<PAGE> 1
U.S. Securities and Exchange Commission
Washington, D.C. 20549
Form 10-SB
(Amendment No. 1)
GENERAL FORM FOR REGISTRATION OF SECURITIES OF
SMALL BUSINESS ISSUERS
Under Section 12(b) or (g) of the Securities Exchange Act of 1934
HAND BRAND DISTRIBUTION, INC.
(Name of Small Business Issuer in its charter)
<TABLE>
<CAPTION>
FLORIDA 65-0622463
------------------------------ ------------------------------------
<S> <C>
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
</TABLE>
9845 N.E. 2nd Avenue
Miami Shores, FL 33138
----------------------------------------
(Address of principal executive offices)
Issuer's telephone number: (305) 759-8710
--------------
Securities to be registered under Section 12(b) of the Act:
NONE
Securities to be registered under Section 12(g) of the Act:
COMMON STOCK
<PAGE> 2
PART I
Item 1. Description of Business.
Hand Brand Distribution, Inc. ("HBDC" or the Company") is filing this
Form 10-SB to register its common stock and thus become a reporting company
pursuant to Section 12(g) of the Securities Exchange Act of 1934.
We publish an informational magazine/catalog, Family Health News, four times a
year which includes articles on health, nutrition, lifestyle and innovative
health products and therapies. We distribute a select line of products related
to these topics including books and tapes, health and nutritional supplements,
lifestyle products and water filtration systems through the Family Health News,
through a sales force of independent distributors recruited primarily though
our catalog and through World Wide Web site on the Internet
(www.familyhealthnews.com). Although most of the products we sell are developed
and manufactured by others, we manufacture a line of water filtration systems
which we sell. Our product line is narrowly focused and consists of
approximately 120 products.
We are a Florida corporation which was incorporated in 1995. Our
executive offices are located at 9845 N.E. 2nd Avenue, Miami Shores, FL 33138
and our telephone number is 305-759-8710.
Background
In October 1996 we acquired The Family News, Inc. which publishes
Family Health News, a news catalog that is devoted to marketing a select line
of innovative health and lifestyle products. The Family News was founded in
1990 to offer a subscription-based newsletter and digest focused on health,
nutrition, and alternative medical therapies. Family Health News has been
published quarterly since its founding in 1990.
In January of 1997 HBDB acquired a line of water filters from The
Rockland Corporation. This product line employs a proprietary filtration medium
and consists of 22 models that range from 1/2 to 300 gallons per minute. We are
currently manufacturing and marketing the products.
The Family Health News
The Family Health News is published quarterly and typically contains
24-30, 11 x 17 inch pages. It is printed on newsprint in black and white with
spot color. Each issue contains five to seven articles on health topics that
range in length from 4,500 to 12,000 words. These treatises are designed to
give readers a comprehensive range of information on a particular disease,
condition, therapy or other health-related issue and generally focus on the
scientific basis and design rationale behind therapeutic innovations We
currently have a paid subscription base of over 10,000 people who pay $16.00
annually for the publication.
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Our articles are either written especially for the Family Health News,
or are digested from other periodicals. Products that are related to the
content of the feature articles are frequently offered to the reader. HBDB
manufactures some of its approximately 120 advertised products and is a
distributor for the remainder. The product list is continuously changed to
reflect the latest research developments in health and nutrition.
Our Direct Sales Organization
Every subscriber to the Family Health News has the opportunity to join
our direct sales organization as an independent distributor. To become a
distributor, a person or entity must subscribe to the Family Health News. There
is no agreement or any other purchase obligation and no fees are charged to
become a distributor. Distributors are offered discounts on our products
ranging from 10% to 40% Distributors who recruit other distributors are
entitled to a commission of the sales of such persons of approximately 3% to
15%. Each distributor is issued a unique identification number and the number
included in any order is used to keep track of commissions earned. We have
approximately 1,400 active distributors at the present time.
Product Selection and Pricing and Sourcing
We have considered over 4,500 products for distribution in the last
ten years and yet the Company carries only 120 products. We seek to identify
products which represent effective, science-based formulas and technologies.
However, as with most vitamins, herbals and nutritional supplements, such
products do not undergo the vigorous scientific validation of safety and
effectiveness and pre-market approval by the Food and Drug Administration
required of pharmaceutical products. All products, other than our water filter
line, are manufactured by established manufacturers. Some products are standard
formulations and some are specially formulated for HBDB alone. The products are
generally sold under the brand name of the manufacturer but approximately 24 of
our products are labeled under our Hand Brand name.
We depend upon the manufacturers of our products to conduct adequate
quality control and compliance with applicable manufacturing and labeling
regulations. We do not undertake independent quality testing of our products
after they are received from the manufacturer.
We do not have any long term supply contracts with the manufacturers
of our products. We believe that virtually all of the products we offer are
available from several sources and have not experienced any inability to obtain
products in the past. We currently deal with 80 different suppliers of our
products. Retail prices range from $4 to $49 per unit.
Water Filters
We acquired our water filtration line in 1997 and manufacture the
products in Miami, Florida. The line utilizes a proprietary filtration medium
which we consider a trade secret and have not patented. Our water filtration
line consists of 31 models ranging in capacity from 1/2 to
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300 gallons per minute. Besides selling our water filters through our catalog,
direct sales organization and the Internet, we also have independent
distributors who purchase the water filter line for resale. We have no written
agreements with these distributors and such sales are generally made by
purchase order.
Competition
The primary channels of distribution for the Company's products are:
(i) mass market retailers which include drug stores, supermarkets, mass
merchandisers and discount stores; (ii) health food stores; (iii) direct sales
organizations; (iv) mail order; and (v) the Internet. The market is highly
competitive. We believe that we compete based upon the information which we
provide to our customers through the Family Health News and our World Wide Web
site. We believe the narrow focus of our product line, along with the
information provided, avoids the confusion of the typical retail location which
carries a vast selection of products but generally offers little information on
the products.
Order Fulfillment
We currently have between four and six individuals available for
receiving orders and offering customer service between 8:00 am and 6:00 pm
Eastern Time, Monday through Friday and can accept online payments at two
websites 24 hours a day seven days a week. The administrative office can handle
up to twenty simultaneous orders. We generally ship orders within one day of
receipt.
Government Regulation
The manufacturing, processing, formulation, packaging, labeling and
advertising of certain of our products are subject to regulation by one or more
federal agencies, including the FDA, the Federal Trade Commission ("FTC"), the
Consumer Product Safety Commission, the United States Department of
Agriculture, the United States Postal Service, the United States Environmental
Protection Agency and the Occupational Safety and Health Administration. These
activities are also regulated by various agencies of the states and localities,
as well as of foreign countries, in which the Company's products are sold. In
particular, the FDA regulates the safety, labeling and distribution of dietary
supplements, including vitamins, minerals, herbs, food, OTC and prescription
drugs and cosmetics. The regulations that are promulgated by the FDA relating
to the manufacturing process are known as CGMPs, and are different for drug and
food products. In addition, the FTC has overlapping jurisdiction with the FDA
to regulate the labeling, promotion and advertising of vitamins, OTC drugs,
cosmetics and foods.
The Dietary Supplement Health and Education Act of 1994 ("DSHEA") was
enacted on October 25, 1994. DSHEA amends the Federal Food, Drug and Cosmetic
Act by defining dietary supplements, which include vitamins, minerals,
nutritional supplements and herbs, as a new
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<PAGE> 5
category of food separate from conventional food. DSHEA provides a regulatory
framework to ensure safe, quality dietary supplements and the dissemination of
accurate information about such products. Under DSHEA, the FDA is generally
prohibited from regulating the active ingredients in dietary supplements as
drugs unless product claims, such as claims that a product may heal, mitigate,
cure or prevent an illness, disease or malady, trigger drug status.
DSHEA provides for specific nutritional labeling requirements for
dietary supplements and FDA's final regulations require that all dietary
supplements must be labeled in compliance with the regulations by no later than
March 23, 1999. DSHEA permits substantiated, truthful and non-misleading
statements of nutritional support to be made in labeling, such as statements
describing general well-being resulting from consumption of a dietary
ingredient or the role of a nutrient or dietary ingredient in affecting or
maintaining a structure or function of the body. On April 29, 1998, FDA issued
a Proposed Rule, "Regulations on Statements Made For Dietary Supplements
Concerning the Effect of the Product on the Structure or Function of the Body."
The Proposed Rule, when finalized, will establish criteria for determining when
a statement is a claim to diagnose, cure, mitigate, treat or prevent disease
thereby making the product an unapproved new drug. The Company anticipates that
the FDA will finalize this Proposed Rule, as well as CGMPs which are specific
to dietary supplements.
Final labeling regulations require expanded or different labeling
for the Company's vitamin and nutritional supplement products. Final CGMPs
for dietary supplements will require at least some of the quality control
provisions contained in the CGMPs for drugs. The Company cannot determine what
effect such regulations, when fully implemented, will have on its business in
the future. Such regulations could, among other things, require the recall,
reformulation or discontinuance of certain products, additional record keeping,
warnings, notification procedures and expanded documentation of the properties
and manufacturing processes of certain products and scientific substantiation
regarding ingredients, product claims, safety or efficacy. Failure to comply
with applicable FDA requirements can result in sanctions being imposed on the
Company or the manufacturers of its products, including, warning letters,
fines, product recalls and seizures.
On November 18, 1998, the FTC issued its "Dietary Supplements: An
Advertising Guide for Industry." Such guide provides an application of FTC law
to dietary supplement advertising and includes examples of how principles of
advertisement interpretation and substantiation apply in the context of dietary
supplement advertising. Such Guide provides additional explanation but does not
substantively change the FTC's existing policy that all supplement marketers
have an obligation to ensure that claims are presented truthfully and to verify
the adequacy of the support behind such claims. The Company believes that its
current advertising is in substantial compliance with such Guide, although no
assurances can be given in this regard.
We are subject to regulation under various state and local laws which
include provisions regulating, among other things, the operation of direct
sales programs.
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In addition, we cannot predict whether new legislation regulating our
activities will be enacted. Such new legislation could have a material adverse
effect on the Company.
Product Liability Insurance
The Company, like other distributors and retailers of products that
are ingested, faces an inherent risk of exposure to product liability claims
if, among other things, the use of its products results in injury. Because we
do not manufacture our ingestable products, we do not currently have product
liability insurance for these products. However, we require that each of our
suppliers certify that it carries adequate product liability insurance and in
the event of any claims would seek indemnification from the manufacturer.
Employees
As of August 16, 1999, we employed 5 persons on a full-time basis and
6 persons on a part-time basis. None of our employees are represented by a
collective bargaining unit.
Item 2. Management's Discussion and Analysis or Plan of Operations.
The following discussion and analysis should be read in conjunction
with the financial statements and notes thereto that appear elsewhere herein.
This Form 10-SB contains forward looking statements including, without
limitation, statements relating to the Company's plans, expectations,
intentions, and adequate resources, and are made pursuant to the "safe harbor"
provisions of the Private Securities Litigation Reform Act of 1995. The words
"believes" "intends" "expects" "plans" "anticipates" "estimates" or "potential"
and similar expressions identify forward looking statements. The Company does
not undertake to update, revise, or correct any of the forward looking
information. Actual results may differ materially from those expressed in any
forward looking statement made by or on behalf of the Company. Some important
factors that could cause the Company's actual results or expectations to differ
materially from those discussed in the forward looking statements include,
We generate revenue from two sources: subscription revenue from
publication of Family Health News and sale of products. All products other than
our water filter line are purchased from manufacturers. We seek distributor
pricing of approximately 42% of retail price on purchased products.
RESULTS OF OPERATIONS
The following table sets forth certain operating data as a percentage
of total revenues for the periods indicated.
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<PAGE> 7
<TABLE>
<CAPTION>
Fiscal Year Six Months
1997 1998 6/30/98 6/30/99
<S> <C> <C> <C> <C>
Revenues:
Total Revenues 100% 100% 100% 100%
Cost of Goods Sold 43.3 41.8 42.9 43
Gross Profit 56.7 58.2 57.1 57
Selling, General and 59.2 77.8 71.4 83.9
Administrative
</TABLE>
SIX MONTHS ENDED JUNE 30, 1999 AND 1998
Sales for the six months ended June 30, 1999 were $166,600 an 11%
decrease over sales for the six months ended June 30, 1998. Decrease was due to
a reduced level of sales activity.
Cost of goods sold as a percentage of sales was 43% for the six months
ended June 30, 1999 as compared to 42.9% for the six months ended June 30, 1998
reflecting a slight increase is sales of our lower margin products.
Selling, general and administrative expenses increased to $150,186 for
the six months ended June 30, 1999. However this was 83.9% of sales compared
71.4% of sales for the six months ended June 30, 1998. This increase was due
primarily to legal and professional fees.
FISCAL 1998 COMPARED TO FISCAL 1997
Sales for the year ended December 31, 1998 were $311,147 a 17%
decrease from sales for the year ended December 31, 1997. Decrease was due to
poor results from advertising budget - infomercials.
Cost of goods sold as a percentage of sales was 41.8% for the year
ended December 31, 1998 as compared to 43.3% for the year ended December 31,
1997 reflecting our success in adjusting our product mix to products with
higher margins.
Selling, general and administrative expenses increased to $298,984 for
the year ended December 31, 1998. However this was 77.8% of sales compared
59.2% of sales for the year ended December 31, 1997. This increase was due
primarily to legal and professional fees.
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LIQUIDITY AND CAPITAL RESOURCES
As of June 30, 1999 the balance sheet reflects a note payable of
$460,000 owed to the Rockland Corporation of Tulsa Oklahoma for the purchase of
our water filter line. This reflects a $400,000 dollar purchase price plus two
and one half years interest at 6%. As of August 20th 1999 the $400,000 purchase
price was adjusted to $250,000 and the interest was forgiven in exchange
$23,000 in merchandise and $10,000 cash. A payment schedule was agreed to. It
is a ten year note at 7% on $250,000 due January 1, 2009. The payments were
made as required by this note to make it current as of the date of this filing.
The Company had a cash balance of $268,868 as of June 30, 1999 and
believes it has adequate working capital for at least the next 12 months.
"Y2K" ISSUE:
The "Y2K" issue arises because certain computer systems were
originally designed to handle a two digit year would have difficulty dealing
with dates after December 31, 1999. The Company has reviewed its personal
computers and software and have determined that its systems are Y2K compliant.
We have also discussed this issue with our suppliers and Internet site host and
have been assured that there would be no major interruptions due to the Y2K
Issue.
Item 3. Description of Property.
All of the operations of the Company are conducted from premises
leased from independent landlords. The following table sets forth information
concerning these facilities:
<TABLE>
<CAPTION>
Location Tenant Approx. Size Lease Expiration Monthly Rent
--------------- ------------ ---------------- ------------
<S> <C> <C> <C>
9845 N.E. 2nd Avenue 1,200 Sq. Ft. Month-to-Month $ 745.50
Miami Shores, FL 33138
13341 N.E. 17th Avenue 6,500 Sq. Ft. August 2001 $1,647.50
N. Miami, FL 33161
</TABLE>
Item 4. Security Ownership of Certain Beneficial Owners and Management.
The following table sets forth, as of August 17, 1999, the beneficial
ownership of our 2,524,100 outstanding shares of Common Stock by (1) the only
persons who own of record or are known to own, beneficially, more than 5% of
our Common Stock; (2) each director and executive officer of the Company; and
(3) all directors and officers as a group.
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<PAGE> 9
<TABLE>
<CAPTION>
Number of
Name Shares Percent
---- --------- -------
<S> <C> <C>
John M. Taggart 856,000 32.6%
Ellen & Timothy McLaughlin 260,000 9.9%
Equitable Management Services 200,000 7.6%
David M. Taggart 53,000 2%
Preston T. Johnson 50,000 1.9%
All directors and officers 959,000 36.5%
as a group (3 persons)
</TABLE>
Item 5. Directors, Executive Officers, Promoters and Corporate Persons.
The directors and executive officers of the Company are:
<TABLE>
<CAPTION>
Name Age Position
---- --- --------
<S> <C> <C>
John M. Taggart 39 President, Chairman of the Board
David M. Taggart 44 Director
Preston T. Johnson 62 Director
</TABLE>
John Taggart has been President and Chairman since our incorporation. He is the
brother of David Taggart, a director.
David Taggart has been a director since inception. He has been employed as a
tax accountant by Bacardi-Martini USA, Inc. since 1975. He is the brother of
John Taggart.
Preston T. Johnson has been retired since 1984.
Item 6. Executive Compensation.
Summary Compensation Table
The following table sets forth the total compensation paid to the
Company's chief executive officer for the last three completed fiscal years. No
executive officer of the Company received compensation of $100,000 or more
during any such year.
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<TABLE>
<CAPTION>
Other Annual
Principal Position Year Salary Bonus Compensation
------------------ ---- ------ ----- ------------
<S> <C> <C> <C> <C>
John Taggart, President 1998 $28,600 -0- -0-
1997 $25,700 -0- -0-
1996 $23,850 -0- -0-
</TABLE>
We do not currently have any long term compensation plans, pension
plans or stock based compensation plans.
DIRECTOR COMPENSATION No fees are paid for director services.
Item 7. Certain Relationships and Related Transactions.
None.
Item 8. Description of Securities.
Common Stock
The Company is authorized to issue 12,500,000 shares of Common Stock,
$.002 par value. The holders of Common Stock are entitled to one vote for each
share held of record on all matters to be voted on by stockholders. There is no
cumulative voting with respect to the election of directors, with the result
that the holders of more than 50% of the shares voting for the election of
directors can elect all of the directors then up for election. The holders of
Common Stock are entitled to receive dividends when, as and if declared by the
Board of Directors out of funds legally available therefor. In the event of
liquidation, dissolution or winding up of the Company, the holders of Common
Stock are entitled to share ratably in all assets remaining which are available
for distribution to them after payment of liabilities. Holders of shares of
Common Stock, as such, have no conversion, preemptive or other subscription
rights, and there are no redemption provisions applicable to the Common Stock.
All of the outstanding shares of Common Stock are fully paid and nonassessable.
PART II
Item 1. Market Price of and Dividends on the Registrant's Common Equity
and other Shareholder Matters.
The Company's Common Stock trades on the over-the-counter under the
symbol: HBDC. The following sets forth the range of high and low bid quotations
for the periods indicated as reported by National Quotation Bureau, Inc. Such
quotations reflect prices between dealers, without retail mark-up, markdown or
commission, and may not represent actual transactions and have not been
adjusted for stock splits and have not been adjusted for stock splits.
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<TABLE>
<CAPTION>
Quarter Ended High bid Low bid
- ------------- -------- -------
<S> <C> <C>
March 31, 1997 $5.00 $5.00
June 30, 1997 5.00 1.875
September 30, 1997 1.50 2.65
December 31, 1997 2.75 1.625
March 31, 1998 1.75 1.25
June 30, 1998 3.375 1.125
September 30, 1998 4.75 3.50
December 31, 1998 6.125 4.00
March 31, 1999 6.50 5.25
June 30, 1999
</TABLE>
There are no restrictions on the payment of dividends. We have paid no
dividends to date and none are anticipated. As of August 17, 1999 there were
approximately 140 holders of record of the Company's common stock.
Item 2. Legal Proceedings.
None.
Item 3. Changes In and Disagreements With Accountants.
None.
Item 4. Recent Sales of Unregistered Securities.
The following provides information concerning all sales of securities
within the last three years which were not registered under the Securities Act
of 1933.
In October 1996 the Company issued 1,200,000 shares of its common
stock to four persons in connection with its acquisition of the Family News,
Inc. Such shares were issued without registration pursuant to the exemption
available under Section 4(2) of the Securities Act of 1933.
In a private placement in the second quarter of 1996 the Company
issued common stock purchase warrants to purchase 1,000,000 shares of common
stock. 824,100 shares were issued upon exercise of such warrants for $486,850
through March 28, 1999. Such shares were issued pursuant to an exemption from
registration under Rule 504 of Regulation D.
Item 5. Indemnification of Directors and Officers.
The Florida Business Corporation Act provides that a person who is
successful on the merits or otherwise in defense of an action because of
service as an officer or director or a corporation, such person is entitled to
indemnification of expenses actually and reasonably incurred in such defense.
F.S. 607.0850(3).
Such Act also provides that the corporation may indemnify an officer
or director, advance
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<PAGE> 12
expenses, if such person acted in good faith and in a manner the person
reasonably believed to be in, or not opposed to, the best interests of the
corporation and, with respect to a criminal action, had no reasonable cause to
believe his conduct was unlawful. F.S. 607.0850(1)(2).
A court may order indemnification of an officer or director if it
determines that such person is fairly and reasonably entitled to such
indemnification in view of all the relevant circumstances.
F.S. 607.0850(9).
PART F/S
The following financial statements are included herein:
Audited Financial Statements:
Independent Auditors' Report
Balance Sheets as at
December 31, 1998 and 1997
Statements of Income,
years ended December 31, 1998 and 1997
Statement of Changes in Stockholders'
Equity, years ended December 31, 1998 and 1997
Statements of Cash Flows, years ended December 31, 1998 and 1997
Notes to Financial Statements.
Unaudited Financial Statements:
Balance Sheet as at
June 30, 1999
Statements of Income, Six months
ended June 30, 1999 and 1998
Statement of Changes in Stockholders'
Equity, Six months ended June 30, 1999
Statements of Cash Flows, Six months ended
June 30, 1999 and 1998
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<PAGE> 13
Notes to Financial Statements.
PART III
Item 1. Exhibits
<TABLE>
<CAPTION>
Exhibit No. Description
- ----------- -----------
<S> <C>
2(a) Articles of Incorporation of the Registrant*
2(b) Articles of Amendment to Articles of
Incorporation*
2(c) By-Laws of the Registrant*
27 Financial Data Schedule (for SEC use only)*
</TABLE>
* to be filed by amendment
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<PAGE> 14
SIGNATURES
In accordance with Section 12 of the Exchange Act of 1934, the
registrant caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized this 1st day of September, 1999.
HAND BRAND DISTRIBUTION, INC.
By: s/ John Taggart
-----------------------
John Taggart, President
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<PAGE> 15
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE NO.
<S> <C>
Independent Auditors' Report
Balance Sheet
Statement of Income
Statement of Changes in Stockholders'
Equity
Statement of Cash Flows
Notes to Financial Statements
</TABLE>
<PAGE> 16
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholders
Hand Brand Distribution, Inc.
Miami, Florida
We have audited the accompanying balance sheet of Hand Brand Distribution, Inc.
as of December 31, 1997 and 1998, and the related statements of income, equity,
and cash flows for the year then ended. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Hand Brand Distribution, Inc.
as of December 31, 1997 and 1998, and its income and retained earnings, and
cash flows for the year then ended, on the basis of generally accepted
accounting procedures.
SEWELL AND COMPANY, PA
Pembroke Pines, Florida
June 15, 1999
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<PAGE> 17
HAND BRAND DISTRIBUTION, INC.
BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30,
1997 1998 1999
----------------------------- -----------
(UNAUDITED)
<S> <C> <C> <C>
Current assets
Cash $ 7,610 $ 2,649 $ 267,686
Accounts receivables 18,002 9,973 14,623
Inventory 279,712 253,643 300,810
Other current assets 5,000 5,600 5,600
----------------------------- ---------
Total current assets 310,324 271,865 588,719
Fixed assets 173,651 190,764 192,264
Less: Accumulated depreciation (18,762) (38,412) (48,285)
----------------------------- ---------
154,889 152,352 143,979
Other assets
Deposits 2,025 2,025 2,025
Goodwill and trademarks, net of accumulated
amortization $29,481 191,361 177,558 170,658
Deferred tax asset 6,711 6,711 6,711
Other assets 1,960 1,960 1,960
----------------------------- ---------
Total other assets 202,057 188,254 181,354
----------------------------- ---------
$ 667,270 $ 612,471 $ 914,052
============================= =========
Liabilities
Accounts payable $ 25,199 $ 13,749 $ 4,839
Taxes payable 1,662 379 43
----------------------------- ---------
Total current liabilities 26,861 14,128 4,882
Long term liabilities
Notes payable 424,000 448,000 460,000
----------------------------- ---------
424,000 448,000 460,000
Shareholders' equity
Common stock $.002 par value, authorized:
12,500,000 shares, issued and outstanding:
3,400,000 and 1,773,100 and 1,8151,100 and
2,524,100 at June 30, 1999 3,546 3,630 5,048
Additional paid in capital 325,954 367,870 738,202
Retained earnings (deficit) (113,091) (221,157) (294,080)
----------------------------- ---------
216,409 150,343 449,170
----------------------------- ---------
$ 667,270 $ 612,471 $ 914,052
============================= =========
</TABLE>
See auditors' report and notes to financial statements.
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<PAGE> 18
HAND BRAND DISTRIBUTION, INC.
INCOME STATEMENT
<TABLE>
<CAPTION>
SIX MONTH ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
1996 1997 1998 1998 1999
--------------------------------------------- ---------------------------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Income
Sales net of returns $ 79,912 $ 374,915 $ 311,147 $ 186,457 $ 166,601
Less cost of goods sold 54,557 157,044 134,776 80,607 72,564
--------------------------------------------- ---------------------------
Gross profit 25,355 217,871 176,371 105,850 94,037
Expenses
General and administrative expenses 63,873 222,053 242,234 134,019 141,745
Printing and publications 9,566 26,385 8,750 5,132 8,442
Depreciation and amortization 3,272 31,168 33,453 16,773 16,773
--------------------------------------------- ---------------------------
76,711 279,606 284,437 155,924 166,960
--------------------------------------------- ---------------------------
Net loss $ (51,356) $ (61,735) $(108,066) $ (50,074) $ (72,923)
============================================= ===========================
Loss per common share $ (0.02) $ (0.03) $ (0.12) $ (0.03) $ (0.03)
============================================= ===========================
</TABLE>
See auditors' report and notes to financial statements.
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<PAGE> 19
HAND BRAND DISTRIBUTION, INC.
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
YEARS ENDED DECEMBER 31, 1997, 1998 AND
THE SIX MONTHS ENDED JUNE 30, 1999
<TABLE>
<CAPTION>
COMMON STOCK PAID IN ACCUMULATED
SHARES AMOUNT CAPITAL DEFICIT TOTAL
--------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Balance December 31, 1996 3,400,000 $ 3,400 $253,000 $ (51,356) $205,044
1 x 2 reverse stock split (1,700,000) --
Warrants exercised 73,100 146 72,954 73,100
Net loss from operations (61,735) (61,735)
-------------------------------------------------------------------------------
Balance December 31, 1997 1,773,100 3,546 325,954 (113,091) 216,409
</TABLE>
See auditors' report and notes to financial statements.
-6-
<PAGE> 20
HAND BRAND DISTRIBUTION, INC.
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
YEARS ENDED DECEMBER 31, 1997, 1998 AND
THE SIX MONTHS ENDED JUNE 30, 1999
<TABLE>
<CAPTION>
COMMON STOCK PAID IN ACCUMULATED
SHARES AMOUNT CAPITAL DEFICIT TOTAL
------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Balance December 31, 1997 1,773,100 $ 3,546 $325,954 $(113,091) $216,409
Warrant exercised 42,000 84 41,916 42,000
Net Loss from Operations (108,066) (108,066)
------------------------------------------------------------------------------
Balance December 31, 1998 1,815,100 3,630 367,870 (221,157) 150,343
Issuance of common stock
($.002 per share) 709,000 1,418 370,332 371,750
Net loss June 30, 1999 (72,923) (72,923)
------------------------------------------------------------------------------
Balance June 30, 1999 (Unaudited) 2,524,100 $ 5,048 $738,202 $(294,080) $449,170
==============================================================================
</TABLE>
See auditors' report and notes to financial statements.
-6-
<PAGE> 21
HAND BRAND DISTRIBUTION, INC.
STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30,
1997 1998 1998 1999
---------------------------- -----------------------------
(UNAUDITED)
<S> <C> <C> <C> <C>
Cash flows from operating activities:
Net loss $ (61,735) $ (108,066) $ (50,074) $ (72,923)
---------------------------- ----------------------------
Adjustments to reconcile net loss to net
cash provided by operating activities:
Depreciation and amortization 31,168 33,453 16,773 16,773
(Increase) decrease in accounts receivable (15,079) 8,029 4,896 (4,650)
(Increase) decrease in prepaid expenses
(Increase) decrease in inventories (251,712) 26,069 20,824 (47,167)
(Increase) decrease in other assets (97,531) (600)
Increase (decrease) in accounts payable 18,371 (12,733) 10,830 (9,246)
Increase (decrease) in accrued liabilities 1,662
---------------------------- ----------------------------
Total adjustments (313,121) 54,218 53,323 (44,290)
---------------------------- ----------------------------
Net cash used by operating activities (374,856) (53,848) 3,249 (117,213)
---------------------------- ----------------------------
Cash flows from investing activities:
Cash payments for the purchase of property (118,079) (17,113) (1,500)
---------------------------- ----------------------------
Net cash used by investing activities (118,079) (17,113) -- (1,500)
---------------------------- ----------------------------
Cash flows from financing activities:
Proceeds from issuance of common stock 146
Adjustment to additional paid in capital
Proceeds from issuance of long-term debt 424,000 24,000 12,000 12,000
Proceeds from issuance of stock warrants 72,954 42,000 14,500 371,750
---------------------------- ----------------------------
Net cash provided by financing activities 497,100 66,000 26,500 383,750
---------------------------- ----------------------------
Net increase in cash and cash equivalents 4,165 (4,961) 29,749 265,037
Cash and cash equivalents, beginning of year 3,445 7,610 7,610 2,649
---------------------------- ----------------------------
Cash and cash equivalents, end of year $ 7,610 $ 2,649 $ 37,359 $ 267,686
============================ ============================
</TABLE>
See auditors' report and notes to financial statements.
-7-
<PAGE> 22
HAND BRAND DISTRIBUTION, INC.
STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30,
1997 1998 1998 1999
----------------------- --------------------------
(UNAUDITED)
<S> <C> <C> <C> <C>
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest expense $ 24,000 $ 24,000
======================= ==========================
</TABLE>
Acquisition Note
In connection with the acquisition of The Family News, Inc., the company
acquired assets with a fair value of $ 216,000.
Shareholders' equity note
During the second quarter, the company issued 600,000 shares of its common
stock pursuant to a private placement offering. The proceeds from the
offering were $40,000 net of offering cost of $10,000.
See auditors' report and notes to financial statements.
-7-
<PAGE> 23
HAND BRAND DISTRIBUTION, INC.
CONSOLIDATED NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1997 & 1998
NOTE 1 ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Hand Brand Distribution, Inc.("the Company") was incorporated in
November 1995, under the laws of the State of Florida for the purpose
of developing and marketing nutritional supplements, cleaning and
hygiene products. It also publishes a news catalog to market its
products.
Basis of Accounting
The Company presents its financial statements on the accrual basis of
accounting in compliance with generally accepted accounting principles.
Income Taxes
The Company accounts for income taxes in accordance with Statement of
Financial Accounting Standards No. 109, which requires a liability
approach to calculating deferred income taxes.
Use of Estimates in Preparation of Financial Statements
The preparation of the accompanying financial statements in conformity
with generally accepted accounting principles requires management to
make certain estimates and assumptions that directly affect the results
of reported assets and liabilities and disclosure of contingent assets
and liabilities as of the balance sheet date, and the reported amounts
of revenues and expenses for the period presented. Actual results could
differ from these estimates.
Cash and Cash Equivalents
The Company considers all cash and cash equivalents highly liquid
investments with an original maturity of three months or less to be
cash equivalents.
Inventory
The inventory of the Company is recorded at average cost and includes
nutritional supplements, cleaning and hygiene products and raw
materials from the acquisition of The Rockland Corporation, doing
business as Lifetime Water.
<PAGE> 24
NOTE 2 ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Property and Equipment and Depreciation
Property and equipment are stated at cost. Depreciation is computed by
using the straight-line method based over the assets estimated useful
lives as follows:
<TABLE>
<S> <C>
Furniture & Fixtures 5 - 10 years
</TABLE>
Amortization
Amortization of trademarks and goodwill is determined utilizing the
straight-line method based generally on the estimated useful lives of
the intangibles as follows:
<TABLE>
<S> <C>
Trademarks 15 years
Goodwill 15 years
</TABLE>
Credit Risk
Financial instruments that potentially subject the Company to credit
risk include cash on deposit with one financial institution amounting
to $2,649 at December 31, 1998, which was insured for up to $100,000 by
the U.S. Federal Deposit Insurance Corporation (FDIC).
Advertising
Advertising costs are charged to operations when incurred. Advertising
costs during 1998 amounted to $2,257.
NOTE 3 COMMON STOCK AND PREFERRED STOCK
The Company has authorized 12,500,000 shares of common stock. The
shares of common stock issued and outstanding for 1997 and 1998. This
includes June 30, 1999 unaudited.
At December 31, 1997, the total shares of common stock was as follows:
<TABLE>
<S> <C>
1 for 2 Reverse Stock split (3,400,000/2) 1,700,000
Warrants exercised - 73,100 73,100
---------
Total (par value of $.002) 1,773,100
=========
</TABLE>
<PAGE> 25
COMMON STOCK AND PREFERRED STOCK CONTINUED
During 1998, a total of 42,000 warrants were exercised at a price of
$1.00 per share.
At December 31, 1998, the total shares of common stock was as follows:
<TABLE>
<S> <C>
Issued & outstanding December 31, 1997 1,773,100
Warrants exercised - 42,000 42,000
---------
Total (par value of $.002) 1,815,100
=========
</TABLE>
The warrants not exercised at December 31, 1998 were extended for a
one-year period and maintain the stated terms of conversion.
The total amount of warrants outstanding is 834,900 at December 31,
1998.
During 1999 (unaudited) a total of 709,000 warrants were exercised,
34,500 at $1.00 and 674,500 at $.50
At June 30, 1999, the total shares of common stock Was as follows:
<TABLE>
<S> <C>
Issued & Outstanding December 31, 1998 1,815,100
Warrants Exercised - 709,000 709,000
---------
Total (par value of $.002) 2,524,100
</TABLE>
Subsequent to 34,500 warrants being converted in the first
quarter of 1999 the company offered a premium share for every warrant
converted from March 21 through April 21, 1999 resulting in a yield of
50 cents per share on 674,500 shares.
NOTE 3 INCOME TAXES
The Company reduced taxable income in 1997 by applying federal net
operating losses to pre-tax income, reducing the taxable income by
$63,316. These losses were carried forward from prior years.
The Company has a remaining federal net operating loss carryforward of
$221,157, of which $60,316 expires in 2011, and $57,590 expires in
2017, and $108,066 expires in 2018.
In addition, the purchase of The Family News, Inc. entitles the Company
to additional NOL's of approximately $45,000, which expire in 2008,
2009, and 2011. The respective deferred tax asset of $6,711 is
reflected in the balance sheet.
<PAGE> 26
NOTE 4 INVENTORIES
At December 31, 1997, inventories consisted of the following:
<TABLE>
<S> <C>
Finished goods $187,245
Raw materials 92,467
--------
$279,712
========
</TABLE>
At December 31, 1998, inventories consisted of the following:
<TABLE>
<S> <C>
Finished goods $157,665
Raw materials 90,407
Labels and jars 5,571
--------
$253,643
========
</TABLE>
NOTE 5 FIXED ASSETS
Furniture and fixtures were acquired with the purchase of The Family
News, Inc.
Equipment was purchased from The Rockland Corporation, doing business
as Lifetime Water.
Fixed assets at December 31, 1997 consisted of the following:
<TABLE>
<S> <C>
Furniture & fixtures $ 55,572
Equipment 118,079
--------
173,651
Less accumulated depreciation (18,762)
--------
Total $154,889
========
</TABLE>
Depreciation expense for the year ended December 31, 1997 was $17,365.
Fixed assets at December 31, 1998 consisted of the following:
<TABLE>
<S> <C>
Furniture & fixtures $ 55,974
Computers and software 16,711
Equipment 118,079
--------
190,764
Less accumulated depreciation (38,412)
--------
Total $152,352
========
</TABLE>
Depreciation expense for the year ended December 31, 1998 was $19,650.
NOTE 6 INTANGIBLE ASSETS
At December 31, 1997, intangible assets are summarized by major
classification as follows:
<PAGE> 27
<TABLE>
<CAPTION>
TFN Lifetime Total
--------- --------- ---------
<S> <C> <C> <C>
Trademark $ 12,500 $ 95,131 $ 107,631
Goodwill 99,408 0 99,408
--------- --------- ---------
111,908 95,131 207,039
Less:
Accumulated
amortization (9,336) (6,342) (15,678)
--------- --------- ---------
Total $ 102,572 $ 88,789 $ 191,361
========= ========= =========
</TABLE>
The goodwill represents the excess of the cost over the fair value of
net assets of the acquired business, The Family News, Inc.
Amortization expense for the year ended December 31, 1997 was $13,803
At December 31, 1998, intangible assets are summarized by major
classification as follows:
<TABLE>
<CAPTION>
TFN Lifetime Total
--------- --------- ---------
<S> <C> <C> <C>
Trademark $ 12,500 $ 95,131 $ 107,631
Goodwill 99,408 0 99,408
--------- --------- ---------
111,908 95,131 207,039
Less:
Accumulated
amortization (16,797) (12,684) (29,481)
--------- --------- ---------
Total $ 95,111 $ 82,447 $ 177,558
========= ========= =========
</TABLE>
The goodwill represents the excess of the cost over the fair value of
net assets of the acquired business, The Family News, Inc.
Amortization expense for the year ended December 31, 1998 was $13,803.
NOTE 7 PROMISSORY NOTE PAYABLE
The Company has a non-negotiable promissory note payable in the amount
of $400,000. The note is jointly and severally guaranteed to The
Rockland Corporation by the Company and John M. Taggart.
Interest is 6% on the entire outstanding balance and a 2.5% fee will be
added to each installment if more than 7 days past due. The late fee
shall be 5% if more than 30 days past due.
<PAGE> 28
PROMISSORY NOTE PAYABLE CONTINUED
Payments are in the amount of $44,443 to be made in nine equal
installments plus interest on the entire outstanding balance beginning
on January 1, 1998. The first payment due on January 1, 1999, has been
extended for a twelve month period, with no fees or penalties.
According to management, the Company will renegotiate the loan in 1999,
and has agreed to accept partial payment from inventory.
Accrued interest of $24,000 as of December 31, 1998 has been recorded.
NOTE 8 COMMITMENTS
On July 10, 1998, the Company entered into a lease agreement with Bert
Manno for warehouse space in North Miami, Florida. Monthly payments are
$1,500 plus tax for a period of two years, ending January 30, 2000.
Since 1992, the Company has maintained a lease agreement with Shapar
Realty Company for its main facility, renewable annually. Monthly
rental payments are $700 plus tax.
Total rental expense for the year ended December 31, 1998 was $31,373.
NOTE 9 LEGAL CONTINGENCIES
In the normal course of business, the Company was involved in a civil
action lawsuit. The case was dismissed on March 2, 1999
NOTE 10 ACQUISITION
During January 1997, the Company acquired the assets of the water
filter division of The Rockland Corporation for a purchase price of
$400,000. The acquisition was accounted for as a purchase and was
included with combined operations from that date through December 31,
1997. The purchase was financed with $400,000 installment promissory
note plus 6% interest on the entire outstanding balance.
The total purchase price of $400,000 was allocated as follows:
<TABLE>
<S> <C>
Raw materials $ 92,467
Equipment 118,079
Other intangible assets 95,131
Inventory 94,323
--------
Total $400,000
========
</TABLE>
<PAGE> 1
Exhibit 2(a)
State of Florida
Department of State
I certify the attached is a true and correct copy of the Articles of
Incorporation of HAND BRAND DISTRIBUTION INC., a Florida corporation, filed on
November 8, 1995, as shown by the records of this office.
The document number of this corporation is P95000086464.
Given under by hand and the
Great Seal of the State of Florida,
at Tallahassee, the Capital, this the
Thirteenth day of November, 1995
Sandra B. Mortham
Secretary of State
CR2E022 (1-95)
<PAGE> 2
FILED 95 NOV -8 AM 8:48
SECRETARY OF STATE
TALLAHASSEE FLORIDA
ARTICLES OF INCORPORATION
OF
The undersigned incorporator(s), for the purpose of forming a corporation under
the Florida General Corporation Act, hereby adopt(s) the following Articles of
Incorporation.
ARTICLES I NAME
The name of the corporation shall be: Hand Brand Distribution Inc.
The principal place of business of this corporation shall be: 9845 NE 2nd Ave,
Miami Shores, FL 33138
ARTICLE II NATURE OF BUSINESS
This corporation may engage in or transact any or all lawful activities or
business permitted under the laws of the United States, the State of Florida, or
any other state, county, territory or nation.
Wholesale and retail distribution of nutritional supplements, personal
care items and cleaning products.
ARTICLE III CAPTIAL STOCK
The aggregate number of shares of stock and its par value that this corporation
is authorized to have outstanding at any one time is:
Authorized share 25,000,000 at .001 cent par value.
ARTICLE IV TERM OF EXISTENCE
This corporation is to exist perpetually. Perpetual.
ARTICLE V OFFICERS DIRECTORS
The name(s) and street address(es) of the initial officer(s) and director(s), if
any, who shall hold office the first year of the corporation's existence or
until their successor(s) is(are) elected, is(are):
John M. Taggart, President (Sole Incorporator)
10418 NE 2nd Ave.
Miami Shores, FL 33138
<PAGE> 3
ARTICLE VI INCORPORATOR(S)
The name(s) and street address(es) of the incorporator(s) to this articles of
incorporation is(are):
John M. Taggart President (Sole Incorporator)
10418 NE 2nd Ave.
Miami Shores, FL 33138
ARTICLE VII PRINCIPAL OFFICE:
Hand Brand Distribution Inc.
9845 N.E. 2nd Ave.
Miami Shores, FL 33138
(305) 759-8710
IN WITNESS WHEREOF, the undersigned incorporator(s) has(have) executed these
Articles of Incorporation this 8th day of November, 1995.
Signature(s) of Incorporator(s)
John M. Taggart
President
STATE OF FLORIDA
COUNTY OF DADE
THE FOREGOING instrument was acknowledged and sworn to before me this day of
NOV, 1995 by John M. Taggart (Name of Incorporator) of Hand Brand Distribution
(Name of Corporation)
Notary Public
Lois E. Lindley
Notary Public, State of Florida
Commission No. CC 246263
My Commission Expires 12/15/96
Submitted driver's license
(SEAL)
ARTICLES OF INCORPORATION FILING FEE: $20
<PAGE> 4
CERTIFICATE DESIGNATING
REGISTERED AGENT/REGISTERED OFFICE
Pursuant to the provisions of Section 607.325, Florida Statutes, the undersigned
corporation, organized under the laws of the State of Florida, submits the
following statement in designating the registered office/registered agent, in
the State of Florida.
1. The name of the corporation is: Hand Brand Distribution Inc.
2. The name and address of the registered agent and office is:
David M. Taggart
6293 SW 32 Street
Miami, FL 33155
Signature (Corporate Officer)
TITLE John M. Taggart President
DATE November 8, 1995
HAVING BEEN NAMED TO ACCEPT SERVICE OF PROCESS FOR THE ABOBE STATED CORPORATION,
AT THE PLACE DESIGNATED IN THIS CERTIFICATE, I HEREBY AGREE TO ACT IN THIS
CAPACITY, AND I FURTHER AGREE TO COMPLY WITH THE PROVISIONS OF ALL STATUTES
RELATIVE TO THE PROPER AND COMPLETE PERFORMANCE OF MY DUTIES, AND I ACCEPT THE
DUTIES AND OBLIGATIONS OF SECTION 607.325 FLORIDA STATUTES.
SIGNATURE (Registered Agent) David M. Taggart
DATE November 8, 1995
FILED 95 NOV -8 AM 8:48
SECRETARY OF STATE
TALLAHASSEE FLORIDA
REGISTERED AGENT FILING FEE: $20.00
<PAGE> 1
Exhibit 2(b)
ARTICLES OF AMENDMENT
TO
ARTICLES OF INCORPORATION
OF
HAND BRAND DISTRIBUTION, INC.
***
The undersigned corporation adopts the following Articles of amendment to its
Articles of Incorporation:
1. The name of the corporation is HAND BRAND DISTRIBUTION, INC.
2. Each share of the Corporation's outstanding common stock, $.001 par
value per share, shall be and they are hereby automatically changed (without any
further act) into one-half share of common stock, $.001 par value per share.
The forgoing reverse stock split shall be accomplished in the following
manner:
(1) All certificates representing issued shares which are in
existence as of the close of business on January 31, 1997 (the "Record
Date") shall thereafter, without any further action being taken, represent
one-half the number of shares as they theretofore represented. In lieu of
fractional shares, each shareholder shall receive the next whole number of
shares to which he shall be entitled as a result of the foregoing reverse
stock split.
(2) The appropriate officers of the Corporation are authorized and
directed as soon as practicable after the close of the business on the
Record date, to notify each shareholder of record as of the close of the
business on the Record Date to turn in their certificates in exchange for
new certificates representing the Corporation's common stock to which they
shall be entitled pursuant to the foregoing reverse stock split.
(3) The Board of Directors of the Corporation or any executive
committee thereof is empowered to adopt further rules and regulations
concerning the foregoing reverse stock split and to appropriately adjust
any options, warrants or other securities which are convertible into
shares of the Corporation's Common Stock as they deem to be fair and
equitable and in the best interests of the Corporation.
3. The foregoing amendments were approved by written consent of a
sufficient number for approval by the common shareholders, which was the only
voting group entitled to vote thereon, in accordance with Section 607.0704,
Florida Business Corporation Act on January 21, 1997
Date: January 21, 1997
John M. Taggart
President
<PAGE> 1
Exhibit 2(c)
TABLE OF CONTENTS
OF THE AMENDED AND RESTATED BYLAWS OF
HAND BRAND DISTRIBUTION, INC.
ARTICLE I. IDENTIFICATION
Section 1.01. Name
Section 1.02. Registered Office and Resident Agent
Section 1.03. Other Offices
Section 1.04. Seal
Section 1.05. Fiscal Year
ARTICLE II. CAPITAL STOCK
Section 2.01. Consideration for Shares
Section 2.02. Certificates Representing Shares
Section 2.03. Transfer of Stock
Section 2.04. Regulations
Section 2.05. Transfer Agents and Registrars
Section 2.06. Lost or Destroyed Certificates
ARTICLE III. SHAREHOLDERS
Section 3.01. Place of Shareholder Meetings
Section 3.02. Annual Shareholder Meetings
Section 3.03. Special Shareholder Meetings
Section 3.04. Business at Meetings of Shareholders
Section 3.05. Notice of Shareholder Meetings
Section 3.06. Shareholder Quorum
Section 3.07. Adjourned Shareholder Meetings
Section 3.08. Entry of Notice
Section 3.09. Voting
Section 3.10. Consent of Absentees
Section 3.11. Action Without Meeting
Section 3.12. Proxies
Section 3.13. Definition of Shareholder
ARTICLE IV. BOARD OF DIRECTORS
Section 4.01. Number; Term; Election
Section 4.02. Nominations
Section 4.03. Vacancies
Section 4.04. Annual Meetings
Section 4.05. Regular Meetings
Section 4.06. Other Meetings
Section 4.07. Notice of Adjourned Meetings
Section 4.08. Entry of Notice
Section 4.09. Waiver of Notice
Section 4.10. Quorum
Section 4.11. Participation in Meetings by Telephone
Section 4.12. Adjournment
Section 4.13. Action Without Meeting
Section 4.14. Fees and Compensation
Section 4.15. Limitation of Liability
Section 4.16. Indemnification; Advancement of Expenses
Section 4.17. Indemnification of Employees and Agents
Section 4.18. Powers of Directors
Section 4.19. Committees
<PAGE> 2
Section 4.20. Audit Committee
ARTICLE V.OFFICERS
Section 5.01. Officers
Section 5.02. Election
Section 5.03. Subordinate Officers
Section 5.04. Removal and Resignation
Section 5.05. Vacancies
Section 5.06. Chairman of the Board
Section 5.07. Chief Executive Officer
Section 5.08. President
Section 5.09. Chief Operating Officer
Section 5.10. Executive Vice Presidents
Section 5.11. Secretary
Section 5.12. Assistant Secretaries
Section 5.13. Chief Financial Officer
Section 5.14. Treasurer
Section 5.15. Assistant Treasurers
Section 5.16. Corporate Bank Accounts
Section 5.17. Transfers of Authority
ARTICLE VI. MISCELLANEOUS
Section 6.01. Record Date and Closing Stock Books
Section 6.02. Stock List
Section 6.03. Checks, Drafts, etc.
Section 6.04. Contracts, etc.; How Executed
Section 6.05. Representation of Shares
Section 6.06. Inspection of Bylaws
ARTICLE VII. AMENDMENTS
Section 7.01. Power of Shareholders
Section 7.02. Power of Directors
<PAGE> 3
AMENDED AND RESTATED BY LAWS OF MEDIZONE INTERNATIONAL, INC.
ARTICLE I IDENTIFICATION
SECTION 1.01. NAME. The name of the Corporation is HAND BRAND DISTRIBUTION, INC.
SECTION 1.02. REGISTERED OFFICE AND RESIDENT AGENT. The name and address of the
registered agent and office of the Corporation in the State of Florida shall be
the registered office named in the Articles of Incorporation of the Corporation
or such other office (which need not be a place of business of the Corporation)
as may be designated from time to time by the Board of Directors in the manner
provided by law.
SECTION 1.03. OTHER OFFICES. The principal business office of the Corporation
shall be established by the Board of Directors and branch or subordinate offices
may be established by the Board of Directors.
SECTION 1.04. SEAL. The seal of the Corporation, if any, will be circular in
form and mounted upon a metal die, suitable for impressing the same upon paper.
The use of the seal is not necessary on any corporate document and its use or
non-use shall not in any way affect the legality of the document.
SECTION 1.05. FISCAL YEAR. The fiscal year of the Corporation will be determined
by, resolution of the Board of Directors.
<PAGE> 4
ARTICLE II CAPITAL STOCK
SECTION 2.01. CONSIDERATION FOR SHARES. The capital stock may be issued for such
consideration, expressed in dollars, as shall be fixed from time to time by the
Board of Directors. Treasury shares may be disposed of by the Corporation for
such consideration expressed in dollars as may be fixed from time to time by the
Board of Directors.
SECTION 2.02. CERTIFICATES REPRESENTING SHARES. Each holder of the capital stock
of the Corporation is entitled to a certificate in such form as may be required
by applicable law signed by the Chairman of the Board, President, Chief
Executive Officer, Chief Operating Officer or a Vice President, and the
Secretary (or an Assistant Secretary), certifying the number of shares owned by
the shareholder in the Corporation. In case any officer or officers who shall
have signed, or whose facsimile signature or signatures shall have been used on,
any certificate or certificates shall cease to be an officer or officers of the
Corporation, whether because of death, resignation or otherwise, before the
certificate or certificates shall have been delivered by the Corporation, the
certificate or certificates may nevertheless be adopted by the Corporation and
be issued and delivered as though the person or persons who signed the
certificate or certificates, or whose facsimile signature or signatures shall
have been used thereon, had not ceased to be an officer or officers of the
Corporation.
SECTION 2.03. TRANSFER OF STOCK. Transfers of stock shall be made only upon the
transfer books of the Corporation kept in an office of the Corporation or by
transfer agents designated to transfer shares of the stock of the Corporation.
SECTION 2.04. REGULATIONS. The issue, transfer, conversion and registration of
certificates of stock shall be governed by such other regulations as the Board
of Directors may establish.
SECTION 2.05. TRANSFER AGENTS AND REGISTRARS. The Board of Directors may appoint
one or more transfer agent and one or more registrar with respect to the
certificates representing shares of stock of the Corporation.
SECTION 2.06. LOST OR DESTROYED CERTIFICATES. The Corporation may issue a new
certificate for stock of the Corporation in place of any certificate theretofore
issued by it, alleged to have been lost or destroyed, and the Board of Directors
may, in its discretion, require the owner of the lost or destroyed certificate
or his, her or its legal representative, to give the Corporation a bond in such
form and amount as the Board of Directors may direct, and with such surety or
sureties as may be satisfactory to the Board of Directors, to indemnify the
Corporation and its transfer agent(s) and/or registrar(s), if any, against any
claims that may be made against it or any such transfer agent or registrar on
account of the issuance of such new certificate. A new certificate may be issued
without requiring any bond when, in the judgment of the Board of Directors, it
is proper to do so.
ARTICLE III SHAREHOLDERS
SECTION 3.01. PLACE OF SHAREHOLDER MEETINGS. Meetings of the shareholders of the
Corporation shall be held at the principal executive offices of the Corporation,
or at such other place as may be designated by the Chairman of the Board,
President, Chief Executive Officer or the Board of Directors.
SECTION 3.02. ANNUAL SHAREHOLDER MEETINGS. The annual meeting of the
shareholders shall be held on such date and at such time as the Board of
Directors shall fix for the purposes of electing directors and transacting such
other business as may properly be brought before the meeting.
SECTION 3.03. SPECIAL SHAREHOLDER MEETINGS. Subject to the Corporation's
Articles of Incorporation, special shareholders' meetings may be called by the
Board of Directors, and shall be held on such date and at such time as shall be
fixed by resolution. Written notice of a special meeting of shareholders stating
the time and place and object thereof, shall be given to each shareholder
entitled to vote at such meeting not
<PAGE> 5
less then ten (10) days nor more than sixty (60) days before such meeting,
unless a greater period of notice is required by applicable law.
SECTION 3.04. BUSINESS AT MEETINGS OF SHAREHOLDERS. Except as otherwise provided
by law (including, but not limited to, Rule 14a-8 under the Securities Exchange
Act of1934, as amended, or any successor provision thereto) or in these Bylaws,
the business that shall be conducted at any meeting of the shareholders shall
(a) have been specified in the written notice of the meeting (or any supplement
thereto) given by the Corporation, (b) be brought before the meeting at the
direction of the Board of Directors or the presiding officer of the meeting or
(c) have been specified in a written notice given to the Secretary of the
Corporation by or on behalf of any shareholder who shall have been a shareholder
of record on the record date for such meeting and who shall continue to be
entitled to vote thereat (the "Shareholders Notice"), in accordance with all of
the following requirements:
(a) Each Shareholder Notice must be delivered to, or be mailed and received at,
the principal executive offices of the corporation:
(i) in the case of an annual meeting that is called for a date that is
within thirty (30) days before or after the anniversary date of the
immediately preceding annual meeting of shareholders, not less than sixty
(60) days nor more than ninety (90) days prior to such anniversary date;
and
(ii) in the case of an annual meeting that is called for a date that is
not within thirty (30) days before or after the anniversary date of the
immediately preceding annual meeting, not later than the close of business
on the tenth (10th) day following the day on which notice of the date of
the meeting was mailed or public disclosure of the date of the meeting was
made, whichever occurs first; and
(b) Each such Shareholder Notice must set forth each of the following:
(i) the name and address of the shareholder who intends to bring the
business before the meeting;
(ii) the general nature of the business that he or she seeks to bring
before the meeting; and
(iii) a representation that the shareholder is a holder of record of the
stock of the Corporation entitled to vote at such meeting and intends to
appear in person or by proxy at the meeting to bring the business
specified in the notice before the meeting.
The presiding officer of the meeting may, in his or her sole discretion, refuse
to acknowledge any business proposed by a shareholder not made in compliance
with the foregoing procedure.
SECTION 3.05. NOTICE OF SHAREHOLDER MEETINGS. Written notice stating the place,
day and hour of a shareholders' meeting must be delivered not less than ten (10)
days, nor more than sixty (60) days before the date of the meeting, either
personally, or by mail or by other means of written communication, charges
prepaid, by or at the direction of the Chairman of the Board, President, Chief
Executive Officer, Chief Operating Officer, Secretary or the officer or
person(s) calling the meeting, to each registered shareholder entitled to vote
at the meeting. If mailed, the notice shall be considered to be delivered when
deposited in the United States mail addressed to the shareholder at the
shareholder's address as it appears on the stock transfer books of the
Corporation, with postage prepaid. If a shareholder gives no address, notice
shall be deemed to have been given to the shareholder if sent by mail or other
written communication addressed to the place where the Corporation's registered
office is located, or if published at least once in a newspaper of general
circulation in the county in which the Corporation's registered office is
located. Waiver by a shareholder in writing of notice of a meeting is equivalent
to giving notice. Attendance by a shareholder, without objection to the notice,
whether in person or by proxy, at a meeting is a waiver of notice of the
meeting.
SECTION 3.06. SHAREHOLDER QUORUM. A majority of the shares entitled to vote,
represented in person or by proxy, is a quorum at a shareholders'meeting, unless
or except to the extent that the presence of a larger
<PAGE> 6
number may be required by law. Where separate vote by a class or classes is
required, a majority of the 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. The shareholders present at a duly
organized meeting may continue to do business until adjournment, notwithstanding
the withdrawal of enough shareholders to leave less than a quorum present.
SECTION 3.07. ADJOURNED SHAREHOLDER MEETINGS. Any shareholders' meeting, whether
annual or special, whether or not a quorum is present, may be adjourned from
time to time by the vote of a majority of the shares, the holders of which are
either present in person or represented by proxy, but in the absence of a
quorum, no other business may be transacted at any shareholders' meeting. when
any shareholders' meeting, either annual or special, is adjourned for thirty
(30) days or more, notice of the adjourned meeting shall be given as in the case
of an original meeting. As to any adjournment of less than thirty (30) days, it
shall not be necessary to give any notice of the time and place of the adjourned
meeting or of the business to be transacted, other than by announcement at the
meeting at which the adjournment is taken.
SECTION 3.08. ENTRY OF NOTICE. An entry in the minutes of any meeting of
shareholders, whether annual or special, to the effect that notice has been duly
given shall be conclusive and incontrovertible evidence that due notice of the
meeting was given to all shareholders as required by law and by these Bylaws.
SECTION 3.09. VOTING. Except as otherwise provided by law, only persons in whose
names shares entitled to vote stand on the stock registry of the Corporation on
the day prior to any shareholders' meeting, or, if a record date for voting
purposes is fixed as provided in Section 6.01 below, then on that record date,
shall be entitled to vote at the meeting. Voting shall be by ballot, each of
which shall state the shareholders name or proxy voting and such other
information as may be required under the procedure established for the meeting.
The Corporation may, and to the extent required by law shall, in advance of any
meeting of shareholders, appoint one or more inspectors to act at the meeting
and make written report thereof. Each vote taken by ballot shall be counted by
an inspector or inspectors appointed by the chairperson of the meeting. Except
as otherwise provided by law or by an express provision in the Corporation's
Articles of Incorporation, or in any directors' resolution for a series of
Preferred Stock, each fall share is entitled to one (I) vote and, when a quorum
is present at the commencement of any shareholders' meeting, the vote of the
holders of a majority of the shares entitled to vote present, in person or by
proxy, shall decide any question brought before the shareholders' meeting.
Fractional shares shall not be entitled to any voting rights whatsoever.
SECTION 3.10. CONSENT OF ABSENTEES. The transactions of any shareholders'
meeting, either annual or special and however called and noticed, shall be as
valid as though had at a meeting duly held after regular call and notice if a
quorum is present, either in person or by proxy, and if, either before or after
the meeting, each of the shareholders entitled to vote not present in person or
by proxy, signs a written waiver of notice or a consent to the holding of the
meeting, or an approval of the minutes thereof, all such waivers, consents or
approvals shall be filed with the Secretary or be made a part of the minutes of
the meeting.
SECTION 3.11. ACTION WITHOUT MEETING. Subject to the Corporation's Articles of
Incorporation, any action that, under applicable provisions of law, may be taken
or ratified at a meeting of the shareholders, may be taken or ratified without a
meeting if authorized in writing by shareholders holding all of the voting
power. In no instance where action is taken by written consent need a meeting of
the shareholders be called or noticed. The Board of Directors may fix a record
date to determine the shareholders entitled to sign the written consent. If no
record date has been fixed by the Board of Directors, the record date for
determining shareholders entitled to consent to corporate action in writing
without a meeting, when no prior action by the Board of Directors is required by
the Nevada Private Corporation Act, shall be the earliest date that a
shareholder signed the written consent. All written consents shall be filed with
the minutes of the proceeding of the shareholders.
Section 3.12. Proxies. Every person entitled to vote or execute consents shall
have the right to do so either in person or by an agent or agents authorized by
a written proxy executed by the person or by the person's duly authorized agent
and filed with the Secretary of the Corporation;
<PAGE> 7
provided, however, that no proxy shall be valid after the expiration of eleven
(11 ) months from the date of its execution unless the shareholder executing it
specified therein the length of time for which the proxy is to continue in
force, which in no event shall exceed seven (7) years from the date of its
execution.
Section 3.13. Definition of Shareholder. As used in these Bylaws, the term "
shareholder", and any term of like import, shall include all persons entitled to
vote the shares held by a shareholder, unless the context in which the term is
used indicates that a different meaning is intended.
ARTICLE IV
BOARD OF DIRECTORS
Section 4.01. Number; Term; Election. The number of directors shall be fixed
from time to time exclusively by the Board of Directors pursuant to a resolution
adopted by a majority of the total number of authorized directors (whether or
not there exists any vacancies in previously authorized directorships at the
time any such resolution is presented to the Board for adoption) but the number
shall be not less than three (3) nor more than seven (7). In the case of any
vacancy on the Board of Directors, including a vacancy created by an increase in
the number of directors, the vacancy shall be filled by election of the Board of
Directors with the director so elected to serve for the remainder of the term of
the director being replaced or, iJ1 the case of an additional director, until
directors are again elected and qualified for office. All directors shall
continue in office until the election and qualification of their respective
successors in office. No decrease in the number of directors shall have the
effect of shortening the term of any incumbent director. Election of directors
need not be by written ballot unless these Bylaws so provide.
Section 4.02. Nominations. Only persons who are nominated in accordance with the
following procedures shall be eligible for election as directors. Nominations of
persons for election to the Board of Directors at the annual meeting, by or at
the direction of the Board of Directors, may be made by any Nominating Committee
or person appointed by the Board of Directors; nomiJ1ations may also be made by
any shareholder of the Corporation entitled to vote for the election of
directors at the meeting who complies with the notice procedures set forth in
this Section 4.02. Such nomination, other than those made by or at the direction
of the Board of Directors, shall be made pursuant to timely notice in writing to
the Secretary of the Corporation. To be timely, a shareholder's notice shall be
delivered to or mailed and received at the principal executive office of the
Corporation addressed to the attention of the Secretary of the Corporation not
less than thirty-five (35) days prior to the meeting or the date the
shareholders are first solicited for their consents as the case may be;
provided, however, that in the case of an annual meeting and in the event that
less than fifty (50) days' notice or prior public disclosure of the date of the
meeting is given or made to shareholders, notice by the shareholder to be timely
must be so received no later than the earlier of (a) the close of business on
the tenth (10th) day following the day on which such notice of the date of the
meeting was mailed or such public disclosure was made, whichever first occurs,
or (b) two (2) days prior to the date of the meeting.
<PAGE> 8
Such shareholder's notice to the Secretary shall set forth
(a) as to each person who the shareholder proposes to nominate for election or
reelection as a director, each of the following:
(i) the name, age, business address and residence address of the person;
(ii) it the principal occupation or employment of the person;
(iii) the class and number of shares of capital stock of the Corporation
that are beneficially owned by the person;
(iv) a statement as to the person's citizenship; and
(v) any other information relating to the person that is required to be
disclosed in solicitations for proxies for election of directors
pursuant to Section 14 of the Securities Exchange Act of 1934, as
amended, and the Rules and Regulations promulgated thereunder; and
(b) as to the shareholder giving the notice, each of the following:
(i) the name and record address of the shareholder giving the notice;
(ii) it the name and record address of the shareholder; and
(iii) the class, series and number of shares of capital stock of the
Corporation that are beneficially owned by the shareholder.
The Corporation may require any proposed nominee to furnish such other
information as may reasonably be required by the Corporation to determine the
eligibility of such proposed nominee to serve as a director of the Corporation.
No person shall be eligible for election as a director of the Corporation unless
nominated in accordance with the procedures set forth herein.
In connection with any annual meeting, the Chairman of the Board, the President,
the Chief Executive Officer or such officer presiding at the meeting shall, if
the facts warrant, determine and declare to the meeting that a nomination was
not made in accordance with the foregoing procedure and that the defective
nomination shall be disregarded.
Section 4.03. Vacancies. Any vacancy occurring in the Board of Directors may be
filled by the affirmative vote of a majority of the remaining Directors, though
less than a quorum of the Board of Directors was present, or by the sole
remaining director. A elected to fill a vacancy shall be elected for the
unexpired term of the director's predecessor in office. A vacancy or vacancies
in the Board of Directors shall be deemed to exist in case of the death,
resignation or removal of any director, or if the authorized number of directors
is increased, or if the shareholders fail at any annual
<PAGE> 9
or special meeting of shareholders at which any director or directors are
elected to elect the fill authorized number of directors to be voted for at that
meeting, or if a vacancy is declared by the Board of Directors for any reason
permitted by law. The shareholders may elect a director or directors at any time
to fill any vacancy or vacancies not filled by the Board of Directors. If the
Board of Directors accepts the resignation of a director tendered to take effect
at a future time, the Board of Directors shall have power to elect a successor
to take office when the resignation is to become effective. No reduction of the
authorized number of directors shall have the effect of removing any director
prior to the expiration of the director's term of office.
Section 4.04. Annual Meetings. Immediately after the annual meeting of the
shareholders, at the same place as the meeting of the shareholders, or such
other place as may be provided in a notice thereof, the Board of Directors shall
meet each year for the purpose of organization, election of officers and
consideration of any other business that is properly brought before the meeting.
No notice of any kind to either old or new members of the Board of Directors for
this annual meeting shall be necessary unless the meeting is to be held at a
place other than the place of the annual meeting of the shareholders, in which
case notice of the place of the meeting shall be given as provided in section
4,06 below,
Section 4.05. Regular Meetings. Regular meetings of the Board of Directors shall
be held at the times and places within or without the State of Nevada as may be
designated from time to time by resolution of the Board of Directors or by
written consent of all members of the Board of Directors. No notice of any kind
to members of the Board of Directors for these regular meetings shall be
necessary unless the meeting is to be held at a place other than the principal
executive office of the Corporation, in which case notice of the place of the
meeting shall be given as provided in section 4.06 below
Section 4.06. Other Meetings. Other meetings of the Board of Directors for any
purpose or purposes may be held at any time upon call by the Chairman of the
Board, or, if the above-listed individual is absent or unable or refuses to act,
by any two (2) directors. The other meetings may be held at any place within or
without the State of Nevada as may be designated from time to time by resolution
of the Board of Directors or by written consent of all directors. Written notice
of the time and place of other meetings shall be delivered personally to each
director or sent to each director by mail or other form of written communication
(including but not limited to notice by facsimile or other means of visual data
transmission) charges prepaid, addressed to the director at the director's
address as shown upon the records of the Corporation or, if it is not so shown
on the Corporation's records or is not readily ascertainable, at the place in
which the meetings of the directors are regularly held. In case the notice is
mailed, faxed, or telegraphed, it shall be deposited in the United States mail
or delivered to the courier or telegraph company in the place in which the
principal executive office of the Corporation is located at least one business
day prior to the time of the meeting. In case the notice is delivered personally
as above provided, it shall be so delivered at least eight (8) hours prior to
the time of the holding of the meeting. The mailing, faxing, telegraphing or
delivery as above-provided shall constitute due, legal and personal notice to
the director.
Section 4.07. Notice of Adjourned Meetings. Notice of the time and place of
holding an adjourned meeting need not be given to absent directors if the time
and place is fixed at the meeting that is adjourned
Section 4.08. Entry of Notice. An entry in the minutes of any special meeting of
the Board of Directors to the effect that notice has been duly given shall be
conclusive and incontrovertible evidence that due notice of the special meeting
was given to all directors as required by law and by these By laws.
Section 4.09. Waiver of Notice. The transactions of any meeting of the Board of
Directors, however called and noticed or wherever held, shall be as valid as
though had at a meeting duly held after regular call and notice, if a quorum is
present, and if either before or after the meeting, each
<PAGE> 10
of the directors not present signs a Petition waiver of notice or a consent to
the holding of the meeting or an approval of the minutes thereof. All such
waivers, consents or approvals shall be filed with the corporate records or made
a part of the minutes of the meeting.
Section 4.10. Quorum. A majority of the established number of directors shall be
necessary to constitute a quorum for the transaction of business, except to
adjourn as hereinafter provided. Every act or decision done or made by a
majority of the directors present at a meeting duly held at which a quorum is
present shall be regarded as the act of the Board of Directors unless a greater
number or different vote is required by the Corporation's Articles of
Incorporation, these Bylaws or applicable law.
Section 4.ll. Participation in Meetings by Telephone. Members of the Board of
Directors, or of any committee thereof ( may participate in any meeting of the
Board of Directors or committee by means of telephone conference or similar
communications by which all persons participating in the meeting can hear each
other and such participation shall constitute presence in person at such
meeting.
Section 4.12. Adjournment. A quorum of the directors may adjourn any directors'
meeting to meet again at a stated day and hour; provided, however, that in the
absence of a quorum, a majority of the directors present at any directors'
meeting, either regular or special, may adjourn from time to time until the time
fixed for the next regular meeting of the Board of Directors.
Section 4.13. Action Without Meeting. Any action required or permitted to be
taken by the Board of Directors under the Corporation's Articles of
Incorporation, these Bylaws or under applicable law, may be taken without a
meeting if all members of the Board of Directors shall individually or
collectively consent, in writing, before or after the action, to the action. Any
action by written consent shall have the sane force and effect as a unanimous
vote of all directors. All written consents must be filed with the Secretary of
the Corporation.
Section 4,14. Fees and Compensation. The Board of Directors shall have the
authority to fix the compensation, if any, of Directors for their services as
Directors or as members of committees. Nothing herein contained shall be
construed to preclude any director from serving the Corporation in any other
capacity as an officer, agent, employee or otherwise, and receiving compensation
therefor.
Section 4.15. Limitation of Liability. To the fullest extent permitted by the
Nevada Private Corporations Act, as the sane now exists or may hereafter be
amended, or other applicable law, a director shall have no personal liability to
the Corporation or its shareholders for monetary damages for breach of fiduciary
duty as a director. Any amendment to or repeal of this Section 4.15 shall not
adversely affect any right or protection of a director of the Corporation for or
with respect to any acts or omissions of such director occurring prior to such
amendment or repeal.
Section 4.16. Indemnification; Advancement of Expenses. The Corporation shall
indemnify the officers and directors of the Corporation to the fullest extent
permitted by the Nevada Private Corporations Act as the sane now exists or may
hereafter be amended. In the event that the Nevada Private Corporations Act is
amended after the filing of the Corporation's Articles of Incorporation with the
Nevada Secretary of State's Office so as to authorize corporate action further
eliminating or limiting the personal liability of an officer or director, then
the liability of an officer or director of the Corporation shall be eliminated
or limited to the fullest extent permitted by the Nevada Private Corporations
Act as so amended. The Corporation shall pay the expenses incurred by an officer
or director in defending any civil, criminal, administrative or investigative
action, suit or proceeding in advance of the final disposition of such action,
suit or proceeding upon receipt of an undertaking by or on behalf of such
officer or director to repay such amount if it should by ultimately determined
that he or she is not entitled to be indemnified by the Corporation as
authorized by the Nevada Private Corporations Act. Any amendment to or repeal of
any of the provisions in this Section 4.16 shall not adversely affect any fight
or protection of an officer or
<PAGE> 11
director of the Corporation for or with respect to any act or omission of such
director occurring prior to such amendment or repeal.
Section 4.17. Indemnification of Employees and Agents. The Corporation may, to
the extent authorized from time to time by the Board of Directors, grant fights
to indemnification and to the advancement of expenses to any employee or agent
of the Corporation to the fullest extent permitted by the provisions of Section
4.16 of these Bylaws and Article VII of the Corporation's Articles of
incorporation,
Section 4.18. Powers of Directors. The Board of Directors may, except as
otherwise provided or required by law, exercise all such powers and do all such
acts and things as may be exercised or done by the Corporation.
Section 4.19. Committees. The Board of Directors, by resolution passed by a
majority of the directors, may from time to time designate committees of the
Board of Directors, including, without limitation, Executive, Nomination, Audit
and Compensation Committees with such lawfully delegable powers and duties as
the Board of Directors may confer, to serve at the pleasure of the Board of
Directors and shall, for those committees and any other provided herein, elect
one or more directors to serve on each such committee. Except as otherwise
provided in these Bylaws or by resolution of the Board of Directors, each
committee may fix its own rules of procedure and shall hold its meetings as
provided by such rules.
Section 4.20. Audit Committee. The Board of Directors shall, by resolution
passed by a majority of the directors, create an Audit Committee. The majority
of the members of the Audit Committee shall be independent directors. The Audit
Committee shall conduct appropriate reviews of all related party transactions,
review situations and transactions that may pose a potential or actual conflict
of interest and perform such other responsibilities as the Board of Directors
may direct by resolution.
ARTICLE V
OFFICERS
Section 5.01. Officers. The Officers of the Corporation shall be a Chairman of
the Board, Chief Executive Officer, President, Chief Operating Officer, Chief
financial Officer, Treasurer and Secretary, as determined by the Board or as
otherwise required by statute. The Corporation may also have, at the discretion
of the Board of Directors, one or more Executive Vice Presidents and Vice
Presidents, one or more Assistant Treasurers, one or more Assistance Secretaries
and such other Officers as may be designated from time to time by the Board of
Directors. Any number of offices may be held by the sane person, except to the
extent limited by law. The officers shall be elected by the Board of Directors
and shall hold office at the pleasure of the Board of Directors, subject to any
powers of removal set forth as set forth in Section 5.04 hereof. Officers, other
than the Chairman of the Board, need not be directors.
Section 5.02. Election. The officers of the Corporation, except those officers
as may be appointed in accordance with the provisions of Section 5.03 or Section
5.05 hereof, shall be elected annually by the Board of Directors, and each shall
hold office until the officer shall resign or shall be removed or otherwise
disqualified to serve, or the officer's successor shall be elected and
qualified; provided, however, that officers may be elected at any time by the
Board of Directors, or, as permitted by Section 5.03 hereof, appointed by the
Chairman of the Board, for the purpose of initially filling an office or filling
a newly-created or vacant office. Section 5.03. Subordinate Officers. The Board
of Directors may elect, and may empower the Chairman of the Board or the Chief
Executive Officer to appoint, such other officers as the business of the
Corporation may require, each of whom shall hold office for the term, have the
authority and perform the duties as are provided in these Bylaws or as the Board
of Directors may from time to time determine.
<PAGE> 12
Section 5.04. Removal and Resignation. Any officer may, subject to any
contractual arrangements between the officer and the Corporation, be removed,
either with or without cause, by a majority of the directors in office at the
time, at any regular or special meeting of the Board of Directors, or, unless
otherwise specified by the Board of Directors, by the Chairman of the Board or
any other officer upon whom a general or special power of removal may be
conferred by the Board of Directors. Any officer may resign at any time by
giving written notice to the Board of Directors or to the Chairman of the Board,
the Chief Executive Officer, the Chief Operating Officer, the President or to
the Secretary of the Corporation. Any resignation shall take effect at the date
of the receipt of the notice or at any later time specified therein, and, unless
otherwise specified therein, the acceptance of a resignation shall not be
necessary to make it effective.
Section 5.05. Vacancies. A vacancy in any office because of death, resignation,
removal, disqualification or any other cause shall be filled in the manner
prescribed in these Bylaws for regular appointments to that office.
Section 5.06. Chairman of the Board. The Chairman of the Board, if there be such
an officer, shall, if present, preside at and conduct all meetings of the Board
of Directors and exercise and perform such other powers and duties as may be
from time to time assigned to him or her by the Board of Directors or prescribed
by these Bylaws. If there is not a Chief Executive Officer, the Chairman of the
Board shall, in addition, be the Chief Executive Officer of the Corporation and
shall have the powers and duties prescribed in Section 5.07 hereof. In the
absence of the Chairman of the Board at any meeting of the Board of Directors,
the President shall preside at and conduct all such meetings of the Board of
Directors.
Section 5.07. Chief Executive Officer. Subject to the control of the Board of
Directors and the Chairman of the Board, the Chief Executive Officer shall have
the general supervision, direction and control of the business and affairs of
the Corporation. In the absence of the Chairman of the Board, or if there be
none, the Chief Executive Officer shall preside at all meetings of the Board of
Directors and the shareholders. Except as expressly stated otherwise in these
Bylaws, the Chief Executive Officer shall be ex officio a member of all standing
committees of the Board of Directors, including the Executive Committee, if any.
The Chief Executive Officer shall have all the powers and shall perform all of
the duties that are ordinarily inherent in the office of Chief Executive Officer
of a corporation, and he or she shall have such inner powers and shall perform
such further duties as may be prescribed for him or her by the Board of
Directors.
Section 5.08. President. In the absence or disability of the Chief Executive
Officer, or if there be none, the President shall perform all of the duties of
the Chief Executive Officer, and when so acting shall have all of the powers of
and be subject to all of the restrictions upon the Chief Executive Officer. In
the absence or disability of the Chief Operating Officer, the President shall
also be the Chief Operating Officer with such duties as the Board of Directors
may from time to time prescribe. The President shall have such other duties as
from time to time may be prescribed for him or her by the Board of Directors.
Section 5.09. Chief Operating Officer. In the absence or disability of the
President, or if there be none, the Chief Operating Officer shall have all of
the powers of the President. The Chief Operating Officer shall be responsible
for daily office operations, shareholder relations, and such other or additional
duties as the Board of Directors may from time to time prescribe.
Section 5.10. Executive Vice Presidents. The Vice Presidents in order of their
rank as fixed by the Board of Directors, or if not ranked, the Executive Vice
President or Vice President designated by the Board of Directors, shall perform
all the duties of the Chief Operating Officer in the absence of the Chief
Operating Officer, and when so acting, shall have all the powers of and be
subject to all the restrictions upon the Chief Operating Officer. The Executive
Vice Presidents or Vice Presidents shall have such other powers and perform such
other duties as may be prescribed for them, respectively, by the Board of
Directors, the President, the Chief Operating Officer, and any officer(s), if
arty, who are senior to the President or by these Bylaws.
<PAGE> 13
Section 5.ll. secretariat. The Secretary shall keep or cause to be kept, at the
registered office, the principal business office or such other place as the
Board of Directors may order, a book of minutes of all meetings of the directors
and shareholders, with the time and place of holding, whether regular or
special, and, if special, how authorized, the notice thereof given, the names of
those present at directors' meetings, the number of shares present or
represented at shareholders' meetings and the proceedings thereof The Secretary
shall be responsible for authenticating records of the Corporation.
The Secretary shall keep or cause to be kept, in any form permitted by law, at
the registered office, the principal business office or at the office of the
Corporation's transfer agent, a stock register, or a duplicate stock register,
revised at least annually, showing the names of the shareholders and their
residence addresses and the number and classes of shares held by each
shareholder. If the share register or a duplicate share register is located at a
place other than the registered office of the Corporation, the Secretary shall
file a certificate with the resident agent located at the registered office
setting out the name of the custodian of the stock ledger or a duplicate stock
ledger, and the present and complete post office address, including street and
number, if any, where such stock ledger or duplicate stock ledger is kept.
The Secretary shall give, or cause to be given, notice of all meetings of the
shareholders and of the Board of Directors and written consents in lieu thereof
required by these Bylaws or by law to be given, and shall keep the seal of the
Corporation, if any, in safe custody, and shall have such other powers and
perform such other duties as may be prescribed by the Board of Directors, the
Chairman of the Board, the Chief Executive Officer, the President or by these
Bylaws.
After fixing a record date for a meeting, the Secretary shall prepare an
alphabetical list of the names of all of the Corporation's shareholders who are
entitled to notice of a shareholders' meeting, which list shall be arranged by
voting group and class of stock, if applicable, and show the address and number
of shares held by each shareholder. The list must be available for inspection by
any shareholder, for any purpose germane to the meeting, beginning ten (10)
business days before the meeting and shall continue to be available throughout
the meeting at the place indicated in the meeting notice in the city where the
meeting is held.
Section 5.12. Assistant Secretaries. It shall be the duty of the Assistant
Secretaries, if any, to assist the Secretary in the performance of his or her
duties and generally to perform such other duties as may be delegated to them by
the Board of Directors.
Section 5.13. Chief Financial Officer. The Chief Financial Officer shall keep
and maintain, or cause to be kept and maintained, adequate and correct books and
records of account of the Corporation. He or she shall receive and deposit all
moneys and other valuable belongings of the Corporation in the name and to the
credit of the Corporation and shall disburse the same and only in such manner as
the Board of Directors or the appropriate officer of the Corporation may from
time to time determine, shall render to the Board of Directors, the Chairman of
the Board, the Chief Executive Officer and the Chief Operating Officer, whenever
any of them may request it, an account of all his or her transactions as Chief
Financial Officer and of the financial condition of the Corporation, and shall
perform such additional duties as the Board of Directors or the Chairman of the
Board may require.
Section 5.14. Treasurer. The Treasurer shall have such duties as may be
specified by the Chief Financial Officer to assist the Chief Financial Officer
in the performance of his or her duties.
Section 5.15. Assistant Treasurer. It shall be the duty of the Assistant
Treasurers, if any, to assist the Treasurer in the performance of his or her
duties and generally to perform such other duties as may be delegated to them by
the Board of Directors.
Section 5.16. Corporate Bank Accounts. Bank accounts in the name of the
Corporation
<PAGE> 14
may be opened without the approval of the Board of Directors if opened with the
consent of both the Chief Executive Officer and the Chief Financial Officer. The
Chief Financial Officer shall inform the Board of Directors of any bank account
opened by the Chief Executive Officer and Chief Financial Officer pursuant to
the authority granted in this Section 5.16 at the next meeting of the Board of
Directors.
Section 5.17. Transfers of Authority. In case of the absence of any officer of
the Corporation, or for any reason that the Board of Directors may consider
sufficient, the Board of Directors may transfer the powers or duties of that
officer to any other officer or to any director or employee of the Corporation,
provided a majority of the Board of Directors concurs.
ARTICLE VI
MISCELLANEOUS
Section 6.01. Record Date and Closing Stock Books. The Board of Directors may
fix a time in the future, as a record date for the determination of the
shareholders entitled to notice of and to vote at any meeting of shareholders,
or entitled to receive any dividend or distribution, or any allotment of rights,
or to exercise rights in respect to any change, conversion or exchange of
shares. The record date so fixed shall not be more than sixty (60) days prior to
the date of the meeting or event for the purposes of which it is fixed. when a
record date is so fixed, only shareholders of record on that date shall be
entitled to notice of and to vote at the meeting, or to receive the dividend,
distribution or allotment of rights, or to exercise the fights, as the case may
be, notwithstanding any transfer of any shares on the books of the Corporation
after the record date. The Board of Directors may close the books of the
Corporation against transfers of shares during the whole or any part of the
sixty (60) day period.
Section 6.02. Stock List. A list of all shareholders entitled to vote at any
meeting of the shareholders, arranged in alphabetical order by voting group and
class of stock, if applicable, and showing the address of each such shareholder
and the number of shares registered in his or her name, shall be open to the
examination of any such shareholder, for any purpose germane to the meeting,
during ordinary business hours for a period of at least ten (10) business days
before the meeting at the place appointed in the notice of the meeting, or if
not so specified, at the Corporation's primary place of business, which list
shall continue to be available throughout the meeting at the place indicated in
the meeting notice in the city where the meeting is held.
Section 6.03. Checks, Drafts, etc. All checks, drafts, bonds, bills of exchange
or other Orders for payment of money, notes or other evidences of indebtedness
issued in the name of or payable to the Corporation shall be signed or endorsed
by such person or persons and in such manner as, from time to time, shall be
determined by resolution of the Board of Directors.
Section 6.04. Contracts, etc.; How Executed. The Board of Directors, except as
in these Bylaws otherwise provided, may authorize any officer(s) or agent(s) to
enter into any contract or execute any instrument or document in the name of and
on behalf of the Corporation, and the authority may be general or confined to
specific instances. Unless otherwise specifically determined by the Board of
Directors or otherwise required by law, formal contracts, promissory notes and
other evidences of indebtedness, deeds of trust, mortgages and certificates for
shares of stock owned by the Corporation shall be executed, signed or endorsed
by the Chief Executive Officer, President (or any Vice President) and by the
Secretary (or any Assistant Secretary) or the Treasurer (or any Assistant
Treasurer). The Board of Directors may, however, authorize any one ( I ) of
these officers to sign any of such instruments, for and on behalf of the
Corporation, without necessity of countersignature; may designate officers or
employees of the Corporation, other than those named above, who may, in the none
of the Corporation, sign such instruments; and may authorize the use of
facsimile signatures for any of such persons. No officer, agent or employee
shall have any power or authority to bind the Corporation by any contract or
engagement or to pledge its credit to render it liable for any purpose or to any
amount except as specifically authorized in these Bylaws or by the Board of
Directors in accordance with these Bylaws.
<PAGE> 15
Section 6.05. Representation of Shares. The Chairman of the Board, the Chief
Executive Officer, the Chief Operating Officer or the President (or any Vice
President) and the Secretary (or any Assistant Secretary) of the Corporation are
authorized to vote, represent and exercise on behalf of the Corporation all
rights incident to any and all shares of any other corporation or corporations
standing in the none of the Corporation. The authority herein granted to these
officers to vote or represent on behalf of the Corporation any and all shares
held by the Corporation in any other corporation or corporations may be
exercised either by these officers in person or by any persons authorized so to
do by proxy or power of attorney duly executed by said officers.
Section 6.06. Inspection of Bylaws. The Corporation shall keep in its registered
office for the transaction of business the original or a copy of these Bylaws as
amended or otherwise altered to date, certified by the Secretary, which shall be
open to inspection by the shareholders at all reasonable times during office
hours.
ARTICLE VII
AMENDMENTS
Section 7.01. Power of Shareholders. New Bylaws may be adopted or these Bylaws
may be amended or repealed by the vote or written assent of shareholders
entitled to exercise a majority of the voting power of the Corporation, unless a
greater number is required by law, by the Corporation's Articles of
Incorporation or by these Bylaws.
Section 7.02. Power of Directors. Subject to the right of the shareholders as
provided in Section 7.01 hereof to adopt, amend or repeal Bylaws, Bylaws for the
Corporation may be adopted, amended or repealed by the Board of Directors.
CERTIFICATE OF SECRETARY OF
HAND BRAND DISTRIBUTION, INC.
I, David M Taggart, hereby certify:
1. That I am the duly elected secretary of Hand Brand Distribution, Inc.
2. That the foregoing Amended and Restated Bylaws, comprising eighteen (14)
pages, excluding this page, are the Bylaws of Hand Brand Distribution, Inc. as
duly adopted at a meeting of the Board of Directors thereof duly held on the
21st day of August, 1996,
IN WITNESS WHEREOF, I have subscribed my name this 21st day of August, 1996.
David M. Taggart, Secretary
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