<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-SB
GENERAL FORM FOR THE REGISTRATION OF SMALL
BUSINESS ISSUERS
Under Section 12 (b) or (g) of the Securities Exchange Act of
1934
MYRIAD INTERNATIONAL, INC.
(Name of Small Business Issuer in Its Charter)
DELAWARE 137-17176-7
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
4330 LA JOLLA VILLAGE DR
SAN DIEGO, CA 92122
(Address of Principal Executive Offices) (Zip Code)
ISSUER'S TELEPHONE NUMBER: (619) 677-6580 FAX (610) 677-6564
SECURITIES TO BE REGISTERED UNDER SECTION 12(b) OF THE EXCHANGE ACT:
NONE
SECURITIES TO BE REGISTERED UNDER SECTION 12(g) OF THE EXCHANGE ACT:
TITLE OF EACH CLASS
CLASS A COMMON STOCK, PAR VALUE $0.01
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TABLE OF CONTENTS
PART I
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ITEM 1. DESCRIPTION OF BUSINESS.................................................... 1
(a) Business Development...................................................................... 1
(b) Business of Myriad
(1) Current Operations............................................................ 3
PRINCIPAL PRODUCTS AND SERVICES....................................... 4
MARKETING............................................................. 4
GOVERNMENT REGULATION................................................. 5
PRINCIPAL CUSTOMERS - PENDING TRANSACTIONS ........................... 6
SOURCES AND AVAILABILITY OF RAW MATERIALS.............................. 7
COMPETITIVE CONDITIONS................................................. 8
PATENTS, TRADEMARKS, LICENSES, FRANCHISES, CONCESSIONS,
ROYALTY AGREEMENTS AND LABOR CONTRACTS..................... 8
SEASONALITY AND INFLATION.............................................. 8
EMPLOYEES ........................................................... 8
(2) Discontinued Operations........................................................ 8
(3) Recent Developments............................................................ 9
ITEM 2. PLAN OF OPERATION................................................................. 11
ITEM 3. DESCRIPTION OF PROPERTY........................................................... 13
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT.................................................................... 14
ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND
CONTROL PERSONS .................................................................. 18
Business Experience of Directors and Executive Officers
of Myriad................................................ 18
Key Employees......................................................... 21
ITEM 6. EXECUTIVE COMPENSATION............................................................ 23
</TABLE>
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ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.................................... 28
ITEM 8. DESCRIPTION OF SECURITIES......................................................... 30
Capital Stock......................................................... 30
Class A Common Stock.................................................. 30
Class B Common Stock.................................................. 30
Preferred Stock....................................................... 31
PART II
ITEM 1. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.......................... 33
ITEM 2. LEGAL PROCEEDINGS................................................................. 34
ITEM 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE.......................................................... 35
ITEM 4. RECENT SALES OF UNREGISTERED SECURITIES........................................... 35
ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS......................................... 38
PART F/S. FINANCIAL STATEMENTS.............................................................. 39
PART III
ITEM 1. INDEX TO EXHIBITS................................................................. 40
</TABLE>
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PART I
ITEM 1. DESCRIPTION OF BUSINESS
(A) BUSINESS DEVELOPMENT
Myriad International, Inc. ("Myriad" or the "Company") was incorporated in 1992
in Delaware as Myriad Industries, Inc. In July 1992, Myriad merged with a
Colorado corporation, Pharmaco-Medico Systems Corp. ("Pharmaco"), which had been
incorporated ten years earlier in 1982. In conjunction with the merger Pharmaco
changed its name to Myriad Industries, Inc., and the shareholders of Pharmaco
received Myriad Class A Common Stock in a 50-to-1 reverse stock split in which
one share of Myriad stock was issued for each 50 shares of Pharmaco.
In August 1994 Myriad discontinued its then principal business of providing ship
repair services to the United States Navy, through its wholly-owned subsidiary
A&E Industries, Inc. ("A&E) and placed A&E in Chapter 11 bankruptcy. Two other
wholly-owned subsidiaries, Advanced Test Systems, Inc. ("ATS") and Remedquip
International, Inc. "(Remedquip") also ceased operations at approximately this
time. (See: "ITEM 1. DESCRIPTION OF BUSINESS - (b) Business of Myriad -
DISCONTINUED OPERATIONS ")
In September 1994 the Company formed Pacific Marine and Steel, Inc., a Delaware
corporation ("PMSI"). The Company was issued 5,000,000 shares of PMSI common
stock. From September 1994 to June 1995 an additional 1,874,302 shares of PMSI
common stock were issued for cash and as consideration for services rendered and
loan fees, including shares issued to affiliates of the Company, including
certain officers and directors. (See: "ITEM 7. CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS").
From September 1994 to approximately January 1996 the Company, through PMSI,
attempted to start a small ship design and manufacturing business. In January
1966 it decided to abandon this effort and focus the Company's resources and
efforts primarily on its Construction Division and Peruvian fish meal joint
venture.
In December 1995 the Company acquired all of the minority outstanding shares of
PMSI common stock through the issuance of 1,774,302 shares of its Class A Common
Stock pursuant to a one-for-one exchange offer. (See: "ITEM 7. CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS").
In November 1994 the Company began exploring opportunities in Peru and other
parts of the world to construct affordable housing and the entry into the
profitable and growing fishmeal business in Peru.
To reflect the Company's global marketing efforts, Myriad's name was changed to
Myriad International, Inc. at the end of December 1995.
At the same time the Company increased its authorized capital stock to
105,000,000 shares, consisting of 75,000,000 shares of Class A Common Stock,
10,000,000 shares of Class B Common Stock and 20,000,000 shares of Preferred
Stock. As of July 31, 1996 there were approximately 24,000,000 shares of Class A
Common Stock outstanding, 3,701,250 shares of Class B Common Stock outstanding
and
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783,667 shares of Preferred Stock outstanding.
In approximately November 1994 PMSI began engaging in the business of designing
and building light-gauged steel framed buildings and other building systems for
the rapidly expanding global marketplace, including homes (single and multiple
dwellings), schools, office buildings, hotels, casinos, resorts, hospitals,
clinics, and other public buildings.
In September 1995 PMSI formed a wholly-owned subsidiary in Peru, Pacific Marine
and Steel, Inc. - Peru S.A. ("PMSI-Peru"), which is operating as a construction
company to build housing and other building projects in Peru.
PMSI-Peru has commenced work on building the initial 1,000 home phase of a 3,000
unit housing project in Piura, Peru. PMSI-Peru has constructed model homes and
a sales office and has started accepting applications for purchase of the homes
and financing. Final permitting of the site is expected by September 30,1996
with site improvements and construction of the first 200 homes to commence
upon issuance of such permits.
PMSI and PMSI-Peru are currently negotiating several additional construction
projects for single family dwellings, hotels, office centers, casinos, and
resorts in Peru and other countries in South America.
Myriad has also formed, in June 1995, a wholly-owned subsidiary in Peru, Myriad
International, Inc. - Peru S.A. ("Myriad-Peru"), to provide financing for homes
and other projects to be built in Peru (including projects to be built by
PMSI-Peru), and to be a financial partner in a number of joint ventures in Peru
for hotels, casinos, office centers and resorts.
Myriad is the majority owner of a Peruvian company, Corporacin Peruana Americana
de Pesca S.A. ("CPA") which was formed in April 1995. CPA was formed for the
purpose of acquiring several operating fish meal plants and fish oil refineries
in Peru and to purchase currently licensed commercial fishing vessels to supply
CPA's fishmeal plant operations.
Myriad is a publicly held corporation with approximately 300 shareholders of
record as of July 31, 1996. The Company's Class A Common Stock is traded on the
NASD Electronic Bulletin Board under the symbol "MRAD."
Myriad's administrative office is located at 4330 La Jolla Village Drive, Suite
310, San Diego, CA 92122. Its telephone number is (619) 677-6580 (FAX
(619)677-6564.
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(b) BUSINESS OF MYRIAD
(1) CURRENT OPERATIONS
The following chart shows the corporate structure of Myriad and its operating
subsidiaries. (This chart does not include Myriad's ownership of several
subsidiaries which have ceased operations and are in various stages of
dissolution and/or liquidation. (See: "(b) - Business of Myriad - Discontinued
Operations").
=========================================================
MYRIAD
INTERNATIONAL, INC.
DELAWARE
=========================================================
------------------------------------------------------
Pacific Marine and Steel
Inc.
Delaware
("PMSI")
(100%)
------------------------------------------------------
------------------------------------------------------
PACIFIC MARINE AND STEEL,
INC. - PERU. S.A.
("PMSI-PERU")
(100%)
------------------------------------------------------
-------------------------------------------------------
MYRIAD INDUSTRIES, INC.
PERU S.A.
("MYRIAD-PERU")
(100%)
-------------------------------------------------------
-------------------------------------------------------
CORPORACION PERUANA
AMERICANA DE PESCAS.A.
("CPA")
(51%)
-------------------------------------------------------
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PRINCIPAL PRODUCTS AND SERVICES
Myriad Industries Inc. is the parent company to its subsidiary, Pacific Marine
and Steel Inc. (PMSI). PMSI was established in September 1994 and is presently
100% owned by Myriad. From its inception until approximately November 1995 PMSI
attempted, through its now discontinued Marine Division, to develop a business
of constructing small-to-medium-sized vessels for commercial shipping
industries. In December 1995 the Company's decided to deploy its limited capital
in the furtherance of its Construction Division and Peruvian fish meal joint
venture. (See: "(b) Business of Myriad - Discontinued Operations").
The Construction Division of PMSI is developing the business of designing and
building steel framed buildings and other building systems for the rapidly
expanding global marketplace, including homes (single and multiple dwellings),
schools, office buildings, hotels, hospitals and clinics, and other public
buildings.
PMSI is also headquartered in San Diego, California,
PMSI has incorporated a wholly-owned subsidiary in Peru, Pacific Marine and
Steel Inc. - Peru S.A. ("PMSI-Peru"). PMSI-Peru is a construction company which
builds the housing and other building projects in Peru and other parts of the
world, outside of the United States.
Myriad has incorporated a wholly-owned subsidiary in Peru, Myriad Industries
Inc. - Peru S.A. ("Myriad-Peru"). Myriad-Peru plans to provide financing for
homes and other buildings to be built by PMSI-Peru, and also plans be a partner
in a number of joint ventures in Peru for the operation of hotels, casinos,
office centers, resorts, etc.
MARKETING
The marketing strategy for Myriad is based on searching the global marketplace
for business opportunities that provide a high rate of return on investment.
Areas that provide this scenario include construction of steel-framed homes,
hotels, resorts and casino operations, fishing, and fishmeal plants. Myriad is
targeting emerging third world countries where business opportunities abound.
The Myriad strategy is to place itself in a majority ownership position through
partnerships, joint ventures, or acquisitions in project areas such as those
identified above. In the area of housing construction, PMSI will build the homes
for a profit, and Myriad will arrange construction and mortgage financing,
eventually selling some of the mortgages to the secondary mortgage market. For
hotels, resorts, and casinos, PMSI will build them for a profit, and Myriad will
hold the majority ownership in the projects.
With Myriad forming strategic partnerships, joint ventures, and acquisitions,
and PMSI providing the construction to support these ventures, a combination has
been formed that is finding excellent business opportunities in places like
Peru, Argentina, and other South American countries. Myriad and PMSI have
specifically concentrated on establishing a broad business base in the rapidly
growing economy of Peru, initially in the areas of residential construction and
fish meal.
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GOVERNMENT REGULATION
Since the Company's activities are presently concentrated in construction and
the acquisition of fish meal and fish oil plants in Peru, it is the laws and
regulations of Peru which have the greatest impact on its current business
operations. As Myriad starts to do business in other countries the laws and
regulations of such countries will also impact Myriad's operations. As a general
rule Myriad does not plan to operate in countries which have restrictions on the
removal of capital and/or profits from their jurisdictions; nor does it plan to
operate in countries which prohibit conducting transactions in U.S. currency.
PERU
The following description of Peruvian business conditions is based on
information which has appeared in several articles which have been published in
the last two years. A list of these articles is contained at the end of this
discussion.
In the past few years, more than 30 years of state intervention in the Peruvian
economy has been reversed through the initiation of far-reaching structural
reforms designed to implement a free market policy. Two features of this process
of special interest to foreign investors are the privatization of state-owned
companies and the enactment of laws designed to encourage foreign investment by
removing discriminatory barriers. The result has been that Peru recorded one of
the world's highest rates of economic growth in 1994 and is expected to show
impressive results in 1995 and beyond.
The liberalization of Peru's economy has dramatically increased the
participation of both foreign investors and foreign companies in the Peruvian
economy. Peru has no laws specifically limiting the ability of foreign companies
to engage in merger and acquisition activity, nor any restrictions on the
removal of capital. Foreign investment in Peru more than doubled during 1994
from approximately $2.3 billion to $5.8 billion.
The privatization of state-owned companies is central to the government's
attempt to bring significant new capital into the Peruvian economy and reduce
state participation. The Privatization Law, enacted in September 1991, seeks to
promote both national and foreign private investment in state- owned
enterprises. Overseeing the privatization process in the Private Investment
Promotion Commission (COPRI), which makes decisions regarding which state-owned
companies are to be privatized and the manner by which the process is to be
accomplished. Once COPRI chooses a state company to be sold, the sale takes
place either by stock offerings by public auction.
The present administration under President Fujimori, who was re-elected to a
five year term in the fall of 1995, has enacted numerous statutes that have
liberalized and eliminated most government controls over the economy. In
addition, the Foreign Investment Law, enacted in 1991, grants equal treatment to
both foreign and domestic investors.
Foreign investors and the companies in which they invest may participate in
virtually all sectors of the Peruvian economy, including basic utilities, and
100% foreign ownership is permitted. Foreigners are not required to seek
governmental approval to carry out their investments or to transfer abroad
capital or profits. Industrial and intellectual property rights of foreigners
are treated no differently than those of domestic investors.
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While there can be no assurance that the present favorable business climate will
continue in Peru the continuing high level of foreign investment is indicative
of the confidence of the international business community in the Peruvian
economy and political system. AN RE-INTRODUCTION OF LAWS LIMITING FOREIGN
INVESTMENT OR RESTRICTING THE REMOVAL OF PROFITS OR CAPITAL WOULD HAVE A
MATERIAL ADVERSE EFFECT ON THE COMPANY.
List of Articles used a source material for above discussion:
1. Foreign Flows by Jorge Munoz Ziches, 64 Latin Finance pp48-49.
2. The Pot is Boiling in Peru. Business Week/May 8, 1995
3. Peru Back From the Brink by Salley Bowen, U.S. Latin Trade/April 1995
4. Peru, 63 Latin Finance pp. 31-33.
PRINCIPAL CUSTOMERS - PENDING TRANSACTIONS
EL CHIPE, PIURA, PERU
PMSI-Peru has commenced work on building the initial 1,000 home phase of a 3,000
home housing project in Piura, Peru. In August 1996 PMSI-Peru completed the
construction of two model homes and a sales office and started accepting
applications for purchase of the homes and financing. This project enjoys the
support of the national and local government and the business community. The
Grand Opening Ceremonies, held on August 9, 1996, were attended by over 700
guests, including the Mayor of Piura, and senior representatives from the
military, educational and business communities. This event was widely reported
in the national and local press, as well as television. Final permitting of the
site is expected by September 30, 1996 with site improvements and construction
of the first 200 homes to commence upon issuance of such permits.
This project is being operated pursuant to a joint venture with a Peruvian land
owner. Under the terms of the joint venture the land owner is contributing the
land to the project at a fixed price per house and PMSI-Peru in responsible for
all costs and operations of the venture and retains all profits of the venture.
This project is the first of its kind in Peru. The Company is providing
"American Style" homes, built with quality materials and workmanship, at a price
competitive with traditional Peruvian construction materials and methods. In
addition, the Company's construction methods will enable it to build
approximately 200 houses per month, after a four month start-up period, a rate
of construction virtually unattainable using traditional Peruvian materials and
methods.
PERUVIAN FISH MEAL JOINT VENTURE
Myriad is the majority owner of a fishmeal company in Peru known as Corporacion
Peruana Americana de Pesca S.A. ("CPA"). Fishmeal is a high protein product used
worldwide as a base for a number of agricultural products, and is produced by
repeatedly vacuum drying tons of anchovies, sardines and mackerel which are then
ground into an odorless meal.
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For the last several years the Peruvian government has been privatizing the fish
meal industry by selling the government owned fish meal and fish oil refineries
to the private sector. CPA has been formed for the purpose of acquiring one or
more fish meal plants and/or fish meal refineries through the privatization
process.
In order to successfully enter this business the Company must arrange financing
in the range of ten to thirty million dollars. While it is in the process of
negotiating such financing with several sources there can be no assurance that
such negotiations will be successful, or that the Company will be able to
acquire any fish meal plants or fish oil refineries from the Peruvian
government.
Peru supplies approximately 50% of the world fishmeal production. Typically the
entire output from each year's fishing season is presold by all of the
approximately 117 Peruvian fishmeal plants. The Peruvian government regulates
the number of fishing days per year to prevent over harvesting.
SOURCES AND AVAILABILITY OF RAW MATERIALS
HOUSING
The raw materials for the Company's light gaged steel housing business are wood,
steel, aluminum, copper, metal and plastic fasteners, metal and plastic pipe,
coatings, roofing and siding materials and concrete. All of these raw materials
are available from numerous sources of supply both in the United States and from
foreign suppliers. The company is not dependent on any single source of supply
for any of its raw materials.
FISHMEAL - PERU
For a discussion of the raw materials used in the Company's planned fishmeal
operations see: - Peruvian Fish Meal Joint Ventures."
COMPETITIVE CONDITIONS
HOUSING - PERU
PMSI-Peru is thus far the only company, domestic or foreign that is building
light-gaged steel framed housing in Peru. While it is likely that competition
will develop in this market if the Company is successful in the projects it is
presently engaged in, the Company believes that the demand for affordable
residential housing is so strong that the growth of the Company's business will
be limited solely to its ability to obtain working capital.
FISHMEAL - PERU
In the past several years the worldwide demand for Peruvian fishmeal is at a
level such that all of the fish meal and fish oil plants operating in Peru sell
their entire annual outputs at prices enabling highly profitable operations. In
addition, the Peruvian government has restricted the building of any new plants.
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PATENTS, TRADEMARKS, LICENSES, FRANCHISES, CONCESSIONS, ROYALTY AGREEMENTS AND
LABOR CONTRACTS
The Company has no material patents, trademarks, licenses, franchises,
concessions, royalty agreements or labor contracts.
SEASONALITY AND INFLATION
Management believes that neither seasonality nor inflation are material factors
in the operation of the its businesses at this time.
EMPLOYEES
At August 31, 1966 approximately twenty (20) persons are employed by the
Company, all of which are full time employees. Of these ten (10) are located at
the Company's San Diego headquarters and five (10) are located at its Lima, Peru
facility. This number does not include approximately five (5) full-time sales
and administrative employees of the Piura, Peru housing venture. The number of
employees in Piura will increase when construction commences on the ventures
initial 1,000 homes.
(2) DISCONTINUED OPERATIONS
For the year ended July 31, 1994 the Company conducted all operating activities
through its wholly-owned subsidiaries: A&E Industries, Inc. ("A&E"), Advanced
Test Systems, Inc ("ATS") and Remedquip International Manufacturing, Inc.
("RIM), (collectively the "Former Subsidiaries"). A&E provided marine
fabrication and repair services for both governmental and commercial companies,
usually as the prime contractor. ATS provided marine electrical subcontractor
services to A&E and other ship repair prime contractors. Ship repair and marine
electrical work performed for the U.S. Navy were the dominant source of revenues
for A&E and ATS. RIM was a fabricator of environmental remediation equipment.
Upon the completion of a major ship repair contract, A&E filed for protection
under Chapter 11 of the U.S. Bankruptcy Code on August 2, 1994 as result of a
substantial loss at July 31, 1994, a deterioration of working capital and
pending or threatened vendor collection actions. The United States Bankruptcy
Court for the Southern District of California, upon the request of A&E,
converted the action to a Chapter 7 liquidation on November 30, 1994 and
appointed a trustee. Although ATS and RIM have not filed for protection under
the U.S. Bankruptcy Code, they are insolvent and ceased all operations
concurrently with A&E. Accordingly, the financial position and results of
operations of the Former Subsidiaries have been reported as discontinued
operations as of and for the periods ended July 31, 1995 and 1994.
At the time of the discontinuance of the operations of the Former Subsidiaries,
the liabilities of the Former Subsidiaries exceeded the investment of Myriad in
these companies. Included with discontinued operations in 1994 is a gain of
$3,454,000 arising from the exclusion of liabilities in excess of Myriad's
investment. This gain is net of an accrual of $4,302,000 by Myriad to provide
for anticipated expenses related to the discontinued operations. These expenses
related to obligations of the Former Subsidiaries for which Myriad was legally
obligated, as well as obligations related to Former Subsidiary payroll tax
obligations. Upon the bankruptcy of A&E and the discontinuance of ATS and RIM,
the Former Subsidiaries had unpaid payroll taxes due to the Internal Revenue
Service ("IRS") and the State of California Employment Development Department
("EDD") aggregating $ 1,136,000 and $ 403,000,
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respectively. Although Myriad is not directly responsible for the liabilities of
the Former Subsidiaries, it is required to indemnify officers of Myriad for
expenses incurred during the performance of their duties. As part of their
Myriad corporate responsibilities, officers of Myriad also served as officers of
the Former Subsidiaries. As officers of the Former Subsidiaries they have been
personally assessed for an amount equal to 100% of the unpaid taxes by the IRS
and the EDD. Myriad has accrued an amount equal to this assessment to properly
reflect its responsibility to indemnify the officers. To the extent that these
taxes are paid from the proceeds of the liquidation of A&E, the assessment
against the officers by the IRS and the EDD will be reduced accordingly with a
dollar-for-dollar reduction in Myriad's indemnification obligations.
(3) RECENT DEVELOPMENTS
ACQUISITION OF PMSI MINORITY INTEREST
In September 1994 the Company formed Pacific Marine and Steel, Inc., a Delaware
corporation ("PMSI"). The Company was issued 5,000,000 shares of PMSI common
stock. From September 1994 to June 1995 an additional 1,874,302 shares of PMSI
common stock were issued for cash and as consideration for services rendered and
loan fees, including shares issued to affiliates of the Company, including
certain officers and directors. (See: "ITEM 7. CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS").
From September 1994 to approximately January 1996 the Company, through PMSI,
attempted to start a small ship design and manufacturing business. In January
1966 it decided to abandon this effort and focus the Company's resources and
efforts primarily on its Construction Division and Peruvian fish meal joint
venture.
In April 1995 PMSI entered into an operating lease for a facility in Tongue
Point, Oregon, which was to be the site of PMSI's small ship design and
manufacturing division. This lease required a monthly payment of $25,000 in
addition to taxes, maintenance and other costs. In February 1996 the lessor
terminated the lease for non-payment. PMSI is obligated to pay the lessor past
due rent ($95,000) and other payments ("$10,000) of approximately $105,000 for
October 15, 1995 through February 14, 1996 plus interest of $1,184 per month
from March 15, 1996 until the past due rent of $95,000 has been paid.
In December 1995 the Company acquired all of the minority outstanding shares of
PMSI common stock through the issuance of 1,774,302 shares of its Class A Common
Stock pursuant to a one-for-one exchange offer. (See: "ITEM 7. CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS").
A corporation affiliated with Mr. Jerome O. Crawford, Chairman and Chief
Executive Officer of the Company received 500,000 shares of Class A Common Stock
as part of this transaction, on the same basis as all other shareholders of PMSI
who participated in the exchange offer.
David W. Pequet, who was at the time a director and Chairman of the Compensation
Committee of the Board of Directors, received 150,000 shares of Class A Common
Stock as part of this transaction, on the same basis as all other shareholders
of PMSI.
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AMENDMENT OF CERTIFICATE OF INCORPORATION
In December 1995, Myriad amended its Certificate of Incorporation to: (i) change
the name of the Company to "Myriad International, Inc.", (ii) increase the
authorized number of shares to 105,000,000, consisting of 75,000 shares of Class
A Common Stock, 20,000,000 shares of Class B Common Stock and 10,000,000 shares
of Preferred Stock; and (iii) clarify certain provisions relating to the voting
rights of the Class B Common Stock.
OFFICER EMPLOYMENT AGREEMENTS
In January 1996 the Company entered into employment agreements with Jerome O.
Crawford (Chairman & CEO), Victor L. Parks (Senior Vice President & Secretary),
Sharon A. Snyder (Senior Vice President & Treasurer and Michael Nalu (Vice
President). The employment agreements for Messrs. Crawford and Parks and Ms.
Snyder replaced employment agreements between each of these individuals and the
Company dated August 18, 1994. See: "ITEM 6. EXECUTIVE COMPENSATION."
CONVERSION INDUSTRIES INC. LOAN AGREEMENT
On June 26, 1996 the Company entered into an agreement with Conversion
Industries Inc. ("Conversion") regarding repayment of their loan of $6,295,000
and accrued interest of $1,921,000. In consideration of (i) a cash payment of
$750,000, and (ii) the assignment of all rights, title and interest that Myriad
and ATS have in the A&E bankruptcy, Conversion has agreed to release Myriad of
all liability with respect to the loan agreement and all amounts owing
thereunder. Pursuant to an amendment to the agreement dated August 14, 1996 the
cash payment of $750,000 is payable in three $250,000 installments due on or
before September 3, 1996, October 1, 1996 and November 1, 1996. Conversion is
required to submit the agreement to Bankruptcy Court for approval as soon as
reasonably practical. The forgiveness of debt of $7,466,000 will be treated as
income for financial statement purposes and as additional paid in capital for
tax purposes. As of September 20, 1996 the Company has not made the initial
payment of $250,000.
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ITEM 2. PLAN OF OPERATIONS
OVERVIEW
Myriad International, Inc. ("Myriad" or the "Company") was incorporated in 1992
in Delaware as Myriad Industries, Inc. In July 1992, Myriad merged with a
Colorado corporation, Pharmaco-Medico Systems Corp. ("Pharmaco"), which had been
incorporated ten years earlier in 1982. In conjunction with the merger Pharmaco
changed its name to Myriad Industries, Inc., and the shareholders of Pharmaco
received Myriad Class A Common Stock in a 50-to-1 reverse stock split in which
one share of Myriad stock was issued for each 50 shares of Pharmaco.
In August 1994 Myriad discontinued its then principal business of providing ship
repair services to the United States Navy, through its wholly-owned subsidiary
A&E Industries, Inc. ("A&E) and placed A&E in Chapter 11 bankruptcy. Two other
wholly-owned subsidiaries, Advanced Test Systems, Inc. ("ATS") and Remedquip
International, Inc. "(Remedquip") also ceased operations at approximately this
time.
PMSI
In September 1994 the Company formed Pacific Marine and Steel, Inc., a Delaware
corporation ("PMSI") to start a small ship design and manufacturing business.
In November 1994 PMSI began exploring opportunities in Peru, and other parts of
the world, to construct affordable housing and other buildings.
In approximately November 1994 PMSI began engaging in the business of designing
and building light-gauged steel framed buildings and other building systems for
the rapidly expanding global marketplace, including homes (single and multiple
dwellings), schools, office buildings, hotels, casinos, resorts, hospitals,
clinics, and other public buildings.
In January 1966 the Company decided to abandon PMSI's small ship design and
manufacturing business and to focus its resources and efforts primarily on
PMSI's Construction Division and the Company's Peruvian fish meal joint venture.
PMSI-Peru
In September 1995 PMSI formed a wholly-owned subsidiary in Peru, Pacific Marine
and Steel, Inc.-Peru S.A. ("PMSI-Peru"), which is operating as a construction
company to build housing and other building projects in Peru.
PMSI-Peru has commenced work on building the initial 1,000 home phase of a 3,000
unit housing project in Piura, Peru. PMSI-Peru has constructed model homes and a
sales office and has started accepting applications for purchase of the homes
and financing. Final permitting of the site is expected by September 30, 1996
with site improvements and construction of the first 200 homes to commence upon
issuance of such permits.
PMSI and PMSI-Peru are currently negotiating several additional construction
projects for single family dwellings, hotels, office centers, casinos, and
resorts in Peru and other countries in South America.
Myriad-Peru
In June 1995 Myriad formed a wholly-owned subsidiary in Peru, Myriad
International, Inc. - Peru S.A. ("Myriad- Peru"), to provide financing for homes
and other projects to be built in Peru (including projects to be built by PMSI-
Peru), and to be a financial partner in a number of joint ventures in Peru for
hotels, casinos, office centers and resorts.
11
<PAGE> 15
CPA
Myriad is the majority owner of a Peruvian company, Corporacin Peruana Americana
de Pesca S.A. ("CPA") which was formed in April 1995. CPA was formed for the
purpose of acquiring several operating fish meal plants and fish oil refineries
in Peru and to purchase currently licensed commercial fishing vessels to supply
CPA's fishmeal plant operations.
OPERATIONS FOR THE NEXT 12 MONTHS
During the next 12 months the Company plans to complete the initial 1000 homes
in the Piura, Peru housing venture and to commence several additional housing
projects in Peru and other countries in South America. The Company also plans to
submit bids to the Peruvian government for the acquisition of one or more fish
meal plants and fish meal refineries through CPA.
The Company also plans on substantially reducing its liabilities by funding the
agreement with Conversion Industries Inc. ("Conversion") for the elimination of
the Company's approximately $8,000,000 of debt (principal and interest) to
Conversion through the payment of $750,000.
The Company estimates that it will need approximately $3,000,000 of additional
equity and/or debt to provide for its working capital needs over approximately
the next 6 months until cash flow from the Piura housing venture reaches a level
to both sustain the Company's overhead and provide working capital for
additional construction projects. The Company plans on raising substantially all
of this amount through the private placement of equity securities or a public
offering and construction loans from one or more Peruvian banks.
CPA will require a combination of debt and equity of at least $7,000,000 to have
a realistic chance of entering the Peruvian fish meal and fish oil market
through the acquisition of at least one fish meal plant and one fish oil
refinery. The Company is presently negotiating with several groups to obtain
this financing.
EMPLOYEES
The Company presently has approximately 20 full-time employees, 10 at its San
Diego, CA headquarters location and 10 in Peru. Over the next twelve months the
Company expects to add 3 to 5 additional employees in San Diego, CA to provide
accounting and administrative support; and to add several additional employees
in Peru, also to provide accounting and administrative support. In addition, as
the Company's construction projects commence, laborers and supervisors will be
hired depending on the size of the project. The Company estimates that it will
hire approximately 250 employees at the Piura housing venture over the next
twelve months.
LIQUIDITY
As indicated in the accompanying financial statements, the Company recognized
net losses of $3,115,000 in 1995 and $7,116,000 in 1994 and had a net
stockholder's deficit of $12,445,000 at July 31, 1995. In addition, as discussed
in Note 2 - Discontinued Operations, the Company recorded a loss on discontinued
operations of $8,186,000 during 1994. This amount includes a $4,032,000
($3,513,000 at July 31, 1995) provision for the payment of certain obligations
of the Former Subsidiaries for which the Company is legally obligated, either
directly as a result of guarantees or indirectly as a result of its
indemnification obligations to officers of the Company who served as officers of
one or more of the former subsidiaries. The loss on discontinued operations and
the expenses of starting up certain new businesses has resulted in the Company
having cash shortages and delayed payment of certain obligations when they
became due, including certain federal and state payroll tax obligations of both
the Company and the Former Subsidiaries. This cash shortage has in turn resulted
in several creditors having obtained judgments against the Company and/or its
officers for non-payment of trade payables or loans made to the Company. The
Company is in the process of renegotiating the timing of certain payments.
Management believes that cash generated from its new businesses will be adequate
to meet the Company's debt and operating requirements commencing during the
second quarter of fiscal 1997; and that it will be current on all of its
obligations by the end of fiscal 1997. Until such time the Company continues to
rely on funds provided by the sale of equity securities and short-term loans to
meet its operating needs and to retire past due obligations.
12
<PAGE> 16
ITEM 3. DESCRIPTION OF PROPERTY
The Company leases two principal properties: its corporate and administrative
headquarters in San Diego, California and an administrative office in Lima,
Peru.
The administrative offices in San Diego, California house corporate functions
including accounting, billing and marketing. The site occupies approximately
11,000 square feet and is currently occupied on a month-to-month basis at a
rental of $5,025 per month.
The administrative offices in Lima, Peru occupies APPROXIMATELY 12,000 square
feet and is leased for $2,300 per month . The current lease expires in May 1997.
PMSI-Peru also owns, through its Piura housing joint venture, two model homes
and a sales office in Piura, Peru. These facilities were constructed in July
1996 are located approximately five miles from the site on which the initial
1,000 houses of the project will be constructed. See: "DESCRIPTION OF BUSINESS -
(b) Business of Myriad - PRINCIPAL CUSTOMERS - PENDING TRANSACTIONS."
13
<PAGE> 17
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The issued and outstanding stock of the Company at July 31, 1996 consisted of
approximately 24,000,000 shares of Class A Common Stock, each entitled to 1/10
of a vote, and 4,701,250 shares of Class B Common Stock, each entitled to one
vote. The only difference in the rights of the holders of Class A Common Stock
and the rights of holders of Class B Common Stock is that the former class has
one tenth of a vote per share and the latter class has one vote per share. The
Class B Common Stock is convertible at any time into shares of Class A Common
Stock on a share for share basis at the option of the holders thereof.
As of July 33, 1996 no person was known to the Company to own beneficially more
than 5% of the Class A Common Stock or Class B Common Stock of the Company
except as set forth below.
CLASS B COMMON STOCK
The following table sets forth certain information with respect to Myriad Class
B Common Stock as of June 30, 1996 beneficially owned directly by Mr. Jerome O.
Crawford, Chairman of the Board of Directors and Chief Executive Officer of the
Company, and Mr. Victor L. Parks, Senior Vice President and Secretary and a
director of the Company. Messrs. Crawford and Parks are the only holders of
Class B Common Stock. For information with respect to the shares of Class A
Common Stock beneficially owned by Messrs. Crawford and Parks see: " Class A
Common Stock."
<TABLE>
<CAPTION>
Name and Address Amount and Nature of
of Beneficial Owner Ownership Percent of Class
------------------- -------------------- ----------------
<S> <C> <C>
Jerome O. Crawford 4,000,000 (1)(2) 85 (3)(4)
4330 La Jolla Village Drive
San Diego, CA 92122
Victor L. Parks 701,250 (5) 15 (4)(6)
4330 La Jolla Village Drive
San Diego, CA 92122
</TABLE>
- -------------------------
(1) Includes 1,000,000 shares which Mr. Crawford currently has the right to
purchase pursuant to the exercise of stock options.
(2) See: "Item. 6 - EXECUTIVE COMPENSATION" for a discussion regarding
restrictions on transfer of Class B Shares and the right of the Company to
repurchase up to 2,025,000 of Mr. Crawford's Class B shares under certain
circumstances.
14
<PAGE> 18
(3) Based upon the Class A Common Stock and Class B Common Stock of the Company
outstanding at July 31, 1996, Mr. Crawford controlled approximately 57% of
the voting power of all voting securities of the Company. This percentage
could increase to approximately 64% if Mr. Crawford exercised all the
currently exercisable options to purchase shares of the Class A Common
Stock and Class B Common Stock of the Company held by him and Mr. Parks did
not exercise any of his options.
(4) Based upon the Class A Common Stock and Class B Common Stock of the Company
outstanding at July 31, 1996, Mr. Crawford and Mr. Parks controlled
approximately 71% of the voting power of all voting securities of the
Company. This percentage could increase to approximately 76% if Mr.
Crawford and Mr. Parks exercised all the presently outstanding options to
purchase shares of the Class A Common Stock and Class B Common Stock of the
Company held by them.
(5) See: "ITEM 6" - EXECUTIVE COMPENSATION" for a discussion regarding
restrictions on transfer of Class B Shares and the right of the Company to
repurchase Mr. Park's Class B shares under certain circumstances.
(6) Based upon the Class A Common Stock and Class B Common Stock of the Company
outstanding at July 31, 1996, Mr. Parks controlled approximately 14% of
the voting power of all voting securities of the Company. This percentage
could increase by approximately 1/2 percentage point if Mr. Parks exercised
all the presently outstanding options to purchase shares of the Class A
Common Stock of the Company held by him and Mr. Crawford did not exercise
any of his options.
15
<PAGE> 19
CLASS A COMMON STOCK
The following table sets forth certain information with respect to the ownership
of Myriad Class A Common Stock as of July 31, 1996, by (i) those persons known
by the Company to be the beneficial owners of more than 5% of the total number
of outstanding shares, (ii) each director and (iii) all executive officers named
in the Summary Compensation Table, and (iv) all officers and directors of the
Company as a group:
<TABLE>
<CAPTION>
Name and Address of Amount and Nature of
Beneficial Owner Ownership (1) Percent of Class (2)
------------------- -------------------- --------------------
<S> <C> <C>
Jerome O. Crawford (3)(4) 2,275,000 9%
4330 La Jolla Village Drive
San Diego, CA 92122
Victor L. Parks (5)(6) 998,750 4%
4330 La Jolla Village Drive
San Diego, CA 92122
Sharon Snyder (7) 541,500 2%
4330 La Jolla Village Drive
San Diego, CA 92122
James L. Walton (8) 45,000 ----
717 Market Street
Tacoma, WA 98402
J. Thomas Wood (9) 45,000 ----
1809 - 7th Avenue
Seattle, WA 98101
Thomas M. Closz (10) 2,038,931 8%
222 East Pearson
Chicago, IL 60611
Conversion Industries Inc. (11 1,615,000 6%
234 E. Colorado Blvd.
Pasadena, CA 91101
Dr. Michael Goldstein (12)(13) 7,543,705 33%
4993 Sky Street
San Diego, CA 92110
David W. Pequet (14)(15) 2,775,586 11%
105 E. First Street
Hinsdale, IL 60521
Fred Pickard (16) 2,770,000 10%
200 East 9th Court
Hinsdale, IL 60521
All Directors and Officers
as a Group (6) persons 4,110,250 16 %
</TABLE>
16
<PAGE> 20
- -------------
(1) Ownership is direct unless otherwise stated.
(2) Based on 23,834,133 shares of Class A Common Stock outstanding at July 31,
1996.
(3) Excludes 395,500 shares owned by a corporation controlled by Mr. Crawford's
mother and adult daughter Mr. Crawford disclaims any beneficial interest in
these shares.
(4) Includes 1,275,000 shares issuable upon exercise of stock options
exercisable within 60 days of July 31, 1996.
(5) Excludes 225,000 shares beneficially owned by Mr. Park's adult children.
Mr. Parks disclaims beneficial interest in these shares.
(6) Includes 325,000 shares issuable upon exercise of stock options exercisable
within 60 days of July 31, 1996.
(7) Includes 201,500 shares of Class A Common Stock issuable upon exercise of
stock options exercisable within 60 days of July 31, 1996.
(8) Includes 45,000 shares issuable upon exercise of stock options exercisable
within 60 days of July 31, 1996.
(9) Includes 45,000 shares issuable upon exercise of stock options exercisable
within 60 days of July 31, 1996.
(10) Includes 2,038,931 shares of Class A Common Stock issuable upon exercise of
currently exercisable stock purchase warrants. See: "CERTAIN RELATIONSHIPS
AND RELATED TRANSACTIONS."
(11) Includes 1,215,000 shares of Class A Common Stock issuable upon exercise of
currently exercisable stock purchase warrants.
(12) Includes 3,005,298 shares beneficially owned by a trust of which Dr.
Goldstein is the sole beneficiary and trustee. See: "CERTAIN RELATIONSHIPS
AND RELATED TRANSACTIONS."
(13) Includes 3,278,202 shares issuable upon exercise of currently exercisable
stock purchase warrants.
(14) Includes 65,672 shares of Class A Common Stock owned by a partnership of
which Mr. Pequet is managing partner..
(15) Includes 2,354,914 shares of Class A Common Stock issuable upon exercise of
currently exercisable options and stock purchase warrants including 10,000
warrants owned by a partnership of which Mr. Pequet is managing partner.
(16) Includes 2,740,000 shares of Class A Common Stock issuable upon exercise of
currently exercisable stock purchase warrants.
17
<PAGE> 21
ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
<TABLE>
<CAPTION>
Affiliated
With
Company Positions Company
Name Age and Offices Since
---- --- ----------------- ----------
<S> <C> <C> <C>
Jerome O. Crawford (2) 49 Chief Executive Officer and Director 1992
Sharon A. Snyder 45 Senior Vice President and Treasurer 1992
Victor L. Parks (2) 51 Senior Vice President, Secretary
and Director 1992
Michael Nalu 58 Vice President 1995
James L. Walton (1)(3) 57 Director 1994
L. Thomas Wood (1)(3) 53 Director 1994
</TABLE>
- -----------------------------
(1) Class A Director
(2) Class B Director
(3) Member of Compensation Committee
BUSINESS EXPERIENCE OF DIRECTORS AND EXECUTIVE OFFICERS OF MYRIAD
JEROME O. CRAWFORD. Mr. Crawford presently serves as Chairman of the Company's
Board of Directors and Chief Executive Officer. Mr. Crawford became a Vice
President and Director of the Company in July 1992 and was elected as President
and Chief Executive Officer in September 1992. He was elected Chairman and Chief
Executive Officer in January 1996. Mr. Crawford joined A&E in April 1992, after
having acted as a consultant to A&E for approximately six months.
Prior to joining the Company Mr. Crawford was a Senior Vice President with
Northwest Funding Group Inc. ("Northwest") from April 1990 until May, 1991.
Northwest is a company which arranges financing, venture capital and lease
financing for small and medium-sized companies. Prior to joining Northwest, Mr.
Crawford was President of Support Services Inc. ("Support"), a company engaged
in the facility management business from 1985 to March 1990.
Mr. Crawford obtained a degree in Political Science from the University of Puget
Sound, Tacoma, Washington, in 1969, and obtained his Juris Doctorate from the
University of Washington in 1973.
Mr. Crawford has served as an officer and director of Myriad's wholly-owned
subsidiary, A&E Industries, Inc. ("A&E") since April 1992. In August 1994 A&E
filed for protection under Chapter 11 of the United States Bankruptcy Code. In
November 1994 the Chapter 11 Bankruptcy was converted to a Chapter 7 Bankruptcy
at the request of A&E.. A&E has been in the process of liquidation under the
auspices of a trustee since such date. (See: "ITEM 1. DESCRIPTION OF BUSINESS -
(b) Business of Myriad - (3) Discontinued Operations").
18
<PAGE> 22
VICTOR L. PARKS. Mr. Parks currently serves as Senior Vice President and
Secretary of Myriad and is a member of the Company's Board of Directors. In
addition, Mr. Parks is presently the acting President of PMSI. Mr. Parks joined
A&E in April 1992, after having acted as a consultant to A&E for approximately
six months. He served as a director and Chief Financial Officer of the Company
from July 1992 to September 1992 and as a Senior Vice President from July 1992.
He was reelected as a director in August 1994; and as Secretary in January 1996.
From May 1986 to October 1991 Mr. Parks has served as President of Delta Pacific
Mortgage Company, and from October 1972 to May 1986 held Assistant Vice
President positions with The Bank of California and California First Bank. Mr.
Parks received his Bachelor of Arts degree in Business Administration from the
University of Nebraska in 1971.
Mr. Parks has been officer and director of Myriad's wholly-owned subsidiary, A&E
Industries, Inc. ("A&E) since April 1992. In August 1994 A&E filed for
protection under Chapter 11 of the United States Bankruptcy Code. In November
1994 the Chapter 11 Bankruptcy was converted to a Chapter 7 Bankruptcy at the
request of A&E.. A&E has been in the process of liquidation under the auspices
of a trustee since such date. (See: "ITEM 1. DESCRIPTION OF BUSINESS - (b)
Business of Myriad - (3) Discontinued Operations").
MICHAEL NALU. Mr. Nalu joined the Company in June 1995 as President of PMSI's
Construction Division. He was elected as a Vice President of the Company in
January 1996. Mr. Nalu has a lengthy background as an Architect (NCARB
Certified) and a General Building Contractor, including serving as a
Commissioner with the State of California regarding California Architects
Licensing Examination, and serving as a consultant with the U.S. Department of
Energy on energy performance of buildings, and a consultant with The American
Institute of Architects regarding energy conservation in mobile homes. Mr. Nalu
has also served as a lecturer with Lawrence Technological Institute, Detroit,
Michigan concerning building construction systems. Mr. Nalu is a member of The
American Institute of Architects, the National Council of Architectural
Registration Boards (NCARB), and is a registered architect in California,
Michigan, Arizona and Florida. Mr. Nalu holds a Bachelor of Architecture from
Oklahoma State University (1964), and a Master of Architecture from University
of Detroit (1975).
SHARON A. SNYDER. Ms. Snyder joined Myriad in July 1992 as Controller. She was
elected as Chief Financial Officer in October 1993; and in January 1996 she was
elected to her present position as Senior Vice President and Treasurer.
From September 1991 to July 1992 Ms. Snyder provided financial consulting
services during start-up phases to Indian gaming ventures. From October 1989
until September 1991 Ms. Snyder was controller of Sycuan Gaming Center in El
Cajon, California. She reported to the General Manager and was responsible for
the accounting, financial reporting, budgeting, purchasing, payroll and cash
operations of an Indian Casino with annual revenues of $40,000,000.
From December 1984 to September 1989, Ms. Snyder was Vice President, CFO and
Controller of Bank of Southern California in San Diego, California. She reported
to the Senior Vice President and had responsibility over all aspects of
accounting, budgeting, financial reporting, purchasing and payroll. From
September 1982 until December 1984 Ms. Snyder was a senior
19
<PAGE> 23
auditor with Peat Marwick Mitchell & Co. in San Diego, California. Ms. Snyder
received a bachelors of science degree in accounting from San Diego State
University (cum laude) in 1982.
Ms. Snyder has been an officer of Myriad's wholly-owned subsidiary, A&E
Industries, Inc. ("A&E) since July 1992. In August 1994 A&E filed for protection
under Chapter 11 of the United States Bankruptcy Code. In November 1994 the
Chapter 11 Bankruptcy was converted to a Chapter 7 Bankruptcy at the request of
A&E.. A&E has been in the process of liquidation under the auspices of a trustee
since such date. (See: "ITEM 1. DESCRIPTION OF BUSINESS - (b) Business of Myriad
- - (3) Discontinued Operations").
JAMES L. WALTON. Mr. Walton was elected as a director in January 1996. He also
served as a member of the PMSI Board of Directors from April 1995 until June 20,
1996.
Since January 1990, Mr. Walton has served as Deputy City Manager for the City of
Tacoma, Washington where he is responsible for the City's Finance, Human
Resources, and General Services Departments, as well as strategic planning and
budget development. The City has an annual general fund budget of $237 million,
and employs over 1,800 full time employees. Prior to this position, Mr. Walton
served as Assistant City Manager and Director of Human Rights from August 1979
to January 1990. Mr. Walton has more than twenty-five years of public
administration experience and public service. He has worked for the State of
Washington as State Coordinator of the Model Cities program, and presently
serves as a director of the Economic Development Board for Tacoma/Pierce County,
and a trustee of the Board of the Anne Wright School, a private institution. Mr.
Walton was the first African-American to serve as President of Sunrise Rotary
Club where he is a Paul Harris Fellow. He is also a sustaining member of the
Tacoma Urban League and a member of the Washington City/County Management
Association. Mr. Walton is a graduate and senior Fellow of the American
Leadership Forum and received the Tacoma/Pierce County Municipal League's
Distinguished Citizen Award. He attended the University of Puget Sound and the
City University in Tacoma, majoring in Public Administration.
J. THOMAS WOOD. Mr. Wood was elected as a director in January 1996. He also
served as a member of the PMSI Board of Directors from April 1995 until June 26,
1996.
In June 1988 Mr. Wood founded Harper-Wood and Associates ("HWA") with James
Harper, now deceased. Previously to HWA, Mr. Wood spent seventeen years working
in all levels and areas of the commercial banking industry. For eleven years, he
was a commercial lending executive, handling financing for companies in the $10
million to $50 million annual sales range. For three years he was responsible
for marketing and administering loans, commercial paper and capital funding for
Fortune 500 companies in the New York area. For two and one half years Mr. Wood
was the Assistant Director of Credit for Weyerhaeuser Corporation. He was
responsible for internal reporting and management of regional credit managers
located throughout the continental United States and Europe and for
administering $690 millions in accounts receivable.
Mr. Wood is a member of the City of Seattle Employee Pension Fund Investment
Advisory Committee, serves on the Eastern Washington University Alumni Board and
is a member of Rotary International. Mr. Wood is a 1966 graduate of Eastern
Washington University with a Bachelor of Arts degree in Economics and Political
Science. He also attended Pacific Coast Banking School from 1978 to 1980.
20
<PAGE> 24
KEY EMPLOYEES
MYRIAD
DAVID A. RAPAPORT (54). Mr. Rapaport joined the Company as Corporate Counsel in
June 1996 after having acted as a consultant since February 1995. Mr. Rapaport
is a graduate of the St. John's University School of Law (1966). He has over 25
years of experience in corporate legal matters and capital formation. From
August 1990 to December 1996 he served as the Executive Vice President and
General Counsel of Conversion Industries Inc., a publicly traded merchant
banking company. From January 1975 to July 1990 he was an executive officer of
National Patent Development Corporation, a diversified company with interests in
growth technologies, technical training and engineering support, medical and
health care and consumer products distribution. Prior to joining National Patent
Mr. Rapaport practiced corporate law in New York City. Mr. Rapaport served as a
director of Myriad from approximately September 1992 to October 1994.
MELISSA LUCKEY (30). Ms. Luckey is presently serving as Assistant to the
Chairman and Manager of Human Resources for Myriad. Ms. Luckey joined the
Company in 1994 as Personnel Manager. In addition to assisting the Chairman on a
range of special projects, Ms. Luckey is responsible for all of Myriad's human
resource programs, including recruiting all prospective employees. Prior to
joining the Company, Ms. Luckey served as Human Resource Manager and/or
Administrator with National Staff Network, in Van Nuys, California from 1992 to
1994. and with Heliz View Heal Care Center, in El Cajon, California from 1991 to
1992. Ms. Luckey also served as a executive recruiter with Old Town Staffing
Agency in San Diego, California from 1983 to 1991. Ms. Luckey holds a Bachelor
of Science degree in Business Administration from San Diego State University,
with a minor in Human Resources Management.
PMSI
FELEKE TEKA (46). Mr. Teka joined PMSI as its Chief Financial Officer in
December 1994. Prior to joining PMSI Mr. Teka was Chief Financial Officer with
Security Environmental Services, Inc. from September 1994 to October 1994 and
Vice President of Finance from March 1991 to October 1992, where he was
responsible for all financial reporting and accounting matters. From October
1992 to September 1994 Mr. Teka served as Senior Audit Manager for Macias &
Company, Certified Public Accountants where he planned, coordinated and
completed all phases of audits. Prior to this position, from November 1980 to
March 1991, Mr. Teka was Senior Audit Manager with Deloitte & Touche. Mr. Teka
has extensive experience with both public and private companies, including
initial and secondary public offerings. Mr. Teka holds a Bachelor of Arts degree
in Economics from California State University at Long Beach and has a Bachelor
of Arts degree in Accounting and a Masters degree in Public Finance from
California State University at Dominguez Hills.
SILVANA BERNASCONI (36). Ms. Bernasconi joined the Company in May 1995 as
General Manager and a director of Myriad-Peru and as General Manager and a
director of PMSI-Peru. Prior to joining the Company from May 1993 to April 1995
Ms. Bernasconi was Executive Managing Director of Peruvian Mediterranean
Trading, where she was responsible for administration and operations of this
international trading firm. During this same period Ms. Bernasconi served as
Marketing and Sales Manager for a private Italian hospital in Lima, Peru.
21
<PAGE> 25
Ms. Bernasconi's business and management experience includes serving as
Administrative and Commercial Manager from January 1992 to April 1993 for
Inversiones Ferno S.A., an international business and consulting firm.
ARMANDO CARBONEL (42). Mr. Carbonel is the General Financial Officer of
Myriad-Peru. Prior to joining the Company in December 1995 Mr. Carbonel held the
position of Executive Director of the Instituto de Desarrollo Empresarial, a
financial educational institution from January 1994 to November 1995. Mr.
Carbonel served as General Financial Officer of EXTRU FILM, a plastic
manufacturing company and Textil Group Lanificio del Peru from January 1993 to
December 1993. Mr. Carbonel holds degrees from the National University of San
Marcos, the Peruvian Administrative Institute and the OEA-ADEX Peruvian
Institute.
PERCY COLFER (48) - Mr. Colfer joined the Company in January 1996 as
Administrative and Commercial Manager of the Company's Peruvian fishmeal joint
venture, CPA. Mr. Colfer has over 20 years of experience in commercial and
financial management. Prior to his present position, Mr. Colfer served from
November 1993 to November 1995 as an Executive Consultant at Solariz S.A
Customhouse Agency. He also served from March 1991 to October 1993 as Manager
Director of AGECE, a company dedicated to the assessment of commercial trade.
Before coming to these positions, Mr. Colfer was the General Manager of Agencia
Maritime Tauro S.A. from August 1992 to June 1993. He also held the position of
Commercial Manager at Sindicato Pesquiro del Peru S.A., a Peruvian fishmeal
plant in the private sector from February 1985 to March 1991. Mr. Colfer has
taken Business Administration courses at ESAN School for Graduates and has
graduated in Accounting Management (1974) . He has also graduated as Computer
Programmer in IBM del Peru (1969), and holds a Bachelor Degree in Business
Administration from The Federico Villarreal National University (1971)
GERALD A. DELGADILLO (45). Mr. Delgadillo joined PMSI-Peru in November 1995 as
Construction Manager. Mr. Delgadillo has more than 23 years of experience in all
phases of the construction industry. He formerly was employed by E.F. Brady, a
construction company, from May 1982 to April 1992. From June 1992 to September
1994 Mr. Delgadillo was a Regional Sales Manager for Steeler, Inc. a steel
supply company; and from September 1994 to November 1995 he operated his own
consulting business.
KIRK JONES (41). Mr Jones is presently serving as Project Manager for PMSI-Peru.
Prior to joining the Company in November 1995 Mr. Jones was employed as the
Operations Manager and Sales Representative of Steeler, Inc. a steel supply
company from January 1994 to December 1995. He served as Project Coordinator,
Foreman and Journeyman at E.F. Brady and has more than 20 years of experience in
all phases of the construction industry.
22
<PAGE> 26
ITEM 6. EXECUTIVE COMPENSATION
The following table sets forth the total remuneration of the Chief Executive
Officer and the Company's two Senior Vice Presidents.
<TABLE>
<CAPTION>
========================================================================================================================
SUMMARY COMPENSATION TABLE
- ------------------------------------------------------------------------------------------------------------------------
Long Term Compensation
Annual Compensation
-------------------------------------------------
Awards Pay-
outs
- ------------------------------------------------------------------------------------------------------------------------
(a) (b) (c) (d) (e) (f) (g) (h) (i)
Other All
Name Annual Restricted LTIP Other
and Compen- Stock Options/ Pay- Compen-
Principal Year Salary Bonus sation Award(s) SARs outs sation
Position f/y/e ($) ($) ($) (#) ($) ($)
July 31 ($)
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Jerome Crawford 1994 100,000 ---- ---- ---- ---- ---- 36,000
President (1)
1995 100,000 ---- ---- 130,000 ---- ---- 37,000
Victor Parks 1994 65,000 ---- ---- ---- ---- ---- ----
Senior Vice
President (2) (3) 1995 75,000 ---- ---- 65,000 ---- ---- ----
Sharon Snyder 1994 77,000 --- --- --- ---- --- ---
Chief Financial
Officer (4) 1995 85,000 --- --- 20,000 ---- --- ---
========================================================================================================================
</TABLE>
(1) Effective January 1, 1996, the Company entered into an employment agreement
with Jerome O. Crawford ("1996 Agreement") pursuant to which Mr. Crawford
became Chairman and Chief Executive Officer of the Company for the five
year period ending on December 31, 2000. The 1996 Agreement replaced the
employment agreement between the Company and Mr. Crawford dated September
1, 1992, as amended on August 18, 1994 (the "1992 Agreement") pursuant to
which Mr. Crawford served as President and Chief Executive Officer of the
Company.
The 1996 Agreement provides for annual compensation of $250,000 with annual
increases to be determined by the board of directors. The increase in
annual compensation from $100,000 in the 1992 Agreement will not take
effect until the board of directors determines that the Company "has
adequate cash flow" to pay the increased amount. The 1996 Agreement also
provides for an annual bonus to be determined by the Company's board of
directors based on profitability, a $2000 per month housing and commuter
allowance, and a $2,000,000 life insurance policy with the beneficiary to
be designated by Mr. Crawford.
The 1996 Agreement grants Mr. Crawford 1,000,000 shares of the Company's
Class A Common Stock, which will vest on March 31, 1996, and an award of
2,000,000 shares of the Company's Class B Common Stock, 1,500,000 shares of
which are subject to repurchase by the Company at nominal cost in equal
annual installments of 500,000 shares between December 31, 1996 and
December 31, 1998 in the event the 1996 Agreement is wrongfully terminated
by Mr. Crawford or terminated for cause by the Company. In addition
350,000 shares of Class B Common Stock awarded to Mr. Crawford under the
1992 Agreement is subject
23
<PAGE> 27
to repurchase at a nominal cost on the same basis as under the 1996
Agreement at the rate of 175,000 shares per year between August 18, 1997
and August 18, 1998.
The 1996 Agreement provides that all shares of Class B Common Stock held by
Mr. Crawford shall not be sold, assigned, hypothecated, or otherwise
encumbered or transferred during the lifetime of Mr. Crawford except to his
spouse, children or grandchildren or to another registered holder of Class
B Common Stock and that the shares of Class B Common Stock held by Mr.
Crawford shall not be converted into shares of Class A Common Stock except
by Mr. Crawford or a permitted transferee. At January 31, 1996 the only
holders of Class B Common Stock were Mr. Crawford and Mr. Parks.
The 1996 Agreement grants to Mr. Crawford an option to purchase 2,500,000
shares of Class B Common Stock at a price of $0.25 per share for a five
year period. The option vests 1,000,000 shares immediately with the balance
vesting in equal annual installments of 375,000 from January 1, 1997 to
January 1, 2000.
(2) Mr. Parks has not received payment of $38,000 of the compensation payable
to him for the fiscal year ended July 31, 1995.
(3) Effective January 1, 1996, the Company entered into an employment agreement
with Victor L. Parks ("1996 Agreement") pursuant to which Mr. Park's will
serve as Senior Vice President for the five year period ending on December
31, 2000. The 1996 Agreement replaced the employment agreement between the
Company and Mr. Crawford dated August 18, 1994 (the"1994 Agreement")
pursuant to which Mr. Parks served as Senior Vice President.
The 1996 Agreement provides for annual compensation of $125,000 with annual
increases to be determined by the board of directors. The increase in
annual compensation from $75,000 in the 1994 Agreement will not take effect
until the board of directors determines that the Company "has adequate cash
flow" to pay the increased amount. The 1996 Agreement also provides for a
one-time signing bonus of $20,000 and an annual bonus to be determined by
the Company's board of directors based on profitability.
The 1996 Agreement grants Mr. Parks 500,000 shares of the Company's Class A
Common Stock, which vests immediately and an award of 600,000 shares of the
Company's Class B Common Stock, 450,000 shares of which are subject to
repurchase by the Company at nominal cost in equal annual installments of
150,000 shares between December 31, 1996 and December 31, 1998 in the event
the 1996 Agreement is wrongfully terminated by Mr. Parks or terminated for
cause by the Company. In addition 251,250 shares of Class B Common Stock
awarded to Mr. Parks under the 1994 Agreement is subject to repurchase at a
nominal cost on the same basis as under the 1996 Agreement at the rate of
83,750 shares per year between August 18, 1996 and August 18, 1998.
The 1996 Agreement provides that all shares of Class B Common Stock held by
Mr. Parks shall not be sold, assigned, hypothecated, or otherwise
encumbered or transferred during the lifetime of Mr. Parks except to his
spouse, children or grandchildren or to another registered holder of Class
B Common Stock and that the shares of Class B Common Stock held by Mr.
Parks shall not be converted into shares of Class A Common Stock except by
Mr. Parks or a permitted transferee. At January 31, 1996 the only holders
of Class B Common Stock were Mr. Parks and Mr. Crawford.
The 1996 Agreement grants to Mr. Parks an option to purchase 1,000,000
shares of Class A Common Stock at a price of $0.25 per share for a five
year period. The option vests 200,000 shares immediately with the balance
vesting in equal annual installments of 200,000 shares from January 1, 1997
to January 1, 2000.
(4) Effective January 1, 1996, the Company entered into an employment agreement
with Sharon Snyder ("1996 Agreement") pursuant to which Ms. Snyder will
serve as Senior Vice President and Treasurer for the five year period
ending on December 31, 2000. The 1996 Agreement replaced the employment
agreement between the Company and Ms. Snyder dated August 18, 1994 (the
"1994 Agreement") pursuant to which Ms. Snyder served as Senior Vice
President and Chief Financial Officer.
24
<PAGE> 28
The 1996 Agreement provides for annual compensation of $100,000 with annual
increases to be determined by the board of directors. The increase in
annual compensation from $85,000 in the 1992 Agreement will not take effect
until the board of directors determines that the Company "has adequate cash
flow" to pay the increased amount. The 1996 Agreement also provides for a
one-time signing bonus of $20,000 and an annual bonus to be determined by
the Company's board of directors based on profitability.
The 1996 Agreement grants Ms. Snyder 200,000 shares of the Company's Class
A Common Stock, which vests immediately and an option to purchase 500,000
shares of Class A Common Stock at a price of $0.25 per share for a five
year period. The option vests 100,000 shares immediately with the balance
vesting in equal annual installments of 100,000 shares from January 1, 1997
to January 1, 2000.
(5) Effective January 1, 1996, the Company entered into an employment agreement
with Michael Nalu ("1996 Agreement") pursuant to which Mr. Nalu will serve
as a Vice President for the five year period ending on December 31, 2000.
The 1996 Agreement provides for annual compensation of $100,000 with annual
increases to be determined by the board of directors.
The 1996 Agreement grants Mr. Nalu 150,000 shares of the Company's Class A
Common Stock, which vests immediately and an option to purchase 300,000
shares of Class A Common Stock at a price of $0.25 per share for a five
year period. The option vests 100,000 shares immediately with the balance
vesting in equal annual installments of 50,000 shares from January 1, 1997
to January 1, 2000.
25
<PAGE> 29
OPTIONS GRANTED DURING F/Y/E JULY 31, 1995
<TABLE>
<CAPTION>
Percent of Exercise
Total Options Price Expiration
Name Options Granted Granted ($/share) Date
---- --------------- ------------- --------- ----------
<S> <C> <C> <C> <C>
Jerome Crawford 200,000 37.4 $0.13 August 18, 2004
Victor Parks 125,000 23.3 $0.13 August 18, 2004
Sharon Snyder 50,000 9.3 $0.13 August 18, 2004
</TABLE>
- --------------------------------------------------------------------------------
All of the above options were granted on August 18, 1994 and vested 1/3
immediately, 1/3 on January 18, 1995 and 1/3 on August 18, 1995.
26
<PAGE> 30
Option Exercises and Year-End Values Table -The table set forth below contains
information with respect to (i) the unexercised options to purchase shares of
Class A Common Stock granted to the executive officers named in the Summary
Compensation Table and held by them at July 31, 1995, (ii) the aggregate number
of shares acquired by such executive officers upon the exercise during fiscal
1995 of options to purchase shares of Class A common stock (none during fiscal
1995) and (iii) the value of unexercised in-the-money options at July 31. 1995.
There were no options to purchase shares of Class B common stock granted or
outstanding at July 31, 1995.
AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
Number of
Securities Underlying Value of Unexercised
Unexercised Options at In-the-Money Options at
Shares July 31, 1995 July 31, 1995(1)
Acquired on Value ---------------------------------- ------------------------------
Name Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
---- ----------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Jerome Crawford ---- ---- 275,000 ---- $24,000 ----
Victor Parks ---- ---- 125,000 ---- $15,000 ----
Sharon Snyder ---- ---- 101,500 8,500 $ 6,000 ----
</TABLE>
- --------------------------------------------------------------------------------
(1) Based on the closing bid price of the Class A Common Stock on the NASD
Electronic Bulletin Board on July 31, 1995 of $0.25 per share.
27
<PAGE> 31
COMPENSATION OF DIRECTORS
Non-employee directors receive $500 for each Board meeting they attend in
person, plus reimbursement for reasonable out-of-pocket expenses. Employee
directors do not receive any additional compensation for Board or committee
service.
EMPLOYEE BENEFIT PLANS
The Company provides medical and/or dental coverage for executives and certain
salaried employees, on an individual-by-individual basis and not pursuant to a
plan or formula based on position or salary.
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
(a) Employment and Consulting agreements.
The Company has entered into employment agreements with Messrs. Crawford, Parks
and Nalu and Ms. Snyder. See: "ITEM 6. EXECUTIVE COMPENSATION" for a description
of the material terms of these agreements.
(b) Transaction with Michael Goldstein.
During February and March of 1995 a Dr. Michael Goldstein, who is an independent
investor and who has no business, family or personal relationship with the
Company or any of its officers or directors, purchased, in a series of
arms-length transactions, 2,100,000 shares of Class A Common Stock at an average
price of $0.24 per share. Dr. Goldstein received warrants to purchase 2,000,000
shares of Class A Common Stock as additional consideration for his stock
purchases. The warrants had an average exercise price of $0.49 and were
exercisable for two years from the date of issuance.
During the period of May through July of 1995 Dr. Goldstein made short-term
loans to the Company in the principal amount of $650,000. These loans were
negotiated at arms-length and carried interest at 8 1/2 %. $500,000 of this
amount was repaid during this same period through the exercise of 710,204
warrants at an exercise price of $0.49. In addition, Dr. Goldstein received
10,094 shares of Class A stock valued at $5,007 as payment for interest for
loans outstanding during this period. Dr. Goldstein also received 20,000 shares
of Class A Stock valued at $10,000 and 1,000,000 warrants as consideration for
making and converting loans during this period. Dr. Goldstein also received a 1%
profit participation from one of the Company's joint-venture partners in the
Company's Peruvian fish meal venture as consideration for making a $150,000
loan, a 5% profit participation in the Company's Peruvian finance subsidiary and
a 5% profit participation in the Company's Egyptian hotel/casino project for
making a $500,000 loan, all during this period.
Between August 1995 and July 1996 Dr. Goldstein made additional short-term loans
to the Company in the principal amount of $116,500. As of July 31, 1996 $102,500
had been repaid, leaving a balance of $7,500. Of this amount $80,000 was repaid
through proceeds made available by the conversion to 160,000 shares of Class A
Common Stock at $0.50 per share. During this
28
<PAGE> 32
period Dr. Goldstein extended the payment dates of these loans on numerous
occasions. In consideration of the making of the loans and the granting of such
extensions Dr. Goldstein received 57,147 shares of Class A Common Stock valued
at $30,182 and 472,147 warrants.
As additional consideration for the loans and loan extensions Dr. Goldstein
received profit participation of from 1/2% to 20% in various projects and joint
ventures of the Company. In January 1996 the shareholder and the Company entered
into an agreement whereby Dr. Goldstein gave up or substantially reduced such
profit-participation in return for 1,500,000 warrants, 500,000 exercisable for
$1.00 for two years, 500,000 exercisable at $1.50 for two years and 500,000
exercisable for $2.00 for two years. Dr. Goldstein retained a 5% profit
participation in each of the Company's South Africa and Venezuela housing
projects, neither of which are under active development at this time, in
addition to the 5% profit participation in the Company's Peruvian finance
subsidiary.
(c) Transactions with David Pequet
During the fiscal year ending July 31, 1995 David Pequet (who also served as a
Director from December 1, 1995 through April 4, 1996) and a partnership of which
he is the managing partner received an aggregate of 150,000 shares of Class A
Common Stock, valued at $37,500 and 243,000 common stock purchase warrants
exercisable at prices ranging from $0.13 to $0.49, having a nominal value, for
financial and investor relations consulting services. During the fiscal year
ended July 31, 1996 Mr. Pequet and his related partnership were issued an
additional 65,672 shares of common stock, valued at $32,836; 664,467 common
stock purchase warrants exercisable for two years at $0.45; and 364,436 common
stock purchase warrants exercisable for five years at $1.50; having a nominal
value, for financial and investor relations consulting services. Mr. Pequet also
received 150,000 shares of common stock through the PMSI exchange offer
discussed in "ITEM 1. DESCRIPTION OF BUSINESS - (b) Business of Myriad - (3)
Recent Developments."
(d) Transactions with Thomas Closz.
During the fiscal year ended July 31, 1996 Thomas Closz, a shareholder of the
Company, received 2,038,931 common stock purchase warrants exercisable for two
years at a price of $0.55, having a nominal value, for financial consulting
services.
(f) Transactions with Multiple Enterprises and Investments, Inc. ("MEI")
During the fiscal year ended July 31, 1995 MEI, a corporation owned by members
of the immediate family of Jerome O. Crawford, the Chairman of the Board of
Directors and Chief Executive Officer of the Company, was issued 500,000 shares
of PMSI valued at $5,000 for making a $30,000 loan to PMSI. This loan provided
the initial start-up funds for PMSI. In January 1996 these shares were exchanged
for an equal number of shares of the Company's common stock as discussed in
"ITEM 1. DESCRIPTION OF BUSINESS - (b) Business of Myriad - (3) Recent
Developments."
29
<PAGE> 33
(g) Indemnification of Certain Officers and Directors
For a discussion of the Company's liability to indemnify certain officers and
directors for their personal liability arising out of the discontinuance of the
businesses of A&E, ATS and RIM see: "ITEM 1. DESCRIPTION OF BUSINESS - (b)
Business of Myriad - (2) Discontinued Operations"
ITEM 8. DESCRIPTION OF SECURITIES
CAPITAL STOCK
The authorized capital stock of the Company consists of 105,000,000 shares,
consisting of (i) 75,000,000 shares of Class A Common Stock, $0.01 par value;
(ii) 10,000,000 shares of Class B Common Stock, $0.01 par value; and (iii)
20,000,000 shares of Preferred Stock, $0.01 par value.
CLASS A COMMON STOCK
The Class A Common Stock and Class B Common Stock are equal in all respects
except that the Class A Common Stock has 1/10 vote per share (as compared to one
vote per share for the Class B Common Stock) and the Holders of the Class A
Common Stock are entitled to elect 25% of the members of the Company's Board of
Directors and shall have exclusive authority to remove such Class A Directors
(as compared to the right of the holders of Class B Common Stock to elect and
remove 75% of the Company's Board of Directors. Such holders are not entitled to
vote cumulatively for the election of directors. Holders of Class A Common Stock
have no redemption, conversion, preemptive or other subscription rights. In the
event of the liquidation, dissolution or winding up of the Company, holders of
Class A Common Stock are entitled to share ratably in all of the assets of the
Company remaining, if any, after satisfaction of the debts and liabilities of
the Company and the preferential rights of the holders of the Series 1 and
Series 2 Preferred Stock and any other series of Preferred Stock then
outstanding. The outstanding shares of Class A Common Stock are, validly issued,
fully paid and non-assessable.
Holders of Class A Common Stock are entitled to receive dividends when and as
declared by the Board of Directors of the Company out of funds legally available
therefor only after payment of, or provision for, full dividends (on a
cumulative basis, if applicable) on all outstanding shares of Series 1 Preferred
Stock and any other series of Preferred Stock. The Company has not paid any
dividends since its inception and does not anticipate paying such dividends in
the foreseeable future.
CLASS B COMMON STOCK
Holders of Class B Common Stock have one vote for each share owned (as compared
to 1/10 of a vote for each share of Class A Common Stock). Holders of the Class
B Common Stock are also entitled to elect 75% of the members of the Company's
Board of Directors and shall have exclusive authority to remove such Class B
Directors. Such holders are not entitled to vote
30
<PAGE> 34
cumulatively for the election of directors. Holders of Class B Common Stock have
no redemption, preemptive or other subscription rights. Holder of Class B Common
Stock may convert their shareholdings into an equal number of shares of Class A
Common Stock. In the event of the liquidation, dissolution or winding up of the
Company, holders of Class B Common Stock are entitled to share ratably with the
holders of the Class A Common Stock in all of the assets of the Company
remaining, if any, after satisfaction of the debts and liabilities of the
Company and the preferential rights of the holders of the Series 1 and Series 2
Preferred Stock and any other series of Preferred Stock then outstanding. The
outstanding shares of Class B Common Stock are validly issued, fully paid and
non-assessable.
Holders of Class B Common Stock are entitled to receive dividends when and as
declared by the Board of Directors of the Company out of funds legally available
therefor only after payment of, or provision for, full dividends (on a
cumulative basis, if applicable) on all outstanding shares of Series 1 Preferred
Stock and any other series of Preferred Stock. The Company has not paid any
dividends since its inception and does not anticipate paying such dividends in
the foreseeable future.
Shares of Class B Common Stock are convertible, at the option of the holders,
into shares of Class A Common Stock, on a one-for-one basis.
See: "ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT"
for a discussion of the voting control of Mr. Jerome O. Crawford, Chairman and
Chief Executive Officer and Mr. Victor L. Parks, Senior Vice President and
Secretary. Mr. Crawford controls approximately 59% of the voting power of the
Company and accordingly no change in control of the Company can be effected
without his votes. In addition, since Mr. Crawford controls 85% of the Class B
Common Stock, which has the right to elect and remove 75% of the Company's Board
of Directors, Mr. Crawford may be deemed to control the Board of Directors.
See: "ITEM 6. EXECUTIVE COMPENSATION" for a discussion of certain restrictions
on the sale and/or hypothecation of the Class B Common Stock owned by Mr. Jerome
O. Crawford, Chairman and Chief Executive Officer and Mr. Victor L. Parks,
Senior Vice President and Secretary, who collectively own 100% of the issued and
outstanding shares of Class B Common Stock.
PREFERRED STOCK
The Company is authorized to issue 20,000,000 shares of Preferred Stock, $0.01
par value. The Board of Directors of the Company, without obtaining stockholder
approval, may issue shares of the Preferred Stock with such preferences, voting
rights or conversion rights which could materially adversely affect the voting
power of the holders of the Class A and Class B Common Stock. The issuance of
Preferred Stock could also decrease the amount of earnings and assets available
for distribution to holders of Class A Common Stock and Class B Common Stock. In
addition, the issuance of Preferred Stock may have the effect of delaying,
deferring or preventing a change in control of the Company.
31
<PAGE> 35
The Company has two series of Preferred Stock authorized and outstanding: Series
1 Nonvoting Cumulative Convertible Preferred Stock ("Series 1 Preferred Stock")
and Series 2 Nonvoting Cumulative Convertible Preferred Stock ("Series 2
Preferred Stock").
SERIES 1 PREFERRED STOCK. At July 31, 1995 and July 31, 1994 the Company had
outstanding 292,000 shares of Series 1 Preferred Stock. These shares were issued
in September 1992 in exchange for $1,750,000 of debt and are convertible at the
option of the holder at the rate of $6.00 per share into 292,000 shares of
Myriad Class A Common Stock. In April 1996 8,333 shares of Series 1 Preferred
Stock were converted into 208,333 shares of Class A Common Stock at an agreed
value of $50,000 and the holders of the Series 1 Preferred Stock agreed that
their right to receive a dividend would terminate 10 days following notice that
the closing price of Myriad's Class A Common Stock has been at least $6.00 or
more for 30 consecutive trading days. The Series 1 Preferred Stock bears a
coupon of 7% per annum and has a liquidation preference over the Class A and
Class B Common Stock.
The Series 1 Preferred Stock is non-voting unless there is a default in the
payment of dividends or principal. In the event of such a default (which exists
at the present time) the holders of Series 1 Preferred stock are entitled to
208,333 Class A votes.
SERIES 2 PREFERRED STOCK. The Company has outstanding 500,000 shares of Series 2
Preferred Stock. These shares were issued in January 1993 in exchange for
$500,000 of debt. These shares are convertible at the option of the holder in
1,000,000 shares of Class A Common Stock and may be redeemed at the option of
the Company for $1.00 per share, plus any accrued but unpaid dividends. The
Series 2 Preferred Stock bears a coupon of 6% per annum and has a liquidation
preference over the Class A and Class B Common Stock.
The Series 2 Preferred Stock is non-voting unless there is a default in the
payment of dividends or principal. In the event of such a default (which exists
at the present time) the holders of Series 2 Preferred stock are entitled to
1,000,000 Class A votes.
TRANSFER AGENT
The transfer agent and registrar for the Company's Class A Common Stock is:
Harris Trust Company of New York
77 Water Street
New York, NY 10005
32
<PAGE> 36
PART II
ITEM 1. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
The Common Stock of the Company is traded on the over-the-counter market under
the NASDAQ symbol MRAD. Such trading began on July 19, 1989. The following table
sets forth in United States dollars the high and low bid quotations for such
shares as reported by the NASD for the period indicated. Such bid quotations
reflect inter-dealer prices, without retail mark-up, markdown or commissions,
and do not necessarily represent actual transactions.
<TABLE>
<CAPTION>
Fiscal Year Quarter High Low
----------- ------- ---- ---
<S> <C> <C> <C>
1994 10/30/93 * *
1/30/94 3.00 0.75
4/30/94 1.75 0.75
7/31/94 0.75 0.125
1995 10/30/94 0.75 0.125
1/30/95 0.625 0.188
4/30/95 1.00 0.125
7/31/95 0.69 0.125
1996 10/30/95 0.94 0.25
1/30/96 0.88 0.25
4/30/96 0.625 0.125
7/31/96 0.375 0.25
</TABLE>
__________________________________________
* Data not available.
As of July 31, 1996 there were approximately 300 holders of record of Myriad
Industries, Inc. Class A Common Stock.
The Company has no formal policy concerning the declaration of dividends and has
never issued dividends. The payment of dividends is within the discretion of the
Board of Directors. The payment of any future dividends will be contingent upon
the Company's future earnings, if any, its financial condition and capital
requirements, general business conditions and other factors.
33
<PAGE> 37
ITEM 2. LEGAL PROCEEDINGS
The Company and/or its officers are parties to several lawsuits arising out of
the discontinuance of the businesses of its former subsidiaries, A&E, ATS and
RIM and the resulting lack of liquid. See: "ITEM 1. DESCRIPTION OF BUSINESS -
Business of Myriad - (b) Discontinued Operations." The Company has made
provision on its balance sheet at July 31, 1995 in the Reserve for Loss on
Discontinued Operations for all amounts which it believes may become due and
payable as a result of such lawsuits and is in the process of negotiating
settlements and payment terms.
ITEM 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
None.
34
<PAGE> 38
ITEM 4. RECENT SALES OF UNREGISTERED SECURITIES
The Company is a Delaware corporation with capital stock consisting of Class A
Common Stock, Class B Common Stock; Series 1 Preferred Stock and Series 2
Preferred Stock. The following table sets forth, as of July 31, 1996,
information for the past three years with respect to securities sold by the
Company which were not registered under the Securities Act of 1933, as amended
(the "Act"), the name of the underwriter, if any, or other purchasers, the
consideration received by the Company.
All of the sales listed in the below table werre exempt from registration under
the Act in that they did not involve a public offering within the meaning of
Seciton 4(2) and Regulation D, promulgated thereunder. All such sales were to
"accredited investors," officers or employees of the Company, or other persons
who had a close ongoing relationship with the Company.
<TABLE>
<CAPTION>
SECURITIES SOLD UNDERWRITER OR OTHER CONSIDERATION
--------------- PURCHASER -------------
--------------------
FISCAL YEAR ENDED JULY
31, 1994
----------------------
- -------------------------------------------------------------------------------------------------------------------
<C> <C> <C>
1 Sale of 1,090,000 shares 25 accredited investors Cash consideration of
of Class A Common Stock $1,091,000
- -------------------------------------------------------------------------------------------------------------------
2 Sale of 400,000 shares of Conversion Industries Inc. Conversion of $400,000
Class A Common Stock promissory note
- -------------------------------------------------------------------------------------------------------------------
3 Sale of 1,142,500 shares Private placement to 33 Cash consideration of
of Class A Common Stock accredited investors $1,142,500
- -------------------------------------------------------------------------------------------------------------------
FISCAL YEAR ENDED JULY
31, 1995
-----------------------
- -------------------------------------------------------------------------------------------------------------------
1 Sale of 636,203 shares of Sale to 17 accredited Cash considerations of $166,443
Class A Common Stock investors
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
35
<PAGE> 39
<TABLE>
<CAPTION>
SECURITIES SOLD UNDERWRITER OR OTHER CONSIDERATION
--------------- PURCHASER -------------
--------------------
FISCAL YEAR ENDED JULY
31,1995 (CON'T.)
----------------------
- -----------------------------------------------------------------------------------------------------------------------
<C> <C> <C>
2 Sale of 3,140,298 shares Dr. Michael Goldstein Purchase of 3,110,204 shares for
of Class A Common Stock See: "ITEM 7. CERTAIN cash consideration of $1,010,000;
RELATIONSHIPS AND 10,094 shares issued in payment of
RELATED $5,036 of interest; and 20,000
TRANSACTIONS." shares valued at $5,000 issued as a
loan fee.
- -----------------------------------------------------------------------------------------------------------------------
3 Sale of 150,000 shares of Sharon A. Snyder Shares issued pursuant to
Class A Common Stock employment agreement valued at
$19,500, the fair market value at
date of grant.
- -----------------------------------------------------------------------------------------------------------------------
4 Sale of 150,000 shares of David W. Pequet Consideration of $37,500 for
Class A Common Stock See: "ITEM 7. CERTAIN financial consulting services.
RELATIONSHIPS AND
RELATED
TRANSACTIONS."
- -----------------------------------------------------------------------------------------------------------------------
5 Sale of 250,000 shares of Issued to a note holder Payment of $125,000 loan
Class A Common Stock principal.
- -----------------------------------------------------------------------------------------------------------------------
Sale of 100,000 shares of Issued to a note holder Payment of $25,000 loan principal.
Class A Common Stock
- -----------------------------------------------------------------------------------------------------------------------
6 Sale of 520,000 shares of Issued to a law firm Payment of $116,590 legal fee.
Class A Common Stock
- -----------------------------------------------------------------------------------------------------------------------
7 Sale of 10,000 shares of Issued to 2 employees Cash consideration of $1,350.
Class A Common Stock upon exercise of stock
options
- -----------------------------------------------------------------------------------------------------------------------
8 Sale of 20,000 shares of Issued to a lender Payment of a $5,000 loan fee.
Class A Common Stock
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
36
<PAGE> 40
<TABLE>
<CAPTION>
SECURITIES SOLD UNDERWRITER OR OTHER CONSIDERATION
--------------- PURCHASER -------------
--------------------
FISCAL YEAR ENDED JULY
31, 1996
----------------------
- -----------------------------------------------------------------------------------------------------------------------
<C> <C> <C>
1 Sale of 25,000 shares of Issued to 5 employees Cash consideration of $3,250.
Class A Common Stock upon exercise of stock
options
- ------------------------------------------------------------------------------------------------------------------------------------
2 Sale of 1,749,302 shares Issued to the 19 minority Aggregate consideration of
of Class A Common Stock shareholders of PMSI. See: $187,325 consisting of 1,749,302
"ITEM 1. DESCRIPTION shares of the common stock of
OF BUSINESS - (b) PMSI.
Business of Myriad - (3)
Recent Developments.
- ------------------------------------------------------------------------------------------------------------------------------------
3 Sale of 260,891 shares of Dr. Michael Goldstein 200,000 shares issued in payment
Class A Common Stock See: "ITEM 7. CERTAIN of $100,000 in loan principal; and
RELATIONSHIPS AND 60,891 shares issued in payment of
RELATED $28,568 of fees for making and
TRANSACTIONS." extending loans.
- ------------------------------------------------------------------------------------------------------------------------------------
4 Sale of 65,672 shares of MPI Investment Payment of $32,836 consulting
Class A Common Stock Management. an affiliate of fee.
David Pequet. See: "ITEM
7. CERTAIN
RELATIONSHIPS AND
RELATED
TRANSACTIONS."
- ------------------------------------------------------------------------------------------------------------------------------------
5 Sale of 88,500 shares of Issued to a consultant Payment of $44,250 consulting
Class A Common Stock fee.
- ------------------------------------------------------------------------------------------------------------------------------------
6 Sale of 137,222 shares of Issued to a former officer Payment of $40,578 of wages.
Class A Common Stock of PMSI
- ------------------------------------------------------------------------------------------------------------------------------------
7 Sale of 222,000 shares of Issued to a note holder and Payment of $58,000 of loan and
Class A Common Stock consultant loan extension and consulting fees.
- ------------------------------------------------------------------------------------------------------------------------------------
8 Sale of 152,000 shares of Issued to a creditor Payment of $76,000 of past due
Class A Common Stock accounts payable.
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
37
<PAGE> 41
<TABLE>
<CAPTION>
SECURITIES SOLD UNDERWRITER OR OTHER CONSIDERATION
--------------- PURCHASER -------------
--------------------
FISCAL YEAR ENDED JULY
31, 1996(CON'T.)
----------------------
- -----------------------------------------------------------------------------------------------------------------------
<C> <C> <C>
9 Sale of 1,850,000 shares Issued to 4 offices Aggregate consideration of
of Class A Common Stock See: "ITEM 6. $462,500 for stock grants pursuant
EXECUTIVE to employment contracts.
COMPENSATION."
- ------------------------------------------------------------------------------------------------------------------------------------
10 Sale of 275,000 shares of Issued to a lender Consideration of $99,000 for
Class A Common Stock making of a loan and late fees.
- ------------------------------------------------------------------------------------------------------------------------------------
11 Sale of 17,500 shares of Issued to a lender Consideration of $ 6,213 for
Class A Common Stock making a loan.
- ------------------------------------------------------------------------------------------------------------------------------------
12 Sale of 250,000 shares of Issued to a consultant Payment of $ 88,750 of expenses.
Class A Common Stock
- ------------------------------------------------------------------------------------------------------------------------------------
13 Sale of 208,333 shares of Issued to the two holders Consideration of $50,000 for
Class A Common Stock of Series 1 Preferred Stock converting 8,333 shares of Series
1 Preferred Stock.
- ------------------------------------------------------------------------------------------------------------------------------------
14 Sale of 77,415 shares of Issued to a law firm Payment of $23,225 in legal fees.
Class A Common Stock
- ------------------------------------------------------------------------------------------------------------------------------------
15 Sale of 1,030,000 shares Sale to 10 existing Aggregate cash consideration of
of Class A Common Stock shareholdrs $228,500.
- ------------------------------------------------------------------------------------------------------------------------------------
16 Sale of 5,945,284 shares Sale to 46 accredited Aggregate consideration of
of Class A Common Stock investors $1,626,599.
- ------------------------------------------------------------------------------------------------------------------------------------
17 Sale of 45,000 shares of Exercise of stock option by Exercise price of $5,850 credited
Class A Common Stock former employee against salary.
====================================================================================================================================
</TABLE>
ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Company's Certificate of Incorporation provides that the liability
of the Company's directors for monetary damages shall be eliminated to
the fullest extent permissible under Delaware law. This is intended to
eliminate the personal liability of a director for monetary damages in
an action brought by or in the right of the Company for breach of a
director's fiduciary duties to the Company or its shareholders except
for liability: (1) for any breach of the director's duty of loyalty to
the Company or its stockholders; (2) for acts or omissions not in good
faith or which involve intentional misconduct or a knowing violation of
law; (3) for unlawful payment of
38
<PAGE> 42
dividends, stock purchase or redemption; and (4) for any transaction from which
the director derived an improper personal benefit.
This provision does not eliminate or limit the liability of an officer for any
act or omission as an officer, notwithstanding that the officer is also a
director or that his actions, if negligent or improper, have been ratified by
the Board of Directors.
Further, the provision has no effect on claims under federal or state securities
laws and does not affect the availability of injunctions and other equitable
remedies available to the Company's shareholders for any violation of a
director's fiduciary duty to the Company or its shareholders.
Although the validity and scope of the legislation underlying this provision
have not been interpreted to a great extent by the Delaware courts, the
provision may relieve directors of monetary liability to the Company for grossly
negligent conduct, including conduct in situations involving attempted takeovers
of the Company.
The Bylaws of the Company provide that the Company shall indemnify its officers,
directors, employees and agents to the fullest extent permissible under Delaware
law.
<TABLE>
<CAPTION>
PART F/S FINANCIAL STATEMENTS PAGE
<S> <C>
Report of Independent Auditors -
July 31, 1995 and 1994 F-1
Consolidated Balance Sheets at July 31, 1995 and 1994. F-2
Consolidated Statements of Operations for the years ended
July 31, 1995 and 1994. F-4
Consolidated Statements of Cash Flows for the years ended
July 31, 1995 and 1994. F-5
Consolidated Statements of Stockholder's Deficiency for the
years ended July 31, 1995 and 1994 F-6
Notes to Consolidated Financial Statements F-7
Condensed Consolidated Balance Sheets for the Nine Months ended
April 30, 1996 and 1995 (Unaudited) F-20
Condensed Consolidated Statements of Operations for the Nine Months
ended April 30, 1996 and 1995 (Unaudited) F-22
</TABLE>
39
<PAGE> 43
<TABLE>
<CAPTION>
PART F/S FINANCIAL STATEMENTS PAGE
<S> <C>
Condensed Consolidated Statements of Cash Flows for the Nine Months
ended April 30, 1996 and 1995 (Unaudited) F-23
Notes to Condensed Consolidated Financial Statements for the Nine
Months ended April 30, 1996 and 1995 (Unaudited) F-24
</TABLE>
PART III
ITEM 1. INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------ -----------
<S> <C>
3.1 Restated Certificate of Incorporation of the Company
3.2 By laws of the Company
10.1 1992 Stock Option Plan, as amended
10.2 Jerome O. Crawford Employment Agreement]
10.3 Victor L. Parks Employment Agreement]
10.4 Sharon A. Snyder Employment Agreement]
10.5 Michael Nalu Employment Agreement]
10.6 Agreement with Conversion Industries dated June 26, 1966 as
amended on August 14, 1966
10.7 Agreement with Dr. Michael Goldstein dated as of Janury 31,
1996
10.8 Agreement with Dr. Michael Goldstein dated as of June 28, 1995
10.9 Agreement with Dr. Michael Goldstein dated as of September 27,
1995
10.10 Stock Pledge Agreement with Fairfield Development Company
dated February 28, 1994
10.11 Joint Venture Agreement between PMSI-Peru and El Chipe S.A.
dated February 8, 1996.
21 List of Subsidiaries - See: "ITEM 1. DESCRIPTION OF
BUSIINESS - (b) Business of Myriad - (1) Current Operations
</TABLE>
40
<PAGE> 44
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized on this 20th, day of September, 1996.
MYRIAD INTERNATIONAL, INC.
BY: /s/Jerome O. Crawford
------------------------------------
Jerome O. Crawford
Chairman and Chief Executive
Officer
In accordance with the Exchange Act, this registration statement has been signed
below by the following persons on behalf of the registrant and in the capacities
and on the dates indicated.
<TABLE>
<S> <C> <C>
DATED: September 20, 1996 BY: /s/Jerome O. Crawford
------------------------------------------
Jerome O. Crawford
Chairman and Chief Executive Officer
(Principal Executive Officer and Director)
DATED: September 20, 1996 BY: /s/Victor L. Parks
------------------------------------------
Victor L. Parks
Senior Vice President
( Director)
DATED: September 20, 1996 BY: /s/Sharon A. Snyder
------------------------------------------
Sharon A. Snyder
Senior Vice President and Treasurer
(Principal Financial and Accounting
Officer)
DATED: September 20, 1996 BY: /s/James L. Walton
------------------------------------------
James L. Walton
Director
DATED: September 20, 1996 BY: /s/J. Thomas Wood
------------------------------------------
J. Thomas Wood
Director
</TABLE>
41
<PAGE> 45
REPORT OF INDEPENDENT AUDITORS
To the Board of Directors and Stockholders of
Myriad International, Inc.
We have audited the accompanying consolidated balance sheets of Myriad
International, Inc. and Subsidiaries (the "Company") as of July 31, 1995 and
1994 and the related consolidated statements of operations, stockholders'
deficiency and cash flows for the years then ended. These consolidated 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 audits 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 presentation. We believe
that our audits provide a reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly, in all
material respects, the financial position of Myriad International, Inc. and
Subsidiaries as of July 31, 1995 and 1994, and the results of their operations
and their cash flows for the years then ended in conformity with generally
accepted accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 1 and Note 3 to
the consolidated financial statements, the Company incurred a substantial loss
from operations which raises substantial doubt about its ability to continue as
a going concern. Management's plans concerning these matters are also described
in Note 3. The financial statements do not include any adjustments that might
result from the outcome of this uncertainty referred to herein and in the
preceding paragraph.
Thefeld & Associates
San Diego, California
July 19, 1996
F - 1
<PAGE> 46
MYRIAD INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
JULY 31, 1995 AND 1994
================================================================================
<TABLE>
<CAPTION>
1995 1994
======== ========
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents (Note 1) $ 4,000 $ 0
Deposits and prepaid expenses 62,000 1,000
-------- --------
Total current assets 66,000 1,000
Property, Plant and Equipment: (Note 1)
Furniture and fixtures 79,000 82,000
Computer equipment 51,000 53,000
-------- --------
130,000 135,000
Less: Accumulated depreciation 40,000 20,000
-------- --------
Net property and equipment 90,000 115,000
Other Assets:
Organization costs, net 17,000 0
Deferred compensation (Note 1) 185,000 150,000
Other 23,000 0
-------- --------
Total other assets 225,000 150,000
-------- --------
$381,000 $266,000
======== ========
</TABLE>
See accompanying notes to consolidated financial statements
F - 2
<PAGE> 47
MYRIAD INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
JULY 31, 1995 AND 1994
================================================================================
<TABLE>
<CAPTION>
1995 1994
============ ============
<S> <C> <C>
LIABILITIES
Current Liabilities:
Accounts payable $ 297,000 $ 193,000
Dividends payable 275,000 125,000
Other accrued expenses (Note 4) 5,304,000 4,610,000
Notes payable (Note 5) 6,648,000 6,160,000
------------ ------------
Total current liabilities 12,524,000 11,088,000
Minority interest in subsidiary (Note 1) 68,000 0
------------ ------------
Total liabilities 12,826,000 11,088,000
Commitments and contingencies (Note 7)
STOCKHOLDERS' DEFICIENCY (NOTES 9 AND 10):
Convertible preferred stock - $0.01 par value; 20,000,000
shares authorized:
7% Convertible Series 1 Preferred Stock, 292,000
shares issued and outstanding 3,000 3,000
6% Convertible Series 2 Preferred Stock, 500,000
shares issued and outstanding 5,000 5,000
Class A Common Stock - $0.01 par value; 75,000,000
shares authorized ; 10,682,000 and 5,423,000 shares
issued and outstanding, in 1995 and 1994, respectively 107,000 55,000
Class B Common Stock - $0.01 par value; 10,000,000
shares authorized ; 1,600,000 and 550,000 shares
issued and outstanding in 1995 and 1994, respectively 16,000 6,000
Additional paid-in capital 6,783,000 5,203,000
Accumulated deficit (19,125,000) (16,094,000)
------------ ------------
Total stockholders' deficiency (12,211,000) (10,822,000)
------------ ------------
$ 381,000 $ 266,000
============ ============
</TABLE>
See accompanying notes to consolidated financial statements
F - 3
<PAGE> 48
MYRIAD INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR FISCAL YEARS ENDED JULY 31, 1995 AND 1994
================================================================================
<TABLE>
<CAPTION>
1995 1994
=========== ===========
<S> <C> <C>
Revenues $ 0 $ 0
Expenses:
General and administrative 2,085,000 1,627,000
Interest 1,030,000 757,000
----------- -----------
3,115,000 2,384,000
----------- -----------
Loss from continuing operations before
discontinued operations (3,115,000) (2,384,000)
Discontinued operations: (Note 2)
Loss from operations 0 (8,186,000)
Gain on disposal 0 3,454,000
----------- -----------
0 (4,732,000)
----------- -----------
Net loss before minority interest (Note 1) $(3,115,000) $(7,116,000)
Minority interest in subsidiary's net loss 234,000 0
----------- -----------
Net loss $(2,881,000) $(7,116,000)
=========== ===========
Net loss per share: (Note 1)
Loss from continuing operations before
discontinued operations $ (0.35) $ (0.49)
Discontinued operations 0.00 (0.96)
----------- -----------
Net loss $ (0.35) $ (1.45)
=========== ===========
Weighted average number of common shares outstanding 8,141,000 4,906,000
=========== ===========
</TABLE>
See accompanying notes to consolidated financial statements
F - 4
<PAGE> 49
MYRIAD INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR FISCAL YEARS ENDED JULY 31, 1995 AND 1994
================================================================================
<TABLE>
<CAPTION>
1995 1994
=========== ===========
Cash flows from operating activities:
<S> <C> <C>
Net loss $(2,881,000) $(7,116,000)
Adjustments to reconcile net loss to cash (used in)
Operating Activities:
Depreciation and amortization 162,000 70,000
Provision for doubtful accounts 110,000 0
Issuance of common stock for services rendered 256,000
Minority interest in subsidiary's loss (234,000) --
Discontinued operations (Note 2) 0 (2,259,000)
Changes in net operating assets and liabilities:
Deposits and prepaid expenses (84,000)
Accounts payable 104,000 193,000
Other accrued expenses (Note 4) 694,000 4,443,000
----------- -----------
Net cash (used in) operating activities (1,873,000) (4,669,000)
Cash flows from investing activities:
Acquisition (disposition) of property and equipment (25,000) (135,000)
Advances to affiliate (110,000) 0
----------- -----------
Net cash provided by (used in) investing activities (135,000) (135,000)
----------- -----------
Cash flows from financing activities:
Proceeds from the issuance of common stock 1,055,000 2,001,000
Short-term borrowings (Notes 5 and 8) 957,000 2,773,000
Payment on short-term borrowings (Note 5) (50,000)
----------- -----------
Net cash provided by (used in) financing activities 2,012,000 4,724,000
----------- -----------
Net increase (decrease) in cash and cash equivalents 4,000 (80,000)
Cash and cash equivalents, beginning of year 0 80,000
=========== ===========
Cash and cash equivalents, end of year $ 4,000 $ 0
=========== ===========
Supplemental cash flow information:
Interest payments $ 31,000 $ 11,000
=========== ===========
Income tax payments $ 3,000 $ 0
=========== ===========
</TABLE>
See accompanying notes to consolidated financial statements
F - 5
<PAGE> 50
MYRIAD INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIENCY
FOR FISCAL YEARS ENDED JULY 31, 1995 AND 1994
================================================================================
<TABLE>
<CAPTION>
ADDITIONAL
PREFERRED COMMON PAID-IN ACCUMULATED
STOCK STOCK CAPITAL DEFICIT TOTAL
============ ============ ============ ============ ============
<S> <C> <C> <C> <C> <C>
Balance July 31, 1993 $ 8,000 38,000 3,476,000 (8,828,000) $ (5,306,000)
Issuance of common stock 23,000 1,727,000 -- 1,750,000
Preferred dividends (150,000) (150,000)
Net loss (7,116,000) (7,116,000)
------------ ------------ ------------ ------------ ------------
Balance July 31, 1994 8,000 61,000 5,203,000 (16,094,000) (10,822,000)
Issuance of common stock 62,000 1,580,000 -- 1,642,000
Preferred dividends (150,000) (150,000)
Net loss (2,881,000) (2,881,000)
------------ ------------ ------------ ------------ ------------
Balance July 31, 1995 $ 8,000 123,000 6,783,000 (19,125,000) $(12,211,000)
============ ============ ============ ============ ============
</TABLE>
See accompanying notes to consolidated financial statements
F - 6
<PAGE> 51
MYRIAD INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JULY 31, 1995 and 1994
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation
The consolidated financial statements include the accounts of Myriad
International, Inc.("Myriad") and Subsidiaries (the "Company"). In
August 1994, the Company discontinued all operations related to ship
repairs. See Note 2 - Discontinued Operations. All significant
intercompany accounts and transactions have been eliminated in
consolidation.
Pacific Marine and Steel, Inc. ("PMSI"), a wholly-owned subsidiary of
Myriad, was established in September 1994. PMSI designs and builds
prefabricated steel framed buildings and other building systems for the
global marketplace, including homes (single and multiple dwellings),
schools, office buildings, and other public buildings. At July 31, 1995
approximately 27% of the common stock of PMSI was owned by shareholders
other than Myriad. This minority interest was acquired by Myriad in
December 1995. See Note 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
- Minority Interest in Subsidiary and Note 10 - SUBSEQUENT EVENTS -
Pacific Marine and Steel, Inc.
Myriad Industries, Inc. - Peru S.A. ("Myriad - Peru"), a wholly-owned
subsidiary of Myriad was established in June 1995 to provide financing
for homes and other buildings to be built by PMSI.
Minority Interest in Subsidiary
Minority interest in subsidiary representing the minority shareholders'
proportionate share of interest in PMSI is classified with noncurrent
liabilities in the accompanying balance sheet. At July 31, 1995, Myriad
owned approximately 73% of the common stock of PMSI. The minority share
in the net loss of PMSI was $234,000 for the fiscal year ended July 31,
1995.
Basis of presentation
The accompanying financial statements have been prepared assuming that
the Company will continue as a going concern. As discussed in Note 3,
the Company has incurred significant losses from operations, raising
substantial doubt about its ability to continue as a going concern. The
subsidiaries through which the Company conducted all of its operations
during 1994 are insolvent, have ceased operations and are reflected as
discontinued operations.
There is no assurance that the Company has or will be able to obtain
the working capital necessary to finance ongoing operations, or that
such operations will be profitable. The financial statements do not
include any adjustments that might result from the outcome of this
uncertainty. See Note 3 - Liquidity.
Cash and Cash Equivalents
Cash equivalents consist of highly liquid investments with an original
maturity of three months or less.
Property, Plant and Equipment
Property, plant and equipment are stated at cost. Depreciation and
amortization are provided on a straight-line basis over their estimated
useful lives, generally 3 to 30 years.
F - 7
<PAGE> 52
Deferred Compensation
Deferred compensation expense is recorded equal to the value of
unvested stock grants to employees. The deferred compensation is
amortized to expense as the restrictions on the stock lapse.
Income taxes
Beginning August 1, 1993, the Company adopted Statement of Financial
Accounting Standards ("SFAS") No. 109," Accounting for Income Taxes."
Under this method, deferred tax assets and liabilities are recognized
based on differences between financial statements and tax basis of
assets and liabilities using presently enacted tax rates. The adoption
did not have a material effect on the financial statements presented
herein.
Net Loss Per Share
Net loss per share is calculated using the weighted average number of
shares of common stock and dilutive common stock equivalents
outstanding during the year. Common stock equivalents consist of stock
options and warrants.
Impact of Recently Issued Accounting Standards
In March 1995, the Financial Accounting Standards Board issued a new
statement titled "Accounting for Impairment of Long-Lived Assets." This
new standard is effective for years beginning after December 15, 1995,
and would change the Company's method of determining impairment of
long-lived assets. The Company does not believe that the adoption of
the new standard will have a material effect on the financial
statements.
In October, 1995, the Financial Accounting Standards Board issued a new
statement titled "Accounting for Stock-Based Compensation." The new
statement is effective for fiscal years beginning after December 15,
1995. The new standard encourages, but does not require, companies to
recognize compensation expense for grants of stock, stock options and
other equity instruments to employees based on fair value. Companies
that do not adopt the fair value accounting rules must disclose the
impact of adopting the new method in the notes to the financial
statements. Transactions in equity instruments with non employees for
goods or services must be accounted for on the fair value method. The
Company currently does not intend to adopt the fair value accounting
method prescribed and will only be subject to the footnote disclosure
requirements.
NOTE 2 - DISCONTINUED OPERATIONS
For the year ended July 31, 1994 the Company conducted all operating
activities through its wholly-owned subsidiaries: A&E Industries, Inc.
("A&E"), Advanced Test Systems, Inc ("ATS") and Remedquip International
Manufacturing, Inc. ("RIM), (collectively the "Former Subsidiaries").
A&E provided marine fabrication and repair services for both
governmental and commercial companies, usually as the prime contractor.
ATS provided marine electrical subcontractor services to A&E and other
ship repair prime contractors. Ship repair and marine electrical work
performed for the U.S. Navy were the dominant source of revenues for
A&E and ATS. RIM was a fabricator of environmental remediation
equipment.
Upon the completion of a major ship repair contract, A&E filed for
protection under Chapter 11 of the U.S. Bankruptcy Code on August 2,
1994 as result of a substantial loss at July 31, 1994, a deterioration
of working capital and pending or threatened vendor collection actions.
The United States Bankruptcy Court for the Southern District of
California, upon the request of A&E, converted the action to a Chapter
7 liquidation on November 30, 1994 and appointed a trustee. Although
ATS and RIM have not filed for protection under the U.S. Bankruptcy
Code, they are insolvent and ceased all operations concurrently with
A&E. Accordingly, the financial position and results of operations of
the Former Subsidiaries have been reported as discontinued operations
as of and for the periods ended July 31, 1995 and 1994.
F - 8
<PAGE> 53
At the time of the discontinuance of the operations of the Former
Subsidiaries, the liabilities of the Former Subsidiaries exceeded the
investment of Myriad in these companies. Included with discontinued
operations in 1994 is a gain of $3,454,000 arising from the exclusion
of liabilities in excess of Myriad's investment. This gain is net of an
accrual of $4,032,000 by Myriad to provide for anticipated expenses
related to the discontinued operations. These expenses related to
obligations of the Former Subsidiaries for which Myriad was legally
obligated, as well as obligations related to Former Subsidiary payroll
tax obligations. Upon the bankruptcy of A&E and the discontinuance of
ATS and RIM, the Former Subsidiaries had unpaid payroll taxes due to
the Internal Revenue Service ("IRS") and the State of California
Employment Development Department ("EDD") aggregating $ 1,136,000 and
$403,000, respectively. Although Myriad is not directly responsible for
the liabilities of the Former Subsidiaries, it is required to indemnify
officers of Myriad for expenses incurred during the performance of
their duties. As part of their Myriad corporate responsibilities,
officers of Myriad also served as officers of the Former Subsidiaries.
As officers of the Former Subsidiaries they have been personally
assessed for an amount equal to 100% of the unpaid taxes by the IRS and
the EDD. Myriad has accrued an amount equal to this assessment to
properly reflect its responsibility to indemnify the officers. To the
extent that these taxes are paid from the proceeds of the liquidation
of A&E, the assessment against the officers by the IRS and the EDD will
be reduced accordingly with a dollar-for-dollar reduction in Myriad's
indemnification obligations.
Net revenues and components of net assets of the Companies are as
follows:
<TABLE>
<CAPTION>
1995 1994
------------ ------------
<S> <C> <C>
Net Revenues $ -0- $ 16,863,000
============ ============
Working Capital: None None
Noncurrent: None None
Total net assets of discontinued operations None None
</TABLE>
NOTE 3 - LIQUIDITY
As indicated in the accompanying financial statements, the Company
recognized net losses of $3,115,000 in 1995 and $7,116,000 in 1994 and
had a net stockholder's deficit of $12,445,000 at July 31, 1995. In
addition, as discussed in Note 2 - Discontinued Operations, the Company
recorded a loss on discontinued operations of $8,186,000 during 1994.
This amount includes a $4,032,000 ($3,513,000 at July 31, 1995)
provision for the payment of certain obligations of the Former
Subsidiaries for which the Company is legally obligated, either
directly as a result of guarantees or indirectly as a result of its
indemnification obligations to officers of the Company who served as
officers of one or more of the former subsidiaries. The loss on
discontinued operations and the expenses of starting up certain new
businesses has resulted in the Company having cash shortages and
delayed payment of certain obligations when they became due, including
certain federal and state payroll tax obligations of both the Company
and the Former Subsidiaries. This cash shortage has in turn resulted in
several creditors having obtained judgments against the Company and/or
its officers for non-payment of trade payables or loans made to the
Company. The Company is in the process of renegotiating the timing of
certain payments. Management believes that cash generated from its new
businesses will be adequate to meet the Company's debt and operating
requirements commencing during the second quarter of fiscal 1997; and
that it will be current on all of its obligations by the end of fiscal
1997. Until such time the Company continues to rely on funds provided
by the sale of equity securities and short-term loans to meet its
operating needs and to retire past due obligations.
F - 9
<PAGE> 54
NOTE 4 - ACCRUED EXPENSES
Accrued expenses are summarized as follows:
<TABLE>
<CAPTION>
1995 1994
---------- ----------
<S> <C> <C>
Reserve for loss on discontinued operations (Note 2) $3,513,000 $4,032,000
Accrued interest 1,361,000 369,000
Accrued payroll 211,000 47,000
Payroll tax liability in arrears 202,000 162,000
Misc.Expenses 17,000 - 0-
---------- ----------
$5,304,000 $4,610,000
========== ==========
</TABLE>
NOTE 5 - NOTES PAYABLE
Notes payable are summarized as follows:
<TABLE>
<CAPTION>
1995 1994
---------- ----------
<S> <C> <C>
Secured note payable, interest at 8%
interest and principal payable in
full March 4, 1994. (1)(2) $ 55,000 $ 55,000
Unsecured note payable, interest at 8%
due on demand. (1) 25,000 25,000
Unsecured note payable, interest at 10%
interest and principal payable in
full March 15, 1994. (1) 48,000 39,000
Unsecured note payable, interest at 8%
interest and principal payable
full February 11, 1994 - 0 - 10,000
Unsecured PMSI note payable, interest at 12%
interest and principal payable in
full August 23, 1995(1) 50,000 -0-
Unsecured PMSI note payable, interest at 12%
interest and principal payable in
full August 23, 1995(1) 50,000 -0-
Unsecured note payable, interest at 62%
interest and principal payable in
full August 24, 1994 (3) 125,000 250,000
Secured note payable, interest at 14%,
interest and principal payable in
full November 1, 1996 (4) 6,295,000 5,781,000
---------- ----------
$6,648,000 $6,160,000
========== ==========
</TABLE>
(1) Note is in default.
(2) Secured by 100% of the issued and outstanding stock of PMSI.
(3) $125,000 converted to equity August 24, 1994. See Note 7.
(4) Subject to terms of Capital Contribution and Debt Cancellation
Agreement dated June 26, 1996. See Note 10.
F - 10
<PAGE> 55
NOTE 6 - INCOME TAXES
Effective August 1, 1993, the Company adopted SFAS 109, "Accounting for
Income Taxes," which requires an asset and liability approach to
financial accounting and reporting for income taxes. Deferred income tax
assets and liabilities are computed annually for differences between the
financial statement and tax bases of assets and liabilities that result
in taxable or deductible amounts in the future based on enacted tax laws
and rates applicable to the periods in which the differences are
expected to affect taxable income. Valuation allowances are established
when necessary to reduce deferred tax assets to the amount expected to
be realized. Income tax expense is the tax payable or refundable for the
period plus or minus the change during the period in deferred tax assets
and liabilities. The cumulative effect of the accounting change of
adopting Statement 109 was not material.
At July 31, 1995 the Company had a net operating loss carryforward
("NOL") of approximately $15,645,000 which expire from 1999 to 2010.
Since the Company does not presently file a consolidated federal tax
return, this NOL may only be utilized by Myriad and may not be used to
offset the taxable income of its wholly-owned subsidiary PMSI. PMSI has
an NOL of $758,000 at July 31, 1995 which expires in 2010. Should there
be significant changes in ownership, these NOL's may be subject to
annual limitations.
NOTE 7 - COMMITMENTS AND CONTINGENCIES
Subsidiary Liabilities
At the time of the discontinuance of A&E, ATS and RIM the liabilities of
these Former Subsidiaries exceeded the investment of Myriad in these
companies. Accordingly, the liabilities in excess of Myriad's investment
were excluded from consolidated operations and the related gain of
$3,454,000 included with discontinued operations. As discussed in Note 2
- Discontinued Operations, the Company has recorded the sum of
$4,032,000 at July 31, 1994 to accrue the liabilities of the Former
Subsidiaries for which Myriad is legally obligated, either directly or
as a result of its indemnification obligation to its officers. This
amount has been reduced to $3,513,000 at July 31, 1995.
Leases
The Company leases its San Diego, CA office facilities under an
operating lease through April 30, 1998; and PMSI-Peru leases its Lima
office facilities under an operating lease through May 2,1997 . Both of
these leases require the Company to pay certain taxes, maintenance and
other costs. Rent expense for operating leases was $ 129,000 and
$47,000 for the years ended July 31, 1995 and 1994, respectively.
In April 1995 PMSI entered into an operating lease for a facility in
Tongue Point, Oregon, which was to be the site of PMSI's small ship
design and manufacturing division. See Note 10 - Subsequent Events. This
lease required a monthly payment of $25,000 in addition to taxes,
maintenance and other costs. In February 1996 the lessor terminated the
lease for non-payment. PMSI is obligated to pay the lessor past due rent
($95,000) and other payments ("$10,000) of approximately $105,000 for
October 15, 1995 through February 14, 1996 plus interest of $1,184 per
month from March 15, 1996 until the past due rent of $95,000 has been
paid.
Litigation
The Company and/or its officers are parties to several lawsuits arising
out of the discontinuance of the businesses of the Former Subsidiaries
and the Company's resulting lack of liquidity. See Note 3 - Liquidity.
The Company has made provision on its balance sheet in the Reserve for
Loss on Discontinued Operations for all amounts which it believes may
become due and payable as a result of such lawsuits and is in the
process of negotiating settlements and payment terms.
F - 11
<PAGE> 56
The Company is also a defendant in an action for payment of a $250,000
note payable. The Company is disputing the amount due on the note and
has made provision on its balance sheet for the $125,000 and accrued
interest which it believes is properly due. See Note 5 - Notes Payable.
NOTE 8 - RELATED PARTY TRANSACTIONS
(a) During February and March of 1995 a shareholder, who is an independent
investor and who has no business, family or personal relationship with
the Company or any of its officers or directors, purchased, in a series
of arms-length transactions, 2,100,000 shares of Class A Common Stock at
an average price of $0.24 per share. The shareholder received warrants
to purchase 2,000,000 shares of Class A Common Stock as additional
consideration for his stock purchases. The warrants had an average
exercise price of $0.49 and were exercisable for two years from the date
of issuance.
During the period of May through July of 1995, the shareholder made
short-term loans to the Company in the principal amount of $650,000.
These loans were negotiated at arms-length and carried interest at
8 1/2%. $500,000 of this amount was repaid during this same period
through the exercise of 710,204 warrants at an exercise price of $0.49.
In addition, the shareholder received 10,094 shares of Class A stock
valued at $5,007 as payment for interest for loans outstanding during
this period. The shareholder also received 20,000 shares of Class A
Stock valued at $10,000 and 1,000,000 warrants as consideration for
making and converting loans during this period. The shareholder also
received a 1% profit participation from one of the Company's
joint-venture partners in the Company's Peruvian fish meal venture as
consideration for making a $150,000 loan, a 5% profit participation in
the Company's Peruvian finance subsidiary and a 5% profit participation
in the Company's Egyptian hotel/casino project for making a $500,000
loan, all during this period.
Between August 1995 and July 1996 the shareholder made additional
short-term loans to the Company in the principal amount of $116,500. As
of July 31, 1996 $109,000 had been repaid, leaving a balance of $7,500.
Of this amount $80,000 was repaid through proceeds made available by the
conversion to 160,000 shares of Class A Common Stock at $0.50 per share.
During this period the shareholder extended the payment dates of these
loans on numerous occasions. In consideration of the making of the loans
and the granting of such extensions the shareholder received 57,147
shares of Class A Common Stock valued at $30,182 and 472,147 warrants.
As additional consideration for the loans and loan extensions the
shareholder received profit participation of from 1/2% to 20% in various
projects and joint ventures of the Company. In January 1996 the
shareholder and the Company entered into an agreement whereby the
shareholder gave up or substantially reduced such profit participation
in return for 1,500,000 warrants, 500,000 exercisable at $1.00 for two
years, 500,000 exercisable at $1.50 for two years and 500,000
exercisable at $2.00 for two years. The shareholder retained a 5% profit
participation in each of the Company's South Africa and Venezuela
housing projects, neither of which are under active development at this
time, in addition to the 5% profit participation in the Company's
Peruvian finance subsidiary.
(b) During the fiscal year ending July 31, 1995 a shareholder of the Company
(who also served as a Director from December 1, 1995 through April 4,
1996) and a partnership of which he is the managing partner, received an
aggregate of 150,000 shares of Class A Common Stock, valued at $37,500
and 243,000 common stock purchase warrants exercisable at prices ranging
from $0.13 to $0.49, having a nominal value, for financial and investor
relations consulting services. During the nine months ending April 30,
1996 this shareholder and his related partnership were issued an
additional 65,672 shares of common stock, valued at $32,836 and 300,000
common stock purchase warrants exercisable at a price of $0.45, having a
nominal value, for financial and investor relations consulting services.
This shareholder also received 150,000 shares of common stock through
the PMSI exchange offer discussed in Note 10.
(c) During the nine months ending April 30, 1996 a shareholder received
1,643,810 common stock purchase warrants exercisable at a price of $0.55
for financial consulting services.
F - 12
<PAGE> 57
(d) During the fiscal year ended July 31, 1995 a corporation owned by
members of the immediate family of a shareholder, officer and director
was issued 500,000 shares of PMSI for making a $30,000 loan to PMSI. In
January 1996 these shares were exchanged for an equal number of shares
of the Company's common stock as discussed in Note 10.
(e) Effective January 1, 1996, the Company entered into an employment
agreement with Jerome O. Crawford ("1996 Agreement") pursuant to which
Mr. Crawford became Chairman and Chief Executive Officer of the Company
for the five-year period ending on December 31, 2000. The 1996 Agreement
replaced the employment agreement between the Company and Mr. Crawford
dated September 1, 1992, as amended on August 18, 1994 (the "1992
Agreement") pursuant to which Mr. Crawford served as President and Chief
Executive Officer of the Company.
The 1996 Agreement provides for annual compensation of $250,000 with
annual increases to be determined by the board of directors. The
increase in annual compensation from $105,000 in the 1992 Agreement will
not take effect until the board of directors determines that the Company
"has adequate cash flow" to pay the increased amount. The 1996 Agreement
also provides for an annual bonus to be determined by the Company's
board of directors based on profitability, a $2000 per month housing and
commuter allowance, and a $2,000,000 life insurance policy with the
beneficiary to be designated by Mr. Crawford.
The 1996 Agreement grants Mr. Crawford 1,000,000 shares of the Company's
Class A Common Stock, which will vest on March 31, 1996, and an award of
2,000,000 shares of the Company's Class B Common Stock, 1,500,000 shares
of which are subject to repurchase by the Company at nominal cost in
equal annual installments of 500,000 shares between December 31, 1996
and December 31, 1998 in the event the 1996 Agreement is wrongfully
terminated by Mr. Crawford or terminated for cause by the Company. In
addition 350,000 shares of Class B Common Stock awarded to Mr. Crawford
under the 1992 Agreement is subject to repurchase at a nominal cost on
the same basis as under the 1996 Agreement at the rate of 175,000 shares
per year between August 18, 1997 and August 18, 1998.
The 1996 Agreement provides that all shares of Class B Common Stock held
by Mr. Crawford shall not be sold, assigned, hypothecated, or otherwise
encumbered or transferred during the lifetime of Mr. Crawford except to
his spouse, children or grandchildren or to another registered holder of
Class B Common Stock and that the shares of Class B Common Stock held by
Mr. Crawford shall not be converted into shares of Class A Common Stock
except by Mr. Crawford or a permitted transferee. At January 31, 1996
the only holders of Class B Common Stock were Mr. Crawford and
Mr. Parks.
The 1996 Agreement grants to Mr. Crawford an option to purchase
2,500,000 shares of Class B Common Stock at a price of $0.25 per share
for a five year period. The option vests 1,000,000 shares immediately
with the balance vesting in equal annual installments of 375,000 from
January 1, 1997 to January 1, 2000.
Mr. Crawford has not received payment of $61,000 of the compensation
payable to him for the nine months ending April 30, 1996.
(f) Effective January 1, 1996, the Company entered into an employment
agreement with Victor L. Parks ("1996 Agreement") pursuant to which
Mr.Park's will serve as Senior Vice President for the five year period
ending on December 31, 2000. The 1996 Agreement replaced the employment
agreement between the Company and Mr. Parks dated August 18, 1994
(the"1994 Agreement") pursuant to which Mr. Parks served as Senior Vice
President.
The 1996 Agreement provides for annual compensation of $125,000 with
annual increases to be determined by the board of directors. The
increase in annual compensation from $75,000 in the 1994 Agreement will
not take effect until the board of directors determines that the Company
"has adequate cash flow" to pay the increased amount. The 1996 Agreement
also provides for a one-time signing bonus of $20,000 and an annual
bonus to be determined by the Company's board of directors based on
profitability.
F - 13
<PAGE> 58
The 1996 Agreement grants Mr. Parks 500,000 shares of the Company's
Class A Common Stock, which vests immediately and an award of 600,000
shares of the Company's Class B Common Stock, 450,000 shares of which
are subject to repurchase by the Company at nominal cost in equal annual
installments of 150,000 shares between December 31, 1996 and
December 31, 1998 in the event the 1996 Agreement is wrongfully
terminated by Mr. Parks or terminated for cause by the Company. In
addition 251,250 shares of Class B Common Stock awarded to Mr.Parks
under the 1994 Agreement is subject to repurchase at a nominal cost on
the same basis as under the 1996 Agreement at the rate of 83,750 shares
per year between August 18, 1996 and August 18, 1998.
The 1996 Agreement provides that all shares of Class B Common Stock held
by Mr. Parks shall not be sold, assigned, hypothecated, or otherwise
encumbered or transferred during the lifetime of Mr. Parks except to his
spouse, children or grandchildren or to another registered holder of
Class B Common Stock and that the shares of Class B Common Stock held by
Mr. Parks shall not be converted into shares of Class A Common Stock
except by Mr. Parks or a permitted transferee. At January 31, 1996 the
only holders of Class B Common Stock were Mr. Parks and Mr. Crawford.
The 1996 Agreement grants to Mr. Parks an option to purchase 1,000,000
shares of Class A Common Stock at a price of $0.25 per share for a five
year period. The option vests 200,000 shares immediately with the
balance vesting in equal annual installments of 200,000 shares from
January 1, 1997 to January 1, 2000.
Mr. Parks has not received payment of $38,000 and $25,000 of the
compensation payable to him for the fiscal year ended July 31, 1995 and
the nine months ending April 30, 1966, respectively.
(g) Effective January 1, 1996, the Company entered into an
employment agreement with Sharon Snyder ("1996 Agreement") pursuant to
which Ms. Snyder will serve as Senior Vice President and Treasurer for
the five year period ending on December 31, 2000. The 1996 Agreement
replaced the employment agreement between the Company and Ms. Snyder
dated August 18, 1994 (the "1994 Agreement") pursuant to which
Ms. Snyder served as Senior Vice President and Chief Financial Officer.
The 1996 Agreement provides for annual compensation of $100,000 with
annual increases to be determined by the board of directors. The
increase in annual compensation from $85,000 in the 1992 Agreement will
not take effect until the board of directors determines that the Company
"has adequate cash flow" to pay the increased amount. The 1996 Agreement
also provides for a one-time signing bonus of $20,000 and an annual
bonus to be determined by the Company's board of directors based on
profitability.
The 1996 Agreement grants Ms. Snyder 200,000 shares of the Company's
Class A Common Stock, which vests immediately and an option to purchase
500,000 shares of Class A Common Stock at a price of $0.25 per share for
a five year period. The option vests 100,000 shares immediately with the
balance vesting in equal annual installments of 100,000 shares from
January 1, 1997 to January 1, 2000.
Ms. Snyder has not received payment of $59,000 of the compensation
payable to her for the nine months ending April 30, 1996.
(h) Effective January 1, 1996, the Company entered into an employment
agreement with Michael Nalu ("1996 Agreement") pursuant to which
Mr. Nalu will serve as a Vice President for the five year period ending
on December 31, 2000.
The 1996 Agreement provides for annual compensation of $100,000 with
annual increases to be determined by the board of directors.
The 1996 Agreement grants Mr. Nalu 150,000 shares of the Company's Class
A Common Stock, which vests immediately and an option to purchase
300,000 shares of Class A Common Stock at a price of $0.25 per share for
a five year period. The option vests 100,000 shares immediately with the
balance vesting in equal annual installments of 50,000 shares from
January 1, 1997 to January 1, 2000.
F - 14
<PAGE> 59
Mr. Nalu has not received payment of $7,900 and $28,000 of the
compensation payable to him for the fiscal year ended July 31, 1995 and
the nine months ending April 30, 1996, respectively.
(i) In June 1996 the Company renegotiated a loan with Conversion Industries
Inc., a shareholder. See Note 10 - Subsequent Events.
(j) The Company is obligated to indemnify certain of its officers for
payroll tax and other liabilities which they have incurred as a result
of the discontinuance of the Former Subsidiaries. See Note 2 -
Discontinued Operations; Note 3 - Liquidity and Note 7 - Commitments
and Contingencies.
NOTE 9 - CAPITAL STOCK
CAPITAL STOCK
The authorized capital stock of the Company consists of 105,000,000
shares, consisting of (i) 75,000,000 shares of Class A Common Stock,
$0.01 par value; (ii) 10,000,000 shares of Class B Common Stock, $0.01
par value; and (iii) 20,000,000 shares of Preferred Stock, $0.01 par
value.
CLASS A COMMON STOCK
The Class A Common Stock and Class B Common Stock are equal in all
respects except that the Class A Common Stock has 1/10 vote per share
(as compared to one vote per share for the Class B Common Stock) and the
Holders of the Class A Common Stock are entitled to elect 25% of the
members of the Company's Board of Directors and shall have exclusive
authority to remove such Class A Directors (as compared to the right of
the holders of Class B Common Stock to elect and remove 75% of the
Company's Board of Directors). Such holders are not entitled to vote
cumulatively for the election of directors. Holders of Class A Common
Stock have no redemption, conversion, preemptive or other subscription
rights. In the event of the liquidation, dissolution or winding up of
the Company, holders of Class A Common Stock are entitled to share
ratably in all of the assets of the Company remaining, if any, after
satisfaction of the debts and liabilities of the Company and the
preferential rights of the holders of the Series 1 and Series 2
Preferred Stock and any other series of Preferred Stock then
outstanding. The outstanding shares of Class A Common Stock are, validly
issued, fully paid and non-assessable.
Holders of Class A Common Stock are entitled to receive dividends when
and as declared by the Board of Directors of the Company out of funds
legally available therefore, only after payment of, or provision for,
full dividends (on a cumulative basis, if applicable) on all outstanding
shares of Series 1 Preferred Stock and any other series of Preferred
Stock. The Company has not paid any dividends since its inception and
does not anticipate paying such dividends in the foreseeable future.
CLASS B COMMON STOCK
Holders of Class B Common Stock have one vote for each share owned (as
compared to 1/10 of a vote for each share of Class A Common Stock).
Holders of the Class B Common Stock are entitled to elect 75% of the
members of the Company's Board of Directors and shall have exclusive
authority to remove such Class B Directors. Such holders are not
entitled to vote cumulatively for the election of directors. Holders of
Class B Common Stock have no redemption, preemptive or other
subscription rights. Holder of Class B Common Stock may convert their
shareholdings into an equal number of shares of Class A Common Stock. In
the event of the liquidation, dissolution or winding up of the Company,
holders of Class B Common Stock are entitled to share ratably with the
holders of the Class A Common Stock in all of the assets of the Company
remaining, if any, after satisfaction of the debts and liabilities of
the Company and the preferential rights of the holders of the Series 1
and Series 2 Preferred Stock and any other series of Preferred Stock
then outstanding. The outstanding shares of Class B Common Stock are
validly issued, fully paid and non-assessable.
Holders of Class B Common Stock are entitled to receive dividends when
and as declared by the Board of Directors of the Company out of funds
legally available therefore, only after payment of, or provision for,
full
F - 15
<PAGE> 60
dividends (on a cumulative basis, if applicable) on all outstanding
shares of Series 1 Preferred Stock and any other series of Preferred
Stock. The Company has not paid any dividends since its inception and
does not anticipate paying such dividends in the foreseeable future.
Shares of Class B Common Stock are convertible, at the option of the
holders, into shares of Class A Common Stock, on a one-for-one basis.
PREFERRED STOCK
The Company is authorized to issue 20,000,000 shares of Preferred Stock,
$0.01 par value. The Board of Directors of the Company, without
obtaining stockholder approval, may issue shares of the Preferred Stock
with such preferences, voting rights or conversion rights which could
materially adversely affect the voting power of the holders of the Class
A and Class B Common Stock. The issuance of Preferred Stock could also
decrease the amount of earnings and assets available for distribution to
holders of Class A Common Stock and Class B Common Stock. In addition,
the issuance of Preferred Stock may have the effect of delaying,
deferring or preventing a change in control of the Company.
The Company has two series of Preferred Stock authorized and
outstanding: Series 1 Nonvoting Cumulative Convertible Preferred Stock
("Series 1 Preferred Stock") and Series 2 Nonvoting Cumulative
Convertible Preferred Stock ("Series 2 Preferred Stock").
SERIES 1 PREFERRED STOCK
At July 31, 1995 and July 31, 1994 the Company had outstanding 292,000
shares of Series 1 Preferred Stock. These shares were issued in
September 1992 in exchange for $1,750,000 of debt and are convertible at
the option of the holder at the rate of $6.00 per share into 292,000
shares of Myriad Class A Common Stock. In April 1996 8,333 shares of
Series 1 Preferred Stock were converted into 208,333 shares of Class A
Common Stock at an agreed value of $50,000 and the holders of the Series
1 Preferred Stock agreed that their right to receive a dividend would
terminate 10 days following notice that the closing price of Myriad's
Class A Common Stock has been at least $6.00 or more for 30 consecutive
trading days.The Series 1 Preferred Stock bears a coupon of 7% per annum
and has a liquidation preference over the Class A and Class B Common
Stock.
The Series 1 Preferred Stock is non-voting unless there is a default in
the payment of dividends or principal. In the event of such a default
(which exists at the present time) the holders of Series 1 Preferred
stock are entitled to 208,333 Class A votes.
SERIES 2 PREFERRED STOCK
The Company has outstanding 500,000 shares of Series 2 Preferred Stock.
These shares were issued in January 1993 in exchange for $500,000 of
debt. These shares are convertible at the option of the holder in
1,000,000 shares of Class A Common Stock and may be redeemed at the
option of the Company for $1.00 per share, plus any accrued but unpaid
dividends. The Series 2 Preferred Stock bears a coupon of 6% per annum
and has a liquidation preference over the Class A and Class B Common
Stock.
The Series 2 Preferred Stock is non-voting unless there is a default in
the payment of dividends or principal. In the event of such a default
(which exists at the present time) the holders of Series 2 Preferred
stock are entitled to 1,000,000 Class A votes.
F - 16
<PAGE> 61
QUALIFIED STOCK OPTIONS
Under the Company's 1992 Stock Option Plan (the "Plan"), an aggregate of
500,000 common shares is reserved for issuance to officers, directors
and consultants. On January 1, 1996 the Board of Directors increased the
shares reserved for issuance to 2,000,000, subject to shareholder
approval. Under the Plan, the option price is equal to the fair market
value at the date of grant. Unexercised options expire ten years from
the date of grant and become exercisable at such dates as are determined
by the Compensation Committee of the Board of Directors.
A summary of stock option activity is as follows:
<TABLE>
<CAPTION>
Number of Per
Options Share
------- -----
<S> <C> <C>
Outstanding July 31, 1993 110,000 $ 0.75
Granted 30,000 $ 1.00
Cancelled 0
-------
Outstanding July 31, 1994 140,000 $0.75-$1.00
Granted 590,000 $ 0.13
Cancelled 0
-------
Outstanding July 31, 1995 730,000 $0.13-$1.00
=======
</TABLE>
At July 31, 1995, 527,000 options were exercisable to purchase shares
at an price of $0.13 to $1.00 per share. As of July 31, 1996, 465,000
additional options were issued at a exercise prices of $0.25 to $0.50
per share; and 105,000 options had been exercised or cancelled.
NON QUALIFIED STOCK OPTIONS
Class A Common Stock
There are no non qualified Class A Common Stock options outstanding at
July 31, 1995.
On January 1, 1996, in conjunction with executive officer employment
agreements (see Note 8, Related Party Transactions) 1,800,000 non
qualified Class A Common Stock options were issued to three executives.
The options are exercisable at $0.25 per share and expire in five
years. 400,000 of the options are immediately vested with the balance
vesting in equal annual installments of 350,000 shares.
Class B Common Stock
There are no non qualified Class B Common Stock options outstanding at
July 31, 1995.
On January 1, 1996, in conjunction with executive officer employment
agreements (see Note 8, Related Party Transactions) 2,500,000 non
qualified Class B Common Stock options were issued to an executive. The
options are exercisable at $0.25 per share and expire in five years.
1,000,000 of the options are immediately vested with the balance
vesting in equal annual installments of 375,000 shares.
F - 17
<PAGE> 62
WARRANTS
The Company has issued warrants to purchase common stock in connection
with private placements of equity securities, loans and to certain
consultants of the Company. These warrants generally have terms ranging
from two to five years, and are fully vested. All warrants outstanding
at July 31, 1996 are exercisable between 1996 and 2001.
<TABLE>
<CAPTION>
SHARES EXERCISE
------ --------
PRICE
-----
<S> <C> <C>
Outstanding at 7/31/92 0
Granted 8/1/92 to 7/31/93 215,000 $0.50 -$1.00
Outstanding at 7/31/93 215,000 $0.50 -$1.00
Exercisable at 7/31/93 215,000 $0.50 -$1.00
Granted 8/1/93 to 7/31/94 780,000 $1.10
Exercised 5,000 $1.10
Cancelled 25,000 $1.10
Outstanding at 7/31/94 965,000 $0.50 -$1.10
Exercisable at 7/31/94 965,000 $0.50 -$1.10
Granted 8/1/94 to 7/31/95 2,468,000 $0.37 -$1.10
Exercised 514,243 $0.49
Cancelled 20,000 $0.50
Outstanding at 7/31/95 2,898,757 $0.37 -$1.10
Exercisable at 7/31/95 2,898,757 $0.37 -$1.10
Granted 8/1/95 to 7/31/96 17,904,206 $0.39 - $2.00
Cancelled 80,000 $0.50
Outstanding at 7/31/96 20,772,963 $0.37 -$2.00
Exercisable at 7/31/96 20,772,963 $0.37 -$2.00
</TABLE>
F - 18
<PAGE> 63
NOTE 10 - SUBSEQUENT EVENTS
Conversion Industries Inc. Loan
On June 26, 1996 the Company entered into an agreement with Conversion
regarding repayment of their loan of $6,295,000 and accrued interest of
$1,921,000. In consideration of (i) a cash payment of $750,000, and
(ii) the assignment of all rights, title and interest that Myriad and
ATS have in the A&E bankruptcy, Conversion has agreed to release Myriad
of all liability with respect to the loan agreement and all amounts
owing thereunder. Pursuant to an amendment to the agreement dated
August 14, 1996 the cash payment of $750,000 is payable in three
$250,000 installments due on or before September 3, 1996, October 1,
1996 and November 1, 1996. Conversion is required to submit the
agreement to Bankruptcy Court for approval as soon as reasonably
practical. The forgiveness of debt of $7,466,000 will be treated as
income for financial statement purposes and as additional paid-in
capital for tax purposes. As of September 20, 1996 the Company has not
made the initial payment of $250,000. The following pro forma
illustrates the effect of this agreement as if it were effective July
31, 1995:
<TABLE>
<CAPTION>
As Reported Pro Forma
----------- ---------
<S> <C> <C>
Total Assets $ 569,000 $ 569,000
Total Liabilities $ 12,469,000 $ 4,915,000
Shareholders' Deficiency $(11,901,000) $ (4,347,000)
</TABLE>
Pacific Marine and Steel, Inc
In September 1994 the Company formed Pacific Marine and Steel, Inc., a
Delaware corporation ("PMSI"). The Company was issued 5,000,000 shares of
PMSI common stock. From September 1994 to June 1995 an additional
1,874,302 shares of PMSI common stock were issued for cash and as
consideration for services rendered by affiliates of the Company,
including certain officers and directors. See Note 8 Related Party
Transactions.
From September 1994 to approximately January 1996 the Company, through
PMSI, attempted to start a small ship design and manufacturing business,
but decided to abandon this effort and focus the Company's resources and
efforts primarily on its construction division and Peruvian fish meal
joint venture.
Pacific Marine and Steel, Inc - Peru S.A. ("PMSI - Peru"), a wholly-owned
subsidiary of PMSI, is a Peru based construction company established in
September 1995 to initially construct steel framed buildings and single
family housing in Peru, and other international projects.
In December 1995 the Company acquired all the outstanding shares of PMSI
common stock through the issuance of 1,874,302 shares of its Class A
Common Stock pursuant to a one-for-one exchange offer. See
Note 8 - Related Party Transactions.
In August 1996 PMSI's wholly-owned subsidiary PMSI - Peru commenced a
project to construct 1000 houses in Piura, Peru. PMSI-Peru has completed
two model homes and a sales office and has started accepting applications
for mortgage financing from prospective buyers. The houses are in the
$35,000 to $45,000 price range. PMSI-Peru is presently negotiating
construction financing with several banks and expects to commence
construction of the initial 200 homes during the second quarter of fiscal
1997.
Amendment to Certificate of Incorporation
In December 1995, Myriad amended its Certificate of Incorporation to: (i)
change the name of the Company to "Myriad International, Inc.", (ii)
increase the authorized number of shares to 105,000,000, consisting of
75,000 shares of Class A Common Stock, 10,000,000 shares of Class B
Common Stock and 20,000,000 shares of Preferred Stock; and (iii) clarify
certain provisions relating to the voting rights of the Class B Common
Stock.
F - 19
<PAGE> 64
MYRIAD INTERNATIONAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
APRIL 30, 1996 AND 1995
(UNAUDITED)
<TABLE>
<CAPTION>
ASSETS 1996 1995
-------- --------
<S> <C> <C>
Current Assets:
Cash and cash equivalents $ 0 $ 1,000
Deposits and prepaid expenses 19,000 49,000
-------- --------
Total current assets 19,000 50,000
Construction in progress 238,000 0
Property, Plant and Equipment, net of
accumulated depreciation of $56,000
and $20,000 for April 30, 1996 and
April 30, 1995 respectively 66,000 98,000
Goodwill, Net of accumulated amortization
of $33,000 for April 30, 1996 405,000 0
Organization costs, Net of accumulated
amortization of $1,000 for April 30, 1995 -- 18,000
Deferred Compensation 614,000 212,000
Other assets 32,000 0
-------- --------
$1,374,000 $378,000
======== ========
</TABLE>
See accompanying notes to Condensed Consolidated Financial Statements
F-20
<PAGE> 65
MYRIAD INTERNATIONAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
APRIL 30, 1996 AND 1995
(UNAUDITED)
<TABLE>
<CAPTION>
1996 1995
----------- -----------
<S> <C> <C>
LIABILITIES
Current Liabilities:
Accounts payable $ 554,000 $ 302,000
Dividends payable 388,000 237,000
Other accrued expenses 6,341,000 4,742,000
Notes payable 6,704,000 6,724,000
----------- -----------
Total current liabilities 13,987,000 12,005,000
Minority interest in subsidiaries 0 102,000
----------- -----------
Total Liabilities 13,987,000 12,107,000
STOCKHOLDERS' DEFICIENCY:
Convertible Preferred Stock - $0.01 par value, 20,000,000
shares authorized:
7% Convertible Series 1 Preferred Stock, 284,000 and 292,000
shares issued and outstanding at April 30, 1996 and
April 30, 1995, respectively 3,000 3,000
6% Convertible Series 2 Preferred Stock, 500,000
shares issued and outstanding 5,000 5,000
Class A Common Stock - $0.01 par value; 75,000,000 shares authorized;
19,574,000 and 8,256,000 shares
issued and outstanding on April 30, 1996 and 1995,
respectively 196,000 82,000
Class B Common Stock - $0.01 par value; 10,000,000
shares authorized; 3,701,000 and 1,700,000 issued and
outstanding on April 30, 1996 and April 30, 1995, respectively 37,000 17,000
Additional paid-in capital 9,724,000 6,009,000
Accumulated Deficit 22,578,000 17,845,000
----------- -----------
Total stockholders' deficiency 12,613,000 11,729,000
----------- -----------
$ 1,374,000 $ 378,000
=========== ===========
</TABLE>
See accompanying notes to Condensed Consolidated Financial Statements
F-21
<PAGE> 66
MYRIAD INTERNATIONAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
NINE MONTHS ENDED APRIL 30, 1996 AND 1995
(UNAUDITED)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
APRIL 30,
-----------------------------
1996 1995
----------- -----------
<S> <C> <C>
Revenues $ 0 $ 0
Expenses:
Operating 0 0
General and administrative 2,644,000 1,090,000
Interest 734,000 776,000
----------- ------------
Net loss from continuing operations before
loss from discontinued operations, and
minority interest (3,378,000) (1,866,000)
Discontinued operations (Note 3) 0 0
----------- -----------
Net loss before minority interest $(3,378,000) $(1,866,000)
Minority interest in subsidiary's net loss 0 115,000
----------- -----------
$(3,378,000) $(1,751,000)
=========== ===========
Net loss per share:
Loss from continuing operations before
discontinued operations $ (0.19) $ (0.21)
Discontinued operations 0.00 0
----------- -----------
Net loss per share $ (0.19) $ (0.21)
=========== ===========
Weighted Average Number of
Common Shares Outstanding 18,031,000 8,286,000
=========== ===========
</TABLE>
See accompanying notes to Condensed Consolidated Financial Statements
F-22
<PAGE> 67
MYRIAD INTERNATIONAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED APRIL 30, 1996 AND 1995
(UNAUDITED)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
APRIL 30,
------------------------------
1996 1995
----------- -----------
<S> <C> <C>
Net cash used in operating activities:
Net loss $(3,378,000) $(1,751,000)
Adjustments to reconcile net loss to cash (used in) operating activities:
Depreciation & Amortization 52,000 18,000
Provision for doubtful accounts 59,000 0
Issuance of common stock for services rendered 232,000 275,000
Deferred compensation vesting 222,000 83,000
Preferred stock cancellation (31,000) 0
Minority interest in subsidiary's loss (Note 2) 0 (115,000)
Discontinued operations (Note 3) 0 0
Changes in net operating assets and liabilities:
Deposits and prepaid expenses 43,000 (48,000)
Other assets (9,000) 0
Accounts payable 257,000 109,000
Other accrued expenses 1,037,000 132,000
----------- -----------
Net cash provided by (used in) operating activities (1,516,000) 1,297,000
----------- -----------
Cash flows from investing activities:
Acquisition (disposition) of property and equipment (13,000) 0
Advances to affiliates (59,000) 0
Construction activity (238,000) 0
----------- -----------
Net cash provided by (used in) investing activities (310,000) 0
----------- -----------
Cash flows from financing activities:
Proceeds from issuance of common stock 1,771,000 609,000
Short-term borrowings 106,000 717,000
Payment of short-term borrowings (55,000) (28,000)
----------- -----------
Net cash provided by (used in) financing activities 1,822,000 1,298,000
----------- -----------
Net increase (decrease) in cash and cash equivalents (4,000) 1,000
Cash and cash equivalents, beginning of year 4,000 0
----------- -----------
Cash and cash equivalents, end of year $ 0 $ 1,000
=========== ===========
</TABLE>
See accompanying notes to Condensed Consolidated Financial Statements
F-23
<PAGE> 68
MYRIAD INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NINE MONTHS ENDED APRIL 30, 1996 AND 1995
The accompanying unaudited consolidated financial statements have been prepared
by Myriad International, Inc ("Myriad") and include the accounts of Myriad and
Subsidiaries (the "Company"); and include all adjustments which are, in the
opinion of management, necessary for a fair presentation of financial results
for the nine months ended April 30, 1996 and 1995, pursuant to the rules and
regulations of the Securities and Exchange Commission ("SEC"). All adjustments
and provisions included in these statements are of a normal and recurring
nature. For further information regarding the Company's accounting policies,
refer to the Consolidated Financial Statements for the years ended July 31, 1995
and 1994 and related notes included in the Company's Form 10SB filed with the
SEC on or about September 30, 1996.
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation
The consolidated financial statements include the accounts of Myriad
International, Inc.("Myriad") and Subsidiaries (the "Company"). In
August 1994, the Company discontinued all operations related to ship
repairs. See Note 3 - Discontinued Operations. All significant
intercompany accounts and transactions have been eliminated in
consolidation.
Basis of presentation
The accompanying financial statements have been prepared assuming that
the Company will continue as a going concern. As discussed in Note 4,
the Company has incurred significant losses from operations, raising
substantial doubt about its ability to continue as a going concern. The
subsidiaries through which the Company conducted all of its operations
during 1994 are insolvent, have ceased operations and are reflected as
discontinued operations.
There is no assurance that the Company has or will be able to obtain
the working capital necessary to finance ongoing operations, or that
such operations will be profitable. The financial statements do not
include any adjustments that might result from the outcome of this
uncertainty. See Note 4 - Liquidity.
NOTE 2 - ACQUISITION OF MINORITY INTEREST IN PACIFIC MARINE AND STEEL, INC.
In September 1994 the Company formed Pacific Marine and Steel, Inc., a
Delaware corporation ("PMSI"). The Company was issued 5,000,000 shares
of PMSI common stock. From September 1994 to June 1995 an additional
1,874,302 shares of PMSI common stock were issued for cash and as
consideration for services rendered by affiliates of the Company,
including certain officers and directors.
F-24
<PAGE> 69
In December 1995 the Company acquired all the outstanding shares of
PMSI common stock through the issuance of 1,749,302 shares of its Class
A Common Stock pursuant to a one-for-one exchange offer. The 1,749,302
shares of Class A Common Stock issued in this transaction were valued
at $0.25 per share, the estimated fair market value of such shares. The
aggregate consideration of $437,326 was booked as goodwill because it
exceeds the fair value of PMSI's assets and is being amortized over
five years, commencing January 1, 1996. Amortization for the nine
months ended April 30, 1996 was $32,799.
NOTE 3- DISCONTINUED OPERATIONS
For the year ended July 31, 1994 the Company conducted all operating
activities through its wholly-owned subsidiaries: A&E Industries, Inc.
("A&E"), Advanced Test Systems, Inc ("ATS") and Remedquip International
Manufacturing, Inc. ("RIM), (collectively the "Former Subsidiaries").
A&E provided marine fabrication and repair services for both
governmental and commercial companies, usually as the prime contractor.
ATS provided marine electrical subcontractor services to A&E and other
ship repair prime contractors. Ship repair and marine electrical work
performed for the U.S. Navy were the dominant source of revenues for
A&E and ATS. RIM was a fabricator of environmental remediation
equipment.
Upon the completion of a major ship repair contract, A&E filed for
protection under Chapter 11 of the U.S. Bankruptcy Code on August 2,
1994 as result of a substantial loss at July 31, 1994, a deterioration
of working capital and pending or threatened vendor collection actions.
The United States Bankruptcy Court for the Southern District of
California, upon the request of A&E, converted the action to a
Chapter 7 liquidation on November 30, 1994 and appointed a trustee.
Although ATS and RIM have not filed for protection under the U.S.
Bankruptcy Code, they are insolvent and ceased all operations
concurrently with A&E. Accordingly, the financial position and results
of operations of the Former Subsidiaries have been reported as
discontinued operations as of and for the fiscal years ended July 31,
1995 and 1994 and the nine months ended April 30, 1995 and 1996.
At the time of the discontinuance of the operations of the Former
Subsidiaries, the liabilities of the Former Subsidiaries exceeded the
investment of Myriad in these companies. Included with discontinued
operations in 1994 is a gain of $3,454,000 arising from the exclusion
of liabilities in excess of Myriad's investment. This gain is net of an
accrual of $4,032,000 by Myriad to provide for anticipated expenses
related to the discontinued operations. These expenses related to
obligations of the Former Subsidiaries for which Myriad was legally
obligated, as well as obligations related to Former Subsidiary payroll
tax obligations. Upon the bankruptcy of A&E and the discontinuance of
ATS and RIM, the Former Subsidiaries had unpaid payroll taxes due to
the Internal Revenue Service ("IRS") and the State of California
Employment Development Department ("EDD") aggregating $ 1,136,000 and
$403,000, respectively. Although Myriad is not directly responsible for
the liabilities of the Former Subsidiaries, it is required to indemnify
officers of Myriad for expenses incurred during the performance of
their duties. As part of their Myriad corporate responsibilities,
officers of Myriad also served as officers of the Former Subsidiaries.
As officers of the Former Subsidiaries they have been personally
assessed for an amount equal to 100% of the unpaid taxes by the IRS and
the EDD. Myriad has accrued an amount equal to this assessment to
properly reflect its responsibility to indemnify the officers. To the
extent that these taxes are paid from the proceeds of the liquidation
of A&E, the assessment against the officers by the IRS and the EDD will
be reduced accordingly with a dollar-for-dollar reduction in Myriad's
indemnification obligations. At April 30, 1996 and April 30, 1995 there
were no revenues, working capital or assets of the Former Subsidiaries.
NOTE 4- LIQUIDITY
The Company recognized net losses of $3,378,000 for the nine months
ended April 30, 1996; $2,881,000 and $7,116,000 for the fiscal years
ended July 31, 1995 and 1994, respectively, and had a net stockholder's
deficit of $12,613,000 at April 30, 1996, As discussed in Note 3 -
Discontinued Operations, the Company recorded a provision of $4,032,000
at July 31, 1994 for the payment of certain obligations of the Former
Subsidiaries for which the Company is legally obligated, either
directly as a result of guarantees or indirectly as a result of its
F-25
<PAGE> 70
indemnification obligations to officers of the Company who served as
officers of one or more of the former subsidiaries. At April 30, 1996
this provision had been reduced to $3,451,335.
The loss on discontinued operations and the expenses of starting up
certain new businesses has resulted in the Company having cash
shortages and delayed payment of certain obligations when they became
due, including certain federal and state payroll tax obligations of
both the Company and the Former Subsidiaries. This cash shortage has in
turn resulted in several creditors having obtained judgments against
the Company and/or its officers for non-payment of trade payables or
loans made to the Company. The Company is in the process of
renegotiating the timing of certain payments. Management believes that
cash generated from its new businesses will be adequate to meet the
Company's debt and operating requirements commencing during the second
quarter of fiscal 1997; and that it will be current on all of its
obligations by the end of fiscal 1997. Until such time the Company
continues to rely on funds provided by the sale of equity securities
and short-term loans to meet its operating needs and to retire past due
obligations.
NOTE 5 - LOSS PER COMMON SHARE
Net loss per common share is computed using 18,031,000 and 8,286,000
weighted average shares of common stock for the nine months ended
April 30, 1996 and 1995, respectively. Common equivalent shares from
stock options and warrants are excluded from the computation as their
effect is anti-dilutive.
NOTE 6 - RELATED PARTY TRANSACTIONS
(a) Between August 1995 and July 1996 a shareholder made short-term loans
to the Company in the principal amount of $116,500. As of July 31, 1996
$109,000 had been repaid, leaving a balance of $7,500. Of this amount
$80,000 was repaid through proceeds made available by the conversion to
160,000 shares of Class A Common Stock at $0.50 per share. During this
period the shareholder extended the payment dates of these loans on
numerous occasions. In consideration of the making of the loans and the
granting of such extensions the shareholder received 57,147 shares of
Class A Common Stock valued at $30,182 and 472,147 warrants.
As additional consideration for the loans and loan extensions the
shareholder received profit participation of from 1/2% to 20% in
various projects and joint ventures of the Company. In January 1996 the
shareholder and the Company entered into an agreement whereby the
shareholder gave up or substantially reduced such profit participation
in return for 1,500,000 warrants, 500,000 exercisable at $1.00 for two
years, 500,000 exercisable at $1.50 for two years and 500,000
exercisable at $2.00 for two years. The shareholder retained a 5%
profit participation in each of the Company's South Africa and
Venezuela housing projects, neither of which are under active
development at this time, in addition to the 5% profit participation in
the Company's Peruvian finance subsidiary.
(b) During the nine months ending April 30, 1996 a shareholder and his
related partnership were issued 65,672 shares of common stock, valued
at $32,836 and 300,000 common stock purchase warrants exercisable at a
price of $0.45, having a nominal value, for financial and investor
relations consulting services. This shareholder also received 150,000
shares of common stock through the PMSI exchange offer discussed in
Note 2.
(c) During the nine months ending April 30, 1996 a shareholder received
fees of approximately $75,000 plus 1,643,810 common stock purchase
warrants exercisable at a price of $0.55 for financial consulting
services.
(d) In January 1966 a corporation owned by members of the immediate family
of a shareholder, officer and director was issued 500,000 shares Class
A Common Stock pursuant to the terms of the PMSI exchange offer. These
shares were issued on the same terms as the other minority shareholders
of PMSI. See Note 2.
(e) Effective January 1, 1996, the Company entered into an employment
agreement with Jerome O. Crawford ("1996 Agreement") pursuant to which
Mr. Crawford became Chairman and Chief Executive Officer of the Company
for
F-26
<PAGE> 71
the five-year period ending on December 31, 2000. The 1996 Agreement
replaced the employment agreement between the Company and Mr. Crawford
dated September 1, 1992, as amended on August 18, 1994 (the "1992
Agreement") pursuant to which Mr. Crawford served as President and Chief
Executive Officer of the Company.
The 1996 Agreement provides for annual compensation of $250,000 with
annual increases to be determined by the board of directors. The
increase in annual compensation from $105,000 in the 1992 Agreement will
not take effect until the board of directors determines that the Company
"has adequate cash flow" to pay the increased amount. The 1996 Agreement
also provides for an annual bonus to be determined by the Company's
board of directors based on profitability, a $2000 per month housing and
commuter allowance, and a $2,000,000 life insurance policy with the
beneficiary to be designated by Mr. Crawford.
The 1996 Agreement grants Mr. Crawford 1,000,000 shares of the Company's
Class A Common Stock, which will vest on March 31, 1996, and an award of
2,000,000 shares of the Company's Class B Common Stock, 1,500,000 shares
of which are subject to repurchase by the Company at nominal cost in
equal annual installments of 500,000 shares between December 31, 1996
and December 31, 1998 in the event the 1996 Agreement is wrongfully
terminated by Mr. Crawford or terminated for cause by the Company. In
addition 350,000 shares of Class B Common Stock awarded to Mr. Crawford
under the 1992 Agreement is subject to repurchase at a nominal cost on
the same basis as under the 1996 Agreement at the rate of 175,000 shares
per year between August 18, 1997 and August 18, 1998.
The 1996 Agreement provides that all shares of Class B Common Stock held
by Mr. Crawford shall not be sold, assigned, hypothecated, or otherwise
encumbered or transferred during the lifetime of Mr. Crawford except to
his spouse, children or grandchildren or to another registered holder of
Class B Common Stock and that the shares of Class B Common Stock held by
Mr. Crawford shall not be converted into shares of Class A Common Stock
except by Mr. Crawford or a permitted transferee. At January 31, 1996
the only holders of Class B Common Stock were Mr. Crawford and Mr.
Parks.
The 1996 Agreement grants to Mr. Crawford an option to purchase
2,500,000 shares of Class B Common Stock at a price of $0.25 per share
for a five year period. The option vests 1,000,000 shares immediately
with the balance vesting in equal annual installments of 375,000 from
January 1, 1997 to January 1, 2000.
Mr. Crawford has not received payment of $61,000 of the compensation
payable to him for the nine months ending April 30, 1996.
(f) Effective January 1, 1996, the Company entered into an employment
agreement with Victor L. Parks ("1996 Agreement") pursuant to which
Mr. Park's will serve as Senior Vice President for the five year period
ending on December 31, 2000. The 1996 Agreement replaced the employment
agreement between the Company and Mr. Parks dated August 18, 1994
(the"1994 Agreement") pursuant to which Mr. Parks served as Senior Vice
President.
The 1996 Agreement provides for annual compensation of $125,000 with
annual increases to be determined by the board of directors. The
increase in annual compensation from $75,000 in the 1994 Agreement will
not take effect until the board of directors determines that the Company
"has adequate cash flow" to pay the increased amount. The 1996 Agreement
also provides for a one-time signing bonus of $20,000 and an annual
bonus to be determined by the Company's board of directors based on
profitability.
The 1996 Agreement grants Mr. Parks 500,000 shares of the Company's
Class A Common Stock, which vests immediately and an award of 600,000
shares of the Company's Class B Common Stock, 450,000 shares of which
are subject to repurchase by the Company at nominal cost in equal annual
installments of 150,000 shares between December 31, 1996 and December
31, 1998 in the event the 1996 Agreement is wrongfully terminated by Mr.
Parks or terminated for cause by the Company. In addition 251,250 shares
of Class B Common Stock awarded to Mr. Parks under the 1994 Agreement is
subject to repurchase at a nominal cost on the same basis as under the
1996 Agreement at the rate of 83,750 shares per year between August 18,
1996 and August 18, 1998.
The 1996 Agreement provides that all shares of Class B Common Stock held
by Mr. Parks shall not be sold, assigned, hypothecated, or otherwise
encumbered or transferred during the lifetime of Mr. Parks except to his
spouse, children or grandchildren or to another registered holder of
Class B Common Stock and that the shares of Class B Common Stock held by
Mr. Parks shall not be converted into shares of Class A Common Stock
except by Mr. Parks or a permitted transferee. At January 31, 1996 the
only holders of Class B Common Stock were Mr.
F-27
<PAGE> 72
Parks and Mr. Crawford.
The 1996 Agreement grants to Mr. Parks an option to purchase 1,000,000
shares of Class A Common Stock at a price of $0.25 per share for a five
year period. The option vests 200,000 shares immediately with the
balance vesting in equal annual installments of 200,000 shares from
January 1, 1997 to January 1, 2000.
Mr. Parks has not received payment of $38,000 and $25,000 of the
compensation payable to him for the fiscal year ended July 31, 1995 and
the nine months ending April 30, 1966, respectively.
(g) Effective January 1, 1996, the Company entered into an employment
agreement with Sharon Snyder ("1996 Agreement") pursuant to which Ms.
Snyder will serve as Senior Vice President and Treasurer for the five
year period ending on December 31, 2000. The 1996 Agreement replaced the
employment agreement between the Company and Ms. Snyder dated August 18,
1994 (the "1994 Agreement") pursuant to which Ms. Snyder served as
Senior Vice President and Chief Financial Officer.
The 1996 Agreement provides for annual compensation of $100,000 with
annual increases to be determined by the board of directors. The
increase in annual compensation from $85,000 in the 1992 Agreement will
not take effect until the board of directors determines that the Company
"has adequate cash flow" to pay the increased amount. The 1996 Agreement
also provides for a one-time signing bonus of $20,000 and an annual
bonus to be determined by the Company's board of directors based on
profitability.
The 1996 Agreement grants Ms. Snyder 200,000 shares of the Company's
Class A Common Stock, which vests immediately and an option to purchase
500,000 shares of Class A Common Stock at a price of $0.25 per share for
a five year period. The option vests 100,000 shares immediately with the
balance vesting in equal annual installments of 100,000 shares from
January 1, 1997 to January 1, 2000.
Ms. Snyder has not received payment of $59,000 of the compensation
payable to her for the nine months ending April 30, 1996.
(h) Effective January 1, 1996, the Company entered into an employment
agreement with Michael Nalu ("1996 Agreement") pursuant to which Mr.
Nalu will serve as a Vice President for the five year period ending on
December 31, 2000.
The 1996 Agreement provides for annual compensation of $100,000 with
annual increases to be determined by the board of directors.
The 1996 Agreement grants Mr. Nalu 150,000 shares of the Company's Class
A Common Stock, which vests immediately and an option to purchase
300,000 shares of Class A Common Stock at a price of $0.25 per share for
a five year period. The option vests 100,000 shares immediately with the
balance vesting in equal annual installments of 50,000 shares from
January 1, 1997 to January 1, 2000.
Mr. Nalu has not received payment of $7,900 and $28,000 of the
compensation payable to him for the fiscal year ended July 31, 1995 and
the nine months ending April 30, 1996, respectively.
(i) In June 1996 the Company renegotiated a loan with Conversion Industries
Inc., a shareholder. See Note 8 - Subsequent Events.
(j) The Company is obligated to indemnify certain of its officers for
payroll tax and other liabilities which they have incurred as a result
of the discontinuance of the Former Subsidiaries. See Note 3 -
Discontinued Operations; Note and Note 4 - Liquidity.
F-28
<PAGE> 73
NOTE 7 - WARRANTS
The Company has issued warrants to purchase common stock in connection
with private placements of equity securities, loans and to certain
consultants of the Company. These warrants generally have terms ranging
from two to five years, and are fully vested. All warrants outstanding
at July 31, 1996 are exercisable between 1996 and 2001.
<TABLE>
<CAPTION>
EXERCISE
SHARES PRICE
------ --------
<S> <C> <C>
Outstanding at 7/31/95 2,898,757 $ 0.37 -$1.10
Exercisable at 7/31/95 2,898,757 $ 0.37 -$1.10
Granted 8/1/95 to 7/31/96 17,904,206 $ 0.39 -$2.00
Cancelled 80,000 $ 0.50
Outstanding at 7/31/96 20,772,963 $ 0.37 -$2.00
Exercisable at 7/31/96 20,772,963 $ 0.37 -$2.00
</TABLE>
NOTE 8 - SUBSEQUENT EVENTS
Conversion Industries Inc. Loan
On June 26, 1996 the Company entered into an agreement with Conversion
regarding repayment of their loan of $6,295,000 and accrued interest of
$1,921,000. In consideration of (i) a cash payment of $750,000, and
(ii) the assignment of all rights, title and interest that Myriad and
ATS have in the A&E bankruptcy, Conversion has agreed to release Myriad
of all liability with respect to the loan agreement and all amounts
owing thereunder. Pursuant to an amendment to the agreement dated
August 14, 1996 the cash payment of $750,000 is payable in three
$250,000 installments due on or before September 3, 1996, October 1,
1996 and November 1, 1996. Conversion is required to submit the
agreement to Bankruptcy Court for approval as soon as reasonably
practical. The forgiveness of debt of $7,466,000 will be treated as
income for financial statement purposes and as additional paid-in
capital for tax purposes. As of September 20, 1996 the Company has not
made the initial payment of $250,000. The following pro forma
illustrates the effect of this agreement as if it were effective APRIL
30, 1996:
<TABLE>
<CAPTION>
As Reported Pro Forma
----------- ---------
<S> <C> <C>
Total Assets $ 1,374,000 $ 1,374,000
Total Liabilities $ 13,987,000 $ 6,529,000
Shareholders' Deficiency $(12,613,000) $ (5,155,000)
</TABLE>
Amendment to Certificate of Incorporation
In December 1995, Myriad amended its Certificate of Incorporation to: (i)
change the name of the Company to "Myriad International, Inc.", (ii)
increase the authorized number of shares to 105,000,000, consisting of
75,000 shares of Class A Common Stock, 10,000,000 shares of Class B
Common Stock and 20,000,000 shares of Preferred Stock; and (iii) clarify
certain provisions relating to the voting rights of the Class B Common
Stock.
F-29
<PAGE> 1
EXHIBIT 3.1
RESTATED CERTIFICATE OF INCORPORATION
OF
MYRIAD INTERNATIONAL, INC.
(Originally Incorporated on 7/21/92).
Myriad International, Inc., a corporation organized and existing under the laws
of the State of Delaware, hereby certifies as follows:
1. The name of the corporation is Myriad International, Inc. and the
name under which the corporation was originally incorporated is Myriad
Industries, Inc.
2. This Restated Certificate of Incorporation only restates and
integrates and does not furher amend the provisions of the Certificate of
Incorporation of this corporation as heretofore amended or supplemented and
there is no discrepancy between thoses provisions and the provisions of the
Restated Certificate of Incorporation.
3. The text of the Certificate of Incorporation as amended or
supplemented heretofore is hereby restated without further amendments or changes
to read as herein set forth in full:
ARTICLE I
The name of the corporation is MYRIAD INTERNATIONAL, INC.
ARTICLE II
The location of the registered office of the Corporation in the State of
Delaware is Corporation Trust Center, 1209 Orange Street in the City of
Wilmington, County of New Castle. The name of the registered agent of the
Corporation at such address is The Corporation Trust Company.
ARTICLE III
The purposes of the Corporation are (a) to engage in the design, construction,
fabrication and repair of ships and boats, (b) to engage in the design,
fabrication and construction of steel structures and equipment and (c) to engage
in any capacity in any lawful act or activity for which corporations may be
organized under the General Corporation Law of the State of Delaware and the
Corporation shall be authorized to exercise and enjoy all powers, rights and
privileges conferred upon corporations by the laws of the State of Delaware as
in force from time to time, including, without limitation, all powers necessary
or appropriate to carry out all those acts and activities in which it may
lawfully engage.
ARTICLE IV
A. The total authorized capital stock of the Corporation is 105,000,000 shares,
consisting of (i) 75,000,000 shares which are designated Class A Common Stock
and have a par value of $0.01 per share; (ii) 10,000,000 shares which are
designated Class B Common Stock and have a par
<PAGE> 2
value of $0.01 per share; and (iii) 20,000,000 shares which are designated
Preferred Stock and have a par value of $0.01 per share. The Preferred Stock may
be issued in any number of series, as determined by the Board of Directors. The
Board may by resolution fix the designation and number of shares of any such
series, and may determine, alter, or revoke the rights, including voting rights,
preferences, privileges, and restrictions pertaining to any wholly unissued
series. The Board may thereafter in the same manner increase or decrease the
number of shares of any such series (but not below the number of shares of that
series then outstanding).
B. Except as set forth below, the Class A Common Stock and the Class B Common
Stock are identical in all respects and have equal rights and privileges.
1. Voting. The holders of shares of Class A Common Stock shall have
exclusive voting power when no shares of Class B Common Stock are outstanding
and the holders of shares of Class B Common Stock shall have exclusive voting
power when no shares of Class A Common Stock are outstanding. Otherwise, Voting
power shall be divided between such classes as follows:
a. With respect to the election of directors, the holders of Class A
Common Stock voting as a separate class shall be entitled to elect that number
of directors which constitutes 25% of the authorized number of members of the
Board of Directors and, if such 25% is not a whole number, then the holders of
Class A Common Stock shall be entitled to elect the nearest higher whole number
of directors. Holders of Class B Common Stock voting as a separate class shall
be entitled to elect the remaining directors.
b. The holders of Class A Common Stock shall be entitled to vote as a
separate class on the removal, with or without cause, of any director elected by
the holders of Class A Common Stock and the holders of Class B Common Stock
shall be entitled to vote as a separate class on the removal, with or without
cause, of any director elected by the holders of Class B Common Stock.
c. Any vacancy in the office of a director elected by the holders of
the Class A Common Stock shall be filled by a vote of the remaining director or
directors elected by that class and any vacancy in the office of a director
elected by the holders of the Class B Common Stock shall be filled by a vote of
the director or directors elected by that class. If no director elected by a
class is remaining to elect a successor to a director elected by the same class,
the vacancy will be filled by a vote of the holders of the shares of that class.
Any director elected by the remaining directors of a class shall serve until the
next annual meeting of stockholders and until such director's successor shall be
chosen by a vote of the stockholders of the relevant class.
d. If on the record date for any meeting of stockholders at which
directors are to be elected, the number of outstanding shares of Class B Common
Stock is less than twelve and one half (12 1/2%) percent of the aggregate number
of outstanding shares of Class A Common Stock and Class B Common Stock, and the
number of outstanding shares of Class A Common Stock is not less than ten (10%)
percent of the aggregate number of outstanding shares of Class A
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Common Stock and Class B Common Stock, the holders of Class A Common Stock shall
continue to have the right to elect or remove directors as set forth in
subparagraphs 1(a), (b) and (c) of this Article. The remaining directors to be
elected or removed at such meeting shall be elected or removed by the holders of
Class A Common Stock and Class B Common Stock voting together as a single class
with each share of Class A Common Stock being entitled to one-tenth of a vote
and each share of Class B Common Stock being entitled to one vote,
e. If on the record date for any meeting of stockholders at which
directors are to be elected, the number of outstanding shares of Class A Common
Stock is less than ten (10%) percent of the aggregate number of outstanding
shares of Class A Common Stock and Class B Common Stock , the provisions set
forth in subparagraphs 2(a), (b) and (c) of this Article shall not apply. In
such case, all directors to be elected or removed at such meeting shall be
elected or removed by the holders of Class A Common Stock and Class B Common
Stock voting together as a single class with each share of Class A Common Stock
being entitled to one-tenth of a vote and each share of Class B Common Stock
being entitled to one vote,
f. The holders of Class A Common Stock and the holders of Class B
Common Stock shall be entitled to vote as separate classes on such other matters
as may be required by law or the Certificate of Incorporation to be submitted to
such holders voting as separate classes.
g. On all matters not specified in subparagraphs 2(a), (b), (c), (d)
and (e) of this Article or required by law to be submitted to such holders
voting as separate classes, the holders of Class A Common Stock and Class B
Common Stock shall vote together as a single class with each share of Class A
Common Stock being entitled to one-tenth of a vote and each share of Class B
Common Stock being entitled to one vote.
h. The holders of Class A Common Stock and Class B Common Stock shall
vote together as a single class (with each share of Class A Common Stock being
entitled to one-tenth of a vote and each share of Class B Common Stock being
entitled to one vote) with respect to any proposed increase or decrease in the
aggregate number of authorized shares of Class A Common Stock, increase or
decrease in the par value of the Class A Common Stock, or any alteration or
change in the powers, preferences, or special rights of the shares of Class A
Common Stock.
2. Conversion. So long as any shares of Class A Common Stock are issued
or outstanding, each holder of record of Class B Common Stock may at any time or
from time to time, in such holder's sole discretion and at such holder's option,
convert any whole number or all of such holder's Class B Common Stock into
shares of fully paid and nonassessable Class A Common Stock at the rate (subject
to adjustment as hereinafter provided) of one share of Class A Common Stock for
each share of Class B Common Stock surrendered for conversion. Any such
conversion may be effected by any holder of Class B Common Stock by surrendering
such holder's certificate or certificates for Class B Common Stock to be
converted, duly endorsed, at the office of the Corporation or any transfer agent
for the Class B Common Stock, together with a written notice to the Corporation
at such office that such holder elects to convert all or a
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specified whole number of shares of Class B Common Stock and stating the name or
names in which such holder desires the certificate or certificates for such
shares of Class A Common Stock to be issued. Promptly thereafter, the
Corporation shall issue and deliver to such holder or such holder's nominee or
nominees, a certificate or certificates for the number of shares of Class A
Common Stock to which such holder shall be entitled as aforesaid. Such
conversion shall be deemed to have been made at the close of business on the
date of such surrender and the person or persons entitled to receive Class A
Common Stock issuable on such conversion shall be treated for all purposes as
the record holder or holders of such Class A Common Stock on that date.
The number of shares of Class A Common Stock into which the Class B Common Stock
may be converted shall be subject to adjustment from time to time in the event
of any reorganization, reclassification of the stock of the Corporation,
consolidation or merger of the Corporation with or into another corporation or
sale or conveyance of all or substantially all of the assets of the Corporation
to another corporation or other entity or person. In any such case, appropriate
adjustments shall be made by the Board of Directors of the Corporation in the
application of the provisions herein set forth with respect to the rights and
interests thereafter of the holders of Class B Common Stock, to the end that the
provisions set forth herein (including provisions for adjustment of the
conversion rate) shall thereafter be applicable, as nearly as reasonably may be,
in relation to any securities or other assets thereafter deliverable on
conversion of the Class B common Stock.
The Corporation shall at all times reserve and keep available out of the
authorized and unissued Class A Common Stock, solely for the purpose of
effecting the conversion of the outstanding shares of Class B Common Stock, such
number of shares of Class A Common Stock as shall from time to time be
sufficient to effect the conversion of all outstanding Class B Common Stock and
if, at any if, at any time, the number of authorized and unissued shares of
Class A Common Stock shall not be sufficient to effect conversion of the number
of then outstanding shares of Class B Common Stock, the Corporation shall take
such corporate action as may be necessary to increase the number of authorized
and unissued shares of Class A Common Stock to such number as shall be
sufficient for such purposes.
C. So long as the Corporation has at least two classes of voting Common Stock
and at least one such class of voting Common Stock is listed on a national
securities exchange, the voting rights granted to any Preferred Stock will not
exceed one vote per share and the shares of Preferred Stock may vote only with
the Class B Common Stock in the election of directors.
ARTICLE V
The existence of the Corporation is to be perpetual.
ARTICLE VI
The business and affairs of the Corporation shall be managed by the Board of
Directors and the Directors need not be elected by ballot unless required by the
Bylaws of the Corporation.
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ARTICLE VII
In furtherance and not in limitation of the powers conferred by the laws of the
State of Delaware, the Board of Directors is expressly authorized to adopt,
amend or repeal its Bylaws.
ARTICLE VIII
The Corporation reserves the right at any time, and from time to time, to amend,
alter, change or repeal any provision contained in this Certificate of
Incorporation, and other provisions authorized by the laws of the State of
Delaware at the time in force may be added or inserted, in the manner now or
hereafter prescribed by law; and all rights, preferences and privileges of
whatsoever nature conferred upon stockholders, directors or any other persons
whomever by and pursuant to this Certificate of Incorporation in its present
form or as hereafter amended are granted subject to the rights reserved in this
Article.
ARTICLE IX
A director of this Corporation shall not be liable to the Corporation or its
stockholders for monetary damages for breach of fiduciary duty as a director,
except to the extent such exemption from liability or limitation thereof is not
permitted under the General Corporation Law of the State of Delaware as the same
exists or may hereafter be amended.
Any repeal or modification of the foregoing paragraph shall
not adversely affect any right or protection of a director of the Corporation
existing hereunder with respect to any act or omission occurring prior to such
repeal or modification.
4. This Restated Certificate of Incorporation was duly adopted by the
Board of Directors in accordance with Section 245 of the General Corporation Law
of the State of Delaware.
IN WITNESS WHEREOF, said Myriad International, Inc. has caused this
Certificate to be signed by Jerome O. Crawford its Chairman, this 27th day of
June, 1996.
Myriad International, Inc.
/s/ Jerome O. Crawford
------------------------------
Jerome O. Crawford, Chairman
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EXHIBIT 3.2
Amended on April 6, 1996
MYRIAD INTERNATIONAL, INC.
* * * * *
B Y - L A W S
* * * * *
ARTICLE I
OFFICES
Section 1. The registered office shall be in the City of
Wilmington, County of New Castle, State of Delaware.
Section 2. The corporation may also have offices at such other
places both within the without the State of Delaware as the board of directors
may from time to time determine or the business of the corporation may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
Section 1. All meetings of the stockholders for the election
of directors shall be held in the County of San Diego, State of California, at
such place as may be fixed from time to time by the board of directors, or at
such other place either within or without the State of Delaware as shall be
designated from time to time by the board of directors and stated in the notice
of the meeting or in a duly executed waiver of notice thereof.
Section 2. Annual meetings of stockholders shall be held on
the second Wednesday of December if not a legal holiday, and if a legal holiday,
then on the next secular day following, at 10:00 A.M., or at such other date and
time as shall be designated from time to time by the board of directors and
stated in the notice of the meeting, at which they shall elect a board of
directors, and transact such other business as may properly be brought before
the meeting.
Section 3. Written notice of the annual meeting stating the
place, date and hour of the meeting shall be given to each stockholder entitled
to vote at such meeting not less than ten (10) nor more than sixty (60) days
before the date of the meeting.
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Section 4. The officer who has charge of the stock ledger of
the corporation shall prepare and make, at least ten days before every meeting
of stockholders, a complete list of the stockholders entitled to vote at the
meeting, arranged in alphabetical order, and showing the address of each
stockholder and the number of shares registered in the name of each stockholder.
Such list shall be open to the examination of the stockholders, for any purpose
germane to the meeting, during ordinary business hours, for a period of at least
ten days prior to the meeting, either at a place within the city where the
meeting is to be held, which place shall be specified in the notice of the
meeting, or, if not so specified, at the place where the meeting is to be paid.
This list shall also be produced and kept at the time and place of the meeting
during the whole time thereof, and may be inspected by any stockholder who is
present.
Section 5. Special meeting of the stockholders, for any
purpose or purposes, unless otherwise prescribed by statute or by the
certificate of incorporation, may be called by the chairman and shall be called
by the chairman or secretary at the request in writing of stockholders owning a
majority in amount of the Class A Common Stock and Class B Common Stock of
corporation issued and outstanding and entitled to vote. Such request shall
state the purpose or purposes of the proposed meeting.
Section 6. Written notice of a special meeting stating the
place, date and hour of the meeting and the purpose or purposes for which the
meeting is called, shall be given not less than three (3) nor more than five (5)
days before the date of the meeting, to each stockholder entitled to vote at
such meeting.
Section 7. Business transacted at any special meeting of
stockholders shall be limited to the purposes stated in the notice.
Section 8. The holders of a majority of the stock issued and
outstanding and entitled to vote thereat, present in person or represented by
proxy, shall constitute a quorum at all meetings of the stockholders for the
transaction of business except as other-wise provided by statute or by the
certificate of incorporation. Where a separate vote by a class or classes is
required, a majority of +we outstanding shares of such class or classes, present
in person or represented by proxy, shall constitute a quorum entitled to take
action with respect to that vote on that matter and the affirmative vote of the
majority of shares of such class or classes present in person or represented by
proxy at the meeting shall be the act of such class. If, however, such quorum
shall not be present or represented at any meeting of the stockholders, the
stockholders entitled to vote thereat, present in person or represented by
proxy, shall have power to adjourn the meeting from time to time, without notice
other than announcement at the meeting, until a quorum shall be present or
represented. 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. If the adjournment is for more than thirty
days, or if after the adjournment a new record date is fixed for the adjourned
meeting, a notice of the adjourned meeting shall be given to each stockholder of
record entitled to vote at the meeting.
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Section 9. When a quorum is present at any meeting, the vote
of the holders of a majority of the stock having voting power present in person
or represented by proxy shall decide any question brought before such meeting,
unless the question is one upon which by express provision of the statutes or of
the certificate of incorporation, a different vote is required in which case
such express provision shall govern and control the decision of such question.
Section 10. The holders of Class A Common Stock shall at every
meeting of the stockholders be entitled to one vote in person or by proxy for
each share of the Class A Common Stock power held by such stockholder and the
holders of Class B Common Stock shall at every meeting of the stockholders be
entitled to ten votes in person or by proxy for each share of the Class B Common
Stock power held by such stockholder, but no proxy shall be voted on after three
years from its date, unless the proxy provides for a longer period.
Section 11. Unless otherwise provided in the certificate of
incorporation, any action required to be taken at any annual or special meeting
of stockholders of the corporation, or any action which may be taken at any
annual or special meeting of such stockholders, may be taken without a meeting,
without prior notice and without a vote, if a consent in writing, setting forth
the action so taken, shall be signed by the holders of outstanding stock having
not less than the minimum number of votes that would be necessary to authorize
or take such action at a meeting at which all shares entitled to vote thereon
were present and voted. Prompt notice of the taking of the corporate action
without a meeting by less than unanimous written consent shall be given to those
stockholders who have not consented in writing.
ARTICLE III
DIRECTORS
Section 1.(a) The number of directors which shall constitute
the whole board shall be not less than four (4) nor more than nine (9). The
first board shall consist of six (6) directors. Thereafter, within the limits
above specified, the number of directors shall be determined by resolution of
the board of directors or by the stockholders at the annual meeting. The
directors shall be elected at the annual meeting of the stockholders, except as
provided in Section 2 of this Article, and each director elected shall hold
office until his successor is elected and qualified. Directors need not be
stockholders.
(b) With respect to the election of directors, the
holders of Class A Common Stock voting as a separate class shall be entitled to
elect that number of directors which constitutes 25% of the authorized number of
members of the board of directors and, if such 25% is not a whole number, then
the holders of Class A Common Stock shall be entitled to elect the nearest
higher whole number of directors. Holders of Class B Common Stock voting as a
separate class shall be entitled to elect the remaining directors.
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(c) The holders of Class A Common Stock shall be
entitled to vote as a separate class on the removal, with or without cause, of
any director elected by the holders of Class A Common Stock and the holders of
Class B Common Stock shall be entitled to vote as a separate class on the
removal, with or without cause, of any director elected by the holders of Class
B Common Stock.
(d) Any vacancy in the office of a director elected
by the holders of the Class A Common Stock shall be filled by a vote of the
remaining director or directors elected by that class and any vacancy in the
office of a director elected by the holders of the Class B Common Stock shall be
filled by a vote of the director or directors elected by that class. If no
director elected by a class is remaining to elect a successor to a director
elected by the same class, the vacancy will be filled by a vote of the holders
of the shares of that class. Any director elected by the remaining directors of
a class shall serve until the next annual meeting of stockholders and until such
director's successor shall be chosen by a vote of the stockholders of the
relevant class.
Section 2. Newly created directorships resulting
from any increase in the authorized number of directors shall be designated as
Class A or Class B directors by a majority of the directors then in office,
provided that the number of Class A directors shall not be less than 25% of the
total number of directors rounded to the next highest whole number. Newly
created Class A directors shall be elected by a majority of the Class A
directors then in office or by a sole remaining Class A director, and the Class
A directors so chosen shall hold office until the next annual election and until
their successors are duly elected and shall qualify, unless sooner displaced.
Newly created Class B directors shall be elected by a majority of the Class B
directors then in office or by a sole remaining Class B director, and the Class
B directors so chosen shall hold office until the next annual election and until
their successors are duly elected and shall qualify, unless sooner displaced. If
there are no directors in office, then an election of directors may be held in
the manner provided by statute. If, at the time of filling any vacancy or any
newly created directorship, the directors then in office shall constitute less
than a majority of the whole board (as constituted immediately prior to any such
increase), the Court of Chancery may, upon application of any stockholder or
stockholders holding at least ten percent of the total number of shares at the
time outstanding having the right to vote for such directors, summarily order an
election to be held to fill any such vacancies or newly created directorships,
or to replace the directors chosen by the directors then in office.
Section 3. The business of the corporation shall be managed by
or under the direction of its board of directors which may exercise all such
powers of the corporation and do all such lawful acts and things as are not by
statute or by the certificate of incorporation or by these by-laws directed or
required to be exercised or done by the stockholders.
MEETINGS OF THE BOARD OF DIRECTORS
Section 4. The board of directors of the corporation may hold
meetings, both regular and special, either within or without the State of
Delaware.
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Section 5. The first meeting of each newly elected board of
directors shall be held at such time and place as shall be fixed by the vote of
the stockholders at the annual meeting and no notice of such meeting shall be
necessary to the newly elected directors in order to constitute the meeting,
provided a quorum shall be present. In the event of the failure of the
stockholders to fix the time and place of such first meeting of the newly
elected board of directors, or in the event such meeting is not held at the time
and place so fixed by the stockholders, the meeting may be held at such time and
place as shall be specified in a notice given as hereinafter provided for
special meetings of the board of directors, or as shall be specified in a notice
given as hereinafter provided for special meetings of the board of directors, or
as shall be specified in a written waiver signed by all the directors.
Section 6. Regular meetings of the board of directors may be
held without notice at such time and at such place as shall from time to time be
determined by the board.
Section 7. Special meetings of the board may be called by the
chairman on one (1) days' notice to each director, either personally or by mail,
telecopy, electronic mail or by telegram; special meetings shall be called by
the chairman or secretary in like manner and on like notice on the written
request of the sole director.
Section 8. At all meetings of the board a majority of the
directors shall constitute a quorum for the transaction of business and the act
of a majority of the directors present at any meeting at which there is a quorum
shall be the act of the board of directors, except as may be otherwise
specifically provided by statute or by the certificate of incorporation. If a
quorum shall not be present at any meeting of the board of directors the
directors present thereat may adjourn the meeting from time to time, without
notice other than announcement at the meeting, until a quorum shall be present.
Section 9. Unless otherwise restricted by the certificate of
incorporation or these by-laws, any action required or permitted to be taken at
any meeting of the board of directors or of any committee thereof may be taken
without a meeting, if all members of the board or committee, as the case may be,
consent thereto in writing, and the writing or writings are filed with the
minutes of proceedings of the board or committee.
Section 10. Unless otherwise restricted by the certificate of
incorporation or these by-laws, members of the board of directors, or any
committee designated by the board of directors, may participate in a meeting of
the board of directors, or any committee, by means of conference telephone or
similar communications equipment by means of which all persons participating in
the meeting can hear each other, and such participation in the meeting shall
constitute presence in person at the meeting.
COMMITTEES OF DIRECTORS
Section 11. The board of directors may, by resolution passed
by a majority of the whole board, designate one or more committees, each
committee to consist of one or more
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of the directors of the corporation. The board may designate one or more
directors as alternate members of any committee, who may replace any absent or
disqualified member at any meeting of the committee.
In the absence or disqualification of a member of a committee,
the member or members thereof present at any meeting and not disqualified from
voting, whether or not he or they constitute a quorum, may unanimously appoint
another member of the board of directors to act at the meeting in the place of
any such absent or disqualified member.
Any such committee, to the extent provided in the resolution
of the board of directors, shall have and may exercise all the powers and
authority of the board of directors in the management of the business and
affairs of the corporation, and may authorize the seal of the corporation to be
affixed to all papers which may require it; but no such committee shall have the
power or authority in reference to amending the certificate of incorporation,
(except that a committee may, to the extent authorized in the resolution or
resolutions providing for the issuance of shares of stock adopted by the board
of directors as provided in Section 151(a) fix any of the preferences or rights
of such shares relating to dividends, redemption, dissolution, any distribution
of assets of the corporation or the or the conversion into, or the exchange of
such shares for, shares of any other class or classes or any other series of the
same or any other class or classes of stock of the corporation) adopting an
agreement of merger or consolidation, recommending to the stockholders the sale,
lease or exchange or all or substantially all of the corporation's property and
assets, recommending to the stockholders a dissolution of the corporation or a
revocation of a dissolution, or amending the by-laws of the corporation; and,
unless the resolution or the certificate of incorporation expressly so provide,
no such committee shall have the power or authority to declare a dividend or to
authorize the issuance of stock or to adopt a certificate of ownership and
merger. Such committee or committees shall have such name or names as may be
determined from time to time by resolution adopted by the board of directors.
Section 12. Each committee shall keep regular minutes of its
meetings and report the same to the board of directors when required.
COMPENSATION OF DIRECTORS
Section 13. Unless otherwise restricted by the certificate of
incorporation or these by-laws, the board of directors shall have the authority
to fix the compensation of directors. The directors may be paid their expenses,
if any, of attendance at each meeting of the board of directors and may be paid
a fixed sum for attendance at each meeting of the board of directors or a stated
salary as director. No such payment shall preclude any director from serving the
corporation in any other capacity and receiving compensation therefor. Members
of special or standing committees may be allowed like compensation for attending
committee meetings.
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REMOVAL OF DIRECTORS
Section 14. Unless otherwise restricted by the certificate of
incorporation or by law, any director or the entire board or directors may be
removed, with or without cause, by the holders of a majority of shares entitled
to vote at an election of directors; provided that the directors elected by the
vote of the Class A Common Stock may only be removed by the holders of a
majority of the shares of the Class A Common Stock entitled to vote at an
election of directors and the directors elected by the vote of the Class B
Common Stock may only be removed by the holders of a majority of the shares of
the Class B Common Stock entitled to vote at an election of directors.
ARTICLE IV
NOTICES
Section 1. Whenever, under the provisions of the statutes or
of the certificate of incorporation or of these by-laws, notice is required to
be given to any director or stockholder, it shall not be construed to mean
personal notice, but such notice may be given in writing, by mail, addressed to
such director or stockholder, at his address as it appears on the records of the
corporation, with postage thereon prepaid, and such notice shall be deemed to be
given at the time when the same shall be deposited in the United States mail.
Notice to directors may also be given by telecopy, electronic mail or by
telegram.
Section 2. Whenever any notice is required to be given under
the provisions of the statutes or of the certificate of incorporation or of
these by-laws, a waiver to said notice, whether before or after the time stated
therein, shall be deemed equivalent thereto.
ARTICLE V
OFFICERS
Section 1. The officers of the corporation shall be chosen by
the board of directors and shall be a chairman of the board of directors, , a
chief executive officer, a president, a senior vice president, a vice-president,
a secretary and a treasurer. The board of directors may also choose additional
senior vice presidents, vice-presidents, and one or more assistant secretaries
and assistant treasurers. Any number of offices may be held by the same person,
unless the certificate of incorporation or these by-laws otherwise provide.
Section 2. The board of directors at its initial meeting and
the first meeting after each annual meeting of stockholders shall choose a chief
executive officer, a president, one or more senior vice presidents, one or more
vice presidents, a secretary and a treasurer.
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Section 3. The board of directors may appoint such other
officers and agents as it shall deem necessary who shall hold their offices for
such terms and shall exercise such powers and perform such duties as shall be
determined from time to time by the board.
Section 4. The salaries of all officers and agents of the
corporation shall be fixed by the board of directors.
Section 5. The officers of the corporation shall hold office
until their successors are chosen and qualify. Any officer elected or appointed
by the board of directors may be removed at any time by the affirmative vote of
a majority of the board of directors. Any vacancy occurring in any office of the
corporation shall be filled by the board of directors.
THE CHAIRMAN OF THE BOARD OF DIRECTORS
Section 6. The chairman of the board of directors shall
preside at all meetings of the stockholders and the board of directors of the
corporation and shall be the principal spokesperson of the corporation. The
chairman of the board of directors shall be the principal representative of the
corporation before government and private agencies and shall have such other
duties and responsibilities as from time to time determined by a majority of the
board of directors.
CHIEF EXECUTIVE OFFICER
Section 7. The chief executive officer shall be the chief
executive officer of the corporation, shall in the absence of the chairman
preside at all meetings of the stockholders and the board of directors, shall
have general and active management of the business of the corporation and shall
see that all orders and resolutions of the board of directors are carried into
effect.
Section 8. He shall execute bonds, mortgages and other
contracts requiring a seal, under the seal of the corporation, except where
required or permitted by law to be otherwise signed and executed and except
where the signing and the execution thereof shall be expressly delegated by the
board of directors to some other officer or agent of the corporation.
THE PRESIDENT
Section 9. The President shall be the chief operating officer
of the corporation and shall have general and active management of the business
operations of the corporation and, subject to the direction of the Chief
Executive Officer, shall see that all orders and resolutions of the board of
directors are carried into effect.
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Section 10. In the absence of the Chief Executive Officer or
in the event of his inability or refusal to act, the president shall perform the
duties of the Chief Executive Officer, and when so acting, shall have all the
powers of and be subject to all the restrictions upon the Chief Executive
Officer. The president shall perform such other duties and have such other
powers as the board of directors may from time to time prescribe.
SENIOR VICE-PRESIDENTS
Section 11. In the absence of the chief executive officer or
in the event of his inability or refusal to act, the senior vice-president (or
in the event there be more than one senior vice-president, the senior
vice-presidents in their order designated by the directors, or in the absence of
any designation, then in the order of their election) shall perform the duties
of the chief executive officer, and when so acting, shall have all the powers of
and be subject to all the restrictions upon the chief executive officer. The
senior vice-presidents shall perform such other duties and have such other
powers as the board of directors may from time to time prescribe.
CHIEF FINANCIAL OFFICER
Section 12. Chief Financial Officer. The chief financial
officer is responsible for staffing and managing the Corporation's accounting
systems and procedures. He supervises and directs the accounting staff in the
preparation of financial statements and all reports required by the Securities
Exchange Commission. He represents the company in negotiations with banks and
other financial institutions regarding credit lines, letters of credit and other
financial matters. The chief financial officer also develops and presents
reports regarding the corporations financial status and requirements to the
board of directors. The chief financial officer shall also perform such other
duties as from time to time may be assigned to him by the chief executive
officer or by the board of directors.
THE VICE-PRESIDENTS
Section 13. The vice-presidents shall perform such duties and
have such powers as the board of directors may from time to time prescribe.
THE SECRETARY AND ASSISTANT SECRETARY
Section 14. The secretary shall attend all meetings of the
board of directors and all meetings of the stockholders and record all the
proceedings of the meetings of the corporation and of the board of directors in
a book to be kept for that purpose and shall perform like duties for the
standing committees when required. He shall give, or cause to be given, notice
of all meetings of the stockholders and special meetings of the board of
directors, and shall perform such other duties as may be prescribed by the board
of directors or chief executive officer, under whose supervision he shall be. He
shall have custody of the corporate seal of the corporation and he, or an
assistant secretary, shall have authority to affix the same to any instrument
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requiring it and when so affixed, it may be attested by his signature or by the
signature of such assistant secretary. The board of directors may give general
authority to any other officer to affix the seal of the corporation and to
attest the affixing by his signature.
Section 15. The assistant secretary, or if there be more than
one, the assistant secretaries in the order determined by the board of directors
(or if there be no such determination, then in the order of their election)
shall, in the absence of the secretary or in the event of his inability or
refusal to act, perform the duties and exercise the powers of the secretary and
shall perform such other duties and have such other powers as the board of
directors may from time to time prescribe.
THE TREASURER AND ASSISTANT TREASURERS
Section 16. The treasurer shall have the custody of the
corporate funds and securities and shall keep full and accurate accounts of
receipts and disbursements in books belonging to the corporation and shall
deposit all moneys and other valuable effects in the name and to the credit of
the corporation in such depositories as may be designated by the board of
directors.
Section 17. He shall disburse the funds of the corporation as
may be ordered by the board of directors, taking proper vouchers for such
disbursements, and shall render to the chief executive officer and the board of
directors, at its regular meetings, or when the board of directors so requires,
an account of all his transactions as treasurer and of the financial condition
of the corporation.
Section 18. If required by the board of directors, he shall
give the corporation a bond (which shall be renewed every six years) in such sum
and with such surety or sureties as shall be satisfactory to the board of
directors for the faithful performance of the duties of his office and for the
restoration to the corporation, in case of his death, resignation, retirement or
removal from office, of all books, papers, vouchers, money and other property of
whatever kind in his possession or under his control belonging to the
corporation.
Section 19. The assistant treasurer, or if there shall be more
than one, the assistant treasurers in the order determined by the board of
directors (or if there be no such determination, then in the order of their
election) shall, in the absence of the treasurer or in the event of his
inability or refusal to act, perform the duties and exercise the powers of the
treasurer and shall perform such other duties and have such other powers as the
board of directors may from time to time prescribe.
10
<PAGE> 11
ARTICLE VI
CERTIFICATES OF SHARES
Section 1. The shares of the corporation shall be represented
by a certificate of shall be uncertified. Certificates shall be signed by, or in
the name of the corporation by, the chairman or vice-chairman of the board of
directors, or the chief executive officer, or the president or a vice-president,
and by the treasurer or an assistant treasurer, or the secretary or an assistant
secretary of the corporation.
Within a reasonable time after the issuance or transfer of
uncertified stock, the corporation shall send to the registered owner thereof a
written notice containing the information required to be set forth or stated on
certificates pursuant to Sections 151, 156, 202(a) and 218(a) or a statement
that the corporation will furnish without charge to each stockholder who so
requests the powers, designations, preferences and relative participated,
optional or other special rights of each class of stock or series thereof and
the qualifications, limitations or restrictions of such preferences and/or
rights.
Section 2. Any of or all the signatures on a certificate may
be facsimile. In case any officer, transfer agent or registrar who has signed or
whose facsimile signature has been placed upon a certificate shall have ceased
to be such officer, transfer agent or registrar before such certificate is
issued, it may be issued by the corporation with the same effect as if he were
such officer, transfer agent or registrar at the date of issue.
LOST CERTIFICATES
Section 3. The board of directors may direct a new certificate
or certificates or uncertified shares to be issued in place of any corporation
alleged to have been lost, stolen or destroyed, upon the making of an affidavit
of the fact by the person claiming the certificate of stock to be lost, stolen
or destroyed. When authorizing such issue of new certificate or certificates or
uncertificated shares, the board of directors may, in its discretion and as a
condition precedent to the issuance thereof, require the owner of such lost,
stolen or destroyed certificate or certificates, or his legal representative, to
advertise the same in such manner as it shall required and/or to give the
corporation a bond in such sum as it may direct as indemnity against any claim
that may be made against the corporation with respect to the certificate alleged
to have been lost, stolen or destroyed.
TRANSFER OF STOCK
Section 4. Upon surrender to the corporation or the transfer
agent of the corporation of a certificate for shares duly endorsed or
accompanied by proper evidence or succession, assignation or authority to
transfer, it shall be the duty of the corporation to issue a new certificate to
the person entitled thereto, cancel the old certificate and record the
transaction
11
<PAGE> 12
upon its books. Upon receipt of proper transfer instructions from the registered
owner of uncertificated shares such uncertificated shares shall be canceled and
issuance of new equivalent uncertificated shares or certificated shares shall be
made to the person entitled thereto and the transaction shall be recorded upon
the books of the corporation.
FIXING RECORD DATE
Section 5. In order that the corporation may determine the
stockholders entitled to notice of or to vote at any meeting of stockholders or
any adjournment thereof, or to express consent to corporate action in writing
without a meeting, or entitled to receive payment of any dividend or other
distribution or allotment of any rights, or entitled to exercise any rights in
respect of any change, conversion or exchange of stock or for the purpose of any
other lawful action, the board of directors may fix, in advance, a record date,
which shall not be more than sixty nor less than ten days before the date of
such meeting, nor more than sixty days prior to any other action. A
determination of stockholders of record entitled to notice of or to vote at a
meeting of stockholders shall apply to any adjournment of the meeting; provided,
however, that the board of directors may fix a new record date for the adjourned
meeting.
REGISTERED STOCKHOLDERS
Section 6. The corporation shall be entitled to recognize the
exclusive right of a person registered on its books as the owner of shares to
receive dividends, and to vote as such owner, and to hold liable for calls and
assessments a person registered on its books as the owner of shares, and shall
not be bound to recognize any equitable or other claim to or interest in such
share or shares on the part of any other person, whether or not it shall have
express or other notice thereof, except as otherwise provided by the laws of
Delaware.
ARTICLE VII
GENERAL PROVISIONS
DIVIDENDS
Section 1. Dividends upon the capital stock of the
corporation, subject to the provisions of the certificate of incorporation, if
any, may be declared by the board of directors at any regular or special
meeting, pursuant to law. Dividends may be paid in cash, in property, or in
shares of the capital stock, subject to the provisions of the certificate of
incorporation.
Section 2. Before payment of any dividend, there may be set
aside out of any funds of the corporation available for dividends such sum or
sums as the directors from time to time, in their absolute discretion, think
proper as a reserve or reserves to meet contingencies, or for equalizing
dividends, or for repairing or maintaining any property of the corporation, or
for such other purpose as the directors shall think conducive to the interest of
the corporation, and the directors may modify or abolish any such reserve in the
manner in which it was created.
12
<PAGE> 13
ANNUAL STATEMENT
Section 3. The board of directors shall present at each annual
meeting, and at any special meeting of the stockholders when called for by vote
of the stockholders, a full and clear statement of the business and condition of
the corporation.
CHECKS
Section 4. All checks or demands for money and notes of the
corporation shall be signed by such officer or officers or such other person or
persons as the board of directors may from time to time designate.
FISCAL YEAR
Section 5. The fiscal year of the corporation shall be fixed
by resolution of the board of directors.
SEAL
Section 6. The corporate seal shall have inscribed thereon the
name of the corporation, the year of its organization and the words "Corporate
Seal, Delaware". The seal may be used by causing it or a facsimile thereof to be
impressed or affixed or reproduced or otherwise.
INDEMNIFICATION
Section 7. The corporation shall indemnify its officers,
directors, employees and agents to the extent permitted by the General
Corporation Law of Delaware.
AUTHORITY TO ENTER INTO CONTRACTS
Section 8. Any contract or commitment to be entered into on
behalf of the corporation (or any subsidiary or affiliate of the corporation)
which may obligate the corporation (or such subsidiary or affiliate) in an
amount of $25,000,000 or more or which extends for a period of two years or
longer and which may not be terminated without penalty on 180 days notice or
less shall require the approval of a majority of the board of directors.
RELATED PARTY TRANSACTIONS
Section 9. Any contract or commitment to be entered into on
behalf of the corporation (or any subsidiary or affiliate of the corporation) in
which a director, officer, or member of such persons immediate family, has any
direct or indirect interest shall require the
13
<PAGE> 14
approval of a majority of the board of directors. In the case of any such
contract involving a director or a member of a director's immediate family such
director shall abstain from the vote on such contract.
Section 10. No member of the immediate family of a director or
officer of the corporation shall be directly or indirectly employed by or
engaged as a consultant by the corporation or any subsidiary or affiliate of the
corporation without the approval of a majority of the board of directors. In the
case of any such person who is a member of a director's immediate family such
director shall abstain from the vote on such matter.
ARTICLE VIII
AMENDMENTS
Section 1. These by-laws may be altered, amended or repealed
or new by-laws may be adopted by the stockholders or by the board of directors,
when such power is conferred upon the board of directors by the certificate of
incorporation at any regular meeting of the stockholders or of the board of
directors or at any special meeting of the stockholders or of the board of
directors if notice of such alteration, amendment, repeal or adoption of new
by-laws be contained in the notice of such special meeting. If the power to
adopt, amend or repeal by-laws in conferred upon the board of directors by the
certificate of incorporation it shall not divest or limit the power of
stockholders to adopt, amend or repeal by-laws.
14
<PAGE> 1
EXHIBIT 10.1
MYRIAD INTERNATIONAL, INC. 1992 STOCK OPTION PLAN
(As Amended June 28, 1996)
1. PURPOSE; DEFINITIONS.
A. Purpose: The purpose of the Plan is to attract, retain and
motivate officers, key employees, consultants and directors of
the Company, or a Subsidiary, by giving them the opportunity
to acquire Stock ownership in the Company. Options granted
under this Plan may be Incentive Stock Options ("ISO") or
Non-statutory Stock Options, as determined by the
Administrator.
B. Definitions: For purposes of the Plan, the following terms
have the following meanings:
(1) "Administrator" means the committee referred to in
Section 4 or the Board in its capacity as
administrator of the Plan in accordance with Section
4.
(2) "Board" means the Board of Directors of the Company.
(3) "Commission" means the Securities and Exchange
Commission, and any successor agency.
(4) "Company" means Myriad International, Inc.
(5) "Disinterested Person" has the meaning set forth in
Rule 16b-3 under the Exchange Act, and any successor
definition adopted by the Commission.
(6) "Effective Date" has the meaning set forth in
Section 2.
(7) "Exchange Act" means the Securities Exchange Act of
1934, as amended from time to time, and any successor
statute.
(8) "Grant Date" means the date of grant of any Option.
(9) "Option" means an Option granted under Section 6.
(10) "Option Agreement" means the written agreement
covering an option.
(11) "Optionee" means the holder of an Option.
(12) "Plan" means this Myriad Industires, Inc. 1992
Non-Statutory Stock Option Plan, as amended from time
to time.
1
<PAGE> 2
MYRIAD INTERNATIONAL, INC. 1992 STOCK OPTION PLAN
(As Amended June 28, 1996)
(13) "Rule 16b-3" means Rule 16b-3 under Section 16(b) of
the Exchange Act, as amended from time to time, and
any successor rule.
(14) "Stock" means the Class A Common Stock of the
Company, and any successor entity.
(15) "Subsidiary" means any corporation in which the
company directly or indirectly owns a majority of the
issued and outstanding voting securities.
(16) "Tax Date" means the date defined in Section 7.
(17) "Vesting Date" means the date on which an Option
becomes wholly or partially exercisable.
2. EFFECTIVE DATE; TERM OF PLAN. The Effective Date of this Plan shall be
July 22, 1992. This Plan, but not Options already granted, shall
terminate automatically ten years after its adoption by the Board,
unless terminated earlier by the Board under Section 13. No Options
shall be granted after termination of this Plan but all Options granted
prior to termination shall remain in effect in accordance with their
terms. No options shall be exercisable under this Plan unless and until
the Company shall have registered as a public company pursuant to the
Securities Exchange Act of 1934, as amended.
3. NUMBER AND SOURCE OF SHARES OF STOCK SUBJECT TO THE PLAN.
Subject to the Provisions of Section 8, the total number of shares of
Stock with respect to which Options may be granted under this Plan are
2,000,000 shares of stock. The Shares of Stock covered by any
cancelled, expired, or terminated Option or the unexercised portion
thereof shall become available again for grant under this Plan. The
shares of stock to be issued hereunder upon exercise of an Option may
consist of authorized and unissued shares of treasury shares.
4. ADMINISTRATION OF THIS PLAN. This Plan shall be administered by the
Board or by a committee of at least two members of the Board to which
administration of this Plan is delegated by the Board, all of whom
shall be Disinterested Persons. The Administrator may delegate
nondiscretionary administrative duties to such employees of the
Company, or a Subsidiary, as it deems proper.
2
<PAGE> 3
MYRIAD INTERNATIONAL, INC. 1992 STOCK OPTION PLAN
(As Adopted July 22, 1992)
Page 3
Disinterested Persons. The Administrator may delegate nondiscretionary
administrative duties to such employees of the Company, or a
Subsidiary, as it deems proper.
The Administrator may also make rules and regulations which it deems
useful to administer this Plan. Any decision or action or the
Administrator in connection with this Plan or Options granted or shares
of Stock purchased under this Plan shall be final and binding. The
Administrator shall not be liable for any decision, action or omission
respecting this Plan, or any Options granted or shares of Stock sold
under this Plan. The Board at any time may abolish the committee and
revest in the Board the administration of the Plan; provided that all
members of the Board at the time of such action must be "Disinterested
Persons."
5. PERSONS ELIGIBLE TO PARTICIPATE IN THIS PLAN. Options may be granted
under this Plan to officers, employees, consultants and non-employee
directors of the Company, or a Subsidiary; provided that ISO options
may not be granted to consultants.
6. GRANT OF OPTIONS; TERMS AND CONDITIONS OF GRANT.
A. Grant of Options. The Administrator may, in its absolute
discretion, grant Options under this Plan at any time and from
time to time before the expiration of ten years from the
Effective Date to employees and consultants of the Company and
its Subsidiaries. Non-employee directors of the company shall
automatically be granted options to purchase 20,000 shares of
Stock on the date they become a director and non-employee
directors who have served for at least one full year shall
receive options to purchase an additional 5,000 shares of Stock
on the fifth business day following the Company's annual
meeting of shareholders, commencing with the company's 1995
annual meeting of shareholders. The Administrator shall specify
the Grant Date, the number of shares of Stock covered by the
Option, the exercise price and the terms and conditions for
exercise of the Options. If the Administrator fails to specify
the Grant Date, the Grant Date shall be the date of the action
taken by the Administrator to grant the Option. As soon as
practicable after the Grant Date, the Company will provide the
Optionee with a written Option Agreement in the form approved
by the Administrator, which sets out the Grant Date, the number
of shares of Stock covered by the Option, the exercise price
and the terms and conditions for exercise of the Option.
3
<PAGE> 4
MYRIAD INTERNATIONAL, INC. 1992 STOCK OPTION PLAN
(As Adopted July 22, 1992)
Page 4
B. Terms and Conditions of Grant. Options granted under this
Plan shall be subject to the following terms and conditions and
such other terms and conditions not inconsistent with this Plan
as the Administrator may impose:
(1) Exercise of Option. In order to exercise all or any
portion of any Option granted under this Plan, an
Optionee must remain as an officer, employee,
consultant or director of the Company, or a
Subsidiary, until the Vesting Date. The Option shall
be exercisable on or after each Vesting Date in
accordance with the terms set forth in the Option
Agreement.
(2) Option Term. The term of any Option shall be fixed
by the Administrator, but in no event shall the term
of an option be more than ten (10) years.
(3) Exercise Price. The Exercise Price shall be at least
100% of the fair market value of the shares of Stock
covered by the Option on the Grant Date, as
determined in good faith by the Administrator.
(4) Method of Exercise. To the extent the right to
purchase shares of Stock has accrued, Options may be
exercised, in whole or in part, from time to time in
accordance with their terms by written notice from
the Optionee to the Company stating the number of
shares of Stock with respect to which the Option is
being exercised and accompanied by payment in full of
the exercise price. Payment may be made in cash,
certified check or, at the absolute discretion of the
Administrator, by non-certified check.
(5) Restrictions on Stock; Option Agreement. At the time
it grants Options under this plan, the Company may
retain, for itself or others, rights to repurchase
the shares of Stock acquired under the Option or
impose other restrictions on such shares. The terms
and conditions of any such rights or other
restrictions shall be set forth in the Option
Agreement evidencing the Option. No Option shall be
exercisable until after execution of the Option
Agreement by the Company and the Optionee.
(6) Nonassignability of Option Rights. No Option shall
be transferable other than by will or by the laws of
descent and distribution.
4
<PAGE> 5
MYRIAD INTERNATIONAL, INC. 1992 STOCK OPTION PLAN
(As Adopted July 22, 1992)
Page 5
During the lifetime of an Optionee, only the Optionee
may exercise an Option.
(7) Exercise After Termination of Employment or Death.
If for any reason other than permanent and total
disability or death an Optionee ceases to be employed
by or to be a consultant or director of the Company,
or a Subsidiary, Options held at the date of such
termination (to the extent then exercisable) may be
exercised, in whole or in part, at any time within
three (3) months after the date of such termination
or such lesser period specified in the Option
Agreement (but in no event after the earlier of (i)
the expiration date of the Option as set forth in the
Option Agreement, and (ii) ten (10) years from the
Grade Date). If an Optionee becomes permanently and
totally disabled (within the meaning of Section
11(e)(3) of the Internal Revenue Code of 1986, as
amended from time to time, and any successor statute,
or dies while employed by the Company, or a
Subsidiary, (or, if the Optionee dies within the
period that the Option remains exercisable after
termination of employment), Options then held (to the
extent then exercisable) may be exercised by the
Optionee, the Optionee's personal representative, or
by the person to whom the Option is transferred by
will or the laws of descent and distribution, in
whole or in part, at any time within one year after
the disability or death or any lesser period
specified in the Option Agreement (but in no event
after the earlier of (i) the expiration date of the
Option as set forth in the Option Agreement, and (ii)
ten years from the Grant Date.
(8) Compliance with Securities Laws. The Company shall
not be obligated to issue any shares of Stock upon
exercise of an Option unless such shares are at that
time effectively registered or exempt from
registration under the federal securities laws and
the offer and sale of the shares of Stock are
otherwise in compliance with all applicable
securities laws. The Company shall have no obligation
to register the shares of Stock under the federal
securities laws or to take whatever other steps may
be necessary to enable the shares of Stock to be
offered and sold under federal or other securities
laws. Upon exercising all or any portion of an
Option, an Optionee may be required to furnish
representations or undertakings deemed appropriate by
he Company to enable the offer and sale of the shares
of Stock or subsequent transfers of
5
<PAGE> 6
MYRIAD INTERNATIONAL, INC. 1992 STOCK OPTION PLAN
(As Adopted July 22, 1992)
Page 6
any interest in such shares to comply with applicable
securities laws. Evidences of ownership of shares of
Stock acquired upon exercise of Options shall bear
any legend required by, or useful for purposes of
compliance with, applicable securities laws, this
Plan or the Option Agreement evidencing the Option.
(9) Adjustment of Terms. All options granted prior to
the day on which the Company registers as a public
company pursuant to the Exchange Act shall be subject
to adjustment as to the number of shares, term and
exercise price in the sole and absolute discretion of
the Committee.
7. PAYMENT OF TAXES. Unless the Administrator permits otherwise, the
participant shall pay the Company in cash, promptly when the amount of
such obligations becomes determinable (the "Tax Date"), all applicable
local, state and federal withholding taxes applicable, in the
Administrator's absolute discretion, to (i) the exercise of any Option,
or (ii) the transfer or other disposition of shares acquired upon the
exercise of any Option.
8. ADJUSTMENT FOR CHANGES IN CAPITALIZATION. The existence of
outstanding Options shall not affect the Company's right to effect
adjustments, recapitalizations, reorganizations or other changes in its
or any other corporation's capital structure or business, any merger or
consolidation, any issuance of bonds debentures, preferred or prior
preference stock ahead of or affecting the Stock the dissolution or
liquidation of the Company's or any other corporation's assets or
business or any other corporate act whether similar to the events
described above or otherwise. Subject to Section 9, if the outstanding
shares of the Stock are increased or decreased in number or changed
into or exchanged for a different number or kind of securities of the
Company or any other corporation by reason of a recapitalization,
reclassification, stock split, combination of shares, stock dividend or
other event, the number and kind of securities with respect to which
Options may be granted under this Plan, the number and kind of
securities as to which outstanding Options may be exercised, and the
exercise price at which outstanding Options may be exercised, shall be
adjusted, to the extent possible, so as to prevent dilution and without
regard to any resulting tax consequences to the Optionee.
9. DISSOLUTION, LIQUIDATION, MERGER. In the event of a dissolution or
liquidation of the Company, a merger in which the Company is not the
surviving corporation, or a sale of over 80% of the assets of the
Company, the Administrator, in its absolute discretion, may cancel each
outstanding Option
6
<PAGE> 7
MYRIAD INTERNATIONAL, INC.1992 STOCK OPTION PLAN
(As Adopted July 22, 1992)
Page 7
upon payment in cash to the Optionee of the amount by which any cash
and the fair market value of any other property which the Optionee
would have received as consideration for the shares of Stock covered by
the Option if the Option had been exercised before such liquidation,
dissolution, merger, or sale exceeds the exercise price of the Option.
In addition to the foregoing, in the event of a merger in which the
Company is not the surviving corporation, the Administrator, in its
absolute discretion, may accelerate the time within which each
outstanding Option may be exercised.
10. SUCCESSOR CORPORATIONS. In the event of a merger in which the Company
is not the surviving corporation, the successor entity may assume the
obligations under all outstanding Options.
11. NO RIGHTS AS SHAREHOLDER OR TO CONTINUED EMPLOYMENT. An Optionee shall
have no rights as a shareholder with respect to any shares of Stock
covered by an Option until such Optionee has acquired title to such
shares. Subject to Sections 8 and 9, no adjustment shall be made for
dividends or other rights for which the record date is prior to the
date title to the shares of Stock has been acquired by the Optionee.
The grant of an Option shall in no way be constructed so as to confer
on any Optionee the right to continued employment by the Company, or a
Subsidiary.
12. TERMINATION; AMENDMENT. The Board may amend, suspend or terminate
this Plan at any time and for any reason, but no amendment, suspension
or termination shall be made which would impair the right of any person
under any outstanding Options without such person's consent; provided
however, that any amendment which (i) increases the number of shares of
Stock available for issuance under this Plan (except as provided in
Section 8), (ii) materially changes the class of persons who are
eligible for the grant of Options, or (iii) materially increases the
benefits accruing to participants under this Plan, shall be subject to
the approval of the Company's shareholders. Shareholder approval shall
not be required for any other amendment of this Plan.
13. GOVERNING LAW. This Plan and the rights of all persons under this Plan
shall be constructed in accordance with and under applicable provisions
of the laws of the State of Delaware.
7
<PAGE> 1
EXHIBIT 10.2
EMPLOYMENT AGREEMENT
AGREEMENT dated as of January 1, 1996 between Myriad International,
Inc., 4330 LaJolla Village Drive, Suite 320, San Diego, California, 92122, a
corporation organized under the laws of the State of Delaware (hereinafter
referred to as the "Employer"), and Jerome O. Crawford (hereinafter referred to
as the "Employee").
1. Employment: The Employer hereby employs the Employee and the
Employee hereby accepts employment upon the terms and conditions hereinafter set
forth.
2. Term: Subject to the provisions for termination as hereinafter
provided, the term of this Agreement shall begin on the date of execution of
this Agreement and shall continue until December 31, 2000, unless sooner
terminated in accordance with the terms contained herein. If Employer desires to
extend the term of this Agreement beyond December 31, 2000, Employer and
Employee shall negotiate an extension agreement before September 30, 2000.
3. Compensation: For services rendered by the Employee under this
Agreement, the Employee shall receive the following:
(a) An annual salary of $250,000. Employee shall be entitled
to increases in his base annual salary, at least annually, on the anniversary of
the date of this Agreement. The amount of the increase shall be determined by
the Board or a committee appointed by the Board. However, it is agreed that the
Employee salary stated above should not be increased from its present amount
until the Board of Directors determined that Myriad has adequate cash flow to
pay the increased salary.
(b) As an inducement to Employee entering into this Agreement,
Employer shall issue to Employee 1,000,000 shares of Class A Common Stock. The
vesting period of this stock shall be March 31, 1996.
(c) Also an inducement to Employee entering into this
Agreement, Employer shall issue to Employee as soon as reasonably practical
2,000,000 shares of Class B Common Stock. The vesting schedule is as follows:
<TABLE>
<CAPTION>
Date Number of Shares
---- ----------------
<S> <C>
Upon Signing this Contract 500,000
12/31/96 500,000
12/31/97 500,000
12/31/98 500,000
</TABLE>
<PAGE> 2
Page 2
Initials_____________
(d) The employer hereby grants to the Employee, Stock Options
to purchase all or part of an aggregate of 2,500,000 shares of Class A Common
Stock according to the following performance schedule:
<TABLE>
<CAPTION>
Options Granted
---------------
<S> <C>
1. Upon Signing this contract 1,000,000 Shares
2. January 1, 1997 375,000 Shares
3. January 1, 1998 375,000 Shares
4. January 1, 1999 375,000 Shares
5. January 1, 2000 375,000 Shares
------------------------
2,500,000 Shares
</TABLE>
The options allow the employee to purchase the Class A Common stock at a price
of $0.25 per share for a term of five years from the date of this contract,
subject to the provisions with respect to termination of employment, death or
disability of the employee. Any portion of the option not exercised prior to the
termination of the option shall thereupon become null and void. The shares of
Class A Common Stock and Class B Common Stock are being acquired for investment
and will bear appropriate restrictive legends.
(e) The employer hereby grants to the Employee, Stock Options
to purchase all or part of an aggregate of 2,500,000 shares of Class B Common
Stock according to the following performance schedule:
<TABLE>
<CAPTION>
Options Granted
---------------
<S> <C>
1. Upon Signing this contract 1,000,000 Shares
2. January 1, 1997 375,000 Shares
3. January 1, 1998 375,000 Shares
4. January 1, 1999 375,000 Shares
5. January 1, 2000 375,000 Shares
--------------
2,500,000 Shares
</TABLE>
The options allow the employee to purchase the Class B Common stock at a price
of $0.25 per share for a term of five years from the date of this contract,
subject to the provisions with respect to termination of employment, death or
disability of the employee. Any portion of the option not exercised prior to the
termination of the option shall thereupon become null and void.
The shares of Class A Common Stock and Class B Common Stock are being acquired
for investment and will bear appropriate restrictive legends.
<PAGE> 3
Page 3
Initials___________
The options granted pursuant to this Agreement shall be subject to the terms and
conditions set forth on Exhibit A attached hereto and made a part hereof.
(f) Additional compensation in the form of an annual bonus,
during the Initial Term, and any extensions of thereof, of this Agreement. The
exact structure and amount of said bonus shall either be determined by, or
subject to approval of, the Board. Said bonus shall be based on the annualized
profitability of the Employer.
(g) such other stock options or incentive performance stock
programs determined at the sole discretion of Employer's Board of Directors
during the term of this agreement.
(h) Five weeks paid vacation during each employment year
(i.e., [January 1] through [December 31]), which shall be taken in accordance
with a schedule submitted by the Board or its designee. This vacation period
shall be non-cumulative unless Employee shall forego his vacation in whole or in
part at the request of the Board or its designee, in which case the portion of
such vacation not taken in such employment year may be taken as additional
vacation in the following year.
(i) other compensation and fringe benefits, including health
insurance, and company car, as the Board of Directors of the Employer may grant
to Employee from time to time in conformity with the Employer's policy, at the
sole discretion of the Board of Directors of the Employer.
(j) Employee agrees that as a condition to the effectiveness
of this Agreement all shares of the Class B Common Stock of the Company now or
hereafter owned by the Employee shall be subject to the following restrictions
which shall be endorsed on all certificates for shares of Class B Common Stock
registered in the name of Employee:
The shares of Class B Common Stock evidenced by this
certificate shall not be sold, assigned, hypothecated, or
otherwise encumbered or transferred during the lifetime of
Jerome O. Crawford except to his spouse, children or
grandchildren or to another registered holder of Class B
Common Stock. Shares of Class B Common Stock shall not be
converted into shares of Class A Common Stock except by Jerome
O. Crawford or the persons designated in the preceding
sentence. The foregoing restriction does not prohibit the
transfer of Jerome O. Crawford's Class B Common Stock by will
or the laws of descent and distribution.
<PAGE> 4
Page 4
Initials __________
4. Duties: The employee is engaged as Chairman of the Board and Chief
Executive Officer (CEO) of Employer. Specific duties are: The CEO shall be the
principle executive officer of the corporation and subject to the control of the
Board of Directors. He shall in general supervise and control all of the
business and affairs of the corporation and its subsidiaries.
The CEO shall in general perform all duties incident to the
office of CEO and such other duties as may be prescribed by the Board of
Directors from time to time.
5. Extent of Services: The Employee shall devote substantially his full
time, attention and energies to the business of the Employer and may not, during
the term of this Agreement, engage in other business activities, whether or not
such business activities are pursued for gain, profit or other pecuniary
advantage. Employee shall not be prevented from investing his assets in such
form or manner as will not require any services on the part of the Employee in
the operation of the affairs of the companies in which such investments are
made.
6. Disclosure of Information:
(a) The Employee recognizes and acknowledges that the
information, processes, developments, experimental work, work in progress,
business, list of the Employer's customers and any other trade secret or other
secret or confidential information relating to Employer's business as they may
exist from time to time are valuable, special and unique assets Employer's
business. Therefore, Employee agrees that;
(i) Employee will hold in strictest confidence and
not disclose, reproduce, publish or use in any manner, whether during or
subsequent to his employment, without the express authorization of the Board of
Directors of the Employer, any information, process, development or experimental
work, work in process, business, customer lists, trace secret or any other
secret or confidential matter relating to any aspect of the Employer's business,
except as such disclosure or use may be required in connection with Employee's
work for the Employer.
(ii) Upon request or at time of leaving the employ of
the Employer, the Employee will deliver to the Employer, and not keep or deliver
to anyone else, any and all notes, memoranda, documents and, in general, any and
all material relating to the Employer's business.
<PAGE> 5
Page 5
Initials________
(b) In the event of a breach or threatened breach by the
Employee of the provisions of this paragraph 6, the Employer shall be entitled
to an injunction (i) restraining the Employee from disclosing, in whole or in
part, any information as described above or from rendering any services to any
person, firm, corporation, association or other entity to whom such information,
in whole or in part, has been disclosed or is threatened to be disclosed; and/or
(ii) requiring that Employee deliver to Employer all information, documents,
notes, memoranda and any and all discoveries or other material as described
above upon Employee's leave of the employ of the Employer. Nothing herein shall
be construed as prohibiting the Employer from pursuing other remedies available
to the Employer for such breach or threatened breach, including the recovery of
damages from the Employee.
7. Expenses: The Employee is authorized to incur reasonable expenses
for promoting the business of the Employer, including expenses for
entertainment, travel and similar items. The Employer will reimburse the
Employee for all such expenses upon the presentation by the Employee from time
to time of an itemized account of such expenditures.
7a. Housing and Commuter Allowance: The employer agrees to provide
employee living quarters in the San Diego area, at the employee's discretion and
not to exceed $2,000 per month.
8. Disability: If the Employee is unable to perform his services by
reason of illness or incapacity for a continuous period of more than 180 days,
the Employer may terminate this Agreement. Upon such termination Employer shall
pay Employee twelve months of salary as provided in paragraph 3(a) hereof. The
full amount of such salary shall be paid at such times as such compensation
would otherwise be paid hereunder. All other obligations hereunder, except the
continuing obligations described in paragraph 6 hereof, shall thereupon cease.
9. Termination by Employer: The Employer may terminate this Agreement
for cause at any time, but only after a majority vote of the Board of Directors.
As used in this Agreement, the phrase "for cause" shall mean any of the
following: breach of any fiduciary duty to the Employer, fraud, gross
negligence, willful misconduct or conviction (including a plea of nolo
contendere) in a felony criminal proceeding (excluding traffic violations or
similar misdemeanors). In such event, the Employee, if requested by the
Employer, shall continue to render his services and shall be paid his regular
salary up to the date of termination. The Employer may terminate this Agreement
without cause at any time, but in such event the Employer shall be obligated to
pay Employee his full compensation under paragraph 3 hereof (including the
release of stock) through the end of the term of this agreement at such times as
such compensation would otherwise be paid hereunder. In
<PAGE> 6
Page 6
Initials_________
each such event of termination, all other obligations hereunder, except the
continuing obligations described in paragraph 6 hereof, shall thereupon cease.
The amount due under this provision shall not be subject to reduction for other
compensation or remuneration in any form received by Employee after the
termination of his employment under this Agreement.
10. Termination by Employee: Employee may terminate his employment by
notifying Employer at least 60 days before the date of termination of the
Initial Term or the then effective Additional Term. Such termination shall be
effective as of the last day of the Initial Term or the then effective
Additional Term. Employee may also terminate this Agreement for cause upon the
Employer's failure to materially comply with its obligations set forth in this
Agreement.
11. Death During Employment: If the employee dies during the term of
his employment, the Employer shall pay to the estate of the Employee six months
of salary as provided in paragraph 3(a) hereof. The full amount of such salary
shall be paid within 60 days of such death.
12. Restrictive Covenant: During the term of this Agreement and any
extension hereof, the Employee will not, within a radius of 500 miles from the
present place of the Employer's business (or, even though the parties agree that
such limitation is reasonable, if such locations are determined by a court to
broad, such geographic area as such court may determine is reasonable) directly
or indirectly, own, manage, operate, control, be employed on a full time basis
in a managerial capacity by, participate in or be connected in any manner with
the ownership, management, operation or control of any business in direct
competition with the type of business conducted by the Employer at the time of
the termination of this Agreement.
In the event of an actual or threatened breach by the Employee of the provisions
of this paragraph, the Employer shall be entitled to seek an injunction
restraining the Employee from owning, managing, operating, controlling, being
employed by, participating in or being in any way so connected with any business
in direct competition with the type of business conducted by the Employer during
the term of this Agreement. Nothing herein stated shall be construed as
prohibiting the Employer from pursuing any other remedies available to the
Employer for such breach or threatened breach.
13. Life Insurance: The Employer shall use it best efforts to obtain
key-man life insurance at standard rates on the life of Employee in the amount
of $2,000,000 with the beneficiary designated by the Employee.
14. Disability Insurance: The Employer shall use it best efforts to
obtain
<PAGE> 7
Page 7
Initials_________
maximum coverage Disability insurance at standard rates on the Employee with the
Employee named as beneficiary.
15. Arbitration: Any controversy or claim arising out of or relating to
this Agreement or the breach thereof shall be settled by arbitration in the City
of San Diego, California, in accordance with the rules then existing of the
American Arbitration Association and judgment upon the award may be entered in
any court having jurisdiction thereof.
16. Notices: The notices required or permitted to be given under this
Agreement shall be sufficient if in writing and if sent by registered or
certified mail, return receipt requested, to his residence in the case of the
Employee, or to its principal office in the case of the Employer.
17. Waiver of Breach: The waiver by the Employer of a breach of any
provision of this Agreement by the Employee shall not operate to be construed as
a waiver of any subsequent breach by the Employee.
18. Assignment: Neither this Agreement nor any benefits hereunder are
assignable by Employee; but the rights and obligations of the Employer under
this Agreement shall inure to the benefit of and be binding upon the successors
and assigns of the Employer.
19. Entire Agreement: This instrument contains the entire agreement of
the parties and it may be changed, modified, supplemented or amended only by an
agreement in writing signed by the Employer and Employee. The employment
agreement between the company and employee dated as amended is terminated
provided that options to purchase the Class B Common Stock of Myriad granted
under such agreement shall remain in full force and affect.
20. Governing Law: This Agreement shall be interpreted and governed in
accordance with the laws of the State of California.
21. Severability: If any paragraph, sentence, clause or phrase of this
Agreement is for any reason declared to be illegal, invalid, unconstitutional,
void or unenforceable, all other paragraphs hereof not so held shall be and
remain in full force and effect.
22. Authorization The Compensation Commitee of the Board of Directors
of the Employer has authorized this Agreement, and specifically authorized
execution hereof by the undersigned on behalf of the Employer.
<PAGE> 8
Page 8
Initials_________
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
Myriad International, Inc.
By: /s/ David W. Pequet
---------------------------------------
David W. Pequet
Chairman of the Compensation Committee
Employee:
/s/ Jerome O. Crawford
---------------------------------------
Jerome O. Crawford
<PAGE> 9
EXHIBIT A
OPTION TERMS
The options to purchase shares of the Class A Common Stock and/or the Class B
Common Stock of the Company shall be governed by the following terms and
conditions:
1. DEFINITIONS. For purposes of the Plan, the following terms have the
following meanings:
(1) "Agreement" means the Employment Agreement between
the Optionee and the Company dated as of January 1,
1996.
(2) "Board" means the Board of Directors of the Company.
(3) "Commission" means the Securities and Exchange
Commission, and any successor agency.
(4) "Company" means Myriad International, Inc.
(5) "Effective Date" has the meaning set forth in
Section 2.
(6) "Exchange Act" means the Securities Exchange Act of
1934, as amended from time to time, and any successor
statute.
(7) "Grant Date" means the date of grant of any Option.
(8) "Option" means an Option granted under the Employment
Agreement between the Optionee and the Company dated
as of January 1, 1996.
(9) "Stock" means the Class A Common stock (with respect
to Class A Options) or the Class B Common Stock (with
respect to Class B Options) of the Company, and any
successor entity.
(10) "Tax Date" means the date defined in Section 7.
(11) "Vesting Date" means the date on which an Option
becomes wholly or partially exercisable.
Initials ________ ______
Exhibit A Page 1
<PAGE> 10
2. Terms and Conditions of Grant. Options granted under the Agreement
shall be subject to the following terms and conditions and such other
terms and conditions not inconsistent with the Agreement as the Board
shall impose:
(1) Exercise of Option. In order to exercise all or any
portion of any Option granted under the Agreement, an
Optionee must remain as an officer, employee,
consultant or director of the Company, or a
Subsidiary, until the Vesting Date. The Option shall
be exercisable on or after each Vesting Date in
accordance with the terms set forth in the Agreement.
(2) Method of Exercise. To the extent the right to
purchase shares of Stock has accrued, Options may be
exercised, in whole or in part, from time to time in
accordance with their terms by written notice from
the Optionee to the Company stating the number of
shares of Stock with respect to which the Option is
being exercised and accompanied by payment in full of
the exercise price. Payment may be made in cash,
certified check or, at the absolute discretion of the
Board, by non-certified check.
(3) Nonassignability of Option Rights. No Option shall
be transferable other than by will or by the laws of
descent and distribution except to the parents,
spouse, children or grandchildren of the Optionee.
During the lifetime of an Optionee, only the Optionee
or the permitted assignees may exercise an Option.
Options assigned pursuant to this sub-section 2.(3)
shall remain subject to the provisions of sub-section
2.(4).
(4) Exercise After Termination of Employment or Death. If
for any reason other than permanent and total
disability or death an Optionee ceases to be employed
by or to be a consultant or director of the Company,
or a Subsidiary, Options held at the date of such
termination (to the extent then exercisable) may be
exercised, in whole or in part, at any time within
three (3) months after the date of such termination
or such lesser period specified in the Option
Agreement (but in no event after the earlier of the
expiration date of the Option as set forth in the
Agreement.
If an Optionee becomes permanently and totally
disabled (within the meaning of Section 11(e)(3) of
the Internal Revenue Code of 1986, as amended from
time to time, and any successor statute, or dies
while employed by the Company, or a Subsidiary, (or,
if the Optionee dies within the period that the
Option remains
Initials______ ______
Exhibit A Page 2
<PAGE> 11
exercisable after termination of employment), Options
then held (to the extent then exercisable) may be
exercised by the Optionee, the Optionee's personal
representative, or by the person to whom the Option
is transferred by will or the laws of descent and
distribution, in whole or in part, at any time within
one year after the disability or death or any lesser
period specified in the Option Agreement (but in no
event after the earlier of the expiration date of the
Option as set forth in the Agreement.
(5) Compliance with Securities Laws. The Company shall
not be obligated to issue any shares of Stock upon
exercise of an Option unless such shares are at that
time effectively registered or exempt from
registration under the federal securities laws and
the offer and sale of the shares of Stock are
otherwise in compliance with all applicable
securities laws. The Company shall have no obligation
to register the shares of Stock under the federal
securities laws or to take whatever other steps may
be necessary to enable the shares of Stock to be
offered and sold under federal or other securities
laws. Upon exercising all or any portion of an
Option, an Optionee may be required to furnish
representations or undertakings deemed appropriate by
he Company to enable the offer and sale of the shares
of Stock or subsequent transfers of any interest in
such shares to comply with applicable securities
laws. Evidences of ownership of shares of Stock
acquired upon exercise of Options shall bear any
legend required by, or useful for purposes of
compliance with, applicable securities laws.
3. PAYMENT OF TAXES. Unless the Board permits otherwise, the participant
shall pay the Company in cash, promptly when the amount of such
obligations becomes determinable (the "Tax Date"), all applicable
local, state and federal withholding taxes applicable, in the Board's
absolute discretion, to (i) the exercise of any Option, or (ii) the
transfer or other disposition of shares acquired upon the exercise of
any Option.
4. ADJUSTMENT FOR CHANGES IN CAPITALIZATION. The existence of outstanding
Options shall not affect the Company's right to effect adjustments,
recapitalizations, reorganizations or other changes in its or any other
corporation's capital structure or business, any merger or
consolidation, any issuance of bonds debentures, preferred or prior
preference stock ahead of or affecting the Stock the dissolution or
liquidation of the Company's or any other corporation's assets or
business or any other corporate act whether similar to the events
described above or otherwise. Subject to Section 5, if the outstanding
shares of the Stock are increased or decreased in number or changed
into or exchanged for a different number or kind of securities of the
Company or any other corporation by reason of a recapitalization,
Initials ____ ____
Exhibit A Page 3
<PAGE> 12
reclassification, stock split, combination of shares, stock dividend or
other event, the number and kind of securities with respect to which
Options may be granted under the Agreement, the number and kind of
securities as to which outstanding Options may be exercised, and the
exercise price at which outstanding Options may be exercised, shall be
adjusted, to the extent possible, so as to prevent dilution and without
regard to any resulting tax consequences to the Optionee.
5. DISSOLUTION, LIQUIDATION, MERGER. In the event of a dissolution or
liquidation of the Company, a merger in which the Company is not the
surviving corporation, or a sale of over 80% of the assets of the
Company, the Board, in its absolute discretion, may cancel each
outstanding Option upon payment in cash to the Optionee of the amount
by which any cash and the fair market value of any other property which
the Optionee would have received as consideration for the shares of
Stock covered by the Option if the Option had been exercised before
such liquidation, dissolution, merger, or sale exceeds the exercise
price of the Option. In addition to the foregoing, in the event of a
merger in which the Company is not the surviving corporation, the
Board, in its absolute discretion, may accelerate the time within which
each outstanding Option may be exercised.
6. SUCCESSOR CORPORATIONS. In the event of a merger in which the Company
is not the surviving corporation, the successor entity may assume the
obligations under all outstanding Options.
7. NO RIGHTS AS SHAREHOLDER OR TO CONTINUED EMPLOYMENT. An Optionee shall
have no rights as a shareholder with respect to any shares of Stock
covered by an Option until such Optionee has acquired title to such
shares. Subject to Sections 4 and 5, no adjustment shall be made for
dividends or other rights for which the record date is prior to the
date title to the shares of Stock has been acquired by the Optionee.
The grant of an Option shall in no way be constructed so as to confer
on any Optionee the right to continued employment by the Company, or a
Subsidiary.
Initials _____ _____
Exhibit A Page 4
<PAGE> 1
EXHIBIT 10.3
EMPLOYMENT AGREEMENT
AGREEMENT dated as of January 1, 1996 between Myriad Industries, Inc.,
4330 LaJolla Village Drive, Suite 320, San Diego, California, 92122, a
corporation organized under the laws of the State of Delaware (hereinafter
referred to as the "Employer"), and Victor L. Parks (hereinafter referred to as
the "Employee").
1. Employment: The Employer hereby employs the Employee and the
Employee hereby accepts employment upon the terms and conditions hereinafter set
forth.
2. Term: Subject to the provisions for termination as hereinafter
provided, the term of this Agreement shall begin on the date of execution of
this Agreement and shall continue until December 31, 2000, unless sooner
terminated in accordance with the terms contained herein. If Employer desires to
extend the term of this Agreement beyond December 31, 2000, Employer and
Employee shall negotiate an extension agreement before September 30, 2000.
3. Compensation: For services rendered by the Employee under this
Agreement, the Employee shall receive the following:
(a) As inducement to sign this contract employer will pay
employee a one time signing bonus of $20,000. This bonus will be paid within
thirty days after execution of this document.
(b) An annual salary of $125,000. Employee shall be entitled
to increases in his base annual salary, at least annually, on the anniversary of
the date of his Agreement. The amount of the increase shall be determined by the
Board or a committee appointed by the Board. However, it is agreed that the
Employee salary stated above should not be increased from its present amount
until the Board of Directors determined that Myriad has adequate cash flow to
pay the increased salary.
(c) As an inducement to Employee entering into this Agreement,
Employer shall issue to Employee as soon as reasonably practical 500,000 shares
of Class A Common Stock. The vesting period of this stock will be immediate.
<PAGE> 2
Page 2 Initials________
(d) Also an inducement to Employee entering into this
Agreement, Employer shall issue to Employee as soon as reasonably practical
600,000 shares of Class B Common Stock. The vesting schedule is as follows:
<TABLE>
<CAPTION>
Date Number of Shares
---- ----------------
<S> <C>
Upon Signing this Contract 150,000
12/31/96 150,000
12/31/97 150,000
12/31/98 150,000
</TABLE>
(e) The employer hereby grants to the Employee, Stock Options
to purchase all or part of an aggregate of 1,000,000 shares of Class A Common
Stock according to the following performance schedule:
<TABLE>
<CAPTION>
Options Granted
<S> <C>
1. Upon Signing this contract 200,000 Shares
2. January 1, 1997 200,000 Shares
3. January 1, 1998 200,000 Shares
4. January 1, 1999 200,000 Shares
5. January 1, 2000 200,000 Shares
----------------
1,000,000 Shares A
</TABLE>
The options allow the employee to purchase the Class A Common stock at a price
of $0.25 per share for a term of five years from the date of this contract,
subject to the provisions with respect to termination of employment, death or
disability of the employee. Any portion of the option not exercised prior to the
termination of the option shall thereupon become null and void. The shares of
Class A Common Stock and Class B Common Stock are being acquired for investment
and will bear appropriate restrictive legends.
The options granted pursuant to this Agreement shall be subject to the terms and
conditions set forth on Exhibit A attached hereto and made a part hereof.
(f) Additional compensation in the form of an annual bonus,
during the Initial Term, and any extensions of thereof, of this Agreement. The
exact structure and amount of said bonus shall either be determined by, or
subject to approval of, the Board. Said bonus shall be based on the annualized
profitability of the Employer.
(g) Such other stock options or incentive performance stock
programs determined at the sole discretion of Employer's Board of Directors
during the term of this agreement.
(h) Four weeks paid vacation during each employment year
(i.e., [January 1] through [December 31], which shall be taken in accordance
with a schedule submitted by the Board or its designee. This vacation period
shall be non-
<PAGE> 3
Page 3 Initials______
cumulative unless Employee shall forego his vacation in whole or in part at the
request of the Board or its designee, in which case the portion of such vacation
not taken in such employment year may be taken as additional vacation in the
following year.
(i) Other compensation and fringe benefits, including health
insurance, and company car, as the Board of Directors of the Employer may grant
to Employee from time to time in conformity with the Employer's policy, at the
sole discretion of the Board of Directors of the Employer.
(j) Employee agrees that as a condition to the effectiveness
of this Agreement all shares of the Class B Common Stock of the Company now or
hereafter owned by the Employee shall be subject to the following restrictions
which shall be endorsed on all certificates for shares of Class B Common Stock
registered in the name of Employee:
The shares of Class B Common Stock evidenced by this
certificate shall not be sold, assigned, hypothecated, or
otherwise encumbered or transferred during the lifetime of
Victor L. Parks except to his spouse, children or
grandchildren or to another registered holder of Class B
Common Stock. Shares of Class B Common Stock shall not be
converted into shares of Class A Common Stock except by Victor
L. Parks or the persons designated in the preceding sentence.
The foregoing restriction does not prohibit the transfer of
Victor L. Parks's Class B Common Stock by will or the laws of
descent and distribution.
4. Duties: The employee is engaged as Senior Vice President and
Secretary of the Employer. The Senior Vice President of the Corporation is
subject to the control of the Chairman and Chief Executive Officer and the Board
of Directors. His duties shall be as follows, unless changed by The Board of
Directors.
SUMMARY: Directs and coordinates activities of one or more departments such as
purchasing, operations, or sales, or major division of business organization,
and aids Chief Executive Officer in formulating and administering organization
policies by performing the following duties personally or through subordinate
managers.
ESSENTIAL DUTIES AND RESPONSIBILITIES include the following. Other duties may be
assigned. Participates in formulating and administering company policies and
developing long range goals and objectives. Directs and coordinates activities
of department or division for which responsibility is delegated to further
attainment of goals and objectives. Reviews analyses of activities, costs,
operations, and forecast data to determine department or division progress
toward stated goals and objectives. Confers with Chief Executive Officer and
other administrative personnel to review achievements and discuss required
changes in goals or objectives resulting from current status and conditions.
Serves as member of management committees on special studies.
<PAGE> 4
Page 4 Initials________
5. Extent of Services: The Employee shall devote substantially his full
time, attention and energies to the business of the Employer and may not, during
the term of this Agreement, engage in other business activities, whether or not
such business activities are pursued for gain, profit or other pecuniary
advantage. Employee shall not be prevented from investing his assets in such
form or manner as will not require any services on the part of the Employee in
the operation of the affairs of the companies in which such investments are
made.
6. Disclosure of Information:
(a) The Employee recognizes and acknowledges that the
information, processes, developments, experimental work, work in progress,
business, list of the Employer's customers and any other trade secret or other
secret or confidential information relating to Employer's business as they may
exist from time to time are valuable, special and unique assets Employer's
business. Therefore, Employee agrees that;
(i) Employee will hold in strictest confidence and
not disclose, reproduce, publish or use in any manner, whether during or
subsequent to his employment, without the express authorization of the Board of
Directors of the Employer, any information, process, development or experimental
work, work in process, business, customer lists, trace secret or any other
secret or confidential matter relating to any aspect of the Employer's business,
except as such disclosure or use may be required in connection with Employee's
work for the Employer.
(ii) Upon request or at time of leaving the employ of
the Employer, the Employee will deliver to the Employer, and not keep or deliver
to anyone else, any and all notes, memoranda, documents and, in general, any and
all material relating to the Employer's business.
(b) In the event of a breach or threatened breach by the
Employee of the provisions of this paragraph 6, the Employer shall be entitled
to an injunction (i) restraining the Employee from disclosing, in whole or in
part, any information as described above or from rendering any services to any
person, firm, corporation, association or other entity to whom such information,
in whole or in part, has been disclosed or is threatened to be disclosed; and/or
(ii) requiring that Employee deliver to Employer all information, documents,
notes, memoranda and any and all discoveries or other material as described
above upon Employee's leave of the employ of the Employer. Nothing herein shall
be construed as prohibiting the Employer from pursuing other remedies available
to the Employer for such breach or threatened breach, including the recovery of
damages from the Employee.
7. Expenses: The Employee is authorized to incur reasonable expenses
for promoting the business of the Employer, including expenses for
entertainment, travel and similar items. The Employer will reimburse the
Employee for all such expenses upon the presentation by the Employee from time
to time of an itemized account of such expenditures.
<PAGE> 5
Page 5 Initials__________
8. Disability: If the Employee is unable to perform his services by
reason of illness or incapacity for a continuous period of more than 180 days,
the Employer may terminate this Agreement. Upon such termination Employer shall
pay Employee twelve months of salary as provided in paragraph 3(a) hereof. The
full amount of such salary shall be paid at such times as such compensation
would otherwise be paid hereunder. All other obligations hereunder, except the
continuing obligations described in paragraph 6 hereof, shall thereupon cease.
9. Termination by Employer: The Employer may terminate this Agreement
for cause at any time, but only after a majority vote of the Board of Directors.
As used in this Agreement, the phrase "for cause" shall mean any of the
following: breach of any fiduciary duty to the Employer, fraud, gross
negligence, willful misconduct or conviction (including a plea of nolo
contendere) in a felony criminal proceeding (excluding traffic violations or
similar misdemeanors). In such event, the Employee, if requested by the
Employer, shall continue to render his services and shall be paid his regular
salary up to the date of termination. The Employer may terminate this Agreement
without cause at any time, but in such event the Employer shall be obligated to
pay Employee his full compensation under paragraph 3 hereof (including the
release of stock) through the end of the term of this agreement at such times as
such compensation would otherwise be paid hereunder. In each such event of
termination, all other obligations hereunder, except the continuing obligations
described in paragraph 6 hereof, shall thereupon cease. The amount due under
this provision shall not be subject to reduction for other compensation or
remuneration in any form received by Employee after the termination of his
employment under this Agreement.
10. Termination by Employee: Employee may terminate his employment by
notifying Employer at least 60 days before the date of termination of the
Initial Term or the then effective Additional Term. Such termination shall be
effective as of the last day of the Initial Term or the then effective
Additional Term. Employee may also terminate this Agreement for cause upon the
Employer's failure to materially comply with its obligations set forth in this
Agreement
11. Death During Employment: If the employee dies during the term of
his employment, the Employer shall pay to the estate of the Employee six months
of salary as provided in paragraph 3(a) hereof. The full amount of such salary
shall be paid within 60 days of such death.
12. Restrictive Covenant: During the term of this Agreement and any
extension hereof, the Employee will not, within a radius of 500 miles from the
present place of the Employer's business (or, even though the parties agree that
such limitation is reasonable, if such locations are determined by a court to
broad, such geographic area as such court may determine is reasonable) directly
or indirectly, own, manage, operate, control, be employed on a full time basis
in a managerial capacity by, participate in or be connected in any manner with
the ownership, management, operation or control of any business in direct
<PAGE> 6
Page 6 Initials__________
competition with the type of business conducted by the Employer at the time of
the termination of this Agreement.
In the event of an actual or threatened breach by the Employee of the provisions
of this paragraph, the Employer shall be entitled to seek an injunction
restraining the Employee from owning, managing, operating, controlling, being
employed by, participating in or being in any way so connected with any business
in direct competition with the type of business conducted by the Employer during
the term of this Agreement. Nothing herein stated shall be construed as
prohibiting the Employer from pursuing any other remedies available to the
Employer for such breach or threatened breach.
13. Arbitration: Any controversy or claim arising out of or relating to
this Agreement or the breach thereof shall be settled by arbitration in the City
of San Diego, California, in accordance with the rules then existing of the
American Arbitration Association and judgment upon the award may be entered in
any court having jurisdiction thereof.
14. Notices: The notices required or permitted to be given under this
Agreement shall be sufficient if in writing and if sent by registered or
certified mail, return receipt requested, to his residence in the case of the
Employee, or to its principal office in the case of the Employer.
15. Waiver of Breach: The waiver by the Employer of a breach of any
provision of this Agreement by the Employee shall not operate to be construed as
a waiver of any subsequent breach by the Employee.
16. Assignment: Neither this Agreement nor any benefits hereunder are
assignable by Employee; but the rights and obligations of the Employer under
this Agreement shall inure to the benefit of and be binding upon the successors
and assigns of the Employer.
17. Entire Agreement: This instrument contains the entire agreement of
the parties and it may be changed, modified, supplemented or amended only by an
agreement in writing signed by the Employer and Employee. The employment
agreement between the company and employee dated as amended is terminated
provided that options to purchase the Class B Common Stock of Myriad granted
under such agreement shall remain in full force and affect.
18. Governing Law: This Agreement shall be interpreted and governed in
accordance with the laws of the State of California.
19. Severability: If any paragraph, sentence, clause or phrase of this
Agreement is for any reason declared to be illegal, invalid, unconstitutional,
void or unenforceable, all other paragraphs hereof not so held shall be and
remain in full force and effect.
<PAGE> 7
Page 7 Initials___________
20. Authorization The Compensation Commitee of the Board of Directors
of the Employer has authorized this Agreement, and specifically authorized
execution hereof by the undersigned on behalf of the Employer.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
Myriad International, Inc.
By: /s/David W. Pequet
---------------------------------------
David W. Pequet
Chairman of the Compensation Committee
Employee:
/s/ Victor L. Parks
---------------------------------------
Victor L. Parks
<PAGE> 8
EXHIBIT A
OPTION TERMS
The options to purchase shares of the Class A Common Stock and/or the Class B
Common Stock of the Company shall be governed by the following terms and
conditions:
1. DEFINITIONS. For purposes of the Plan, the following terms have the
following meanings:
(1) "Agreement" means the Employment Agreement between
the Optionee and the Company dated as of January 1,
1996.
(2) "Board" means the Board of Directors of the Company.
(3) "Commission" means the Securities and Exchange
Commission, and any successor agency.
(4) "Company" means Myriad International, Inc.
(5) "Effective Date" has the meaning set forth in
Section 2.
(6) "Exchange Act" means the Securities Exchange Act of
1934, as amended from time to time, and any successor
statute.
(7) "Grant Date" means the date of grant of any Option.
(8) "Option" means an Option granted under the Employment
Agreement between the Optionee and the Company dated
as of January 1, 1996.
(9) "Stock" means the Class A Common stock (with respect
to Class A Options) or the Class B Common Stock (with
respect to Class B Options) of the Company, and any
successor entity.
(10) "Tax Date" means the date defined in Section 7.
(11) "Vesting Date" means the date on which an Option
becomes wholly or partially exercisable.
Initials ________ ______
Exhibit A Page 1
<PAGE> 9
2. Terms and Conditions of Grant. Options granted under the Agreement
shall be subject to the following terms and conditions and such other
terms and conditions not inconsistent with the Agreement as the Board
shall impose:
(1) Exercise of Option. In order to exercise all or any
portion of any Option granted under the Agreement, an
Optionee must remain as an officer, employee,
consultant or director of the Company, or a
Subsidiary, until the Vesting Date. The Option shall
be exercisable on or after each Vesting Date in
accordance with the terms set forth in the Agreement.
(2) Method of Exercise. To the extent the right to
purchase shares of Stock has accrued, Options may be
exercised, in whole or in part, from time to time in
accordance with their terms by written notice from
the Optionee to the Company stating the number of
shares of Stock with respect to which the Option is
being exercised and accompanied by payment in full of
the exercise price. Payment may be made in cash,
certified check or, at the absolute discretion of the
Board, by non-certified check.
(3) Nonassignability of Option Rights. No Option shall
be transferable other than by will or by the laws of
descent and distribution except to the parents,
spouse, children or grandchildren of the Optionee.
During the lifetime of an Optionee, only the Optionee
or the permitted assignees may exercise an Option.
Options assigned pursuant to this sub-section 2.(3)
shall remain subject to the provisions of sub-section
2.(4).
(4) Exercise After Termination of Employment or Death. If
for any reason other than permanent and total
disability or death an Optionee ceases to be employed
by or to be a consultant or director of the Company,
or a Subsidiary, Options held at the date of such
termination (to the extent then exercisable) may be
exercised, in whole or in part, at any time within
three (3) months after the date of such termination
or such lesser period specified in the Option
Agreement (but in no event after the earlier of the
expiration date of the Option as set forth in the
Agreement.
If an Optionee becomes permanently and totally
disabled (within the meaning of Section 11(e)(3) of
the Internal Revenue Code of 1986, as amended from
time to time, and any successor statute, or dies
while employed by the Company, or a Subsidiary, (or,
if the Optionee dies within the period that the
Option remains exercisable after termination of
employment), Options then held
Initials______ ______
Exhibit A Page 2
<PAGE> 10
(to the extent then exercisable) may be exercised by
the Optionee, the Optionee's personal representative,
or by the person to whom the Option is transferred by
will or the laws of descent and distribution, in
whole or in part, at any time within one year after
the disability or death or any lesser period
specified in the Option Agreement (but in no event
after the earlier of the expiration date of the
Option as set forth in the Agreement.
(5) Compliance with Securities Laws. The Company shall
not be obligated to issue any shares of Stock upon
exercise of an Option unless such shares are at that
time effectively registered or exempt from
registration under the federal securities laws and
the offer and sale of the shares of Stock are
otherwise in compliance with all applicable
securities laws. The Company shall have no obligation
to register the shares of Stock under the federal
securities laws or to take whatever other steps may
be necessary to enable the shares of Stock to be
offered and sold under federal or other securities
laws. Upon exercising all or any portion of an
Option, an Optionee may be required to furnish
representations or undertakings deemed appropriate by
he Company to enable the offer and sale of the shares
of Stock or subsequent transfers of any interest in
such shares to comply with applicable securities
laws. Evidences of ownership of shares of Stock
acquired upon exercise of Options shall bear any
legend required by, or useful for purposes of
compliance with, applicable securities laws.
3. PAYMENT OF TAXES. Unless the Board permits otherwise, the participant
shall pay the Company in cash, promptly when the amount of such
obligations becomes determinable (the "Tax Date"), all applicable
local, state and federal withholding taxes applicable, in the Board's
absolute discretion, to (i) the exercise of any Option, or (ii) the
transfer or other disposition of shares acquired upon the exercise of
any Option.
4. ADJUSTMENT FOR CHANGES IN CAPITALIZATION. The existence of outstanding
Options shall not affect the Company's right to effect adjustments,
recapitalizations, reorganizations or other changes in its or any other
corporation's capital structure or business, any merger or
consolidation, any issuance of bonds debentures, preferred or prior
preference stock ahead of or affecting the Stock the dissolution or
liquidation of the Company's or any other corporation's assets or
business or any other corporate act whether similar to the events
described above or otherwise. Subject to Section 5, if the outstanding
shares of the Stock are increased or decreased in number or changed
into or exchanged for a different number or kind of securities of the
Company or any other corporation by reason of a recapitalization,
reclassification, stock split, combination of shares, stock dividend
or other
Initials ____ ____
Exhibit A Page 3
<PAGE> 11
event, the number and kind of securities with respect to which
Options may be granted under the Agreement, the number and kind of
securities as to which outstanding Options may be exercised, and the
exercise price at which outstanding Options may be exercised, shall be
adjusted, to the extent possible, so as to prevent dilution and without
regard to any resulting tax consequences to the Optionee.
5. DISSOLUTION, LIQUIDATION, MERGER. In the event of a dissolution or
liquidation of the Company, a merger in which the Company is not the
surviving corporation, or a sale of over 80% of the assets of the
Company, the Board, in its absolute discretion, may cancel each
outstanding Option upon payment in cash to the Optionee of the amount
by which any cash and the fair market value of any other property which
the Optionee would have received as consideration for the shares of
Stock covered by the Option if the Option had been exercised before
such liquidation, dissolution, merger, or sale exceeds the exercise
price of the Option. In addition to the foregoing, in the event of a
merger in which the Company is not the surviving corporation, the
Board, in its absolute discretion, may accelerate the time within which
each outstanding Option may be exercised.
6. SUCCESSOR CORPORATIONS. In the event of a merger in which the Company
is not the surviving corporation, the successor entity may assume the
obligations under all outstanding Options.
7. NO RIGHTS AS SHAREHOLDER OR TO CONTINUED EMPLOYMENT. An Optionee shall
have no rights as a shareholder with respect to any shares of Stock
covered by an Option until such Optionee has acquired title to such
shares. Subject to Sections 4 and 5, no adjustment shall be made for
dividends or other rights for which the record date is prior to the
date title to the shares of Stock has been acquired by the Optionee.
The grant of an Option shall in no way be constructed so as to confer
on any Optionee the right to continued employment by the Company, or a
Subsidiary.
Initials _____ _____
Exhibit A Page 4
<PAGE> 1
EXHIBIT 10.4
EMPLOYMENT AGREEMENT
AGREEMENT dated as of January 1, 1996 between Myriad International,
Inc., 4330 LaJolla Village Drive, Suite 320, San Diego, California, 92122, a
corporation organized under the laws of the State of Delaware (hereinafter
referred to as the "Employer"), and Sharon Snyder (hereinafter referred to as
the "Employee").
1. Employment: The Employer hereby employs the Employee and the
Employee hereby accepts employment upon the terms and conditions hereinafter set
forth.
2. Term: Subject to the provisions for termination as hereinafter
provided, the term of this Agreement shall begin on the date of execution of
this Agreement and shall continue until December 31, 2000, unless sooner
terminated in accordance with the terms contained herein. If Employer desires to
extend the term of this Agreement beyond December 31, 2000, Employer and
Employee shall negotiate an extension agreement before September 30, 2000.
3. Compensation: For services rendered by the Employee under this
Agreement, the Employee shall receive the following:
(a) As inducement to sign this contract employer will pay
employee a one time signing bonus of $20,000.00. This bonus will be paid within
thirty days after execution of this document.
(b) An annual salary of $100,000. Employee shall be entitled
to increases in his base annual salary, at least annually, on the anniversary of
the date of his Agreement. The amount of the increase shall be determined by the
Board or a committee appointed by the Board. However, it is agreed that the
Employee salary stated above should not be increased from its present amount
until the Board of Directors determined that Myriad has adequate cash flow to
pay the increased salary.
(c) As an inducement to Employee entering into this Agreement,
Employer shall issue to Employee as soon as reasonably practical 200,000 shares
of Class A Common Stock. The vesting period of this stock will be immediate.
(d) The employer hereby grants to the Employee, Stock Options
to purchase all or part of an aggregate of 500,000 shares of Class A Common
Stock according to the following performance schedule:
Page 1 Initials_______ ________
<PAGE> 2
<TABLE>
<CAPTION>
Options Granted
---------------
<S> <C>
1. Upon Signing this contract 100,000 Shares
2. January 1, 1997 100,000 Shares
3. January 1, 1998 100,000 Shares
4. January 1, 1999 100,000 Shares
5. January 1, 2000 100,000 Shares
------------------
500,000 Shares A
</TABLE>
The options allow the employee to purchase the Class A Common stock at a price
of $0.25 per share for a term of five years from the date of this contract,
subject to the provisions with respect to termination of employment, death or
disability of the employee. Any portion of the option not exercised prior to the
termination of the option shall thereupon become null and void. The shares of
Class A Common Stock are being acquired for investment and will bear appropriate
restrictive legends.
The options granted pursuant to this Agreement shall be subject to the terms and
conditions set forth on Exhibit A attached hereto and made a part hereof.
(e) Additional compensation in the form of an annual bonus,
during the Initial Term, and any extensions of therof, of this Agreement. The
exact structure and amount of said bonus shall either be determined by, or
subject to approval of, the Board. Said bonus shall be based on the annualized
profitability of the Employer.
(f) Such other stock options or incentive performance stock
programs determined at the sole discretion of Employer's Board of Directors
during the term of this agreemenet.
(g) Four weeks paid vacation during each employment year
(i.e., [January 1] through [December 31], which shall be taken in accordance
with a schedule submitted by the Board or its designee. This vacation period
shall be non-cumulative unless Employee shall forego his vacation in whole or in
part at the request of the Board or its designee, in which case the portion of
such vacation not taken in such employment year may be taken as additional
vacation in the following year.
(h) Other compensation and fringe benefits, including health
insurance, and company car, as the Board of Directors of the Employer may grant
to Employee from time to time in conformity with the Employer's policy, at the
sole discretion of the Board of Directors of the Employer.
4. Duties: The employee is engaged as Senior Vice President and
Treasurer of the Employer. The Senior Vice President and Treasurer of the
Corporation is subject to the control of the Chairman of the Board and Chief
Executive Officer and The Board of Directors. Her duties shall be as follows,
unless changed by The Board of Directors.
Page 2 Initials_______ ________
<PAGE> 3
SUMMARY: Directs the organization's financial planning and budgeting practices
as well as its relationship with lending institutions, shareholders, and the
financial community by performing the following duties personally or through
subordinate managers.
ESSENTIAL DUTIES AND RESPONSIBILITIES include the following: Other duties may be
assigned. Oversees and directs treasury, budgeting, real estate and insurance
activities for the organization. Acts as custodian of funds, securities and
assets of the organization. Appraises the organization's financial position and
issues periodic financial and operating reports. Directs and coordinates the
establishment of budget programs. Analyzes, consolidates and directs all cost
accounting procedures together with other statistical and routine reports.
Oversees and directs the preparation and issuance of the corporation's Annual
Report. Directs and analyses studies of general economic, business and financial
conditions and their impact on the organization's policies and operations.
5. Extent of Services: The Employee shall devote substantially his full
time, attention and energies to the business of the Employer and may not, during
the term of this Agreement, engage in other business activities, whether or not
such business activities are pursued for gain, profit or other pecuniary
advantage. Employee shall not be prevented from investing his assets in such
form or manner as will not require any services on the part of the Employee in
the operation of the affairs of the companies in which such investments are
made.
6. Disclosure of Information:
(a) The Employee recognizes and acknowledges that the
information, processes, developments, experimental work, work in progress,
business, list of the Employer's customers and any other trade secret or other
secret or confidential information relating to Employer's business as they may
exist from time to time are valuable, special and unique assets Employer's
business. Therefore, Employee agrees that;
(i) Employee will hold in strictest confidence and
not disclose, reproduce, publish or use in any manner, whether during or
subsequent to his employment, without the express authorization of the Board of
Directors of the Employer, any information, process, development or experimental
work, work in process, business, customer lists, trace secret or any other
secret or confidential matter relating to any aspect of the Employer's business,
except as such disclosure or use may be required in connection with Employee's
work for the Employer.
(ii) Upon request or at time of leaving the employ of
the Employer, the Employee will deliver to the Employer, and not keep or deliver
to anyone else, any and all notes, memoranda, documents and, in general, any and
all material relating to the Employer's business.
Page 3 Initials_______ ________
<PAGE> 4
(b) In the event of a breach or threatened breach by the
Employee of the provisions of this paragraph 6, the Employer shall be entitled
to an injunction (i) restraining the Employee from disclosing, in whole or in
part, any information as described above or from rendering any services to any
person, firm, corporation, association or other entity to whom such information,
in whole or in part, has been disclosed or is threatened to be disclosed; and/or
(ii) requiring that Employee deliver to Employer all information, documents,
notes, memoranda and any and all discoveries or other material as described
above upon Employee's leave of the employ of the Employer. Nothing herein shall
be construed as prohibiting the Employer from pursuing other remedies available
to the Employer for such breach or threatened breach, including the recovery of
damages from the Employee.
7. Expenses: The Employee is authorized to incur reasonable expenses
for promoting the business of the Employer, including expenses for
entertainment, travel and similar items. The Employer will reimburse the
Employee for all such expenses upon the presentation by the Employee from time
to time of an itemized account of such expenditures.
8. Disability: If the Employee is unable to perform his services by
reason of illness or incapacity for a continuous period of more than 180 days,
the Employer may terminate this Agreement. Upon such termination Employer shall
pay Employee twelve months of salary as provided in paragraph 3(a) hereof. The
full amount of such salary shall be paid at such times as such compensation
would otherwise be paid hereunder. All other obligations hereunder, except the
continuing obligations described in paragraph 6 hereof, shall thereupon cease.
9. Termination by Employer: The Employer may terminate this Agreement
for cause at any time, but only after a majority vote of the Board of Directors.
As used in this Agreement, the phrase "for cause" shall mean any of the
following: breach of any fiduciary duty to the Employer, fraud, gross
negligence, willful misconduct or conviction (including a plea of nolo
contendere) in a felony criminal proceeding (excluding traffic violations or
similar misdemeanors). In such event, the Employee, if requested by the
Employer, shall continue to render his services and shall be paid his regular
salary up to the date of termination. The Employer may terminate this Agreement
without cause at any time, but in such event the Employer shall be obligated to
pay Employee his full compensation under paragraph 3 hereof (including the
release of stock) through the end of the term of this agreement at such times as
such compensation would otherwise be paid hereunder. In each such event of
termination, all other obligations hereunder, except the continuing obligations
described in paragraph 6 hereof, shall thereupon cease. The amount due under
this provision shall not be subject to reduction for other compensation or
remuneration in any form received by Employee after the termination of his
employment under this Agreement.
10. Termination by Employee: Employee may terminate his employment by
notifying Employer at least 60 days before the date of termination of the
Initial Term or the then effective Additional Term. Such termination shall be
effective as of
Page 4 Initials_______ ________
<PAGE> 5
the last day of the Initial Term or the then effective Additional Term. Employee
may also terminate this Agreement for cause upon the Employer's failure to
materially comply with its obligations set forth in this Agreement.
11. Death During Employment: If the employee dies during the term of
his employment, the Employer shall pay to the estate of the Employee three
months of salary as provided in paragraph 3(a) hereof. The full amount of such
salary shall be paid within 60 days of such death.
12. Restrictive Covenant: During the term of this Agreement and any
extension hereof, the Employee will not, within a radius of 500 miles from the
present place of the Employer's business (or, even though the parties agree that
such limitation is reasonable, if such locations are determined by a court to
broad, such geographic area as such court may determine is reasonable) directly
or indirectly, own, manage, operate, control, be employed on a full time basis
in a managerial capacity by, participate in or be connected in any manner with
the ownership, management, operation or control of any business in direct
competition with the type of business conducted by the Employer at the time of
the termination of this Agreement.
In the event of an actual or threatened breach by the Employee of the provisions
of this paragraph, the Employer shall be entitled to seek an injunction
restraining the Employee from owning, managing, operating, controlling, being
employed by, participating in or being in any way so connected with any business
in direct competition with the type of business conducted by the Employer during
the term of this Agreement. Nothing herein stated shall be construed as
prohibiting the Employer from pursuing any other remedies available to the
Employer for such breach or threatened breach.
13. Arbitration: Any controversy or claim arising out of or relating to
this Agreement or the breach thereof shall be settled by arbitration in the City
of San Diego, California, in accordance with the rules then existing of the
American Arbitration Association and judgment upon the award may be entered in
any court having jurisdiction thereof.
14. Notices: The notices required or permitted to be given under this
Agreement shall be sufficient if in writing and if sent by registered or
certified mail, return receipt requested, to his residence in the case of the
Employee, or to its principal office in the case of the Employer.
15. Waiver of Breach: The waiver by the Employer of a breach of any
provision of this Agreement by the Employee shall not operate to be construed as
a waiver of any subsequent breach by the Employee.
16. Assignment: Neither this Agreement nor any benefits hereunder are
assignable by Employee; but the rights and obligations of the Employer under
this Agreement shall inure to the benefit of and be binding upon the successors
and assigns of the Employer.
Page 5 Initials_______ ________
<PAGE> 6
17. Entire Agreement: This instrument contains the entire agreement of
the parties and it may be changed, modified, supplemented or amended only by an
agreement in writing signed by the Employer and Employee. The employment
agreement betwen the company and employee dated as amended is terminated
provided that options to purchase the Class A Common Stock of Myriad granted
under such agreement shall remain in full force and affected.
18. Governing Law: This Agreement shall be interpreted and governed in
accordance with the laws of the State of California.
19. Severability: If any paragraph, sentence, clause or phrase of this
Agreement is for any reason declared to be illegal, invalid, unconstitutional,
void or unenforceable, all other paragraphs hereof not so held shall be and
remain in full force and effect.
20. Authorization The Compensation Commitee of the Board of Directors
of the Employer has authorized this Agreement, and specifically authorized
execution hereof by the undersigned on behalf of the Employer.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and
year first above written.
Myriad International, Inc.
By: /s/ Jerome O. Crawford
------------------------------------
Jerome O. Crawford
Chairman
Employee:
/s/ Sharon A. Snyder
------------------------------------
Sharon A. Snyder
Page 6 Initials_______ _____
<PAGE> 7
EXHIBIT A
OPTION TERMS
The options to purchase shares of the Class A Common Stock and/or the Class B
Common Stock of the Company shall be governed by the following terms and
conditions:
1. DEFINITIONS. For purposes of the Plan, the following terms have the
following meanings:
(1) "Agreement" means the Employment Agreement between
the Optionee and the Company dated as of January 1,
1996.
(2) "Board" means the Board of Directors of the Company.
(3) "Commission" means the Securities and Exchange
Commission, and any successor agency.
(4) "Company" means Myriad International, Inc.
(5) "Effective Date" has the meaning set forth in
Section 2.
(6) "Exchange Act" means the Securities Exchange Act of
1934, as amended from time to time, and any successor
statute.
(7) "Grant Date" means the date of grant of any Option.
(8) "Option" means an Option granted under the Employment
Agreement between the Optionee and the Company dated
as of January 1, 1996.
(9) "Stock" means the Class A Common stock (with respect
to Class A Options) or the Class B Common Stock (with
respect to Class B Options) of the Company, and any
successor entity.
(10) "Tax Date" means the date defined in Section 7.
(11) "Vesting Date" means the date on which an Option
becomes wholly or partially exercisable.
Initials ________ ______
Exhibit A Page 1
<PAGE> 8
2. Terms and Conditions of Grant. Options granted under the Agreement
shall be subject to the following terms and conditions and such other
terms and conditions not inconsistent with the Agreement as the Board
shall impose:
(1) Exercise of Option. In order to exercise all or any
portion of any Option granted under the Agreement, an
Optionee must remain as an officer, employee,
consultant or director of the Company, or a
Subsidiary, until the Vesting Date. The Option shall
be exercisable on or after each Vesting Date in
accordance with the terms set forth in the Agreement.
(2) Method of Exercise. To the extent the right to
purchase shares of Stock has accrued, Options may be
exercised, in whole or in part, from time to time in
accordance with their terms by written notice from
the Optionee to the Company stating the number of
shares of Stock with respect to which the Option is
being exercised and accompanied by payment in full of
the exercise price. Payment may be made in cash,
certified check or, at the absolute discretion of the
Board, by non-certified check.
(3) Nonassignability of Option Rights. No Option shall
be transferable other than by will or by the laws of
descent and distribution except to the parents,
spouse, children or grandchildren of the Optionee.
During the lifetime of an Optionee, only the Optionee
or the permitted assignees may exercise an Option.
Options assigned pursuant to this sub-section 2.(3)
shall remain subject to the provisions of sub-section
2.(4).
(4) Exercise After Termination of Employment or Death. If
for any reason other than permanent and total
disability or death an Optionee ceases to be employed
by or to be a consultant or director of the Company,
or a Subsidiary, Options held at the date of such
termination (to the extent then exercisable) may be
exercised, in whole or in part, at any time within
three (3) months after the date of such termination
or such lesser period specified in the Option
Agreement (but in no event after the earlier of the
expiration date of the Option as set forth in the
Agreement.
If an Optionee becomes permanently and totally
disabled (within the meaning of Section 11(e)(3) of
the Internal Revenue Code of 1986, as amended from
time to time, and any successor statute, or dies
while employed by the Company, or a Subsidiary, (or,
if the Optionee dies within the period that the
Option remains exercisable after termination of
employment), Options then held
Initials______ ______
Exhibit A Page 2
<PAGE> 9
(to the extent then exercisable) may be exercised
by the Optionee, the Optionee's personal
representative, or by the person to whom the Option
is transferred by will or the laws of descent and
distribution, in whole or in part, at any time within
one year after the disability or death or any lesser
period specified in the Option Agreement (but in no
event after the earlier of the expiration date of the
Option as set forth in the Agreement.
(5) Compliance with Securities Laws. The Company shall
not be obligated to issue any shares of Stock upon
exercise of an Option unless such shares are at that
time effectively registered or exempt from
registration under the federal securities laws and
the offer and sale of the shares of Stock are
otherwise in compliance with all applicable
securities laws. The Company shall have no obligation
to register the shares of Stock under the federal
securities laws or to take whatever other steps may
be necessary to enable the shares of Stock to be
offered and sold under federal or other securities
laws. Upon exercising all or any portion of an
Option, an Optionee may be required to furnish
representations or undertakings deemed appropriate by
he Company to enable the offer and sale of the shares
of Stock or subsequent transfers of any interest in
such shares to comply with applicable securities
laws. Evidences of ownership of shares of Stock
acquired upon exercise of Options shall bear any
legend required by, or useful for purposes of
compliance with, applicable securities laws.
3. PAYMENT OF TAXES. Unless the Board permits otherwise, the participant
shall pay the Company in cash, promptly when the amount of such
obligations becomes determinable (the "Tax Date"), all applicable
local, state and federal withholding taxes applicable, in the Board's
absolute discretion, to (i) the exercise of any Option, or (ii) the
transfer or other disposition of shares acquired upon the exercise of
any Option.
4. ADJUSTMENT FOR CHANGES IN CAPITALIZATION. The existence of outstanding
Options shall not affect the Company's right to effect adjustments,
recapitalizations, reorganizations or other changes in its or any other
corporation's capital structure or business, any merger or
consolidation, any issuance of bonds debentures, preferred or prior
preference stock ahead of or affecting the Stock the dissolution or
liquidation of the Company's or any other corporation's assets or
business or any other corporate act whether similar to the events
described above or otherwise. Subject to Section 5, if the outstanding
shares of the Stock are increased or decreased in number or changed
into or exchanged for a different number or kind of securities of the
Company or any other corporation by reason of a recapitalization,
reclassification, stock split, combination of shares, stock dividend or
other
Initials ____ ____
Exhibit A Page 3
<PAGE> 10
event, the number and kind of securities with respect to which
Options may be granted under the Agreement, the number and kind of
securities as to which outstanding Options may be exercised, and the
exercise price at which outstanding Options may be exercised, shall be
adjusted, to the extent possible, so as to prevent dilution and without
regard to any resulting tax consequences to the Optionee.
5. DISSOLUTION, LIQUIDATION, MERGER. In the event of a dissolution or
liquidation of the Company, a merger in which the Company is not the
surviving corporation, or a sale of over 80% of the assets of the
Company, the Board, in its absolute discretion, may cancel each
outstanding Option upon payment in cash to the Optionee of the amount
by which any cash and the fair market value of any other property which
the Optionee would have received as consideration for the shares of
Stock covered by the Option if the Option had been exercised before
such liquidation, dissolution, merger, or sale exceeds the exercise
price of the Option. In addition to the foregoing, in the event of a
merger in which the Company is not the surviving corporation, the
Board, in its absolute discretion, may accelerate the time within which
each outstanding Option may be exercised.
6. SUCCESSOR CORPORATIONS. In the event of a merger in which the Company
is not the surviving corporation, the successor entity may assume the
obligations under all outstanding Options.
7. NO RIGHTS AS SHAREHOLDER OR TO CONTINUED EMPLOYMENT. An Optionee shall
have no rights as a shareholder with respect to any shares of Stock
covered by an Option until such Optionee has acquired title to such
shares. Subject to Sections 4 and 5, no adjustment shall be made for
dividends or other rights for which the record date is prior to the
date title to the shares of Stock has been acquired by the Optionee.
The grant of an Option shall in no way be constructed so as to confer
on any Optionee the right to continued employment by the Company, or a
Subsidiary.
Initials _____ _____
Exhibit A Page 4
<PAGE> 1
EXHIBIT 10.5
EMPLOYMENT AGREEMENT
AGREEMENT dated as of January 1, 1996 between Myriad International,
Inc., 4330 LaJolla Village Drive, Suite 320, San Diego, California, 92122, a
corporation organized under the laws of the State of Delaware (hereinafter
referred to as the "Employer"), and Michael Nalu (hereinafter referred to as the
"Employee").
1. Employment: The Employer hereby employs the Employee and the
Employee hereby accepts employment upon the terms and conditions hereinafter set
forth.
2. Term: Subject to the provisions for termination as hereinafter
provided, the term of this Agreement shall begin on the date of execution of
this Agreement and shall continue until December 31, 2000, unless sooner
terminated in accordance with the terms contained herein. If Employer desires to
extend the term of this Agreement beyond December 31, 2000, Employer and
Employee shall negotiate an extension agreement before September 30, 2000.
3. Compensation: For services rendered by the Employee under this
Agreement, the Employee shall receive the following:
(a) An annual salary of $100,000. Employee shall be entitled
to increases in his base annual salary, at least annually, on the anniversary of
the date of his Agreement. The amount of the increase shall be determined by the
Board or a committee appointed by the Board. However, it is agreed that the
Employee salary stated above should not be increased from its present amount
until the Board of Directors determined that Myriad has adequate cash flow to
pay the increased salary.
(b) As an inducement to Employee entering into this Agreement,
Employer shall issue to Employee as soon as reasonably practical1 150,000 shares
of Class A Common Stock. The vesting period of this stock will be immediate.
(c) The employer hereby grants to the Employee, Stock Options
to purchase all or part of an aggregate of 300,000 shares of Class A Common
Stock according to the following performance schedule:
Page 1 Initials
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<PAGE> 2
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<TABLE>
<CAPTION>
Options Granted
---------------
<S> <C>
1. Upon Signing this contract 100,000 Shares
2. January 1, 1997 50,000 Shares
3. January 1, 1998 50,000 Shares
4. January 1, 1999 50,000 Shares
5. January 1, 2000 50,000 Shares
----------------------
300,000 Shares
</TABLE>
The options allow the employee to purchase the Class A Common stock at a price
of $0.25 per share for a term of five years from the date of this contract,
subject to the provisions with respect to termination of employment, death or
disability of the employee. Any portion of the option not exercised prior to the
termination of the option shall thereupon become null and void. The shares of
Class A Common Stock are being acquired for investment and will bear appropriate
restrictive legends. The options granted pursuant to this Agreement shall be
subject to the terms and conditions set forth on Exhibit A attached hereto and
made a part hereof.
(d) Additional compensation in the form of an annual bonus,
during the Initial Term, and any extensions of therof, of this Agreement. The
exact structure and amount of said bonus shall either be determined by, or
subject to approval of the Board. Said bonus shall be based on the annualized
profitability of the Employer.
(e) Such other stock options or incentive performance stock
programs determined at the sole discretion of Employer's Board of Directors
during the term of his agreement.
(f) Five weeks paid vacation during each employment year
(i.e., [January 1] through [December 31], which shall be taken in accordance
with a schedule submitted by the Board or its designee. This vacation period
shall be non-cumulative unless Employee shall forego his vacation in whole or in
part at the request of the Board or its designee, in which case the portion of
such vacation not taken in such employment year may be taken as additional
vacation in the following year.
(g) Other compensation and fringe benefits, including health
insurance, and company car, as the Board of Directors of the Employer may grant
to Employee from time to time in conformity with the Employer's policy, at the
sole discretion of the Board of Directors of the Employer.
4. Duties: The employee is engaged as Vice President of Employer. Vice
President of the Corporation is subject to the control of the Chairman of the
Board and Chief Executive Officer. His duties shall be as follows, unless
changed by The Board of Directors.
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<PAGE> 3
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SUMMARY: Directs and coordinates activities of project design and development
for building construction division and aids Chief Executive e Officer in
formulating and administering organization policies by performing the following
duties personally or through subordinate managers.
ESSENTIAL DUTIES AND Responsibilities include the following. Other duties may be
assigned. Directs and coordinates activities of department or division for which
responsibility is delegated to further attainment of goals and objectives.
Confers with Chief Executive Officer and other administrative personnel to
review achievements and discuss required changes in goals or objectives
resulting from current status and conditions. Serves as member of management
committees on special studies.
5. Extent of Services: The Employee shall devote substantially his full
time, attention and energies to the business of the Employer and may not, during
the term of this Agreement, engage in other business activities, whether or not
such business activities are pursued for gain, profit or other pecuniary
advantage. Employee shall not be prevented from investing his assets in such
form or manner as will not require any services on the part of the Employee in
the operation of the affairs of the companies in which such investments are
made.
6. Disclosure of Information:
(a) The Employee recognizes and acknowledges that the
information, processes, developments, experimental work, work in progress,
business, list of the Employer's customers and any other trade secret or other
secret or confidential information relating to Employer's business as they may
exist from time to time are valuable, special and unique assets Employer's
business. Therefore, Employee agrees that;
(i) Employee will hold in strictest confidence and
not disclose, reproduce, publish or use in any manner, whether during or
subsequent to his employment, without the express authorization of the Board of
Directors of the Employer, any information, process, development or experimental
work, work in process, business, customer lists, trace secret or any other
secret or confidential matter relating to any aspect of the Employer's business,
except as such disclosure or use may be required in connection with Employee's
work for the Employer.
(ii) Upon request or at time of leaving the employ of
the Employer, the Employee will deliver to the Employer, and not keep or deliver
to anyone else, any and all notes, memoranda, documents and, in general, any and
all material relating to the Employer's business.
(b) In the event of a breach or threatened breach by the
Employee of the provisions of this paragraph 6, the Employer shall be entitled
to an injunction (i)
Page 3 Initials
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<PAGE> 4
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restraining the Employee from disclosing, in whole or in part, any information
as described above or from rendering any services to any person, firm,
corporation, association or other entity to whom such information, in whole or
in part, has been disclosed or is threatened to be disclosed; and/or (ii)
requiring that Employee deliver to Employer all information, documents, notes,
memoranda and any and all discoveries or other material as described above upon
Employee's leave of the employ of the Employer. Nothing herein shall be
construed as prohibiting the Employer from pursuing other remedies available to
the Employer for such breach or threatened breach, including the recovery of
damages from the Employee.
7. Expenses: The Employee is authorized to incur reasonable expenses
for promoting the business of the Employer, including expenses for
entertainment, travel and similar items. The Employer will reimburse the
Employee for all such expenses upon the presentation by the Employee from time
to time of an itemized account of such expenditures.
8. Disability: If the Employee is unable to perform his services by
reason of illness or incapacity for a continuous period of more than 180 days,
the Employer may terminate this Agreement. Upon such termination Employer shall
pay Employee twelve months of salary as provided in paragraph 3(a) hereof. The
full amount of such salary shall be paid at such times as such compensation
would otherwise be paid hereunder. All other obligations hereunder, except the
continuing obligations described in paragraph 6 hereof, shall thereupon cease.
9. Termination by Employer: The Employer may terminate this Agreement
for cause at any time, but only after a majority vote of the Board of Directors.
As used in this Agreement, the phrase "for cause" shall mean any of the
following: breach of any fiduciary duty to the Employer, fraud, gross
negligence, willful misconduct or conviction (including a plea of nolo
contendere) in a felony criminal proceeding (excluding traffic violations or
similar misdemeanors). In such event, the Employee, if requested by the
Employer, shall continue to render his services and shall be paid his regular
salary up to the date of termination. The Employer may terminate this Agreement
without cause at any time, but in such event the Employer shall be obligated to
pay Employee his full compensation under paragraph 3 hereof (including the
release of stock) through the end of the term of this agreement at such times as
such compensation would otherwise be paid hereunder. In each such event of
termination, all other obligations hereunder, except the continuing obligations
described in paragraph 6 hereof, shall thereupon cease. The amount due under
this provision shall not be subject to reduction for other compensation or
remuneration in any form received by Employee after the termination of his
employment under this Agreement.
10. Termination by Employee: Employee may terminate his employment by
notifying Employer at least 60 days before the date of termination of the
Initial Term or the then effective Additional Term. Such termination shall be
effective as of
Page 4 Initials
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<PAGE> 5
Page 5 Initials
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the last day of the Initial Term or the then effective Additional Term. Employee
may also terminate this Agreement for cause upon the Employer's failure to
materially comply with its obligations set forth in this Agreement.
11. Death During Employment: If the employee dies during the term of
his employment, the Employer shall pay to the estate of the Employee six months
of salary as provided in paragraph 3(a) hereof. The full amount of such salary
shall be paid within 60 days of such death.
12. Restrictive Covenant: During the term of this Agreement and any
extension hereof, the Employee will not, within a radius of 500 miles from the
present place of the Employer's business (or, even though the parties agree that
such limitation is reasonable, if such locations are determined by a court to
broad, such geographic area as such court may determine is reasonable) directly
or indirectly, own, manage, operate, control, be employed on a full time basis
in a managerial capacity by, participate in or be connected in any manner with
the ownership, management, operation or control of any business in direct
competition with the type of business conducted by the Employer at the time of
the termination of this Agreement.
In the event of an actual or threatened breach by the Employee of the provisions
of this paragraph, the Employer shall be entitled to seek an injunction
restraining the Employee from owning, managing, operating, controlling, being
employed by, participating in or being in any way so connected with any business
in direct competition with the type of business conducted by the Employer during
the term of this Agreement. Nothing herein stated shall be construed as
prohibiting the Employer from pursuing any other remedies available to the
Employer for such breach or threatened breach.
13. Arbitration: Any controversy or claim arising out of or relating to
this Agreement or the breach thereof shall be settled by arbitration in the City
of San Diego, California, in accordance with the rules then existing of the
American Arbitration Association and judgment upon the award may be entered in
any court having jurisdiction thereof.
14. Notices: The notices required or permitted to be given under this
Agreement shall be sufficient if in writing and if sent by registered or
certified mail, return receipt requested, to his residence in the case of the
Employee, or to its principal office in the case of the Employer.
15. Waiver of Breach: The waiver by the Employer of a breach of any
provision of this Agreement by the Employee shall not operate to be construed as
a waiver of any subsequent breach by the Employee.
Page 5 Initials
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<PAGE> 6
Page 6 Initials
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16. Assignment: Neither this Agreement nor any benefits hereunder are
assignable by Employee; but the rights and obligations of the Employer under
this Agreement shall inure to the benefit of and be binding upon the successors
and assigns of the Employer.
17. Entire Agreement: This instrument contains the entire agreement of
the parties and it may be changed, modified, supplemented or amended only by an
agreement in writing signed by the Employer and Employee.
18. Governing Law: This Agreement shall be interpreted and governed in
accordance with the laws of the State of California.
19. Severability: If any paragraph, sentence, clause or phrase of this
Agreement is for any reason declared to be illegal, invalid, unconstitutional,
void or unenforceable, all other paragraphs hereof not so held shall be and
remain in full force and effect.
20. Authorization The Compensation Commitee of the Board of Directors
of the Employer has authorized this Agreement, and specifically authorized
execution hereof by the undersigned on behalf of the Employer.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and
year first above written.
Myriad International, Inc.
By: /s/ Jerome O. Crawford
---------------------------------------
Jerome O. Crawford
Chairman
Employee:
/s/ Michael Nalu
-------------------------------------------
Michael Nalu
Page 6 Initials
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<PAGE> 7
EXHIBIT A
OPTION TERMS
The options to purchase shares of the Class A Common Stock and/or the Class B
Common Stock of the Company shall be governed by the following terms and
conditions:
1. DEFINITIONS. For purposes of the Plan, the following terms have the
following meanings:
(1) "Agreement" means the Employment Agreement between
the Optionee and the Company dated as of January 1,
1996.
(2) "Board" means the Board of Directors of the Company.
(3) "Commission" means the Securities and Exchange
Commission, and any successor agency.
(4) "Company" means Myriad International, Inc.
(5) "Effective Date" has the meaning set forth in Section
2.
(6) "Exchange Act" means the Securities Exchange Act of
1934, as amended from time to time, and any successor
statute.
(7) "Grant Date" means the date of grant of any Option.
(8) "Option" means an Option granted under the Employment
Agreement between the Optionee and the Company dated
as of January 1, 1996.
(9) "Stock" means the Class A Common stock (with respect
to Class A Options) or the Class B Common Stock (with
respect to Class B Options) of the Company, and any
successor entity.
(10) "Tax Date" means the date defined in Section 7.
(11) "Vesting Date" means the date on which an Option
becomes wholly or partially exercisable.
Exhibit A Page 1 Initials
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<PAGE> 8
2. Terms and Conditions of Grant. Options granted under the Agreement
shall be subject to the following terms and conditions and such other
terms and conditions not inconsistent with the Agreement as the Board
shall impose:
(1) Exercise of Option. In order to exercise all or any
portion of any Option granted under the Agreement, an
Optionee must remain as an officer, employee,
consultant or director of the Company, or a
Subsidiary, until the Vesting Date. The Option shall
be exercisable on or after each Vesting Date in
accordance with the terms set forth in the Agreement.
(2) Method of Exercise. To the extent the right to
purchase shares of Stock has accrued, Options may be
exercised, in whole or in part, from time to time in
accordance with their terms by written notice from
the Optionee to the Company stating the number of
shares of Stock with respect to which the Option is
being exercised and accompanied by payment in full of
the exercise price. Payment may be made in cash,
certified check or, at the absolute discretion of the
Board, by non-certified check.
(3) Nonassignability of Option Rights. No Option shall be
transferable other than by will or by the laws of
descent and distribution except to the parents,
spouse, children or grandchildren of the Optionee.
During the lifetime of an Optionee, only the Optionee
or the permitted assignees may exercise an Option.
Options assigned pursuant to this sub-section 2.(3)
shall remain subject to the provisions of sub-section
2.(4).
(4) Exercise After Termination of Employment or Death. If
for any reason other than permanent and total
disability or death an Optionee ceases to be employed
by or to be a consultant or director of the Company,
or a Subsidiary, Options held at the date of such
termination (to the extent then exercisable) may be
exercised, in whole or in part, at any time within
three (3) months after the date of such termination
or such lesser period specified in the Option
Agreement (but in no event after the earlier of the
expiration date of the Option as set forth in the
Agreement.
If an Optionee becomes permanently and totally
disabled (within the meaning of Section 11(e)(3) of
the Internal Revenue Code of 1986, as amended from
time to time, and any successor statute, or dies
while employed by the Company, or a Subsidiary, (or,
if the Optionee dies within the period that the
Option remains exercisable after termination of
employment), Options then held
Exhibit A Page 2 Initials
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<PAGE> 9
(to the extent then exercisable) may be exercised by
the Optionee, the Optionee's personal representative,
or by the person to whom the Option is transferred by
will or the laws of descent and distribution, in
whole or in part, at any time within one year after
the disability or death or any lesser period
specified in the Option Agreement (but in no event
after the earlier of the expiration date of the
Option as set forth in the Agreement.
(5) Compliance with Securities Laws. The Company shall
not be obligated to issue any shares of Stock upon
exercise of an Option unless such shares are at that
time effectively registered or exempt from
registration under the federal securities laws and
the offer and sale of the shares of Stock are
otherwise in compliance with all applicable
securities laws. The Company shall have no obligation
to register the shares of Stock under the federal
securities laws or to take whatever other steps may
be necessary to enable the shares of Stock to be
offered and sold under federal or other securities
laws. Upon exercising all or any portion of an
Option, an Optionee may be required to furnish
representations or undertakings deemed appropriate by
he Company to enable the offer and sale of the shares
of Stock or subsequent transfers of any interest in
such shares to comply with applicable securities
laws. Evidences of ownership of shares of Stock
acquired upon exercise of Options shall bear any
legend required by, or useful for purposes of
compliance with, applicable securities laws.
3. PAYMENT OF TAXES. Unless the Board permits otherwise, the participant
shall pay the Company in cash, promptly when the amount of such
obligations becomes determinable (the "Tax Date"), all applicable
local, state and federal withholding taxes applicable, in the Board's
absolute discretion, to (i) the exercise of any Option, or (ii) the
transfer or other disposition of shares acquired upon the exercise of
any Option.
4. ADJUSTMENT FOR CHANGES IN CAPITALIZATION. The existence of outstanding
Options shall not affect the Company's right to effect adjustments,
recapitalizations, reorganizations or other changes in its or any other
corporation's capital structure or business, any merger or
consolidation, any issuance of bonds debentures, preferred or prior
preference stock ahead of or affecting the Stock the dissolution or
liquidation of the Company's or any other corporation's assets or
business or any other corporate act whether similar to the events
described above or otherwise. Subject to Section 5, if the outstanding
shares of the Stock are increased or decreased in number or changed
into or exchanged for a different number or kind of securities of the
Company or any other corporation by reason of a recapitalization,
reclassification, stock split, combination of shares, stock dividend or
other
Exhibit A Page 3 Initials
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<PAGE> 10
event, the number and kind of securities with respect to which Options
may be granted under the Agreement, the number and kind of securities
as to which outstanding Options may be exercised, and the exercise
price at which outstanding Options may be exercised, shall be adjusted,
to the extent possible, so as to prevent dilution and without regard to
any resulting tax consequences to the Optionee.
5. DISSOLUTION, LIQUIDATION, MERGER. In the event of a dissolution or
liquidation of the Company, a merger in which the Company is not the
surviving corporation, or a sale of over 80% of the assets of the
Company, the Board, in its absolute discretion, may cancel each
outstanding Option upon payment in cash to the Optionee of the amount
by which any cash and the fair market value of any other property which
the Optionee would have received as consideration for the shares of
Stock covered by the Option if the Option had been exercised before
such liquidation, dissolution, merger, or sale exceeds the exercise
price of the Option. In addition to the foregoing, in the event of a
merger in which the Company is not the surviving corporation, the
Board, in its absolute discretion, may accelerate the time within which
each outstanding Option may be exercised.
6. SUCCESSOR CORPORATIONS. In the event of a merger in which the Company
is not the surviving corporation, the successor entity may assume the
obligations under all outstanding Options.
7. NO RIGHTS AS SHAREHOLDER OR TO CONTINUED EMPLOYMENT. An Optionee shall
have no rights as a shareholder with respect to any shares of Stock
covered by an Option until such Optionee has acquired title to such
shares. Subject to Sections 4 and 5, no adjustment shall be made for
dividends or other rights for which the record date is prior to the
date title to the shares of Stock has been acquired by the Optionee.
The grant of an Option shall in no way be constructed so as to confer
on any Optionee the right to continued employment by the Company, or a
Subsidiary.
Exhibit A Page 4 Initials
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<PAGE> 1
EXHIBIT 10.6
CAPITAL CONTRIBUTION AND DEBT CANCELLATION AGREEMENT
This CAPITAL CONTRIBUTION AND DEBT CANCELLATION AGREEMENT (the
"Agreement") is made and entered into this 26th day of June, 1996, by and
between Myriad International, Inc., a Delaware corporation ("Myriad"), and
Conversion Industries, Inc., a British Columbia corporation ("Conversion"), as
to the following recitals of fact:
RECITALS
A. Conversion, pursuant to a Loan Agreement by and between Conversion
and Myriad, dated October 31, 1993, loaned Myriad the principal sum of Five
Million Seven Hundred Eighty Thousand Seven Hundred Twenty One Dollars and fifty
nine cents ($5,780,721.59) and has subsequently loaned Myriad an additional
$514,000, for a total principal balance of $6,294,721.59 (the "Loan").
B. Myriad acknowledges that it is presently obligated to pay to
Conversion all unpaid principal and accrued interest owing on the Loan, which
amounts to $8,215,607 as of April 30, 1996 (the "Loan Balance").
C. Conversion is the owner of approximately 300,000 shares of Myriad
Class A Common Stock; warrants to acquire an additional 215,000 shares of Myriad
Class A Common Stock (125,000 warrants exercisable at $1.00 per share, 50,000
exercisable at $0.50 per share and 40,000 exercisable at $0.75 per share) and
500,000 shares of Myriad Series 2 Preferred Stock which is convertible into
1,000,000 shares of Myriad Class A Common Stock. (Conversion's shareholdings in
Myriad Class A Common Stock; warrants and Series 2 Preferred Stock will
sometimes collectively be referred to herein as the "Myriad Securities").
D. As collateral for the Loan, Conversion is holding all of the
outstanding shares of Remedquip International Manufacturing, Inc., an Oregon
corporation ("Remedquip"), A&E Industries, Inc., a Delaware corporation ("A&E"),
and Advanced Test Systems, Inc., a California corporation ("ATS"). Remedquip,
A&E, and ATS are all wholly-owned subsidiaries of Myriad.
E. Myriad has made capital contributions to A&E in the amount of
$6,000,000 as of July 31, 1995.
F. A&E, in consideration of the capital contributions described in
Paragraph E above, guaranteed the repayment of the Loan in accordance with the
provisions of a Guaranty and Indemnity Agreement dated October 31, 1994 (the
"Guaranty Agreement") and a Security Agreement dated as of the same date (the
"Security Agreement").
<PAGE> 2
G. A&E is presently in Chapter 7 proceedings under the United States
Bankruptcy Code in the United States Bankruptcy Court, Southern District of
California, Case Number 94-08317-A7 (the "A&E Bankruptcy Proceedings").
H. Conversion, by virtue of the Guaranty Agreement and the Security
Agreement, is a secured creditor of A&E in the A&E Bankruptcy Proceedings.
I. Myriad is also a claimant against A&E in the A&E Bankruptcy
Proceedings and filed all documents necessary to perfect its rights as a
claimant in such proceedings.
J. ATS is also a claimant in the A&E Bankruptcy Proceedings.
K. A&E, prior to the Bankruptcy Proceedings, performed work pursuant to
four (4) contracts entered into between A&E and the United States Department of
the Navy dated October 8 and 9, 1993, respectively (the "Navy Contracts"), which
work related to the vessel known as the U.S.S. Constellation. A dispute has
arisen between A&E and the United States Department of the Navy regarding
non-payment of certain amounts owing under the Navy Contracts.
L. Conversion is willing to: (a) release Myriad of all liability with
respect to the Loan Agreement and all amounts owing thereunder and (b) to return
to Myriad all of the shares of Remedquip, A&E, and ATS that it is holding as
collateral in return for (i) the payment of Seven Hundred and Fifty Thousand
Dollars ($750,000); (ii) the assignment of all rights, title and interest that
Myriad and ATS have in the A&E Bankruptcy Proceedings and (iii) the reduction in
exercise price of the 125,000 warrants presently at $1.00 and the 40,000
warrants presently at $0.75 to $0.50.
AGREEMENT
In consideration of the terms, conditions, releases, warranties, and
covenants contained herein, Conversion and Myriad agree as follows:
1. Recitals and Exhibits Recitals A through L are incorporated herein
by this reference and made a part hereof. All Exhibits referenced in this
Agreement shall be attached to the Agreement and shall be deemed incorporated
herein.
2. Payment and Assignment by Myriad to Conversion
2.1 On or before August 1, 1996 Myriad shall pay to Conversion
by cashier's check or federal wire the sum of Two Hundred and Fifty Thousand
Dollars ($250,000).
2
<PAGE> 3
2.2 On or before September 30, 1996, Myriad shall pay to
Conversion by cashier's check or federal wire the sum of Two Hundred and Fifty
Thousand Dollars ($250,000).
2.3 On or before October 31, 1996, Myriad shall pay to
Conversion by cashier's check or federal wire the sum of Two Hundred and Fifty
Thousand Dollars ($250,000).
2.4 Myriad, in its capacities as a shareholder and/or creditor
of A&E, hereby transfers and assigns and agrees to execute any additional
documents reasonably required to transfer and assign to Conversion all of its
rights to the claims filed or which can be filed by Myriad in and to the A&E
Bankruptcy Proceedings to Conversion. Myriad will provide the Notice of
Assignment, a copy of which is attached hereto as Exhibit 2.3, to the Trustee in
the A&E Bankruptcy Proceedings.
2.5 Myriad, in its capacities as a shareholder and/or creditor
of A&E and the sole shareholder of ATS, hereby transfers and assigns and agrees
to execute any additional documents reasonably required to transfer and assign
to Conversion all of ATS' rights to the claims filed or which can be filed by
ATS in and to the A&E Bankruptcy Proceedings to Conversion. Myriad will cause
ATS to provide the Notice of Assignment, a copy of which is attached hereto as
Exhibit 2.4, to the Trustee in the A&E Bankruptcy Proceedings.
2.6 Myriad agrees to reduce the exercise price of the 165,000
warrants presently at $1.00 (125,000) and $0.75 (40,000) to $0.50.
3. Release of Liability
3.1 Upon receipt of the payments required by Paragraphs 2.2,
2.3 and 2.4 above and return of an acknowledgment of the assignments provided
for in Paragraphs 2.4 and 2.5 from the United States Bankruptcy Trustee in the
A&E Bankruptcy Proceedings. Conversion shall release Myriad with respect to all
liability for the repayment of the Loan and return to Myriad the shares of
Remedquip, A&E and ATS that it is holding as collateral.
3.2 In the event Myriad fails to make any of the payments
required by Paragraph 3.1 on or before the dates specified, Conversion has the
right to terminate this Agreement on five days written notice; provided that the
Loan Balance shall be reduced by $1.00 for each dollar of payments made by
Myriad.
3.3 Upon consummation of this Agreement, Myriad shall release
Conversion from any and all liability with respect to the Loan and transactions
related to the Loan.
3
<PAGE> 4
4. Cooperation of Myriad
4.1 Conversion intends to enter into an agreement with the
Trustee in the A&E Bankruptcy Proceedings and the Internal Revenue Service,
subject to the United States Bankruptcy Court's approval, regarding the funding
of special counsel to pursue any claims A&E has against the United States
Department of the Navy arising out of the Navy Contracts.
4.2 Myriad shall utilize its best efforts to cause A&E,
through the Bankruptcy Trustee, to continue to pursue all claims against the
United States Department of the Navy arising out of the Navy Contracts and to
take all steps reasonably necessary to cause payment by the United States
Department of the Navy to A&E and/or to the Bankruptcy Trustee, including but
not limited to providing all documents and materials to the Trustee's special
counsel and to utilize its best efforts to identify and make available all
personnel necessary so as to assist A&E and/or the Bankruptcy Trustee to prove
any claims against the United States Department of the Navy arising out of the
Navy Contracts.
5. Representations and Warranties of the Parties
5.1 Myriad hereby represents and warrants to Conversion that
it is a corporation validly existing and in good standing under the laws of the
State of Delaware and has all requisite corporate power and authority to carry
on its business as now conducted in the State of California. Myriad further
represents that each of the recitals made herein concerning Myriad and/or A&E
are true and correct as of the date hereof.
5.2 Myriad hereby represents that it has not made any prior
assignments of the claims against A&E of Myriad and/or ATS being assigned to
Conversion pursuant to Paragraphs 2.4 and 2.5 of this Agreement.
5.3 Conversion hereby represents and warrants to Myriad that
it is a corporation duly organized and validly existing under the laws of the
Province of British Columbia and has all requisite corporate power and authority
to carry on its business as now conducted in the State of California. Conversion
further represents that each of the recitals made herein concerning it are true
and correct as of the date hereof.
5.4 Myriad and Conversion each represents that each
corporation is duly qualified to transact business in each jurisdiction in which
it transacts business. All corporate action on the part of Myriad and Conversion
necessary for the authorization, execution and delivery hereunder has been taken
or will be taken prior to the delivery of and payment for the Myriad Securities,
and this Agreement constitutes a valid and legally binding obligation of Myriad
and Conversion.
4
<PAGE> 5
No consent, approval, order or authorization of, or registration, qualification,
designation, declaration or filing with, any federal, state, local or provincial
governmental authority on the part of Myriad or Conversion is required in
connection with the consummation of the transactions contemplated by this
Agreement. NOTHING HEREIN SHALL AFFECT CONVERSION'S RIGHT TO SEEK REPAYMENT OF
THE LOAN FROM A&E PURSUANT TO THE GUARANTY AGREEMENT.
6. Bankruptcy Court Approval
6.1 Conversion shall use its reasonable best efforts to obtain
approval of the Bankruptcy Court to the consummation of the transactions
contemplated by this Agreement. Conversion further agrees to submit this
Agreement to the Bankruptcy Court for its approval as soon as reasonably
practical but in no event later than July 15, 1996.
6.2 Myriad agrees to pay the reasonable attorneys fees
incurred by Conversion in seeking Bankruptcy Court approval of this Agreement,
such fees not to exceed $5,000.
7. Survival. Notwithstanding the consummation of the transactions
contemplated by this Agreement, the representations and warranties of Myriad and
Conversion contained in this Agreement shall survive the consummation of the
transactions contained in this Agreement for three (3) years after the date of
execution of this Agreement.
8. Counterparts. This Agreement may be executed in one or more
counterparts, including counterparts by telecopy or facsimile signature, each of
which shall constitute one in the same instrument.
9. Entire Agreement. This Agreement contains all of the promises which
have been made in connection with the cancellation of the Loan and supersedes
the Capital Contribution and Debt Cancellation Agreement dated July 31, 1995.
There are no unstated or hidden terms, and every term which is important to this
Agreement is specified in writing. This Agreement contains the entire
understanding of the Parties of the terms upon which they have agreed to enter
into this Agreement, and any prior contemporaneous oral representations shall be
of no force and effect.
10. Headings. All topic headings in this Agreement have been used for
organizational purposes only and have no independent legal significance or
import.
11. Unenforceable Terms. The Parties agree that if any provision of
this Agreement is held by a court of competent jurisdiction to be invalid, void,
or unenforceable, the remaining provisions shall nevertheless continue in full
force without being impaired or invalidated in any way.
5
<PAGE> 6
12. Further Assurances. Each of the Parties hereby agrees to at any
time and from time to time, upon the request of any party hereto, to execute and
deliver such further documents and do such other acts as reasonably requested in
order to effect fully the purposes of this Agreement.
13. Assignment. Each of the Parties shall have the right to assign this
Agreement to any successor entity, provided such entity agrees in writing to be
bound by all of the terms of this Agreement.
14. Arbitration. Any dispute concerning this Agreement shall be settled
by binding arbitration in accordance with the rules of the American Arbitration
Association in Los Angeles County, California.
15. Action on Agreement. If any party brings an action to enforce this
Agreement or any provision thereof, the prevailing party shall be entitled to
recover its attorneys' fees and costs from the losing party.
Dated as of the date first written above.
Conversion Industries, Inc.
By \s\ Daniel J. Roggemann
-----------------------------------
Daniel J. Roggemann
Chairman & CEO
Myriad Industries, Inc.
By \s\ Jerome O. Crawford
-----------------------------------
Jerome O. Crawford
Chairman & CEO
6
<PAGE> 7
August 14, 1996
Mr. Daniel J. Roggemann, Chairman
Conversion Industries Inc.
234 E. Colorado Blvd.. Suite 510
Pasadena, CA 91101
Dear Mr. Roggemann:
This letter confirms our agreement that the date for the initial payment of
$250,000 set forth in Section 2.1 of the Capital Contribution and Debt
Cancellation Agreement of June 26, 1996 is extended to September 3, 1996: the
date for the second payment set forth in Section 2.2 is extended to October 1,
1996 and the date for the final payment set forth in Section 2.3 is extended to
November 1, 1996.
In addition the date to submit the agreement for Bankruptcy Court approval set
forth in Section 6.1 is extended to a date as soon as reasonably practicable as
mutually agreed by the parties.
Sincerely,
/s/ Jerome O. Crawford
Jerome O. Crawford,
Chairman
Accepted and Agreed:
Conversion Industries Inc.
By: /s/ Daniel J. Roggemann
------------------------------------------
Daniel J. Roggemann,
Chairman
7
<PAGE> 1
EXHIBIT 10.7
PROFIT PARTICIPATION CANCELLATION AGREEMENT
This PROFIT PARTICIPATION CANCELLATION AGREEMENT ("Agreement") is made
and entered as January 31, 1996, by and between Myriad International, Inc., a
Delaware corporation ("Myriad") 4330 La Jolla Village Drive, Suite 320, San
Diego, CA 92122 and Michael Goldstein, 4993 Sky Street, San Diego, CA 92110
("Goldstein").
RECITALS
A. Myriad and Goldstein are party to a Memorandum of Understanding
dated June 28, 1995 ("June 28, 995 MOU") pursuant to which Goldstein provided a
$250,000 short term loan to Myriad and received as incentive a 5% net profit
participation in a joint venture being established between Myriad and La Societe
de Developpement Des Iles for the building and operation of a fleet of long line
fishing vessels in Tahiti ("Long Line Venture").
B. Myriad and Goldstein are party to a Memorandum of Understanding
dated August 2, 1995 ("August 2, 1995 MOU") pursuant to which Goldstein provided
a $60,000 short term loan to Myriad and received as incentive an additional 15%
net profit participation in the Long Line Venture.
C. Myriad and Goldstein are party to a Memorandum of Understanding
dated September 27, 1995 ("September 27, 1995 MOU") pursuant to which Goldstein
provided a $20,000 short term loan to Myriad and received as incentive a 1% net
profit participation in a venture being established by Myriad for the
construction of pre-fabricated housing in South Africa ("South Africa Venture").
D. Myriad and Goldstein are party to a Memorandum of Understanding
dated November 6, 1995 ("November 6, 1995 MOU") pursuant to which Goldstein
provided a $30,000 short term loan to Myriad and received as incentive a 5% net
profit participation in Myriad Capital Corporation - Peru ("Myriad Capital
Venture")
E. Myriad and Goldstein are party to a Memorandum of Understanding
dated November 8, 1995 ("First November 8, 1995 MOU") pursuant to which
Goldstein provided a $16,500 short term loan to Myriad and received as incentive
a 2.5% net profit participation in the South Africa Venture and a venture to
construct pre-fabricated housing in Venezuela ("Venezuela Venture").
F. Myriad and Goldstein are party to a Memorandum of Understanding
dated November 8, 1995 (" Second November 8, 1995 MOU ") pursuant to which
Goldstein
<PAGE> 2
provided a $3,500 short term loan to Myriad and received as incentive an
additional 0.5% net profit participation in the South Africa Venture and the
Venezuela Venture.
G. Myriad and Goldstein are party to a Memorandum of Understanding
dated November 29, 1995 ("November 29, 1995 MOU ") pursuant to which Goldstein
provided a $3,000 short term loan to Myriad and received as incentive an
additional 0.5% net profit participation in the South Africa Venture and the
Venezuela Venture.
H. Myriad and Goldstein are party to a Memorandum of Understanding
dated December 6, 1995 ("December 6,, 1995 MOU ") pursuant to which Goldstein
agreed to an extension of a $30,000 short term loan to Myriad and received as
incentive an additional 2.5% net profit participation in the Venezuela Venture
and a 2% net profit participation in Myriad Industries Inc. - Peru S.A. ("Myriad
Peru Venture").
I. Myriad and Goldstein are party to a Memorandum of Understanding
dated December 12, 1995 ("December 12, 1995 MOU ") pursuant to which Goldstein
agreed to an extension of a $30,000 short term loan to Myriad and received as
incentive an additional 4.5% net profit participation in the Venezuela Venture.
J. Myriad and Goldstein are party to a Memorandum of Understanding
dated December 22, 1995 ("December 22, 1995 MOU ") pursuant to which Goldstein
agreed to an extension of a $17,500 short term loan to Myriad and received as
incentive an additional 3% net profit participation in the South Africa Venture.
K. Myriad and Goldstein are party to a Memorandum of Understanding
dated December 27, 1995 ("December 27, 1995 MOU ") pursuant to which Goldstein
agreed to an extension of a $17,500 short term loan to Myriad and received as
incentive an additional 2.5% net profit participation in the Venezuela Venture.
L. As a result of the agreements between Myriad and Goldstein set forth
in recitals A to K above Goldstein has the following profit participations:
Long Line Venture 20.0 %
Venezuela Venture 12.5
South Africa Venture 7.5
Myriad Capital Venture 5.0
Myriad Peru Venture 2.0
M. Goldstein presently is the beneficial owner (directly and
indirectly) of 3,241,189 shares of the issued and outstanding Class A Common
Stock (approximatel;y 21%) and holds warrants to purchase an additional
2,156,941 shares of Class A Common Stock.
Page 2
<PAGE> 3
N. Myriad and Goldstein have agreed that it is in their mutual best
interests for Goldstein to exchange his profit participations in the Long Line,
Venezuela, South Africa, Myriad Capital and Myriad Peru Ventures for warrants to
purchase 1,500,000 shares of Myriad Class A Common Stock; 500,000 exercisable at
$1.00 per share, 500,000 exercisable at $1.50 per share and 500,000 exercisable
at $2.00 per share.
AGREEMENT
In consideration of the terms, conditions, releases, warranties, and
covenants contained herein, Myriad and Goldstein agree as follows:
1. Recitals and Exhibits . Recitals A through N are incorporated herein
by this reference and made a part hereof. All Exhibits referenced in this
Agreement shall be attached to the Agreement and shall be deemed incorporated
herein.
2. Issuance and Delivery of Class A Stock Purchase Warrants.
2.1 Myriad shall deliver to Goldstein on or before February
15, 1996 stock purchase warrants for the purchase of 500,000 shares of Myriad
Class A common stock for $1.00 per share in the form attached as Exhibit 2.1.
2.2. Myriad shall deliver to Goldstein on or before February
15, 1996 stock purchase warrants for the purchase of 500,000 shares of Myriad
Class A common stock for $1.50 per share in the form attached as Exhibit 2.2.
2.3. Myriad shall deliver to Goldstein on or before February
15, 1996 stock purchase warrants for the purchase of 500,000 shares of Myriad
Class A common stock for $200 per share in the form attached as Exhibit 2.3.
3. Cancellation of Profit Participations
3.1. Upon receipt of the stock purchase warrants referred to
in sub-sections 2.1, 2.2 and 2.3 above by Goldstein the profit participations in
the Long Line Venture, Venezuela Venture, South Africa Venture, Myriad Capital
Venture and Myriad Peru Venture shall be cancelled and shall be of no further
force and effect.
4. Entire Agreement . This Agreement contains all of the promises which
have been made in connection with the transactions contemplated hereby. There
are no unstated or hidden terms, and every term which is important to this
Agreement is specified in writing. This Agreement contains the entire
understanding of the Parties of the terms upon which they have agreed to enter
into this Agreement, and any prior contemporaneous oral representations shall be
of no force and effect.
Page 3
<PAGE> 4
5. Headings. All topic headings in this Agreement have been used for
organizational purposes only and have no independent legal significance or
import.
6. Unenforceable Terms. The Parties agree that if any provision of
this Agreement is held by a court of competent jurisdiction to be invalid, void,
or unenforceable, the remaining provisions shall nevertheless continue in full
force without being impaired or invalidated in any way.
7. Further Assurances. Each of the parties hereby agrees to at any
time and from time to time, upon the request of any party hereto, to execute and
deliver such further documents and do such other acts as reasonably requested in
order to effect fully the purposes of this Agreement.
8. Arbitration. Any dispute concerning this Agreement shall be settled
by binding arbitration in accordance with the rules of the American Arbitration
Association in San Diego County, California.
9. Action on Agreement. If any Party brings an action to enforce this
Agreement or any provision thereof, the prevailing party shall be entitled to
recover its attorneys' fees and costs from the losing party.
Dated as of the date first written above.
Myriad International, Inc.
By /s/ Jerome O. Crawford
--------------------------------
Jerome O. Crawford, Chairman
/s/ Michael Goldstein
--------------------------------
Michael Goldstein
Page 4
<PAGE> 1
EXHIBIT 10.8
MEMORANDUM OF UNDERSTANDING
BETWEEN
MYRIAD INDUSTRIES INC.
AND
MICHAEL GOLDSTEIN, INVESTOR
THIS MEMORANDUM OF UNDERSTANDING is entered into between Myriad Industries Inc.
(hereafter known as "Myriad"), 4330 La Jolla Village Drive, Suite 320, San
Diego, California, 92122 and Michael Goldstein, a qualified investor,(hereafter
referred to "Goldstein"), 4993 Sky Street, San Diego, California 92110.
WHEREAS, Myriad is seeking a Two hundred fifty thousand dollar ($250,000) Short
Term Loan to fund various corporate activities and
WHEREAS, Goldstein is willing to provide Myriad a Short Term Loan in the amount
of Two hundred fifty thousand dollars ($250,000) and
WHEREAS, Myriad has agreed to accept the Short Term loan from Goldstein and
Goldstein has agreed to advance the funds, the parties state the following:
1. SHORT TERM LOAN
The loan to Myriad from Goldstein will be for a term of three
months (3) and will bear interest at the rate of eight and
one-half per cent (8 1/2%). The loan will be secured by a
promissory note, a copy of which is attached to this agreement
2. INCENTIVE FOR PROVIDING THE LOAN
A. THE EGYPTIAN PROJECT
As incentive for Goldstein providing the Short Term Loan,
Goldstein will receive a five per cent (5%)net profit share in
a certain Joint Venture Agreement presently being formalized
between Myriad and the Red Sea Company For Touristic Projects
("Red Sea"), an Egyptian Corporation. The Joint Venture will
be engaged in the business of building and operating for
profit a "5 Star" hotel and other facilities called the
Windsor Garden City Hotel and Village located in Hurghada,
Egypt.
<PAGE> 2
B. CAPITAL CORPORATION
As further consideration Goldstein will receive a (5%) net
profit share of the Financing Corporation described below.
Myriad has formed a financing corporation in Peru which is
named Myriad Industries - Peru S. A. ("Myriad - Peru"). The
corporation was created to provide construction financing for
PMSI - Peru S.A. ("PMSI - Peru"), a Myriad subsidiary, and
mortgage financing for home buyers who purchase homes built by
PMSI - Peru. It is understood that Myriad - Peru will be
funded via an off-shore Bond offering. All of PMSI - Peru's
construction projects will be funded by Myriad - Peru, except
projects where customers have arranged their own financing and
do not choose to use Myriad - Peru for financing.
3. TRANSFERABILITY
Myriad agrees that the profit share from the Joint Venture is
transferable and Goldstein may transfer same without the
approval of Myriad.
4. "NET PROFIT" DEFINED
For the purpose of this agreement Net Profit is defined as the
income remaining after first deducting all reasonable
operating expenses, any loan payments due and related Taxes
and Tariffs.
5. PAYMENT OF PROFIT SHARE
A. THE EGYPTIAN PROJECT
Goldstein will receive his profit share at the same time and
in the same manner as the Joint Venture partners will be paid
per the Joint Venture Agreement. Myriad will provide Goldstein
with financial reports and statements pertaining to the Joint
Venture operations with each distribution of profits or at any
time with reasonable notice.
B. CAPITAL CORPORATION
The net profits from Myriad - Peru, the Capital Corporation,
will be distributed thirty days after the close of each
accounting quarter. Myriad - Peru will provide Goldstein with
financial reports and statements pertaining to the
corporation's operations with each distribution of net profits
or at any time with reasonable notice.
<PAGE> 3
6. EXCLUSIVITY OF OPERATIONS
Myriad agrees that it or any other entities it substantially
owns or controls will not create, incorporate or develop any
other entity to operate as a capital corporation in Peru, or
take any other action directly or through any of the
afore-mentioned entities, that will in any manner impair in
any way the percentage ownership or share of Goldstein as
provided in this or any other agreement memorandum or writing
between Goldstein and Myriad. Once Myriad - Peru is funded all
PMSI - Peru construction projects in Peru will be funded by
Myriad - Peru, the only exception will be when a customer
arranges his own financing.
7. SUCCESSORS AND ASSIGNS
This Agreement shall be binding upon and shall inure to the
benefit of the Parties, and their respective successors and
assigns.
8. AMENDMENTS
Amendments may be made to this Agreement from time to time
only by the unanimous written consent of the Parties.
9. ATTORNEYS' FEES AND COSTS
If any legal action, arbitration or other proceeding shall be
commenced because of the alleged breach of default of, or
request for a declaratory judgment by, a party in connection
with any provision of this Agreement, the prevailing party
shall be entitled to recover reasonable attorneys' fees and
other costs incurred, in addition to any other relief to which
that party may be entitled.
10. NOTICES
Unless written notice of change of address is given, all
notices pertaining to this Agreement shall be in writing and
shall be delivered personally, or sent by first class mail,
postage prepaid, or by telefax, charges prepaid, to the
Parties at the following address:
<PAGE> 4
TO: MYRIAD INDUSTRIES INC.
4330 La Jolla Village Drive
Suite 320
San Diego, California 92122
Tel:(619)677-6580
Fax:(619)677-6564
Contact: Jerome Crawford
TO: MICHAEL GOLDSTEIN
4993 Sky Street
San Diego, California 92110
Tel:(619)276-2660
Contact: Michael Goldstein
10. APPLICABLE LAW
This Agreement shall be deemed to have been entered
into and shall be construed and enforced in
accordance with the laws of the State of California.
11. VENUE
The Parties hereby consent to and submit to the
jurisdiction of the courts presiding over the State
of California, and any legal action or suit
respecting this Agreement shall be brought only in
the or courts with jurisdiction in California. In the
case of any legal or administrative action or
requirement from either Party, such action must be
brought in the jurisdiction of the courts presiding
in California.
IN WITNESS WHEREOF, the parties hereto have agreed to execute
this Agreement on this 28th day of June 1995.
MYRIAD INDUSTRIES INC.
By /s/ Jerome O. Crawford
-------------------------
Jerome Crawford
President & CEO
MICHAEL GOLDSTEIN
By /s/ Michael Goldstein
----------------------
Michael Goldstein
Investor
<PAGE> 1
EXHIBIT 10.9
MEMORANDUM OF UNDERSTANDING
BETWEEN
MYRIAD INDUSTRIES INC.
AND
MICHAEL GOLDSTEIN, INVESTOR
THIS MEMORANDUM OF UNDERSTANDING is entered into between Myriad Industries Inc.
(hereafter known as "Myriad"), 4330 La Jolla Village Drive, Suite 320, San
Diego, California, 92122 and Michael Goldstein, a qualified investor,(hereafter
referred to "Goldstein"), 4993 Sky Street, San Diego, CA 92110.
WHEREAS, Myriad is seeking a Eighty Thousand Dollar ($80,000) One Year Loan to
fund various corporate activities and
WHEREAS, Goldstein is willing to provide Myriad a One Year Loan in the amount of
Eighty Thousand Dollar ($80,000) and
WHEREAS, Myriad has agreed to accept the One Year loan from Goldstein and
Goldstein has agreed to advance the funds, the parties state the following:
1. ONE YEAR LOAN
The loan to Myriad from Goldstein will be for a term of One
Year. The loan will bear interest at the rate of Bank of
America Prime rate plus 2%. The loan will be a Convertible
Unsecured Note , a copy of which is attached to this
Agreement.
2. INCENTIVE FOR PROVIDING THE LOAN
As incentive for Goldstein providing the One Year
Loan,Goldstein will receive a five per cent(5%)net profit
share in Myriad's South African and Venezuela Prefrab Housing
Activities for term of 20 years from the date of this
document.
3. TRANSFERABILITY
Myriad agrees that the profit share from the South African and
Venezuela Prefrab Housing Activities is transferable and
Goldstein may transfer same without the approval of Myriad.
However Goldstein must offer Myriad a "First Right of Refusal"
if he decides to sell his profit share to a third party.
<PAGE> 2
4. "NET PROFIT" DEFINED
For the purpose of this agreement Net Profit is defined as the
income remaining after first deducting all reasonable
operating expenses, any loan payments due and related Taxes
and Tariffs.
5. PAYMENT OF PROFIT SHARE
Goldstein will receive his profit share annually one month
after Myriad's fiscal year ending (July 30) of each year.
Audited Financial reports and statements pertaining to
Myriad's South African and Venezuela Prefrab Housing
Activities will be distributed three months after its' fiscal
year end.
6. EXCLUSIVITY OF OPERATIONS
Myriad agrees that it or any other entities it substantially
owns or controls will not create, incorporate or develop any
other entity that would impair in any way the percentage of
ownership or share of Goldstein as described in this
agreement.
7. SUCCESSORS AND ASSIGNS
This Agreement shall be binding upon and shall inure to the
benefit of the Parties, and their respective successors and
assigns.
8. AMENDMENTS
Amendments may be made to this Agreement from time to time
only by the unanimous written consent of the Parties.
9. ATTORNEYS' FEES AND COSTS
If any legal action, arbitration or other proceeding shall be
commenced because of the alleged breach of default of, or
request for a declaratory judgment by, a party in connection
with any provision of this Agreement, the prevailing party
shall be entitled to recover reasonable attorneys' fees and
other costs incurred, in addition to any other relief to which
that party may be entitled.
10. NOTICES
Unless written notice of change of address is given, all
notices pertaining to this Agreement shall be in writing and
shall be delivered personally, or sent by
2
<PAGE> 3
first class mail, postage prepaid, or by telefax, charges
prepaid, to the Parties at the following address:
TO: MYRIAD INDUSTRIES INC.
4330 La Jolla Village Drive
Suite 320
San Diego, California 92122
Tel:(619)677-6580
Fax:(619)677-6564
Contact: Jerome Crawford
TO: MICHAEL GOLDSTEIN
4993 Sky Street
San Diego, California 92110
Tel:(619)276-2660
Contact: Michael Goldstein
11. APPLICABLE LAW
This Agreement shall be deemed to have been entered
into and shall be construed and enforced in
accordance with the laws of the State of California.
12. VENUE
The Parties hereby consent to and submit to the
jurisdiction of the courts presiding over the State
of California, and any legal action or suit
respecting this Agreement shall be brought only in
the or courts with jurisdiction in California. In the
case of any legal or administrative action or
requirement from either Party, such action must be
brought in the jurisdiction of the courts presiding
in California.
3
<PAGE> 4
IN WITNESS WHEREOF, the parties hereto have agreed to execute
this Agreement on this 27th day of September 1995.
MYRIAD INDUSTRIES INC.
By /s/ Jerome O. Crawford
------------------------
Jerome Crawford
President & CEO
MICHAEL GOLDSTEIN
By /s/ Michael Goldstein
------------------------
Michael Goldstein
Qualified Investor
4
<PAGE> 1
EXHIBIT 10.10
STOCK PLEDGE AGREEMENT
This Stock Pledge Agreement (this "Agreement") is entered into this
28th day of February, 1994, by and between Myriad Industries, Inc., a Delaware
corporation ("Pledgor"), and Fairfield Developments, Inc., a Washington
Corporation ("Pledgee").
RECITALS
A. Pledgor is indebted to Pledgee in the amount of $55,000.00, as evidenced by a
promissory note of even date herewith made and delivered by Pledgor to Pledgee.
B. Pursuant to the agreement of the parties, Pledgee has agreed to forego its
rights of collection with respect to all existing indebtedness of Pledgor in
return for Pledgor's promissory note in the amount set forth above and its
pledge to Pledgee of the shares of the common stock of any new subsidiary
subsequently purchased or organized by Myriad pursuant to the terms and
conditions set forth below.
C. Pledgor has determined that it is in its best interest to agree to the terms
set forth above.
NOW, THEREFORE, the parties hereto, in consideration of the foregoing
premises, the mutual covenants set forth and other good and valuable
consideration, hereby agree as follows:
1. PLEDGE OF STOCK.
a. Pledge. Pledgor hereby assigns and transfers to
Pledgee, and grants a security interest to Pledgee in, the Shares as security
for the prompt payment to Pledgee when due, whether by acceleration or
otherwise, and at all times thereafter, of Pledgor's obligation to make payments
to Pledgee from the date hereof pursuant to the Promissory Note.
b. Delivery. Concurrently with the exception and
delivery of this Agreement, Pledgor agrees to promptly deliver to Pledgee any
and all Certificates representing Pledgor's interests in any new subsidiary
subsequently purchased or organized by Myriad pursuant to the terms and
conditions set forth below. Pledgee agrees that so long as Pledgor does not
breach or default in any payment due Pledgee pursuant to the Promissory Note or
this Agreement, Pledgee shall hold in trust pursuant to the provisions of this
Agreement the Certificates and any other items called for hereinbelow.
2. RIGHTS AND BENEFITS OF PLEDGED SHARES.
Unless and until default shall occur under the terms of this Agreement, Pledgor
shall be entitled to vote the Shares and to receive cash dividends upon the
shares; provided, however, that Pledgor
<PAGE> 2
Stock Pledge Agreement
Page 1 of 6
shall be permitted to receive no cash dividends at any time while Pledgor is in
default of its obligations to Pledgee pursuant to the Promissory Note and all
such cash dividends shall be deposited with Pledgee.
3. APPOINTMENT OF PLEDGEE AS ATTORNEY-IN-FACT.
In the event of a default hereunder, Pledgor hereby appoints and constitute
Pledgee as its true and lawful attorney-in-fact and with full power of
substitution in the premises to execute assignments and endorsements of the
Shares as may be necessary to effect the rights and remedies which Pledgee has
under this Agreement.
4. WARRANTIES OF PLEDGOR
a. Pledgor has marketable title to the Stock, free from prior
liens, encumbrances, charges or pledges of any kind;
b. The Stock constitutes duly authorized and issued shares of
Pledgor in accordance with the Articles of Incorporation and Bylaws of Pledgor
and in compliance with all applicable law;
c. Pledgor has been duly formed and is in good standing as a
Delaware corporation, and is in compliance with all applicable law of each
jurisdiction in which it does business;
d. Pledgor's entry into this Agreement will not violate any
prior agreement, contract, court order or applicable law, or Pledgor's Articles
of Incorporation or Bylaws;
5. COVENANTS OF PLEDGOR.
a. Pledgor hereby covenants that, so long as this Agreement
shall remain in force, Pledgor shall not take any of the following actions
without the prior written consent of Pledgee:
(1) Dissolve, merge or liquidate Pledgor;
(2) Change materially the nature of the business of
Pledgor taken as a whole.
(3) Issue additional shares of its common stock or
authorize the issuance of additional share of its common stock;
(4) Declare or distribute a stock dividend or make any
other distribution with respect to its common stock;
(5) Sell or lease all or essentially all of its assets
outside of the ordinary course of business; or,
<PAGE> 3
Stock Pledge Agreement
Page 2 of 6
(6) Issue any rights to subscribe to additional shares of
its common stock.
b. Pledgor hereby covenants that, so long as this Agreement
shall remain in force, Pledgor shall:
(1) Pay promptly all liens, taxes, assessments, or
contributions required by law;
(2) Maintain its corporate existence and comply with all
applicable law;
(3) Maintain its properties and assets in good working
condition; and,
(4) Reimburse Pledgee for all expenses or costs reasonably
incurred in protecting or realizing on the Stock.
6. EVENTS OF DEFAULT.
The occurrence of any of the following events shall constitute a default
hereunder:
a. The failure of Pledgor to pay when due, whether by
acceleration or otherwise; any payment to Pledgee called for by the Promissory
Note referred to therein and the failure of Pledgor to make such payment without
thirty (30) days following notice from Pledgee of Pledgor's failure to make
timely payment thereof;
b. Pledgor breaches any covenant, warranty or agreement
contained in this Agreement;
c. Pledgor becomes insolvent;
d. The filing of a petition in bankruptcy or other arrangement
under the Federal Bankruptcy Code by or against a Pledgor, an assignment for the
benefit of creditors by Pledgor, or the appointment of a receiver for Pledgor or
any property of Pledgor;
e. The making of any levy, seizure or attachment of any of the
Shares which continues unpaid for a period of thirty (30) days or longer.
7. POWER TO SELL FOLLOWING DEFAULT.
Upon the occurrence of an event of default under the provisions of this
Agreement, Pledgee shall have the option to declare this Agreement in default
and thereupon Pledgee is authorized to exercise, and shall have, in addition to
all other rights and remedies, the rights and remedies of a secured party under
the Uniform Commercial Code of Washington and any other applicable laws and the
rights and remedies provided in this Agreement.
<PAGE> 4
Stock Pledge Agreement
Page 3 of 6
Pledgee is authorized, at its option and without further notice or demand, to
cause the Shares to be transferred of record to Pledgee and shall be entitled to
exercise all rights of ownership in respect to the Shares and all property
received with respect to the Shares. Further, Pledgee shall have the right to
hold and vote the Shares and, at its option and upon thirty (30) days' notice in
writing to Pledgor, shall have the right to sell and transfer the Shares and the
property received with respect to the Shares or any portion thereof at any
public or private sale, including private placement based upon investment
representations, and for cash or such other consideration as Pledgee shall in
his discretion determine to be reasonable and Pledgor shall have no right or
equity of redemption in connection with any such sale; provided, however, that
during such thirty (30) day period Pledgor shall have the right to cure any
default by paying all indebtedness and other obligations to Pledgee together
with all expenses incurred by Pledgee, including without limitation, reasonable
attorneys' fees and expenses, in obtaining, holding, and preparing for sale the
Shares and the property received with respect to the Shares, and in arranging
for the sale. After deducting the expenses of such sale, including reasonable
attorney's fees, the proceeds therefrom shall be applied to the payment of
Pledgor's obligations to Pledgee pursuant to the Stock Sale Agreement and the
surplus, if any, shall be paid to Pledgor. Nothing in this Agreement shall
preclude Pledgee from collecting any indebtedness without resorting to the
Stock.
8. COMPLIANCE WITH SECURITIES LAW.
Pledgee recognizes and agrees that the requirements of federal securities law,
applicable blue sky or other state securities law, and similar laws analogous in
purpose or effect may limit Pledgee's actions if Pledgee, after a default by
Pledgor, elects to dispose of any part of the Stock, and may also limit a
subsequent transferee's ability to transfer the Stock. Accordingly, Pledgee
agrees that if Pledgee sells the Stock at any public or private sale, Pledgee
will sell only to a buyer who will give further assurance, in form satisfactory
to Pledgor and its legal counsel, to the effect that the sale is exempt from
registration under the federal Securities Act of 1933 as amended and under
applicable state securities laws.
9. RELEASE OF COLLATERAL.
At such time as all payments secured pursuant to this Agreement have been paid
in full, Pledgee shall deliver the Shares and any property distributed with
respect to the Shares to Pledgor in accordance with the terms of this Agreement
and Pledgor shall be discharged in full from any and all obligations hereunder.
10. DELAY; WAIVER.
All rights and remedies of Pledgee under this Agreement are cumulative and are
in addition to but not in limitation of any rights or remedies which Pledgee may
have by law.
<PAGE> 5
Stock Pledge Agreement
Page 4 of 6
No delay on the part of Pledgee in the exercise of any right or remedy under
this Agreement shall operate as a waiver thereof, and no single or partial
exercise by Pledgee of any right or remedy under this Agreement shall preclude
other or further exercise thereof or the exercise of any other right or remedy.
No waiver by Pledgee of any right or remedy under this Agreement shall be deemed
to be or construed as a further or continuing waiver of such right or remedy or
as a waiver of any other right or remedy.
11. COOPERATION.
At the execution of this Agreement and at any time or from time to time
thereafter, each of the parties agrees to cooperate in carrying out the terms of
this Agreement, including the execution and delivery of such further instruments
and documents as may be reasonably requested in order to more effectively carry
out the terms and conditions thereof.
12. MISCELLANEOUS.
a. Notices. Any demand, notice, or request required or
permitted under this Agreement shall be given in writing, and shall be deemed to
have been properly made, as of the time of such delivery, if personally
delivered, or as of the third day after such mailing, if sent by certified mail,
postage prepaid, return receipt requested, to the addresses set forth below:
Pledgor: Myriad Industries, Inc.
4330 La Jolla Village Drive, Suite 320
San Diego, California 92122
Pledgee: Fairfield Developments, Inc.
10900 N.E. 8th Street, Suite 900
Bellevue, Washington 98004
Either of the above may change its mailing address by giving written notice to
the other in the manner provided for in this paragraph.
b. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all of which
shall constitute one and the same instrument.
c. Parties Bound. All the terms, covenants, representations,
warranties and conditions of this Agreement shall be binding upon, and inure to
the benefit of and be enforceable by, the parties hereto and their respective
heirs, personal representatives, successors and assigns.
<PAGE> 6
Stock Pledge Agreement
Page 5 of 6
d. Attorneys' Fees; Costs. In the event of a dispute as to the
interpretation or enforcement of any provision of this Agreement and any party
hereto refers such dispute to any attorney for resolution, the prevailing party
shall be entitled to recover its reasonable costs and attorney fees incurred in
connection therewith, whether or not litigation is commenced.
e. Applicable Law; Venue. This Agreement shall be governed by
and construed in accordance with the laws of the State of Washington. Venue for
resolution of any dispute arising hereunder shall be in the Superior Court for
King County, Washington, and shall not be removed therefrom.
f. Headings. The section headings contained herein are for
reference purposes only and shall not in any way affect the meaning or
interpretation of this Agreement.
g. Time of Essence. Time is of the essence as to the
performance of this Agreement.
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the date
first above written.
PLEDGOR: PLEDGEE:
Myriad Industries, Inc. Fairfield Developments, Inc.
By: /S/ Jerome O. Crawford By: /S/ Richard R. Hathaway
----------------------------- ---------------------------------
Richard R. Hathaway
Its: President Its: Vice President
-----------------------------
<PAGE> 1
EXHIBIT 10.11
JOINT VENTURE AGREEMENT
THIS AGREEMENT is made and entered into as of February 08, 1996, by and between
Pacific Marine and Steel Inc., Peru S.A. a corporation organized and existing
under the laws of Peru(hereinafter "PMSI-PERU") and El Chipe S.A., a Piura, Peru
Corporation organized and existing under the laws of Peru (hereinafter "EL
CHIPE").
WHEREAS, the Ventures intend to enter into an agreement to initially develop
approximately 1,000 housing units. The project is know as "The Piura Project."
PMSI-PERU will prepare foundations and construct the buildings, manage the
advertising, and arrange financing for the Joint Ventrue project, so as the
financement for the urban habilitation while El Chipe will provide the land that
the housing units and project will be constructed upon (property description to
be provided per deed), assist in selling the housing units, ensure that the
property is properly zoned for the intended project, and provide site security
during construction; and
WHEREAS, the parties desire to work jointly to construct and sell all housing
units for the project;
NOW, THEREFORE, in consideration of the mutual promises and convenats contained
herein, the parties agree as follows:
I
GENERAL PROVISIONS
1.01 Formation of Joint Venture
The Venturers hereby form and establish a joint venture (the
"Venture"), to be named "Pacific Marine and Steel Inc., Peru S.A., and El Chipe
S.A. Joint Venture" for the limited purpose of constructing housing units and
other buildings in Peru for a housing project to be known as "The Piura
Project." The Venture shall engage in no other business.
1.02 Duration of the Venture
The Venture shall commence as of the date of executing of this
Agreement by all the Ventures, and shall continue until dissolved by mutual
consent of the Ventures, or terminated as hereinafter provided.
<PAGE> 2
1.03 Title To and Ownership of Venture Property.
Any property hereinafter owned or acquired by the Venture, whether
tangible or intangible, including, but not limited to, all rights title and
interest in equipment otherwise acquired in the performance of this Agreement,
may be taken in the name of the Venture, and shall be deemed to be the joint
property of all of the Venturers, and shall not be used in any manner by any one
of the Venturers with out the prior written consent of the other Venturer.
II
CAPITAL CONTRIBUTIONS
2.01 Capital Contributions
Phase I of this project shall consist of 1,000 housing units and lots.
El Chipe has represented to PMSI-PERU that for Phase I there is a potential
market identified and that the buyers could be capable and in agreement to
provide a 25% cash down payment at the time the sales agreement is signed with
each buyer. PMSI-PERU will provide a 45, 60, 75 and 90 square meter house with
selling prices ranging from US$ 22,000 to U.S. $37,000. PMSI-PERU will arrange
a mortgage for the balance to be financed for a terms of either 15, 20 or 30
years at interest rates shown in the example in Attachment 1, 2, 3 and 4.
The initial capital contributions of the Venturers shall consist of the
assets that each Venturer has agreed to contribute to the Joint Venture.
PMSI-PERU will provide the material and labor for the construction of the
houses, including foundations and floor slabs, and will arrange financing for
the habilitation, and permanent mortgage financing for the houses and lad, and
El Chipe will provide the land of an extension of 320,000 square meters, without
habilitation in a justiprice of US$ 5.00 per square meter, provide marketing and
selling in cooperation with PMSI-PERU sales personnel, ensure that the property
is properly zoned for the intended project. PMSI-PERU will provide all plans and
engineering for the foundations and houses. The mentioned contributions will be
done in steps, in accordance with the different legal entity with respect to the
Venturers; therefore the mentioned contributions will not be a transference of
property for the Joint Venture, but a contribution in benefit of it. At the
moment of transference of the finished houses, each Venturer will sign the
Contract in the portion of property that corresponds to that Venturer.
<PAGE> 3
II
MANAGEMENT
3.01 Management of the Venture
The management and control of the business and affairs of the Venture
shall be vested in PMSI-PERU. Except as may otherwise be mutually agreed upon,
all decisions affecting or arising out of the management, conduct and operations
of the business of the Venture shall be made by PMSI-PERU.
3.02 Services to be Performed by the Venturers.
The work to be performed under the Agreement shall be
performed primarily by PMSI-PERU and El Chipe. Specific work assignments may be
delegated from time to time as mutually agreed upon among the Venturers. Each
Venturer shall be responsible for the timely performance or its designated share
of the work to be performed. Subject to the foregoing, no Venturer shall be
required to devote full time to Venture work and each Venturer may at all times
engage in and possess interests in other business Venturers.
In the event that any Venturer is unable to complete any assigned task
within the agreed time, the other Venturer shall, upon notice to the defaulting
Venturer, be free to assign any such uncompleted task to such other Venturers as
shall be willing to complete any such uncompleted work. Additionally, the
Venturer who completes any such task shall be entitled to payment at the work.
Additionally, the Venturer who completes any such task shall be entitled to
payment at the rate set forth in this Agreement. Further provided, that in the
event that any Venturer is unable to complete more than half of the total work
allocated to him under this Agreement within a reasonable time, the remaining
Venturers shall upon notice, be entitled to compensate the noncomplying Venturer
for the work actually completed (based upon the total charge), and to eliminate
that Venturer from further participation in the Venture and in the profits
received thereunder.
3.03 Authority of Venturers.
Notwithstanding any other provision of this Agreement, the Ventures
shall not have the power, without the written consent of all the other
Venturers, to:
(i) Borrow money in the Venture's name;
(ii) Loan any Venture funds;
(iii) Incur any obligation in the name or on the credit of
the Venture; or
(iv) Transfer, sell, lease or encumber any Venture
property or enter into any contract for such
purpose.
<PAGE> 4
3.04 Liability for Debts
Any Venturer who incurs any obligation in the name and on the credit of
the Venture in violation of this Agreement may be held individually liable by
the other Venturers for the entire amount of the obligation thus incurred.
3.05 Indemnification Among Venturers.
Any liability incurred by any Venturer arising out of any claim of any
fault or defect in the product provided related to this Agreement, or any breach
of warranty, or any liability shall be prorated to the Venturers. In the event
any legal action or other proceeding shall be commenced against any of the
Venturers respecting the above, then the cost of defending such action,
including attorneys fees, shall be borne prorated among the Venturers. However,
such indemnification shall not extend to, and each Venturer shall be
individually liable for and shall hold each other Venturer harmless from, any
work, conduct or dealings not authorized by all the Venturers, or which is the
result of negligent or other wrongful conduct by the individual Venturer which
is not related to any claimed fault of defect in the services.
PMSI-PERU makes no warranty, either expressed or implied, as to
findings, recommendations, plans, designs, specifications, of professional
advice made by professional advice made by professional of non-professional
persons not directly employed or hired by PMSI-PERU.
IV
EXPENSES, INCOME AND ROYALTIES
4.01 Expenses
All operating expenses incurred by the Venture in conducting its
business and affairs, such as, but not limited to, legal and account services,
taxes and other fees, if any, shall be paid for by the Venture, and charged
against income and profits. Office and other overhead expenses shall be charged
in proportion to the Venture work being conducted, as appropriate.
Pre-established fixed expenses shall be utilized wherever possible. Other
expenses, such as assembly facilities, special tools, customs clearing,
engineering, transportation, housing of the mobilized personnel, and other
mobilization expenses shall be allowed where necessary to complete the
contribution of each Venturer.
Each Venturer shall assume the expense of providing finished work
product to the Agreement, abscent any agreement to the contrary by the
Venturers; provided, that any costs related to the production of transmittal of
work product shall be limited to the actual costs incurred.
<PAGE> 5
4.02 Distrubution of Net Income and Profits.
The net income and profits of the Venture shall be paid to PMSI-PERU,
and to El Chipe, at the time that the Mortgage Investment Company has sign the
mortgage Agreement with each buyer, and after first deducting all operating
expenses, the payment of the houses or other building systems and related costs
to PMSI-PERU, and payment of land habilitation, related land costs. Each
Venturer shall be entitled to be reimbursed for its costs and expenses incurred
in the performance of its share of the work under the Agreement. Receipt,
invoices, and other appropriate documentation shall be submitted to determine
the actual costs incurred and allow for payment to the Venturers and other
parties. El Chipe will receive a flat commission of US$1,000 for each sold
house, the $1,000 shall be paid to El Chipe when the down payment is received
from each buyer. PMSI-PERU shall be free to utilize the remainder of the down
payment for construction expenses in building the houses. El Chipe will be paid
for any related land costs, and other authorized costs when the permanent
mortgage financing is received for each house.
V
ATTRIBUTION AND CONFIDENTIALITY
5.01 Attribution.
All services performed pursuant to this Agreement shall be the joint
effort of the Venturers regardless of any independent of parallel endeavors of
the Venturers of any consultants who may become involved in the construction
process. Credits for the projects shall be attributed to the Venturer and the
joint efforts of the Venturers, with appropriate recongnition to any consultants
of other parties involved as agreed upon in writting by the Venturers. All
listings for the construction project shall be made in the following form:
Pacific Marine and Steel Inc. - Peru S.A. and El Chipe S.A. Joint Venture,
except that the priority of listing shall be discretionary. Each Venturers shall
at all times and in all places acribe and attribute to the Venturers joint
origin, Venturers shall not make an innuendo or statement, oral or written,
public or private, contrary to such joint attribution. In the event of any such
statement by a Venturer, the Venture shall reafirm, as Venturers, that Venturer
shall issue restatement to the effect of the joint nature of the effort
described herein.
Whenever the question of cooperation under the terms of this Agreement
arises, the parties shall undertake to be completely open with each other
regarding the economic stipulation in the inquiry and/or contract. Both parties
agree to cooperate with each other in every way on the project.
<PAGE> 6
5.02 Confidentiality
Each Venturer agrees to hold in confidence any and all designs, plans
and other confidential information developed or acquired in the performance of
the work pursuant to this Agreement. Such confidential information shall be
disseminated only on a "need to know" basis, and as may be required by the
interaction of the Venturers among themselves and within the scope of the
Agreement, and any consultants or other contractors engaged by the Venturers.
All such confidential information shall be coded and labeled as agreed upon by
the Venturer so as to avoid unnecessary or inadvertent dissemination. No
Venturer shall use any such confidential information to compete with, or to
assist any other person in competing with, the Venture, any other Venturer, or
the Contractor.
El Chipe agrees that it will not compete with PMSI-PERU on any project
or company undertaking for prefabricated housing for Peru, and that it will not
circumbent PMSI-PERU in any manner on any project or undertaking for such
prefabricated buildings.
PMSI-PERU retains all rights and title in and to its information and
designs in prefabricated houses and other builings. El Chipe acknowledges that
the ownership of and all copyright and intellectual property rights in the
design remains the sole property of PMSI-PERU or its affiliates and designs,
documents, systems, drawings, and other products of PMSI-PERU without the
consent of the other party to this Agreement. Neither party to this Agreement
shall allow the use of any drawings, etc. of the other party on projects and
locations other than those involving PMSI-PERU and El Chipe.
VI
RECORDS AND ACCOUNTING
6.01 Books and Records;
PMSI-PERU shall keep such books of account and other records with
respect to the operations on behalf of the Venture as will enable financial
statements for the Venture to be prepared in accordance with generally accepted
accounting principles.
6.02 Fiscal Year.
The fiscal year of the Venture shall end on December 31st of each year.
6.03 Tax Returns
The Venturers shall cause all required income tax (information) returns
for the Venturer to be prepared and timely filed with the appropriate
authorities.
<PAGE> 7
6.04 Bank Accounts.
All receipts and income of the Venture shall be deposited in such bank
account(s) at such bank(s) as shall be approved from time to time by PMSI-PERU.
All such funds shall be and remain the property of the Venture. No other funds
shall be commingled with the funds belonging to the Venture. Withdrawls from
such account(s) shall be made only upon the signature(s) of such person(s) as
may from time to time be designated by PMSI-PERU.
VII
ASSIGNABILITY OF INTERESTS
No Venturer may sell, transfer, assign, pledge, or otherwise dispose of
all or any part of its interest in the Venture (whether voluntarily,
involuntarily or by opetation of law) without the prior written consent of the
other Venturers.
VIII
DISSOLUTION
8.01 Events of Dissolution.
(a) The Venture shall be dissolved:
(i) upon the occurrence of any event specified under Peruvian
laws as on effecting dissolution;
(ii) upon the withdrawal of dissolution of any Venturer, or
upon the filing by any Venturer of a voluntary petition in bankruptcy or upon an
adjudication of any Venturer as bankrupt of insolvent, or any Ventuer's seeking,
or consenting to, or acquiescing in, the appointment of any trustee, receiver,
conservator or liquidator of itself or of all, or any substantial portion of,
its property of its interest in the Venture; or
(iii) upon the unanimous consent of the Venturers.
(b) Upon dissolution, the Venturers shall liquidate the assets of the
Venturer, and apply and distribute the proceeds thereof as contemplated by this
Agreement, and as provided by law.
IX
CONSTRUCTION SCHEDULE
The construction schedule for the delivery and erection of the homes
and site preparation will be as mutually agreed to by both parties in the Joint
Venture. Routine meetings between the two parties and other coordination
communications will take place concerning proper execution of marketing efforts
and coordination of site preparation and house erections and completions.
<PAGE> 8
X
MISCELLANEOUS
10.01 Succesors and Assigns
Subject to the restriction on transfer set forth herein, this Agreement
shall be binding upon and shall inure to the benefit of the Venturers, and their
respective successors and assigns.
10.02 Amendments.
This Agreement contains the entire agreements between the parties
relating to projects and provisions of services to the projects. Any prior
agreements, promises, negotiations or representations not expressly set forth in
this Agreement are on no force of effect. Subsequent amendments to this
Agreement shall be in writing and signed by both parties.
10.03 Attorney's Fees and Costs.
If any legal action, arbitration or other proceeding shall be commenced
because of the alleged breach of default of, or request for a declaratory
judgement by, a party in connection with any provision of this Agreement, the
prevailing party shall be entitled to recover reasonable attorneys' fees and
other costs incurred, in addition to any other relief to which that party may be
entitled.
10.04 Notices.
Unless written notice of change of address is given, all notices
pertaining to this Agreement shall be delivered personnally, or sent by first
class mail, postage prepaid, or by telefax, charges prepaid, to the Venturers at
the following address:
To: Pacific Marine and Steel, Inc. - Peru S.A.
Av. Las Palmeras 171 Oficinas B
Camacho, La Molina, Lima, Peru
Tel: (511) 436-3939
Fax: (511) 436-3939
Contact: Silvana Bernasconi C.
Title: General Mananger
To: El Chipe S.A.
Av. Grau 1420 Piura, Peru
Tel: (517) 432-2691
Fax: (517) 432-7245
Contact: Sr. Luis Camminati R.
Title: Manager Director
<PAGE> 9
10.05 Applicable Law.
This Agreement shall be deemd to have been entered into and shall be
construed and enforced in accordance with the laws of Peru.
9.06 Venue.
The Venturers hereby consent to and submit to the jurisdiction of the
courts located in Lima, Peru, and any legal action or suit respecting this
Agreement among the Venturers shall be brought only in the courts with
jurisdiction in Lima, Peru. In the case of any legal of administrative action or
requirement from PMSI-PERU against El Chipe, such action must be brought in the
jurisdiction of courts presiding over Peru.
IN WITNESS WHEREOF, the parties hereto have agreed to execute
this Agreement on the date first above written.
PACIFIC MARINE AND STEEL, INC. - PERU S.A.
Date: 02-08-96 By: /s/ Silvana Bernasconi
-----------------------
Name: Silvana Bernasconi
/s/ Title: General Manager
-----------------------
Witness
EL CHIPE S.A.
Date: 02-08-96 By: /s/ Louis Camminati R
------------------------
Name: Luis Camminati R.
/s/ Title: Manager Director
------------------------
Witness
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM (A) THE
MYRIAD INTERNATIONAL, INC. FINANCIAL STATEMENTS AT JULY 31, 1995 AND FOR THE
FISCAL YEAR THEN ENDED AND AT APRIL 30, 1996 AND THE NINE MONTHS THEN ENDED AND
IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH (B) FINANCIAL STATEMENTS
INCLUDED IN THE MYRIAD INTERNATIONAL, INC. REGISTRATION STATEMENT ON FORM 10SB.
</LEGEND>
<MULTIPLIER> 1
<CURRENCY> US DOLLARS
<S> <C> <C>
<PERIOD-TYPE> 9-MOS YEAR
<FISCAL-YEAR-END> JUL-31-1995 JUL-31-1995
<PERIOD-START> AUG-01-1995 AUG-01-1994
<PERIOD-END> APR-30-1996 JUL-31-1995
<EXCHANGE-RATE> 1 1
<CASH> 0 4,000
<SECURITIES> 0 0
<RECEIVABLES> 0 0
<ALLOWANCES> 0 0
<INVENTORY> 0 0
<CURRENT-ASSETS> 19,000 66,000
<PP&E> 122,000 130,000
<DEPRECIATION> 56,000 40,000
<TOTAL-ASSETS> 1,374,000 381,000
<CURRENT-LIABILITIES> 13,987,000 12,524,000
<BONDS> 0 0
0 0
8,000 8,000
<COMMON> 233,000 123,000
<OTHER-SE> 9,724,000 6,783,000
<TOTAL-LIABILITY-AND-EQUITY> 1,374,000 381,000
<SALES> 0 0
<TOTAL-REVENUES> 0 0
<CGS> 0 0
<TOTAL-COSTS> 0 0
<OTHER-EXPENSES> 2,644,000 3,115,000
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 734,000 1,030,000
<INCOME-PRETAX> (3,378,000) (2,881,000)
<INCOME-TAX> 0 0
<INCOME-CONTINUING> (3,378,000) (2,881,000)
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (3,378,000) (2,881,000)
<EPS-PRIMARY> (0.19) (0.35)
<EPS-DILUTED> (0.00) (0.35)
</TABLE>
