivery and performance of this Agreement by the
Company and the sale and delivery of the Common Stock as provided
herein, will not conflict with, or result in a breach of any of
the terms or provisions of, or constitute a default under any
agreement to which the Company is a party or by which the assets
of it may be bound. No consent, approval, authorization or other
order of any regulatory, administrative or other government body
(other than under the Act and the Regulations) is legally
required for the valid issuance and sale of the Common Stock
under this Agreement.
(k) The financial statements contained in the Prospectus are true and
accurate as of the date thereof and no subsequent events of the
Company has caused such information not to be truthful or
accurate.
3. REPRESENTATIONS AND WARRANTIES OF THE SELLING AGENT.
----------------------------------------------------
You represent and warrant to and agree with the Company as follows:
(a) You are a member in good standing of the NASD and will maintain
such registration and qualification throughout the term of this
Agreement and have full power and authority to act as a Selling
Agent hereunder.
(b) You will comply with all federal laws pertaining to the sale of
the Common Stock, and the Constitution, By-Laws and Rules of the
NASD.
(c) You will not knowingly offer any shares of the Common Stock in
any jurisdiction where you are not licensed to conduct business
as a broker/dealer.
(d) You have made no sale of the Common Stock prior to the effective
date of the Prospectus and will not make any sales unless
preceded or accompanied by a Prospectus.
3
<PAGE>
(e) You agree that all subscriptions for the shares of Common Stock
will be promptly transmitted by noon the next business day to an
Escrow Account established by the Company entitled "Renaissance -
Escrow Account" maintained with the Mesquite State Bank,
Mesquite, Nevada.
(f) Your actions as Selling Agent hereunder shall be performed
pursuant to this Agreement and the Prospectus.
(g) That you will not confirm sales of the Common Stock to any
account over which you exercise discretionary authority without
the written consent of the account owner.
4. SALE OF COMMON STOCK.
---------------------
Subject to the sale of minimum shares of Common Stock aggregating
$3,000,000, you will receive a commission of nine percent (9%) on sale
of shares of Common Stock by you. In the event such sales were
directed to you by the Company and you chose to execute such sales,
your commission will be six and one-half percent (6.50%) of the sale
of the shares of Common Stock. All commissioner will be paid in cash
only and computed solely on the amount of initial subscriptions.
All subscribers payments for Shares are to be made payable to
"Renaissance - Escrow Account" with the Mesquite State Bank, Mesquite,
Nevada and must be promptly transmitted by you to such escrow (by noon
the next business day after receipt) in compliance with the applicable
rules of the NASD and of the Securities Exchange Act of 1934.
5. FURTHER AGREEMENTS.
-------------------
The Company covenants and agrees that:
(a) The Prospectus shall have become effective on the date of this
Agreement and, to the best of its knowledge, no stop order
suspending the effectiveness of the Prospectus or the institution
or threatening of any proceedings for that purpose have been
initiated. The Company will use its best efforts to prevent the
issuance of any such stop order and to obtain as soon as possible
the withdrawal thereof, if issued. To permit the offer and sale
of all of the Common Stock pursuant to the requirements of the
Act, the Company will prepare and file with the Securities and
Exchange Commission any required filings which, in the opinion of
Michael G. Quinn, counsel for the Company, may deem necessary or
advisable in connection with the distribution of the Common
Stock; and the Company will advise you promptly of any request of
the Securities and Exchange Commission of an amendment or
supplement to the Prospectus or for additional information.
4
<PAGE>
(b) If, at any time while the Prospectus relating to the Common Stock
is required to be delivered under federal or state law, any event
occurs as a result of which, in the opinion of counsel for the
Company, the Prospectus as then amended or supplemented includes
an untrue statement of a material fact or omits to state any
material fact required to be stated therein, or necessary to make
the statements therein not misleading, or if it is necessary at
any time to amend the Prospectus to comply with federal or state
law, the Company will promptly notify you and prepare and file an
appropriate amendment or supplement.
(c) The Company will deliver to you from time to time as many copies
of the Prospectus (and, in the event the Prospectus is amended or
supplemented pursuant to the provisions of this Agreement, or
such amended or supplemented Prospectus) as you may reasonably
request, which copies, as from time to time amended or
supplemented, the Company authorized for use in connection with
the distribution of the Common Stock.
6. PAYMENTS OF EXPENSES.
---------------------
The Company will bear and pay all costs and expenses in connection
with the issuance and registration of the Common Stock, this Agreement
and the preparation, printing, filing, delivery and shipping of the
Prospectus and Supplements, and all costs and expenses incurred or to
be incurred in connection with the sale and delivery of the Common
Stock pursuant to this Agreement. The Company will pay all expenses
for the registration of the shares of Common Stock in such state
jurisdictions that you may reasonably request.
7. CONDITION OF YOUR OBLIGATIONS.
------------------------------
Your obligations hereunder shall be subject to the accuracy of the
representations and warranties contained herein as of the date hereof,
and as of the date of the Closing of the Common Stock, to the accuracy
of the statements of officers of the Company made pursuant to the
provisions hereof, to the performance by the Company of its obligation
hereunder and to the following other conditions:
(a) The Prospectus shall have become effective on the date of this
Agreement and remain effective during the term of the offering,
as set forth in Paragraph 1 of this Agreement, and during the
term of the offering no stop order shall have been issued and in
effect and no proceedings therefore shall have been initiated or
threatened by any regulatory agency.
(b) At the closing of the sale of Common Stock, you shall receive the
favorable opinion of Michael G. Quinn, counsel for the Company,
dated as of such dates and addressed to you the effect that:
5
<PAGE>
(i) The Company's Restated Articles of Incorporation, and
amendments thereto, have been properly executed, filed and
recorded, are legal and valid instruments under the laws of
the State of Nevada and authorize the Company and its
successors to conduct the business of the Company as
contemplated thereunder and as described in the Prospectus
and Supplements thereto; and the Company is duly organized,
validly existing and in good standing under the laws of the
state of Nevada and has the power and authority to own its
assets and to conduct its business as described in the
Prospectus;
(ii) The issuance of the Common Stock has been duly and
validly authorized by all necessary action on the part of
the Company and, the Common Stock will be validly issued and
non-assessable;
(iii) The Common Stock conform to the descriptions
thereof contained in the Prospectus;
(iv) The Prospectus is in compliance with the Act, and to
the best of such counsel's knowledge no proceedings for a
stop order are pending or threatened;
(v) The Prospectus and any amendments or supplements thereto
(other than the financial statements included therein, as to
which no opinion need be rendered) comply as to form in all
material respects with the requirements of the Act and the
Regulations, and nothing has come to the attention of such
counsel that would lead them to believe that the Prospectus,
as amended or supplemented if amended or supplemented,
contains any 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;
(vi) To the best of such counsel's knowledge, there are no
contracts or other documents required to be summarized
therein and no legal or governmental proceedings pending or
threatened against or involving the properties of the
Company required to be disclosed in the Prospectus;
(vii) The Company has full power and authority to execute,
deliver and perform this Agreement, and this Agreement has
been duly and validly authorized, executed and delivered by
the Company and is a valid and legally binding agreement
enforceable in accordance with its terms;
(viii) The execution, delivery and performance of this
Agreement by the Company, as well as the agreements referred
to in the Prospectus, and the sale and delivery of the
6
<PAGE>
Common Stock as provided herein, will not conflict with, or
result in a breach of any of the terms or provisions, or
constitute a default under, the Restated Articles of
Incorporation, as amended, or any applicable law, rule,
regulation, judgment, order or decree of any government,
governmental instrumentality or court, domestic or foreign,
having jurisdiction over the Company or the assets of the
Company, or any agreement known to such counsel to which the
Company is a party or by which the assets of any of them may
be bound; and
(ix) To the best of such counsel's knowledge, no consent,
approval, authorization or other order of any regulatory,
administrative or other governmental body (other than under
the Act) is legally required for the valid issuance and sale
of the Common Stock under this Agreement.
In giving the foregoing opinion, such counsel may rely upon
certificates of the Secretary of State of Nevada with respect to
qualification and good standing.
(b) You should receive from a duly authorized officer of the Company,
a certificate that during the term of the offering, as set forth in
Paragraph 1 of this Agreement,
(i) There shall be no material adverse change in the
condition of the Company, financial or otherwise, or its
results of operations from that as of the latest date as of
which such condition is set forth in the Prospectus, except
as referred to therein;
(ii) There shall be no material transaction entered into by
the Company from the date as of which their financial
condition is set forth in the Prospectus, other than
transactions referred to or contemplated therein and
transactions in the ordinary course of business;
(iii) No action, suit or proceeding, at law or in equity,
shall be pending or, to the knowledge of the Company,
threatened against the Company before or by any Federal or
state commission, board or other administrative agency
wherein an unfavorable decision, ruling or finding would
materially adversely affect the business or operations of
the Company; and
(iv) No stop order shall have been issued under the Act and
no proceeding therefore shall be initiated or, to the
knowledge of the Company, threatened.
7
<PAGE>
All such opinions, certificates, letters and documents will be in
compliance with the provisions hereof only if they are satisfactory to
you. Any certificate signed by an officer of the Company, signed as
such, and delivered to you or to your counsel shall be deemed a
representation and warranty by the Company to you as to the statements
made therein.
8. CONDITIONS OF SELLING AGENT.
----------------------------
At the Closing of the sale of Common Stock, there shall be delivered
by you to the Company in form satisfactory to its counsel, the
following:
(a) A certificate executed by your officers, dated as of the Closing
of the Shares, to the effect that you are qualified to conduct
your business; that you are a corporation in good standing in the
state of ________________, that you are a member in good standing
of the NASD, and that this Agreement has been duly and validly
authorized, executed and delivered and is a valid and legally
binding agreement enforceable in accordance with its terms.
9. INDEMNIFICATION.
----------------
Each of us agrees with the other, including our officers, directors,
and shareholders, to indemnify and hold each other harmless from and
against any losses, claims, damages, or liabilities, joint or several,
to which we may become subject under the Act, or otherwise, insofar as
such losses, claims, damages or liabilities arise out of, or are based
upon, any untrue statement or alleged untrue statement of a material
fact regarding any information or representation other than as
contained in the Prospectus and all amendments thereto and the
material identified in the Prospectus, including out-of-pocket
expenses and attorneys fees reasonably incurred in investigating,
defending, or preparing to defend any such action or claim at trial or
on appeal.
10. SURVIVAL OF AGREEMENTS, REPRESENTATIONS, INDEMNITIES.
-----------------------------------------------------
The respective rights of the Company and you, and the agreements,
representations, warranties and other statements of the Company set
forth in or made pursuant to this Agreement, will remain in full force
and effect, regardless of any termination or cancellation of this
Agreement.
11. NOTICES.
--------
All communications hereunder, except as specifically provided
otherwise herein, shall be in writing and shall be sent by certified
mail, return receipt requested, to you at
__________________________________________________________________; or
8
<PAGE>
if sent to the Company shall be sent by certified mail, return receipt
requested to 1001 S. W. Gage Boulevard, Topeka, Kansas 66609.
12. REPORTS.
--------
Copies of all reports which the Company submits to each Shareholder
will also be submitted to you.
13. CONSTRUCTION.
-------------
This Agreement shall be governed by and construed in accordance with
the laws of the State of Kansas.
14. SUCCESSORS.
-----------
This Agreement shall inure to the benefit of and be binding upon your
successors and assigns and the successors and assigns of the Company,
but this Agreement shall not be assignable by a party hereto without
the written consent of the other parties.
If the foregoing correctly sets forth the understanding between you and the
Company, please so indicate in the space provided below for that purpose,
whereupon this letter shall constitute a binding agreement between us.
Very truly yours,
RENAISSANCE DESIGNER GALLERY PRODUCTS, INC.
By: __________________________________
A duly authorized officer
Accepted:
By: _________________________________
A duly authorized officer
9
SUBSCRIPTION AGREEMENT
----------------------
RENAISSANCE DESIGNER GALLERY PRODUCTS, INC.
UP TO 50,000,000 SHARES OF COMMON STOCK
($0.01 PAR VALUE PER SHARE)
The undersigned hereby offers to purchase shares of the Common Stock of
Renaissance Designer Gallery Products, Inc., a Kansas corporation (the
"Company"), in the amount set forth on the Signature Page of this Subscription
Agreement and on the terms described in the current Prospectus (as supplemented
or amended from time to time). The undersigned agrees that if this subscription
is accepted by the Company, it will be held, together with the underlying
payment, on the terms described in the Prospectus during the Offering Period.
The undersigned acknowledges a receipt of the current Prospectus of the Company
and has given special attention to the sections therein entitled "Risk Factors"
and "Dilution."
The undersigned acknowledges that the certificates for shares of the Common
Stock will not be issued until approximately ten (10) days after the successful
completion of the Offering.
This subscription cannot be withdrawn without the consent of the Company. ALL
CHECKS FOR PAYMENT OF SUBSCRIPTIONS SHOULD BE MADE TO "RENAISSANCE - ESCROW
ACCOUNT" WHICH WILL BE DEPOSITED WITH THE MESQUITE STATE BANK, MESQUITE, NEVADA.
[SIGNATURE PAGE ON PAGE 2]
1
<PAGE>
SIGNATURE PAGE OF SUBSCRIPTION AGREEMENT
(Please Print or Type)
Subscriber(s) Legal Address
______________________________________ ____________________________________
(First) (Middle) (Last) (Number) (Street)
______________________________________ ____________________________________
(First) (Middle) (Last) (City) (State) (Zip)
Address for Notices and
Distribution, if Different ____________________________________
from Legal Address: (c/o Name) (Acct. Number)
____________________________________
(Number) (Street)
____________________________________
(City) (State) (Zip)
Social Security or Tax I.D. No. _______________________________________________
Tax Year End: _________________________________________________________________
I (We) Subscribe $_________________________ [________________ Share(s)]
Title to Share(s) to be held:
___ Individual ___ Joint Tenants WROS ___ Tenants in Common
(All persons must sign) (All persons must sign)
___ Trust ___ Corporation ___ Partnership
- -------------------------------------------------------------------------------
SIGNATURE OF SUBSCRIBER(S)
X__________________________________________ (Date) __________________________
X__________________________________________ (Date) __________________________
- -------------------------------------------------------------------------------
Make checks payable to
"Renaissance - Escrow Account "
- -------------------------------------------------------------------------------
2
<PAGE>
(TO BE COMPLETED BY THE COMPANY)
The foregoing subscription is accepted by Renaissance Designer Gallery Products,
Inc. on this ________ day of ________________, 1998.
RENAISSANCE DESIGNER GALLERY PRODUCTS, INC.
By: _________________________________________
A duly authorized officer
DATED: ___________________________
- -------------------------------------------------------------------------------
3
<PAGE>
UP TO
$5,000,000
RENAISSANCE DESIGNER GALLERY PRODUCTS, INC.
PROCEEDS ESCROW AGREEMENT
-------------------------
THIS ESCROW AGREEMENT is made as of this__________day of _________, 1998,
by and among RENAISSANCE DESIGNER GALLERY PRODUCTS, INC., a Nevada corporation
(the "Company"), and MESQUITE STATE BANK, Mesquite, Nevada (the "Escrow Agent").
A. The Company proposes of offer and sell on behalf of the Company a
minimum of 30,000,000 shares of common stock, $.01 par value per share
(the "Shares"), aggregating $3,000,000 ("Minimum Proceeds") and a
maximum of 50,000,000 Shares, aggregating $5,000,000 ("Maximum
Proceeds"), each Share is offered at $0.10 per Share. The Shares will
be offered on a "best efforts" basis.
The Company desires to establish an escrow account in which funds
received from the subscribers for the Shares (the "Subscribers") will
be deposited pending completion of the escrow period. The Escrow Agent
agrees to serve as Escrow Agent in accordance with the terms and
conditions set forth herein.
As used herein, the term Selling Agent shall include the
broker/dealers selling the shares pursuant to a Selling Agreement.
All Selling Agents shall be bound by this agreement.
B. The Shares will be offered to the general public pursuant to a
Registration Statement filed under form SB-2 with the United States
Securities and Exchange Commission, under the Securities Act of 1933,
as amended, and pursuant to various state securities laws. In
connection with the offering of the Shares, the Company has prepared a
Prospectus (the "Prospectus").
C. The offering of the Shares will not close unless 30,000,000 Shares are
sold within ninety (90) days of the effective date of the final
Prospectus (which period may be extended for up to an additional
ninety (90) days by the Company). The Company desires to have the
funds received from the Subscribers (the "Subscription Funds") held
in an escrow account by the Escrow Agent, upon the terms and subject
to the conditions set forth in this Agreement.
D. Until the closing (the "Closing"), which shall occur not later than
ninety (90) days after the effective date of the final Prospectus
(unless extended up to an additional ninety (90) days), the Company
and the Selling Agent will promptly forward to the Escrow Agent to be
held in the Escrow Account the Subscription Funds received along with
a statement of the name, address, taxpayer identifying number and
number of Shares subscribed to by the subscriber whose Subscription
Funds are being submitted.
<PAGE>
E. The Closing of the purchase and sale of the Shares will be held on a
day selected by the Company following the receipt by the Escrow Agent
of Minimum Proceeds for the Shares (the "Closing Date").
COVENANTS
---------
NOW, THEREFORE, in consideration of the mutual covenants and agreements,
contained herein, the parties hereto agree as follows:
1. The Escrow Agent is hereby appointed to hold the Subscription Funds
and to dispose of the Subscription Funds as hereinafter provided and
it hereby accepts such appointment. All Subscription Funds,
represented by check or otherwise, shall be made payable to
"Renaissance - Escrow Account."
2. Upon its receipt of any Subscription Funds, the Company and Selling
Agents shall forward to the Escrow Agent by noon of the next business
day after receipt the check or other form of payment representing the
Subscription Funds. Escrow Agent shall deposit and hold all
Subscription Funds in a special account entitled the "Renaissance -
Escrow Account" (the "Escrow Account"). Escrow Agent shall hold the
Subscriptions in trust as escrow agent only and shall not claim or be
entitled to ownership of such funds. If Escrow Agent is unable to
collect upon any Subscription Funds, it shall promptly notify the
Underwriter of such failure and of the name and address of the
Subscriber and the amount subscribed for and shall return the form of
payment to the Underwriter. Escrow Agent shall deposit the
Subscription Funds in a non-interest bearing account or if
Subscription Funds are invested, such investments will only be made in
investments permissible under SEC Rule 15c2-4.
3. Escrow Agent shall maintain records of all Subscription Funds received
and deposited into the Escrow Account. The records shall separately
identify the name and mailing address of each Subscriber, the number
of Shares subscribed for, the date on which the Subscription Funds
were received by Escrow Agent and the date on which the proceeds of
the Subscription Funds were collected by Escrow Agent.
4. In the event the Escrow Agent does not receive Subscription Funds
totaling the Minimum Proceeds by the Closing Date, the Escrow Agent
shall refund to each Subscriber, without deduction and without
interest, the amount received by the Subscriber and shall notify the
Company.
5. (a) Except as set forth herein, Escrow Agent shall make no
payments or disbursements from the Escrow Account. No creditor
of the Company or of Escrow Agent shall have any interest in the
funds held in the Escrow Account.
(b) The Company may at any time by notice to Escrow Agent request
that all or a portion of Subscription Funds be returned to the
2
<PAGE>
Subscribers. Promptly after receiving such notice, Escrow Agent
shall return the Subscription Funds described in the notice to
the Subscriber in full, without deduction and without interest.
6. On the Closing Date (or any subsequent closing date, as the case may
be), the Escrow Agent shall make payment in good funds from the Escrow
Account to the Company as described in the Prospectus of the full
amount of the Subscription Funds and as instructed pursuant to written
advice signed by the Company.
7. The Escrow Agent shall have no duties or responsibilities except those
expressly set forth herein. Except as otherwise provided herein, the
Escrow Agent shall take such action as the Company may reasonably
request in order to further effectuate the purposes of this Agreement.
8. It is understood and agreed further that:
(a) The Escrow Agent shall have no duty to know or determine the
performance or non-performance of any provisions of any agreement
between the other parties hereto, and the original, or a copy of
any such agreement deposited with the Escrow Agent shall not bind
said Escrow Agent in any manner. The Escrow Agent assumes no
responsibility for the validity or sufficiency of any documents
or papers or payments deposited or called for hereunder except as
may be expressly set forth in this Agreement, and the duties and
responsibilities of the Escrow Agent are limited to those
expressly stated in this Agreement. The Escrow Agent shall be
entitled to its normal fees for services as Escrow Agent;
(b) This Agreement may be supplemented, altered, amended, modified or
revoked by writing only, signed by all of the parties hereto, and
approved by the Escrow Agent upon payment of all fees, costs and
expenses incident thereto;
(c) No assignment, transfer, conveyance or hypothecation of any
right, title or interest in and to the subject matter of this
Escrow Agreement shall be binding upon the Escrow Agent unless
written notice thereof shall be served upon the Escrow Agent and
all fees, costs and expenses incident thereto shall have been
paid and then only upon the Escrow Agent's assent thereto in
writing;
(d) Any notice required or desired to be given by the Escrow Agent to
any party to this Agreement may be given by mailing the same
addressed to such party at the address noted herein, or the most
recent address of such party shown on the records of the Escrow
Agent, or reasonably believed by Escrow Agent to be proper, and
notice so mailed shall be as effectual as though served upon such
party in person at the time of depositing such notice in the
mail;
3
<PAGE>
(e) The Escrow Agent may receive any payment or performance called
for hereunder after the due date thereof unless subsequent to the
due date of such payment or performance and prior to the receipt
thereof the Escrow Agent shall have been instructed in writing by
the proper parties to refuse any such payment of performance;
(f) The Escrow Agent shall not be personally liable for any act it
may do or omit to do hereunder as such agent, while acting in
good faith and in the exercise of its own best judgment, except
for any act that constitutes wilful misconduct, gross negligence
or fraud. The Escrow Agent shall have the right at any time to
consult with counsel on any question arising hereunder and shall
incur no liability for any delay reasonably required to obtain
the advise of counsel;
(g) The Escrow Agent is hereby expressly authorized to disregard any
and all notices of warning given by any of the parties hereto, or
by any other person, firm or corporation, excepting only orders
of process of court, and is hereby expressly authorized to comply
with and obey any and all process, orders, judgments or decrees
of any court, and in case the Escrow Agent obeys or complies with
any such process, order, judgment or decree of any court it shall
not be liable to any of the parties hereto or to any other
person, firm or corporation by reason of such compliance,
notwithstanding that any such process, order, judgment or decree
be subsequently reversed, modified, annulled, set aside or
vacated, or found to have been issued or entered without
jurisdiction;
(h) In consideration of the acceptance of this Escrow Agreement by
the Escrow Agent, the undersigned agree jointly and severally,
for themselves, their heirs, legal representatives, successors
and assigns to pay the Escrow Agent its charges and fees
hereunder and to indemnify and hold it harmless as to any
liability incurred by it by reason of it having accepted this
agency, or in the event of a dispute, whether or not resulting in
litigation, between the parties hereon, or between the parties
hereto and the Escrow Agent, to reimburse the Escrow Agent for
all its expenses, including, among other things, court costs and
reasonable attorneys' fees incurred in connection therewith.
Escrow fees or charges, as distinguished from other expenses
hereunder, shall be made pursuant to a letter agreement between
the Company and the Escrow Agent and may be deducted from the
amount payable to the Company at the Closing if not otherwise
provided for and are intended as compensation for the Escrow
Agent's ordinary services as contemplated by this Agreement. In
the event the conditions hereof are not promptly fulfilled, or
any dispute arises hereunder, or if for any other reason the
Escrow Agent renders services not provided for in this Agreement,
the parties hereon jointly and severally agree to pay reasonable
compensation for such extraordinary services. In the event of
4
<PAGE>
any action to recover the Escrow Agent's fees, expenses or
charges from any party hereto, the Escrow Agent shall be entitled
to reasonable attorneys' fees and costs incurred with respect to
any such action. No provision in any attached special
instructions by which one or more of the other parties hereto
shall undertake to pay such fees, charges and expenses, or any
portion thereof, shall, except as expenses, or any portion
thereof, shall, except as between such other parties, alter their
joint and several liability to the Escrow Agent for such fees,
charges and expenses;
(i) The Escrow Agent shall be under no duty or obligation to
ascertain the identity, authority or rights of the parties (or
their agents) executing or delivering or purporting to execute or
deliver this Agreement or any documents or papers or payments
deposited or called for hereunder;
(j) The Escrow Agent shall not be liable for the outlawing of any
rights under any statute of limitations or by reason of laches in
respect to the subject of this Agreement or any documents or
papers deposited; and
(k) In the event of any dispute between the parties hereto as to the
facts of default, the validity or meaning of the terms or
provisions of this Agreement or any other fact or matter relating
to the transactions covered hereby between the parties, the
Escrow Agent is instructed as follows:
(i) that it shall be under no obligation to act, except under
process or order of court, or until it has been adequately
indemnified to its full satisfaction, and shall sustain no
liability for its failure to act pending such process or
court order or indemnification;
(ii) that it may in its sole and absolute discretion, deposit the
property described herein or so much thereof as remains in
its hands with the then clerk, or acting clerk, of the
District Court of Shawnee County, Kansas, State of Kansas,
and interplead the parties hereto, and upon so depositing
such property and filings its complaint in interpleader it
shall be relieved of all liability under the terms hereof as
to the property so deposited and shall be entitled to
recover in such interpleader action, from the other parties
hereto, its reasonable attorney fees and related costs and
expenses incurred in commencing such action and furthermore,
the parties hereto for themselves, their heirs, legal
representatives, successors and assigns do hereby submit
themselves to the jurisdiction of said court and do hereby
appoint the then clerk, or acting clerk, of said court as
their agent for the service of all process in connection
with such proceedings. The institution of any such
interpleader action shall not impair the other rights of
the Escrow Agent under this paragraph 8.
5
<PAGE>
9. Any notice or other communications to any party to this Escrow
Agreement shall be given by first class mail, postage prepaid,
addressed as follows:
ESCROW AGENT: Mesquite State Bank
Mesquite, Nevada
COMPANY: Renaissance Designer Gallery Products, Inc.
1001 S.W. Gage Boulevard
Topeka, Kansas 66604
Any notice sent by mail shall be deemed to have been given on the
earlier of the date of receipt or on the fifth business day following
the date of mailing.
10. The Escrow Agent may resign by notifying the other parties hereto by
registered mail at the address set forth in Section 9 hereof, and,
until a successor escrow agent is named and accepts its appointment,
the Escrow Agent shall have no duty save to hold the Subscription
Funds in the Escrow Account.
11. This Agreement shall be construed and interpreted in accordance with,
and governed and enforced in all respects by the laws of the State of
Kansas. The rights and obligations of the parties to this Agreement
shall not be assigned or delegated without the prior written consent
of the other party. This Agreement shall inure to and be binding upon
the parties hereto, their successors and assigns.
12. The term of this Agreement shall commence upon the date hereof and
shall continue until the final discharge of the obligations of the
Escrow Agent hereunder.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their duly authorized representatives as of the
date first above written.
"Company"
RENAISSANCE DESIGNER GALLERY
PRODUCTS, INC.
By: ________________________________________
President
"Escrow Agent"
MESQUITE STATE BANK, MESQUITE NEVADA
By:______________________________
Authorized Officer
6
[STAMP: FILED IN THE OFFICE
OF THE SECRETARY OF STATE OF THE
STATE OF NEVADA
FEB 03 1997
No C10251-95
DEAN HELLER, SECRETARY OF STATE]
RESTATED ARTICLES OF INCORPORATION
OF
RENAISSANCE DESIGNER GALLERY PRODUCTS, INC.
FIRST: The name of the corporation is Renaissance Designer Gallery
Products, Inc.
SECOND: The principal office of the corporation in the State of
Nevada is located at 4041 E. Sunset Road, Henderson, Nevada 89014. The name
and address of its resident agent is Herman L. Waldman, Esquire,
4041 E. Sunset Road, Henderson, Nevada 89014.
THIRD: The Corporation may engage in any lawful act, activity and/or
business for which corporations may be organized under the General Corporation
Laws of the State of Nevada.
FOURTH: The aggregate number of shares which this corporation is
authorized to issue in five hundred and ten million (510,000,000) divided into
ten million (10,000,000) Preferred Shares of the par value of One Cent ($0.01)
per share, and five hundred million (500,000,000) Common Shares with a par
value of One Cent ($0.01) per share..
The preferences, qualifications, limitations, restrictions and the special
or relative rights in respect of the shares of each class are as follows:
A. Provisions relating to the Preferred Shares:
1. The Preferred Shares may be issued from time to time in one or
more classes or series, the shares of each class or series to have such
designations and powers, preferences and rights, and qualifications,
limitation and restrictions thereof as are stated and expressed herein and
in the resolution or resolutions providing for the issue of such class or
series adopted by the Board of Directors as hereafter provided.
2. Authority is hereby expressly granted to and vested in the
Board of Directors to authorize the issuance of the Preferred Shares from
time to time in one or more class or series, and with respect to each
class or series of the Preferred Shares, to fix and state by the
resolution or resolutions from time to time adopted providing for the
issuance thereof the following:
(i) Whether or not the class or series is to have voting
rights, full or limited, or is to be without voting powers;
provided, in no event shall a single share of a class or series be
entitled to more than one vote on each matter it is entitled to vote
upon;
(ii) The number of shares to constitute the class or series
and the designations thereof;
<PAGE>
(iii) The preferences and relative, participating, optional
or other special rights, if any, and the qualifications, limitations
or restrictions thereof, if any, with respect to any class or series;
(iv) Whether or not the shares of any class or series shall
be redeemable and if redeemable the redemption price or prices, and
the time or times at which, and the terms and conditions upon which
such shares shall be redeemable and the manner of redemption;
(v) Whether or not the shares of a class or series shall be
subject to the operation of retirement or sinking funds to be
applied to the purchase or redemption of such shares for retirement,
and if such retirement or sinking fund or funds be established, the
annual amount thereof and the terms and provisions relative to the
operations thereof;
(vi) The dividend rate, the conditions upon which and the
times when such dividends are payable, the preference to or the
relation to the payment of the dividends payable on any other class
or classes or series of stock whether or not such dividend shall be
cumulative or noncumulative, and if cumulative, the date or dates
from which such dividends shall accumulate,
(vii) The preferences, if any, and the amounts thereof
which the holders of any series thereof shall be entitled to
receive upon the voluntary or involuntary dissolution of, or upon
any distribution of the assets of, the corporation;
(viii) Whether or not the shares of any class or series
shall be convertible into, or exchangeable for, the shares of any
other class or classes or of any other series of the same or any
other class or classes of stock of the corporation and the
conversion price or prices or ratio or ratios of the rate or rates
at which such exchange may be made, with such adjustments, if any,
as shall be stated and expressed or provided for in such resolution
or resolutions; and
(ix) Such other special rights and protective provisions
with respect to any class or series as may to the Board of
Directors seem advisable.
The shares of each class or series of the Preferred Shares may vary from
the shares of any other class and series thereof in any or all of the
foregoing respects. Unless otherwise provided in any such resolution or
resolutions, the number of shares of any class or series of the Preferred
shares set forth in such resolution or resolutions may by the Board of
Directors from time to time be increased or decreased (but not below the
number of shares thereof then outstanding).
2
<PAGE>
B. Provisions relating to the Common Shares.
Subject to the provisions of law and the Preferred Shares, dividends may
be paid on the Common Shares of the Corporation at such time and in such
amounts as the Board of Directors may deem advisable. Each Common Share shall
be entitled to one vote on each matter submitted to a vote at a meeting of
shares.
C. General.
(i) Subject to the provisions of law and the foregoing
provisions of these Restated Articles of Incorporation, the
Corporation may issue shares of its Preferred Shares or Common
Shares from time to time for such consideration (not less than
the par value or stated value thereof) as may be fixed by the
Board of Directors which is expressly authorized to fix the same
in its absolute and uncontrolled discretion subject to the
foregoing conditions. Shares so issued for which the consideration
has been paid or delivered to the Corporation shall be deemed fully
paid stock and shall not be liable to any further call or assessment
thereon and the holders of such shares shall not be liable for any
further payments in respect of such shares.
(ii) No stockholder of this Corporation shall have by
reason of the holding of shares of any class or series of stock of
this Corporation, any preemptive or preferential rights to purchase
or subscribe for any other shares of any class or series of this
Corporation now or hereafter to be authorized, and any other equity
securities, or any notes, debentures, warrants, bonds, or other
securities convertible into or carrying options or warrants to
purchase shares of any class, now or hereafter to be authorized,
whether or not the issuance of any such shares, or such notes,
debentures, bonds or other securities, would adversely affect the
dividend or voting rights of such stockholder.
(iii) Cumulative voting by any shareholder is hereby
expressly denied.
FIFTH: Except for the initial member of the Board, the members of
the governing board shall be styled directors and the number of directors of
the Corporation shall not be less than three (3) nor more than fifteen (15),
and within that minimum and maximum shall be such number as shall be from
time to time specified by resolution of at least two-thirds of the board of
directors; provided, however, no director's term shall be shortened by
reason of a resolution reducing the number of directors.
The names and post office addresses of the initial Board of Directors,
which shall consist of one (1) member, is as follows:
Michael C. Cooper
2635 NW 86th Street
Topeka, Kansas 66618
3
<PAGE>
SIXTH: The name and post office address of the incorporator signing
the Articles of Incorporation is:
Michael C. Cooper
2635 NW 86th Street
Topeka, Kansas 66618
SEVENTH: The Corporation shall have perpetual existence.
EIGHTH: A. The Board of Directors is expressly authorized to make,
alter or amend the By-Laws of the Corporation.
B. Authority is hereby expressly granted to and vested in the Board
of Directors to issue notes, bonds, debentures, warrants and other obligations
of the Corporation convertible into stock of such class, or bearing such
warrants or other evidence of optional rights to purchase and/or subscribe to
stock of such class and issued and convertible upon such terms and conditions
and in such manner as may be fixed and stated by the resolution or resolutions
from time to time adopted providing for the issuance thereof.
C. The Corporation reserves the rights to amend, alter, change or
repeal any provision contained in the Restated Articles of Incorporation, in
the manner now or hereafter prescribed by statute, and all rights conferred by
stockholders herein are created subject to this reservation.
D. The Board of Directors shall be authorized to exercise all such
powers and do all such things and acts as may be exercised or done by the
Corporation subject to the provisions of the laws of the State of Nevada, of
this Certificate of Incorporation and of the By-Laws of the Corporation.
NINTH: No contract or other transaction between the Corporation and
any other corporation and no other act of the Corporation shall, in the
absence of fraud, be invalidated or in any way affected by the fact that any
of the stockholders, directors or officers of the Corporation are pecuniarily
or otherwise interested in such contract, transaction, or other act, or are
stockholders, directors or officers of such corporation. Any stockholder,
director or officer of the corporation, individually, or any firm or
association of which any such stockholder, director or officer may be a
member, may be a party to, or may be pecuniarily or otherwise interest in,
any contract or transaction of the Corporation, provided that the fact that
he individually or such firm or association is so interested shall be
disclosed or shall have been known to the Board of Directors or a majority
of such members thereof as shall be present at any meeting of the Board of
Directors at which action upon any such contract or transaction shall be
taken; and any director of the Corporation who is a stockholder, director or
officer of such other corporation or who is so interested may be counted in
determining the existence of a quorum at any meeting of the Board of
Directors which shall authorize any such contract or transaction and may vote
thereat to authorize any such contract or transaction with like force and
effect as if he were not such stockholder, director or officer of such other
corporation or not so interested; every stockholder, director or officer of
the Corporation being hereby relieved from any disability which might
otherwise prevent him from carrying out transactions
4
<PAGE>
with or contracting with the Corporation for the benefit of himself or any
firm or corporation, association, trust or organization in which or with which
he may be in anyway interest or connected.
TENTH: A. The Corporation shall have power to indemnify any person
who was or is a party or is threatened to 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 or is or was serving at the request of the Corporation as a
director, officer, trustee, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, against expenses
(including attorney fees), judgments, fines, and amounts paid in settlement,
actually and reasonably incurred by him in connection with such action, suit
or proceeding, if such person 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, with respect to any criminal action or proceedings had no
reasonable cause to believe his conduct was unlawful. The termination of any
action, suit or proceeding by judgment, order, settlement, or conviction, or
on 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.
B. The Corporation shall have power to indemnify any 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
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, trustee, agent or employee
of another corporation, partnership, joint venture, trust or other enterprise,
against expenses (including attorney 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 to any claim, issue or manner as to
which such person shall have been adjudged to be liable for negligence or
misconduct in the performance of his duty to the Corporation unless and only
to the extent that the court in which such action or suite was brought shall
determine upon application that despite the adjudication of liabilities but
in view of all the circumstances of the case, such persons is fairly and
reasonably entitled to indemnity for such expenses which the court shall deem
proper.
C. To the extent that a director, officer, employee or agent of the
Corporation has been successful on the merits or otherwise in defense of any
action, suit or proceeding referred to in subsections A and B, or in defense
of any claim, issue or matter therein he shall be indemnified against
expenses (including attorney fees) actually and reasonably incurred by him
in connection therewith.
D. Expenses incurred in defending a civil or criminal action, suit
or proceeding may be paid by the Corporation in advance of the final
disposition of such action, suit or proceeding as
5
<PAGE>
authorized by the Board of Directors.
E. The indemnification provided by this section shall not be deemed
exclusive of any other right to which those seeking indemnification may be
entitled under any by-law, agreement, vote of stockholders or disinterested
directors, or otherwise, both as to action in his official capacity and as to
his action in other capacities while holding such office and shall continue as
to a person who has ceased to be a director, officer, trustee, employee or
agent and shall inure to the benefit of the heirs, executors and
administrators of such a person.
F. The Corporation shall have power to purchase and maintain
insurance on behalf of any person who 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, trustee, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise against
any liability asserted against him and incurred by him in any such capacity
or arising out of his status as such whether or not the Corporation would
have the power to indemnify him against such liability under the provisions
of this section.
ELEVENTH:
A. Eighty Percent Vote Required for Certain Transactions.
Notwithstanding any other provision of these Articles of Incorporation, and
subject to the exceptions provided in Paragraph D of this Article ELEVENTH,
the types of transactions described in Paragraph C of this Article ELEVENTH
shall require the affirmative vote or consent of eighty percent (80%) of the
outstanding shares of each class of stock of the Corporation normally
entitled to vote in elections of directors, voting for the purposes of this
Article ELEVENTH as separate classes, when a Major Stockholder (as defined
in Paragraph B of this Article ELEVENTH) is a party to the transaction. Such
affirmative vote or consent shall be in addition to the vote or consent of
the holders of the stock of the Corporation otherwise required by law or by
the terms of any class or series of preferred stock, whether now or hereafter
authorized, or any agreement between the Corporation and any national
securities exchange.
B. "Major Stockholder" Defined. The term "Major Stockholder" shall
mean any corporation, person or other entity which is the beneficial owner,
directly or indirectly, of more than ten percent (10%) of the outstanding
shares of stock of the Corporation normally entitled to vote in elections of
directors, considered for the purposes of this definition as one class, and
shall include any affiliate or associate, as such terms are defined in
clause (ii) below, of a Major Stockholder. For the purposes of this Article
ELEVENTH, (a) any corporation, person or other entity shall be deemed to be
the beneficial owner of any shares of stock of the Corporation (i) which it
has the right to acquire pursuant to any agreement or upon exercise of
conversion rights or warrants, or otherwise (but excluding stock options
granted by the Corporation), or (ii) which are beneficially owned, directly
or indirectly (including shares deemed owned through application of clause
(i) above), by any other corporation, person or entity with which it or its
"affiliate" or "associate" (as defined below) has any agreement, arrangement
or understanding for the purpose of acquiring, holding, voting or disposing
of stock of the Corporation, or which is its "affiliate" or "associate" as
those terms are defined in Rule
6
<PAGE>
12b-2 of the General Rules and Regulations under the Securities Exchange Act
of 1934 as in effect on December, 1976, and (b) the outstanding shares of
any class of stock of the Corporation shall include shares deemed owned
through application of clauses (i) and (ii) above but shall not include any
other shares which may be issuable pursuant to any agreement, or upon
exercise of conversion rights or warrants, or otherwise.
C. Transactions Covered. This Article ELEVENTH shall apply to the
following transactions:
(i) The merger or consolidation of the Corporation or any
subsidiary of the Corporation with or into any Major Stockholder;
(ii) The issuance of any securities of the Corporation to a
Major Stockholder for cash;
(iii) The sale, lease or exchange of all or any substantial part
of the assets of the Corporation to any Major Stockholder (except assets
having an aggregate fair market value of less than $1,000,000,
aggregating for the purpose of such computation all assets sold, leased
or exchanged in any series of similar transactions within a twelve-month
period);
(iv) The sale, lease or exchange to the Corporation or any
subsidiary thereof, in exchange for securities of the Corporation, of
any assets of any Major Stockholder (except assets having an aggregate
fair market value of less than $1,000,000, aggregating for the purpose
of such computation all assets sold, leased or exchanged in any series
of similar transactions with a twelve-month period);
(v) A loan from the Corporation or any subsidiary thereof to a
Major Stockholder or a guaranty by the Corporation or any subsidiary of
any obligation of a major Stockholder; and
(vi) The use of any assets of the Corporation or any subsidiary
thereof as collateral or compensating balances, directly or indirectly,
for any obligation of a Major Stockholder.
D. Transactions Not Covered. The provision of this Article ELEVENTH
shall not be applicable to (i) any of the transactions described in
Paragraph C of this Article ELEVENTH if the Board of Directors of the
Corporation shall by resolution having approved a memorandum of understanding
with such Major Stockholder with respect to and substantially consistent with
such transaction, or (ii) any such transaction with any corporation of which
a majority of the outstanding shares of all classes of stock normally
entitled to vote in elections of directors is owned of record or beneficially
by the Corporation and its subsidiaries.
E. Board of Directors Determination Conclusive. The Board of
Directors shall have the power and duty to determine for the purposes of
this Article ELEVENTH, on the basis of information
7
<PAGE>
known to the Corporation, whether (i) a corporation, person or entity
beneficially owns more than ten percent (10%) of the outstanding shares of
stock of the Corporation normally entitled to vote in elections of directors,
(ii) a corporation, person or entity is an "affiliate" or "associate" (as
defined above) of another, (iii) the assets being acquired or leased to or by
the Corporation, or any subsidiary thereof, have an aggregate fair market
value of less than $1,000,000, and (iv) the memorandum of understanding
referred to in Paragraph D hereof is substantially consistent with the
transaction covered thereby. Any such determination shall be conclusive and
binding for all purposes of this Article ELEVENTH.
F. Amendment by Eighty Percent Vote. No amendment to the Articles of
Incorporation of the Corporation shall amend, alter, change or repeal any of
the provision of this Article ELEVENTH, unless the amendment effecting such
amendment, alteration, change or repeal shall receive the affirmative vote or
consent of eighty percent (80%) of the outstanding shares of each class of
stock of the Corporation normally entitled to vote in elections of directors,
voting for the purposes of this Article ELEVENTH as separate classes. Such
affirmative vote or consent shall be in addition to the vote or consent of the
holders of the stock of the Corporation otherwise required by law or by the
terms of any class or series of preferred stock, whether now or hereafter
authorized, or any agreement between the Corporation and any national
securities exchange.
IN WITNESS WHEREOF, these Restated Articles of Incorporation were
approved by a majority of the stockholders of the Corporation upon a
Resolution of the Board of Directors at a duly held meeting therefor on
the 10th day September, 1996.
/s/ Melvin G. McCall
-------------------------------
Melvin G. McCall, President
/s/ Michael C. Cooper
-------------------------------
Michael C. Cooper, Secretary
8
<PAGE>
STATE OF KANSAS )
)
COUNTY OF SHAWNEE )
-------
Now on the 26th day of December, 1996, appeared before me Melvin G.
McCall, President of Renaissance Designer Gallery Products, Inc., and has
executed the foregoing Restated Articles of Incorporation.
/s/ Sheryl S. Tasker
-------------------------------
Notary Public
[SEAL]
My Commission Expires:
Aug 13, 2000
- ----------------------
STATE OF KANSAS )
)
COUNTY OF SHAWNEE )
-------
Now on the 26th day of December, 1996, appeared before me Michael C.
Cooper, Secretary of Renaissance Designer Gallery Products, Inc., and has
executed the foregoing Restated Articles of Incorporation.
/s/ Sheryl S. Tasker
-------------------------------
Notary Public
[SEAL]
My Commission Expires:
Aug 13, 2000
- ----------------------
9
<PAGE>
THIS FORM SHOULD ACCOMPANY RESTATED ARTICLES (PURSUANT TO NRS 78.403 (b))
OF INCORPORATION FOR A NEVADA CORPORATION
1. Name of corporation Renaissance Designer Gallery Products, Inc.
-------------------------------------------------------
2. Date of adoption of Amended and Restated Articles September 10, 1996
-------------------------
3. If the articles were amended, please indicate what changes have been made:
(a) Was there a name change? Yes ___ No _X_ If yes, what is the
new name?
(b) Did you change the resident agent? Yes ___ No _X_ If yes, please
indicate the new resident agent and address.
-----------------------------------------------------------------------
-----------------------------------------------------------------------
Please attach the resident agent acceptance certificate.
(c) Did you change the purposes? Yes ___ No _X_
Did you add Banking? ___ Gaming? ___ Insurance? ___
None of these? ___
(d) Did you change the capital stock? Yes _X_ No ___ If yes, what is
the new capital stock?
510,000,000 Shares consisting of 10,000,000 of preferred at $.01 par
value and 500,000,000 common shares of $.01 par value
-----------------------------------------------------------------------
(e) Did you change the directors? Yes ___ No _X_ If yes, indicate
the change:
-----------------------------------------------------------------------
(f) Did you add the directors liability provision? Yes _X_ No ___
(g) Did you change the period of existence? Yes ___ No _X_ If yes,
what is the new existence?
-----------------------------------------------------------------------
(h) If none of the above apply, and you have amended or modified the
articles, how did you change your articles?
-----------------------------------------------------------------------
-----------------------------------------------------------------------
-----------------------------------------------------------------------
/s/ Melvin G. McCall President 12/26/96
- ------------------------------------------------------- -------------------
Name and Title of Officer Date
Melvin G. McCall, President
State of KANSAS )
--------------- )
)
County of Shawnee )
--------------- )
On ____DEC_26,_1996____, personally appeared before me, a Notary Public,
_________Melvin_ G._McCall,_President______________________, who acknowledged
that he/she executed the above instrument.
[SEAL] Sheryl S. Tasker
(NOTARY STAMP OR SEAL) ----------------------------------
Notary Public
BYLAWS
OF
RENAISSANCE DESIGNER
GALLERY PRODUCTS, INC.
ARTICLE I. OFFICES
-------
Section 1. Business.
---------
The principal office of the corporation shall be located in the State of
Kansas. The corporation may have such offices, either within or outside
Kansas, as the Board of Directors may designate or as the business of the
corporation may require from time to time.
Section 2. Registered Office.
------------------
The registered office of the corporation required by the Nevada Corporation
Code shall be maintained in Nevada and the address of the registered office
may be changed from time to time by the Board of Directors.
ARTICLE II. SHAREHOLDERS
------------
Section 1. Annual Meeting.
---------------
An annual meeting of the shareholders shall be held on such date as may be
determined by the Board of Directors, for the purpose of electing directors
and for the transaction of such other business as may come before the
meeting. If the day fixed for the annual meeting shall be a legal holiday,
such meeting shall be held on the next succeeding business day. If the
election of directors shall not be held on the day designated herein for
any annual meeting of the shareholders, or at any adjournment thereof, the
Board of Directors shall cause the election to be held at a meeting of the
shareholders as soon thereafter as conveniently may be. Failure to hold an
annual meeting as required by these bylaws shall not invalidate any action
taken by the Board of Directors or officers of the corporation.
Section 2. Special Meetings.
-----------------
Special meetings of the shareholders, for any purpose or purposes, unless
otherwise prescribed by statute, may be called by the president or the
Board of Directors, and shall be called by the president at the request of
the holders of not less than twenty percent (20%) of all the outstanding
shares of the corporation entitled to vote at the meeting.
Section 3. Place of Meeting.
-----------------
Each meeting of the shareholders shall be held at such place, either within
or outside Kansas, as may be designated in the notice of meeting, or, if no
place is designated in the notice, at the principal office of the
corporation in Kansas.
Section 4. Notice of Meeting.
------------------
Except as otherwise prescribed by statute, written notice of each meeting of
the shareholders stating the place, day and hour of the meeting, and, in the
case of a special meeting, the purpose or purposes for which the meeting is
called, shall be given no less than ten (10) nor more than sixty (60) days
before the date of the meeting, either personally or by first class,
certified or registered mail, by or at the direction of the president, or the
secretary, or the officer or person calling the
1
<PAGE>
meeting, to each shareholder of record entitled to vote at such meeting. If
mailed, such notice shall be deemed to be given when deposited in the United
States mail, addressed to each shareholder at his address as it appears on
the stock transfer books of the corporation, with postage thereon prepaid,
but if three (3) successive notices mailed to the last-known address of any
shareholder of record are returned as undeliverable, no further notices to
such shareholder shall be necessary until another address for such shareholder
is made known to the corporation. If requested by a person or persons, other
than the corporation, lawfully calling a meeting, the secretary shall give
notice of such meeting at corporate expense.
Section 5. Closing of Transfer Books or Fixing of Record Date.
---------------------------------------------------
For the purpose of determining shareholders entitled to notice of or to vote
at any meeting of the shareholders or any adjournment thereof, or shareholders
entitled to receive payment of any dividend, or in order to make a
determination of shareholders for any other proper purpose, the Board of
Directors may provide that the stock transfer books shall be closed for any
stated period not exceeding sixty (60) days. If the stock transfer books shall
be closed for the purpose of determining shareholders entitled to notice of
or to vote at a meeting of the shareholders, such books shall be closed for at
least ten (10) days immediately preceding such meeting. In lieu of closing the
stock transfer books, the Board of Directors may fix in advance a date as the
record date for any such determination of shareholders, such date in any case
to be not more than sixty (60) days and in case of a meeting of the
shareholders, not less than ten (10) days prior to the date on which the
particular action, requiring such determination of shareholders, is to be
taken. If the stock transfer books are not closed and no record date is fixed
for the determination of shareholders entitled to notice of or to vote at a
meeting of the shareholders, or shareholders entitled to notice of or to vote
at a meeting of the shareholders, or shareholders entitled to receive payment
of a dividend, the date on which notice of the meeting is mailed or the date
on which the resolution of the Board of Directors declaring such dividend is
adopted, as the case may be, shall be the record date for such determination
of shareholders. When a determination of shareholders entitled to vote at any
meeting of the shareholders has been made as provided in this section, such
determination shall apply to any adjournment thereof except where the
determination has been made through the closing of the stock transfer books
and the stated period of the closing has expired.
Section 6. Voting Record.
--------------
The officer or agent having charge of the stock transfer books for shares of
the corporation shall make, at least ten (10) days before each meeting of the
shareholders, a complete record of the shareholders entitled to vote at such
meeting or any adjournment thereof, arranged in alphabetical order, with the
address of and the number of shares held by each. For a period of ten (10)
days before such meeting, this record shall be kept on file at the principal
office of the corporation, whether within or outside Kansas, and shall be
subject to inspection by any shareholder for any purpose germane to the
meeting at any time during usual business hours. Such record shall also be
produced and kept open at the time and place of the meeting and shall be
subject to the inspection of any shareholder for any purpose germane to the
meeting during the whole time of the meeting. The original stock transfer
books shall be prima facie evidence as to who are the shareholders entitled
to examine such record or transfer books or to vote at any meeting of the
shareholders.
Section 7. Proxies.
--------
At each meeting of the shareholders, a shareholder may vote by proxy executed
in writing by the shareholder or his duly authorized attorney in fact. Such
proxy shall be filed with the secretary of the corporation before or at the
time of the meeting. No proxy shall be valid after eleven (11) months from
the date of its execution, unless otherwise provided in the proxy.
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<PAGE>
Section 8. Quorum.
-------
Except as otherwise required by the laws of Nevada or the articles of
incorporation, a majority of the outstanding shares of the corporation
entitled to vote, represented in person or by proxy, shall constitute a
quorum at each meeting of the shareholders, and the affirmative vote of a
majority of the shares represented at a meeting at which a quorum is present
and entitled to vote on the subject matter shall be the act o the
shareholders. If less than a majority of the outstanding shares are
represented at a meeting, a majority of the shares so represented may
adjourn the meeting from time to time for a period not to exceed sixty (60)
days at any one adjournment without further notice other than an announcement
at the meeting. At such adjourned meeting, at which a quorum shall be present
or represented, any business may be transacted which might have been
transacted at the meeting as originally notified.
Section 9. Voting of Shares.
-----------------
Each outstanding share of record, regardless of class, is entitled to one
(I) vote, and each fractional share is entitled to a corresponding fractional
vote, on each matter submitted to a vote of the shareholders either at a
meeting thereof or pursuant to Section 2 of this Article, except to the extent
that the voting rights of the shares of any class or classes are limited or
denied by the articles of incorporation as permitted by the Nevada Corporation
Code. Cumulative voting for the election of directors of the corporation is
specifically denied.
Section 10. Voting of Shares of Certain Holders.
------------------------------------
Neither treasury shares nor shares held by another corporation, if a majority
of the shares entitled to vote for the election of directors of such other
corporation is held by this corporation, shall be voted at any meeting or
counted in determining the total number of outstanding shares at any given
time. Shares standing in the name of another corporation may be voted by such
officer, agent or proxy as the bylaws of such corporation may prescribe or, in
the absence of such provision, as the Board of Directors of such corporation
may determine. Shares held by an administrator, executor, guardian or
conservator may be voted by him, either in person or by proxy, without a
transfer of such shares into his name. Shares standing in the name of a
trustee may be voted by him, either in person or by proxy, but no trustee
shall be entitled to vote shares held by him without a transfer of such
shares into his name.
Shares standing in the name of a receiver may be voted by such receiver, and
shares held by or under the control of a receiver may be voted by such
receiver without the transfer thereof into his name if authority so to do is
contained in an appropriate order of the court by which such receiver was
appointed.
A shareholder whose shares are pledged shall be entitled to vote such shares
until the shares have been transferred into the name of the pledgee, and
thereafter the pledgee shall be entitled to vote the shares so transferred.
Section 11. Conduct of Meetings.
--------------------
The chairman of the annual or any special meeting of the shareholders shall be
the chairman of the corporation, as selected by the Board of Directors (or in
his absence, any person designated by the Board of Directors), unless and
until a different person is elected by a majority of the shares entitled to
vote at such meeting. The chairman of the meeting shall appoint one or more
persons to act as inspectors of election at the meeting. Meetings of
shareholders shall be conducted in accordance with the following rules:
(a) The chairman of the meeting shall have absolute authority over matters of
procedure and there shall be no appeal from the ruling of the chairman.
If the chairman, in his absolute discretion, deems it advisable to
dispense with the rules of parliamentary procedure as to any one meeting
of shareholders or part
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thereof, the chairman shall so state and shall clearly state the rules
under which the meeting or appropriate part thereof shall be conducted.
(b) If disorder should arise which prevents continuation of the legitimate
business of the meeting, the chairman may quit the chair and announce the
adjournment of the meeting; and upon his so doing, the meeting is
immediately adjourned.
(c) The chairman may ask or require that anyone not a bona fide shareholder
or proxy leave the meeting.
(d) A resolution or motion shall be considered for vote only if proposed by a
shareholder or a duly authorized proxy and seconded by an individual,
who is a shareholder or a duly authorized proxy, other than the
individual who proposed the resolution or motion.
ARTICLE III. BOARD OF DIRECTORS
------------------
Section 1. General Powers.
---------------
The business and affairs of the corporation shall be managed by its Board of
Directors, except as otherwise provided in the Nevada Corporation Code, the
articles of incorporation or these bylaws.
Section 2. Number, Tenure and Qualifications.
----------------------------------
The number of Board of Directors which shall constitute the whole Board shall
be not less than one (I) nor more than nine (9). Hereafter, within the limits
above specified, the number of directors shall be determined by resolution of
the Board of Directors at any meeting of the Board or by the shareholders at
the annual meeting of shareholders. None of the directors need be a shareholder
of the corporation or a resident of the state of Nevada but, no company,
business, or corporation may have more than one (I) person as a member of the
Board. Each director shall hold office until the next annual meeting of the
shareholders and thereafter until his successor shall have been elected and
qualified, or until his earlier death, resignation or removal.
Section 3. Vacancies.
----------
Any director may resign at any time by giving written notice to the president
or to the secretary of the corporation. A director's resignation shall take
effect at the time specified in such notice; and unless otherwise specified
therein, the acceptance of such resignation shall not be necessary to make it
effective. Any vacancy occurring in the Board of Directors may be filled by
election of a majority of the remaining directors though less than a quorum,
or by the affirmative vote of two (2) directors if there are only two (2)
directors remaining, or by a sole remaining director, or by the shareholders
if there are no directors remaining. A director elected to fill a vacancy
shall be elected for the unexpired term of his predecessor in office. Any
directorship to be filled by reason of an increase in the number of directors
shall be filled by the affirmative vote of a majority of the directors then
in office or by an election at a meeting of the shareholders called for that
purpose, and a director so chosen shall hold office for the term specified in
Section 2 above.
Section 4. Removal.
--------
At a meeting called expressly for that purpose, the entire Board of Directors
or any lesser number may be removed, with or without cause, by a vote of the
holders of the majority of shares then entitled to vote at an election of
shareholders; except that if the holders of shares of any class of stock are
entitled to elect one or more directors by the provisions of the articles of
incorporation, the provisions of this section shall apply, with respect to
the removal of a director or directors so elected
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<PAGE>
by such class, to the vote of the holders of the outstanding shares of that
class and not to the vote of the outstanding shares as a whole.
Section 5. Regular Meetings.
-----------------
A regular meeting of the Board of Directors shall be held immediately after
and at the same place as the annual meeting of the shareholders, or as soon as
practicable thereafter at the time and place, either within or outside Kansas,
determined by the board, for the purpose of electing officers and for the
transaction of such other business as may come before the meeting. The Board
of Directors may provide by resolution the time and place, either within or
outside Kansas, for the holding of additional regular meetings.
Section 6. Special Meetings.
-----------------
Special meetings of the Board of Directors may be called by or at the request
of the president or any two directors. The person or persons authorized to
call special meetings of the Board of Directors may fix any place as the
place, either within or outside Kansas, for holding any special meeting of the
board called by them.
Section 7. Notice.
-------
Notice of each meeting of the Board of Directors stating the place, day and
hour of the meeting shall be given to each director at least five (5) days
prior thereto by the mailing of written notice by first class, certified or
registered mail, or at least two (2) days prior thereto by personal delivery
of written notice or by telephonic or telegraphic notice, except that in the
case of a meeting to be held pursuant to Section 12 of this Article,
telephone notice may be given one (1) day prior thereto. (The method of notice
need not be the same to each director.) Notice shall be deemed to be given, if
mailed, when deposited in the United States mail, with postage thereon
prepaid, addressed to the director at his business or residence address; if
personally delivered, when delivered to the director; if telegraphed, when
the telegram is delivered to the telegraph company; if telephoned, when
communicated to the director. Any director may waive notice of any meeting.
The attendance of a director at a meeting shall constitute a waiver of notice
of such meeting, except where a director attends a meeting for the express
purpose of objecting to the transaction of any business because the meeting is
not lawfully called or convened. Neither the business to be transacted at, nor
the purpose of, any meeting of the Board of Directors need be specified in the
notice or waiver of notice of such meeting unless otherwise required by
statute.
Section 8. Presumption of Assent.
----------------------
A director of the corporation who is present at a meeting of the Board of
Directors at which action on any corporate mater is taken shall be presumed to
have assented to the action taken unless his dissent shall be entered in the
minutes of the meeting or unless he shall file his written dissent to such
action with the person acting as the secretary of the meeting before the
adjournment thereof or shall forward such dissent by registered mail to the
secretary of the corporation immediately after the adjournment of the meeting.
Such right to dissent shall not apply to a director who voted in favor of such
action.
Section 9. Quorum and Voting.
------------------
A majority of the number of directors fixed by Section 2 of this Article,
present in person, shall constitute a quorum for the transaction of business
at any meeting of the Board of Directors, and the vote of a majority of the
directors present at a meeting at which a quorum is present shall be the act
of the Board of Directors. If less than such majority is present at a meeting,
a majority of the directors present may adjourn the meeting from time to time
without further notice other than an announcement at the meeting, until a
quorum shall be present. No director may vote or act by proxy or power of
attorney at any meeting of directors.
Section 10. Compensation.
-------------
By resolution of the Board of Directors, any director may be paid any one or
more of the following: his expenses, if any, of attendance at meetings; a
fixed sum for
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<PAGE>
attendance at such meeting; or a stated salary as director. No such payment
shall preclude any director serving the corporation in any other capacity
and receiving compensation therefor.
Section 11. Executive and Other Committees.
------------------------------
The Board of Directors, by resolution, may designate from among its members
an executive committee and one or more other committees, each of which, to the
extent provided in the resolution establishing such committee, shall have and
may exercise all of the authority of the Board of Directors, except as
prohibited by statute. The delegation of authority to any committee shall not
operate to relieve the Board of Directors or any member of the Board from any
responsibility imposed by law. Rules governing procedures for meetings of any
committee of the Board shall be as established by the committee, or in the
absence thereof by the Board of Directors.
Section 12. Meetings by Telephone.
----------------------
Unless otherwise provided by the articles of incorporation, members of the
Board of Directors or any committee thereof may participate in a meeting of
the Board or committee by means of conference telephone or similar
communications equipment by which all persons participating in the meeting
can hear each other at the same time. Such participation shall constitute
presence in person at the meeting.
Section 13. Action Without a Meeting.
-------------------------
Any action required or permitted to be taken at a meeting of the directors or
any committee thereof may be taken without a meeting if a consent in writing,
setting forth the action so taken, shall be signed by all of the directors or
committee members entitled to vote with respect to the subject mater thereof.
Such consent (which may be signed in counterparts) shall have the same force
and effect as a unanimous vote of the directors or committee members, and may
be stated as such in any articles or documents filed with the office of the
Secretary of State of Nevada under the Nevada Corporation Code, or other
governmental agency.
ARTICLE IV. OFFICERS AND AGENTS
-------------------
Section 1. Number and Qualifications.
--------------------------
The officers of the corporation shall be at least a president, a secretary and
a treasurer. The Board of Directors may also elect or appoint such other
officers, assistant officers and agents, including a chairman of the board,
one or more vice-presidents, a controller, assistant secretaries and assistant
treasurers, as they may consider necessary. One person may hold any two (2)
offices, except that no person may simultaneously hold the offices of
president and secretary. All officers must be at least eighteen (18) years old.
Section 2. Election and Term of Office.
----------------------------
The officers of the corporation shall be elected by the Board of Directors
annually at the first meeting of the Board held after each annual meeting of
the shareholders. If the election of officers shall not be held at such
meeting, such election shall be held as soon thereafter as conveniently may
be. Each officer shall hold office until his successor shall have been duly
elected and shall have qualified, or until his earlier death, resignation or
removal.
Section 3. Salaries.
---------
The salaries of the officers shall be as fixed from time to time by the Board
of Directors and no officer shall be prevented from receiving a salary by
reason of the fact that he is also a director of the corporation.
Section 4. Removal.
--------
Any officer or agent may be removed by the Board of Directors whenever in its
judgment the best interests of the corporation will be served thereby, but
such removal shall be without prejudice to the contract rights, if any, of the
person so
6
<PAGE>
removed. Election or appointment of an officer or agent shall not in itself
create contract rights.
Section 5. Vacancies.
----------
Any officer may resign at any time, subject to any rights or obligations under
any existing contracts between the officer and the corporation, by giving
written notice to the president or to the Board of Directors. An officer's
resignation shall take effect at the time specified in such notice; and unless
otherwise specified therein, the acceptance of such resignation shall not be
necessary to make it effective. A vacancy in any office, however occurring,
may be filled by the Board of Directors for the unexpired portion of the term.
Section 6. Authority and Duties of Officers.
---------------------------------
The officers of the corporation shall have the authority and shall exercise
the powers and perform the duties specified below and as may be additionally
specified by the president, the Board of Directors or these bylaws, except
that in any event each officer shall exercise such powers and perform such
duties as may be required by law: (The Chairman of the Board or any Vice
Chairman shall not be an officer of the Corporation.)
(a) President.
The president shall, subject to the direction and supervision of the
Board of Directors,
(i) be the chief executive officer of the corporation and have general
and active control of its affairs and business and general
supervision of its officers, agents and employees;
(ii) unless there is a chairman of the board, preside at all meetings
of the shareholders and the Board of Directors;
(iii) see that all orders and resolutions of the Board of Directors are
carried into effect; and
(iv) perform all other duties incident to the office of president and
as, from time to time, may be assigned to him by the Board of
Directors.
(b) Vice-Presidents.
The vice-president, if any, (or if there is more than one, then each
vice-president) shall assist the president and shall perform such duties
as may be assigned to him by the president or by the Board of Directors.
The vice-president, if there is one (or if there is more than one, then
the vice-president designated by the Board of Directors, or if there is no
such designation, then the vice-presidents in order of their election),
shall, at the request of the president, or in his absence or inability or
refusal to act, perform the duties of the president and when so acting
shall have all the powers of and be subject to all the restrictions upon
the president.
(c) Secretary.
The secretary shall:
(i) keep the minutes of the proceedings of the shareholders, the Board
of Directors and any committees of the Board;
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<PAGE>
(ii) see that all notices are duly given in accordance with the
provisions of these bylaws or as required by law;
(iii) be custodian of the corporate records and of the seal of the
corporation;
(iv) keep at the corporation's registered office or principal place
of business within or outside Kansas a record containing the
names and addresses of all shareholders and the number and
class of shares held by each, unless such a record shall be kept
at the office of the corporation's transfer agent or registrar;
(v) have general charge of the stock books of the corporation, unless
the corporation has a transfer agent; and
(vi) in general, perform all duties incident to the office of secretary
and such other duties as from time to time may be assigned to him
by the president or by the Board of Directors. Assistant
secretaries, if any, shall have the same duties and powers,
subject to supervision by the secretary.
(d) Treasurer.
The treasurer shall:
(i) be the principal financial officer of the corporation and have the
care and custody of all its funds, securities, evidences of
indebtedness and other personal property and deposit the same in
accordance with the instructions of the Board of Directors;
(ii) receive and give receipts and acquittance for monies paid in on
account of the corporation, and pay out of the funds on hand all
bills, payrolls and other just debts of the corporation of whatever
nature upon maturity;
(iii) unless there is a controller, be the principal accounting officer
of the corporation and as such prescribe and maintain the methods
and systems of accounting to be followed, keep complete books and
records of account, prepare and file all local, state and federal
tax returns, prescribe and maintain an adequate system of internal
audit and prepare and furnish to the president and the Board of
Directors statements of account showing the financial position of
the corporation and the results of its operations;
(iv) upon request of the Board, make such reports to it as may be
required at any time; and
(v) perform all other duties incident to the office of treasurer and
such other duties as from time to time may be assigned to him by
the Board of Directors or the president. Assistant treasurers, if
any, shall have the same powers and duties, subject to the
supervision by the treasurer.
Section 7. Surety Bonds.
-------------
The Board of Directors may require any officer or agent of the corporation to
execute to the corporation a bond in such sums and with such sureties as shall
be satisfactory to the board, conditioned upon the faithful performance of his
duties and for the restoration to the corporation of all books, papers,
vouchers, money and other property of whatever kind in his possession or under
his control belonging to the corporation.
8
<PAGE>
ARTICLE V. STOCK
-----
Section 1. Issuance of Shares.
-------------------
The issuance or sale by the corporation of any shares of its authorized
capital stock of any class, including treasury shares, shall be made only upon
authorization by the Board of Directors, except as otherwise may be provided
by statute.
Section 2. Certificates.
-------------
The shares of stock of the corporation shall be represented by consecutively
numbered certificates signed in the name of the corporation by the chairman or
vice-chairman of the Board of Directors or by the president or a vice-
president and by the treasurer or an assistant treasurer or by the secretary
or an assistant secretary, and shall be sealed with the seal of the
corporation, or with a facsimile thereof. The signatures of the corporation's
officers on any certificate may also be facsimiles if the certificate is
countersigned by a transfer agent, or registered by a registrar, other than
the corporation itself or an employee of the corporation. In case any officer
who has signed or whose facsimile signature has been placed upon such
certificate shall have ceased to be such officer before such certificate is
issued, it may be issued by the corporation with the same effect as if he
were such officer at the date of its issue. Certificates of stock shall be
in such form consistent with law as shall be prescribed by the Board of
Directors. No certificate shall be issued until the shares represented
thereby are fully paid.
Section 3. Consideration for Shares.
-------------------------
Shares shall be issued for such consideration expressed in dollars (but not
less than the par value thereof) as shall be fixed from time to time by the
Board of Directors. Such consideration may consist, in whole or in part, of
money, other property, tangible or intangible, or labor or services actually
performed for the corporation, but neither the promissory note of a
subscriber or direct purchaser of shares from the corporation, nor the
unsecured or nonnegotiable promissory note of any other person, nor future
services shall constitute payment or part payment for shares. Treasury
shares shall be disposed of for such consideration expressed in dollars as
may be fixed from time to time by the Board.
Section 4. Lost Certificates.
------------------
In case of the alleged loss, destruction or mutilation of a certificate of
stock, the Board of Directors may direct the issuance of a new certificate
in lieu thereof upon such terms and conditions in conformity with law as it
may prescribe. The Board of Directors may in its discretion require a bond
in such form and amount and with such surety as it may determine, before
issuing a new certificate.
Section 5. Transfer of Shares.
-------------------
Upon surrender to the corporation or to a transfer agent of the corporation of
a certificate of stock duly endorsed or accompanied by proper evidence of
succession, assignment or authority to transfer, it shall be the duty of the
corporation to issue a new certificate to the person entitled thereto, and
cancel the old certificate. Every such transfer of stock shall be entered on
the stock books of the corporation.
Section 6. Holders of Record.
------------------
The corporation shall be entitled to treat the holder of record of any share
of stock as the holder in fact thereof, and accordingly shall not be bound to
recognize any equitable or other claim to or interest in such share on the
part of any other person whether or not it shall have express or other notice
thereof, except as may be required by the laws of Nevada.
Section 7. Shares Held for the Account of a Specified Person or Persons.
------------------------------------------------------------
The Board of Directors, in the manner provided by the statutes of Nevada, may
adopt a procedure whereby a shareholder of the corporation may certify in
writing to the corporation that all or a portion of the shares registered in
the name of such shareholder are for the account of a specified person or
persons.
9
<PAGE>
Section 8. Transfer Agents, Registrars and Paying Agents.
----------------------------------------------
The Board of Directors may at its discretion appoint one or more transfer
agents, registrars or agents for making payment upon any class of stock,
bond, debenture or other security of the corporation. Such agents and
registrars may be located either within or outside Kansas. They shall have
such rights and duties and shall be entitled to such compensation as may
be agreed.
ARTICLE VI. INDEMNIFICATION
---------------
Section 1. Definitions.
------------
For purposes of this Article VI, the following terms have the meanings set
forth below:
(a) Action. Any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative, arbitrative or investigative;
(b) Derivative Action. Any Action by or in the right of the corporation to
procure a judgment in its favor;
(c) Third Party Action. Any Action other than a Derivative Action;
(d) Indemnified Party. Any person who is or was a party or is threatened to
be made a party to any Action by reason of the fact that he is or was a
director, officer, employee, fiduciary or agent of the corporation,
partnership, joint venture, trust or other enterprise, including without
limitation any employee benefit plan of the corporation for which any
such person is or was serving as trustee, plan administrator or other
fiduciary.
Section 2. Third Party Actions.
--------------------
The corporation shall indemnify any Indemnified Party against expenses
(including attorney fees), judgments, fines, excise taxes and amounts paid in
settlement actually and reasonably incurred by him in connection with any
Third Party Action if, as determined pursuant to Section 5 below, 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, had no reasonable cause to believe his conduct was unlawful. The
termination of any Third Party Action by judgment, order, settlement,
conviction or upon a plea of nolo contendere or its equivalent, shall not
of itself create either a presumption that the Indemnified Party did not act
in good faith and in a manner which he reasonably believed to be in or not
opposed to the best interests of the corporation or, with respect to any
criminal action, a presumption that the Indemnified Party had reasonable
cause to believe that his conduct was unlawful.
Section 3. Derivative Actions.
-------------------
The corporation shall indemnify any Indemnified Party against expenses
(including attorney fees) actually and reasonably incurred by him in
connection with the defense or settlement of any Derivative Action if, as
determined pursuant to Section 5 below, 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, except that no indemnification shall be made in respect
of any claim, issue or matter as to which such person is or has been adjudged
to be liable for negligence or misconduct in the performance of his duty to
the corporation unless and only to the extent that the court in which such
Action was brought determines upon application that, despite the adjudication
of liability and in view of all circumstances of the case, such Indemnified
Party is fairly and reasonably entitled to indemnification for such expenses
which such court deems proper. If any claim that may be made by or in the
right of the corporation against any person who may seek indemnification
under this Article VI is joined with any claim by or in the right of the
corporation (and all
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<PAGE>
expenses related thereto) shall nevertheless be deemed the subject of a
separate and distinct Derivative Action for purposes of this Article VI.
Section 4. Success on Merits or Otherwise.
-------------------------------
If and to the extent that any Indemnified Party has been successful on the
merits or otherwise in defense of any Action referred to in Section 2 or 3
of this Article VI, or in defense of any claim, issue or mater therein, he
shall be indemnified against expenses (including attorney fees) actually
and reasonably incurred by him in connection therewith without the necessity
of any determination that he has met the applicable standards of conduct set
forth in Section 2 or 3 of this Article VI.
Section 5. Determination.
--------------
Except as provided in Section 4, any indemnification under Section 2 or 3 of
this Article VI (unless ordered by a court) shall be made by the corporation
only upon a determination that indemnification of the Indemnified Party is
proper in the circumstances because he has met the applicable standards of
conduct set forth in said Section 2 or 3. Any indemnification under Section 4
of this Article VI (unless ordered by a court) shall be made by the
corporation only upon a determination by the corporation of the extent to
which the Indemnified Party has been or would have been successful on the
merits or otherwise. Any such determination shall be made (a) by a majority
vote of a quorum of the whole Board of Directors consisting of directors who
are not or were not parties to the subject Action, or (b) upon the request
of a majority of the directors who are not or were not parties to such
Action, or if there be none, upon the request of a majority of a quorum of
the whole Board of Directors, by independent legal counsel (which counsel
shall not be the counsel generally employed by the corporation in connection
with its corporate affairs) in a written opinion, or (c) by the shareholders
of the corporation at a meeting called for such purpose.
Section 6. Payment in Advance.
-------------------
Expenses (including attorney fees) or some part thereof incurred by an
Indemnified Party in defending any Action, shall be paid by the corporation
in advance of the final disposition of such Action if a determination to make
such payment is made on behalf of the corporation as provided in Section 5 of
this Article VI; provided that no such payment may be made unless the
corporation shall have first received a written undertaking by or on behalf of
the Indemnified Party to repay such amount unless it is ultimately determined
that he is entitled to be indemnified by the corporation as authorized in
this Article VI.
Section 7. Other Indemnification.
----------------------
The indemnification provided by this Article VI shall not be deemed exclusive
of any other rights to which any Indemnified Party or other person may be
entitled under the articles of incorporation, any agreement, bylaw (including
without limitation any other or further Section or provision of this Article
VI), vote of the shareholders or disinterested directors or otherwise, and
any procedure provided for by any of the foregoing, both as to action in his
official capacity and as to action in another capacity while holding such
office.
Section 8. Period of Indemnification.
--------------------------
Any indemnification pursuant to this Article VI shall be applicable to acts or
omissions that occurred prior to the adoption of this Article VI, shall
continue as to any Indemnified Party who has ceased to be a director,
officer, employee, fiduciary or agent of the corporation or, at the request
of the corporation, was serving as and has since ceased to be a director,
officer, employee, fiduciary or agent of another corporation, partnership,
joint venture, trust or other enterprise, including, without limitation,
any employee benefit plan of the corporation for which any such person
served as trustee, plan administrator or other fiduciary, and shall inure
to the benefit of the heirs and personal representatives of such Indemnified
Party. The repeal or amendment of this Article VI or of any Section or
provision thereof which would have the effect of limiting, qualifying or
11
<PAGE>
restricting any of the powers or rights of indemnification provided or
permitted in this Article VI shall not, solely by reason of such repeal or
amendment, eliminate, restrict or otherwise affect the right or power of
the corporation to indemnify any person, or affect any right of
indemnification of such person, with respect to any acts or omissions which
occurred prior to such repeal or amendment.
Section 9. Insurance.
----------
By action of the Board of Directors, notwithstanding any interest of the
directors in such action, the corporation may purchase and maintain insurance,
in such amounts as the Board may deem appropriate, on behalf of any
Indemnified Party against any liability asserted against him and incurred by
him in his capacity of or arising out of his status as an Indemnified Party,
whether or not the corporation would have the power to indemnify him against
such liability under applicable provisions of law.
Section 10. Right to Impose Conditions to Indemnification.
----------------------------------------------
The corporation shall have the right to impose, as conditions to any
indemnification provided or permitted in this Article VI, such reasonable
requirements and conditions as to the Board of Directors or shareholders may
appear appropriate in each specific case and circumstances, including but
not limited to any one or more of the following:
(a) that any counsel representing the person to be indemnified in connection
with the defense or settlement of any Action shall be counsel mutually
agreeable to the person to be indemnified and to the corporation;
(b) that the corporation shall have the right, at its option, to assume and
control the defense or settlement of any claim or proceeding made;
initiated or threatened against the person to be indemnified; and
(c) that the corporation shall be subrogated, to the extent of any payments
made byway of indemnification, to all of the indemnified person's right
of recovery, and that the person to be indemnified shall execute all
writings and do everything necessary to assure such rights of subrogation
to the corporation.
ARTICLE VII. MISCELLANEOUS
-------------
Section 1. Waivers of Notice.
------------------
Whenever notice is required by law, by the articles of incorporation or by
these bylaws, a waiver thereof in writing signed by the director, shareholder
or other person entitled to said notice, whether before or after the time
stated therein, or his appearance at such meeting in person or (in the case
of a shareholders' meeting) by proxy, shall be equivalent to such notice.
Section 2. Voting of Securities by the Corporation.
----------------------------------------
Unless otherwise provided by resolution of the Board of Directors, on behalf
of the corporation the president or any vice-president shall attend in person
or by substitute appointed by him, or shall execute written instruments
appointing a proxy or proxies to represent the corporation at all meetings of
the shareholders of any other corporation, association or other entity in
which the corporation holds any stock or other securities, and may execute
written waivers of notice with respect to any such meetings. At all such
meetings and otherwise, the president or any vice-president, in person or by
substitute or proxy as aforesaid, may vote the stock or other securities so
held by the corporation and may execute written consents and any other
instruments with respect to such stock or securities and may exercise any and
all rights and powers incident to the ownership of said stock or securities,
subject, however, to the instructions, if any, of the Board of Directors.
12
<PAGE>
Section 3. Seal.
-----
A corporate seal, as such, should not be required unless by statute the same
is required of the corporation.
Section 4. Fiscal Year.
------------
The fiscal year of the corporation shall be as established by the Board
of Directors.
Section 5. Amendments.
-----------
Subject to repeal or change by action of the shareholders, the power to
alter, amend or repeal these bylaws and adopt new bylaws shall be vested
in the Board of Directors.
These Bylaws of the Corporation were duly adopted by the Board of Directors
of the Corporation on the 1st day of April, 1997.
/s/ M. Gary Banwart
--------------------------
Secretary
13
LAW OFFICE OF
MICHAEL G. QUINN
5120 EAST CENTRAL, SUITE B
WICHITA, KANSAS 67208
TELEPHONE: (316) 652-0940 FACSIMILE: (316) 652-8740
June 5, 1998
Renaissance Designer Gallery Products, Inc.
1001 S.W. Gage Blvd.
Topeka, Kansas 66606
Ladies and Gentlemen:
We refer to the Registration Statement of Renaissance Designer Gallery
Products, Inc. (the "Company") on Form SB-2 (the "Registration Statement") to
be filed with the Securities and Exchange Commission for the purpose of
registering under the Securities Act of 1933, as amended, 50,000,000 shares
of the Company's Common Stock, par value $0.01 per share (the "Common Stock"),
to be sold by the Company.
We are familiar with the proceedings to date with respect to such
proposed sale and have examined such records, documents and matters of law
and satisfied ourselves as to such matters of fact as we have considered
relevant for the purposes of this opinion.
We are of the opinion that when such 50,000,000 shares of Common Stock
have been issued and sold by the Company as contemplated by the Registration
Statement they will constitute legally issued, fully paid and nonassessable
shares of the Company.
We hereby consent to the reference to us under the heading "Legal
Matters" in the prospectus constituting a part of the Registration Statement
and to the filing of this opinion as Exhibit 5 to the Registration Statement.
Very truly yours,
/s/ Michael G. Quinn
-------------------------------
Michael G. Quinn
MGQ:grw
RENAISSANCE DESIGNER GALLERY PRODUCTS, INC.
d/b/a Advantage International Marketing, Inc.
CONTRACTOR AGREEMENT
THE AGREEMENT, made this 4th day of December, 1997 by and between Renaissance
Designer Gallery Products, Inc. d/b/a Advantage International Marketing, Inc.,
hereinafter referred to as "AIM", a Nevada corporation, with principal place
of business at 1001 Gage, Topeka, Kansas, 66604, and FAR, INC., with a
principle place of business at 11205 Myrtle Ave, Kansas City, Missouri 64137,
hereinafter referred to as "CONTRACTOR".
WITNESSETH:
WHEREAS, AIM is a marketer of a home business tax savings program, as well as
other products and services, herein called "Services";
WHEREAS, AIM desires to contract with Independent Contractors with expertise
in accounting and federal income tax law;
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants,
agreements, representations, and warranties contained in this Agreement, the
parties agree as follows:
1. MARKETING OF AIM SERVICES
A. CONTRACTOR agrees, during the term of this Agreement, to provide
"best efforts" general expertise in the area of accounting and
federal income tax matters to AIM and other Independent Marketing
Associates (IMAs) of AIM by providing CONTRACTOR's expertise through
the Tax Advantage System (TAS) and through CONTRACTOR's weekly
participation in AIM conference calls registered IMAs and TAS
customers may pose any and all questions they may have relating to
federal income tax matters directly to CONTRACTOR for answers based
on her personal expertise in tax accounting.
B. CONTRACTOR shall have no right, title, or interest in the Tax
Advantage System or other related products and services provides by
AIM to its customers and IMAs except as specifically set forth in
this Agreement.
C. CONTRACTOR shall have no authority, either expressed or implied, to
incur any obligation on behalf of AIM except those obligations which
AIM will have to any Customers generated as a result of CONTRACTOR
also choosing to serve as an AIM IMA.
D. CONTRACTOR shall not be an employee or agent of AIM for any purpose,
including, without limitation, entitlement to employment benefits or
the withholding, or payment of, taxes to be paid on income earned
pursuant to this Agreement. The undersigned will be regarded as an
CONTRACTOR for all purposes, and shall represent itself as such to
third parties. CONTRACTOR shall be solely responsible for
CONTRACTOR's own risk, expense and supervision of CONTRACTOR's
employees, if any, and shall procure and maintain adequate insurance
coverage and shall not have any claim against AIM for salaries,
commissions, items of costs, or other form of compensation or
reimbursement.
Contract (v1) Page 1 3/16/98 10:56 AM
<PAGE>
2. AIM SERVICES
AIM shall make its Services available for the purpose of allowing
customers to purchase Renaissance and AIM products and Services at
prices as set forth in current AIM literature for the duration of and
in conformity with the applicable conditions of this Agreement.
3. TERM
The term of this Agreement shall begin on December 1, 1997 and continue
for one year. This agreement shall be automatically renewed from year to
year under the same terms and conditions as stated herein and as may be
modified by mutual agreement of the parties from time to time, unless
either party gives the other party written notice of termination at
least thirty (30) days prior to the end of the term or renewal term.
AIM may not give such notice of termination without just cause for
termination as outlined in Paragraph 6.
4. COMPENSATION AND REMITTANCES
A. AIM shall pay an ongoing commission to CONTRACTOR amounting to one
quarter of one percent (.0025) of the total net collected sales
revenue of the following AIM products and services: The Tax
Advantage System (TAS) and the Prepaid Tax Advantage (PTA) program.
B. AIM shall pay all reasonable travel and incidental expenses
incurred by CONTRACTOR when traveling on the request of AIM to
conduct Advanced Tax Seminars, sales seminars, etc.
C. AIM shall pay all direct dialed long distance costs incurred by
CONTRACTOR when CONTRACTOR is conducting or actively participating
on the PTA tax advice conference calls.
D. CONTRACTOR shall have a period of thirty (30) days after receipt of
monthly statement containing an accounting (receipt shall be deemed
effective as of five days after the monthly statement has been
mailed, whether by US Mail or Private Service) to challenge or
dispute the accuracy or validity of the accounting set forth in the
applicable monthly statement and accompanying payment. If
CONTRACTOR does not challenge or dispute said accounting and payment
as provided to CONTRACTOR within said thirty (30) day period, the
accounting and payment will be considered final and accepted without
recourse or later dispute by CONTRACTOR.
5. PAYMENT FOR REVENUE SHARING AND SERVICES
A. AIM shall make payment of commissions within 30 days after the
calendar month end of the month in which the charges were collected.
AIM will pay commissions only on collected revenue.
B. AIM shall provide with each payment outlined above an accounting
listing total sales of each commissionable product or service for
that accounting period.
C. CONTRACTOR must submit a copy of CONTRACTOR's long distance bill
with PTA conference calls circled and summarized for reimbursement.
Contract (v1) Page 2 3/16/98 10:56 AM
<PAGE>
6. TERMINATION OF AGREEMENT
A. AIM may terminate this Agreement upon sixty (60) days written notice
of an incurred material breach of this Agreement by CONTRACTOR. A
material breach would occur if:
1) CONTRACTOR violation of the terms and conditions of
Paragraph 1, 7 or 8.
2) CONTRACTOR fails to provide services as specified in
Paragraph 1.A.
3) CONTRACTOR misrepresents AIM products or Services or fails to
comply with AIM written requests to cease any associated
activities not approved or condoned by AIM .
4) CONTRACTOR becomes insolvent or files for bankruptcy.
5) CONTRACTOR violates AIM's high standards of honesty and ethics
in marketing AIM's services.
Upon receipt of the notice of breach, CONTRACTOR shall have a thirty (30)
day period to cure, during which time period this Agreement shall be
maintained in force. If the breach is not cured within this time period,
the AIM may terminate this Agreement. In the event of such termination
by AIM there shall be no further obligation by either party to the other.
7. RESTRICTIVE COVENANT
During the term of this Agreement, CONTRACTOR covenants and agrees as
follows:
A. CONTRACTOR will not engage in any activity contrary to the regulatory
requirements imposed by any Federal or any state regulatory agency
having jurisdiction over AIM, Inc.
B. CONTRACTOR will not engage in any activity that would interfere with
the contractual relationships of AIM or with AIM customers, other
service providers, employees, or others relating to the business of
AIM .
C. CONTRACTOR will not engage in any activity that would tend to
disparage or diminish AIM's reputation or cause it to be in violation
of any rule, regulation, order, or requirement of any applicable
regulatory authority or court of competent jurisdiction or result in
a breach of the standards of honesty and integrity established by AIM
D. CONTRACTOR will not engage in any activity that might divert
business from AIM.
E. CONTRACTOR will not engage in any activity that would tend to induce
any person, employee, representative, or consultant of AIM not to
become or remain an employee, representative, consultant or customer
of AIM . Without intending to limit the generality of the foregoing,
CONTRACTOR agrees that during the term of this Agreement, it will
not directly or indirectly employ or enter into any partnership,
joint venture, or other business association with any person or
entity who, at any time during the term of this Agreement has been or
then employs an officer, director, employee, representative, or
consultant of AIM, unless CONTRACTOR obtains the prior written
consent of AIM.
Contract (v1) Page 3 3/16/98 10:56 AM
<PAGE>
F. CONTRACTOR will not engage in providing any similar professional
services to any other direct sales or network marketing company
that could be considered in competition with AIM.
G. CONTRACTOR agrees that monetary damages would be inadequate to
compensate AIM for a breach of this paragraph 7. Therefore,
CONTRACTOR hereby agrees and consents to the issuance of temporary
and/or injunctive relief by a court of competent jurisdiction in
any proceeding that may be brought to enforce any provision of
this Paragraph 7 without the necessity of proof of actual damages.
8. CONFIDENTIAL AND PROPRIETARY INFORMATION
A. CONTRACTOR and AIM acknowledge that all knowledge and information
concerning the business of AIM that acquires, directly or
indirectly, during the term of this Agreement, including but not
limited to customer information, compensation plan design, etc.,
is deemed confidential and proprietary to AIM and will be held in
trust and confidence of CONTRACTOR. CONTRACTOR and AIM shall have
an absolute duty to maintain, in confidence, all such knowledge or
information and to prevent disclosure to unauthorized parties.
B. CONTRACTOR and AIM agree to take all reasonable steps necessary to
insure that this knowledge and information is not made available to
unauthorized parties by any of CONTRACTOR's or AIM's employees,
CONTRACTORs, agents representatives, consultants, or services, and
shall promptly notify AIM of any inadvertent disclosure of any such
knowledge or information. CONTRACTOR and AIM further agree to take
all reasonable steps necessary to insure that its employee's,
contractors, agents representatives, consultants, and servants who
have access to such knowledge and information shall observe and
perform the provisions of this paragraph.
C. CONTRACTOR and AIM agree that any violation or threatened violation
of any provision of this Paragraph 8 shall cause immediate and
irreparable harm to AIM and that monetary damages would be
inadequate to compensate AIM for a breach of this Paragraph 8.
Therefore, CONTRACTOR hereby agrees and consents that in such event,
AIM shall be entitled to all available legal and equitable remedies,
including injunctive relief and without the necessity of posting a
bond, and may, in addition to any and all forms of relief, recover
from CONTRACTOR all costs, including reasonable attorney fees,
should AIM prevail in a court of competent jurisdiction in enforcing
its rights under this Agreement.
D. This Paragraph 8 shall not apply to any knowledge and information
which is required to be disclosed by order of any court or
governmental authority of competent jurisdiction as to which
CONTRACTOR or AIM shall use its best efforts to notify the other
party at the earliest possible time.
9. FORCE MAJEURE
Neither party shall be liable for any delay or failure in performance of
any part of this Agreement from such as, without limitation, acts of
God, acts of civil or military authority, statutes, rules, regulations,
or other orders of any governmental entity with jurisdiction over a
party hereto, embargoes, epidemics, war, terrorist acts, riots,
insurrections, fires, explosions, earthquakes, nuclear accidents,
floods, power blackouts, unusually severe
Contract (v1) Page 4 3/16/98 10:56 AM
<PAGE>
weather conditions, inability to secure products or services of others
person or transportation facilities, or acts or omissions of
transportation common carriers.
10. LIMITATION OF LIABILITY
A. AIM SHALL NOT BE LIABLE TO CONTRACTOR OR TO ANY OTHER PERSON, FIRM,
OR ENTITY IN ANY RESPECT, FOR ANY SPECIAL, INDIRECT, INCIDENTAL, OR
CONSEQUENTIAL DAMAGES OF ANY NATURE AND FROM ANY CAUSE WHETHER BASED
IN CONTRACT, TORT (INCLUDING NEGLIGENCE), OR OTHER LEGAL THEORY,
EVEN IF AIM AS THE CASE MAY BE, HAS BEEN ADVISED OF THE POSSIBILITY
OF SUCH DAMAGES. EACH PARTY FURTHER AGREES THAT THE OTHER PARTY WILL
NOT BE LIABLE FOR ANY LOST PROFITS OR REVENUE OF ANY KIND OR NATURE
WHATSOEVER OR FOR ANY CLAIM OR DEMAND AGAINST CONTRACTOR BY ANY
OTHER PARTY.
B. AIM MAKES NO WARRANTY, WHETHER EXPRESS, IMPLIED OR STATUTORY, AS TO
THE DESCRIPTION, QUALITY, MERCHANTABILITY, COMPLETENESS OR FITNESS
FOR ANY PURPOSE OF THE SERVICE, OR AS TO ANY OTHER MATTER, ALL OF
WHICH WARRANTIES BY AIM ARE HEREBY EXCLUDED AND DISCLAIMED.
C. AIM is not liable for any act or omission of CONTRACTOR in
conjunction with the services provided by AIM hereunder.
11. INDEMNIFICATION AND RELEASE
A. AIM shall not be liable or responsible for, and shall be saved and
held harmless by CONTRACTOR from and against any and all expenses
(including reasonable attorney's fees), claims and damages of
every king whatsoever or for damages or loss of any property,
arising either directly or indirectly, or in respect of:
1. The providing of accounting a Id/or tax strategy advice to
Customers by CONTRACTOR;
2. Any breach of any provision of this Agreement or any untrue
statement contained herein.
12. WORKMEN'S COMPENSATION
CONTRACTOR warrants that it has obtained and will maintain Workmen's
Compensation insurance for any and all of its employees.
13. ASSIGNMENT
CONTRACTOR shall not have the right to assign or otherwise transfer its
rights or duties hereunder without the prior written consent of AIM .
14. GOVERNING LAWS
This Agreement shall be governed by and construed in accordance with
the laws of the State of Kansas without regard to principles of
conflicts of laws. The parties consent to jurisdiction by the federal
and state courts located in Kansas and agree that any actions
hereunder shall be brought in Shawnee County, Kansas. The parties hereby
agree that
Contract (v1) Page 5 3/16/98 10:56 AM
<PAGE>
venue, in the event of any litigation hereunder, shall be in Shawnee
County, Kansas. The parties consent to service of process by certified
mail at their respective addressed specified herein, or to such other
addresses of which notice hereunder shall be given.
15. WAIVER
No action or inaction on the part of AIM or CONTRACTOR with respect
to any breach by CONTRACTOR or AIM of any provision of this Agreement
shall be deemed to be a waiver of any of AIM's or CONTRACTOR's rights
hereunder.
16. THIRD PARTIES
Nothing in this Agreement, expressed or implied, is intended to confer
upon any person, other than the parties hereto and their successors and
assigns, any rights or remedies under or by reason of this Agreement.
17. SEVERABILITY OF PROVISIONS
The invalidity or unenforceability of any term, phrase, clause,
paragraph, restriction, covenant, agreement, or other provision of
this Agreement shall in no way affect the validity or enforcement of
any other provision or any other part of this Agreement.
18. BINDING EFFECT
This Agreement shall inure to the benefit of and be binding upon the
parties hereto and their respective heirs, executors, administrators,
successors, and assigns.
19. NOTICES
A. Any notice, report, demand, or request required or permitted by any
provision of this Agreement shall be deemed to have been
sufficiently given for all purposes if it is in writing, sent by
certified mail, return receipt requested, postage prepaid, and
addressed as follows:
IN THE CASE OF AIM: Renaissance Designer Gallery Products, Inc.
d/b/a Advantage International Marketing, Inc.
1001 SW Gage Boulevard
Topeka, Kansas 66604
IN THE CASE OF CONTRACTOR:
Francis Ruth
1129\05 Myrtle Ave.
Kansas City, Missouri 64137
B. The address to which any such notice, report, demand, request or
other communications may be given by either party may be changed by
written notice given by party to other party pursuant to this
paragraph.
Contract (v1) Page 6 3/16/98 10:56 AM
<PAGE>
20. ENTIRE AGREEMENT: AMENDMENT
This Agreement constitutes the entire agreement between the parties with
respect to the matters contained herein and supersedes any prior
agreement between the parties, whether written or oral, concerning the
subject matter hereof. This Agreement may be amended, supplemented, or
interpreted by a written instrument only and duly executed by each of
the parties hereto.
21. ACCEPTANCE
This Agreement shall be of no force and effect unless and until an
officer of AIM duly executes an original copy of this Agreement and
such signature, when made, shall be deemed to have been made at the
principal place of business of AIM.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed and to become effective on the date this Agreement is accepted by
AIM pursuant to the provisions of Paragraph 21 above.
AIM
By________________________________________ Date: _____________________
Name: Michael C. Cooper
Title: President
FAR, INC.
By________________________________________ Date: _____________________
Name: FAR, INC. by Francis Ruth
Title: President
CONTRACTOR Tax ID #:___________________
Contract (v1) Page 7 3/16/98 10:56 AM
Renaissance Designer Gallery Products, Inc.
d/b/a Advantage International Marketing, Inc.
CONTRACTOR AGREEMENT
THE AGREEMENT, made this 8th day of November, 1997 by and between Renaissance
Designer Gallery Products, Inc. d/b/a Advantage International Marketing, Inc.,
hereinafter referred to as "AIM"), a Nevada corporation, with principal place
of business at 1001 Gage, Topeka, Kansas, 66604, and Tom Steelman, President
of A&T, Inc., with a principle place of business at 704 N. 11th Street, Blue
Springs, Missouri 64015, hereinafter referred to as "CONTRACTOR".
WITNESSETH:
WHEREAS, AIM is a marketer of a home business tax savings program, as well as
other products and services, herein called "Services";
WHEREAS, AIM desires to contract with Independent Contractors with expertise
in accounting and federal income tax law;
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants,
agreements, representations, and warranties contained in this Agreement, the
parties agree as follows:
1. MARKETING OF AIM SERVICES
A. CONTRACTOR agrees, during the term of this Agreement, to use its
best efforts to provide general expertise in the area of accounting
and federal income tax matters to AIM and other Independent
Marketing Associates (IMAs) of AIM through CONTRACTOR's expertise
provided to IMAs and customers through the Tax Advantage System and
through CONTRACTOR's weekly participation in AIM conference calls
where AIM customers may pose any questions they may have relating to
federal income tax matters directly to CONTRACTOR for answers based
on his personal expertise as an Enrolled Agent before the IRS.
B. CONTRACTOR shall have no right, title, or interest in the Tax
Advantage System or other related products and services provides by
AIM to its customers and IMAs except as specifically set forth in
this Agreement.
C. CONTRACTOR shall have no authority, either expressed or implied, to
incur any obligation on behalf of AIM except those obligations
which AIM will have to any Customers generated as a result of
CONTRACTOR also choosing to serve as an AIM IMA.
D. CONTRACTOR shall not be an employee or agent of AIM for any purpose,
including, without limitation, entitlement to employment benefits or
the withholding, or payment of, taxes to be paid on income earned
pursuant to this Agreement. The undersigned will be regarded as an
CONTRACTOR for all purposes, and shall represent itself as such to
third parties. CONTRACTOR shall be solely responsible for
CONTRACTOR's own risk, expense and supervision of CONTRACTOR's
employees, if any, and shall procure and maintain adequate insurance
coverage and shall not have any claim against AIM for salaries,
commissions, items of costs, or other form of compensation or
reimbursement.
Contract (v1) Page 1 3/16/98 10:55 AM
<PAGE>
2. AIM SERVICES
AIM shall make its Services available for the purpose of allowing
customers to purchase Renaissance and AIM products and Services at
prices as set forth in current AIM literature for the duration of and
in conformity with the applicable conditions of this Agreement.
3. TERM
The term of this Agreement shall begin on December 1, 1997 and continue
for one year. This agreement shall be automatically renewed from year
to year under the same terms and conditions as stated herein and as may
be modified by mutual agreement of the parties from time to time, unless
either party gives the other party written notice of termination at
least thirty (30) days prior to the end of the term or renewal term.
AIM may not give such notice of termination without just cause for
termination as outlined in Paragraph 6.
4. COMPENSATION AND REMITTANCE S
A. AIM shall pay an ongoing commission to CONTRACTOR amounting to one
quarter of one percent (.0025) of the total net collected sales
revenue of the following AIM products and services: The Tax
Advantage System (TAS) and the Prepaid Tax Advantage (PTA) system.
B. AIM shall pay all reasonable travel and incidental expenses incurred
by CONTRACTOR when traveling on the request of AIM to conduct
Advanced Tax Seminars, sales seminars, etc.
C. AIM shall pay all direct dialed long distance costs incurred by
CONTRACTOR when CONTRACTOR is conducting or actively participating
on the PTA tax advice conference calls.
D. CONTRACTOR shall have a period of thirty (30) days after receipt of
monthly statement containing an accounting (receipt shall be deemed
effective as of five days after the monthly statement has been
mailed, whether by US Mail or Private Service) to challenge or
dispute the accuracy or validity of the accounting set forth in
the applicable monthly statement and accompanying payment. If
CONTRACTOR does not challenge or dispute said accounting and
payment as provided to CONTRACTOR within said thirty (30) day
period, the accounting and payment will be considered final and
accepted without recourse or later dispute by CONTRACTOR.
5. PAYMENT FOR REVENUE SHARING AND SERVICES
A. AIM shall make payment of commissions within 30 days after the
calendar month end of the month in which the charges were
collected. AIM will pay commissions only on collected revenue.
B. AIM shall provide with each payment outlined above an accounting
listing total sales of each commissionable product or service
for that accounting period.
C. CONTRACTOR must submit a copy of CONTRACTOR's long distance
bill with PTA conference calls circled and summarized for
reimbursement.
Contract (v1) Page 2 3/16/98 10:55 AM
<PAGE>
6. TERMINATION OF AGREEMENT
A. AIM may terminate this Agreement upon sixty (60) days written
notice of an incurred material breach of this Agreement by
CONTRACTOR. A material breach would occur if:
1) CONTRACTOR violation of the terms and conditions of
Paragraph 1, 7 or 8.
2) CONTRACTOR misrepresents AIM products or Services or fails
to comply with AIM written requests to cease any associated
activities not approved or condoned by AIM .
3) CONTRACTOR becomes insolvent or files for bankruptcy.
4) CONTRACTOR violates AIM's high standards of honesty and
ethics in marketing AIM's services.
Upon receipt of the notice of breach, CONTRACTOR shall have a thirty
(30) day period to cure, during which time period this Agreement shall
be maintained in force. If the breach is not cured within this time
period, the AIM may terminate this Agreement. In the event of such
termination by AIM there shall be no further obligation by either
party to the other.
7. RESTRICTIVE COVENANT
During the term of this Agreement, CONTRACTOR covenants and agrees as
follows:
A. CONTRACTOR will not engage in any activity contrary to the regulatory
requirements imposed by any Federal or any state regulatory agency
having jurisdiction over AIM, Inc.
B. CONTRACTOR will not engage in any activity that would interfere with
the contractual relationships of AIM or with AIM customers, other
service providers, employees, or others relating to the business of
AIM .
C. CONTRACTOR will not engage in any activity that would tend to
disparage or diminish AIM's reputation or cause it to be in
violation of any rule, regulation, order, or requirement of any
applicable regulatory authority or court of competent jurisdiction
or result in a breach of the standards of honesty and integrity
established by AIM .
D. CONTRACTOR will not engage in any activity that would tend to
divert business away from AIM.
E. CONTRACTOR will not engage in any activity that would tend to induce
any person, employee, representative, or consultant of AIM not to
become or remain an employee, representative, consultant or customer
of AIM . Without intending to limit the generality of the foregoing,
CONTRACTOR agrees that during the term of this Agreement, it will
not directly or indirectly employ or enter into any partnership,
joint venture, or other business association with any person or
entity who, at any time during the term of this Agreement has been
or then employs an officer, director, employee, representative, or
consultant of AIM, unless CONTRACTOR obtains the prior written
consent of AIM.
Contract (v1) Page 3 3/16/98 10:55 AM
<PAGE>
F. CONTRACTOR will not engage in providing any similar professional
services to any other direct sales or network marketing company
that could be considered in competition with AIM.
G. CONTRACTOR agrees that monetary damages would be inadequate to
compensate AIM for a breach of this paragraph 7. Therefore,
CONTRACTOR hereby agrees and consents to the issuance of temporary
and/or injunctive relief by a court of competent jurisdiction in
any proceeding that may be brought to enforce any provision of
this Paragraph 7 without the necessity of proof of actual damages.
8. CONFIDENTIAL AND PROPRIETARY INFORMATION
A. CONTRACTOR and AIM acknowledge that all knowledge and information
concerning the business of AIM that acquires, directly or
indirectly, during the term of this Agreement, including but not
limited to customer information, compensation plan design, etc.,
is deemed confidential and proprietary to AIM and will be held in
trust and confidence of CONTRACTOR. CONTRACTOR and AIM shall have
an absolute duty to maintain, in confidence, all such knowledge
or information and to prevent disclosure to unauthorized parties.
B. CONTRACTOR and AIM agree to take all reasonable steps necessary to
insure that this knowledge and information is not made available
to unauthorized parties by any of CONTRACTOR's or AIM's employees,
CONTRACTORs, agents representatives, consultants, or services, and
shall promptly notify AIM of any inadvertent disclosure of any
such knowledge or information. CONTRACTOR and AIM further agree to
take all reasonable steps necessary to insure that its employee's,
contractors, agents representatives, consultants, and servants who
have access to such knowledge and information shall observe and
perform the provisions of this paragraph.
C. CONTRACTOR and AIM agree that any violation or threatened violation
of any provision of this Paragraph 8 shall cause immediate and
irreparable harm to AIM and that monetary damages would be
inadequate to compensate AIM for a breach of this Paragraph 8.
Therefore, CONTRACTOR hereby agrees and consents that in such
event, AIM shall be entitled to all available legal and equitable
remedies, including injunctive relief and without the necessity
of posting a bond, and may, in addition to any and all forms of
relief, recover from CONTRACTOR all costs, including reasonable
attorney fees, should AIM prevail in a court of competent
jurisdiction in enforcing its rights under this Agreement.
D. This Paragraph 8 shall not apply to any knowledge and information
which is required to be disclosed by order of any court or
governmental authority of competent jurisdiction as to which
CONTRACTOR or AIM shall use its best efforts to notify the other
party at the earliest possible time.
Contract (v1) Page 4 3/16/98 10:55 AM
<PAGE>
9. FORCE MAJEURE
Neither party shall be liable for any delay or failure in performance of
any part of this Agreement from such as, without limitation, acts of
God, acts of civil or military authority, statutes, rules, regulations,
or other orders of any governmental entity with jurisdiction over a
party hereto, embargoes, epidemics, war, terrorist acts, riots,
insurrections, fires, explosions, earthquakes, nuclear accidents,
floods, power blackouts, unusually severe weather conditions, inability
to secure products or services of others person or transportation
facilities, or acts or omissions of transportation common carriers.
10. LIMITATION OF LIABILITY
A. AIM SHALL NOT BE LIABLE TO CONTRACTOR OR TO ANY OTHER PERSON, FIRM,
OR ENTITY IN ANY RESPECT, FOR ANY SPECIAL, INDIRECT, INCIDENTAL, OR
CONSEQUENTIAL DAMAGES OF ANY NATURE AND FROM ANY CAUSE WHETHER BASED
IN CONTRACT, TORT (INCLUDING NEGLIGENCE), OR OTHER LEGAL THEORY,
EVEN IF AIM AS THE CASE MAY BE, HAS BEEN ADVISED OF THE POSSIBILITY
OF SUCH DAMAGES. EACH PARTY FURTHER AGREES THAT THE OTHER PARTY WILL
NOT BE LIABLE FOR ANY LOST PROFITS OR REVENUE OF ANY KIND OR NATURE
WHATSOEVER OR FOR ANY CLAIM OR DEMAND AGAINST CONTRACTOR BY ANY
OTHER PARTY.
B. AIM MAKES NO WARRANTY, WHETHER EXPRESS, IMPLIED OR STATUTORY, AS TO
THE DESCRIPTION, QUALITY, MERCHANTABILITY, COMPLETENESS OR FITNESS
FOR ANY PURPOSE OF THE SERVICE, OR AS TO ANY OTHER MATTER, ALL OF
WHICH WARRANTIES BY AIM ARE HEREBY EXCLUDED AND DISCLAIMED.
C. AIM is not liable for any act or omission of CONTRACTOR in
conjunction with the services provided by AIM hereunder.
11. INDEMNIFICATION AND RELEASE
A. AIM shall not be liable or responsible for, and shall be saved and
held harmless by CONTRACTOR from and against any and all expenses
(including reasonable attorney's fees), claims and damages of every
king whatsoever or for damages or loss of any property, arising
either directly or indirectly, or in respect of:
1. The providing of accounting and/or tax strategy advice to
Customers by CONTRACTOR;
2. Any breach of any provision of this Agreement or any untrue
statement contained herein.
12. WORKMEN'S COMPENSATION
CONTRACTOR warrants that it has obtained and will maintain Workmen's
Compensation insurance for any and all of its employees.
13. ASSIGNMENT
CONTRACTOR shall not have the right to assign or otherwise transfer its
rights or duties hereunder without the prior written consent of AIM.
Contract (v1) Page 5 3/16/98 10:55 AM
<PAGE>
14. GOVERNING LAWS
This Agreement shall be governed by and construed in accordance with
the laws of the State of Kansas without regard to principles of
conflicts of laws. The parties consent to jurisdiction by the federal
and state courts located in Kansas and agree that any actions hereunder
shall be brought in Shawnee County, Kansas. The parties hereby agree
that venue, in the event of any litigation hereunder, shall be in
Shawnee County, Kansas. The parties consent to service of process by
certified mail at their respective addressed specified herein, or to
such other addresses of which notice hereunder shall be given.
15. WAIVER
No action or inaction on the part of AIM or CONTRACTOR with respect to
any breach by CONTRACTOR or AIM of any provision of this Agreement
shall be deemed to be a waiver of any of AIM's or CONTRACTOR's rights
hereunder.
16. THIRD PARTIES
Nothing in this Agreement, expressed or implied, is intended to confer
upon any person, other than the parties hereto and their successors and
assigns, any rights or remedies under or by reason of this Agreement.
17. SEVERABILITY OF PROVISIONS
The invalidity or unenforceability of any term, phrase, clause,
paragraph, restriction, covenant, agreement, or other provision of
this Agreement shall in no way affect the validity or enforcement of
any other provision or any other part of this Agreement.
18. BINDING EFFECT
This Agreement shall inure to the benefit of and be binding upon the
parties hereto and their respective heirs, executors, administrators,
successors, and assigns.
19. NOTICES
A. Any notice, report, demand, or request required or permitted by any
provision of this Agreement shall be deemed to have been
sufficiently given for all purposes if it is in writing, sent by
certified mail, return receipt requested, postage prepaid, and
addressed as follows:
IN THE CASE OF AIM:
Renaissance Designer Gallery Products, Inc.
d/b/a Advantage International Marketing, Inc.
1001 SW Gage Boulevard
Topeka, Kansas 66604
IN THE CASE OF CONTRACTOR:
Tom Steelman, President
A&T, Inc.
704 N. 11th Street
Blue Springs, Missouri 64015
Contract (v1) Page 6 3/16/98 10:55 AM
<PAGE>
B. The address to which any such notice, report, demand, request or
other communications may be given by either party may be changed by
written notice given by party to other party pursuant to this
paragraph.
20. ENTIRE AGREEMENT: AMENDMENT
This Agreement constitutes the entire agreement between the parties with
respect to the matters contained herein and supersedes any prior
agreement between the parties, whether written or oral, concerning the
subject matter hereof. This Agreement may be amended, supplemented, or
interpreted by a written instrument only and duly executed by each of
the parties hereto.
21. ACCEPTANCE
This Agreement shall be of no force and effect unless and until an
officer of AIM duly executes an original cow of this Agreement and
such signature, when made, shall be deemed to have been made at the
principal place of business of AIM.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed and to become effective on the date this Agreement is accepted by
AIM pursuant to the provisions of Paragraph 21 above.
AIM
By________________________________________ Date: _____________________
Name: Michael C. Cooper
Title: President
CONTRACTOR
By________________________________________ Date: _____________________
Name: Thomas Steelman, Sr.
Title: President
CONTRACTOR Tax ID #:
Contract (v1) Page 7 3/16/98 10:55 AM
Renaissance Designer Gallery Products, Inc.
d/b/a Advantage International Marketing, Inc.
CONTRACTOR AGREEMENT
THIS AGREEMENT, made this 20th day of March, 1998 by and between Renaissance
Designer Gallery Products, Inc. d/b/a Advantage International Marketing, Inc.,
hereinafter referred to as "AIM"), a Nevada corporation, with principal place
of business at 1001 Gage, Topeka, Kansas, 66604, and Dan Gleason, President of
"My Tax Man, Inc." located at PO Box 770728, Ocala, Florida 34477, hereinafter
referred to as "CONTRACTOR".
WITNESSETH:
WHEREAS, AIM is a marketer of a home business tax savings program, as well as
other products and services, herein called "Services";
WHEREAS, AIM desires to contract with Independent Contractors with expertise
in accounting and federal income tax law;
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants,
agreements, representations, and warranties contained in this Agreement, the
parties agree as follows:
1. MARKETING OF AIM SERVICES
A. CONTRACTOR agrees, during the term of this Agreement, to use its
best efforts to provide general expertise in the area of accounting
and federal income tax matters to AIM and other Independent
Marketing Associates (IMAs) of AIM through CONTRACTOR's expertise
provided to IMAs and customers through the Tax Advantage System and
through CONTRACTOR's 1-800-728-2467 toll-free Tax Advice services,
and/or Ask Aim@ aol.com e-mail service, where AIM customers may pose
any questions they may have relating to federal income tax matters
directly to CONTRACTOR for answers based on his personal expertise
as an Enrolled Agent before the IRS. In addition, CONTRACTOR agrees
to provide basic IRS form 1040 Federal and State income tax
preparation at no charge, but may charge the attached discounted fee
schedule for preparation of all supporting schedules required by the
customer's individual 1040 return.
B. CONTRACTOR shall have no right, title, or interest in the Tax
Advantage System or other related products and services provides by
AIM to its customers and IMAs except as specifically set forth in
this Agreement.
C. CONTRACTOR shall have no authority, either expressed or implied, to
incur any obligation on behalf of AIM except those obligations which
AIM will have to any Customers generated as a result of CONTRACTOR
also choosing to serve as an AIM IMA.
D. CONTRACTOR shall not be an employee or agent of AIM for any purpose,
including, without limitation, entitlement to employment benefits or
the withholding, or payment of, taxes to be paid on income earned
pursuant to this Agreement. The undersigned will be regarded as an
CONTRACTOR for all purposes, and shall represent itself as such to
third parties. CONTRACTOR shall be solely responsible
Gleason Contract (v2) Page 1 3/18/98 1:18 PM
<PAGE>
for CONTRACTOR's own risk, expense and supervision of CONTRACTOR's
employees, if any, and shall procure and maintain adequate insurance
coverage and shall not have any claim against AIM for salaries,
commissions, items of costs, or other form of compensation or
reimbursement.
2. AIM SERVICES
AIM shall make its Services available for the purpose of allowing
customers to purchase Renaissance and AIM products and Services at
prices as set forth in current AIM literature for the duration of and
in conformity with the applicable conditions of this Agreement.
3. TERM
The term of this Agreement shall be retroactive to March 1, 1998 and
continue for one year. This agreement shall be automatically renewed
from year to year under the same terms and conditions as stated
herein and as may be modified by mutual agreement of the parties from
time to time, unless either party gives the other party written notice
of termination at least thirty (30) days prior to the end of the term
or renewal term. AIM may not give such notice of termination without
just cause for termination as outlined in Paragraph 6.
4. COMPENSATION AND REMITTANCES
A. AIM shall pay an ongoing commission to CONTRACTOR amounting to
fifty-cents ($0.50) per month on the net collected revenue from
each active Prepaid Tax Advantage (PTA) system customer.
B. AIM shall also pay an additional ongoing commission to CONTRACTOR
amounting to twenty-five-cents ($0.25) per month on the net
collected revenue from each active Prepaid Tax Advantage (PTA)
system customer, with such payment made in the form of stock, or
stock options at the then current market price. Said stock (or
options) shall accrue pro-rata on a monthly basis over the period
of the first two years of continuous service under this agreement,
upon such time it shall be issued at the option of CONTRACTOR,
following such initial two years of service, such stock (options)
shall be earned and issued monthly. Should stock be unavailable
due to regulatory restrictions then this portion of the ongoing
commission shall become immediately payable as in 4.A. above.
C. AIM shall pay all reasonable travel and incidental expenses incurred
by CONTRACTOR when traveling on the request of AIM to conduct
Advanced Tax Seminars, sales seminars, etc.
D. CONTRACTOR shall have a period of thirty (30) days after receipt of
monthly statement containing an accounting (receipt shall be deemed
effective as of five days after the monthly statement has been
mailed, whether by US Mail or Private Service) to challenge or
dispute the accuracy or validity of the accounting set forth in the
applicable monthly statement and accompanying payment. If CONTRACTOR
does not challenge or dispute said accounting and payment as
provided to CONTRACTOR within said thirty (30) day period, the
accounting and payment will be considered final and accepted
without recourse or later dispute by CONTRACTOR.
E. CONTRACTOR shall pay to AIM five per cent (5%) of the total net
collected revenues each month from tax preparation work or any
other source of revenue to CONTRACTOR from any client of CONTRACTOR
who is also a client or
Gleason Contract (v2) Page 2 3/18/98 1:18 PM
<PAGE>
Independent Marketing Associate of AiM.
F. AIM shall, at it's sole expense during the term of this agreement,
including renewals and extension of this agreement, prepare and mail
to each active AIM customer in December of each calendar year a form
known as the "Tax Preparation Organizer" prepared from printed
materials supplied by CONTRACTOR in order to enable the customer to
prepare and submit the information necessary to allow CONTRACTOR to
begin the preparation of IRS form 1040 for each customer returning
such completed form.
5. PAYMENT FOR REVENUE SHARING AND SERVICES
A. AIM and CONTRACTOR shall make payment of all commissions due under
this agreement within 30 days after the calendar month end of the
month in which the revenues were collected.
B. AIM and CONTRACTOR shall provide with each payment outlined above
an accounting listing total sales of each commissionable product or
service for that accounting period.
6. TERMINATION OF AGREEMENT
Either party may terminate this Agreement upon thirty (30) days written
notice. Upon such notice all rights, titles, and obligations under this
agreement shall terminate, except for monies payable to CONTRACTOR
while this agreement was in effect, which shall become immediately
payable upon termination of this agreement.
7. RESTRICTIVE COVENANT
During the term of this Agreement, CONTRACTOR covenants and agrees
as follows:
A. CONTRACTOR will not engage in any activity contrary to the
regulatory requirements imposed by any Federal or any state
regulatory agency having jurisdiction over AIM, Inc.
B. CONTRACTOR will not engage in any activity that would interfere
with the contractual relationships of AIM or with AIM customers,
other service providers, employees, or others relating to the
business of AIM .
C. CONTRACTOR will not engage in any activity that would tend to
disparage or diminish AIM's reputation or cause it to be in
violation of any rule, regulation, order, or requirement of any
applicable regulatory authority or court of competent jurisdiction
or result in a breach of the standards of honesty and integrity
established by AIM .
D. CONTRACTOR will not engage in any activity that would tend to
divert business away from AIM. E. CONTRACTOR will not engage in
any activity that would tend to induce any person, employee,
representative, or consultant of AIM not to become or remain an
employee, representative, consultant or customer of AIM.
Without intending to limit the generality of the foregoing,
CONTRACTOR agrees that during the term of this Agreement, it
will not directly or indirectly employ or enter into any
partnership, joint venture, or other business association with
any person or entity who, at any time
Gleason Contract (v2) Page 3 3/18/98 1:18 PM
<PAGE>
during the term of this Agreement has been or then employs an
officer, director, employee, representative, or consultant of AIM,
unless CONTRACTOR obtains the prior written consent of AIM.
F. CONTRACTOR will not engage in providing any similar professional
services to any other direct sales or network marketing company
that could be considered in competition with AIM , with the
exception of Royal Body Care (RBC).
G. CONTRACTOR agrees that monetary damages would be inadequate to
compensate AIM for a breach of this paragraph 7. Therefore,
CONTRACTOR hereby agrees and consents to the issuance of temporary
and/or injunctive relief by a court of competent jurisdiction in
any proceeding that may be brought to enforce any provision of
this Paragraph 7 without the necessity of proof of actual damages.
8. CONFIDENTIAL AND PROPRIETARY INFORMATION
A. CONTRACTOR and AIM acknowledge that all knowledge and information
concerning the business of AIM that acquires, directly or
indirectly, during the term of this Agreement, including but not
limited to customer information, compensation plan design, etc., is
deemed confidential and proprietary to AIM and will be held in trust
and confidence of CONTRACTOR. CONTRACTOR and AIM shall have an
absolute duty to maintain, in confidence, all such knowledge or
information and to prevent disclosure to unauthorized parties.
B. CONTRACTOR and AIM agree to take all reasonable steps necessary to
insure that this knowledge and information is not made available to
unauthorized patties by any of CONTRACTOR's or AIM's employees,
CONTRACTORs, agents representatives, consultants, or services, and
shall promptly notify AIM of any inadvertent disclosure of any such
knowledge or information. CONTRACTOR and AIM further agree to take
all reasonable steps necessary to insure that its employee's,
contractors, agents representatives, consultants, and servants who
have access to such knowledge and information shall observe and
perform the provisions of this paragraph.
C. CONTRACTOR and AIM agree that any violation or threatened violation
of any provision of this Paragraph 8 shall cause immediate and
irreparable harm to AIM and that monetary damages would be
inadequate to compensate AIM for a breach of this Paragraph 8.
Therefore, CONTRACTOR hereby agrees and consents that in such event,
AIM shall be entitled to all available legal and equitable remedies,
including injunctive relief and without the necessity of posting a
bond, and may, in addition to any and all forms of relief, recover
from CONTRACTOR all costs, including reasonable attorney fees,
should AIM prevail in a court of competent jurisdiction in enforcing
its rights under this Agreement.
D. This Paragraph 8 shall not apply to any knowledge and information
which is required to be disclosed by order of any court or
governmental authority of competent jurisdiction as to which
CONTRACTOR or AIM shall use its best efforts to notify the other
party at the earliest possible time.
9. FORCE MAJEURE
Neither party shall be liable for any delay or failure in performance
of any part of this Agreement from such as, without limitation, acts of
God, acts of civil or military authority,
Gleason Contract (v2) Page 4 3/18/98 1:18 PM
<PAGE>
statutes, rules, regulations, or other orders of any governmental entity
with jurisdiction over a party hereto, embargoes, epidemics, war,
terrorist acts, riots, insurrections, fires, explosions, earthquakes,
nuclear accidents, floods, power blackouts, unusually severe weather
conditions, inability to secure products or services of others person or
transportation facilities, or acts or omissions of transportation common
carriers.
10. LIMITATION OF LIABILITY
A. AIM SHALL NOT BE LIABLE TO CONTRACTOR OR TO ANY OTHER PERSON, FIRM,
OR ENTITY IN ANY RESPECT, FOR ANY SPECIAL, INDIRECT, INCIDENTAL, OR
CONSEQUENTIAL DAMAGES OF ANY NATURE AND FROM ANY CAUSE WHETHER BASED
IN CONTRACT, TORT (INCLUDING NEGLIGENCE), OR OTHER LEGAL THEORY,
EVEN IF AIM AS THE CASE MAY BE, HAS BEEN ADVISED OF THE POSSIBILITY
OF SUCH DAMAGES. EACH PARTY FURTHER AGREES THAT THE OTHER PARTY WILL
NOT BE LIABLE FOR ANY LOST PROFITS OR REVENUE OF ANY KIND OR NATURE
WHATSOEVER OR FOR ANY CLAIM OR DEMAND AGAINST CONTRACTOR BY ANY
OTHER PARTY.
B. AIM MAKES NO WARRANTY, WHETHER EXPRESS, IMPLIED OR STATUTORY, AS TO
THE DESCRIPTION, QUALITY, MERCHANTABILITY, COMPLETENESS OR FITNESS
FOR ANY PURPOSE OF THE SERVICE, OR AS TO ANY OTHER MATTER, ALL OF
WHICH WARRANTIES BY AIM ARE HEREBY EXCLUDED AND DISCLAIMED.
C. AIM is not liable for any act or omission of CONTRACTOR in
conjunction with the services provided by AIM hereunder.
11. INDEMNIFICATION AND RELEASE
A. AIM shall not be liable or responsible for, and shall be saved and
held harmless by CONTRACTOR from and against any and all expenses
(including reasonable attorney's fees), claims and damages of every
kind whatsoever or for damages or loss of any property, arising
either directly or indirectly, or in respect of:
1. The providing of accounting and/or tax strategy advice to
Customers by CONTRACTOR;
2. Any breach of any provision of this Agreement or any untrue
statement contained herein.
12. WORKMEN'S COMPENSATION
CONTRACTOR warrants that it has obtained and will maintain Workmen's
Compensation insurance for any and all of its employees.
13. ASSIGNMENT
CONTRACTOR shall not have the right to assign or otherwise transfer
its rights or duties hereunder without the prior written consent
of AIM .
Gleason Contract (v2) Page 5 3/18/98 1:18 PM
<PAGE>
14. GOVERNING LAWS
This Agreement shall be governed by and construed in accordance with
the laws of the State of Kansas without regard to principles of
conflicts of laws. The parties consent to jurisdiction by the federal
and state courts located in Kansas and agree that any actions hereunder
shall be brought in Shawnee County, Kansas. The parties hereby agree
that venue, in the event of any litigation hereunder, shall be in
Shawnee County, Kansas. The parties consent to service of process by
certified mail at their respective addresses specified herein, or to
such other addresses of which notice hereunder shall be given.
15. WAIVER
No action or inaction on the part of AIM or CONTRACTOR with respect to
any breach by CONTRACTOR or AIM of any provision of this Agreement shall
be deemed to be a waiver of any of AIM's or CONTRACTOR's rights
hereunder.
16. THIRD PARTIES
Nothing in this Agreement, expressed or implied, is intended to confer
upon any person, other than the parties hereto and their successors
and assigns, any rights or remedies under or by reason of this
Agreement.
17. SEVERABILITY OF PROVISIONS
The invalidity or unenforceability of any term, phrase, clause,
paragraph, restriction, covenant, agreement, or other provision of
this Agreement shall in no way affect the validity or enforcement of
any other provision or any other part of this Agreement.
18. BINDING EFFECT
This Agreement shall inure to the benefit of and be binding upon the
parties hereto and their respective heirs, executors, administrators,
successors, and assigns.
19. NOTICES
A. Any notice, report, demand, or request required or permitted by any
provision of this Agreement shall be deemed to have been
sufficiently given for all purposes if it is in writing, sent by
certified mail, return receipt requested, postage prepaid, and
addressed as follows:
IN THE CASE OF AIM:
Renaissance Designer Gallery Products, Inc.
d/b/a Advantage International Marketing
1001 SW Gage Boulevard
Topeka, Kansas 66604
IN THE CASE OF CONTRACTOR:
Dan Gleason, President
PO Box 770728
Ocala, Florida 34477
Gleason Contract (v2) Page 6 3/18/98 1:18 PM
<PAGE>
B. The address to which any such notice, report, demand, request or
other communications may be given by either party may be changed by
written notice given by party to other party pursuant to this
paragraph.
20. ENTIRE AGREEMENT: AMENDMENT
This Agreement constitutes the entire agreement between the parties with
respect to the matters contained herein and supersedes any prior
agreement between the parties, whether written or oral, concerning the
subject matter hereof. This Agreement may be amended, supplemented, or
interpreted by a written instrument only and duly executed by each of
the parties hereto.
21. ACCEPTANCE
This Agreement shall be of no force and effect unless and until an
officer of AIM duly executes an original copy of this Agreement and such
signature, when made, shall be deemed to have been made at the principal
place of business of AIM.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and to become effective on the date this Agreement is
accepted by AIM pursuant to the provisions of Paragraph 21 above.
AIM
By /s/ Michael C. Cooper Date: 3/23/98
---------------------------------------- ---------------------
Name: Michael C. Cooper
Title: President
CONTRACTOR
By /s/ Dan Gleason Date: 3/20/98
---------------------------------------- ---------------------
Name: Dan Gleason
Title: President
CONTRACTOR Tax ID #: 59-3056088
Gleason Contract (v2) Page 7 3/18/98 1:18 PM
[Logo: RENAISSANCE] INDEPENDENT SALES REPRESENTATIVE APPLICATION & AGREEMENT
1001 S.W. GAGE BOULEVARD tel: (913) 273-2244
TOPEKA, KANSAS 66604 fax: (913) 273-5599
- -------------------------------------------------------------------------------
Type or Print Clearly * Complete All Blanks
Read Side Two Completely * Signature Required
APPLICANT
=========
Social Security Number (or Fed I.D.#) Month Day Year
- ------------------------------------- ---------------------
Applicant's Name (First) (M.I.) (Last)
- ------------------------------------- ------ -------------------------------
Address (number and street -
UPS does not deliver to PO Box numbers) SALES TAX RATE
- ------------------------------------------------------- ---------------
City State Zip Code - Plus Four
- ------------------------------------- ------ -------------------------------
Area Home Area Work Area Fax
Code Phone Number Code Phone Number Code Phone Number
- ----- ----------------- ----- ---------------- ----- ----------------
- -------------------------------------------------------------------------------
SIGN
=====
A PARTICIPANT IN THIS NETWORK MARKETING PLAN HAS A RIGHT TO CANCEL AT ANY
TIME, REGARDLESS OF REASON. CANCELLATION MUST BE SUBMITTED IN WRITING TO
THE COMPANY AT ITS PRINCIPLE PLACE OF BUSINESS.
By signing below, I acknowledge receipt of this Agreement, terms and
conditions, and the Renaissance Policies and Procedures provided to me BY
MY SPONSOR. I HAVE CLOSELY READ, UNDERSTAND, AND WILLINGLY AGREE TO BE
BOUND BY ALL OF THESE TERMS AND CONDITIONS. Please accept my ISR
Application in accordance with all Renaissance terms and conditions on
side two of this agreement.
X ____________________________________
- -------------------------------------------------------------------------------
SPONSOR
=======
Social Security Number
Sponsor's Name (or Fed I.D.#) BC#
- -------------------------------- -------------------- -----
PLACEMENT: Automatic placement of this new ISR's Commission Volume (CV) will
be on the deepest point in the weakest division of the Sponsor's organization.
If the Sponsor elects to have this CV placed at a SPECIFIC POINT in the
organization. COMPLETE the following section, otherwise, PLEASE LEAVE THIS
SECTION BLANK, AS NO CHANGES IN PLACEMENT ARE ALLOWED.
- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -
Place Sales Volume Beyond Exact Business Center Number
This Organizational Business Center: (include extension number and division)
- ----------------------------------- --------------------------- ---------
- -------------------------------------------------------------------------------
INDEPENDENT SALES REPRESENTATIVE INITIAL ORDER FORM
(No Inventory Product Purchase Is Required To Become A Renaissance Independent
Sales Representative)
PRODUCTS ORDERED
____ CAREER KIT (REQUIRED) $ 40
____ SILVER PAK $ 100
____ SILVER TRI-PAK (3) $ 300
____ GOURMET PAK $ 120
____ GOURMET TRI-PAK (3) $ 360
____ FOUNDERS PAK (7 either) $______
(includes FREE Career Kit)
(Other quantities-use form L200)
Attached Form L200 Total $_______
ACCELERATION CERTIFICATES: Please send me one Acceleration Certificate
- ----- the first time I qualify for my Gold Bonus in the Renaissance
Compensation Program. This certificate my be used to establish one
additional business center anywhere within my existing organization.
FREE!
DIAMOND BUSINESS CENTER: Please restructure one Business Center ahead
of my entire organization the first time I qualify for my Diamond Bonus
in the Renaissance Compensation Program. This new Business Center will
be eligible for all bonuses and awards and will be restructure ahead of
all of my existing organizational business. FREE!
PRODUCT TOTAL $_____________
Career Kit $40 $ 40.00
(includes VIDEO & AUDIO
training manual, full color
catalogs, brochures & forms)
FREE with Founders Pak Order
Shipping & Handling $ 5.00
FREE with initial Inventory
Order!
TOTAL ENCLOSED $_____________
____ VISA ____ MasterCard # ____ DISCOVER
- --------------------------------------------------
Print or Type Cardholder's Name: Expiration Date:
- ----------------------------------- ----------------
PERSONAL CHECK ORDERS ARE HELD FOR 10 WORKING DAYS PRIOR TO PROCESSING. For
fastest service and CV credit, send all orders by OVERNIGHT DELIVERY with
payment made by CASHIER'S CHECK, MONEY ORDER, OR CREDIT CARD.
- -------------------------------------------------------------------------------
For Office Use Only Rec'd by:__________ Date Rec'd:__________
Amt Rec'd:__________ File #:__________
ORIGINAL - RENAISSANCE * YELLOW - SPONSOR * PINK APPLICANT
Form L100 (9/96)
<PAGE>
NOTICE OF CANCELLATION
YOU MAY CANCEL THIS TRANSACTION, WITHOUT PENALTY OR OBLIGATION, WITHIN
THREE BUSINESS DAYS (ALASKA RESIDENTS FIVE DAYS) FROM THE DATE ON THE REVERSE
OF THIS FORM.
IF YOU CANCEL, ANY PROPERTY TRADED IN, ANY PAYMENTS MADE BY YOU UNDER THE
CONTRACT OR SALE AND ANY NEGOTIABLE INSTRUMENT EXECUTED BY YOU WILL BE
RETURNED WITHIN 10 BUSINESS DAYS FOLLOWING RECEIPT, BY THE SELLER, OR YOUR
CANCELLATION NOTICE, AND ANY SECURITY INTEREST ARISING OUT OF THE TRANSACTION
WILL BE CANCELLED.
IF YOU CANCEL, YOU MUST MAKE AVAILABLE TO THE SELLER, AT YOUR RESIDENCE,
IN SUBSTANTIALLY AS GOOD CONDITION AS WHEN RECEIVED, ANY GOODS DELIVERED TO
YOU UNDER THIS CONTRACT OR SALE, OR YOU MAY, IF YOU WISH, COMPLY WITH THE
INSTRUCTIONS OF THE SELLER REGARDING THE RETURN SHIPMENT OF THE GOODS AT THE
SELLER'S EXPENSE AND RISK.
IF YOU DO MAKE THE GOODS AVAILABLE TO THE SELLER AND THE SELLER DOES NOT
PICK THEM UP WITHIN 20 DAYS OF THE DATE OF YOUR NOTICE OF CANCELLATION, YOU
MAY RETURN OR DISPOSE OF THE GOODS WITHOUT ANY FURTHER OBLIGATION. IF YOU
FAIL TO MAKE THE GOODS AVAILABLE TO THE SELLER, OR IF YOU AGREE TO RETURN THE
GOODS TO THE SELLER AND FAIL TO DO SO, THEN YOU REMAIN LIABLE FOR PERFORMANCE
OF ALL OBLIGATIONS UNDER THIS CONTRACT.
TO CANCEL THIS TRANSACTION, MAIL OR DELIVER A SIGNED AND DATED COPY OF
THIS CANCELLATION NOTICE OR ANY OTHER WRITTEN NOTICE, OR SEND A TELEGRAM, TO
RENAISSANCE, INC., 1001 S.W. GAGE BOULEVARD, TOPEKA, KANSAS 66604, NOT LATER
THAN MIDNIGHT OF THE THIRD DAY PAST THE FOLLOWING DATE:
- -------------------------------------------------------------------------------
I HEREBY CANCEL THIS TRANSACTION: Sales Representative
must enter transaction
- ------------------------------------------------- date here
Date: Buyers Signature:
----------------------
===============================================================================
TERMS AND CONDITIONS OF THE IS R APPLICATION AND AGREEMENT
In accordance with the terms and conditions contained in this Application and
Agreement, I hereby submit my Application to become an Independent Sales
Representative, (hereinafter referred to as an ISR) with Renaissance, Inc.
(hereinafter referred to as the Company). and hereby state and agree as follows:
1. I am of legal age, in the state in which I reside. to enter into this
Agreement. This Application and Agreement becomes effective on the date
received, signed by the applicant, and accepted by the Company in its home
office.
2. Upon acceptance of this Application I understand that I will become an ISR
of the Company and will be eligible to participate in the selling and
distribution of the Company goods and services and receive commissions in
connection with such sales in accordance with the Company's Policies and
Procedures, and Compensation Plan.
3. I understand that as an ISR I am an independent contractor; not an agent,
employee, or franchisee of the Company. I further understand and agree that
I will not be treated as an employee with respect to such services for
federal or state tax purposes. Nor will I be treated as an employee for
purposes of the Federal Unemployment Act, the Federal Insurance
Contributions Act, the Social Security Act, the State Unemployment Act, or
State Employment Security Act, I understand and agree to pay all applicable
federal and state income taxes, self employment taxes, sales taxes, local
taxes, and/or local license fees that may become due as a result of my
activities under this Agreement.
4. I understand and agree that my remuneration will consist solely of retail
profits from the sales of Company goods, commissions. overrides and/or
bonuses relating to the sale or other output derived from in person sales,
solicitations, or orders from ultimate consumers, primarily in the home or
otherwise.
5. I understand that I am not required to make any purchase in order to become
an ISR, other than a Sales Kit (optional in North Dakota and various
states), which is sold at the Company's cost, which contains sales
materials. not for resale. If I decide not to continue as an ISR, I may
submit my written resignation and return, for refund, the Sales Kit in
good and resalable condition less ten percent (10%) for handling. Doing
so automatically terminates this agreement. I understand I am not
required to maintain an inventory of any kind in order to become an ISR.
(See the ISR Manual for additional product refund/return policies).
6. I hereby agree to represent the Company's Compensation Plan fairly and
completely, emphasizing that retail sales are a requirement, that no
purchase of goods or services is required at any level, that no
recruitment fee can be derived from the mere act of sponsoring other
ISRs. and that no earnings are guaranteed from participation in the
Compensation Plan. I agree that I will not make any representations
about the actual. potential, or expected earnings of any ISR of the
Company.
7. I understand that as an ISR. I am not guaranteed any income, nor am I
assured of any profit or success. I understand the Compensation Plan and
that I can only earn commissions upon the sale of the Company's goods
and services. I will be free to set my own hours, and determine the
location and methods of selling, within the guidelines and requirements
of this Agreement. I agree that I am responsible for my own business
expenses in connection with my activities as an ISR.
8. I further certify that neither the Company nor my sponsor have made any
claims of guaranteed earnings or representations of anticipated earnings
that might result from my efforts as an ISR. I understand that my success
as an ISR comes from retail sales, service. and the development of a
Marketing network. I understand and agree that I will make no statements,
disclosures. or representations in selling the Company's goods and services
or in the sponsoring of other ISRs other than those contained in approved
Company literature.
9. I hereby agree that due to the personal nature of the sponsoring of other
ISRs, I will not advertise using the company name in any manner, nor will
I conduct any type of public opportunity meeting, mass recruitment
seminars. telemarketing recruitment campaigns, nor any other type of print,
broadcast. advertisement, or other type of effort designed to recruit more
than one specific ISR at any one time.
10. I hereby agree that due to the unique nature of the Company pay cycle. I
must forward each customer product order and/or ISR Application to the home
office within 24 hours (or the first business day) following the date of
the sale or enrollment. I understand and agree that any failure on my pan
to follow this policy may result in termination of my ISR status.
11. I hereby agree not to re-package or re-label the Company's goods or
services nor to sell said goods or services under any other name or label.
I further agree to refrain from producing, selling, and using. for the
purpose of advertising. promoting or describing the Company's goods and
services. Compensation Plan. or other programs. any written, recorded,
other materials which have not been approved or provided by the Company.
12. In the event that I sponsor other ISRs, I agree to provide a bonafide
supervisory, distributive and selling function in connection with the sale
of the Company's goods and services to the ultimate consumer. I also agree
to train any ISRs I may sponsor in the performance of these functions. I
agree to have a continuing communication and supervision with my sales
organization. I agree that all training seminars to be held in any type of
open or public meeting facility must meet all of the requirements of a
Company approved meeting as detailed in the ISR Training Manual.
13. I understand and agree that the Company, in order to maintain a viable
marketing system, may make modifications in the Policies and Procedures,
Compensation Plan, Company literature, and product prices. I further agree
to be bound by such changes upon notification through official company
literature.
14. CREDIT CARD ACCEPTANCE AGREEMENT: As a convenience to me in placing
initial and future wholesale business purchase orders, I may supply you
with my signature and my confidential credit card account information for
your files exclusively for the purpose of ordering products and services
for my business, including shipping and handling fees, from the Company.
As an Independent Sales Representative with the } Company, I operate my
own business and am responsible for all business decisions I made on
behalf of my business. As a businessperson, I am familiar with the quality
and cost of the product(s) I am ordering. or will order in the future for
resale within my business. As a businessperson I understand that I am
ordering all products at ISR Cost in order to use and resale such products
for the purpose of generating a personal retail profit for my business. As
an independent businessperson, I understand and agree that I have a
merchant rather than a consumer relationship with the Company when ordering
using my VISA, MasterCard, or Discover Card. I am not purchasing products
under the same conditions or purposes as a retail consumer, rather, I am
executing a business decision and purchase order for the purpose of
generating a profit from the requested credit card transaction. As an
independent businessperson, I understand and agree that I am executing
a business decision and purchase order for the purpose of generating a
profit from the requested credit card transaction. There is no additional
charge levied to the retail customer on any order paid by credit card,
however. I agree that a Five Percent (5%) merchant fee will be charged to
me by the Company to any cover the additional merchant banking costs of
processing each approved credit card transaction on my behalf. I am fully
aware of and satisfied with the quality of products. shipping charges,
and other pertinent details of such transactions with the Company and
agree that should I become dissatisfied in any manner with the Company. I
hereby waive my right of cancellation. refund, or billing dispute of any
authorized charges placed on my personal VISA, MasterCard or Discover Card
account except as according to the Policies and Procedures contained in my
ISR Training Manual and this Agreement. Any orders, refunds, billing
disputes, or exchanges shall be handled through the Company home office,
not through VISA, MasterCard. or Discover Card. and will be handled in
accordance with the Policies and Procedures contained in the Company
Training Manual and supporting literature. I understand and agree that
should I execute a personal business decision to order products,
literature, or other items from the Company on behalf of any other person
using my VISA, MasterCard, or Discover Card account. that I will be bound
by the terms of this Agreement regardless of any decision or actions taken
by the person I am ordering for, and agree to hold the Company harmless
from any dispute I or the company may have with this person due to my
business decisions or actions.
15. I understand that federal or state agencies do not approve or endorse
marketing programs. Therefore, I agree that I will not represent that
the Company. its products. or program, have been approved or endorsed by
any governmental agency.
16. I understand that the acceptance of this Application does not constitute
the sale of a franchise or a distributorship, and that there are no
exclusive territories granted to anyone, and that no franchise fees have
been paid, nor am I acquiring any interest in a security by the acceptance
of this Agreement.
17. I understand that because of the personal nature of this Agreement, it may
not be transferred or otherwise assigned without the prior written consent
of the Company.
18. The term of this agreement is for one year. I understand that I must apply
for and renew annually this Agreement. on the anniversary date of the
acceptance of this Application. The renewal process and fees, if any, are
set out in the Policies and Procedures of the Company.
19. I understand that either party to this Agreement may terminate this
Agreement by giving notice to the other party in writing. This Application
and Agreement is governed by the laws of the state of Nevada. and the
parties agree that proper jurisdiction and venue shall be in the state and
federal courts of Nevada. This Agreement shall be binding on the
successors and assigns of both parties.
20. I understand and agree that this Application and Agreement, including the
Company's Polices and Procedures, and Compensation Plan, incorporated
herein by reference, constitute the entire agreement between the parties
hereto. I have read this Agreement including the Polices and Procedures
and Compensation Plan and I acknowledge receiving a copy of all documents
referred to and agree to abide by and be bound by the terms contained
therein.
[Logo: AiM] INDEPENDENT MARKETING ASSOCIATE APPLICATION & AGREEMENT
1001 S.W. GAGE BOULEVARD tel: (913) 273-0993
TOPEKA, KANSAS 66604 fax: (913) 273-2165
- -------------------------------------------------------------------------------
Type or Print Clearly * Complete All Blanks
Read Side Two Completely * Signature Required
APPLICANT
=========
Social Security Number (or Fed I.D.#) Month Day Year
- ------------------------------------- ---------------------
Applicant's Name (First) (M.I.) (Last)
- ------------------------------------- ------ -------------------------------
Address (number and street -
UPS does not deliver to PO Box numbers) SALES TAX RATE
- ------------------------------------------------------- ---------------
City State Zip Code - Plus Four
- ------------------------------------- ------ -------------------------------
Area Home Area Work Area Fax
Code Phone Number Code Phone Number Code Phone Number
- ----- ----------------- ----- ---------------- ----- ----------------
- -------------------------------------------------------------------------------
SIGN
=====
A PARTICIPANT IN THIS NETWORK MARKETING PLAN HAS A RIGHT TO CANCEL AT ANY
TIME, REGARDLESS OF REASON. CANCELLATION MUST BE SUBMITTED IN WRITING TO
THE COMPANY AT ITS PRINCIPLE PLACE OF BUSINESS.
By signing below, I acknowledge receipt of this Agreement, terms and
conditions, and the AIM Policies and Procedures provided to me BY
MY SPONSOR. I HAVE CLOSELY READ, UNDERSTAND, AND WILLINGLY AGREE TO BE
BOUND BY ALL OF THESE TERMS AND CONDITIONS. Please accept my IMA
Application in accordance with all AIM terms and conditions on
side two of this agreement.
X ____________________________________
- -------------------------------------------------------------------------------
SPONSOR
=======
Social Security Number
Sponsor's Name (or Fed I.D.#) BC#
- -------------------------------- -------------------- -----
PLACEMENT: Automatic placement of this new IMA's Sales Volume (SV) will
be on the deepest point in the weakest division of the Sponsor's organization.
If the Sponsor elects to have this SV placed at a SPECIFIC POINT in the
organization. COMPLETE the following section, otherwise, PLEASE LEAVE THIS
SECTION BLANK, AS NO CHANGES IN PLACEMENT ARE ALLOWED.
- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -
Place Sales Volume Beyond Exact Business Center Number
This Organizational Business Center: (include BC number and leg 1,2, or 3)
1 2 3
- ----------------------------------- --------------------------- ---------
- -------------------------------------------------------------------------------
INDEPENDENT MARKETING ASSOCIATE (IMA) OPTIONAL INITIAL ORDER FORM
(No Inventory Product Purchase Is Required To Become An AIM Independent
Marketing Associate)
TAX ADVANTAGE SYSTEM * Includes FREE SALES KIT, complete ($495.00
- ----- retail price) Tax Advantage System (TAS), training workbook, audio
training tapes, expense logs, filing system labels, FREE ($100.00
retail price) Renaissance Membership & Business Plan, product
catalogs, price sheets, & order forms. Associate cost $300.00
BUSINESS CONSULTANT PACK * Includes 4-Tax Advantage Systems and
- ----- 4-Renaissance Memberships as outlined above. Retail value = $2,380.
Potential retail sales profits = $1,180, Qualifies 4 Business
Centers, Qualifies $300 Fast Start Bonus, PLUS Qualifies your first
$100 in FREE PRODUCTS PLUS Tax Miles! Associate cost $1,200.00.
PREPAID TAX ADVANTAGE * I am tired of making the IRS my favorite
- ----- charity! Please enroll me in the Prepaid Tax Advantage (PTA)
System. Includes unlimited Q&A on the live and interactive weekly
tax training calls and toll free 1-800 one on one Tax Consultation,
Free 1040 Preparation, the 16th Amendment Newsletter, & th 2%
National Audit Defense Fund. Draft my enclosed payment method
for $100/month. Once my Associate Bonuses exceed $100 per month,
qualify my additional BCs for the PTA System out of my profits and
send me a 100 minute prepaid calling card for each additional
business center qualified each month.
THIS ORDER WILL QUALIFY 1 4 ________ BUSINESS CENTERS
PRODUCT ORDER TOTAL $_____________
TOTAL ENCLOSED $_____________
____ VISA ____ MasterCard # ____ DISCOVER ____ CHECK
- --------------------------------------------------
Print or Type Cardholder's Name: Expiration Date:
- ----------------------------------- ----------------
PERSONAL CHECK ORDERS ARE HELD FOR 10 WORKING DAYS PRIOR TO PROCESSING. For
fastest service and CV credit, send all orders by OVERNIGHT DELIVERY with
payment made by CASHIER'S CHECK, MONEY ORDER, OR CREDIT CARD.
- -------------------------------------------------------------------------------
For Office Use Only Rec'd by:__________ Date Rec'd:__________
Amt Rec'd:__________ File #:__________
Form L100 (3/30/98)
<PAGE>
NOTICE OF CANCELLATION
YOU MAY CANCEL THIS TRANSACTION, WITHOUT PENALTY OR OBLIGATION, WITHIN
THREE BUSINESS DAYS (ALASKA RESIDENTS FIVE DAYS) FROM THE DATE ON ' HE REVERSE
OF THIS FORM.
IF YOU CANCEL, ANY PROPERTY TRADED IN, ANY PAYMENTS MADE BY YOU UNDER THE
CONTRACT OR SALE AND ANY NEGOTIABLE INSTRUMENT EXECUTED BY YOU WILL BE RETURNED
WITHIN 10 BUSINESS DAYS FOLLOWING RECEIPT, BY THE SELLER, OR YOUR CANCELLATION
NOTICE, AND ANY SECURITY INTEREST ARISING OUT OF THE TRANSACTION WILL BE
CANCELLED.
IF YOU CANCEL, YOU MUST MAKE AVAILABLE TO THE SELLER, AT YOUR RESIDENCE,
IN SUBSTANTIALLY AS GOOD CONDITION AS WHEN RECEIVED, ANY GOODS DELIVERED TO
YOU UNDER THIS CONTRACT OR SALE, OR YOU MAY, IF YOU WISH, COMPLY WITH THE
INSTRUCTIONS OF THE SELLER REGARDING THE RETURN SHIPMENT OF THE GOODS AT THE
SELLER'S EXPENSE AND RISK.
IF YOU DO MAKE THE GOODS AVAILABLE TO THE SELLER AND THE SELLER DOES NOT
PICK THEM UP WITHIN 20 DAYS OF THE DATE OF YOUR NOTICE OF CANCELLATION, YOU
MAY RETURN OR DISPOSE OF THE GOODS WITHOUT ANY FURTHER OBLIGATION. IF YOU
FAIL TO MAKE THE GOODS AVAILABLE TO THE SELLER, OR IF YOU AGREE TO RETURN
THE GOODS TO THE SELLER AND FAIL TO DO SO, THEN YOU REMAIN LIABLE FOR
PERFORMANCE OF ALL OBLIGATIONS UNDER THIS CONTRACT.
TO CANCEL THIS TRANSACTION, MAIL OR DELIVER A SIGNED AND DATED COPY OF
THIS CANCELLATION NOTICE OR ANY OTHER WRITTEN NOTICE, OR SEND A TELEGRAM, TO
AIM, INC., 1001 S.W. GAGE BOULEVARD, TOPEKA, KANSAS 66604, NOT LATER THAN
MIDNIGHT OF THE THIRD DAY PAST THE FOLLOWING DATE:
- -------------------------------------------------------------------------------
I HEREBY CANCEL THIS TRANSACTION: Sales Representative
must enter transaction
- ------------------------------------------------- date here
Date: Buyers Signature:
----------------------
===============================================================================
TERMS AND CONDITIONS OF THE IMA APPLICATION AND AGREEMENT
In accordance with the terms and conditions contained in this Application
and Agreement, I hereby submit my Application to become an Independent
Marketing Associate, (hereinafter referred to as an IMA) with Advantage
International Marketing . (hereinafter referred to as the Company), and
hereby state and agree as follows:
1. I am of legal age, in the state in which I reside, to enter into this
Agreement This Application and Agreement becomes effective on the date
received, signed by the applicant, and accepted by the Company in its
home office.
2. Upon acceptance of this Application I understand that I will become an
IMA of the Company and will be eligible to participate in the selling
and distribution of the Company goods and services and receive
commissions in connection with such sales in accordance with the
Company's Policies and Procedures, and Compensation Plan.
3. I understand that as an IMA I am an independent contractor; not an agent,
employee, or franchisee of the Company. I further understand and agree
that I will not be treated as an employee with respect to such services
for federal or state tax purposes. Nor will I be treated as an employee
for purposes of the Federal Unemployment Act, the Federal Insurance
Contributions Act, the Social Security Act, the State Unemployment Act,
or State Employment Security Act. I understand and agree to pay all
applicable federal and state income taxes, self employment taxes, sales
taxes, local taxes, and/or local license fees that may become due as a
result of my activities under this Agreement.
4. I understand and agree that my remuneration will consist solely of retail
profits from the sales of Company goods, commissions, overrides and/or
bonuses relating to the sale or other output derived from in-person
sales, solicitations, or orders from ultimate consumers, primarily in
the home or otherwise.
5. I understand that I am not required b make any purchase in order b become
an IMA, other than a Sales Kit (optional in North Dakota and various
states), which is sold at the Company's cost, which contains sales
materials, not for resale. If I decide not b continue as an IMA, I may
submit my written resignation and return, for repurchase, the original
Sales Kit in good and resalable condition, less ten percent (10%) for
handling. Doing so automatically terminates this agreement I understand I
am not required to maintain an inventory of any kind in order to become
an IMA.(See the IMA Manual for additional product/ repurchase policies).
6. I hereby agree to represent the Company's Compensation Plan fairly and
completely, emphasizing that retail sales are a requirement, that no
purchase of goods or services is required at any level, that no
recruitment fee can be derived from the mere act of sponsoring other
ISRs, and that no earnings are guaranteed from participation in the
Compensation Plan. I agree that I will not make any representations
about the actual, potential, or expected earnings of any IMA of the
Company.
7. I understand that as an IMA, I am not guaranteed any income, nor am I
assured of any profit or success. I understand the Compensation Plan
and that I can only earn commissions upon the sale of the Company's
goods and services. I will be free to set my own hours, and determine
the location and methods of selling, within the guidelines and
requirements of this Agreement. I agree that I am responsible for my
own business expenses in connection with my activities as an IMA.
8. I further certify that neither the Company nor my sponsor have made any
claims of guaranteed earnings or representations of anticipated earnings
that might result from my efforts as an IMA. I understand that my success
as an IMA comes from retail sales, service, and the development of a
sales organization. I understand and agree that I will make no
statements, disclosures, or representations in selling the Company's
goods and services or in the sponsoring of other ISRs other than those
contained in approved Company literature.
9. I hereby agree that due to the personal nature of the sponsoring of
other ISRs, I will not advertise using the company name in any manner,
nor will I conduct any type of public opportunity meeting, mass
recruitment seminars, telemarketing recruitment campaigns, nor any other
type of print, broadcast, advertisement, or other type of effort designed
to recruit more than one specific IMA at any one time.
10. I hereby agree that due to the unique nature of the Company pay cycle, I
must forward each customer product order and/or IMA Application to the
home office within 24 hours (or the first business day) following the
date of the sale or enrollment. I understand and agree that any failure
on my part to follow this policy may result in termination of my IMA
status.
11. I hereby agree not to re-package or re-label the Company's goods or
services nor to sell said goods or services under any other name or
label. I further agree to refrain from producing, selling, and using,
for the purpose of advertising, promoting or describing the Company' s
goods and services, Compensation Plan, or other programs, any written,
recorded, or other materials which have not been approved or provided
by the Company.
12. In the event that I sponsor other ISRs, I agree to provide a bonafide
supervisory, distributive and selling function in connection with the
sale of the Company's goods and services to the ultimate consumer. I
also agree to tram any ISRs I may sponsor in the performance of these
functions. I agree to have a continuing and positive communication and
supervision with my sales organization. I agree that all training
seminars to be held in any type of open or public meeting facility
must meet all of the requirements of a Company approved meeting as
detailed in the IMA Training Manual.
13. I understand and agree that the Company, in order to maintain a viable
marketing system, may make modifications in the IMA Policies and
Procedures, Compensation Plan, Company literature, and product prices.
I further agree to be bound by such changes upon publication in
official company literature
14. CREDIT CARD AND BANK DRAFT ACCEPTANCE AGREEMENT: As a convenience to
me in placing initial and future wholesale business purchase orders,
I may supply you with my signature and my confidential credit card
and/or bulk account information for your files exclusively for the
purpose of ordering products and services for my business, including
shipping and handling fees, from the Company. As an Independent
Marketing Associate with the Company, I operate my own business and am
responsible for all business decisions made on behalf of my business.
As a businessperson, I am familiar with the quality and cost of the
product(s) I am ordering, or will order m the future for resale within
my business. As a businessperson I understand that I am ordering all
products at IMA Cost in order to use and resale such products for the
purpose of generating a personal retail profit for my business. As an
independent businessperson, I understand and agree that I have a
merchant rather than a consumer relationship with the Company when
ordering using my bank account, VISA, MasterCard, or Discover Card. I
am not purchasing products under the same conditions or purposes as a
retail consumer, rather, I am executing a business decision and
purchase order for the purpose of generating a profit from the
requested credit card transaction. As an independent businessperson, I
understand and agree that I am executing a business decision and
purchase order for the purpose of generating a profit from the requested
credit card transaction. I am fully aware of and satisfied with the
quality of products, shipping charges, and other pertinent details of
such transactions with the Company and agree that should I become
dissatisfied in any manner with the Company, I hereby waive my right
of cancellation, refund, or billing dispute of any authorized charges
placed on my personal VISA, MasterCard, or Discover Card account
except as according to the Policies and Procedures contained in my
IMA Training Manual and this Agreement Any orders, refunds, billing
disputes, or exchanges shall be handled through the Company home
office, not through VISA, MasterCard, or Discover Cud, and will be
handled in accordance with the Policies and Procedures contained in
the Company Training Manual and supporting literature. I understand
and agree that should I execute a personal business decision to
order products, literature, or other items from the Company on behalf
of any other person that I will be bound by the terms of this
Agreement regardless of any decision or actions taken by the person
I am ordering for, and agree to bold the Company harmless from any
dispute I or company may have with this person due b my business
decisions or actions.
15. I understand that federal or state agencies do not approve or endorse
marketing programs. Therefore, I agree that I will not represent that
the Company, its products or program, have been approved or endorsed
by any governmental agency.
16. I understand that the acceptance of this Application does not
constitute the sale of a franchise or a distributorship, and that
there are no exclusive territories granted to anyone, and that no
franchise fees have been paid, nor am I acquiring any interest in a
security by the acceptance of this Agreement.
17. I understand that because of the personal nature of this Agreement it
may not be transferred or otherwise assigned without the prior written
consent of the Company.
18. The term of this agreement is perpetual unless terminated by myself or
the Company. I understand that I must apply for and renew annually
this Agreement, before the current renewal date established by the
Company. The renewal process and fees, if any, are established
annually by the Field Leadership Council in conjunction with the
Company.
19. I understand that either party to this Agreement may terminate this
Agreement by giving notice to the other party in writing. This
Application and Agreement is governed by the laws of the state of
Nevada, and the parties agree that proper jurisdiction and venue
shall be in the state and federal courts of Nevada. This Agreement
shall be binding on the successors and assigns of both parties.
20. I understand and agree that this Application and Agreement, including
the Company's Polices and Procedures, and Compensation Plan,
incorporated herein by reference constitute the entire agreement
between the parties hereto. I have read this Agreement including the
Polices and Procedures and Compensation Plan and I acknowledge
receiving a copy of all documents referred to and agree to abide by
and be bound by the terms contained therein.
SUBLEASE AGREEMENT
------------------
THIS SUBLEASE AGREEMENT hereinafter referred to as the "Lease") is made
and entered into this 1st day of April, 1996 by and between PENNSYLVANIA
HOUSE, INC., as Sublessor (hereinafter referred to as "Lessor"); and
RENAISSANCE DESIGNER GALLERY PRODUCTS, INC., as Sublessee, (hereinafter
referred to as "Lessee").
Statement of Purpose
--------------------
Lessor is the lessee of a building located in City of Topeka, County of
Shawnee, State of Kansas that has an address of 1001 Gage Boulevard, Topeka,
Kansas (the "Leased Premises"), as more particularly described in that
certain Lease Agreement by and between Ralph V. Lewis and Fawna Lewis, as
lessor, and Lessor, as lessee, dated October 28, 1987 (hereinafter referred
to as "Underlying Lease"), which Lessor has agreed to lease to Lessee on a
sublease basis. Lessor and Lessee have entered into this Lease in order to
document their respective understandings and obligations concerning the
subleasing of the Leased Premises.
Agreement
---------
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants hereinafter set forth, Lessor and Lessee hereby covenant,
promise and agree with each other as follows:
1. Description of Leased Premises. Lessor does hereby sublease and
demise unto Lessee, and Lessee hereby takes and hires from Lessor, the
Leased Premises, as described above, SUBJECT TO the Underlying Lease. TO
HAVE AND TO HOLD the Leased Premises unto Lessee, its successors and
assigns, on the terms and conditions hereinafter set forth.
2. Lease Term. The term of this Lease shall be for the period of
time commencing April 1, 1996, and expiring at midnight on
December 31, 1997.
3. Rental. Lessee agrees to pay Lessor rental for the Leased Premises
in monthly installments, each installment being due and payable in advance,
on or before the first (1st) day of each calendar month during the term of
this Lease with the first rent due and payable on May 1, 1996. Upon the
termination of this Lease, Lessee shall pay pro rata rental and any other
amounts remaining unpaid by Lessee to Lessor which pro rata rental shall
include rental for any days remaining under the T ease Term for which
rental has not been previously paid and collected.
For and during the term of this Lease, the minimum rental shall be
FOUR THOUSAND DOLLARS ($4,000.00) per month.
All rent payable under this Lease shall be paid, without notice or
demand, both of which are expressly waived by Lessee, to Lessor at the
following address: Pennsylvania House, 137 N. 10th Street, Lewisburg,
PA 17837 or at such other address as the Lessor may designate from
<PAGE>
time to time, in writing. Rent and other monies due Lessor under this
Lease but not paid by the tenth (10th) day of the month shall bear
interest at the rate of ten percent (10%) per annum from the date same
is due until paid.
4. Security Deposit. Concurrently with Lessee's execution of this
Lease, Lessee has deposited with Lessor a sum equivalent to the first
month's rent. Said sum shall be held by Lessor as security. for the
faithful performance by Lessee of all the terms, covenants, and
conditions of this Lease to be kept and performed by Lessee during the
term hereof. Lessor shall not be required to keep this security deposit
separate from its general funds, and Lessee shall not be entitled to
interest on such deposit. If Lessee shall fully and faithfully perform
every provision of this Lease to be performed by it, the security deposit
or any balance thereof shall be returned to Lessee (or, at Lessor's
option to the last assignee of Lessee's interest hereunder) within ten
(10) days following expiration of the Lease term. In the event of
termination of Lessor's interest in this Lease, Lessor shall transfer
said deposit to Lessor's successor in interest.
5. Taxes and Assessments. Lessee shall pay, as additional rents
all real estate taxes, assessments and water rates and water charges,
and other governmental levies and charges, general and special,
ordinary and extraordinary, unforeseen, as well as foreseen, of any
kind, which are assessed or imposed upon the Leased Premises, or any
part thereof, or become payable during the term of this Lease. Lessee
shall also pay all personal property taxes assessed and levied against
the fixtures and property located within the Leased Premises.
6. Additional Rent. Lessee shall pay, as additional rent, that
percent of the total cost of the following items as Lessee's total
floor area bears to the total floor area of the Fleming Place Office
Park which is from time to time computed as of the first day of each
calendar quarter:
(a) All real estate taxes, including assessments, and all insurance
costs (relating to common areas), and all costs to maintain, repair and
replace common areas, parking lots, sidewalks, driveways, and other
areas used in common by the tenants of the Fleming Place Office Park.
(b) All costs to supervise and administer said common areas, parking
lots, sidewalks, driveways, and other areas used in common by the tenants
or occupants of the-. Fleming Place Office Park as per the Fleming Place
Office Park Owners Association requirements. Said costs shall include such
fees as may be paid to a third party in connection with the same.
(c) Any parking charges, utilities surcharges, or any similar costs
levied, assessed, or imposed by, or interpretations thereof, promulgated
by any governmental authority in connection with the use or occupancy of
the Leased Premises or the parking facilities serving the Leased Premises.
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(d) In addition Lessee shall pay its pro rata portion of the total
cost of the common area maintenance of Fleming Place Office Park as Lessee's
total floor area bears to the total floor area of the Fleming Place Office
Park, as such costs relate to maintenance and upkeep of the environmental
areas.
7 Rental Adjustment. Upon commencement of rental, Lessor shall submit
to Lessee a statement of the anticipated monthly adjustments for the period
between such commencement and the following January and Lessee shall pay
these adjustments on a monthly basis concurrently with the payment of the
Rent. Lessee shall continue to make said monthly payments until notified
by Lessor of a change thereof. By January 1 of each year, Lessor shall
endeavor to give Lessee a statement showing the total adjustments for
the Fleming Place Office Park for the prior calendar year and Lessee's
allocable share thereof, prorated from the commencement of rental. In the
event the total of the monthly payments which Lessee has made for the
prior calendar year is less than the Lessee's actual share of adjustments,
then Lessee shall pay the difference in a lump sum within five (5) days
after receipt of such statement from Lessor and shall concurrently pay
the difference in monthly payments made in the then calendar year and the
amount of the monthly payments which are then calculated as monthly
adjustments based on the prior year's experience. Any overpayment by Lesser
shall be credited towards the monthly adjustments next coming due. The
actual adjustments for the prior year shall be used for purposes of
calculating the anticipated monthly adjustments for the then current year.
In any year in which resurfacing is contemplated by the lessor of the
Underlying Lease, Lessor shall be permitted to include the anticipated cost
of same as part of the estimated monthly adjustments. Even though the term
has expired and Lessee has vacated the Leased Premises, when the final
determination is made of Lessee's share of said adjustments for the year
in which this Lease terminates, Lessee shall immediately pay any increase
due over the estimated adjustments previously paid and, conversely, any
overpayment made shall be immediately rebated by Lessor to Lessee. Failure
of Lessor to submit statements as called for herein shall not be deemed to
be a waiver of Lessee's requirement to pay sums as herein provided.
8. Utilities. Lessor shall not be required to furnish to Lessee any
facilities or services of any kind. Lessee shall make in its own name, all
applications and connections for necessary utility services on the Leased
Premises. Lessee shall be solely liable for utility charges as they become
due, including those for sewer, water, gas, electricity, telephone service,
trash and garbage pick up, janitor service and fuel.
9. Casualty Insurance. Lessee shall, at all times during the term of
this Lease at its own cost and expense, insure and Keep in effect on the
Leased Premises, insurance utilizing the standard fire and extended
coverage endorsement in use in the State of Kansas,in an amount sufficient
to cover the entire building, including additions or improvements, if any,
made by Lessee during the term of this Lease. The insurance provided by
Lessee shall have such coverage as required to cover the interests of both
the Lessor and Lessee in an amount sufficient to pay in full all losses
covered thereby. Lessee shall provide all insurance required on the
personal property that Lessee moves onto the Leased Premises and any
casualty insurance desired by Lessee with respect to such personal
property. The insurance required in this
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paragraph 13 shall provide that is shall not be canceled except after
sixty (60) days notice in writing to Lessor.
10. Waiver of Liability. Lessor and Lessee each hereby releases the
other, and their respective employees, agents, and every person claiming by,
through, or under either of them, and Lessee hereby releases each other
tenant in the office park and shopping center of which the Leased Premises
are a part, and the employees and agents thereof, from any and all liability
or responsibility (to the other or anyone claiming by, through, or under
them by way of subrogation or otherwise) for any loss or damage to any
property (real or personal) caused by fire or any other insured peril
covered by any insurance policies for the benefit of any party, even if
such loss or damage shall have been caused by the fault or negligence of
another party, their employees or agents or such other tenant or any
employee or agent thereof. All policies of insurance written to insure such
buildings, improvement and contents shall contain a proper provision, by
endorsement or otherwise, whereby the insurance carriers issuing the same
shall acknowledge that the insured has so waived and released its right of
recovery against the other party hereto and shall waive the right of
subrogation which such carrier might otherwise have had against such other
party, all without impairment or invalidation of such insurance. The
provisions of this paragraph shall be equally binding upon and inure to the
benefit of any assignee or sublessee of Lessee.
11. Alterations and Improvements. Lessee shall make no alterations,
additions or improvements in or to the Leased Premises except with the
prior written consent of the Lessor. Such consent shall not be unreasonably
withheld. Any alterations, additions or improvements upon the Leased Premises
made by either party shall, unless Lessor elects otherwise, become the
property of the Lessor and shall become and remain part of the Leased
Premises and be surrendered with the property at the end of the term of
this Lease. All fixtures, equipment, machinery, and furnishings installed
in or attached to the Leased Premises by and at the expense of the Lessee
may be removed by the Lessee at any time or from time to time during the
term of this Lease, provided that their removal does not damage the
property or that any damage caused by their removal is promptly repaired by
Lessee at his expense, ordinary wear and tear accepted. Notwithstanding the
foregoing, Lessee shall have the right to make Lessor approved
modifications. Upon expiration or termination of this Lease, Lessee shall
have the right to remove any improvements bearing Lessee's tradename,
trademarks or logos.
12. Maintenance and Repair. The lessor of the Underlying Lease shall
be responsible for the maintenance and repair of all plumbing, heating, and
electrical installation and equipment, and air conditioning equipment.
Lessee shall replace all broken glass. Lessee shall have the right to demand,
in the name of the Lessor but without cost or expense to the Lessor, any
repairs which are reasonable and necessary. If the lessor of the Underlying
Lease refuses and neglects to begin such repairs and complete the same
with reasonable diligence, Lessee may, at its option, cause such repairs
to be made and bill the cost of repairs to the lessor of the Underlying
Lease, for which purpose, the lessor of the Underlying Lease and its agents
and employees shall have full access to the Leased Premises at reasonable
times that shall minimize any interference with Lessee's business.
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13. Assignment. Subleasing and Restrictions. Lessor's written consent
shall be required with respect to any assignment of this Lease or any
subletting of the Leased Premises, in whole or in parts to any firm, person,
entity or corporation including, but not limited to, a firm or corporation
owned by and forming a part of the operations of Lessee, affiliates or
subsidiaries thereof; provided, however, Lessee shall remain liable to
Lessor hereunder for the remainder of the then term of this Lease in the
event of the assignment of this Lease or the subletting of the Leased
Premises.
14. Public Liability Insurance. During the term of this Lease and any
extension thereof, Lessee, at Lessee's expense, shall maintain comprehensive
general liability insurance including contractual liability against claims
for injury, wrongful death or property damage occurring upon, in or about
the leased property, in companies and in form acceptable to Lesser, with
minimum limits of One Million Dollars ($1,000,000.00) on account of bodily
injuries to or death or more than one person as the result of one accident
or disaster, and property damage insurance with minimum limits of Five
Hundred Thousand Dollars ($500,000.00). The insurance shall provide that
it shall not be canceled except after sixty (60) days written notice to
the Lessor.
15. Destruction of Premises. (a) If the Leased Premises shall be
damaged or destroyed by fire, explosion or other casualty so as to render
50% or more of the square foot floor area of the Leased Premises
untenantable or unusable for the purposes of this Lease, either Lessor or
Lessee may terminate this Lease by notifying the other in writing of the
exercise of such option within thirty (30) days after such damage or
destruction occurs. If Lessee shall exercise its option to terminate this
Lease in such event, then any unearned rental paid in advance by Lessee
shall be apportioned and refunded to the Lessee, and the liability of the
parties to perform covenants to be performed after the date of such
termination shall cease and terminate.
(b) In the event that Leased Premises shall be damaged or destroyed by
fire or other casualty, and
(i) Lessee, having an option to terminate this Lease pursuant to
subparagraph (a) above shall not notify Lessor in writing of the exercise
of such option within thirty (30) days after such damage or destruction
occurs; or
(ii) Less than 50% of the square foot floor area of the Leased
Premises are rendered untenantable or unusable for the purposes of this
Lease; or
(iii) The fire or other casualty causing such damage or destruction
shall not be covered and losses therefrom are not insured against;
then in any such event the lessor of the Underlying Lease shall repair,
replace and restore the Leased Premises as provided in the Underlying
Lease and the obligation to pay rental as defined
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hereunder shall cease until the Leased Premises are repaired as aforesaid,
whereupon the obligations to pay rent shall resume to the same rate as
before the damage.
16. Abandonment. Lessee shall not vacate or abandon the premises at any
time during the term of the Lease, or permit the same to remain unoccupied,
except during restoration or repairs.
17. Default. If Lessee fails to make payment of any rent herein reserved
when due or if Lessee becomes in default under the performance of any other
undertaking hereunder to be performed by it and remains in such default or
no effort is made to cure such default for as many as fifteen (15) days after
written notice thereof has been given by or on behalf of Lessor to Lessee,
then and in any such events, Lessor, at its option may enter and resume
possession of the Leased Premises and expel all persons and all property of
others therefrom, and may either declare this Lease terminated, in which
case it shall thereupon be immediately terminated, or may declare that this
Lease shall remain in effect, in which case Lessee shall remain obligated
hereunder. The rights of Lessor set forth herein shall be in addition to any
other rights available to Lessor.
18. Insolvency or Bankruptcy of Lessee. In the event (a) Lessee shall
(i) apply for or consent to the appointment of, or the taking of possession
by, a receiver, custodian, trustee or liquidator of itself or all of a
substantial part of its property, (ii) become insolvent or be generally
unable to or shall generally fail or admit in writing its inability to pay
its debts as such debts become due, (iii) make a general assignment for
the benefit of its creditors, (iv) commence a voluntary case under the
Federal Bankruptcy Code (as now or hereafter in effect), (v) file a
petition seeking to take advantage of any bankruptcy, insolvency,
moratorium, reorganization or other similar law affecting the enforcement
of creditors' rights generally, (vi) acquiesce in writing to, or fail to
controvert in a timely or appropriate manner, any petition filed against
it in an involuntary case under such Bankruptcy Code, (vii) take any
action under the laws of any jurisdiction (foreign or domestic) analogous
to any of the foregoing, or (viii) take any action in furtherance of any
of the foregoing; or
(b) a proceeding or case shall be commenced in respect of Lessee,
without its application or consent, in any court of competent jurisdiction,
seeking (i) the liquidation, reorganization, moratorium, dissolution,
winding up, or composition or readjustment of its debts, (ii) the
appointment of a trustee, receiver, custodian, liquidator or the like of
it or all or any substantial part of its assets, or (iii) similar relief
in respect of it under any law providing for the relief of debtors, and
such proceeding or case described in clauses (i), (ii) or (iii) shall
continue undismissed, or unstayed and in effect, for a period of sixty
(60) days, or an order for relief shall be entered in an involuntary case
under the Federal Bankruptcy Code (as now or hereafter in effect) against
Lessee, or action under the laws of any jurisdiction (foreign or domestic)
analogous to any of the foregoing shall be taken with respect to Lessee
and shall continue undismissed, or unstayed and in effect, for a period
of sixty (60) days;
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then in any such event, Lessor may terminate this Lease and all of the
rights of Lessee hereunder by giving Lessee not less than ten (10) days
notice in writing of the election of Lessor to terminate this Lease.
19. Notices. Any notice or demand, required or permissible under the
terms of this Lease, shall be in writing and shall be deemed given by a
party upon hand delivery of such notice to the other party or upon the date
three (3) business days after mailing the same in the United States mail or
by national courier or express mail service, addressed to the other party at
the following address or such other address as either party may direct
pursuant to this notice provision
(a) If intended for Lessor:
PENNSYLVANIA HOUSE, INC.
137 N. 10th Street
Lewisburg, PA 17837
Attn: Andy Canter
With Copy to:
LADD FURNITURE INC.
One Plaza Center, Box HP 3
High Point, NC 272611500
Attn: William S. Creekmuir
(b) If intended for Lessee:
------------------------------
------------------------------
------------------------------
------------------------------
20. Binding Agreement. The covenants and agreements contained in this
Lease shall apply to, inure to the benefit of, and be binding upon the
parties hereto, and their respective heirs, assigns, successors in
interest, and legal representatives.
21. Lessee's Right to Contest. Subject to the consent of the lessor
of the Underlying Lease, Lessee shall have the right to contest by
appropriate legal proceedings or otherwise in the name of Lessee, or if
required, in the name of Lessee and Lessor, without cost or expense to
Lessor or the lessor of the Underlying Lease, the validity or application
of any law, ordinance, rule, regulation or requirement now or hereafter
imposed on or in respect to the Leased Premises or the use thereof, by any
federal, state, county or any other governmental authority. Lessor agrees
that to the extent that Lessor can obtain the cooperation of the lessor
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of the Underlying Lease to execute and deliver all documents that may be
reasonably necessary to permit Lessee to contest the validity or
application of any such law, ordinance, rule or regulation and to fully
cooperate with Lessee in connection with such proceedings.
22. Compliance with Laws. Regulations and Ordinances. Lessee will
strictly comply with all laws, regulations and ordinances, including those
of an environmental nature arising out of the utilization of the Leased
Premises, and with respect to all other activities by, or obligations of,
Lessee under this Lease. Lessee agrees, upon reasonable and proper notice
and during regular business hours, to allow inspection of the Leased
Premises for purposes of ensuring that Lessee is in compliance with all
applicable laws, regulations and ordinances. Lessee will promptly notify
Lessor if there is any investigation, notice of violation, or claim
against Lessee in any way related to its compliance with the provisions
of this paragraph. Although there is hereby granted to Lessor the right
to inspect the Leased Premises said right shall not create either a duty
on Lessor's part to inspect the same, or any liability of Lessor for
Lessee's operation, including but not limited to, work place safety or
Lessee's use, storage or disposal of any chemicals, petroleum products
or other substances regulated under any law. This right of inspection is
necessary to assure the Lessor that the Leased Premises are being operated
in compliance with laws, regulations and ordinances now in effect or
hereafter created, but said right is not intended to interfere with the
activities of Lessee. Nevertheless should there be any violation of this
paragraph by Lessee, such violation shall be deemed a default.
Notwithstanding anything to the contrary in this Lease, Lessor shall have
the right to immediately terminate this Lease in the event Lessee violates
any of the provisions of this Paragraph, unless Lessee can cure the
default, including any remediation, within a reasonable time to the
reasonable satisfaction of the Lessor.
23. Indemnification and Lessor's Limitation of Liability. The
Lessee shall indemnify, protect and save harmless the Lessor against
all liabilities, expenses and losses incurred by the Lessor as a
result of (a) failure by the Lessee to perform any covenant required
to be performed by the Lessee hereunder; (b) any acts and injuries or
damage which shall happen in or about the Leased Premises or appurtenances,
or on or under the adjoining streets, sidewalks, curbs, or vaults, or
resulting from the condition, maintenance or operation thereof other than
those caused by the negligence of Lessor; (c) failure of Lessee to comply
with any requirements of any governmental authority; and (d) any mechanic's
lien, laborer's lien, materialmen's lien or tax lien or security agreement
filed against the I eased Premises, and the equipment therein, or any
materials used in the construction or alteration or improvement thereon,
which is the direct result ~ of Lessee's action.
24. Partial Invalidity. If any term, covenant, condition or provision
of this Lease or the application thereof to any person or circumstances
shall be invalid or unenforceable, the remainder of this Lease or the
application of such term or provision to persons or circumstances other
than those as to which it is held invalid or unenforceable by a court of
competent jurisdiction, shall not be affected thereby and each remaining
term, covenant, condition and provision of this Lease shall be valid and
enforceable to the fullest extent permitted by law.
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25. Construction of Lease. This Lease shall be governed by and
construed in accordance with the laws of the State of Kansas. This Lease
has been drafted by the joint efforts of Lessor and Lessee and shall not
be construed for or against either party as a result thereof.
26. Entire Agreement. This Lease constitutes the entire agreement
between Lessor and Lessee, and neither Lessor nor Lessee shall be bound
by any warranties, guaranties, representations or promises that are not
specifically set forth herein, and this T ease shall not be altered,
amended or modified except by written instrument executed by the parties
hereto, or their respective heirs, successors and assigns.
27. Underlying Lease. It is understood by the Lessee that all the
terms, covenants and-conditions provided in the Underlying Lease (WITH
THE EXCEPTION of the Option to Renew rights stated in Paragraph 8 of
said Underlying Lease) are incorporated herein by reference and this
Lease is subject to said Underlying Lease and no provision of this Lease
shall be deemed to permit Lessee to make or consent to any use of the
Leased Premises in a manner inconsistent with the terms and provisions
of the Underlying Lease.
[Remainder of this page left intentionally blank]
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IN WITNESS WHEREOF, Lessor and Lessee have caused this Lease to be
duly executed on the day and year first above written.
LESSOR:
PENNSYLVANIA HOUSE, INC.
By: [signature]
----------------------
LESSEE:
RENAISSANCE DESIGNER GALLERY
PRODUCTS, INC.
By: [signature]
----------------------
Consent to Sublease as of the date
first written above:
By: /s/ Ralph V. Lewis
----------------------
Ralph V. Lewis
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Addendum to Sublease
Dated: April 1, 1996
By and Between
Pennsylvania House, Inc., - Sublessor
Renaissance Designer Gallery Products, Inc., - Sublessee
For 1001 SW Gage Blvd., Topeka, Kansas - Premises
Whereas Sublessor's lease of Premises will expire on December 31, 1997, and
Sublessee's lease of Premises will expire December 31, 1997, the above named
lease is amended as follows:
1) The Lessor will become Ralph V. and Fawna Lewis;
2) The term of the Sublease Agreement (copy attached hereto) will
be extended for one (1) year, ending December 31, 1998.
The lease rate ($4,000.00 per month) and all other terms and conditions in
the Sublease Agreement will prevail.
LESSOR: LESSEE:
Ralph V. Lewis Renaissance Designer Gallery
Products, Inc.
By:_____________________________ By:____________________________
Fawna Lewis
By:______________________________
Notice: Notice:
Ralph V. Lewis Mike Cooper
c/o Associated Management 1001 SW Gage
Services Topeka, KS 66604
1111 SW Gage, Suite 100
Topeka, KS 66604
BRIER DEVELOPMENT CO. INC.
1801 SW OAKLEY
TOPEKA, KANSAS 66604-3252
913-232-9188
July 15, 1997
Mr. Michael C. Cooper
President & CEO
Renaissance Design Gallery Products Inc.
1004 Gage Blvd.
Topeka, KS 66604
Dear Mike,
This letter serves to follow up our conversation on Sunday, July 13th.
First, as I indicated, the July rent has not been paid.
Second, as per our conversation regarding our fully executed lease agreement,
(Section 5) wherein "Tenant. shall pay all ad valorem taxes. on a prorata basis.
from and after January 1, 1997". I would suggest we use last year's mill levy
with this year's appraised value. The prorata formula used previously is that
while the actual square footage represents 61.3% of the total space, because
none of Renaissance space is "finished", we reduce the value of the space to
50.8% of the total appraised value. I will prepare that calculation and send
you a statement.
Third, I am authorized to amend your lease in the following manner:
"The rent, effective August 1, 1997, will be reduced by approximately 60% to
$1,000.00 per month; the proration of taxes will be eliminated and in exchange
for these changes you and Renaissance agree to terminating the lease with two
weeks notice."
With every good wish.
Cordially,
/s/ Jack H. Brier
- ------------------------------
Jack H. Brier
Managing Partner, Lakewood Properties
JHB/ar
Accepted and agreed to this 31st day of July, 1997.
[signature]
- ------------------------------
Michael C. Cooper, President
Renaissance Design Gallery Products Inc.
RESOLUTION OF BOARD OF DIRECTORS
RENAISSANCE DESIGNER GALLERY PRODUCTS, INC.
March 25, 1997
The following Resolution was adopted by the Board of Directors of
Renaissance Designer Gallery Products, Inc. at a special meeting of the Board of
Directors held at the office of the Company on March 25, 1997.
" BE IT RESOLVED, that this Corporation will make available each person who
serves as a Director of this Corporation during the ensuring year and amount of
shares equal to 1,000,000 of its Common Stock, one cent ($.01) par value to each
Director which stock may be acquired over a period of five (5) years from the
date of this Resolution or from the data such person serves as a Director of the
Corporation, provided, however, that 200,000 shares of such stock allocated to
an individual Director will vest each year that such person serves as a Director
of the Corporation may acquire the Corporation's Common Stock authorized
hereunder and amount vested annually amounting to 200,000 of the Corporation's
Common Stock. A Director may only earn such right to purchase the Common Stock
for any year that he serves and in the event of his termination as a Director,
the amount vested during his tenure as a Director shall remain vested but any
further amounts allocated hereunder and not vested shall be terminated. The
price per share under this allocation shall be two cents ($.02)."
Dated this 27th day of March, 1997 by the undersigned, the duly acting
Secretary of the Corporation.
/s/ M. Gary Banwart
-------------------------
M. Gary Banwart
1
INDEPENDENT AUDITOR'S CONSENT
-----------------------------
Renaissance Designer Gallery Products, Inc.
We consent to the use of our report included herein and to the references to our
firm under the headings "Selected Financial and Operating Data" and "Experts" in
the prospectus.
/s/ Berberich Trahan & Co., P.A.
BERBEICH TRAHAN & CO., P.A.
Topeka, Kansas
June 5, 1998
