As filed with the Securities and Exchange Commission on November 12, 1998
File No. 333-
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-1
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
NORDIC EQUITY PARTNERS CORP.
(Exact name of registrant as specified in its charter)
<TABLE>
<CAPTION>
<S> <C> <C>
Delaware 5090 13-3853305
(State or other jurisdiction (Primary Standard Industrial (I.R.S. Employer
of incorporation or organization) Classification Code Number) Identification No.)
</TABLE>
135 West 50th Street
New York, New York 10020
(212) 664-1200
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive
offices)
Bjorn Nysted
President & Chief Executive Officer
Nordic Equity Partners Corp.
135 West 50th Street
New York, New York 10020
(212) 664-1200
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Copies to:
<TABLE>
<CAPTION>
<S> <C>
Richard A. Friedman, Esq. Jay M. Kaplowitz, Esq.
Sichenzia, Ross & Friedman LLP Gersten, Savage, Kaplowitz
135 West 50th Street & Fredericks, LLP
New York, New York 10020 101 E. 52nd Street
(212) 664-1200 New York, New York 10022-6102
Fax: (212) 664-7329 (212) 752-9700
Fax: (212) 980-5192
</TABLE>
Approximate date of proposed sale to the public:
As soon as practicable after the effective date of this Registration
Statement.
If any securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. |X|
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. |_|
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If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. |-| If delivery of the prospectus is expected to be made
pursuant to Rule 434, please check the following box. |_|
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
Maximum Maximum
Title of Each Offering Aggregate Amount of
Class Securities Amount Being Price Per Offering Registration
Being Registered Registered Security(1) Price(1) Fee
Common Stock, $.001 par
<S> <C> <C> <C> <C>
value(2) 1,265,000 $ 5.00 $ 6,325,000 $1,865.88
Common Stock Purchase
Warrants(3) 1,897,500 $ .10 189,750 55.98
Common Stock $.001
par value(4) 1,897,500 $ 6.00 11,385,000 3,358.58
Common Stock $.001
par value(5) 132,570 $ 5.00 662,850 195.54
Underwriter's Warrants(6) 1 -- 10 (7)
Common Stock, $.001
par value(8) 110,000 $ 6.00 660,000 194.70
Common Stock Purchase
Warrants(9) 165,000 $ .12 19,800 5.84
Common Stock, $.001
par value(10) 165,000 $ 6.00 990,000 292.05
------- ------ ---------- --------
Totals 20,232,410 $5,968.57
========== =========
</TABLE>
(1) Total estimated solely for the purpose of determining the registration
fee.
(2) Includes 100,000 shares of Common Stock being sold by certain principal
stockholders of the Company (the "Principal Stockholders") and 165,000 shares of
Common Stock subject to sale upon exercise of the Underwriters' Over-allotment
Option granted to the Underwriters by the Company.
(3) Includes 247,500 Redeemable Common Stock purchase warrants (the
"Warrants") subject to sale upon exercise of the Underwriters' Over-allotment
Option granted to the Underwriters.
(4) Issuable upon exercise of the Warrants, together with such
indeterminate number of securities as may be issuable by reason of anti-dilution
provisions contained therein.
(5) Includes 132,570 shares of Common Stock being sold by certain Selling
Stockholders (the "Selling Stockholders").
(6) Represent warrants to be issued to the Underwriters to purchase 110,000
shares of Common Stock and 165,000 Warrants (the "Underwriters' Warrants"). See
"Underwriting."
(7) No fee due pursuant to Rule 457(g).
(8) Represents shares of Common Stock issuable upon the exercise of the
Underwriters' Warrants, together with such indeterminate number of securities as
may be issuable by reason of anti-dilution provisions contained therein.
(9) Represents Warrants issuable upon exercise of the Underwriters'
Warrants.
ii
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(10)Represents shares of Common Stock issuable upon the exercise of
Warrants issuable upon exercise of the Underwriters' Warrants, together with
such indeterminate number of securities as may be issuable by reason of
anti-dilution provisions contained therein.
The Registrant hereby amends this registration statement on such date
or dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this registration
statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the registration statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
iii
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NORDIC EQUITY PARTNERS CORP.
CROSS-REFERENCE SHEET
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<CAPTION>
Form S-1 Item Number and Caption Captions In Prospectus
<S> <C>
1. Front of Registration Statement and Outside
Front Cover of Prospectus...................................................... Cover Page
2. Inside Front and Outside Back Cover Pages of
Prospectus..................................................................... Cover Page, Inside
Cover Page, Outside
Back Page
3. Summary Information and Risk Factors........................................... Prospectus Summary,
Risk Factors
4. Use of Proceeds................................................................ Use of Proceeds
5. Determination of Offering Price................................................ Cover Page,
Underwriting
6. Dilution....................................................................... Dilution
7. Selling Securityholders........................................................ Selling Stockholders
8. Plan of Distribution........................................................... Prospectus Summary,
Underwriting
9. Legal Proceedings.............................................................. Business
10. Directors, Executive Officers, Promoters and
Control Persons................................................................ Management, Principal
Stockholders
11. Security Ownership of Certain Beneficial
Owners and Management.......................................................... Principal Stockholders
12. Description of Securities...................................................... Description of
Securities
13. Interest of Named Experts and Counsel.......................................... Legal Matters; Experts
14. Disclosure of Commission Position on
Indemnification for Securities Act Liabilities................................. Management
15. Organization Within Last Five Years......................................... . Prospectus Summary,
Business
16. Description of Business........................................................ Prospectus Summary,
Business
17. Management's Discussion and Analysis or Plan
of Operation................................................................... Management's Discussion
and Analysis of
Financial Condition and
Results of Operations
18. Description of Property........................................................ Business
19. Certain Relationships and Related Transactions................................. Certain Transactions
iv
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20. Market for Common Equity and Related
Shareholder Matters............................................................ Front Cover Page,
Description of
Securities
21. Executive Compensation......................................................... Management
22. Financial Statements........................................................... Financial Statements
23. Changes in and Disagreements with Accounts on
Accounting and Financial Disclosure............................................ Change in Auditors
</TABLE>
v
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SUBJECT TO COMPLETION, DATED November 12, 1998
NORDIC EQUITY PARTNERS CORP.
1,100,000 Shares of Common Stock
1,650,000 Redeemable Common Stock Purchase Warrants
This is an initial public offering of shares of Common Stock and
redeemable common stock purchase warrants of Nordic Equity Partners Corp., a
Delaware corporation. Of the 1,100,000 shares of Common Stock offered hereby,
1,000,000 shares are being sold by the Company and 100,000 shares are being sold
by certain Principal Stockholders of the Company. The Company will not receive
any of the proceeds from the sale of shares by the Principal Stockholders.
This Prospectus also relates to an offering of 132,570 shares of common
stock of Nordic Equity Partners Corp. by certain Selling Stockholders. The
Company will not receive any proceeds from the sale of shares by the Selling
Stockholders.
No public market for the Company's shares and warrants currently
exists. The offering prices may not reflect the market price of the Company's
shares and warrants after the offering.
The Company has applied for the listing of the Common Stock and
Warrants on the NASDAQ SmallCap Market under the symbols "NEPC" and "NEPCW."
THE SECURITIES OFFERED HEREBY INVOLVE A HIGH DEGREE OF RISK AND IMMEDIATE
AND SUBSTANTIAL DILUTION. YOU SHOULD PURCHASE SHARES ONLY IF YOU CAN AFFORD A
COMPLETE LOSS. SEE RISK FACTORS BEGINNING ON PAGE 9.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
Underwriting Proceeds
Price to Discounts and Proceeds to to Principal
Public Commissions(1) Company(2) Stockholders(3)
<S> <C> <C> <C> <C>
Per Share $5.00 $.50 $4.50 $4.50
Per Warrant $ .10 $.01 $ .09 --
Total(4) $5,665,000 $566,500 $4,648,500 $450,000
</TABLE>
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS OF THIS INITIAL PUBLIC
OFFERING MAY EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF
THE SHARES AT LEVELS ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH STABILIZATION, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
Mason Hill & Co., Inc.
The date of this Prospectus is , 1998.
1
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AVAILABLE INFORMATION
The Company has filed with the Washington, D.C. office of the
Securities and Exchange Commission a Registration Statement (the "Registration
Statement") under the Securities Act with respect to the securities offered by
this Prospectus. This Prospectus does not contain all the information set forth
in the Registration Statement, certain parts of which are omitted in accordance
with the rules and regulations of the Commission. For further information with
respect to the Company and this Offering, reference is made to the Registration
Statement, including the exhibits filed therewith. Statements contained in the
Prospectus as to the contents of any contract or other document are not
necessarily complete and reference is made to each such contract or other
document filed as an exhibit to the Registration Statement, each such statement
being qualified in all respects by such reference.
The Company is subject to the reporting requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"). Reports and other
information filed by the Company can be inspected, without charge, at prescribed
rates from the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, or
at the following Regional Offices of the Commission, at Citicorp, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661 or at Northeast Regional
Office, 7 World Trade Center, New York, New York 10048. The Commission maintains
a World Wide Website that contains reports, proxies and information statements
and other information regarding issuers that file electronically with the
Commission. The Commission's World Wide Website is located at
http://www.sec.gov.
The Company intends to distribute to its stockholders annual reports
containing financial statements audited and reported upon by its independent
public accountants after the close of each fiscal year, and will make such other
periodic reports as the Company may determine to be appropriate or as may be
required by law. The Company's fiscal year ends December 31st of each year.
ENFORCEMENT OF CIVIL LIABILITIES
The Company was incorporated in the State of Delaware. However, all of
the Company's directors and officers reside outside the United States (in Sweden
and Norway) and substantially all of the assets of the Company and of such
persons are located outside the United States. Service of process may be
effected upon the Company through the Company's American counsel, Sichenzia,
Ross & Friedman LLP, in New York, but it may be difficult for investors to
effect service of process within the United States upon non-resident officers
and directors. Moreover, it may not be possible to enforce any judgments
obtained against the Company or such persons in the United States courts
predicated upon the civil liability provisions of the federal securities laws or
other laws of the United States or any state thereof in jurisdictions outside
the United States.
The Company has been advised by its Swedish counsel (Falks Advokatbyra)
and its Norwegian counsel (Komnaes, Huser & Co.), that (1)there is no treaty
between Sweden and the United States or between Norway and the United States,
and, accordingly, Swedish and Norwegian courts would have no obligations to
enforce judgments of the United States obtained in actions against the Company
and/or its officers and directors predicated upon the civil liabilities
provisions of the Federal securities laws, and (2) in original actions brought
in courts in jurisdictions located outside the United States, there is doubt as
to the enforceability of liabilities predicated upon the civil liability
provisions of the U.S. securities laws. Swedish and Norwegian courts, in
original actions to enforce liabilities against such persons predicated solely
upon the Federal securities laws would apply the "Lex loci delicti-principle"
pursuant to which the law of the country in which damage has been done will be
applied by Swedish and Norwegian courts. This principle is complemented by the
"Irma Mignon-formula" pursuant to which the court shall apply the law of the
country to which the issue in question has the closest connection. It is the
opinion of Swedish and Norwegian counsel to the Company that both the "Lex loci
delicti-principle" and the "Irma Mignon-formula"
2
<PAGE>
will most likely lead to the use of United States laws by Swedish and Norwegian
Courts in a situation where a Swedish and Norwegian officer/director of a
company located in the United States has caused damage to such company. It is,
however, not possible, with absolute certainty, to predict the courts decision
on this choice of law issue, however, Swedish and Norwegian counsel to the
Company consider the risks of a possible adverse court determination to be
considerably less than 50%.
-----------
The Company's executive office is located at 135 West 50th Street, 20th
Floor, New York, New York 10020 and its telephone number at that address is
(212) 664-1200.
-----------
In April 1998, the Company incorporated Nortelco Nordic AS, a Norwegian
corporation, for the purpose of becoming the parent holding company for all of
the company's subsidiaries which are involved in the importation and
distribution of electrical, electronic and audio visual products. Prior to the
completion of this offering, the Company intends to complete a corporate
restructuring which will result in the Company having the following corporate
structure:
[graphic omitted]
As used in this Prospectus, the "Company" means Nordic Equity Partners
Corp., a Delaware corporation, and its two wholly-owned subsidiaries, Nortelco
Nordic AS, a Norwegian corporation, and Storebro Machine AB, a Swedish
corporation, as well as the three wholly-owned subsidiaries of Nortelco Nordic
AS, Nortelco System Teknikk AS, a Norwegian corporation, Nortelco AB, a Swedish
corporation and Nortelco AS, a Norwegian corporation, and Nortelco AS's
wholly-owned subsidiary Brannteknikk AS, a Norwegian corporation
The "Nortelco Group" means Nortelco Nordic AS, Nortelco System Teknikk
AS, Nortelco AB, Nortelco AS and Brannteknikk AS. All of the companies in the
Nortelco Group engage in the importation and distribution of products for use in
the electronic, electrical and audio visual industries. "Storebro" means
Storebro Machine AB.
3
<PAGE>
PROSPECTUS SUMMARY
This summary highlights information contained elsewhere in this
Prospectus. This summary is not complete and may not contain all of the
information that you should consider before investing in the Common Stock and
Warrants. You should read the entire Prospectus carefully, including the "Risk
Factors" section and the financial statements and the notes to those statements.
All information in this Prospectus has been adjusted to reflect an approximate
1.473-for-one stock split of the Common Stock effected in November 1998.
The Company
Nordic Equity Partners Corp. imports and distributes products for use
in the electronic, electrical and audio visual industries, and designs, installs
and sells complete, customized conference rooms and auditoriums and provides
after sale service and maintenance support to its customers. The Company also
designs, assembles and distributes lathes, sells lathe spare parts to existing
lathe owners, and services, repairs and overhauls lathes owned by third parties.
All of the Company's business and sales are conducted in the geographic area of
Scandinavia (Norway, Sweden and Finland).
Electrical, Electronic and Audio Visual Products
The Company imports and distributes products for use in the electronic,
electrical and audio visual industries. The Company also designs, installs and
sells complete, customized conference rooms and auditoriums and provides after
sale service and maintenance support to its customers.
Importation and Distribution of Products
The Company does not manufacture any of the electrical, electronic or
audio visual products that it distributes. The Company imports more than 13,000
products for distribution to over 1,000 customers throughout Scandinavia. The
Company purchases its products from over fifty (50) non-affiliated third party
manufacturers worldwide, including Germany and the United States. Substantially
all of the Company's products are sold by its internal sales force which
consists of approximately fifty (50) full time salespersons based in Norway and
Sweden.
The Company's strategy is to have its product line consist
substantially of supplemental, or add-on, products to other high volume
products. Such products are generally highly specific products which are
marketed and sold to a very narrow part of the market. Accordingly, the Company
believes that its product line consists of "niche" products. The products sold
by the Company range in price from $1.00 to $100,000.
The Company believes that it has a competitive advantage over foreign
product manufacturers who consider entering into the Scandinavian markets or
other distributors that are already located or doing business in Scandinavia due
to the following factors:
o Many foreign product manufacturers avoid establishing and
maintaining new operations in Scandinavian countries because
of the start-up costs associated with new operations and the
local competition which already exists.
o The Company employs salesmen who are either engineers or have
engineering backgrounds and who understand the clients' uses
and needs for the products.
o The Company believes that it can distribute products for
manufacturers more efficiently and inexpensively because it
has already established operations in the Scandinavian
countries.
Electronics Products
4
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The Company purchases and resells approximately 5,000 different
products in the electronics industry, including components, telecommunication
and datacommunication equipment, and studio and communication equipment.
Electrical Products
The Company imports and distributes approximately 7,000 products for
use in the electrical industry. The price range that the Company sells products
to its customers in this industry is from $1 to $1,000. The Electrical products
sold by the Company generally are divided into three main areas: explosion
prevention equipment and heavy-duty lighting equipment, passive and active fire
protection equipment, and tools and materials for electrical installations.
Audio Visual Products
The Company sells approximately 1,000 products in the audio visual
industry. The Company's audio visual products include audio equipment (AV
cassette recorders, microphones, sound systems and cassettes) overhead
projectors and accessories and related equipment (such as projection screens,
portable and fixed video projectors and data interface equipment), conference
room and auditorium furniture and related equipment and light-dimming systems.
The price range for such products generally range from $100 to $80,000. The
Company also provides consulting services with clients regarding
previously-built conference rooms and auditoriums.
Design, Assembly and Distribution of Lathes
The Company designs, assembles and distributes lathes. The lathes which
the Company designs, assembles, and distributes are principally used as metal
cutting machine tools. The lathes may, however, be specially designed to work
with plastic or other materials. Metal cutting machine tools utilize a process
in which a part or finished product is generated or shaped by rotating the
workpiece. Lathing is a machining process whereby a surface is shaped with a
tool contained in the lathe which is applied to the rotating workpiece which is
fitted in the lathe.
The Company sells seven different types of lathes which include both
computer numerically controlled ("CNC") lathes and traditional manually-operated
lathes. The Company distributes its lathes mainly to customers in Germany and
Sweden, through its own and independent sales representatives. The prices of its
lathe products range from $18,000-$360,000. The Company also sells lathe spare
parts to existing lathe owners, and services, repairs and overhauls lathes owned
by third parties.
Strategy
The Company's growth strategy is to expand its operations through
aquisitions and by expanding its product lines.
Acquisition Strategy
The Company intends to acquire businesses or assets that are
complementary to the Company's business. In particular, the Company intends to
seek candididates which either have (i) established agency and distribution
agreements or (ii) product groups in niche areas which the Company is not
presently engaged or are complementary to the products currently sold by the
Company.
Expansion of Products Offered
The Company will seek to enter into new agency and distribution
agreements in order to provide its sales force with additional products to sell
to its existing customers and to procure an expanded customer base.
5
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The Offering
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<CAPTION>
Securities Offered By:
<S> <C>
The Company 1,000,000 shares of Common Stock and
1,650,000 Warrants.
The Principal Stockholders 100,000 shares of Common Stock.
The Selling Stockholders 132,570 shares of Common Stock.
Common Stock Outstanding Before
Offering 2,800,000 shares.
Common Stock Outstanding After
Offering(1)(2) 3,800,000 shares.
Warrants Outstanding After Offering 1,650,000 Warrants.
Exercise Terms Each Warrant entitles the holder thereof to
purchase one share of Common Stock for
$6.00, during the five (5) year period
commencing one year after the Effective
Date, subject to adjustment in certain
circumstances. See "Description of
Securities--Warrants".
Expiration Date , 2004 (six
years after the
Effective Date).
Redemption Redeemable by the Company, in whole or in
part, at a price of $.05 per Warrant,
commencing one year after the Effective
Date upon not less than thirty (30) days
prior written notice to the holders of such
Warrants, provided that the closing bid
price (as defined) of the Company's Common
Stock for the twenty (20) consecutive
trading days immediately prior to the date
on which the notice of redemption is given,
shall have exceeded $9.25 per share.
Use of Proceeds Repayment of indebtedness, acquisition of
businesses and working capital and other
general corporate purposes. See "Use of
Proceeds".
Risk Factors Investment in the securities offered hereby
involves a high degree of risk and
immediate substantial dilution. See "Risk
Factors" and "Dilution".
Proposed NASDAQ Symbols:(3)
Common Stock NEPC
Warrants NEPCW
</TABLE>
- ------------------
(1) Does not include (i) 165,000 shares of Common Stock subject to the
Underwriters' Over-allotment Option; (ii) 110,000 shares of Common
Stock and 165,000 Warrants issuable upon the exercise of the
Underwriters' Warrants; or (iii) 250,000 shares of Common Stock
reserved for issuance pursuant to the Company's 1998 Stock Option Plan.
See "Management", "Underwriting" and "Description of Securities".
(2) Does not include 247,500 Warrants subject to the Underwriters' Over-
allotment Option.
6
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(3) The proposed trading symbols do not imply that a liquid and active
market will be developed or sustained for the securities upon
completion of the Offering.
7
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SUMMARY FINANCIAL DATA
The summary financial information set forth below is derived from and
should be read in conjunction with the consolidated financial statements of the
Company, including the notes thereto, appearing elsewhere in this Prospectus.
Statement of Operations Data:
<TABLE>
<CAPTION>
Years Ended Six Months Ended
December 31, June 30,
(unaudited)
1994 1995 1996 1997 1997 1998
---- ---- ---- ---- ---- ----
(In thousands, except for per share amounts)
<S> <C> <C> <C> <C> <C> <C>
Net Sales 5,343 25,333 26,564 25,561 12,473 12,798
Gross Profit 1,649 10,075 10,673 10,125 4,978 5,396
Income from
operations 442 795 840 406 254 646
Net Income (loss) 300 247 153 (124) (24) 240
Earnings Per Share:
Basic and Diluted 44.11 27.65 .14 (.04) (0.01) .13
Weighted average
number of shares
outstanding 6,801 8,932 1,055,582 2,800,000 2,800,000 2,800,000
</TABLE>
<TABLE>
<CAPTION>
Balance Sheet Data:
Years Ended Six Months Ended
December 31, June 30,
1995 1996 1997 1998 1998
(In thousands, except for per share amounts) Actual As Adjusted(1)
(unaudited)
<S> <C> <C> <C> <C> <C>
Working capital(2) 503 1,067 1,460 1,866 5,755
Total assets 12,258 12,757 12,349 12,759 15,458
Long-term
liabilities 1,193 379 1,163 1,279 1,279
Total Liabilities 9,861 9,239 9,428 9,678 8,488
Totalshareholders'
equity 2,397 3,518 2,921 3,081 6,970
</TABLE>
- --------------
(1) Reflects the issuance of the 1,000,000 shares of Common Stock and
1,650,000 Warrants offered hereby and the application of the net
proceeds therefrom.
(2) Working capital represents current assets less current liabiliities.
8
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RISK FACTORS
You should carefully consider the following factors and other
information in this Prospectus before deciding to invest in the shares of Common
Stock and Warrants.
DEPENDENCE BY THE COMPANY ON THIRD PARTY MANUFACTURERS AND SUPPLIERS
The Company does not own or operate any manufacturing or production
facilities with respect to the electrical, electronic or audio visual products
that it sells. The Company distributes electrical, electronic and audio visual
products which are manufactured and supplied by third party companies.
Accordingly, the Company depends on third party manufacturers and suppliers for
its products. Typically, the Company has exclusive agreements with such
manufacturers and suppliers. However, these companies could terminate their
relationships with the Company at any time. The Company believes it has good
relationships with its manufacturers and suppliers and that it would not
experience delays in locating alternative sources for such products. The loss of
business from a number of manufacturers and suppliers could have a material
adverse affect on the Company's operations. See "Management's Discussion and
Analysis of Financial Conditions and Results of Operations" and "Business."
NEED FOR ADDITIONAL FINANCING
The Company believes that the net proceeds from the sale of the Common
Stock and Warrants in this Offering will be sufficient to fund the Company's
operations for at least one year following the completion of this Offering. A
large portion of the funds received by the Company ($2,000,000) will be used to
acquire companies with related and complementary businesses. The continued
expansion and operation of the Company's business beyond this one year period
may be dependent upon its ability to obtain additional financing. No assurance
can be given that the funds allocated for acquisitions will be sufficient to
complete any acquisition proposed. The amount of funds required for any proposed
acquisition will depend upon the nature, size and structure of such acquisition.
In the event that the Company requires additional funds for any proposed
acquisition, the Company may be dependent upon its ability to obtain additional
financing to complete such acquisition. The Company may not be able to obtain
such additional financing on acceptable terms or at all. In the event that the
Company is unable to obtain additional financing, the Company will not be able
to achieve all of its growth and expansion plans. See "Use of Proceeds" and
"Managements's Discussion and Analysis of Financial Condition and Results of
Operations."
RISKS RELATED TO SCANDINAVIA
The Company's principal operations are located in Norway, Sweden and
Finland, and the substantial portion of the Company's revenues are derived from
activities located in such countries. As a result, the economic, political,
legal and social conditions in Norway, Sweden and Finland may have a serious
adverse impact on the Company's results of operations and financial condition.
While the Company has not, to date, experienced any material adverse effects due
to such risks, there can be no assurance
9
<PAGE>
that events will not occur in the future which could result in changes or
reforms in the current political, economic, legal or social conditions, which
could have a material adverse effect on the Company's operations.
DEPENDENCE ON FOREIGN MANUFACTURING
A substantial portion of the Company's business consists of sales of
products manufactured outside of Scandinavia. Foreign manufacturing is subject
to a number of risks, including transportation delays and interruptions,
political and economic disruptions, tariffs and import/export controls and
changes in governmental policies. To date, the Company has not experienced any
such disruptions or added costs. However, the occurrence of any of these events
could have a material adverse effect on the Company's business and financial
results. See "Business."
SENSITIVITY TO ECONOMIC AND OTHER CONDITIONS
The Company's businesses may be affected by changes in economic conditions.
A downturn in the economy in one or more markets served by the Company could
have a material adverse effect on the Company's operations. See "Management's
Discussion and Analysis of Financial Conditions and Results of Operations."
ACQUISITION STRATEGY
The Company's growth strategy includes the acquisition of entities with
businesses and/or assets complementary to the Company's business. The Company
does not currently have any specific acquisitions identified. The Company
intends to seek acquisition candidates in selected markets. No assurance can be
given that the Company will be able to identify and acquire appropriate
businesses or obtain financing for such acquisitions on satisfactory terms. The
process of integrating acquired businesses into the Company's operations may
result in unforeseen difficulties and may require a disproportionate amount of
resources and management's attention. Future acquisitions may be financed
through the issuance of Common Stock, which may dilute the Company's
stockholders, or through the incurrence of additional indebtedness. Furthermore,
there can be no assurance that competition for acquisition candidates will not
escalate. This increase in competition could result in greater costs of making
acquisitions. See "Management's Discussion and Analysis of Financial Condition
and Results of Operations."
COMPETITION
The Company competes in markets that are extremely competitive and
sensitive to changing consumer preferences and demands. The Company competes
against many companies that are substantially larger and have substantially
greater financial, employee and marketing resources than the Company. As a
result, these competitors, as well as their products, are more widely recognized
by the public which may give them a competitive advantage in the market.
Moreover, these competitors have the ability to develop and market products at a
more competitive price than those distributed by the Company. The Company's
competitors in the sale of electrical, electronic and audio visual products
include Hawke, Ltd. (England), Group Schneider, Ltd. (France), Wandel &
Golterman GmbH (Germany), Asea Brown Bowery AS (Norway) and Audio Grafiska AS
(Norway). The Company's competitors in the sale of lathes include Emco Maier
GmbH (Austria), Gildemeister N.E.F.-Drehmaschinen GmbH (Germany), A. Monforts
GmbH & Co. Maschinenfabrik (Germany), Traub AG (Germany), Yamazaki Mazak
Corporation (Japan), Okuma Machinery Works Ltd. (Japan) and Mori Seiki Co., Ltd.
(Japan). No assurances can be given that the Company will be able to compete in
its respective markets. See "Business."
FOREIGN CURRENCY AND FOREIGN EXCHANGE REGULATION
The Company's sales are invoiced primarily in the Norwegian Krone, the
Swedish Krone and the Finish Mark. An increasing value of the Norwegian Krone,
the Swedish Krone and the Finish Mark would make the Company's products more
expensive to its buyers. Fluctuations in exchange rates of the Norwegian Krone,
the Swedish Krone and
10
<PAGE>
the Finish Mark against foreign currencies and the translation of such
currencies into U.S. dollars for determining the Company's financial statements
could adversely affect the Company's results and operations. Furthermore, there
can be no assurances that the Company will be able to forecast and adjust to a
rapid fluctuation in the international currency market.
DEPENDENCE ON SALES OF LATHES
The Company's revenues from the service and sale of lathes and lathe parts
were $3,900,000 for the year ended December 31, 1997 and approximately
$1,800,000 for the six months ended June 30, 1998. A substantial reduction in
lathe sales could have a material adverse effect on the Company's total
revenues. See "Business."
LACK OF EXPERIENCE OF THE REPRESENTATIVE
Mason Hill & Co, Inc., the representative of the several underwriters,
was organized in March 1995, was first registered as a broker dealer in December
1995, and became a member firm of the NASD in December 1995. The Representative
is principally engaged in retail brokerage and market making activities and
various corporate finance projects. Although the Representative has acted as a
placement agent in private offerings and has participated as a member of the
underwriting syndicate or as a selected dealer in public offerings, it only has
acted as the lead managing underwriter in three prior public offerings and has
co-managed two other public offerings. The Representative's lack of experience
as a lead managing underwriter of public offerings could adversely affect the
Offering and the subsequent development of a liquid public trading market in the
Company's securities.
BROAD DISCRETION IN APPLICATION OF PROCEEDS
Approximately 64.5% of the net proceeds of this Offering will be applied to
acquisitions and working capital. Accordingly, management will have a broad
discretion over the use of proceeds. See "Use of Proceeds."
DEPENDENCE ON KEY PERSONNEL
The Company believes that its ability to successfully implement its
business strategy and to operate profitably depends on the continued employment
of its senior management team led by Mr. Bjorn Nysted. If Mr. Nysted or other
members of the management team become unable or unwilling to continue in their
present positions, the Company's business and financial results could be
materially adversely affected. See "Management."
PRODUCT LIABILITY
The Company has approximately $500,000 in product liability insurance with
respect to the sale of electrical, electronic and audio visual products. The
Company also has approximately $2,000,000 of product liability insurance with
respect to the manufacture of lathes. To date, the Company has not been a party
to any material product liability claims asserted against it, and believes its
product liability insurance is sufficient. However, no assurance can be given
that in the future a claim will not be made against the Company and that, if
made, such insurance will be sufficient.
CONTROL BY MANAGEMENT
Following this Offering, management of the Company beneficially owns
approximately 59.7% of the outstanding Common Stock. Accordingly, management of
the Company will have the power to elect a majority of the directors, appoint
management and approve certain actions requiring the approval of a majority of
the Company's stockholders. See "Principal Stockholders" and "Description of
Securities."
<PAGE>
ANTI-TAKEOVER PROVISIONS
Certain of the provisions of the Company's Certificate of Incorporation
could make it more difficult for a third party to acquire control of the
Company, even if such change in control would be beneficial to stockholders. The
Certificate of Incorporation allows the Company to issue preferred stock without
stockholder approval. Such issuances could make it more difficult for a third
party to acquire control of the Company. See "Description of
Securities--Preferred Stock."
SHARES ELIGIBLE FOR FUTURE SALE
The Company currently has 2,800,000 shares of Common Stock outstanding that
are "restricted securities", as that term is defined under Rule 144 promulgated
under the Securities Act of 1933, as amended (the "Securities Act"). In general,
under Rule 144, a person who has satisfied a two-year holding period may, under
certain circumstances, sell within any three month period a number of shares of
Common Stock that does not exceed the greater of 1% of the then outstanding
shares of Common Stock or the average weekly trading volume in such shares
during the four calendar weeks prior to such sale. Rule 144 also permits, under
certain circumstances, the sale of shares without any quantity or other
limitation by a person who is not an affiliate of the Company and who has
satisfied a three-year holding period. Any substantial sale of restricted
securities under Rule 144 could have a significant adverse effect on the market
price of the Company's securities.
Giving effect to the sale of 1,000,000 by the Company and 100,000 shares by
the Principal Stockholders, the Company will have issued and outstanding
3,800,000 shares of its Common Stock, of which 2,700,000 will be "restricted
securities". See "Shares Eligible for Future Sale."
All of the Company's securityholders, on the date hereof, have agreed not
to publicly sell, for a period of two (2) years from the date of this
Prospectus, any shares of the Company's Common Stock without the prior written
consent of the Representative. The Representative's decision whether to release
such individuals from their lock-ups will be dependent upon market conditions,
including the price and volume for the Company's securities, as well as the need
to maintain orderly market conditions.
DILUTION
The initial public offering price per share exceeds the net tangible book
value per share. Accordingly, the purchasers of shares sold in the Offering will
experience immediate and substantial dilution (approximately 68.5%, or $3.42,
per share). See "Dilution."
DIVIDENDS POLICY
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.
To date, no dividends have been declared or paid on the Common Stock, and the
Company does not intend to declare any dividends in the foreseeable future. It
is currently anticipated that earnings, if any, will be used to develop and
finance the Company's proposed business operations. See "Dividend Policy."
LACK OF MARKET FOR COMMON STOCK AND WARRANTS; DETERMINATION OF OFFERING PRICES
Prior to this Offering, there has been no sustained public market for the
Company's Common Stock and no public market for the Company's Warrants. The
Company does not know the extent to which investor interest in the Company will
lead to development of a trading market or how liquid that market might be. The
initial public offering prices of the Common Stock and Warrants and the exercise
price and other terms of the Warrants were determined through negotiations among
the Company and the Underwriter. Investors may not be able to resell their
shares of Common Stock or Warrants at or above the initial public offering
prices. See "Underwriting".
12
<PAGE>
NASDAQ MAINTENANCE REQUIREMENTS; POSSIBLE DELISTING OF SECURITIES FROM
NASDAQ MARKET; RISKS OF LOW-PRICED STOCKS
The Company has applied for listing of the Common Stock and Warrants on
NASDAQ upon the Effective Date. The Commission has approved rules for imposing
criteria for listing of securities on NASDAQ, including standards for
maintenance of such listing. If the Company is unable to satisfy NASDAQ
maintenance criteria for listing in the future, its securities may be delisted
from NASDAQ. In such event, trading, if any, in the Company's securities would
thereafter be conducted in the over-the-counter market in the so-called "pink
sheets" or the NASD's "Electronic Bulletin Board." As a consequence of such
delisting, an investor would likely find it more difficult to dispose of, or to
obtain quotations as to, the price of the Company's securities.
If the Company's Common Stock or Warrants are not listed on Nasdaq
and/or the Boston Stock Exchange, they may become subject to Rule 15g-9 under
the Exchange Act. That rule imposes additional sales practice requirements on
broker-dealers that sell low-priced securities to persons other than established
customers and institutional accredited investors. For transactions covered by
this rule, a broker-dealer must make a special suitability determination for the
purchaser and have received the purchaser's written consent to the transaction
prior to sale. Consequently, the rule may affect the ability of broker-dealers
to sell our shares and may affect the ability of holders to sell shares of the
Company's Common Stock in the secondary market.
PENNY STOCK REGULATION
The Commission defines a "penny stock" to be any equity security that
has a market price of less than $5.00 per share or an exercise price of less
than $5.00 per share, subject to certain exceptions. The penny stock
restrictions will not apply to the Company's Common Stock or Warrants if they
are listed on The Nasdaq SmallCap Market or the Boston Stock Exchange and the
Company provides certain price and volume information on a current and
continuing basis, or meets required minimum net tangible assets or average
revenue criteria. The Company cannot assure you that our shares will qualify for
exemption from these restrictions. If the Company's securities were to become
subject to the regulations applicable to penny stocks, the market liquidity for
the securities could be adversely affected.
POTENTIAL ADVERSE EFFECT OF REDEMPTION OF WARRANTS
The Warrants offered hereby are redeemable, in whole or in part, at a
price of $.05 per Warrant, commencing one year after the Effective Date and
prior to their expiration; provided that (i) prior notice of not less than 30
days is given to the Warrantholders; (ii) the closing bid price of the Company's
Common Stock for the twenty (20) consecutive trading days immediately prior to
the date on which the notice of redemption is given, shall have exceeded $9.25
per share; and (iii) Warrantholders shall have exercise rights until the close
of the business day preceding the date fixed for redemption. Notice of
redemption of the Warrants could force the holders to exercise the Warrants and
pay the Exercise Price at a time when it may be disadvantageous for them to do
so, or to sell the Warrants at the current market price when they might
otherwise wish to hold them, or to accept the redemption price, which may be
substantially less than the market value of the Warrants at the time of
redemption. The Company has agreed to use its best efforts to keep the
registration statement current in connection with any proposed exercise of the
Warrants. Further, the Warrants may not be exercised unless the registration
statement pursuant to the Securities Act covering the underlying shares of
Common Stock is current and such shares have been qualified for sale, or there
is an exemption from applicable qualification requirements, under the securities
laws of the state of residence of the holder of the Warrants. Although the
Company does not presently intend to do so, the Company reserves the right to
call the Warrants for redemption whether or not such underlying shares are not,
or cannot be, registered in the applicable states. Such restrictions could have
the effect of preventing certain Warrantholders from liquidating their Warrants.
Further, in the event the Company does not have a current
13
<PAGE>
registration statement in effect, the Company would be unable to call the
Warrants for redemption. See "Description of Securities--Warrants."
CURRENT PROSPECTUS AND STATE BLUE SKY REGISTRATION REQUIRED TO EXERCISE WARRANTS
Holders of the Warrants will have the right to exercise the Warrants
for the purchase of shares of Common Stock only if a current prospectus relating
to such shares is then in effect and only if the shares are qualified for sale
under the securities laws of the applicable state or states. The Company has
undertaken and intends to file and keep current a prospectus which will permit
the purchase and sale of the Common Stock underlying the Warrants, but there can
be no assurance that the Company will be able to do so. Although the Company
intends to seek to qualify for sale the shares of Common Stock underlying the
Warrants in those states in which the securities are to be offered, no assurance
can be given that such qualification will occur. In addition, purchasers may buy
Warrants in the aftermarket or may move to jurisdictions in which the shares of
Common Stock issuable upon exercise of the Warrants are not so registered or
qualified during the period that the Warrants are exercisable. In such event,
the Company would be unable to issue shares to those persons desiring to
exercise their Warrants unless and until the shares could be registered or
qualified for sale in the jurisdiction in which such purchasers reside, or an
exemption to such qualification exists or is granted in such jurisdiction. The
Warrants may lose or be of no value if a prospectus covering the shares issuable
upon the exercise thereof is not kept current or if such underlying shares are
not, or cannot be, registered in the applicable states. See "Description of
Securities--Warrants."
RELATIONSHIP OF UNDERWRITERS TO TRADING
The Underwriters may act as brokers or dealers with respect to the
purchase or sale of the Common Stock and the Warrants in the over-the-counter
market where each is expected to trade. The Representative also has the right to
act as the Company's exclusive agent in connection with any future solicitation
of warrantholders to exercise their Warrants. Regulation M, which was recently
adopted to replace Rule 10b-6 of the Securities Exchange Act of 1934, as
amended, may prohibit the Representative from engaging in any market-making
activities or solicited brokerage activities with regard to the Company's
securities during a period beginning nine business days prior to the
commencement of any such solicitation and ending on the later of the termination
of such solicitation activity or the termination (by waiver or otherwise) of any
right the Representative may have to receive a fee for the exercise of the
Warrants following such solicitation. As a result, the Representative and
soliciting broker/dealers may be unable to continue to make a market in the
Company's securities during certain periods while the exercise of Warrants is
being solicited. Such a limitation, while in effect, could impair the liquidity
and market price of the Company's securities.
UNDERWRITERS' WARRANTS AND REGISTRATION RIGHTS
In connection with this Offering, the Company has agreed to sell to the
Underwriters, for $10, the Underwriters' Warrants which entitle the Underwriters
to purchase up to 110,000 shares of Common Stock and/or 165,000 Warrants,
respectively. The securities issuable upon exercise of the Underwriters'
Warrants are identical to those offered pursuant to this prospectus. The
Underwriters' Warrants are exercisable at $6.00 and $.12, respectively, for a
period of four years commencing one year from the Effective Date. The exercise
of the Underwriters' Warrants and the Warrants contained in the Underwriters'
Warrants may dilute the value of the shares of Common Stock to be acquired by
holders of the Warrants, may adversely affect the Company's ability to obtain
equity capital, and, if the Common Stock issuable upon the exercise of the
Underwriters' Warrants and the Warrants contained in the Underwriters' Warrants
are sold in the public market, may adversely affect the market price of the
Common Stock. The Underwriters have been granted certain "piggyback" and demand
registration rights for a period of five years from the Effective Date with
respect to the registration under the Securities Act of the securities directly
or indirectly issuable upon exercise of the Underwriters' Warrants. The exercise
of such rights could result in substantial expense to the Company. See
"Underwriting."
14
<PAGE>
EFFECT OF YEAR 2000 ISSUES ON THE COMPANY'S OPERATIONS
Recently, national attention has focused on the potential problems and
costs resulting from computer programs being written using two digits rather
than four to define the year. After December 31, 1999, many computer systems
used today may be unable operate properly because it will recognize the date as
the year 1900 rather than the year 2000. The Company has been assessing this
Year 2000 issue as it relates to its business. Because the Company is dependent
on third party vendors, the Company's review covers both the Company's own
computer systems and the computer systems of the Company's third party vendors
and manufacturers. Failures and interruptions, if any, resulting from the
inability of certain computing systems of third party vendors to recognize the
Year 2000 could have a material adverse effect on the Company's results of
operations. For example, the Company may be unable to process sales
transactions, send invoices or engage in any similar normal business activity.
Although the Company may incur substantial costs in correcting Year 2000 issues,
such costs are uncertain and cannot be estimated at this time.
15
<PAGE>
USE OF PROCEEDS
The net proceeds to the Company from the sale the Securities offered
hereby are estimated to be approximately $3,893,550 ($4,632,832.50 if the
Underwriters' Over-allotment Option is exercised in full) after deducting
underwriting commissions and discounts and other expenses of the Offering. The
Company expects to use the net proceeds approximately as follows:
<TABLE>
<CAPTION>
Approximate
Application of Approximate Percentage of
Net Proceeds Dollar Amount Net Proceeds
<S> <C> <C> <C>
Repayment of Notes(1) $ 834,400 21.4%
Repayment of Indebtedness(2) 550,000 14.1%
Acquisitions(3) 2,000,000 51.4%
Working Capital 509,150 13.1%
---------- -----
Total $3,893,550 100.0%
========== =====
</TABLE>
- --------------------
(1) The Notes which are payable to unaffiliated third parties were
originally payable on the earlier of the closing of this Offering or
February 15, 1998. The holders of the Notes have agreed to extend the
due date on the Notes to the earlier of the closing of this Offering or
November 15, 1998. $142,500 of the principal amount of the Notes,
together with accrued interest thereon, were repaid in November 1998.
The Company has paid all accrued interest on the remaining outstanding
Notes through August 15, 1998. The remaining principal amount of the
Notes of $807,500 bears interest at the rate of 10% per annum. In the
event the Notes are repaid on December 15, 1998, the total amount of
interest to be paid to the holders of the Notes shall be approximately
$26,900. The proceeds of the loans were used for corporate and general
working capital purposes, including the costs incurred in connection
with a previously withdrawn proposed public offering.
(2) The Company intends to use a portion of the proceeds from this Offering
to repay certain loans which were made to the Company and its
subsidiary, Nortelco AS, by Mr. Goran Haggqvist for the purpose of
financing repayment of portions of the Notes, paying interest on the
Notes and paying certain other costs in connection with this Offering.
See "Certain Transactions."
(3) The Company intends to use a portion of the proceeds from this Offering
to pursue acquisition of entities with businesses and/or assets similar
to the Company's. The amount of funds required for any proposed
acquisition will depend upon the nature, size and structure of such
acquisition. In the event that the Company requires additional funds
for any proposed acquisition, the Company may be dependent upon its
ability to obtain additional financing to complete such acquisition.
See "Risk Factors--Acquisition Strategy."
The foregoing represents the Company's current estimate of the
allocation of the net proceeds of the Offering based upon certain assumptions
relating to the Company's business. Future events, including changes in economic
conditions, regulatory or competitive conditions, and the success or lack
thereof of the Company's businesses, may make shifts in the allocation of funds
necessary or desirable. There can be no assurance that the Company's estimates
will prove to be accurate or that unforeseen expenses will not be incurred.
The Company anticipates, based on its currently proposed plans and
assumptions relating to its operations, that the proceeds of this Offering,
together with projected cash flow from operations and available cash resources,
will be sufficient to satisfy the Company's contemplated cash requirements for
at least twelve (12) months following the consummation of this Offering. In the
event that the Company's plans change, its
16
<PAGE>
assumptions change or prove to be inaccurate, or if the proceeds of this
Offering or cash flow otherwise prove to be insufficient to fund operations (due
to unanticipated expenses, problems, difficulties or otherwise), the Company may
find it necessary or advisable to reallocate some of the proceeds within the
above-described categories or may be required to seek additional financing
sooner than currently anticipated or curtail its expansion activities. There can
be no assurance that additional financing will be available to the Company on
commercially reasonable terms, or at all.
Proceeds not immediately required for the purposes described above will
be invested principally in short-term bank certificates of deposit, short-term
securities, United States Government obligations, money market instruments or
other interest-bearing investments.
17
<PAGE>
DILUTION
The difference between the initial public offering price per share of
Common Stock and the pro forma net tangible book value per share of Common Stock
after this Offering constitutes the dilution to investors in this Offering. Net
tangible book value per share is determined by dividing the net tangible book
value of the Company (total tangible assets less total liabilities) by the
number of outstanding shares of Common stock. The following discussions allocate
no value to the Warrants.
At June 30, 1998, the Company's tangible assets exceeded its
liabilities by approximately $2,099,000 and accordingly the Company's Common
Stock had a net tangible book value of approximately $0.75 per share. After
giving effect to the receipt of the net proceeds from the sale of the Common
Stock offered hereby at an initial public offering price of $5.00 per share of
Common Stock (less underwriting discount and offering expenses) the pro forma
net tangible book value of the Company at June 30, 1998 would have been
approximately $5,987,550 or $1.58 per share, representing an immediate increase
in net tangible book value of $0.83 per share to the existing stockholders and
an immediate dilution of $3.42 per share (68.4%) to new investors. The following
table illustrates dilution to new investors on a per share basis:
<TABLE>
<CAPTION>
<S> <C> <C>
Initial public offering price $5.00
Net tangible book value per share before this Offering(1) $0.75
Increase per share attributable to new investors 0.83
-----
Pro forma net tangible book value per share after
this Offering 1.58
Dilution per share to new investors(2) $3.42
</TABLE>
(1) Net tangible book value per share is determined by dividing the
Company's net tangible book value (total assets less intangible assets
and total liabilities) at June 30, 1998 by the number of shares of
Common Stock then outstanding.
(2) Dilution per share is determined by subtracting pro forma net tangible
book value per share after the Offering from the initial public
offering price per share. The foregoing table also assumes no exercise
of the Underwriters' Warrant or options to purchase 250,000 shares of
Common Stock to be granted pursuant to the Company's Stock Option Plan.
In the event the Underwriters exercise the Over-allotment Option in
full, the pro forma net tangible book value per share would be approximately
$6,726,300 which would result in dilution to new investors of $3.40 per share.
The following table sets forth on a pro forma basis as of June 30, 1998
the respective positions of the Company's existing stockholders and new
investors with respect to the number of shares of Common Stock purchased from
the Company, the total cash consideration paid and the average price per share
paid by the existing stockholders and by the new investors with respect to the
1,000,000 shares of Common Stock to be issued by the Company at an initial
public offering price of $5.00 per share.
<TABLE>
<CAPTION>
Percentage
Percentage Of Total Average
Shares of Total Aggregate Consideratio Price
Purchased(1) Shares Consideration n per Share
Existing
<S> <C> <C> <C> <C> <C>
Shareholders......... 2,800,000 73.7% $2,211,800 30.7% $0.79
New Investors........ 1,000,000 26.3% $5,000,000 69.3% $5.00
--------- ------ ---------- -----
Total................ 3,800,000 100.0% $7,211,800 100.0%
========= ====== ========== ======
</TABLE>
(1) This information does not reflect 250,000 Shares that may be issued
under the Company's Stock Option Plan.
The foregoing table assumes no exercise of any Warrants or options to
purchase 250,000 shares of Common Stock to be granted pursuant to the Company's
1998 Stock Option Plan.
<PAGE>
DIVIDEND POLICY
To date, the Company has paid no dividends on any shares of its Common
Stock and the Company's Board of Directors has no present intention of paying
any dividends on its Common Stock in the foreseeable future, as it intends to
use its earnings, if any, to generate increased growth. The payment by the
Company of dividends in the future, if any, rests solely within the discretion
of the Board of Directors and will depend upon, among other things, the
Company's earnings, capital requirements and financial condition, as well as
other factors deemed relevant by the Company's Board of Directors. Although
dividends are not limited currently by any agreements, it is anticipated that
future agreements, if any, with institutional lenders or others may also limit
the Company's ability to pay dividends.
CAPITALIZATION
The following table sets forth (i) the capitalization of the Company as
of June 30, 1998, and (ii) such capitalization as adjusted to give effect to the
sale, by the Company, of 1,000,000 shares of Common Stock and 1,650,000 Warrants
at initial public offering prices of $5.00 per share and $.10 per Warrant and
the application of the net proceeds therefrom. This table should be read in
conjunction with the Financial Statements and the notes thereto appearing
elsewhere in this Prospectus.
<TABLE>
<CAPTION>
June 30, 1998
As
Actual Adjusted(1)
(unaudited)
<S> <C> <C>
Current liabilities ................................................... $ 8,399,000 $ 7,209,000
Long-term liabilities ................................................. $ 1,279,000 $ 1,279,000
Common Stock, $.001 par value; 19,000,000 shares authorized; .......... 2,800,000
shares issued and outstanding as of June 30, 1998 (actual); 3,800,000
shares issued and
outstanding as adjusted ............................................. $ 2,800 $ 3,800
Capital in excess of par value ........................................ $ 2,209,000 $ 6,096,550
Retained earnings ..................................................... $ 1,204,000 $ 1,204,000
Cumulative Currency Translation Adjustment ............................ $ (334,000) $ (334,000)
Total shareholders' equity .......................................... $ 3,081,800 $ 6,970,350
------------ ------------
Total liabilities and shareholders' equity .......................... $ 12,759,800 $ 15,458,350
============ ============
</TABLE>
(1) The adjusted column reflects the changes that will occur upon
completion of this Offering.
MARKET FOR SECURITIES
There is presently no established public trading market for the
Company's Common Stock. Present management is unaware of any active trading in
the Company's Common Stock within the last five (5) years.
The approximate number of record holders of the Company's Common Stock
as of November 1, 1998 was approximately 630.
19
<PAGE>
SELECTED FINANCIAL INFORMATION
The following is a summary of the Company's financial information
extracted from the indicated year end Consolidated Financial Statements of the
Company, and is qualified in its entirety by the detailed financial information
appearing in the Consolidated Financial Statements and the Notes thereto and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations." The unaudited Consolidated Financial Statements of the Company for
the interim periods ended June 30, 1998 and 1997, have been prepared by
management from the books and records of the Company and reflect, in the opinion
of management, all adjustments (consisting of normally occurring accruals),
necessary for a fair presentation of the financial position, results of
operations, and changes in the financial position of the Company, as at the
periods indicated therein. Results for interim periods are not necessarily
indicative of results which can be expected for the entire year.
Statement of Operations Data:
<TABLE>
<CAPTION>
Years Ended Six Months Ended
December 31, June 30,
1994 1995 1996 1997 1997 1998
------------------------------------------------------ ----------- --------
(in thousands, except for per share amounts) (Unaudited)
REVENUES:
<S> <C> <C> <C> <C> <C> <C>
Net Sales $ 5,343 $ 25,333 $ 26,564 $ 25,561 $ 12,473 $ 12,798
Cost of Goods Sold 3,694 15,258 15,891 15,436 7,495 7,402
-------- -------- --------- -------- ------ ------
Gross Profit 1,649 10,075 10,673 10,125 4,978 5,396
Sales & Marketing
Expenses 473 3,144 3,713 3,455 812 759
General & Administrative
Expenses 719 5,924 5,952 6,062 3,809 3,915
Amortization of agency
and distribution rights 15 212 168 202 103 76
-------- ------ ------ ----- ------ ------
Income from operations 442 795 840 406 254 646
-------- ------ ------ ------ ------ ------
Interest income 8 83 39 22 40 22
Foreign exchange gain -- 100 60 46 -- --
Interest expense (50) (514) (487) (438) (255) (235)
Foreign exchange loss (8) (26) (18) (42) -- --
-------- ------- ------ ------- ------ ------
Net Income (loss)
before taxes 392 438 434 (6) 39 433
Income taxes payable 92 196 311 119 63 193
Change in deferred taxes -- (5) (30) (1) -- --
------- ------- ------ ------- ------ -------
Total taxes 92 191 281 118 63 193
-------- ------- ------ ------- ------ -------
Net Income (loss) 300 247 153 (124) (24) 240
-------- ------- ------- ------- ------ -------
Translation adjustments 33 265 (82) (473) (317) (77)
-------- ------- ------ ------- ------ -------
Other comprehensive income:
Comprehensive income (loss) 333 512 71 (597) (341) 163
======== ======= ====== ------- ====== ======
Earnings Per Share:
Basic $ 44.11 $ 27.65 $ .14 $ (.04) $ (0.01) $ .13
======= ======= ====== ======= ======== ======
Diluted $ 44.11 $ 27.65 $ .14 $ (.04) $ (0.01) $ .13
======= ======= ====== ======= ======== ======
</TABLE>
20
<PAGE>
CONSOLIDATED BALANCE SHEET DATA:
<TABLE>
<CAPTION>
December 31,
----------------------------------------------------------
1995 1996 1997 June 30, 1998
--------------------------------------------------------- (unaudited)
(in thousands)
ASSETS:
Current Assets:
<S> <C> <C> <C> <C>
Cash and cash equivalents $ 491 $ 410 $ 547 $ 274
Restricted Cash and cash Equivalents 120
Trade Accounts Receivable 3,832 4,227 4,899 4,697
Other Receivables 63 152 127 297
Inventory 4,501 4,734 3,765 4,806
Prepaid Expenses 258 245 250 71
------- ------- ------- -------
Total Current Assets 9,171 9,927 9,725 10,265
------- ------- ------- -------
Property, plant and equipment, net 1,234 1,138 1,173 1,212
Prepaid pension expense 501 457 326 287
Agency & distribution rights 1,297 1,121 1,086 982
Other Assets 55 114 39 13
------- ------- ------- -------
Total Assets 12,258 12,757 12,349 12,759
======= ======= ======= =======
LIABILITIES AND SHAREHOLDERS' EQUITY:
Current Liabilities:
Short-term borrowings $ 1,331 $ 2,352 $ 3,118 $ 2,930
Accounts payable 3,485 3,456 3,112 3,087
Witholding tax and other taxes payable 1,170 936 987 710
Income taxes payable 45 273 59 279
Prepayments from customers 574 448 270 342
Current portion long-term debt 403 422 167 167
Related party debt 1,000 494 -- --
Current prtion of related prty dbts 129
Other current liabilities 660 479 496 755
-------- ------- ------- -------
Total current liabilities 8,668 8,860 8,265 8,399
----- ------- ------- -------
Long-term Liabilities:
Long term debt 991 204 746 902
Related party debt -- -- 246 206
Deferred income taxes 202 175 171 171
-------- ------- ------- -------
Total long-term liabilities 1,193 379 1,163 1,279
-------- ------- ------- -------
Total liabilities 9,861 9,239 9,428 9,678
-------- ------- ------- -------
Shareholders' Equity:
Common Stock, authorized 100,000,000
shares issued & outstanding, 1,900,625
shares per June 30, 1998 & 1997 -- 3 3 3
Capital in excess of par value 1,161 2,208 2,208 2,208
Retained earnings 938 1,091 967 1,204
Other comprehensive income -- 216 (257) (334)
-------- ------- ------- --------
Total shareholders' equity 2,397 3,518 2,921 3,081
-------- ------- ------- -------
Total liabilities and Total
shareholders' equity $ 12,258 $12,757 $12,349 $12,759
======== ------- ======= =======
</TABLE>
21
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
The following discussion and analysis should be read in conjunction with
the Financial Statements and notes thereto appearing elsewhere in this
Prospectus. The discussion is based upon such financial statements which have
been prepared in accordance with U.S. Generally Accepted Accounting Principles
and are presented in United States dollars ($).
Results of Operations
<TABLE>
<CAPTION>
For Twelve Months
Ended December 31,
1997 1996 1995
<S> <C> <C> <C>
Net Sales 100.0% 100.0% 100.0%
Cost of Goods Sold 60.4% 59.8% 60.2%
------- ------ ------
Gross Profit 39.6% 40.2% 39.8%
Operating Expenses:
Selling, General and Administrative 38.0% 37.0% 36.7%
Interest 1.6% 1.5% 1.4%
Earnings before other income taxes
extraordinary income and minority interest 0.0% 1.7% 1.7%
Earnings before taxes, extraordinary income
and minority interest 0.0% 1.7% 1.7%
Earnings/(Loss) before taxes & minority interest 0.0% 1.7% 1.7%
Earnings/(Loss) before minority interest (0.5%) 0.6% 1.0%
Net Earnings/(Loss) (0.5%) 0.6% 1.0%
</TABLE>
<TABLE>
<CAPTION>
For Six Months
Ended June 30,
1998 1997
<S> <C> <C>
Net Sales 100.0% 100.0%
Cost of Goods Sold 57.8% 60.1%
------- -------
Gross Profit 42.2% 39.9%
Operating Expenses:
Selling, General and Administrative 37.1% 37.7%
Interest 1.7% 1.7%
Earnings before other income taxes
extraordinary income and minority interest 3.4% 0.5%
Earnings before taxes, extraordinary income
and minority interest 3.4% 0.5%
Earnings/(Loss) before taxes & minority interest 3.4% 0.5%
Earnings/(Loss) before minority interest 1.9% (0.1%)
Net Earnings/(Loss) 1.9% (0.1%)
</TABLE>
Comparison of the six Months Ended June 30, 1998 to the six Months Ended June
30, 1997.
<PAGE>
The Company operates in two industry segments:(a) the purchase and
distribution of electronic, electrical and audio-visual equipment (The Nortelco
Group) and (b) the design, assembly and distribution of lathes (Storebro Machine
AB).
Net Income
The Company's net income for the six month period ended June 30, 1998 was
$240,000, an increase of $246,000 from 1997, when the Company had a net loss of
$6,000. Net income for The Nortelco Group increased by approximately 523%, from
$77,000 to $479,000, as a result of the Company increasing its sales and
obtaining a higher percentage of the market. Net income increased especially
within the fire protection area due to large "call-off" orders received in
connection with two offshore oil rig projects.
For the six month period ended June 30, 1998, Storebro Machine AB had a net
loss of ($46,000), compared to net income of $52,000 for six month's ended June
30, 1997, which represented a decrease of approximately 189%. The decrease
primarily resulted from a large decrease in its sales to the German market due
to lower prices on lathes produced in the Far East. Storebro also suffered from
the effects of lower exchange rates on certain Far East currencies. As a result,
the Company has taken steps to improve Storebro's results, including purchasing
more materials from Far East countries in order to reduce its prices. The
Company has also recently begun to implement a corporate restructuring of
Storebro. This restructuring has included changes in its senior management and a
significant reduction in the number of its employees, as well as changes in its
sales methods. The Company beleives that the effects of its changes will not be
realized until 1999.
Net income from operations for the Company's Scandinavian subsidiaries, the
Nortelco Group and Storebro, increased from operations increased by
approximately 335% from $129,000 for the six month period ended June 30, 1997 to
$433,000 for the six month period ended June 30, 1998.
The net income (loss) for the Company's two industrial segments were
offset by net losses incurred by the Company in the amount of $193,000 for the
six months ended June 30, 1998 and $135,000 for the six months ended June 30,
1997.
Net Sales
Net sales for the Company increased by $324,000 for the six months ended
June 30, 1998, from $12,474,000 to $12,798,000, or approximately 2.6%, from the
previous year as a result of normal growth.
Gross Profit
Gross profit increased for the six months ended June 30, 1998 by
$417,000 from $4,979,000 to $5,396,000, or approximately 8.4% as a result of the
increased net sales and higher profit margin on products sold.
Selling, General and Administrative Expenses
Selling, General and Administrative Expenses increased for the six
months ended June 30, 1998 by $44,000, from $4,706,000 to $4,750,000, and
decreased as a percentage of net sales to 37.1% from 37.7%.
Comparison of the Twelve Months Ended December 31, 1997 to the Twelve Months
Ended December 31, 1996.
Net Income
The Company incurred a net loss in 1997 of ($124,000). This represents a
decrease of $278,000 from 1996, when the Company had net income of $153,000. Net
income for The Nortelco Group decreased by approximately 61.8%, from $579,000 to
$221,000, as a result of increased SG&A due to an increased number of employees
as well as increased advertising costs. These increased costs were undertaken by
management in order to develop some of the Company's business areas for future
growth. Net income for Storebro Machine AB decreased by approximately 116.7%
from $209,000 to ($35,000), as a result of a decreased level of sales, smaller
gross profit due to a loss on four special lathes and higher interest costs due
to a higher working capital credit. The
23
<PAGE>
net income (loss) for The Nortelco Group and Storebro Machine AB were offset by
net losses incurred by the parent company, Nordic Equity Partners Corp., in the
amount of $311,000 and $635,000 for the years ended December 31, 1997 and 1996,
respectively.
Net Sales
Net sales decreased by $1,003,000 for the twelve months ended December
31, 1997, from $26,564,000 to $25,561,000, or approximately 3.8%, mainly due to
a higher exchange rate for NOK and SEK into U.S. dollars. In fact, net sales
increased for The Nortelco Group with 7.6% in Scandinavian currency, due to a
higher sales in Nortelco AB and Nortelco System-Teknikk AS as a result of
starting a sales office in Finland, increased market shares and increased prices
of products sold. In U.S. dollars, net sales for The Nortelco Group decreased by
$377,000 for the twelve months ended December 1997, from $22,042,000 to
$21,665,000, or approximately 1.7%. Net sales for Storebro Machine AB decreased
by $626,000 for the twelve months ended December 31, 1997, from $4,684,000 to
$4,058,000, or approximately 13.4%. In Scandinavian currency, net sales
decreased by 1.7% due to the fact that the very important German market did not
pick up as generally expected.
Gross Profit
Gross profit decreased in 1997 by $548,000, from $10,673,000 to
$10,125,000, mainly as a result of a higher exchange rate into US$. Gross profit
for The Nortelco Group decreased by approximately 0.6%, from $8,639,000 to
$8,588,000. In Scandinavian currency, gross profit increased by approximately
8.8% as a result of increased net sales, increases in prices of products sold as
well as a change in the mix of products sold resulting in the sales of products
with a higher gross profit margin. Gross profit for Storebro Machine AB
decreased by $497,000 for the twelve months ended December 31, 1997, from
$2,034,000 to $1,537,000, or approximately 24.4% due to a higher exchange rate
SEK/USD, a loss on four special machines and due to the fact that the price
competition on the German market hardened considerably generating less gross
profit than normally expected.
Selling, General and Administrative Expenses
SG&A decreased in 1997 by $38,000, from $9,719,000 to $9,757,000 and
increased as a percentage of net sales to 38.0% from 37.0%. In Scandinavian
currency The Nortelco Group's SG&A increased by approximately 14.7% as a result
of an increased number of employees and higher marketing costs. Also in
Scandinavian currency, Storebro Machine AB's SG&A decreased by approximately
2.6% as a result of lower expenditures on marketing activities.
Comparison of the Twelve Months Ended December 31, 1996 to the Twelve Months
Ended December 31, 1995.
Net Income
The Company's net income for the twelve month period ended December 31,
1996 was $153,000, a decrease of $94,000 from 1995, when the Company had a net
income of $247,000. Net income for the Nortelco Group increased by approximately
215%, from $184.000 to $579,000, as a result of an increased level of sales,
lower depreciation and interest cost as well as a decreased advertising cost.
Net income from Storebro Machine AS decreased by approximately 15.4% from
$247,000 to $209,000, as a result of lower gross profit margin in % of net
sales, increased SG&A due to an increased number of employees and higher
advertising costs. The net income for the Nortelco Group and Storebro Machine AS
were offset by net losses incurred by the parent company, Nordic Equity Partners
Corp., in the amount of $635,000 and $184,000 for the years ended December 31,
1996 and 1995, respectively.
<PAGE>
Net Sales
Net Sales increased by $1,231,000 for the twelve months ended December
31, 1996, from $25,333,000 to $26,564,000, or approximately 4.9%, from the
previous year as a result of normal growth. Net sales for the Nortelco Group
increased by $740,000, from $21,306,000 to $22,041,000, or approximately 3.5%,
as a result of normal growth. Net sales for Storebro Machine AB increased by
$495,000, from $4,027,000 to $4,523,000, or approximately 12.3%, mainly due to
an increased level of sales to the German market.
Gross Profit
Gross Profit increased in 1996 by $598,000, from $10,075,000 to $10,673,000
due to a higher level of sales. Gross profit for the Nortelco Group increased by
approximately 2.3%, from $8,440,000 to $8,638,000 as a result of normal growth.
Gross profit for Storebro Machine AB increased by approximately 24.4%, from
$1,635,000 to $2,035,000 as a result of a higher percentage of the net sales was
spare parts with higher gross margin percentage.
Selling, General and Administrative Expenses
Selling, General and Administrative Expenses increased for twelve months
ended December 31, 1996 by $553,000 from $9,280,000 to $9,833,000, and increased
as a percentage of net sales to 37.0% from 36.7%. SG&A for the Nortelco Group
decreased by approximately 3.0%, from $7,736,000 to $7,504,000. SG&A for
Storebro Machine AB increased by approximately 29.8%, from $1,334,000 to
$1,732,000, due to an increased number of employees and higher advertising
costs.
Effects of Foreign Currency
The functional currency used by each of the Company's subsidiaries are
either Norwegian NOK, Swedish SEK or Finish FIM. The Company's sales are
invoiced in Norwegian NOK, Swedish SEK and Finish FIM. All foreign invoices
received by the Company are booked at the exchange rate as of the date of such
invoices. Thereafter, upon payment of such invoices by the Company, the gain or
loss resulting from the change in exchange rate between the invoice date and the
payment date will be credited or debited to the Company's financial costs or
income. Accordingly, the Company is subject to foreign currency fluctuations.
The Company does maintain a foreign currency account with respect to sales to
and purchases from customers and suppliers in Germany.
Liquidity and Capital Resources
Historically, The Nortelco Group has financed its operations and
acquisitions through borrowings from certain officers and/or directors of the
Company, loans under its bank credit agreements and cash flow from operations.
Storebro Machine AB has financed its operations from cash flow from operations
and loans under its bank credit agreement.
The primary uses of The Nortelco Group's cash are product acquisitions
from suppliers, and to fund, in part, growth through acquisition of corporations
with compatible product lines. The primary uses of Storebro Machine AB's cash
are to purchase materials and inventory used in the assembly of its lathe
product line.
25
<PAGE>
Storebro, no assurance that such restructuring will be successful or that
Storebro will, in the future, be profitable.
Net cash used by operating activities for the Company was $310,000 for the
year ended December 31, 1997, and $380,000 for the six months ended June 30,
1998. Bank indebtedness was $1,874,052 at December 31, 1997, and $1,869,514 at
June 30, 1998
The Company's working capital was $1,460,000 at December 31, 1997 and
$1,866,000 at June 30, 1998. The Company's accounts receivable were $4,898,697
at December 31, 1997 and $4,697,255 at June 30, 1998. The Company's inventory
was $3,765,291 at December 31, 1997 and $4,805,182 at June 30, 1998.
In August 1997, Gjensidige Bank, a Norwegian Bank posted one year
letters of credit in favor of Nortelco AS ($221,000) and Nortelco System Teknikk
AS ($124,000). Under this facility, Nortelco AS and Nortelco System-Teknikk AS
pay to Gjensidige Bank an annual fee of 1.5% on such amount payable quarterly in
advance. Such letters of credit are posted as security for the Company's lease
on its corporate headquarters located in Oslo, Norway. Such letters of credit
are renewable annually at the option of Nortelco AS and Nortelco System-Teknikk
AS.
In August 1997, Gjensidige Bank posted a letter of credit for Nortelco
System-Teknikk AS in the aggregate principal amount of $438,000 to guarantee
projects delivered and prepayment received according to Norwegian Standard.
Under such facility, Gjensidige charges an annual fee of 1.5% per annum payable
quarterly in advance. There are no charges for the facility, only on the amount
of issued letters of credit at any time. The amount of letters of credit issued
was $18,000 at December 31, 1997, and $95,000 at June 30, 1998.
The Nortelco Group collectively have revolving working capital credit
facilities in an aggregate amount of approximately $2,138,000. Such working
capital credit facilities consist of the following: (1) Nortelco AS has a
revolving working capital credit facility of approximately $828,000 with
Gjensidige Bank, Nortelco System-Teknikk AS has a revolving working capital
credit facility of approximately $414,000 with Gjensidige Bank, Brannteknikk AS
has a revolving working capital credit facility of approximately $69,000 with
Soegne Sparebank, a Norwegian Bank, and Nortelco AB has a revolving working
capital credit of approximately $827,000 with S-E Banken, a Swedish Bank. The
Nortelco AS and Nortelco System-Teknikk AS credit lines bear interest at the
rate of 7.25% per annum for the funds used payable quarterly. Gjensidige Bank
also receives a fee of 0.125% each quarter for all funds outstanding at such
time under each such credit facility. Nortelco AB's credit line bears interest
at the rate of 6.6% per annum for the funds used payable quarterly. S-E Banken
also receives a fee of 0.5% on the total credit line payable yearly in advance.
Brannteknikk AS' credit line bears interest at the rate of 7.5% per annum for
the funds used payable quarterly and a fee of 0.125% each quarter for all funds
outstanding. (2) Storebro Machine AB has a revolving working capital credit line
of approximately $377,000 with Handelsbanken, a Swedish bank. Storebro Machine
AB's credit line bears interest a the rate of 7.1% per annum for the funds used
payable quarterly. Handelsbanken also receives a fee of 1.0% on the total credit
line payably yearly in advance.
As of June 30, 1998, the following companies had the following amounts
outstanding under such facilities: Nortelco AS had approximately $749,000
outstanding; Nortelco System Teknikk AS had approximately $264,000 outstanding;
Nortelco AB had approximately $530,000 outstanding; and Storebro Machine AB had
approximately $326,000 outstanding. All the revolving credit facilities are
secured by the respective companies' inventory and accounts receivable.
In May 1997, Nortelco AS and Nortelco System-Teknikk AS entered into
seven-year working capital loans expiring in May 2004 with Gjensidige Bank in
the amounts of $396,000 and $264,000, respectively. Such loans each bear
interest at the rate of 7.25% per annum, payable quarterly, and have an annual
repayment schedule of $56,560 for Nortelco AS and $37,707 for Nortelco
System-Teknikk AS. As of June 30, 1998,
26
<PAGE>
Nortelco AS had $353,897 outstanding under such loans, and Nortelco
System-Teknikk AS had $235,893 outstanding under such loans.
Under the credit facilities between Nortelco AS, Nortelco System-Teknikk AS
and Gjensidige Bank discussed above, Nortelco AS and Nortelco System-Teknikk AS
have each secured such loans by providing cross security interests in the amount
of $2,639,500 of the inventories and accounts receivable of each such
corporations. As part of the corporate restructuring described under "History of
the Company-Corporate Restucturing", Nortelco Nordic AS will be required to
provide security by pledging its shares in Nortelco AB.
Management believes that the credit facilities of The Nortelco Group and
Storebro Machine AB, together with internally generated funds and the proceeds
of this Offering will be adequate to meet the Company's working capital
requirements for at least the twelve month period following the completion of
this Offering.
27
<PAGE>
HISTORY OF THE COMPANY
The Company
The Company was organized under the laws of Delaware in May 1994. In May
1995, the Company entered into an agreement and plan of merger with Sherman,
Goelz & Associates ("SGA"), pursuant to which SGA was merged with and into the
Company, with the holders of shares of common stock of SGA receiving one share
of Common Stock of the Company for each share of SGA owned by them. Prior to the
merger, as described below, SGA had acquired (i) 80% of the issued and
outstanding shares of Common stock of Nortelco AS, and (ii) all of the shares of
Common Stock of Storebro Machine AB. Subsequent to the merger with SGA, in
November 1995, the Company acquired the remaining 20% of the issued and
outstanding shares of common stock of Nortelco AS from Nordic Business
Development AS ("NBD") for 216,000 shares of Common Stock of the Company, which
shares were provided to NBD from the principal shareholders of the Company.
Nortelco AS
In November 1994, the Company acquired 80% of the issued and outstanding
common stock of Nortelco AS from Universal Commodity Trading Group, Inc.
("Universal") for an aggregate consideration of $2,285,000. The $2,285,000
purchase price paid by SGA to Universal was paid in a combination of $785,000 of
cash and 856 shares of Common Stock of SGA.
In November 1995, the Company acquired the remaining 20% of the issued and
outstanding shares of common stock of Nortelco AS from Nordic Business
Development AS ("NBD") for 216,000 shares of Common Stock of the Company, which
shares were provided to NBD from the principal shareholders of the Company.
Storebro Machine AB
In November 1994, the Company acquired all of the issued and outstanding
shares of common stock of Storebro Machine AB from Ovington Investments Limited
("Ovington") for an aggregate consideration of $1,600,000, which consideration
was paid in a combination of $215,000 of cash and 722 shares of Common Stock of
SGA.
28
<PAGE>
Corporate Restructuring
In April 1998, the Company incorporated Nortelco Nordic AS, a Norwegian
corporation, for the purpose of becoming the parent holding company for all of
the company's subsidiaries which are involved in the importation and
distribution of electrical, electronic and audio visual products. Prior to the
completion of this Offering, the Company intends to complete a corporate
restructuring which will result in the Company having the following corporate
structure:
[graphic ommitted]
29
<PAGE>
BUSINESS
GENERAL
Nordic Equity Partners Corp. imports and distributes products for use in
the electronic, electrical and audio visual industries, and designs, installs
and sells complete, customized conference rooms and auditoriums and provides
after sale service and maintenance support to its customers. The Company also
designs, assembles and distributes lathes, sells lathe spare parts to existing
lathe owners and services, and repairs and overhauls lathes owned by third
parties. All of the Company's business and sales are conducted in the geographic
area of Scandinavia.
Electrical, Electronic and Audio Visual Products
The Company imports and distributes products for use in the electronic,
electrical and audio visual industries. The Company also designs, installs and
sells complete, customized conference rooms and auditoriums and provides after
sale service and maintenance support to its customers.
Importation and Distribution of Products
The Company does not manufacture any of the electrical, electronic or audio
visual products that it distributes. The Company imports more than 13,000
products for distribution to over 1,000 customers throughout Scandinavia. The
Company purchases its products from over fifty (50) non-affiliated third party
manufacturers worldwide including Germany and the United States. Sales of
products manufactured by TTC, Inc. constituted 6.6% of the Company's revenues
for the six month period ended June 30, 1998 and 12.3% of the Company's revenues
for the year ended December 31, 1997. Sales of products manufactured by Lycab AB
constituted 5.7% of the Company's revenues for the six month period ended June
30, 1998 and 7.1% of the Company's revenues for the year ended December 31,
1997. No other manufacturer's products accounted for more than 5% of the
Company's sales in 1997.
The Company's product strategy is to have its product line consist
substantially of products which are supplemental, or add-on, products to other
high volume electrical products. Such products are generally highly specific
products which are marketed and sold to a very narrow part of the market.
Accordingly, the Company believes that its product line consists of "niche"
products. The products sold by the Company range in price from $1.00 to
$100,000.
Substantially all of the Company's products are sold by its internal sales
force which consists of approximately fifty (50) full time salespersons based in
Scandinavia. The Company believes that because its salespersons are experienced
and have technical backgrounds, it is able to service the continuing needs of
its customers and attract additional customers.
The Company's gross profit from the sale of electrical, electronic and
audio visual products results primarily from the difference between the price it
purchases its products from non-affiliated third party manufacturers and the
price at which it sells such products to its customers.
The Company believes that because of the high cost of establishing and
maintaining operations in Scandinavia, many foreign product manufacturers avoid
doing so. As a result, many of such companies enter into agreements with the
Company for the Company to act as their distributor or agent in some or all of
such countries. Because the Company already has established operations in such
countries, the Company believes it can distribute products more efficiently and
inexpensively.
Revenues for the Company from the sale of electrical, electronic and audio
visual products were approximately $11,041,000 for the six months ended June 30,
1998, $21,665,000 for the year ended December 31, 1997 and $22,042,000 for the
year ended December 31, 1996. Net income for the Company from the sale of
electrical, electronic
30
<PAGE>
and audio visual products was approximately $479,000 for the six months ended
June 30, 1998, $220,700 for the year ended December 31, 1997 and $578,500 for
the year ended December 31, 1996.
Design, Assembly and Distribution of Lathes
The Company designs, assembles and distributes lathes. The Company also
sells lathe spare parts to existing lathe owners and services, repairs and
overhauls lathes owned by third parties.
The Company sells over seven different types of its lathes which include
both computer numerically controlled ("CNC") lathes and traditional
manually-operated lathes. The Company also manufactures and sells a lathe which
can function as either a manually operated or CNC lathe. The Company distributes
its lathes mainly to customers in Germany and Sweden, both through its own and
independent sales representatives. The prices of its products range from $18,000
to $360,000.
Revenues for the Company from the sale of lathes were approximately
$1,756,000 for the six months ended June 30, 1998, $3,897,000 for the year ended
December 31, 1997 and $4,522,000 for the year ended December 31, 1996. Net
income (loss) for the Company from the sale of lathes was approximately
($46,300) for the six months ended June 30, 1998, ($35,000) for the year ended
December 31, 1997 and $209,000 for the year ended December 31, 1996.
PRODUCTS
Electrical, Electronic and Audio Visual Products
The Company imports and sells approximately 13,000 select technical
products to its customers throughout Scandinavia. Products included in the
Company's product line are generally the same products that such manufacturers
market and sell in other countries. In determining which products to include in
its product line, the Company examines factors such as demand for the product in
other countries, as well as competition and customer demand within Scandinavia.
The price range that the Company sells its products ranges from $1 to $100,000.
Electronics Products
The Company purchases and resells approximately 5,000 different products in
the electronics industry including components, telecommunication and
datacommunication equipment and studio and communication equipment.
<TABLE>
<CAPTION>
<S> <C>
o Components. The electronic components sold by the Company consist
of power conditioning components that protect, stabilize and monitor a
proper and continuous flow of power to electronic and electrical
appliances and equipment, such as computers. These components are
designed to protect such equipment from disturbances and memory loss
that can result from blackouts, voltage fluctuations and transients.
They include electronic voltage regulators that protect computers by
compensating for rapid and slow variations in voltage, electronic line
conditioners to protect computers and electronics systems from voltage
variations, line noises and voltage spikes; power supply systems that
guarantee power to computers without significant interruptions;
powerline diagnostic analyzers that detect powerline disturbances such
as voltage fluctuations, voltage spikes or blackouts; and high energy
transient protection components such as zener diode regulators, bridge
rectifiers, gas discharge tubes and filters. These products also
include semiconductors, precision potentiometers,
resistors/capacitators, ferrites and interconnecting components that
hook up public telephone networks, data networks and optical fiber
networks.
o Telecommunication Products. Telecommunication products sold by
the Company generally are innovative test and measurement instruments
used in the
31
<PAGE>
development, installation and maintenance of sophisticated
telecommunications networks. Products included in this category include
a wide array of portable instruments and permanently located system
testers, multi-function communicators, analyzers that typically test at
the physical and logical levels of network organization which measure
performance and error on a wide range of network transmission media
equipment, modular, portable fiber optic test instruments which allow
both central office and field technicians to isolate fiber optic cable
breaks and measure degradation caused by aging connectors and related
components.
o Datacommunication Products. Datacommunications products sold by
the Company provide users of information networks with the management
tools to ensure reliable network operations and products to condition
the data operations for transmission via private or public networks.
These products are designed primarily to manage data transmission and
communication networks in a computer environment. Among the products
included in this product category and sold by the Company include
patches used for monitoring, testing and rearranging
datacommunications lines and equipment and high performance packet
switching equipment which breaks up data into "packets" for efficient
transmission over private and public data networks, which generally is
a cost effective means for companies to transmit data over long
distances.
o Studio and Communication Products. Included in this product line is a
wide array of speakers, amplifiers, microphones, microphone systems and
headphones with related accessories and components, and a wide array of
multifamily (apartments) and business (office) video entry security
systems, residential audio and audio/video intercoms, conference and
simultaneous interpretation systems.
</TABLE>
Electrical Products
The Company imports and distributes approximately 7,000 products for use
in the electrical field. The price range that the Company sells products to its
customers in this division is from $1 to $1,000.
The Electrical products sold by the Company include spark protected
metering equipment and heavy-duty lighting equipment, passive and active fire
protection equipment, as well as tools and materials for electrical
installations.
o Explosion Prevention Equipment. These products include a wide array of
"explosion prevention" equipment designed to be used in offshore
drilling or other hazardous areas, such as protected self-housed, high
performance switches, transformers, terminals, terminal blocks, cables,
junction and distribution boxes and a wide variety of protected, high
quality line bushings and cable entries.
o Lighting. The Company sells approximately 200 lighting products. These
products are generally used in highly hazardous areas such as utility
plants and offshore drilling rigs, including a wide variety of special
purpose lighting systems for, among other uses, ships and offshore
drilling platforms including floodlights, hazardous arc lighting
equipment, lanterns and searchlights, and products used in the shipping
industry, such as search lights used by shipyards, and electrical
installers.
o Fire Protection Equipment. The products in this area consist of fire
protection, pressure-tight systems and components for both cables and
pipes. This equipment is used to prevent the spread of fire and gas in
hazardous areas such as on ships and oil rigs and other potentially
hazardous areas. The equipment is also used to seal off construction
into watertight and fireproof sections so that if a fire or gas leak
occurs, the spread of fire or gas between sections of cables or pipes
would be prevented.
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<PAGE>
o Installation Materials. These products include heat-shrinkable products
that protect energy and signal conductors, connectors and cable systems
from corrosion, chemicals and environmental hazards, miniature circuit
breakers, switch gear, time switches, accessories for cabinets, and a
wide variety of electrical insulation tapes for high and low voltage,
infrared heating systems and anaconda circuits.
Audio Visual Products
The Company sells approximately 1,000 products in the audio visual
industry. The Company's audio visual products include audio equipment (AV
cassette recorders, microphones, sound systems and cassettes) overhead
projectors and accessories and related equipment (such as projection screens,
portable and fixed video projectors and data interface equipment), conference
room and auditorium furniture and related equipment and light-dimming systems.
The price range for such products generally range from $100 to $80,000. The
Company also provides consulting services with clients regarding
previously-built conference rooms and auditoriums.
o Products. These products include audio equipment (AV cassette recorders,
microphones, sound systems and cassettes) overhead projectors and
accessories and related equipment (such as projection screens, portable
and fixed video projectors and data interface equipment), conference
room and auditorium furniture and related equipment and light-dimming
systems. The products also include a wide variety of additional related
and compatible services and "add-ons" such as designing, equipping and
installing "turn-key", fully equipped conference rooms and auditoriums.
o Services. The Company provides consulting services to clients regarding
previously-built conference rooms and auditoriums.
In addition to the foregoing, the Company leases equipment such as
overhead slide or film projectors, offers its customers service and maintenance
programs for systems either designed or installed by the Company or others, and
provides installation assistance for equipment purchased.
Lathes
The lathes which the Company designs, assembles, and distributes are
principally used as metal cutting machine tools. The lathes may, however, be
specially designed to work with plastic or other materials. Metal cutting
machine tools utilize a process in which a part or finished product is generated
or shaped by rotating the workpiece. Lathing is a machining process whereby a
surface is shaped with a tool contained in the lathe which is applied to the
rotating workpiece which is fitted in the lathe.
Typically, early metal working machines, including lathes, were either
manually operated or specifically engineered for production applications. In the
early 1950's, numerical controls were introduced which automated the operations
of a machine tool and increased its efficiency. In the mid 1970's,
microprocessors were integrated with numerical controls, which allowed personnel
on the shop floor to program and perform sophisticated metal working tasks
without central office support. Machine tools with computer numerical controls
are referred to as "CNC" machines. All other machine tools are referred to as
"conventional" machines.
The Company's lathe product line includes both manual lathes and CNC
lathes. In the year ended December 31, 1997, the Company sold 21 lathes, of
which 4 were manual lathes and 17 were CNC lathes. The Company also sells lathe
parts to existing lathe owners and also services, repairs and overhauls existing
lathes.
Manual Lathes. The Company's manual lathes are used in small workshops,
vocational schools and tool rooms of large manufacturing companies. The Company
sells two lines of its manual lathes, the GK-195 and the SB-N.
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o The GK-195 manual lathe. This product is used for smaller jobs such as
in repair shops and vocational schools. Generally, these lathes are
designed to be used for small single jobs and single small pieces such
as making spare parts for, among other things, automobiles and boats.
The GK-195 lathe may also be designed by the Company in varying lengths
and with various options, depending upon the needs and specifications,
if any, of a particular customer.
o The SB-N lathe. This product is used for substantially larger, heavy
production jobs such as the manufacture of heavy metal cylinders and
axles. The SB-N model, depending on customer needs and specifications
can be designed in a variety of lengths and with a variety of options.
Depending on the number of "add-ons," if any, a particular client may
request to be built into a particular lathe, the price range for the
GK-195 lathes ranges from approximately $18,000 to $28,000 and
approximately $60,000 to $160,000 for the SB-N lathe.
CNC Lathes. The Company's CNC lathe machine product line consists of
five basic models: the STM 2000, the STM 2500, the STM 4000, the STM 6000 and
the STM Alert 500. The main difference in the models is the size of the "chuck"
within the lathe and the general size of the lathe. The "chuck" is the component
of the lathe which holds the workpiece. Within the four basic CNC lathes sold by
the Company, an unlimited variety of any of each such lathes can be designed and
assembled by the Company, depending upon a particular customer's specifications
and requirements. All of the Company's CNC lathes incorporate CNC control
systems produced by Siemens AG. The Company does not have any written agreements
with Siemens AG.
The Company believes that all of its CNC lathes are equipped with
state-of-the-art interactive programming capabilities with operator guidance,
blueprint programming and graphics. All controls are located in a sliding
console which the Company believes allows the operator easy access. The software
can be manually input into the machine or fed into memory. Because data entry
and display for such lathes are simplified, each of the Company's CNC lathes are
shop-floor programmable.
Depending on the number of "add-ons", a particular client may request to
be built into a particular CNC lathe, the price ranges of the lathes are as
follows: the STM 2000 ranges from approximately $110,000 to $150,000; the STM
2500 ranges from approximately $130,000 to $180,000; the STM 4000 ranges from
approximately $160,000 to $270,000; and the STM 6000 ranges from approximately
$175,000 to $360,000.
Alert Lathe. In 1996, the Company introduced the ALERT lathe, which is a
combination of a conventional and a CNC lathe. The Company believes that this
lathe can either be used as a conventional lathe with a control system recording
the various manual operations made by the operator making a first part in order
to automatically turn the next workpiece in accordance with the originally
turned piece (teach-in), or in the alternative, it can be programmed in a very
easy and user-friendly way as an ordinary CNC machine. Depending on the number
of "add-ons", a particular client may request, the price ranges of the ALERT
lathe ranges from approximately $70,000 to $210,000;
The Company also generates revenues from providing maintenance and
support services to lathe owners and from the sale of spare parts for lathes.
SOURCES OF MANUFACTURING
Electronic, Electrical and Audio Visual Products
The Company does not manufacture any of the electronic, electrical and
audio visual products its distributes. The electronic, electrical and audio
visual products the Company distributes are purchased from various manufacturers
as finished products and are stored at the Company's corporate headquarters and
subsequently sold by the Company to its customers. The Company has not entered
into any written, material contracts with any of its product manufacturers for
the manufacture of products for the Company.
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The Company's electronic, electrical and audio visual products are imported
from non-affiliated, third-party manufacturers throughout the world including
Germany (approximately 15%), the United States (approximately 22%), England
(approximately 7%), and certain countries in the Far East, aggregating
approximately 10%. No other country accounted for more than 5%.
Sales of products manufactured by TTC, Inc. constituted 6.6% of the
Company's revenues for the six month period ended June 30, 1998 and 12.3% of the
Company's revenues for the year ended December 31, 1997. Sales of products
manufactured by Lycab AB constituted 5.7% of the Company's revenues for the six
month period ended June 30, 1998 and 7.1% of the Company's revenues for the year
ended December 31, 1997. No other manufacturer's products accounted for more
than 5% of the Company's sales in 1997.
Electronic, electrical and audio visual products purchased by the Company
are paid for by either letter of credit or wire transfer. Payment is made by the
Company only upon the proper fulfillment of terms established between the
Company and the manufacturer. Most product purchases are made and paid for in
local operating currencies.
Lathes
The Company manufactures and assembles all of its lathes on a customized
basis. Based upon discussions with a particular customer, the Company's in-house
engineers produce drawings of the type of lathe desired by the customers. For
example, where customers request specialized add-on features, such as automated
loading and unloading, the Company contracts with a local unaffiliated design
consulting firm, which produces drawings of the specialized features. The
drawings are than finalized by the Company's engineers. Based upon such
drawings, the Company has molds of the particular lathe parts manufactured by
various unaffiliated local subcontractors. The steel molds are than sent to a
local unaffiliated foundry, which produces iron castings to be used for the
major body and various other parts of the lathe. The iron castings are sent back
to the Company and the lathe body and the mechanical features are machined to
correct specifications and assembled into a customized lathe in the Company's
workshop.
All of the components used in assembling the Company's lathes are
purchased from independent third parties. Many of such components are standard
components and can be ordered and delivered to the Company in one to sixteen
weeks. The Company keeps an internal supply of the standard components.
MARKETING, SALES AND DISTRIBUTION
Electronic, Electrical and Audio Visual Products
The Company distributes electronic, electrical and audio visual products
throughout Scandinavia through its own sales representatives. The Company
currently has fifty (50) in-house full-time sales representatives. The Company
believes that each such sales representative is a highly trained, technical
person able to explain and install the products and assist the customer in
problem solving and after-sale maintenance. Purchasers of the Company's products
include retailers, end users and wholesalers. Other than purchase orders
completed by customers, the Company does not have written agreements with its
customers but sells products to customers on open accounts with payment terms
typically varying from thirty (30) to ninety (90) days.
The Company also markets electronic, electrical and audio visual products
at international and regional trade shows in Norway and Sweden. In addition, the
Company maintains showrooms in its Oslo and Stockholm facilities where it
exhibits its products to customers.
The Company directly, or through independent salespersons, takes written
orders for its products. If the Company has the particular item in inventory, it
generally ships it or makes it available for pick-up by the customer within one
day. If the particular product is not in inventory, the Company orders such
product from the manufacturer. Delivery of such products to its customers can
take, depending on how quickly the Company is able to obtain the product from
the
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<PAGE>
manufacturer, up to six months. Cancellations are generally made in writing and
the Company takes appropriate steps to notify its manufacturers of such
cancellations.
The Company generally does not accept returns, although consistent with
industry practices, it makes exceptions to this policy on a case-by-case
negotiated basis. Generally, the Company provides a one to three year warranty
on its products pursuant to which it replaces defective products. To date,
replacement of products under warranty by the Company have not been material.
The Company considers backlog for the Nortelco Group to be written
customer orders received but not yet shipped by the Company. The Nortelco
Group's backlog at June 30, 1998 was approximately $2,950,000. Backlog generally
represents orders that will be shipped within six months. Because customer
orders may be canceled at any time without penalty, the Company believes that
backlog may not accurately indicate sales for any future period.
The Company has a computer system and custom-made software which enables it
to have a fully integrated state-of-the-art distribution system. The Company
believes that this system saves a substantial amount of time and manpower in the
Company's distribution process, and also allows the Company to order and
distribute its products in a timely and efficient manner. The Company's computer
distribution system encompasses its entire logistics network from purchase
orders to the actual receipt of inventory in its warehouse and from sales orders
to customer invoice and collection. This system enables the Company to track a
product order from initiation through the ultimate cash receipt from the
customer. The system also has a built-in management information system, which
enables the Company to analyze its total profitability as well as profitability
by a particular product or customer.
Lathes
The Company sells its lathes primarily in Sweden and Germany. Sales of
lathes to Swedish customers accounted for approximately 60% and 75% of all of
its lathes sold in the year ended December 31, 1997 and the six months ended
June 30, 1998, respectively. In addition, sales of lathes to German customers
accounted for approximately 27% and 10% of all of its lathes sold in the year
ended December 31, 1997 and the six months ended June 30, 1998. In Sweden, the
Company sells lathes through its two full-time, in house sales representatives.
In Germany, the Company sells lathes through MWD-Vertriebs GmbH, an independent
sales representative. MWD sells lathes in the German market on a non-exclusive
basis. The Company has also distributed its lathes to customers in Norway,
Denmark and Switzerland through independent sales representatives located in
these countries. Such representatives purchase the lathes and then sell them to
their customers.
Generally, all sales of lathes require customers to pay an initial down
payment of approximately 30% of the purchase price, and the balance on delivery.
Delivery of a lathe from the date of order generally is approximately four
months.
The Company advertises through trade shows and trade magazines in Sweden
and uses its corporate headquarters to exhibit lathes to customers. Outside of
Sweden, all advertising and promotion is done by the Company's independent sales
representatives at their own costs.
For all lathes sold, the Company provides a twelve (12) month full warranty
and provides on-site services to customers including delivery of replacement
parts during the warranty period.
The Company considers backlog to be written customer orders received but
not yet shipped. At June 30, 1998, the Company's backlog was $1,030,000. Backlog
generally represents orders that will be shipped and invoiced within eight
months. Because the Company has not experienced any cancellations of customer
orders, the Company believes that backlog accurately indicates sales for future
periods.
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As stated above, the Company has not experienced any cancellations of
customer orders. However, in the event that a cancellation of an order for a
lathe occurs, the Company will retain the customer's 30% down payment. In the
case of cancellation of an order for spare parts, the customer will be charged a
20% cancellation charge on items which the Company has in its inventory, and a
40% cancellation charge on externally purchased spare parts. In all cases, the
Company will be responsible for its commitments to third party manufacturers
from whom it may order parts.
PRODUCT LIABILITY
Nortelco AS has approximately $500,000 in product liability insurance
with respect to the sale of electronic, electrical and audio visual equipment.
The Company has approximately $2,000,000 of product liability insurance with
respect to the sale of lathes. To date, the Company has not been a party to any
material product liability claims asserted against it, and the Company believes
its product liability insurance policies are sufficient.
COMPETITION
The Company competes in markets that are extremely competitive and
sensitive to changing consumer preferences and demands. The Company competes
against many companies that are better known, substantially larger and more
diversified, and have substantially greater financial, employee and marketing
resources than the Company, as well as greater name recognition and the ability
to develop and market products similar to and more competitively priced than
those distributed by such corporations. The Company's competitors with respect
to the sale of electrical, electronic and audio visual products include Hauke,
Ltd. (England), Group Schneider, Ltd. (France), Wandel & Golterman GmbH
(Germany), Asea Brown Bowery AS (Norway) and Audio Grafiska (Norway). The
Company's competitors with respect to the sale of lathes include Emco Maier
Gesellschaft m.b.H. (Austria), Gildemeister N.E.F.-Drehmaschinen GmbH (Germany),
A. Monforts GmbH & Co. Maschinenfabrik (Germany), Traub AG (Germany), Yamazaki
Mazak Corporation (Japan), Okuma Machinery Works Ltd. (Japan) and Mori Seiki
Co., Ltd. (Japan). No assurances can be given that the Company will be able to
compete in its markets.
EMPLOYEES
At June 30, 1998, the Company employed an aggregate of approximately 103
persons. Of such 103 persons, 82 persons were employed by The Nortelco Group and
21 persons were employed by Storebro Machine AB, all of which are full time
employees.
FACILITIES
Electronic, Electrical and Audio Visual Products
The Company leases approximately 30,000 square feet in Oslo, Norway,
pursuant to a lease expiring December 31, 2003, at a rate of $490,000 per year,
subject to an escalation clause based upon the Norwegian Consumer Price Index.
The premises are used as Nortelco AS's executive offices, warehouse, showroom
and business office. The Company also leases approximately 12,000 square meters
in Solna, Sweden, which is used as the main sales office, executive office,
warehouse and workshop for Nortelco AB pursuant to a lease expiring December 31,
1999 at a rent of approximately $90,000 per year. The Company also leases space
in Gothenburg, Sweden, pursuant to a five-year lease expiring June 30, 2001, at
an annual rent of $9,600.
Electronic, Electrical and Audio Visual Products
Pursuant to a year-to-year lease, the Company leases approximately
22,000 square feet in Storebro, Sweden. Of such 22,000 square feet, 6,000 square
feet is used as Storebro Machine AB's executive and main offices and the
remaining 16,000 square feet is the workshop for assembling, re-tooling and
repairing lathes. The lease is renewable on six (6) months notice and the lease
payment is approximately $55,000 per annum,
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subject to an annual escalation clause based upon the Swedish Consumer Price
Index. The Company also leases approximately an additional 8,000 square feet,
also in Storebro, Sweden, which space is used to warehouse spare parts for
lathes that the Company sells. The lease is renewable on nine (9) months notice
and the annual rent payments are approximately $7,500.
LEGAL PROCEEDINGS
The Company is not party to any material legal proceedings.
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MANAGEMENT
Directors and Executive Officers
The directors and executive officers of the Company are as follows:
<TABLE>
<CAPTION>
Name Age Position
<S> <C> <C>
Bjorn Nysted 60 President, Chief Executive Officer and Director
Goran Haggqvist 55 Chairman of the Board
Tore Strand 42 Chief Financial Officer, Treasurer and Secretary
Espen Komnaes 46 Director
</TABLE>
Set forth below is a brief background of the executive officers and
directors of the Company, based on information supplied by them.
GORAN HAGGQVIST has been the Chairman of the Board of the Company since May
1994. From May 1994 to September 1996, Mr. Haggqvist was President of the
Company. Since April 1993 and April 1994, Mr. Haggqvist has been the Chairman of
the Board of Directors of Storebro Machine AB and Nortelco, respectively. Since
1992, Mr. Haggqvist also has been the President and controlling shareholder of
Haggqvinvest AB a privately held international corporate finance firm that
invests in and provides advisory services in connection with domestic and
international corporate transactions. From 1985 to 1992, he was the President of
Societe Generale (Sweden), the Swedish subsidiary of Societe Generale France.
Prior to such time, he held a number of executive positions with two Swedish
banks including Executive Vice President of Gotabanken and President of Svenska
Handelsbanken S.A., Luxembourg. Mr. Haggqvist also was the Assistant to the
Swedish Trade Commissioner in Zurich. Mr. Haggqvist received a master's degree
in political science from the University of Gothenburg in 1970.
BJORN NYSTED has been the President of the Company since September 1996,
and he has been a Director of the Company since May 1994. From May 1994 to
September 1996, Mr. Nysted was the Treasurer of the Company. Mr. Nysted has been
the President, and a Director of Nortelco since 1990 when he founded Nortelco.
Mr. Nysted is also the Chairman of the Board of Directors of Nordic Business
Development AS, a privately held corporation controlled by Mr. Nysted and
certain of his family members.
TORE STRAND has been the Chief Financial Officer, Treasurer and Secretary
of the Company since March 1997, and he has been the Chief Financial officer of
Nortelco since February 1990. From 1989 to February 1990, Mr. Strand was the
Chief Financial Officer of M-Gruppen AS, a Norwegian group which sells
kitchen-products for the professional market. From 1983, to 1989, Mr. Strand was
the Section Manager, Finance in Lefac AS, a Norwegian Lease and Finance company.
Mr. Strand received a Master of Business degree from the University of Lund,
Sweden in 1983.
ESPEN KOMNAES has been a Director of the Company since September 1996.
Since November, 1997, Mr. Komnaes has been a partner at Komnaes & Huser ANS, an
Oslo, Norway based law firm. From 1985 to November 1997, Mr. Komnaes was a
partner at Meltvedt, Komnaes & Co., an Oslo, Norway based law firm. Mr. Komnaes
received a degree in jurisprudence from the University of Bergen in 1979.
Directors are elected annually by the stockholders and hold office until
the next annual meeting and until their respective successors are elected and
qualified. Executive officers are elected by the Board of Directors and hold
office until their respective successors are elected and qualified.
The Company has agreed that for a period of three years, the Representative
will have the right to designate a person to be a non-voting advisor to the
Company's Board of Directors who will receive the same compensation as a
nonofficer member of the Board of Directors and who will be indemnified by the
Company against any claims arising out of his participation at meetings of the
Board of Directors. Such person will serve only in an advisory position in order
to protect the investors in the Offering. In lieu of
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<PAGE>
the Representative's right to designate an advisor to the Board of Directors,
the Representative shall have the right during such three year period, in its
sole discretion, to designate one person for election as a director of the
Company and the Company will use its best efforts to obtain the election of such
person who shall be entitled to receive the same compensation, expense
reimbursements and other benefits as any other director. The identity of such
person has not been determined as of the date hereof, and it is not expected
that such right will be exercised in the immediate future. The Company believes
that the non-voting advisor will not have any liabilities while acting in such
capacity, and it intends to obtain directors and officers insurance for such
person in the event that such person is elected to the board of directors.
Executive Compensation
The following table sets forth, in U.S. dollars, the cash compensation
paid by the Company or its subsidiaries for services rendered during the fiscal
years ended December 31, 1997, 1996 and 1995 to its chief executive officer. No
other executive officer's compensation exceeded $100,000.
Summary Compensation Table
Long-Term
Annual Compensation Compensation
<TABLE>
<CAPTION>
Other Annual
Name and Principal Position Year Salary ($) Bonus ($) Compensation ($) Options (#)
- --------------------------- ----- ---------- --------- ---------------- -----------
Bjorn Nysted, President and
<S> <C> <C> <C> <C> <C>
Chief Executive Officer................ 1997 100,000 15,000 -- --
1996 82,000 10,000 -- --
1995 77,000 10,000 -- --
</TABLE>
Employment Agreements
The Company's subsidiary, Nortelco Nordic AS, intends to enter into a five
year employment agreement with Bjorn Nysted, President and Chief Executive
Officer of the Company, as of the Effective Date of this Offering, pursuant to
which Mr. Nysted shall receive an annual base salary of $160,000. Mr. Nysted
shall agree to devote all of his business time to the affairs of the Nortelco
Group. In addition, Nortelco Nordic AS shall also agree to pay to Mr. Nysted an
$15,000 annual automobile allowance. The Company has the right to terminate the
employment agreement on twelve months notice, and Mr. Nysted shall have the
right to teminate the employment agreement on six months notice. Such employment
contract shall provide that in the event that Mr. Nysted is terminated by the
Company, he shall be entitled to receive all compensation under his employment
agreement.
The Company's subsidiary, Nortelco Nordic AS, intends to enter into a five
year employment agreement with Tore Strand, Chief Financial Officer, Treasurer
and Secretary of the Company, as of the Effective Date of this Offering,
pursuant to which Mr. Strand shall receive an annual base salary of $82,000. Mr.
Strand shall agree to devote all of his business time to the affairs of the
Company. In addition, Nortelco Nordic AS shall also agree to provide Mr. Strand
with the use of an automobile. The Company shall have the right to terminate the
employment agreement on twelve months notice. Mr. Strand shall have the right to
terminate the employment agreement on six months notice.
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Messrs. Nysted and Strand shall agree not to disclose any confidential
information of the Company during the term of employment or thereafter. In
addition, Messrs. Nysted and Strand shall agree not to compete with the Company
during the term of their employment and for a period of one year after the date
of the termination of their employment with the Company.
Although each of the companies in the Nortelco Group and Storebro
Machine AB have entered into employment agreements with a number of their
respective employees, the Company has not entered into any other employment
agreements.
Consulting Agreement
The Company's subsidiary, Nortelco Nordic AS, entered into a two year
consulting agreement with Goran Haggqvist, Chairnman of the Board of the
Company, as of November 11, 1998, pursuant to which Mr. Haggqvist shall receive
an annual compensation of $48,000. Pursuant to the consulting agreement, Mr.
Haggqvist shall agree to assist the Company with corporate planning, financial
public relations, business strategies and shareholder relations.
1998 Stock Option Plan
The Company's 1998 Stock Option Plan (the "Stock Option Plan") was
adopted by the Board of Directors and the stockholders of the Company as of
November 11, 1998.
The Stock Option Plan provides for the granting of options to purchase
up to 250,000 shares of the Company's Common Stock that are intended to qualify
either as incentive stock options ("Incentive Stock Options") within the meaning
of Section 422 of the United States Internal Revenue Code or as options that are
not intended to meet the requirements of such section ("Nonstatutory Stock
Options"). Options to purchase shares may be granted under the Stock Option Plan
to persons who, in the case of Incentive Stock Options, are employees (including
officers) of the Company, or, in the case of Nonstatutory Stock Options, are
employees (including officers) or non-employee directors of the Company or
consultants to the Company.
The Stock Option Plan provides for its administration by a committee
chosen by the Board of Directors comprised of directors who are disinterested
persons (as defined in Rule 16(b)(3) under Section 16(b) of the Securities
Exchange Act of 1934). Once the committee is chosen by the Board of Directors,
the Stock Option Committee shall have full discretionary authority, subject to
certain restrictions, to determine the number of shares for which Incentive
Stock Options and Nonstatutory Stock Options may be granted and the individuals
to whom, the times at which, and the exercise price for which options will be
granted.
The exercise price of all Incentive Stock Options granted under the
Stock Option Plan must be at least equal to the fair market value of such shares
on the date of the grant, or, in the case of Incentive Stock Options granted to
the holder of 10% or more of the Company's Common Stock, at least 110% of the
fair market value of such shares on the date of the grant. The maximum exercise
period for which Incentive Stock Options may be granted is ten years from the
date of grant (five years in the case of an individual owning more than 10% of
the Company's Common Stock). The aggregate fair market value (determined at the
date the option is granted) of shares with respect to which Incentive Stock
Options are exercisable for the first time by the holder of the option during
any calendar year shall not exceed $100,000. If such amount exceeds $100,000,
the Board of Directors or the Committee may, when the Options are exercised and
the shares transferred to an employee, designate those shares that will be
treated as Incentive Stock Options and those that will be treated as
Nonstatutory Stock Options.
As of the date hereof, no options under the Stock Option Plan have been
granted.
<PAGE>
Compensation of Directors
Directors of the Company do not receive compensation for their services
as directors; however, the Board of Directors may authorize the payment of
compensation to directors for their attendance at regular and special meetings
of the Board and for attendance at meetings of committees of the Board as is
customary for similar companies. Directors will be reimbursed for their
reasonable out-of-pocket expenses incurred in connection with their duties to
the Company. As of the date of this Prospectus, no person has received
compensation for serving as a director.
Limitation on Liability of Directors
The Delaware General Corporation Law permits a corporation, through its
Certificate of Incorporation, to exonerate its directors from personal liability
to the corporation, or to its stockholders, for monetary damages for breach of
fiduciary duty of care as a director, with certain exceptions. The exceptions
include a breach of the director's duty of loyalty, acts or omissions not in
good faith or which involve intentional misconduct or knowing violation of law,
improper declarations of dividends, and transactions from which the directors
derived an improper personal benefit. The Company's Certificate of Incorporation
exonerates its directors from monetary liability to the extent permitted by this
statutory provision.
The Company has been advised that it is the position of the Commission
that insofar as the foregoing provision may be invoked to disclaim liability for
damages arising under the Act, that provision is against public policy as
expressed in the Act and is therefore unenforceable.
42
<PAGE>
PRINCIPAL STOCKHOLDERS
The following table sets forth, as of November 1, 1998, certain
information concerning beneficial ownership of shares of Common Stock with
respect to (i) each person known to the Company to own 5% or more of the
outstanding shares of Common Stock, (ii) each director of the Company, (iii) the
executive officer(s) of the Company named in the Summary Compensation Table, and
(iv) all directors and officers of the Company as a group:
<TABLE>
<CAPTION>
Amount Percentage of Amount Percentage of
and Nature Common Stock and Nature Common Stock
Beneficially Owned Before Beneficially Owned After
Owned Before Offering Owned After Offering
Name Offering (1)(2) Offering (1)(2)
---- -------- ------ -------- ------
<S> <C> <C> <C> <C>
Goran Haggqvist 1,208,729(3) 43.2% 1,158,729(3) 30.5%
Karlaplan 10
Stockholm, Sweden
Bjorn Nysted 1,158,818(4) 41.4% 1,108,818(4) 29.2%
c/o Nortelco Nordic AS
P.O. Box 116
Manglerud Oslo, Norway
Jan Haggqvist
Overas Parkvagen 18
Gothenburg, Sweden 185,844 6.6% 185,844 4.9%
Tore Strand
c/o Nortelco Nordic AS
P.O. Box 116
Manglerud Oslo, Norway 0 0 0 0
Espen Komnaes 0 0 0 0
c/o Komnaes & Huser ANS
P.O. Box 1661 Vika
Oslo, Norway
All Officers and
Directors as a
Group (4 persons) 2,367,547(5) 84.6% 2,267,547(5) 59.7%
</TABLE>
* Less than 1% of issued and outstanding.
(1) Based upon 2,800,000 shares of Common Stock issued and outstanding
before the Offering and 3,800,000 shares of Common Stock issued and
outstanding after the Offering. However, each beneficial owner's
percentage ownership is determined by assuming that options, warrants
and other convertible securities that are held by such person (but not
those held by any other person) and that are exercisable or convertible
within sixty (60) days have been exercised or converted. A person is
deemed to be the beneficial owner of securities that can be acquired by
such person within sixty (60) days upon the exercise of options or
warrants.
(2) Unless otherwise provided herein, the Company believes that all persons
named in the table have sole voting and investment power with respect
to all shares of Common Stock beneficially owned by them.
(3) Mr. Haggqvist is the Chairman and a Director of the Company and a
Director of Nortelco Nordic AS and Storebro Machine AB. Amount and
percentage of shares owned
43
<PAGE>
after the Offering gives effect to the sale of 50,000 shares of
Common Stock by Mr. Haggqvist.
(4) All shares are owned by Nordic Business Development AS, a privately
held corporation controlled by Mr. Nysted and certain of his family
members. Mr. Nysted is the President and a Director of the Company, and
the Managing Director, President, and a Director of Nortelco Nordic AS.
Amount and percentage of shares owned after the Offering gives effect
to the sale of 50,000 shares of Common Stock by Mr. Nysted.
(5) See footnotes (3) and (4).
SELLING STOCKHOLDERS
The following table set forth certain information at November 1, 1998
and as adjusted to reflect the sale of the Common Stock by the Selling
Stockholders.
<TABLE>
<CAPTION>
Shares
Beneficially Shares
Owned Owned
Name of Prior Shares After
Stockholder to Offering Offered Offering
<S> <C> <C> <C>
Jeff Levine 14,730 14,730 0
Ballard Property Co. #1 Ltd. 7,365 7,365 0
Richard Metsch 7,365 7,365 0
George Rutland 14,730 14,730 0
Silverio Conte 7,365 7,365 0
Wayne Wiseman 14,730 14,730 0
Joseph Raimando 7,365 7,365 0
Deborah Caruso 14,730 14,730 0
Sierra Holding Trust 14,730 14,730 0
Marscel Aronheim 7,365 7,365 0
ATB, Inc. 7,365 7,365 0
Edward Wilkins 7,365 7,365 0
Joseph DiMauro 7,365 7,365 0
</TABLE>
PLAN OF DISTRIBUTION
The Selling Stochholders are free to offer and sell their shares of
Common Stock at such times, in such manner and at such prices as they shall
determine. Such Common Stock may be offered by Selling Stockholders in one or
more types of transactions, which may or may not involve brokers, dealers or
cash transactions. The Selling Stockholders may also use Rule 144 under the
Securities Act, to sell such securities, if he meets the criteria and conform to
the requirements of such Rule. There is no underwriter or coordinating broker
acting in connection with the proposed sale of Common Stock by the Selling
Stockholders.
The Selling Stockholders have advised the Company that sales of Common
Stock may be effected from time to time in transactions (which may include block
transactions) in the over-the-counter market, in negotiated transactions,
through the writing of options on the Common Stock, or a combination of such
methods of sale, at fixed price which may be changed, at market prices
prevailing at the time of sale, or at negotiated prices, the Selling
Stockholders may effect such transactions by selling Common Stock directly to
purchasers or to or through broker/dealers which may act as agents or
principals. Such broker/dealers may receive compensation in the form of
discounts, concessions, or commissions from the Selling Stockholders and/or the
purchasers of Common Stock for whom such broker/dealers may act as agents or to
whom they sell as principal, or both (which compensation as to a particular
broker/dealer may act as agents might be in excess of customary commissions).
The Selling Stockholders and any broker/dealers that act in connection with the
sale of the Common Stock might be deemed to be "underwriters" within them
meaning of Section 2(11) of the Securities Act, and any commissions received by
them and any profit on the resale of the Common Stock as principal might be
deemed to be underwriting discounts and commissions under the Securities Act.
The Selling Stockholders may agree to indemnify any agent, dealer or
broker/dealer that participates in transactions involving sales of the shares
against certain liabilities, including liabilities arising under the Securities
Act.
Because the Selling Stockholders may be deemed to be an "underwriter"
within the meaning of Section 2(11) of the Securities, they will be subject to
prospectus delivery requirements under the Securities Act. Furthermore, in the
event of a "distribution" of his Common Stock, the Selling Stockholders, any
selling broker/dealer and any "affiliated purchasers" may be subject to
Regulation M under the Exchange Act which prohibits any "stabilizing bid" or
"stabilizing purchase" for the purpose of pegging, fixing or stabilizing the
price of the Common Stock in connection with the Offering.
<PAGE>
CERTAIN TRANSACTIONS
During April 1997, the Company's subsidiary, Norleco AS, borrowed an
aggregate of approximately $104,00 from Goran Haggqvist, a director of the
Company, in order to provide additional funds for working capital. The loan
bears interest at the rate of 10% per annum and is payable on demand.
During February 1998, the Company's subsidiary, Norleco AS, borrowed an
aggregate of approximately $121,250 from Goran Haggqvist, a director of the
Company, in order to provide additional funds for working capital. The loan
bears interest at the rate of 10% per annum and is payable on demand.
During September 1998, the Company's subsidiary, Norleco AS, borrowed
an aggregate of approximately $156,000 from Goran Haggqvist, a director of the
Company, in order to provide additional funds for working capital. The loan
bears interest at the rate of 10% per annum and is payable on demand.
During October 1998, the Company borrowed an aggregate of $150,000 from
Goran Haggqvist, a director of the Company, in order to provide additional funds
for working capital to fund, among other things, the repurchase of certain
shares of Common Stock of the Company, and to repay certain outstanding
promissory notes of the Company, and to pay accrued interest on certain
outstanding promissory notes of the Company. The loan bears interest at the rate
of 10% per annum and is payable on demand.
44
<PAGE>
DESCRIPTION OF SECURITIES
Common Stock
The Company is authorized to issue up to 24,000,000 shares of Common
Stock, $.001 par value per share, 2,800,000 of which are issued and outstanding
as of the date of this Prospectus. The holders of the Common Stock are entitled
to receive dividends equally when, as and if declared by the Board of Directors,
out of funds legally available therefore.
Subject to the rights that may be designated by the Board of Directors
to the holders of any preferred stock, the holders of the Common Stock have sole
voting rights, one vote for each share held of record, and are entitled upon
liquidation of the Company to share ratably in the net assets of the Company
available for distribution. Shares of the Company's Common Stock do not have
cumulative voting rights and vote as a class on all matters requiring
stockholder approval. Therefore, the holders of a majority of the shares of
Common Stock may elect all of the directors of the Company, control its affairs
and day to day operations. The shares of Common Stock are not redeemable and
have no preemptive or similar rights. All outstanding shares of the Company's
Common Stock are fully paid for and non-assessable.
Preferred Stock
The Company is authorized to issue 1,000,000 shares of "blank check"
Preferred Stock par value $.001 per share ("Preferred Stock"). The Preferred
Stock may be issued from time to time, in one or more series, upon authorization
by the Company's Board of Directors. The Board of Directors, without further
approval of the stockholders, will be authorized to fix the dividend rights and
terms, conversion rights, voting rights, redemption rights and terms,
liquidation preferences, and any other rights, preferences, privileges and
restrictions applicable to each series of Preferred Stock. The issuance of
Preferred Stock (subject to the prohibition of the Company issuing such shares
for two years from the Effective Date, without the consent of the Underwriters),
while providing flexibility in connection with possible acquisitions and other
corporate purposes, could, among other things, adversely effect the voting power
of the holders of the Common Stock and, under certain circumstances, make it
more difficult for a third party to gain control of the Company, discourage bids
for the Company's Common Stock at a premium or otherwise adversely effect the
market price of the Common Stock, if the Common Stock is ever publicly traded,
of which there are no assurances. As of the date hereof, the Company has no
plans to issue, or any present intention to issue any such shares.
Redeemable Common Stock Purchase Warrants
Each Warrant entitles its holder to purchase one share of Common Stock
at an exercise price of $6.00 per share, subject to adjustment, commencing one
year after the Effective Date until , 2004.
The Warrants will be issued pursuant to a warrant agreement (the
"Warrant Agreement") among the Company, the Underwriters and Olde Monmouth Stock
Transfer Co., Inc., the warrant agent, and will be evidenced by warrant
certificates in registered form.
The exercise price of the Warrants and the number and kind of shares of
Common Stock or other securities and property issuable upon exercise of the
Warrants are subject to adjustment in certain circumstances, including stock
splits, stock dividends, subdivisions, combinations, reclassification, or
issuances of stock at a price lower than the current market price. Additionally,
an adjustment will be made upon the sale of all or substantially all of the
assets of the Company in order to enable the holders of the Warrants to purchase
the kind and number of shares of stock or other securities or property
(including cash) receivable in such event by a holder of the number of shares of
Common Stock that might otherwise have been purchased upon exercise of the
Warrants.
45
<PAGE>
The Warrants do not confer upon the holder any voting or any other
rights of a stockholder of the Company. Upon notice to the holders of the
Warrants, the Company has the right to reduce the exercise price or extend the
expiration date of the Warrants.
Warrants may be exercised upon surrender of the Warrant certificate
evidencing those Warrants on or prior to the expiration date (or earlier
redemption date) of the Warrants to the Warrant Agent, with the form of
"Election to Purchase" on the reverse side of the Warrant certificate completed
and executed as indicated, accompanied by payment of the full exercise price (in
United States funds, by cash or certified bank check payable to the order of the
Warrant Agent) for the number of Warrants being exercised.
No fractional shares will be issued upon exercise of the Warrants.
However, if a holder of a Warrant exercises all Warrants then owned of record by
him, the Company will pay to that holder, in lieu of the issuance of any
fractional share which would otherwise be issuable, an amount in cash based on
the market value of the Common Stock on the last trading day prior to the
exercise date.
No Warrant will be exercisable unless at the time of exercise the
Company has filed with the Commission a current prospectus covering the issuance
of shares of Common Stock issuable upon exercise of the Warrants and the
issuance of shares has been registered or qualified or is deemed to be exempt
from registration or qualification under the securities laws of the state of
residence of the holder of the Warrant. The Company has undertaken to use its
best efforts to maintain a current prospectus relating to the issuance of shares
of Common Stock upon the exercise of the Warrants until the expiration of the
Warrants, subject to the terms of the Warrant Agreement. While it is the
Company's intention to maintain a current prospectus, there is no assurance that
it will be able to do so. See "Risk Factors--Current Prospectus and State Blue
Sky Registration Required to Exercise Warrants."
The Warrants are redeemable, in whole or in part, by the Company at a
price of $.05 per Warrant, commencing one year after the Effective Date and
prior to their expiration, provided that (i) prior written notice of not less
than 30 days is given to the Warrantholders (ii) the closing bid price per share
of the Company's Common Stock as reported on the Nasdaq National Market (or the
last sale price, if quoted on a national securities exchange) for the twenty
consecutive trading days immediately prior to the date on which the notice of
redemption is given, shall have exceeded $9.25 per share and (iii)
Warrantholders shall have exercise rights until the close of business the day
preceding the date fixed for redemption. The Warrants shall be exercisable until
the close of the business day preceding the date fixed for redemption. In
addition, subject to the rules of the NASD, the Company has agreed to engage the
Underwriters as warrant solicitation agent, in connection with which it would be
entitled to a 5% fee upon exercise of the Warrants. See "Underwriting."
46
<PAGE>
Transfer Agent and Warrant Agent
The Transfer Agent for the Company's Common Stock and the Warrant Agent
for the Company's Warrants is Olde Monmouth Stock Transfer Co., Inc.,
Middletown, New Jersey.
SHARES ELIGIBLE FOR FUTURE SALE
Upon consummation of this Offering, the Company will have 3,800,000
shares of Common Stock outstanding (3,965,000 shares if the Underwriters'
Over-allotment option is exercised in full). All of the shares of Common Stock
sold in this Offering will be freely tradeable without restriction or further
registration under the Securities Act of 1933, as amended (the "Securities
Act"), except for any shares purchased by an "affiliate" of the Company which
will be subject to certain limitations of Rule 144 adopted under the Securities
Act.
The 2,800,000 presently outstanding shares of Common Stock are
restricted securities and will be subject to the resale limitations provided for
in Rule 144. Under Rule 144, as currently in effect, subject to the satisfaction
of certain other conditions, a person, including an affiliate of the company,
who has owned restricted shares of Common Stock beneficially for at least two
years, is entitled to sell, within any three month period, a number of shares
that does not exceed the greater of 1% of the total number of outstanding shares
of the same class or, if the Common stock is quoted on an exchange, the average
weekly trading volume during the four calendar weeks preceding the sale. A
nonaffiliate who has not been an affiliate of the Company for at least the three
months immediately preceding the sale and who has beneficially owned shares of
Common Stock for at least three years is entitled to sell such shares under Rule
144 without regard to any of the limitations described above. In meeting the two
and three year holding periods described above, a holder who has purchased
shares can include the holding periods of a prior owner who was not an affiliate
of the Company.
Giving effect to the sale of 1,000,000 shares by the Company and
100,000 shares by the Selling Stockholders, the Company will have issued and
outstanding 3,800,000 shares of its Common Stock, of which 2,700,000 will be
"restricted securities".
All of the Company's securityholders, on the date hereof, have agreed
not to publicly sell, for a period of two (2) years from the date of this
Prospectus, any shares of the Company's Common Stock without the prior written
consent of the Representative. The Representative's decision whether to release
such individuals from their lock-ups will be dependent upon market conditions,
including the price and volume of the Company's securities, as well as the need
to maintain orderly market conditions.
Prior to this Offering, there has been no sustained market for any
securities of the Company. The effect, if any, of public sales of the restricted
shares of Common Stock or the availability of such shares for future sale at
prevailing market prices cannot be predicted. Nevertheless, the possibility that
substantial amounts of restricted shares may be resold in the public market may
adversely affect prevailing market prices for the Common Stock and the Warrants,
if any such market should develop.
47
<PAGE>
UNDERWRITING
Subject to the terms and conditions contained in the underwriting
agreement between the Company and the Underwriters, for which Mason Hill & Co.,
Inc. is acting as Representative (a copy of which agreement is filed as an
exhibit to the Registration Statement of which this Prospectus forms a part),
the Company and the Principal Stockholders have agreed to sell to each of the
Underwriters named below, and each of such Underwriters has severally agreed to
purchase the number of shares of Common Stock and Warrants set forth opposite
its name. All 1,100,000 shares and 1,650,000 Warrants offered must be purchased
by the several Underwriters if any are purchased. The Shares and Warrants are
being offered by the Underwriters subject to prior sale, when, as and if
delivered to and accepted by the Underwriters and subject to approval of certain
legal matters by counsel and to certain other conditions.
Number of
Underwriter Shares Warrants
Mason Hill & Co., Inc.
Total 1,100,000 1,650,000
========= =========
The Representative has advised the Company that the Underwriters
propose to offer the shares of Common Stock and the Warrants to the public at
the offering prices set forth on the cover page of this Prospectus and that the
Underwriters may allow to certain dealers who are members in good standing with
the National Association of Securities Dealers, Inc. ("NASD") concessions, not
in excess of $ per share of Common Stock and $ per Warrant. After the initial
public offering, the public offering price and concessions may be changed by the
Underwriters.
The Company has granted the Underwriters an option, exercisable for 45
days from the date of this Prospectus, to purchase up to 165,000 shares of
Common Stock and 247,500 Warrants by the Company, at the public offering price
less the underwriting discounts set forth on the cover page of this Prospectus.
The Underwriters may exercise this option solely to cover over-allotments in the
sale of the shares of Common Stock and Warrants offered hereby.
The Company and the Principal Stockholders have agreed to pay the
Underwriters a non-accountable expense allowance of 3% of the gross proceeds of
the shares of Common Stock and Warrants sold in this Offering, or a total of
$154,950 and $15,000, respectively ($180,442.50 and $15,000, respectively, if
the Over-allotment Option is exercised in full), none of which has been paid
prior to the date hereof.
The underwriting agreement provides for reciprocal indemnification
between the Company and the Underwriters against certain civil liabilities,
including liabilities under the Securities Act of 1933.
The Company has agreed to sell to the Underwriters or their designees,
at a price of $10, the Underwriters' Warrants, which entitle the Underwriters to
purchase up to 110,000 shares of Common Stock of the Company and/or 165,000
Warrants, respectively. The securities issuable upon exercise of the
Underwriters' Warrants are identical to those offered pursuant to this
Prospectus. The Underwriters' Warrants will be exercisable at a price of $6.00
per share and $.12 per Warrant, respectively, for a period of four years
commencing one year from the date of this Prospectus, and they will not be
transferable except to underwriters and selected dealers and officers and
partners thereof. Any profit realized upon any resale of the Underwriters'
Warrants or upon any sale of the shares of Common Stock or Warrants underlying
same may be deemed to be additional Underwriters' compensation. The Company has
agreed that, upon written
48
<PAGE>
request of the then holder(s) of at least a majority of the Underwriters'
Warrants, the Company will register (or file a post-effective amendment with
respect to any registration statement registering) the Underwriters' Warrants
and the underlying securities under the Securities Act at its sole expense. In
addition, the Company has also agreed to certain "piggy-back" registration
rights for the holders of the Underwriters' Warrants and the underlying
securities.
The Company has agreed that for a period of three years, the
Representative will have the right to designate a person to be a non-voting
advisor to the Company's Board of Directors who will receive the same
compensation as a nonofficer member of the Board of Directors and who will be
indemnified by the Company against any claims arising out of his participation
at meetings of the Board of Directors. In lieu of the Representative's right to
designate an advisor to the Board of Directors, the Representative shall have
the right during such three year period, in its sole discretion, to designate
one person for election as a director of the Company and the Company will use
its best efforts to obtain the election of such person who shall be entitled to
receive the same compensation, expense reimbursements and other benefits as any
other director. The identity of such person has not been determined as of the
date hereof, and it is not expected that such right will be exercised in the
immediate future.
The Underwriters have informed the Company that they do not expect
sales of shares and the Warrants to be made to discretionary accounts to exceed
1% of the shares of Common Stock and Warrants offered hereby.
The Offering is subject to the agreement by all present stockholders of
the Company that they will not sell any shares of Common Stock to the public
without the prior written consent of the Representative for a period of
twenty-four months.
The Company has agreed to enter into an agreement with the
Representative retaining them as a financial consultant for a period of three
years from the date hereof, pursuant to which they will receive fees aggregating
$100,000 which fees will be payable in full at closing.
The foregoing is a summary of the principal terms of the underwriting
agreement, the Underwriters' Warrant, and the Consulting Agreement. Reference is
made to the copies of the underwriting agreement, the Underwriters' Warrant
Agreement and the Consulting Agreement which are filed as exhibits to the
Registration Statement of which this Prospectus forms a part.
Prior to the Offering, there has been no sustained public market for
the Common Stock and no public market for the Warrants. Consequently, the
Offering Price of the Common Stock and Warrants and the exercise price and other
terms of the Warrants have been determined by the Company and the Underwriters
and are not related to the Company's asset value, earnings, book value or other
such criteria of value. Factors considered in determining the Offering Price of
the Common Stock and Warrants and the exercise price and other terms of the
Warrants include principally, the prospects for the industry in which the
company operates, the Company's management, the general condition of the
securities markets and the demand for securities in similar industries.
49
<PAGE>
LEGAL MATTERS
The validity of the issuance of the shares offered hereby will be
passed upon for the Company by Sichenzia, Ross & Friedman LLP, New York, New
York. Certain legal matters in connection with this Offering will be passed upon
for the Underwriters by Gersten, Savage, Kaplowitz & Fredericks, LLP, New York,
New York. Komnaes & Huser has advised the Company on certain legal matters in
connection with this Offering with respect to the laws of Norway. Falks
Advokatbyra has advised the Company on certain legal matters in connection with
this Offering with respect to the laws of Sweden.
EXPERTS
The consolidated financial statements of Nordic Equity Partners Corp.
at December 31, 1997 and 1996, and for each of the three years in the period
ended December 31, 1997, appearing in this Prospectus and Registration Statement
have been audited by Ernst & Young AS, independent auditors, as set forth in
their report thereon appearing elsewhere herein.
CHANGE IN AUDITORS
In April 1997, the Company dismissed McManus & Co., P.C. as its
independent auditors, and subsequently engaged Ernst & Young AS as its
independent auditors. McManus & Co., P.C. was originally retained as the
Company's independent auditors in connection with the Company's previously
withdrawn public offering. The Company dismissed McManus & Co., P.C. as a result
of the refusal by the Securities and Exchange Commission to accept the audit
report rendered by McManus & Co., P.C., which refusal was based upon the failure
by McManus & Co., P.C. to properly perform their audit and the failure by
McManus & Co., P.C. to comply with applicable auditing standards.
50
<PAGE>
REPORT OF INDEPENDENT AUDITORS
Shareholders and Board of Directors
Nordic Equity Partners Corp.
We have audited the accompanying consolidated balance sheets of Nordic
Equity Partners Corp. and subsidiaries as of December 31, 1997 and 1996, and the
related consolidated statements of income and comprehensive income,
shareholders' equity and cash flows for each of the three years in the period
ended December 31, 1997. These financial statements are the responisibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Nordic Equity
Partners Corp. and subsidiaries as of December 31, 1997 and 1996, and the
consolidated results of their operations and their cash flows for each of the
three years in the period ended December 31, 1997, in conformity with accounting
principles generally accepted in the United States of America.
/s/ ERNST & YOUNG AS
ERNST & YOUNG AS
Oslo, Norway
November 10, 1998
<PAGE>
Nordic Equity Partners Corp.
Consolidated Balance Sheets
<TABLE>
<CAPTION>
December 31,
Note 1997 1996
(in thousands)
Assets
Current assets
<S> <C> <C>
Cash and cash equivalents ........... $547 $410
Restricted cash and cash equivalents 137 159
Trade accounts receivable (4) 4,899 4,227
Other receivables ................... 127 152
Inventories .(3)..................... 3,765 4,734
Prepaid expenses .................... 250 245
Total current assets ................ 9,725 9,927
Property, plant and equipment,
net (5)(8) 1,173 1,138
Prepaid pension expenses (9)......... 326 457
Agency and distribution rights ...... 1,086 1,121
Other assets ........................ 39 114
Total assets ........................ 12,349 12,757
</TABLE>
<PAGE>
Nordic Equity Partners Corp.
Consolidated Balance Sheets
<TABLE>
<CAPTION>
December 31,
Note 1997 1996
(in thousands)
Liabilities and Shareholders' Equity
Current liabilities
<S> <C> <C> <C>
Short-term borrowings (6) ......................... $ 3,118 $ 2,352
Accounts payable .................................. 3,112 3,456
Witholding tax and other taxes payable ............ 984 936
Income taxes payable (11) ......................... 59 273
Prepayments from customers ........................ 270 448
Current portions of long-term debt ................ 167 422
Related party debt (12) ........................... 59 494
Other currrent liabilities ........................ 496 479
Total current liabilities ......................... 8,265 8,860
Long-term liabilities
Long-term debt (7) ................................ 746 204
Related party debt (12) ........................... 246 --
Deferred income taxes (11) ........................ 171 175
Total long term liabilities ....................... 1,163 379
Total liabilities ................................. 9,428 9,239
Shareholders' equity
Common stock, 0.001 par value, 100,000,000 shares
authorized, 2,800,000 shares issued and outstanding 3 3
Capital in excess of par value .................... 2,208 2,208
Retained earnings ................................. 967 1,091
Other comprehensive income ........................ (257) 216
Total shareholders' equity ........................ 2,921 3,518
Total liabilities and shareholders' equity ........ $ 12,349 $ 12,757
</TABLE>
<PAGE>
Nordic Equity Partners Corp.
Consolidated Statements of Income and Comprehensive Income
<TABLE>
<CAPTION>
For the year ended December 31,
Note 1997 1996 1995
(in thousands except per share amounts)
<S> .......................................... <C> <C> <C>
Net sales .................................... %25,561 $ 26,564 $ 25,333
Cost of goods sold ........................... 15,436 15,891 15,258
Gross profit ................................. 10,125 10,673 10,075
Sales and marketing expenses ................. 3,455 3,713 3,144
General and administrative expenses .......... 6,062 5,952 5,924
Amortization of agency and distribution rights 202 168 212
Income from operations ....................... 406 840 795
Interest income .............................. 22 39 83
Foreign exchange gains ....................... 46 60 100
Interest expenses ............................ (438) (487) (514)
Foreign exchange losses ...................... (42) (18) (26)
Net income (loss) before taxes ............... (6) 434 438
Current income taxes (11) .................... 119 311 196
Deferred income taxes (11) ................... (1) (30) (5)
Total taxes .................................. 118 281 191
Net income (loss) ............................ $ (124) $ 153 $ 247
Other comprehensive income:
Translation adjustments ...................... (473) (82) 265
Comprehensive income (loss) .................. (597) 71 512
Earnings per share:
Basic and Diluted ........................... (0.04) 0.14 27.65
</TABLE>
<PAGE>
Nordic Equity Partners Corp.
Consolidated Statements of Cash Flows
<TABLE>
<CAPTION>
"For the year ended December 31,"
1997 1996 1995
(in thousands)
Cash flows from operations
<S> <C> <C> <C>
Net income (loss) .............................................. $(124) $ 153 $ 247
Deferred taxes ................................................. (1) (30) (5)
Depreciation ................................................... 330 275 314
Amortization of agency and distribution rights ................. 202 168 212
Gain (loss) from disposal of assets ............................ 10 (6) --
Changes in inventories ......................................... 969 (233) (1,080)
Changes in accounts receivable ................................. (672) (395) (1,194)
Changes in accounts payable .................................... (344) (29) 702
Changes in other assets and liabilities......................... (680) 49 187
Cash flows from operating activities ........................... (310) (48) (617)
Cash flows from investing activities
Purchases of equipment ......................................... (391) (231) (519)
Proceeds from disposal of assets ............................... 36 46 33
Investments in other assets .................................... (169) (51) (295)
Proceeds from disposal of other assets ......................... 75 --
Cash flows from investing activities ........................... (449) (236) (781)
Cash flows from financing activities
Net change in short term borrowings ............................ 766 1,022 634
Proceeds from long-term debt ................................... 719 -- 488
Payments on long term debt ..................................... (116) (787) (458)
Issuances of common stock - 50 222
Cash flows from financing activities 1,369 285 886
Net effects of exchange rate changes (473) (82) 265
Net changes in cash and cash equivalents 137 (81) (247)
Cash and cash equivalents at beginning of year 410 491 738
Cash and cash equivalents at end of year $547 $410 $ 491
</TABLE>
<PAGE>
Nordic Equity Partners Corp.
Consolidated Statements of Changes in Shareholders' Equity
(in thousands except share amounts)
<TABLE>
<CAPTION>
Other
Common stock Paid in Retained Comprehensive
Shares Amount Capital Earnings Income Total
Total
<S> <C> <C> <C> <C> <C> <C>
Balance, January 1, 1995 ... 8,746 $ 0 $ 586 $ 691 $ 33 $1,310
Foreign currency adjustments 265 265
Common stock issuances ..... 186 222 222
Capital contributions ...... 353 353
Net income ................. 247 247
Balance, December 31, 1995 . 8,932 0 1,161 938 298 2,397
Foreign currency adjustments (82) (82)
Debt for equity conversion . 2,643,700 3 997 1,000
Common stock issuances ..... 147,368 50 50
Net income ................. 153 153
Balance, December 31, 1996 . 2,800,000 3 2,208 1,091 216 3,518
Foreign currency adjustments (473) (473)
Net loss ................... (124) (124)
Balance, December 31, 1997 . 2,800,000 $ 3 $ 2,208 $ 967 $ (257) $ 2,921
</TABLE>
<PAGE>
Nordic Equity Partners Corp.
Notes to the Consolidated Financial Statements
1. Organization and basis of presentation
Nordic Equity Partners Corp. (the "Company") was incorporated under the
laws of Delaware in May 1994 as a wholly-owned subsidiary of Sherman, Goelz &
Associates ("SGA"). SGA was incorporated under the laws of Nevada under the
original name Pearl Ventures. In May 1995 SGA was merged with and into the
Company. Prior to the merger both the Company and SGA were holding companies
with no operations or investments.
In November 1994 the Company acquired 100% of the common stock of Storebro
Machine AB ("Storebro"), a Swedish company under the common control of the
Company's majority shareholder, in exchange for cash of $215,000 and 722 shares
of the Company's common stock. The acquisition was accounted for as a
reorganization of entities under common control, and, accordingly treated in a
manner similar to a pooling of interest.
In November 1994 the Company acquired 80% of the common stock of Nortelco
AS, a Norwegian company ("Nortelco") for cash of $785,000 and 856 shares of the
Company's common stock. The acquisition was accounted for using the purchase
method of accounting, and accordingly, the operating results of Nortelco have
been included in the Company's consolidated financial statements since the date
of acquisition. The excess of the purchase price over the fair value of net
assets of Nortelco at the date of acquisition in the amount of $1,645,000 was
allocated to prepaid pension cost and agency and distribution rights. The
remaining 20% of the common stock of Nortelco was contributed to the Company in
1995 (see note 12).
2. Summary of significant accounting policies
The consolidated financial statements have been prepared in accordance with
United States generally accepted accounting principles.
Consolidation principles
The consolidated financial statements include the accounts of the Company
and its wholly-owned subsidiaries. All significant intercompany transactions
have been eliminated in consolidation.
The subsidiaries located outside of the United States use their local
currency as their functional currency. The assets and liabilities of foreign
subsidiaries are translated into US dollars using the rate of exchange as of the
balance sheet date. For the consolidated income statement, an average exchange
rate is used. Translation gains and losses are accumulated and included as a
separate component of stockholders' equity.
Cash and cash equivalents
Cash and cash equivalents include cash on hand and bank deposits. Cash
equivalents are considered to all be highly liquid investments with original
maturities of three months or less at the date of acquisition.
<PAGE>
Nordic Equity Partners Corp.
Notes to the Consolidated Financial Statements
Inventories
Inventory is stated at the lower of average cost or market. Inventory
reserves are established for slow-moving and obsolete inventory based on the
passage of time and historical and projected sales activity.
Property, plant and equipment
Property, plant and equipment is recorded at cost. Depreciation is provided
using straight-line and accelerated methods.
The useful lives utilized for this purpose are:
Automobiles 4-5 years
Machinery and Equipment 3-4 years
Revenue
Revenue from the sale of products is recorded when the merchandise is
shipped to customers. Estimated returns are accrued for when the revenue is
recorded. Revenue from design and installation services is generally recorded
using the percentage of completion method. Revenue from service and repair is
recorded as the related services are performed.
Income taxes
The Company accounts for certain income and expense items differently for
financial reporting purposes than for tax purposes. Provisions for deferred
taxes are made in recognition of such temporary differences, following the
requirements of Financial Accounting Standards Board No. 109 "Accounting for
Income Taxes."
Concentration of Credit Risk
Financial instruments that potentially subject the Company to concentrated
credit risks consist primarily of cash and trade receivables. Credit risk on
trade receivables is minimized as a result of the large and diverse nature of
the Company's customer base. The Company maintains cash and cash equivalents
with various financial institutions located throughout Norway and Sweden. The
Company's policy is designed to limit exposure to any one institution. Deposits
are required for any large orders or for orders from buyers not having
established a trading history with the Company.
Agency and distribution rights
Agency and distribution rights represent the value assigned to such rights
at the date of the Nortelco acquisition. Such rights are being amortized on a
straight-line basis over 10 years. Accumulated amortization at December 31, 1997
and 1996 amounted to $852,000 and $657,000, respectively.
<PAGE>
Nordic Equity Partners Corp.
Notes to the Consolidated Financial Statements
Impairment of Long Lived and Identifiable Intangible Assets
The Company evaluates the carrying value of long lived assets and
identifiable intangible assets for potential impairment on an ongoing basis. An
impairment loss would be recognized when the estimated undiscounted future cash
flows is less than the carrying amount of the asset.
Fair value of financial instruments
The carrying value of financial instruments such as cash, accounts
receivable, accounts payable and short-term borrowings approximate their fair
value based on the short-term maturities of there instruments. The carrying
value of long-term debt approximates fair value based on quoted market prices
for the same or similar issues as well as the current rates offered to the
Company. The fair value of related party debt is not determinable.
Basic and Diluted Earnings Per Share
In 1997, the Financial Accounting Standards Board issued Statement No. 128,
Earnings per Share (SFAS 128). SFAS 128 replaced the calculation of primary and
fully diluted earnings per share with basic and diluted earnings per share. All
earnings per share amounts for all periods have been restated to conform to SFAS
128 requirements.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.
Restatement
The financial statements of the Company for 1995 have been restated to
correct misapplication of accounting principles.
<PAGE>
Nordic Equity Partners Corp.
Notes to the Consolidated Financial Statements
3. Inventories
Inventory consists of the following:
December 31,
1997 1996
(in thousands)
Finished goods $ 3,352 $ 4,427
Work in progress 413 307
Total $ 3,765 $ 4,734
4. Trade accounts receivable
Trade accounts receivable consists of the following:
December 31,
1997 1996
(in thousands)
Trade accounts receivables $ 4,911 $ 4,239
Provisions for doubtful accounts (12) (12)
Net accounts receivable $ 4,899 $ 4,227
5. Property, plant and equipment
Property and equipment and related accumulated depreciation are
summarized as follows:
December 31,
1997 1996
(in thousands)
Machinery and equipment $ 2,609 $ 2,755
Automobiles 687 535
Less accumulated depreciation (2,123) (2,152)
Total $ 1,173 $ 1,138
<PAGE>
Nordic Equity Partners Corp.
Notes to the Consolidated Financial Statements
6. Short-term borrowings
The Company's subsidiaries have available short-term credit lines which
amounted to $2,757,000 at December 31, 1997. The credit arrangements do not have
fixed termination dates and are renewable annually by the banks subject to
adjustments in interest rates and collateral. Borrowings under the credit lines
bear interest at 7% as of December 31, 1997and 11 % as of December 31, 1996. The
Company had $1,875,000 and $1,215,000 outstanding under these credit lines at
December 31, 1997, and 1996, respectively.
The credit lines are secured by substantially all of the Company's accounts
receivable, inventories property, plant and equipment.
The following items are also included in short-term borrowings:
<TABLE>
<CAPTION>
December 31,
Interest- Maturity Terms of repayment 1997 1996
rate date Principal Interest (in thousands)
<S> <C> <C> <C> <C>
Bridge loans 10.0 % Nov. 1998 at maturity year end 1,093 987
Term loan 12.0 % April 1998 at maturity at maturity 150 150
Total $ 1,243 $ 1,137
</TABLE>
The bridge loans which were received in a private placement in 1996 are
unsecured term loans originally payable on the earlier of the closing of an
Initial Public Offering (IPO) of the Company or February 15, 1998. In 1998 the
holders of the bridge loans agreed to extend the due date to the earlier of the
closing of the IPO or November 15, 1998. Three of the holders, representing
$142,500 in loans, have requested and received repayment of the borrowings
subsequent to December 31, 1997.
<PAGE>
Nordic Equity Partners Corp.
Notes to the Consolidated Financial Statements
7. Long-term debt
Long-term debt consists of the following:
<TABLE>
<CAPTION>
December 31,
Bank Interest- Maturity Terms of repayment 1997 1996
rate date Principal Interest (in thousands)
<S> <C> <C> <C> <C> <C> <C>
Gjensidige, Norway 6.4 % various monthly monthly $ 247 $ 111
Gjensidige, Norway 5.4 % Aug. 2004 quarterly quarterly 659 -
DnB, Norway 7.0 % various monthly monthly 7 30
DnB, Norway 9.5 % June 1998 quarterly quarterly - 350
IBM, Norway 9.5 % Dec. 1997 monthly monthly - 28
Handelsbanken, Sweden 11.0 % Sept. 1998 quarterly quarterly - 107
Total $ 913 $ 626
less current
portion 167 422
746 204
</TABLE>
The interest rates applicable during 1996 ranged between 9.5% and 12% on an
annual basis. All of these above loans have variable interest rates.
Interest paid on short-term borrowings and long-term debt amounted to
$438,000, $487,000 and $514,000 for the years ended December 31, 1997, 1996 and
1995, respectively.
Aggregate principal payments for the next five years subsequent to December
31, 1997 are as follows:
1998 $ 167
1999 191
2000 166
2001 145
2002 105
Thereafter 139
Total minimum principal payments $ 913
<PAGE>
Nordic Equity Partners Corp.
Notes to the Consolidated Financial Statements
8. Leases
Equipment with a cost and accumulated amortization of $95,070 and $47,535,
respectively, at December 31, 1997 ($107,990 and $26,990, respectively at
December 31, 1996) have been leased under capital leases. In addition, the
Company leases certain property and equipment under operating lease agreements
which expire through 2002.
Future minimum annual capital and operating lease commitments at December
31, 1997 are as follows:
<TABLE>
<CAPTION>
Operating Capital
Leases Leases
(in thousands)
<S> <C> <C>
1998 $ 328 $ 28
1999 272 27
2000 158 0
2001 33 0
2002 2 0
Thereafter 0 0
Total minimum lease payments $ 793 $ 55
Amount representing interest 8
Present value of minimum lease payments 47
Current portion 24
Long-term portion $ 23
</TABLE>
Operating lease expenses amounted to approximately $ 310,000, $360,000 and
400,000 for the years ended December 31, 1997, 1996 and 1995, respectively.
9. Pension plans and related provisions
The Company sponsors a defined benefit pension plan for its Norwegian
employees. The Company makes annual payments to the plan, which is administered
and executed by a nationally approved insurance company. The fund complies with
the applicable Norwegian laws on pension funds, which define investment profile
standards and investment assets. Investment assets consists of debt and equity
securities. Contributions to the plan are defined by approved actuaries using
employee historical data and experience ratings. The employee benefits paid at
retirement are based on a formula related to salary at the time of retirement
and years of service.
<PAGE>
Nordic Equity Partners Corp.
Notes to the Consolidated Financial Statements
For the company sponsored defined benefit pension plan, net periodic
pension costs included in the statement of operations includes the following
components:
<TABLE>
<CAPTION>
December 31,
1997 1996 1995
(in thousands)
<S> <C> <C> <C>
Employee service cost earned during the year $ 99 $ 104 $ 157
Interest charges on projected benefit obligation 66 46 57
Return on plan assets (89) (99) (111)
Net amortization and deferral 3 (15) -
Total net periodic pension cost $ 79 $ 36 $ 103
</TABLE>
The following table sets forth the funded status of the defined benefit
pension plan and the corresponding amounts recognized in the consolidated
balance sheet at December 31:
<TABLE>
<CAPTION>
December 31,
1997 1996
(in thousands)
<S> <C> <C> <C>
Vested accumulated benefit obligation (1,120) (844)
Projected benefit obligation $ (1,120) $ (844)
Plan assets at fair value 1,271 1,459
Excess of plan assets over projected 150 616
benefit obligation
Unrecognized net loss (gain) 176 (159)
Prepaid pension cost $ 326 $ 457
For purposes of the above disclosure, the following
assumptions were used:
1997 1996 1995
Discount rate 6.5 % 6.5 % 7.0 %
Assumed long-term rate of return on assets 7.5 % 7.5 % 8.0 %
Rate of compensation increase 3.0 % 3.0 % 2.5 %
</TABLE>
The Company's Swedish employees are covered by government sponsored pension
and welfare programs. Under the terms of the programs the Company makes periodic
payments to various government agencies.
<PAGE>
Nordic Equity Partners Corp.
Notes to the Consolidated Financial Statements
10. Shareholders' equity
In November 1998, the Board of Directors of the Company declared a 1:1.473
stock split, resulting in an increase from 1,900,625 to 2,800,000 shares
outstanding. References to number of shares, except shares authorized, and per
share information, have been adjusted to reflect the stock split on a
retroactive basis.
Retained Earnings
The Company is a holding company with no operations of its own.
Accordingly, the retained earnings of the Company principally represent the
accumulated earnings of its foreign subsidiaries. The ability of the Company to
pay dividends is dependent on the transfer of accumulated earnings from these
subsidiaries. As at December 31, 1997, earnings of the Company`s foreign
subsidiaries available for distribution totaled $200,000 (calculated on the
basis of local statutory accounting). Since it is in the Company`s intention to
indefinitely reinvest these earnings, no U.S. taxes have been provided.
Determination of the amount of unrecognized deferred tax liability on these
unremitted earnings is not practicable.
Common Stock
The Company is authorized to issue up to 100,000,000 shares of Common
Stock, $.001 par value per share, 2,800,000 of which are issued and outstanding.
The holders of the Common Stock are entitled to receive dividends equally, when,
as and if declared by the Board of Directors, out of funds legally available
therefore.
Subject to the rights that may be designated by the Board of Directors to
the holders of any preferred stock, the holders of the Common Stock have sole
voting rights, one vote for each share held of record, and are entitled upon
liquidation of the Company to share ratably in the net assets of the Company
available for distribution. Shares of the Company's Common Stock do not have
cumulative voting rights and vote as a class on all matters requiring
stockholder approval. The shares of Common Stock are not redeemable and have no
preemptive or similar rights
Preferred Stock
The Company is authorized to issue 1,000,000 shares of "blank check"
Preferred Stock par value $.001 per share ("Preferred Stock"). The Preferred
Stock may be issued from time to time, in one or more series, upon authorization
by the Company's Board of Directors. The Board of Directors, without further
approval of the stockholders, will be authorized to fix the dividend rights and
terms, conversion rights, voting rights, redemption rights and terms,
liquidation preferences, and any other rights, preferences, privileges and
restrictions applicable to each series of Preferred Stock. There is no preferred
stock outstanding.
1995 Stock Option Plan
The Company's 1995 Stock Option Plan (the "Stock Option Plan") was adopted
by the Board of Directors and the stockholders of the Company as of September
1995. The Stock Option Plan provides for the granting "of options to purchase up
to 250,000 shares of the Company's Common Stock that are intended to qualify
either as incentive stock options ("Incentive Stock Options") within the meaning
of Section 422 of the United States Internal Revenue Code or as options that are
not intended to meet the requirements of such section ("Nonstatutory Stock
Options"). Options to purchase shares may be granted under the Stock Option Plan
to persons who, in the case of Incentive Stock Options, are employees (including
officers) of the Company, or, in the case of Nonstatutory Stock Options, are
employees (including officers) or non-employee directors of the Company or
consultants to the Company. No options under the Stock Option Plan have been
granted.
<PAGE>
Nordic Equity Partners Corp.
Notes to the Consolidated Financial Statements
11. Income taxes
The Company's Norwegian and Swedish subsidiaries are taxed at the statutory
tax rate 28% in both countries. A reconciliation between the statutory tax rate
and the effective rate shown in the consolidated statement of operations is as
follows:
<TABLE>
<CAPTION>
December 31,
1997 1996 1995
<S> <C> <C> <C>
Income tax based on statuory rate (2) 122 123
Losses for which no tax benefit is recorded 65 143 10
Non-deductible expenses 55 45 58
Tax loss carry forward - (29) -
Income tax in statement of operations 118 281 191
</TABLE>
<PAGE>
Nordic Equity Partners Corp.
Notes to the Consolidated Financial Statements
Items giving rise to deferred tax assets (liabilities) were as follows:
<TABLE>
<CAPTION>
December 31,
1997 1996
(in thousands)
Deferred tax assets:
<S> <C> <C>
Accounts receivable - 3
Inventory 6 -
Other 2 1
Tax Loss Carryforward 218 153
226 157
Deferred tax liabilities:
Accounts receivable $ 3 $ -
Pension 91 128
Property, plant and equipment 44 24
Other 41 27
179 179
Valuation allowance (218) (153)
Net deferred tax liabilities $ 171 $175
</TABLE>
At December 31, 1997, the Company had approximately $800,000 in tax loss
carryforwards. The amount has been fully reserved due to the uncertainty as to
whether such amounts will be realized.
Cash paid for taxes amounted to $333,000, $83,000 and $181,000 for the
years ended December 31, 1997, 1996 and 1995, respectively.
No tax accrual for possible repatiation of dividends from foreign
subsidiaries is provided for (see note 10).
<PAGE>
Nordic Equity Partners Corp.
Notes to the Consolidated Financial Statements
12. Related party transactions
Amounts borrowed from related parties are as follows:
<TABLE>
<CAPTION>
December 31,
Related party Interest- Maturity Terms of repayment 1997 1996
rate date Principal Interest (in thousands)
<S> <C> <C> <C> <C> <C> <C>
NBD AS, Norway 12.0 % July 1999 at maturity year end 174 407
Bjorn Nysted 12.0 % July 1999 at maturity year end 22 33
Espen Nysted 12.0 % July 1999 at maturity year end 22 23
Olle Roy Larsen 10.0 % July 1999 at maturity year end 28 31
Goran Haggqvist 12.0 % Mar 1998 at maturity 59 -
Total $ 305 $ 494
</TABLE>
All interest rates are fixed.
Bjorn Nysted is President of the Company's Norwegian subsidiary, Nortelco
AS. NBD AS, Norway is a shareholder of the Company and is controlled by
Bjorn Nysted. Olle Roy Larsen and Espen Nysted are not shareholders but
are relatives of Bjorn Nysted. The borrowings were originally granted with a
maturity date of December 31, 1996 and were therefore classified as short term.
In 1997 the borrowings were extended to July 1999 and are therefore reclassified
as long term as of December 31, 1997.
Goran Haggqvist is Chairman of the Company's Board of Directors and a
shareholder of the Company. The note to Goran Haggqvist is classified as short
term.
In November 1995, the owner of the remaining 20 % of Nortelco, who is also
a shareholder of the Company, agreed to transfer his 20% interest in Nortelco to
the Company in exchange for shares in the Company held by other shareholders of
the Company. The transaction has been accounted for as a capital contribution in
the amount of $353,000, the estimated fair value of the 20% interest in
Nortelco. The excess of the fair value of $328,000 over the historical net
assets was attributed to agency and distribution rights.
In August 1996, the Company's majority shareholder converted a $1,000,000
loan he made to the Company in exchange for 2,643,700 shares of the Company's
common stock.
<PAGE>
Nordic Equity Partners Corp.
Notes to the Consolidated Financial Statements
13. Segment information
The Company operates in two industry segments (a) the purchase and
distribution of electronic, electrical and audio-visual equipment and (b) the
design, assembly and distribution of lathes. The Company`s revenues are
generated in Scandinavia, principally Sweden and Norway. There are insignificant
transactions between the two industry segments. Information concerning the
Company's industry segments is summarized as follows (in thousands):
<TABLE>
<CAPTION>
Electronic
equipment Lathes Consolidated
Year ended December 31, 1997
<S> <C> <C> <C>
Sales to unaffiliated customers ........................... 21,665 3,897 25,562
Operating income .......................................... 508 25 533
General corporate expenses ................................ 127
Interest expense, net ................................... 412
Net loss before income taxes .............................. (6)
Identifiable assets at December 31, 1997 ................ 9,932 2,417 12,349
Depreciation expense, incl depr. agency and distr. rights 512 20 532
Capital expenditures ...................................... 558 2 560
Year ended December 31, 1996
Sales to unaffiliated customers ........................... 22,042 4,522 26,564
Operating income .......................................... 1,012 302 1,314
General corporate expenses ................................ 474
Interest expense, net ................................... 406
Net income before income taxes ............................ 434
Identifiable assets at December 31, 1996 ................ 9,768 2,989 12,757
Depreciation expense, incl depr. agency and distr. rights 418 25 443
Capital expenditure ....................................... 275 7 282
Year ended December 31, 1995
Sales to unaffiliated customers ........................... 21,305 4,027 25,332
Operating income .......................................... 532 301 833
General corporate expenses ................................ 38
Interest expense, net ................................... 357
Net income before income taxes ............................ 438
Identifiable assets at December 31, 1995 ................ 9,830 2,428 12,258
Depreciation expense, incl depr. agency and distr. rights 514 12 526
Capital expenditure ....................................... 793 21 814
</TABLE>
No clients account for more than 10% of sales or outstanding account
receivables as per December 31, 1997. One supplier accounts for over 10 %
(12.3%) of total purchases in the group.
<PAGE>
Nordic Equity Partners Corp.
Notes to the Consolidated Financial Statements
14. Earnings per share
The following table sets forth the computation of basic and diluted
earnings per share:
<TABLE>
<CAPTION>
December 31,
1997 1996 1995
Numerator:
<S> <C> <C> <C>
Net income (loss) - numerator for basic and diluted $(124) $ 153 $ 247
loss per share (in thousands)
Denominator:
Denominator for basic and diluted earnings per share - 2,800,000 1,055,582 8,932
weighted average shares
Basic and diluted income (loss) per share ................. (0.04) 0.14 27.65
</TABLE>
Weighted average shares reflects the October 1998 stock split.
15. Recent Pronouncements
The Financial Accounting Standards Board has issued the following
statements which have not yet been adopted by the Company:
Statement No. 131, "Disclosures about Segments of an Enterprise and Related
Information". The application of this statement will be effective for years
beginning after December 15, 1997.
Statement No. 132, "Employer's Disclosures about Pensions and other
Postretirement Benefits". The application of this statement will be effective
for years beginning after December 31, 1997.
Statement No. 133, "Accounting for Derivitive Instruments and Hedging
Activities". The application of this statement will be effective for years
beginning after June 15, 1999.
The adoption of Statements No. 131 and 132 will not effect the Company's
financial position or results of operations, but will require changes to
existing disclosures and presentation. The adoption of statement No. 133 will
not impact the Company as it does not currently engage in derivitive or hedging
activites.
<PAGE>
Nordic Equity Partners Corp.
Consolidated Balance Sheets
<TABLE>
<CAPTION>
June 30, December 31,
Note 1998 1997
(Unaudited)
(in thousands)
Assets
Current assets
<S> <C> <C>
Cash and cash eqvivalents ........... $274 $547
Restricted cash and cash equivalents 120 137
Trade accounts receivable ........... 4,697 4,899
Other receivables ................... 297 127
Inventories (2)...................... 4,806 3,765
Prepaid expenses .................... 71 250
Total current assets ................ 10,265 9,725
Property, plant and equipement, net 1,212 1,173
Prepaid pension expenses ............ 287 326
Agency and distribution rights ...... 982 1,086
Other assets ........................ 13 39
Total assets ........................$12,759 $12,349
</TABLE>
<PAGE>
Nordic Equity Partners Corp.
Consolidated Balance Sheets
<TABLE>
<CAPTION>
June 30, December 31,
Note 1998 1997
(Unaudited)
(in thousands)
Liabilities and Shareholders' Equity
Current liabilities
<S> <C> <C>
Short-term borrowings ..............................$ 2,930 $3,118
Accounts payable ................................... 3,087 3,112
Witholding tax and other taxes payable ............. 710 984
Income taxes payable ............................... 279 59
Prepayments from customers ......................... 342 270
Current portions long-term debt .................... 167 167
Related party debt ................................. 129 59
Other currrent liabilities ......................... 755 496
Total current liabilities .......................... 8,399 8,265
Long-term liabilities
Long term debt ..................................... 902 746
Related party debt ................................. 206 246
Deferred income taxes .............................. 171 171
Total long-term liabilities ........................ 1,279 1,163
Total liabilities .................................. 9,678 9,428
Shareholders' equity
Common stock, 0.001 par value, 100,000,000 shares
authorized, 2,800,000 shares issued and outstanding 3 3
Capital in excess of par value ..................... 2,208 2,208
Retained earnings .................................. 1,204 967
Other comprehensive income ......................... (334) (257)
Total shareholders' equity ......................... 3,081 2,921
Total liabilities and shareholders' equity ......... $12,759 $ 12,349
</TABLE>
<PAGE>
Nordic Equity Partners Corp.
Consolidated Statements of Income and Comprehensive Income
<TABLE>
<CAPTION>
Six months ended June 30,
Note 1998 1997
(Unaudited)
(in thousands except per share amounts)
<S> <C> <C>
Net sales ....................................$ 12,798 $ 12,473
Cost of goods sold ........................... 7,402 7,495
Gross profit ................................. 5,396 4,978
Sales and marketing expense .................. 759 809
General and administrative expenses .......... 3,915 3,829
Amortization of agency and distribution rights 76 68
Income from operations ....................... 646 272
Interest income .............................. 22 40
Interest expense ............................. (235) (255)
Net income before taxes ...................... 433 57
Current income taxes ......................... 193 63
Deferred income taxes ........................ -- --
Total taxes .................................. 193 63
Net income (loss) ............................ 240 (6)
Translation adjustments ...................... (77) (361)
Other comprehensive income:
Comprehensive income (loss) .................. $ 163 $(367)
Earnings per share:
Basic and diluted ............................ $ 0.09 $(0.00)
</TABLE>
<PAGE>
Nordic Equity Partners Corp.
Consolidated Statement of Cash Flows
<TABLE>
<CAPTION>
Six Months Ended June 30,
1998 1997
(Unaudited)
(in thousands)
Cash flows from operations
<S> <C> <C>
Net income (loss) .............................................. $ 240 $ (6)
Deferred taxes ................................................. -- --
Depreciation ................................................... 186 199
Amortization of agency and distribution rights ................. 76 68
Changes in inventories ......................................... (1,041) (161)
Changes in accounts receivable ................................. 202 (111)
Changes in accounts payable .................................... (25) 148
Changes in other assets and liabilities ........................ 380 (415)
Cash flows from operating activities ........................... 18 (278)
Cash flows from investing activities
Purchases of equipment ......................................... (207) (96)
Investments in other assets .................................... (13) (211)
Proceeds from disposal of other assets ......................... 39 46
Cash flows from investing activities ........................... (181) (261)
Cash flows from financing activities
Net changes in short term borrowings ........................... (188) 381
Proceeds from long-term debt ................................... 253 293
Payments on long term debt ..................................... (98) (58)
Cash flows from financing activities ........................... (33) 616
Net effects of exchange rate change .......... (77) (361)
Net changes in cash and cash equivalents ..... (273) (284)
Cash and cash equivalents at beginning of year 547 410
Cash and cash equivalents as per June 30 ..... $ 274 $ 126
</TABLE>
<PAGE>
Notes to the Consolidated Financial Statements
Nordic Equity Partners Corp.
Note 1. General
The accompanying unaudited consolidated financial statements have been
prepared in conformity with "the accounting principles stated in the audited
financial statements for the year ended December 31, 1997 and reflect all
adjustments consisting of normal recurring accruals which are, in the opinion of
the management, necessary for a fair presentation of the financial position as
of June 30, 1998 and the results for of operations for the periods presented.
The operating results for the interim periods are not necessarily indicative of
results for the full fiscal year.
Note 2. Inventory
Inventory consists of the following:
December 31, June 30,
1997 1998
Finished goods $ 3,352 $ 3,792
Work in progress 413 1,014
Total $ 3,765 $ 4,806
Note 3. Share split
In October 1998 the Board of Directors of the Company declared a 1 : 1.473
stock split, resulting in increase from 1,900,625 to 2,800,000 shares
outstanding. References to number of shares, except shares authorized, and to
per share information have been adjusted to reflect the stock split on a
retroactive basis.
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Prospective investors may rely only on the
information contained in this Prospectus.
The Company has not authorized any dealer,
salesperson or any other person to provide NORDIC EQUITY
prospective investors with information PARTNERS CORP.
or representations different from that
contained in this Prospectus. Prospective
Investors should not rely on any unauthorized
information. This Prospectus is not an offer
to sell any security other than the Common 1,100,000 Shares of Common Stock
Stock and Warrants offered by this Prospectus, 1,650,000 Common Stock Purchase
nor does this Prospectus offer to buy or sell Warrants
any securities in any jurisdiction where it
is unlawful. The information in this Prospectus
is current as of the date of this Prospectus,
regardless of the time of delivery of this
Prospectus or any sale of these securities.
-----------------
TABLE OF CONTENTS
-----------------
Page
Prospectus Summary..........................................
Risk Factors................................................
Use of Proceeds.............................................
Dilution....................................................
Dividend Policy.............................................
Capitalization..............................................
Market for Securities....................................... ---------------
Selected Financial Information..............................
Management's Discussion and PROSPECTUS
Analysis of Financial Condition
and Results of Operations................................. ---------------
History of the Company......................................
Business....................................................
Management..................................................
Principal Stockholders......................................
Selling Stockholders........................................
Plan of Distribution........................................
Certain Transactions........................................
Description of Securities................................... MASON HILL & CO., INC.
Shares Eligible for Future Sale.............................
Underwriting................................................
Legal Matters...............................................
Experts.....................................................
Index to Financial Statements...............................F-1
Until ___________, 1998 (25 days after
the date of this Prospectus), all dealers , 1998
that buy, sell or trade these securities,
whether or not participating in this offering
may be required to deliver a prospectus.
This is in addition to the dealers' obligation
to deliver a prospectus when acting as
underwriters and with respect to their unsold
allotments or subscriptions.
</TABLE>
51
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 13. Other Expenses of Issuance and Distribution
The estimated expenses of this Offering all of which are to be paid by
the Registrant in connection with the issuance and distribution of the
securities being registered are as follows:
<TABLE>
<CAPTION>
<S> <C>
SEC registration fee $ 5,968.57
NASD filing fee 2,532.24
NASDAQ listing and Filing fee 10,000.00*
Printing and engraving expenses 100,000.00*
Accounting fees and expenses 150,000.00*
Legal fees and expenses 125,000.00*
Blue sky fees and expenses 60,000.00*
Transfer agent fees 5,000.00*
Miscellaneous expenses 41,499.19*
----------
Total $500,000.00*
</TABLE>
* Estimated.
Item 14. Indemnification of Directors and Officers
In general, Section 145 of the Delaware General Corporation Law
provides that persons who are officers or directors of a corporation may be
indemnified by the corporation for acts performed in their capacities as such.
The Registrant's by-Laws authorize indemnification in accordance with and to the
extent permitted by said statute.
The Company's Certificate of Incorporation and By-Laws provide for
indemnification to the fullest extent permitted by law.
Reference is also made to Section 8 of the Underwriting Agreement filed
as Exhibit 1.1 to this Registration Statement, pursuant to which the underwriter
has agreed to indemnify and hold harmless the company and its directors,
officers and controlling persons against certain liabilities.
Except as hereinafter set forth, there is no charter provision, by-law,
contract, arrangement or statute under which any director or officer of the
Company is indemnified in any manner against any liability which he may incur in
his capacity as such.
Article SEVENTH of the Company's Certificate of Incorporation provides
as follows:
Directors of the corporation shall not be liable either to the
corporation or its stockholders for monetary damages for breach of
fiduciary duties unless the breach involves: (1) a director's duty of
loyalty to the corporation or its stockholders; (2) acts or omissions
not in good faith or which involve intentional misconduct or a knowing
violation of law; (3) liability for unlawful payments of dividends or
unlawful stock purchase or redemption by the corporation; or (4) a
transaction from which the director derived any improper personal
benefit.
Article X of the Company's By-Laws provides as follows:
The Corporation shall indemnify to the full extent authorized
by law any person made or threatened to be made a party to an action or
proceeding, whether civil, criminal, administrative or investigative,
by reason of the fact that he, his testator or intestate is or was a
director, officer or employee or agent of
52
<PAGE>
the Corporation or any predecessor of the Corporation or serves or
served any other enterprise as a director, officer or employee or agent
at the request of the Corporation or any predecessor of the
Corporation.
Item 15. Recent Sales of Unregistered Securities
Except as set forth below, there were no sales of unregistered
securities by the Registrant during the past three (3) years:
In July 1996, the Registrant issued an aggregate of 500,000
shares of Common Stock to a total of 2 private investors, who paid
total gross consideration of $150,000. These transactions were exempt
from registration under the Act, under Section 4(2) and Rule 506 of
Regulation D of the Act as not involving a public offering. Mason Hill
& Co., Inc. acted as Placement Agent for these issuances and received
an aggregate of $19,500 in commissions (10%) and non-accountable
expense allowances (3%). The recipients of all of the foregoing
securities represented that such securities were being acquired for
investment and not with a view to the distribution thereof. In
addition, restrictive legends were placed on the certificates
evidencing such securities. In November 1998, the Company repurchased
such securities from the 2 private investors for a total consideration
of $150,000.
In August 1996, the Registrant issued an aggregate of $950,000
principal amount twelve percent (12%) promissory notes, and 100,000
shares of Common Stock to a total of 14 private investors, who paid
total gross consideration of $1,000,000. These transactions were
exempt from registration under the Act, under Section 4(2) and Rule
506 of Regulation D of the Act as not involving a public offering.
Mason Hill & Co., Inc. acted as Placement Agent for these issuances
and received an aggregate of $115,000 in commissions (10%)
non-accountable expenses (1.5%). The recipients of all of the
foregoing securities represented that such securities were being
acquired for investment and not with a view to the distribution
thereof. In addition, restrictive legends were placed on the
certificates evidencing such securities. In November 1998, the Company
repaid the principal amount of, and accrued interest on, the
promissory note held by two of the investors in consideration for such
investors agreeing to return their shares of Common Stock to the
Company. In addition, the Company repaid the principal amount of, and
accrued interest on, the promissory note held by a third investor.
Item 16. Exhibits and Financial Statement Schedules
(a) Exhibits
<TABLE>
<CAPTION>
<S> <C>
1.1 Form of Underwriting Agreement*
1.2 Form of Selected Dealers Agreement*
2.1 Agreement and Plan of Merger, dated as of May 15, 1995, by and between
Sherman, Goelz and Associates and the Company
3.1 Amende and Restated Articles of Incorporation
3.2 By-Laws
4.1 Form of Underwriter's Warrant*
4.2 Form of Financial Advisory and Investment Banking Agreement with the
Underwriter*
4.3 Form of Common Stock Certificate*
4.4 Form of Common Stock Purchase Warrant*
4.5 Form of Promissory Note used for Private Placement
4.6 Form of Warrant Agreement*
5.1 Opinion of Sichenzia, Ross & Friedman LLP*
10.1 Registrant's 1998 Stock Option Plan
10.2 Employment Agreement with Bjorn Nysted
10.3 Employment Agreement with Tore Strand
10.4 Consulting Agreement with Goran Haggqvist
10.5 Agreement dated May 12, 1994 by and between Universal Commodity Trading
Group, S.A. and the Registrant, as amended
53
<PAGE>
10.6 Stock Purchase Agreement dated May 16, 1994 by and between Ovington
Investments Ltd. and the Registrant, as amended
10.7 Agreement between Storebro Machine AB and MWD-Vertriebs GmbH
21.1 List of Subsidiaries of the Registrant
23.1 Consent of Sichenzia, Ross & Friedman LLP (to be included in Exhibit 5.1)*
23.2 Consent of Ernst & Young
23.3 Consent of Komnaes & Huser ANS
23.4 Consent of Falks Advokatbyra
</TABLE>
* To be filed by Amendment.
All other schedules are omitted, as the required information is
either inapplicable or presented in the financial statements or related notes.
Item 17. Undertakings
The Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement;
(i) To include any prospectus required by Section
10(a)(3) of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the registration
statement (or the most recent post-effective amendment
thereof) which, individually or in the aggregate, represent
a fundamental change in the information set forth in the
registration statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the
total dollar value of securities offered would not exceed
that which was registered) and any deviation from the low or
high and of the estimated maximum offering range may be
reflected in the form of prospectus filed with the
Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than 20
percent change in the maximum aggregate offering price set
forth in the "Calculation of Registration Fee" table in the
effective registration statement.
(iii) To include any material information with respect
to the plan of distribution not previously disclosed in the
registration statement or any material change to such
information in the registration statement;
(2) That, for the purpose of determining any liability under
the Securities Act of 1933, each such posteffective amendment shall be
deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall
be deemed to be the initial bona fide offering thereof;
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at
the termination of the offering;
(4) Insofar as indemnification for liabilities arising under
the Securities Act of 1933 (the "Act") may be permitted to directors,
officers and controlling persons of the registrant pursuant to the
foregoing provisions, or otherwise, the registrant has been advised
that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and
is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or
controlling person in
54
<PAGE>
connection with the securities being registered, the registrant will,
unless in the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction
the question of whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final
adjudication of such issue.
(5) The undersigned registrant hereby undertakes to provide to
the underwriters, at the closing, specified in the underwriting
agreement, certificates in such denominations and registered in such
names as required by the underwriter to permit prompt delivery to each
purchaser.
55
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant has duly caused this Registration Statement on Form S-1 to be signed
on its behalf by the undersigned, thereunto duly authorized, in Oslo, Norway, on
the 12th day of November, 1998.
NORDIC EQUITY PARTNERS CORP.
By: /s/ BJORN NYSTED
Bjorn Nysted
President
Pursuant to the requirements of the Securities Act of 1933, this
Amendment to the Registration Statement on Form S-1 has been signed below by the
following persons in the capacities and on the dates indicated:
<TABLE>
<CAPTION>
Signature Title Date
<S> <C> <C>
BJORN NYSTED President and Director November 12, 1998
Bjorn Nysted
GORAN HAGGQVIST Chairman of the Board November 12, 1998
Goran Haggqvist
TORE STRAND Chief Financial Officer, November 12, 1998
Tore Strand Treasurer, and Secretary
(Principal Accounting and
Financial Officer)
ESPEN KOMNAES Director November 12, 1998
Espen Komnaes
</TABLE>
56
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT INDEX
<S> <C>
1.1 Form of Underwriting Agreement*
1.2 Form of Selected Dealers Agreement*
2.1 Agreement and Plan of Merger, dated as of May 15, 1995, by and between
Sherman, Goelz and Associates and the Company
3.1 Amended and Restated Articles of Incorporation
3.2 By-Laws
4.1 Form of Underwriter's Warrant*
4.2 Form of Financial Advisory and Investment Banking Agreement with the
Underwriter*
4.3 Form of Common Stock Certificate*
4.4 Form of Common Stock Purchase Warrant*
4.5 Form of Promissory Note used for Private Placement
4.6 Form of Warrant Agreement*
5.1 Opinion of Sichenzia, Ross & Friedman LLP*
10.1 Registrant's 1998 Stock Option Plan
10.2 Employment Agreement with Bjorn Nysted
10.3 Employment Agreement with Tore Strand
10.4 Consulting Agreement with Goran Haggqvist
10.5 Agreement dated May 12, 1994 by and between Universal Commodity Trading
Group, S.A. and the Registrant, as amended
10.6 Stock Purchase Agreement dated May 16, 1994 by and between Ovington
Investments Ltd. and the Registrant, as amended
10.7 Agreement between Storebro Machine AB and MWD-Vertriebs GmbH
21.1 List of Subsidiaries of the Registrant
23.1 Consent of Sichenzia, Ross & Friedman LLP (to be included in Exhibit 5.1)*
23.2 Consent of Ernst & Young
23.3 Consent of Komnaes & Huser ANS
23.4 Consent of Falks Advokatbyra
</TABLE>
* To be filed by amendment.
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
NORDIC EQUITY PARTNERS CORP.
Nordic Equity Partners Corp., a corporation organized and existing
under the laws of the State of Delaware, hereby certifies as follows:
1. The name of the corporation is Nordic Equity Partners Corp. The date of
filing of its original Certificate of Incorporation with the Secretary of State
was May 31, 1994.
2. This Restated Certificate of Incorporation restates and integrates and
further amends the Certificate of Incorporation of this corporation by: (1)
increasing the issued and outstanding shares from 1,900,000 shares to 2,800,000
shares; (2) reducing the authorized capitalization from 101,000,000 shares, of
which 100,000,000 shares are common stock, par value $.001 per share, and
1,000,000 shares are preferred stock, par value $.001 per share, to 25,000,000
shares, of which 24,000,000 shares are common stock, par value $.001 per share,
and 1,000,000 shares are preferred stock, par value $.001 per share ; (3)
Changing the designation of registered agent set forth in paragraph SECOND
thereof; (4) eliminating paragraphs SEVENTH, EIGHTH and NINTH thereof, and
inserting new paragraphs SEVENTH, EIGHTH, NINTH, TENTH and ELEVENTH into the
Amended and Restated Certificate of Incorporation.
3. The text of the Certificate of Incorporation as amended or supplemented
heretofore is hereby restated without further amendments or changes to read as
herein set forth in full:
FIRST: The name of the corporation is Nordic Equity Partners Corp.
SECOND: The address of its registered office in the State of Delaware is
1013 Centre Road, City of Wilmington, 19805, County of New Castle; and the
registered agent of the corporation in the State of Delaware at such address is
Corporation Service Company.
THIRD: The nature of the business and the objects and purposes to be
transacted, promoted and carried on are to do any or all the things herein
mentioned, as fully and to the same extent as natural persons might or could do
and in any part of the world, viz: "The purpose of the corporation is to engage
in any lawful act or activity for which corporations may be organized under the
General Corporation Law of Delaware."
FOURTH: The total number of shares of all classes of Stock which the
Corporation shall have authority to issue is TWENTY FIVE MILLION (25,000,000)
shares. Of these (i) TWENTY FOUR MILLION (24,000,000) shares shall be shares of
Common Stock of the par value of $.001 per share; and (ii) ONE MILLION
(1,000,000) shall be shares of Preferred Stock of the par value of $.001 per
share.
The holders of the Corporation's Common Stock as a class, have equal
ratable rights to receive dividends when, as and if declared by the Board of
Directors, out of funds legally available therefor and are entitled upon
liquidation of the Company to share ratably in the net assets available for
distribution, are not redeemable and have no preemptive or similar rights; and
holders of the Corporation's Common Stock have one non-cumulative vote for each
share held of record on all matters to be voted on by the Corporation's
stockholders.
The shares of Preferred Stock may be issued in series, and shall have such
1
<PAGE>
voting powers, full or limited, or no voting powers, and such designations,
preferences and relative participating, optional or other special rights, and
qualifications, limitations or restrictions thereof, as shall be stated and
expressed in the resolution or resolutions providing for the issuance of such
stock adopted from time to time by the Board of Directors. The Board of
Directors is hereby expressly vested with the authority to determine and fix in
the resolution or resolutions providing for the issuances of Preferred Stock the
voting powers, designations, preferences and rights, and the qualifications,
limitations or restrictions thereof, of each such series to the full extent now
or hereafter permitted by the laws of the State of Delaware.
FIFTH: The Corporation is to have perpetual existence.
SIXTH: Whenever a compromise or arrangement is proposed between this
corporation and its creditors or any class of them and/or between this
corporation and its stockholders or any class of them, any court of equitable
jurisdiction within the State of Delaware may, on the application in a summary
way of this corporation or of any creditor or stockholder hereof or on the
application of any receiver or receivers appointed for this corporation under
the provisions of Section 291 of Title 8 of the Delaware Code or on the
application of trustees in dissolution or of any receiver or receivers appointed
for this corporation under the provisions of Section 279 of Title 8 of the
Delaware Code order a meeting of the creditors or class of creditors, and/or of
the stockholders or class of stockholders of this corporation, as the case may
be, to be summoned in such manner as the said court directs. If a majority in
number representing three fourths in value of the creditors or class of
creditors, and/or of the stockholders or class of stockholders of this
corporation, as the case may be, agree to any compromise or arrangement and to
any reorganization of this corporation as consequence of such compromise or
arrangement, the said compromise or arrangement and the said reorganization
shall, if sanctioned by the court to which the said application has been made,
be binding on all the creditors or class of creditors, and/or on all the
stockholders or class of stockholders, of this corporation, as the case may be,
and also on this corporation.
SEVENTH: No director of the Corporation shall be personally liable to the
Corporation or any of its stockholders for monetary damages for breach of
fiduciary duty as a director, except for liability (i) for any breach of the
director's duty of loyalty to the Corporation or its stockholders, (ii) for acts
or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) under Section 174 of the Delaware General
Corporation Law, as the same exists or hereafter may be amended, or (iv) for any
transaction from which the director derived an improper personal benefit. If the
Delaware General Corporation Law hereafter is amended to authorize the further
elimination or limitation of the liability of directors, then the liability of a
director of the Corporation, in addition to the limitation on personal liability
provided herein, shall be limited to the fullest extent permitted by the amended
Delaware General Corporation Law. Any repeal or modification of this Article by
the stockholders of the Corporation shall be prospective only, and shall not
adversely affect any limitation on the personal liability of a director of the
2
<PAGE>
Corporation existing at the time of such repeal or modification
EIGHTH: In furtherance and not in limitation of the powers conferred by
statute, the Board of Directors is expressly authorized to make, alter or repeal
the ByLaws of the Corporation. NINTH: Meetings of stockholders may be held
within or without the State of Delaware, as the By-Laws may provide. The books
of the Corporation may be kept (subject to any provision contained in the
statutes) outside the State of Delaware at such place or places as may be
designated from time to time by the Board of Directors or in the By-Laws of the
Corporation. Elections of directors need not be by written ballot unless the
By-Laws of the Corporation shall so provide. TENTH: The Corporation reserves the
right to amend, alter, change or repeal any provision contained in this
Certificate of Incorporation, in the manner now or hereafter prescribed by
statute, and all rights conferred upon stockholders, directors or any other
person herein are granted subject to this reservation. ELEVENTH: The Corporation
elects not to be governed by Section 203 of the Delaware General Corporation
Law.
3
<PAGE>
4. This Restated Certificate of Incorporation was duly adopted by written
consent of the stockholders in accordance with the applicable provisions of
Sections 228, 242 and 245 of the General Corporation Law of the State of
Delaware and written notice of the adoption of this Restated Certificate of
Incorporation has been given as provided by Section 228 of the General
Corporation Law of the State of Delaware to every stockholder entitled to such
notice.
5. This Restated Certificate of Incorporation shall be effective on
November 1, 1998.
4
<PAGE>
IN WITNESS WHEREOF, said Nordic Equity Partners Corp. has caused this
Certificate to be signed by Bjorn Nysted its President, and Tore Strand, its
Secretary, this 1st day of November, 1998.
Nordic Equity Partners Corp.
By: /s/Bjorn Nysted
Bjorn Nysted, President
Attest:
/s/Tore Strand
Tore Strand, Secretary
5
EXHIBIT 3.2
BY-LAWS
OF
NORDIC EQUITY PARTNERS CORP.
(Delaware)
ARTICLE I - OFFICES
The office of the Corporation shall be located in the City and State designated
in the Articles of Incorporation. The Corporation may also maintain offices at
such other places within or without the United States as the Board of Directors
may, from time to time, determine.
ARTICLE II - MEETING OF STOCKHOLDERS
Section 1 - Annual Meetings:
The annual meeting of the stockholders of the Corporation shall be held within
five months after the close of the fiscal year of the Corporation, for the
purpose of electing directors, and transacting such other business as may
properly come before the meeting.
Section 2 - Special Meetings:
Special meetings of the stockholders may be called at any time by the Board of
Directors or by the President, and shall be called by the President or the
Secretary at the request in writing of a majority of the directors or
stockholders entitled to vote or as otherwise required by the Delaware General
Corporation Law (the "Corporation Law").
Section 3 - Place of Meetings:
All meetings of stockholders shall be held at the principal office of the
Corporation, or at such other places as shall be designated in the notices or
waivers of notice of such meetings.
Section 4 - Notice of Meetings:
(a) Except as otherwise provided by statute, written notice of each meeting of
stockholders, whether annual or special, stating the time when and place where
it is to be held, shall be served either personally or by mail, not less than
ten or more than fifty days before the meeting, upon each stockholder of record
entitled to vote at such meeting, and to any other stockholder of record
entitled to vote at such meeting, and to any other stockholder to whom the
giving of notice may be required by law. Notice of a special meeting shall also
state the purpose or purposes for which the meeting is called, and shall
indicate that it is being issued by, or at the direction of, the person or
persons calling the meeting. If, at any meeting, action is proposed to be taken
that would, if taken, entitle stockholders to receive payment for their
<PAGE>
shares pursuant to statute, the notice of such meeting shall include a statement
of that purpose and to that effect. If mailed, such notice shall be directed to
each such stockholder at his address, as it appears on the records of the
stockholders of the Corporation, unless he shall have previously filed with the
Secretary of the Corporation a written request that notices intended for him be
mailed to some other address, in which case, it shall be mailed to the address
designated in such request.
(b) Notice of any meeting need not be given to any person who may become a
stockholder of record after the mailing of such notice and prior to the meeting,
or to any stockholder who attends such meeting, in person or by proxy, or to any
stockholder who, in person or by proxy, submits a signed waiver of notice either
before or after such meeting. Notice of any adjourned meeting of stockholders
need not be given, unless otherwise required by statute.
Section 5 - Quorum:
(a) Except as otherwise provided herein, or by statute, or in the Certificate of
Incorporation (such Certificate and any amendments thereof being hereinafter
collectively referred to as the "Certificate of Incorporation"), at all meetings
of stockholders of the Corporation, the presence at the commencement of such
meetings in person or by proxy of stockholders holding of record a majority of
the total number of shares of the Corporation then issued and outstanding and
entitled to vote, shall be necessary and sufficient to constitute a quorum for
the transaction of any business. The withdrawal of any stockholder after the
commencement of a meeting shall have no effect on the existence of a quorum,
after a quorum has been established at such meeting.
(b) In case a quorum shall not be present at any meeting, a majority in interest
of the stockholders entitled to vote thereat, present in person or by proxy,
shall have power to adjourn the meeting from time to time, without notice other
than announcement at the meeting, until the requisite number of shares entitled
to vote shall be present. At any such adjourned meeting at which the requisite
number of shares entitled to vote shall be represented, any business may be
transacted which might have been transacted at the meeting as originally
noticed; but only those stockholders entitled to vote at the meeting as
originally noticed shall be entitled to vote at any adjournment or adjournments
thereof.
Section 6 - Voting:
(a) Except as otherwise provided herein, or by statute or by the Certificate of
Incorporation, any corporate action, to be taken by vote of the stockholders,
shall be authorized by a majority of votes cast at a meeting of stockholders by
the holders of shares entitled to vote thereon.
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(b) Except as otherwise provided herein, or by the statute or by the Certificate
of Incorporation or by any Certificate of Designations, at each meeting of
stockholders, each holder of record of stock of the Corporation entitled to vote
thereat, shall be entitled to one vote for each share of stock registered in his
name on the books of the Corporation.
(c) Each stockholder entitled to vote or to express consent or dissent without a
meeting, may do so by proxy; provided, however, that the instrument authorizing
such proxy to act shall have been executed in writing by the stockholder
himself, or by his attorney-in-fact thereunto duly authorized in writing. No
proxy shall be valid after the expiration of eleven months from the date of its
execution, unless the person executing it shall have specified therein the
length of time it is to continue in force. Such instrument shall be exhibited to
the Secretary at the meeting and shall be filed with the records of the
Corporation.
Section 7 - Action Without Meeting:
Except as otherwise provided by the Certificate of Incorporation, whenever the
vote of stockholders at a meeting thereof is required or permitted to be taken
in connection with any corporate action by any provisions of the Corporation Law
or the Certificate of Incorporation or of these By-Laws, the meeting and vote of
shareholders may be dispensed with, if the majority of the stockholders who
would have been entitled to vote upon the action if such meeting were held,
shall consent in writing to such corporate action being taken.
ARTICLE III - BOARD OF DIRECTORS
Section 1 - Number, Election and Term of Office:
(a) The number of the directors of the Corporation shall be as determined by
resolution of the Board of Directors.
(b) Except as may otherwise be provided herein, in the Certificate of
Incorporation or in the Corporation Law, the members of the Board of Directors
of the Corporation, who need not be stockholders, shall be elected by a majority
of the votes cast at a meeting of stockholders, by the holders of shares,
present in person or by proxy, entitled to vote in the election.
(c) Each director shall hold office until the annual meeting of the stockholders
next succeeding his election, and until his successor is elected and qualified,
or until his prior death, resignation or removal.
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Section 2 - Duties and Powers:
The Board of Directors shall be responsible for the control and management of
the affairs, property and interests of the Corporation, and may exercise all
powers of the Corporation, except as are in the Certificate of Incorporation or
by statute expressly conferred upon or reserved to the stockholders.
Section 3 - Annual and Regular Meetings; Notice:
(a) A regular annual meeting of the Board of Directors shall be held immediately
following the annual meeting of the stockholders, at the place of such annual
meeting of stockholders.
(b) The Board of Directors, from time to time, may provide by resolution for the
holding of other regular meetings of the Board of Directors, and may fix the
time and place thereof.
(c) Notice of any regular meeting of the Board of Directors shall not be
required to be given and, if given, need not specify the purpose of the meeting;
provided, however, that in case the Board of Directors shall fix or change the
time or place of any regular meeting, notice of such action shall be given to
each director who shall not have been present at the meeting at which such
action was taken within the time limited, and in the manner set forth in
paragraph (b) Section 4 of this Article III, with respect to special meetings,
unless such notice shall be waived in the manner set forth in paragraph (c) of
such Section 4.
Section 4 - Special Meetings; Notice:
(a) Special meetings of the Board of Directors shall be held whenever called by
the President or by a majority of the directors, at such time and place as may
be specified in respective notices or waivers of notice thereof.
(b) Except as otherwise required by statute, notice of special meeting shall be
mailed directly to each director, addressed to him at his residence or usual
place of business, at least two (2) days before the day on which the meeting is
to be held, or shall be sent to him at such place by telegram, radio,
telecopier, facsimile transmission or cable, or shall be delivered to him
personally or given to him orally, not later than the day before the day on
which the meeting is to be held. A notice, or waiver of notice, except as
required by Section 8 of this Article III, need not specify the purpose of the
meeting.
(c) Notice of any special meeting shall not be required to be given to any
director who shall attend such meeting without protesting prior thereto or at
its commencement, the lack of notice to him, or who submits a signed waiver of
notice, whether before or
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after the meeting. Notice of any adjourned meeting shall not be required to be
given.
Section 5 - Telecommunication Meetings Permitted:
Members of the Board of Directors, or any committee designated by the Board, may
participate in a meeting of such Board or committee by means of conference
telephone or similar communications equipment by means of which all persons
participating in the meeting can hear each other, and participation in a meeting
pursuant to this By-Law shall constitute presence in person at such meeting.
Section 6 - Chairman:
At all meetings of the Board of Directors, the Chairman of the Board, if any and
if present, shall preside. If there shall be no Chairman, or he shall be absent,
then the President shall preside, and in his absence, a Chairman chosen by the
directors shall preside.
Section 7 - Quorum and Adjournments:
(a) At all meetings of the Board of Directors, the presence of a majority of the
entire Board shall be necessary and sufficient to constitute a quorum for the
transaction of business, except as otherwise provided by law, by the Certificate
of Incorporation, or by these By-Laws.
(b) A majority of the directors present at the time and place of any regular or
special meeting, although less than a quorum, may adjourn the same from time to
time without notice, until a quorum shall be present.
Section 8 - Manner of Acting:
(a) At all meetings of the Board of Directors, each director present shall have
one vote, irrespective of the number of shares of stock, if any, which he may
hold.
(b) Except as otherwise provided by statute, by the Certificate of
Incorporation, or by these By-Laws, the action of a majority of the directors
present at any meeting at which a quorum is present shall be the act of the
Board of Directors. Any action authorized, in writing, by all of the directors
entitled to vote thereon and filed with the minutes of the Corporation shall be
the act of the Board of Directors with the same force and effect as if the same
had been passed by unanimous vote at a duly called meeting of the Board.
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Section 9 - Vacancies:
Any vacancy in the Board of Directors occurring by reason of an increase in the
number of directors, or by reason of the death, resignation, disqualification,
removal (unless a vacancy created by the removal of a director by the
stockholders shall be filled by the stockholders at the meeting at which the
removal was effected) or inability to act of any director, or otherwise, shall
be filled for the unexpired portion of the term by a majority vote of the
remaining directors, though less than a quorum, at any regular meeting or
special meeting of the Board of Directors called for that purpose.
Section 10 - Resignation:
Any director may resign at any time by giving written notice to the Board of
Directors, the President or the Secretary of the Corporation. Unless otherwise
specified in such written notice, such resignation shall take effect upon
receipt thereof by the Board of Directors or such officer, and the acceptance of
such resignation shall not be necessary to make it effective.
Section 11 - Removal:
Any director may be removed with or without cause at any time by the affirmative
vote of stockholders holding of record in the aggregate at least a majority of
the outstanding shares of the Corporation at a special meeting of the
stockholders called for that purpose, and may be removed for cause by action of
the Board.
Section 12 - Salary:
No stated salary shall be paid to directors, as such, for their services, but by
resolution of the Board of Directors a fixed sum and expenses of attendance, if
any, may be allowed for attendance at each regular or special meeting of the
Board; provided, however, that nothing herein contained shall be construed to
preclude any director from serving the Corporation in any other capacity and
receiving compensation therefor.
Section 13 - Contracts:
(a) No contract or other transaction between this Corporation and any other
Corporation shall be impaired, affected or invalidated, nor shall any director
be liable in any way by reason of the fact that any one or more of the directors
of this Corporation is or are interested in, or is a director or officer, or are
directors or officers of such other corporation, provided that such facts are
disclosed or made known to the Board of Directors.
(b) Any director, personally and individually, may be a party to or may be
interested in any contract or transaction of this Corpora-
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tion, and no director shall be liable in any way by reason of such interest,
provided that the fact of such interest be disclosed or made known to the Board
of Directors, and provided that the Board of Directors shall authorize, approve
or ratify such contract or transaction by the vote (not counting the vote of any
such interested director) of a majority of a quorum, notwithstanding the
presence of any such director at the meeting at which such action is taken. If
there be no disinterested director, the stockholders of the Company may
authorize, approve or ratify such contract or transaction by the vote of a
majority of a quorum. Such director or directors may be counted in determining
the presence of a quorum at such meeting. This Section shall not be construed to
impair or invalidate or in any way affect any contract or other transaction
which would otherwise be valid under the law (common, statutory or otherwise)
applicable thereto.
Section 14 - Committees:
The Board of Directors, by resolution adopted by a majority of the entire Board,
may from time to time designate from among its members an executive committee
and such other committees, and alternate members thereof, as they may deem
desirable, each consisting of three or more members, with such powers and
authority (to the extent permitted by law) as may be provided in such
resolution. Each such committee shall serve at the pleasure of the Board.
ARTICLE IV - OFFICERS
Section 1 - Number, Qualifications, Election and Term of Office:
(a) The officers of the Corporation shall consist of a President, a Secretary, a
Treasurer, and such officers, including a Chairman of the Board of Directors,
and one or more Vice Presidents, as the Board of Directors may from time to time
deem advisable. Any officer may be, but is not required to be, a director of the
Corporation. Any two or more offices may be held by the same person.
(b) The officers of the Corporation shall be elected by the Board of Directors.
(c) Each officer shall hold office until the annual meeting of the Board of
Directors next succeeding his election, and until his successor shall have been
elected and qualified, or until his death, resignation or removal.
Section 2 - Resignation:
Any officer may resign at any time by giving written notice of such resignation
to the Board of Directors, or to the President or the Secretary of the
Corporation. Unless otherwise specified in such written notice, such resignation
shall take effect upon receipt
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thereof by the Board of Directors or by such officer, and the acceptance of such
resignation shall not be necessary to make it effective.
Section 3 - Removal:
Any officer may be removed, either with or without cause, and a successor
elected by a majority vote of the Board of Directors at any time.
Section 4 - Vacancies:
A vacancy in any office by reason of death, resignation, inability to act,
disqualification, or any other cause, may at any time be filled for the
unexpired portion of the term by a majority vote of the Board of Directors.
Section 5 - Duties of Officers:
Officers of the Corporation shall, unless otherwise provided by the Board of
Directors, each have such powers and duties as generally pertain to their
respective offices as well as such powers and duties as may be set forth in
these By-Laws, or may from time to time be specifically conferred or imposed by
the Board of Directors. The President shall be the chief executive officer of
the Corporation. The Treasurer shall be the chief financial officer of the
Corporation.
Section 6 - Sureties and Bonds:
In case the Board of Directors shall so require, any officer, employee or agent
of the Corporation shall execute to the Corporation a bond in such sum, and with
such surety or sureties as the Board of Directors may direct, conditioned upon
the faithful performance of his duties to the Corporation, including
responsibility for negligence and for the accounting for all property, funds or
securities of the Corporation which may come into his hands.
Section 7 - Shares of Other Corporations:
Whenever the Corporation is the holder of shares of any other Corporation, any
rights or power of the Corporation as such stockholder (including the
attendance, acting and voting at stockholders' meetings and execution of
waivers, consents, proxies or other instruments) may be exercised on behalf of
the Corporation by the President, any Vice President, or such other person as
the Board of Directors may authorize.
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ARTICLE V - SHARES OF STOCK
Section 1 - Certificate of Stock:
(a) The certificates representing shares of the Corporation shall be in such
form as shall be adopted by the Board of Directors, and shall be numbered and
registered in the order issued. They shall bear the holder's name and the number
of shares, and shall be signed by (i) the Chairman of the Board or the President
or a Vice President, and (ii) the Secretary or Treasurer, or any Assistant
Secretary or Assistant Treasurer, and shall bear the corporate seal.
(b) No certificate representing shares shall be issued until the full amount of
consideration therefor has been paid, except as otherwise permitted by law.
(c) To the extent permitted by law, the Board of Directors may authorize the
issuance of certificates for fractions of a share which shall entitle the holder
to exercise voting rights, receive dividends and participate in liquidating
distributions, in proportion to the fractional holdings; or it may authorize the
payment in cash of the fair value of fractions of a share as of the time when
those entitled to receive such fractions are determined; or it may authorize the
issuance, subject to such conditions as may be permitted by law, of scrip in
registered or bearer form over the signature of an officer or agent of the
Corporation, exchangeable as therein provided for full shares, but such scrip
shall not entitle the holder to any rights of a stockholder, except as therein
provided.
Section 2 - Lost or Destroyed Certificates:
The holder of any certificate representing shares of the Corporation shall
immediately notify the Corporation of any loss or destruction of the certificate
representing the same. The Corporation may issue a new certificate in the place
of any certificate theretofore issued by it, alleged to have been lost or
destroyed. On production of such evidence of loss or destruction as the Board of
Directors in its discretion may require, the Board of Directors may, in its
discretion, require the owner of the lost or destroyed certificate, or his legal
representatives, to give the Corporation a bond in such sum as the Board may
direct, and with such surety or sureties as may be satisfactory to the Board, to
indemnify the Corporation against any claims, loss, liability or damage it may
suffer on account of the issuance of the new certificate. A new certificate may
be issued without requiring any such evidence or bond when, in the judgment of
the Board of Directors, it is proper to do so.
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Section 3 - Transfers of Shares:
(a) Transfers of shares of the Corporation shall be made on the share records of
the Corporation only by the holder of record thereof, in person or by his duly
authorized attorney, upon surrender for cancellation of the certificate or
certificates representing such shares, with an assignment or power of transfer
endorsed thereon or delivered therewith, duly executed, with such proof of the
authenticity of the signature and of authority to transfer and of payment of
transfer taxes as the Corporation or its agents may require.
(b) The Corporation shall be entitled to treat the holder of record of any share
or shares as the absolute owner thereof for all purposes and, accordingly, shall
not be bound to recognize any legal, equitable or other claim to, or interest
in, such share or shares on the part of any other person, whether or not it
shall have express or other notice thereof, except as otherwise expressly
provided by law.
Section 4 - Record Date:
In lieu of closing the share records of the Corporation, the Board of Directors
may fix, in advance, a date not exceeding fifty days, nor less than ten days, as
the record date for the determination of stockholders entitled to receive notice
of, or to vote at, any meeting of stockholders, or to consent to any proposal
without a meeting, or for the purpose of determining stockholders entitled to
receive payment of any dividends, or allotment of any rights, or for the purpose
of any other action. If no record date is fixed, the record date for the
determination of stockholders entitled to notice of or to vote at a meeting of
stockholders shall be at the close of business on the day next preceding the day
on which notice is given, or, if no notice is given, the day on which the
meeting is held; the record date for determining stockholders for any other
purpose shall be at the close of business on the day on which the resolution of
the directors relating thereto is adopted. When a determination of stockholders
of record entitled to notice of or to vote at any meeting of stockholders has
been made as provided for herein, such determination shall apply to any
adjournment thereof, unless the directors fix a new record date for the
adjourned meeting.
ARTICLE VI - DIVIDENDS
Subject to applicable law, dividends may be declared and paid out of any funds
available therefor, as often, in such amounts, and at such time or times as the
Board of Directors may determine.
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ARTICLE VII - FISCAL YEAR
The fiscal year of the Corporation shall be fixed by the Board of Directors from
time to time, subject to applicable law.
ARTICLE VIII - CORPORATE SEAL
The corporate seal, if any, shall be in such form as shall be approved from time
to time by the Board of Directors.
ARTICLE IX - AMENDMENTS
Section 1 - By Stockholders:
All By-Laws of the Corporation shall be subject to alteration or repeal, and new
By-Laws may be made, by the affirmative vote of stockholders holding of record
in the aggregate at least a majority of the outstanding shares entitled to vote
in the election of directors at any annual or special meeting of stockholders,
provided that the notice or waiver of notice of such meeting shall have
summarized or set forth in full therein, the proposed amendment.
Section 2 - By Directors:
The Board of Directors shall have power to make, adopt, alter, amend and repeal,
from time to time, By-Laws of the Corporation; provided, however, that the
stockholders entitled to vote with respect thereto as in this Article IX
above-provided may alter, amend or repeal By-Laws made by the Board of
Directors, except that the Board of Directors shall have no power to change the
quorum for meetings of stockholders or of the Board of Directors, or to change
any provisions of the By-Laws with respect to the removal of directors or the
filing of vacancies in the Board resulting from the removal by the stockholders.
If any By-Law regulating an impending election of directors is adopted, amended
or repealed by the Board of Directors, there shall be set forth in the notice of
the next meeting of stockholders for the election of directors, the By-Law so
adopted, amended or repealed, together with a concise statement of the changes
made.
ARTICLE X - INDEMNITY
The Corporation shall indemnify to the full extent authorized by law any person
made or threatened to be made a party to an action or proceeding, whether civil,
criminal, administrative or investigative, by reason of the fact that he, his
testator or intestate is or was a director, officer or employee or agent of the
Corporation or any predecessor of the Corporation or serves or served any other
enterprise as a director, officer or employee or agent at the request of the
Corporation or any predecessor of the Corporation.
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ARTICLE XI - CONFLICTS OF INTEREST
Any conflicts of interest that may arise between the Corporation and the
interests of its officers and directors will be resolved in a fair manner which
will protect the interest of the Corporation pursuant to Delaware law. No
contract or other transaction between the Corporation and any of its directors
or any other entity in which one or more of the Corporation's directors are
directors or officers, or are financially or otherwise interested, will be
invalidated because of such relationship if (i) the fact of such relationship or
interest is disclosed or known to the Board of Directors or committee which
authorizes, approves or ratifies the contract or transaction by a vote or
consent sufficient for the purpose without counting the votes or consents of the
interested director, (ii) the fact of such relationship or interest is disclosed
or known to the stockholders entitled to vote and the stockholders authorize,
approve or ratify the contract or transaction; or (iii) the contract or
transaction is fair and reasonable to the Corporation.
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EXHIBIT 4.5
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "1933 ACT") AND THE SECURITIES LAWS OF ANY STATE. THE NOTE HAS BEEN
ACQUIRED FOR INVESTMENT PURPOSES ONLY AND NOT WITH A VIEW TO DISTRIBUTION OR
RESALE, AND MAY NOT BE SOLD, ASSIGNED, MADE SUBJECT TO A SECURITY INTEREST,
PLEDGED, HYPOTHECATED, TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS AND UNTIL
REGISTERED UNDER THE 1933 ACT, OR AN OPINION OF COUNSEL SATISFACTORY TO NORDIC
EQUITY PARTNERS CORP. IS RECEIVED THAT REGISTRATION IS NOT REQUIRED UNDER SUCH
1933 ACT OR SUCH STATE SECURITIES LAWS.
NORDIC EQUITY PARTNERS CORP.
10% REDEEMABLE PROMISSORY NOTE
NEPC - Note 1 $95,000
NORDIC EQUITY PARTNERS CORP., a Delaware corporation (the "Company"),
for value received, hereby promises to pay to the order of
_______________________________________ (the "Payee"), at
__________________________________, on the earlier of (i) eighteen (18) months
from the date hereof, and (ii) at the closing of the Company's initial public
offering (the "Public Offering"), of its securities resulting in the receipt by
the Company of gross proceeds of no less than $5,805,000, as set forth in the
Letter of Intent (the "Letter of Intent") dated April 30, 1996 by and between
the Company and Mason Hill & Co., Inc. ("Mason Hill"), the principal sum of
NINETY FIVE THOUSAND ($95,000) DOLLARS (or such lesser principal amount as may
then be outstanding), together with all accrued unpaid interest (computed on the
basis of a 360-day year of twelve 30-day months) on the unpaid balance at the
rate of 10% per annum from the date hereof; provided, however, that,
<PAGE>
notwithstanding anything to the contrary provided herein or elsewhere, in the
event the Company does not consummate the Public Offering by January 30, 1997
(the "January 30, 1997 Redemption Date"), the Company shall have the right, in
its sole discretion, at any time or from time to time on or after such date, to
redeem this Note (together with 10,000 shares of Common Stock of the Company
being purchased simultaneously by the Payee in a private offering on the date
hereof) at an aggregate redemption price equal to the principal amount then
remaining outstanding on this Note. The January 30, 1997 Redemption Date may be
extended for up to an additional three (3) months (to April 30, 1997) upon the
mutual written consent of the Company and the Payee provided the Company and
Mason Hill have proceeded in good faith towards the consummation of the Public
Offering, at which time the redemption right shall be reinstated automatically.
Notwithstanding the foregoing, the principal amount of the Note may be prepaid
by the Company, in whole or in part, without premium or penalty, at any time.
Upon any prepayment of this Note, all accrued but unpaid interest on the
principal amount being prepaid shall be paid to the holder on the date of
prepayment. All payments hereunder shall be applied first to interest then to
principal.
This Note is one of a series of Notes included in units (the "Units")
of the Company's securities being offered by the Company through Mason Hill
acting as placement agent in a private placement (the "Offering") pursuant to a
Confidential Private Placement Memorandum dated July 17, 1996. Each Unit
consists of (i) a $95,000 Note, and (ii) 10,000 shares of Common Stock of the
Company, and is being offered at a purchase price of $100,000 per Unit. The
Offering is on a "best efforts five (5) Unit minimum ($500,000)-ten (10) Unit
($1,000,000) maximum" basis.
If the Company shall fail to make a payment of principal or interest
when due and such non-payment shall continue for a period of thirty (30) days
after notice by no more than 51% of the Noteholders to the Company; or shall
make an assignment for the benefit of creditors, file a petition in bankruptcy,
be adjudicated insolvent or bankrupt, suffer an order for relief under any
federal bankruptcy law, petition or apply to any tribunal for the appointment of
a custodian, receiver or any trustee for the Company or any substantial part of
its assets, or shall commence any proceeding under any bankruptcy,
reorganization, arrangement, readjustment of debt, dissolution or liquidation
law or statute of any jurisdiction, whether now or hereafter in effect; or if
there shall have been filed any such petition or application, or any such
proceeding shall have been commenced against the Company, which remains
undismissed for a period of thirty (30) days or more; or if the Company, by any
act or omission shall indicate consent to, approval of or acquiescence in any
such petition, application or proceeding or the appointment of, a custodian,
receiver or any trustee for all or any substantial part of its properties, or if
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the Company shall suffer such custodianship, receivership, or trusteeship to
continue undischarged for a period of thirty (30) days or more, or the Company
violates any term or provision of this Note and same remains uncured for a
period of 30 days after written notice thereof by any holder of this Note, then
and in any such event (each such event, an "Event of Default"), the outstanding
principal amount of this Note, together with all accrued and unpaid interest
thereon, shall be and become immediately due and payable.
All payments hereunder (including, without limitation, payments of
principal and interest) are and shall be expressly subordinated in right of
payment to all current and future indebtedness of the Company, and to all
extensions, amendments, deferrals, refinancings or renewals thereof.
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Payments of principal, premium, if any, and interest are to be made in
lawful money of the United States of America at the principal office of the
Company.
1. RESTRICTIONS ON TRANSFER.
The holder acknowledges that he has been advised by the
Company that this Note has not been registered under the Securities Act of 1933,
as amended (the "Securities Act"), that the Note is being issued, on the basis
of the statutory exemption provided by Section 4(2) of the Securities Act
relating to transactions by an issuer not involving any public offering, and
that the Company's reliance upon this statutory exemption is based in part upon
the representations made by the holder in the holder's Subscription Agreement.
The holder acknowledges that he has been informed by the Company of, or is
otherwise familiar with, the nature of the limitations imposed by the Securities
Act and the rules and regulations thereunder on the transfer of securities. In
particular, the holder agrees that no sale, assignment, hypothecation or
transfer of the Note shall be valid or effective, and the Company shall not be
required to give any effect to any such sale, assignment, hypothecation,
transfer or other disposition, unless (i) the sale, assignment, hypothecation,
transfer or other disposition of the Note is registered under the Securities
Act, provided, that the Company has no obligation or intention to so register
the Note in connection herewith, or (ii) the Note is sold, assigned,
hypothecated, transferred or otherwise disposed of in accordance with all the
requirements and limitations of Rule 144 under the Securities Act, or such sale,
assignment, or transfer is otherwise exempt from registration under the
Securities Act.
2. COVENANTS OF COMPANY.
a. The Company covenants and agrees that, so long as this Note
shall be outstanding, it will:
(i) Promptly pay and discharge all lawful taxes,
assessments and governmental charges or levies imposed upon the Company or upon
its income and profits, or upon any of its property, before the same shall
become in default, as well as all lawful claims for labor, materials and
supplies which, if unpaid, might become a lien or charge upon such properties or
any part thereof, except where the failure to so pay would not have a material
effect on the Company; provided, however, that the Company shall not be required
to pay and discharge any such tax, assessment, charge, levy or claim so long as
the validity thereof shall be contested in good faith by appropriate
proceedings, and the Company shall set aside on its books adequate reserves with
respect to any such tax, assessment, charge, levy or claim so contested.
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(ii) Do or cause to be done all things necessary to
preserve and keep in full force and effect its corporate existence, rights and
franchises and comply with all material laws applicable to the Company as its
counsel may advise;
(iii) At all times keep true and correct books,
records and accounts.
3. MISCELLANEOUS.
3.l. All the covenants and agreements made by the holder of
this Note and the Company in this Note shall bind their respective successors
and assigns.
3.2. No recourse shall be had for the payment of the
principal, interest or premium, if any, on this Note or for any claim based
hereon or otherwise in any manner in respect hereof, against any incorporator,
stockholder, officer or director, past, present or future, of the Company or of
any predecessor corporation, whether by virtue of any constitutional provision
or statute or rule of law, or by the enforcement of any assessment or penalty or
in any other manner, all such liability being expressly waived and released by
the acceptance hereof and as part of the consideration for the issue hereof.
3.3. No course of dealing between the Company and the holder
hereof shall operate as a waiver of any right of any holder hereof, and no delay
on the part of the holder in exercising any right hereunder shall so operate.
Any such waiver must be in writing and signed by the holder hereof and the
Company.
3.4. This Note may be amended only by a written instrument
executed by the Company and the holder hereof.
3.5. All communications provided for herein shall be sent,
except as may be otherwise specifically provided, by registered or certified
mail: if to the holder of this Note, to the address shown on the books of the
Company; and if to the Company, to: Nordic Equity Partners Corp., 120 Wall
Street, 11th Floor, New York, New York 10005, Attention: Kjell Sjostrand, or to
such other address as the Company may advise the holder of this Note in writing.
Notices shall be deemed given three days after it is mailed.
3.6. The provisions of this Note shall in all respects be
construed according to, and the rights and liabilities of the parties hereto
shall in all respects be governed by, the laws of the State of New York. This
Note shall be deemed a contract made under the laws of the State of New York and
the validity of this Note and all rights and liabilities hereunder shall be
determined under the laws of said State.
5
<PAGE>
3.7. The headings of the Sections of this Note are inserted
for convenience only and shall not be deemed to constitute a part of this Note.
IN WITNESS WHEREOF, NORDIC EQUITY PARTNERS CORP. has caused
this Note to be executed in its corporate name by an appropriate
officer of the Company.
Dated: July ____, 1996
NORDIC EQUITY PARTNERS CORP.
By:_______________________________
Name:
Position:
6
NORDIC EQUITY PARTNERS CORP.
1998 STOCK OPTION PLAN
1. Purposes
This 1998 Stock Option Plan (the "Plan") is intended to attract and retain the
best available personnel for positions with Nordic Equity Partners Corp. or any
of its subsidiary corporations (collectively, the "Company"), and to provide
additional incentive to such employees and others to exert their maximum efforts
toward the success of the Company. The above aims will be effectuated through
the granting of certain stock options. Under the Plan, options may be granted
which are intended to qualify as Incentive Stock Options ("ISOs") under Section
422 of the Internal Revenue Code of 1986 (the "Code") or which are not
("Non-ISOs") intended to qualify as Incentive Stock Options thereunder. The term
"subsidiary corporation" shall, for the purposes of the Plan, be defined in the
same manner as such term is defined in Section 424(f) of the Code and shall
include a subsidiary of any subsidiary.
2. Administration of the Plan.
(a) The Plan shall be administered by the Board of Directors of the Company (the
"Board of Directors"), as the Board of Directors may be composed from time to
time, except as provided in subparagraph (b) of this Paragraph 2. The
determinations of the Board of Directors under the Plan, including without
limitation as to the matters referred to in this Paragraph 2, shall be
conclusive. Any determination by a majority of the members of the Board of
Directors at any meeting, or by written consent in lieu of a meeting, shall be
deemed to have been made by the whole Board of Directors. Within the limits of
the express provisions of the Plan, the Board of Directors shall have the
authority, in its discretion, to take the following actions under the Plan:
(i) to determine the individuals to whom, and the time or times at which,
ISOs to purchase the Company's shares of Common Stock, par value $.001 per share
("Common Shares"), shall be granted, and the number of Common Shares to be
subject to each ISO,
(ii) to determine the individuals to whom, and the time or times at which,
Non-ISOs to purchase the Common Shares, shall be granted, and the number of
Common Shares to be subject to each Non-ISO,
(iii) to determine the terms and provisions of the respective stock option
agreements granting ISOs and Non-ISOs (which need not be identical),
(iv) to interpret the Plan,
(v) to prescribe, amend and rescind rules and regulations relating to the
Plan, and
<PAGE>
(vi) to make all other determinations and take all other actions necessary
or advisable for the administration of the Plan. In making such determinations,
the Board of Directors may take into account the nature of the services rendered
by such individuals, their present and potential contributions to the Company's
success and such other factors as the Board of Directors, in its discretion,
shall deem relevant. An individual to whom an option has bee granted under the
Plan is referred to herein as an "Optionee."
(b) Notwithstanding anything to the contrary contained herein, the Board of
Directors may at any time, or from time to time, appoint a committee (the
"Committee") of at least two members of the Board of Directors, and delegate to
the Committee the authority of the Board of Directors to administer the Plan.
Upon such appointment and delegation, the Committee shall have all the powers,
privileges and duties of the Board of Directors, and shall be substituted for
the Board of Directors, in the administration of the Plan, except that the power
to appoint members of the Committee and to terminate, modify or amend the Plan
shall be retained by the Board of Directors. In the event that any member of the
Board of Directors is at any time not a "disinterested person", as defined in
Rule 16b-3(c)(3)(i) promulgated pursuant to the Securities Exchange Act of 1934,
the Plan shall not be administered by the Board of Directors, and may only by
administered by a Committee, all the members of which are disinterested persons,
as so defined. The Board of Directors may from time to time appoint members of
the Committee in substitution for or in addition to members previously
appointed, may fill vacancies in the Committee and may discharge the Committee.
A majority of the Committee shall constitute a quorum and all determinations
shall be made by a majority of its members. Any determination reduced to writing
and signed by a majority of the members shall be fully as effective as if it had
been made by a majority vote at a meeting duly called and held. Members of the
Committee shall not be eligible to participate in this Plan.
3. Shares Subject to the Plan.
The total number of Common Shares which shall be subject to ISOs and Non-ISOs
granted under the Plan (collectively, "Options") shall be 250,000 in the
aggregate, subject to adjustment as provided in Paragraph 8. The Company shall
at all times while the Plan is in force reserve such number of Common Shares as
will be sufficient to satisfy the requirements of outstanding Options. The
Common Shares to be issued upon exercise of Options shall in whole or in part be
authorized and unissued or reacquired Common Shares. The unexercised portion of
any expired, terminated or canceled Option shall again be available for the
grant of Options under the Plan.
4. Eligibility.
(a) Subject to subparagraphs (b) and (c) of this Paragraph 4, Options may be
granted to key employees, officers or directors of the Company, as determined by
the Board of Directors.
(b) An ISO may be granted, consistent with the other terms of the Plan, to an
individual
<PAGE>
who owns (within the meaning of Sections 422(b)(6) and 424(d) of the Code), more
that ten (10%) percent of the total combined voting power or value of all
classes of stock of the Company or a subsidiary corporation (any such person, a
"Principal Stockholder") only if, at the time such ISO is granted, the purchase
price of the Common Shares subject to the ISO is an amount which equals or
exceeds one hundred ten percent (110%) of the fair market value of such Common
Shares, and such ISO by its terms is not exercisable more than five (5) years
after it is granted.
(c) A director or an officer of the Company who is not also an employee of the
Company shall be eligible to receive Non-ISOs but shall not be eligible to
receive ISOs.
(d) Nothing contained in the Plan shall be construed to limit the right to the
Board of Directors to grant an ISO and Non-ISO concurrently under a single stock
option agreement so long as each Option is clearly identified as to its status.
Furthermore, if an Option has been granted under the Plan, additional Options
may be granted from time to time to the Optionee holding such Options, and
Options may be granted from time to time to one or more employees, officers or
directors who have not previously been granted Options.
(e) To the extent that the grant of an Option results in the aggregate fair
market value (determined at the time of grant) of the Common Shares (or other
capital stock of the Company or any subsidiary) with respect to which Incentive
Stock Options are exercisable for the first time by an Optionee during any
calendar year (under all plans of the Company and subsidiary corporation) to
exceed $100,000, such Options shall be treated as a Non-ISO. The provisions of
this subparagraph (e) of Paragraph 4 shall be construed and applied in
accordance with Section 422(d) of the Code and the regulations, if any,
promulgated thereunder.
5. Terms of Options.
The term of each Option granted under the Plan shall be contained in a stock
option agreement between the Optionee and the Company and such terms shall be
determined by the Board of Directors consistent with the provisions of the Plan,
including the following:
(a) The purchase price of the Common Shares subject to each ISO shall not be
less than the fair market value (or in the case of the grant of an ISO to a
Principal Stockholder, not less that 110% of fair market value) of such Common
Shares at the time such Option is granted. Such fair market value shall be
determined by the Board of Directors and, if the Common Shares are listed on a
national securities exchange or traded on the over-the-counter market, the fair
market value shall be the mean of the highest and lowest trading prices or of
the high bid and low asked prices of the Common Shares on such exchange, or on
the over-the-counter market as reported by the NASDAQ system or the National
Quotation Bureau, Inc., as the case may be, on the day on which the ISO is
granted or, if there is no trading or bid or asked price on that day, the mean
of the highest and lowest trading or high bid and low asked prices on the most
recent day preceding the day on which the ISO is granted for which such prices
are available.
<PAGE>
(b) The purchase price of the Common Shares subject to each Non-ISO shall not be
less than either (i) 85% of the fair market value of such Common Shares at the
time such Option is granted, or (ii) in the event of an initial public offering
of the Common Shares, the initial public offering price per Common Share. Such
fair market value shall be determined by the Board of Directors in accordance
with subparagraph (a) of this Paragraph 5. The purchase price of the Common
Shares subject to each Non-ISO shall be determined at the time such Option is
granted.
(c) The dates on which each Option (or portion thereof) shall be exercisable and
the conditions precedent to such exercise, if any, shall be fixed by the Board
of Directors, in its discretion, at the time such Option is granted.
(d) The expiration of each Option shall be fixed by the Board of Directors, in
its discretion, at the time such Option is granted; however, unless otherwise
determined by the Board of Directors at the time such Option is granted, an
Option shall be exercisable for ten (10) years after the date on which it was
granted (the "Grant Date") unless the Optionee of an ISO is a Principal
Stockholder, in which case the said ISO shall be exercisable for five years
after the Grant Date. Each Option shall be subject to earlier termination as
expressly provided in Paragraph 6 hereof or as determined by the Board of
Directors, in its discretion, at the time such Option is granted.
(e) Options shall be exercised by the delivery by the Optionee thereof to the
Company at its principal office, or at such other address as may be established
by the Board of Directors, of written notice of the number of Common Shares with
respect to which the Option is being exercised accompanied by payment in full of
the purchase price of such Common Shares. Payment for such Common Shares may be
made (as determined by the Board of Directors) (i) in cash, (ii) by certified
check or bank cashier's check payable to the order of the Company in the amount
of such purchase price, (iii) by a promissory note issued by the Optionee in
favor of the Company in the amount equal to such purchase price and payable on
terms prescribed by the Board of Directors, which provides for the payment of
interest at a fair market rate, as determined by the Board of Directors, (iv) by
delivery of capital stock to the Company having a fair market value (determined
on the date of exercise in accordance with the provisions of subparagraph (a) of
this Paragraph 5) equal to said purchase price, or (v) by any combination of the
methods of payment described in clauses (i) through (iv) above.
(f) An Optionee shall not have any of the rights of a stockholder with respect
to the Common Shares subject to his Option until such shares are issued to him
upon the exercise of his Option as provided herein.
(g) No Option shall be transferable, except by will or the laws of descent and
distribution, and any Option may be exercised during the lifetime of the
Optionee only by him. No Option granted under the Plan shall be subject to
execution, attachment or other process.
<PAGE>
6. Death or Termination of Employment.
(a) If employment or other relationship of an Optionee with the Company shall be
terminated voluntarily by the Optionee and without the consent of the Company or
for "Cause" (as hereinafter defined), and immediately after such termination
such Optionee shall not then be employed by the Company, any Options granted to
such Optionee to the extent not theretofore exercised shall expire forthwith.
For purposes of the Plan, "Cause" shall mean "Cause" as defined in any
employment agreement ("Employment Agreement") between Optionee and the Company,
and, in the absence of an Employment Agreement or in the absence of a definition
of "Cause" in such Employment Agreement, "Cause" shall mean (i) any continued
failure by the Optionee to obey the reasonable instructions of the President or
any member of the Board of Directors, (ii) continued neglect by the Optionee of
his duties and obligations as an employee of the Company, or a failure to
perform such duties and obligations to the reasonable satisfaction of the
President or the Board of Directors, (iii) willful misconduct of the Optionee or
other actions in bad faith by the Optionee which are to the detriment of the
Company, including without limitation commission of a felony, embezzlement or
misappropriation of funds or commission of any act of fraud or (iv) a breach of
any material provision of any Employment Agreement not cured within 10 days
after written notice thereof.
(b) If such employment or other relationship shall terminate other than (i) by
reason of death, (ii) voluntarily by the optionee and without the consent of the
Company, or (iii) for Cause, and immediately after such termination such
Optionee shall not them be employed by the Company, any Options granted to such
Optionee may be exercised at any time within three months after such
termination, subject to the provisions of subparagraph (d) of this Paragraph 6.
After such three-month period, the unexercised Options shall expire. For the
purposes of the Plan, the retirement of an Optionee either pursuant to a pension
or retirement plan adopted by the Company or on the normal retirement date
prescribed from time to time by the Company, and the termination of employment
as a result of a disability (as defined in Section 22(e) (3) of the Code) shall
be deemed to be a termination of such Optionee's employment or other
relationship other than voluntarily by the Optionee or for Cause.
(c) If an Optionee dies (i) while employed by, or engaged in such other
relationship with, the Company or (ii) within three months after the termination
of his employment or other relationship other than voluntarily by the Optionee
and without the consent of the Company or for Cause, any options granted to such
Optionee may be exercised at any time within twelve months after such Optionee's
death, subject to the provisions of subparagraph (d) of this Paragraph 6. After
the three month period, the unexercised Options shall expire.
(d) An Option may not be exercised pursuant to this paragraph 6 except to the
extent that the Optionee was entitled to exercise the Option at the time of
termination of employment or Such other relationship, or death, and in any event
may not be exercised after the expiration of the earlier of (i) the term of the
option or (ii) ten (10) years from the date the Option was granted, or five (5)
years from the date an ISO was granted if the optionee was a Principal
Stockholder at that date.
<PAGE>
7. Leave of Absence.
For purposes of the Plan, an individual who is on military or sick leave or
other bona fide leave of absence (such temporary employment by the United States
or any state d government) shall be considered as remaining in the employ of the
Company for 90 days or such longer period as shall be determined by the Board of
Directors.
8. Option Adjustments.
(a) The aggregate number and class of shares as to which Options may be granted
under the Plan, the number and class shares covered by each outstanding Option
and the exercise price per share thereof (but not the total price), and all such
Options, shall each be proportionately adjusted for any increase decrease in the
number of issued Common Shares resulting from split-up spin-off or consolidation
of shares or any like Capital adjustment or the payment of any stock dividend.
(b) Except as provided in subparagraph (c) of this Paragraph 8, upon a merger,
consolidation, acquisition of property or stock, separation, reorganization
(other than a merger or reorganization of the Company in which the holders of
Common Shares immediately prior to the merger or reorganization have the same
proportionate ownership of Common Shares in the surviving corporation
immediately after the merger or reorganization) or liquidation of the Company,
as a result of which the stockholders of the Company receive cash, stock or
other property in exchange for their Common Shares, any Option granted hereunder
shall terminate, but, provided that the Optionee shall have the right
immediately prior to any such merger, consolidation, acquisition of property or
stock, separation, reorganization or liquidation to exercise his Option in whole
or in part whether or not the vesting requirements set forth in the stock option
agreement have been satisfied.
(c) If the stockholders of the Company receive capital stock of another
corporation ("exchange Stock") in exchange for their Common Shares in any
transaction involving a merger, consolidation, acquisition of property or stock,
separation or reorganization (other than a merger or reorganization of the
Company in which the holders of Common Shares immediately prior to the merger or
reorganization have the same proportionate ownership of Common Shares in the
surviving corporation immediately after the merger or reorganization), all
options granted hereunder shall terminate in accordance with the provision of
subparagraph (b) of this Paragraph 8 unless the of Directors and the corporation
issuing the Exchange Stock in their sole and arbitrary discretion and subject to
any required action by the stockholders of the Company and such corporation,
agree that all such Options granted hereunder are converted into options to
purchase shares of Exchange Stock. The amount and price of such options shall be
determined by adjusting the amount and price of the Options granted hereunder in
the same proportion as used for determining the number of shares of Exchange
Stock the holders of the Common Shares receive in such merger, consolidation,
acquisition of property or stock, separation or reorganization. The vesting
schedule set forth in the stock option agreement shall continue to apply to the
options granted for the Exchange Stock.
<PAGE>
(d) All adjustments pursuant to this Paragraph 8 shall be made by the Board of
Directors and its determination as to what adjustments shall be made, and the
extent thereof, shall be final, binding and conclusive.
9. Further Conditions of Exercise.
(a) Unless prior to the exercise of an Option the Common Shares issuable upon
such exercise are the subject of a registration statement filed with the
Securities and Exchange Commission pursuant to the Securities Act of 1933, as
amended (the "Securities Act"), and there is then in effect a prospectus filed
as part of such registration statement meeting the Requirements of Section
10(a)(3) of the Securities Act, the notice of exercise with respect to such
Option shall be accompanied by a representation or agreement of the individual
exercising the Option to the Company to the effect that such shares are being
acquired for investment only and not with a view to the resale or distribution
thereof, or such other, documentation as may be required by the Company, unless,
in the opinion of counsel to the Company, such representation, agreement or
documentation is not necessary to comply with the Securities Act.
(b) Anything in the Plan to the contrary notwithstanding, the Company shall not
be obligated to issue or sell any Common Shares until they have been listed on
each securities exchange on which the Common Shares may then be listed and until
and unless, in the opinion of counsel to the Company, the Company may issue such
shares pursuant to a qualification or an effective registration statement, or an
exemption from registration, under such state and federal laws, rules or
regulations as such counsel may deem applicable. The Company shall use
reasonable efforts to effect such listing, qualification and registration, as
the case may be.
10. Termination. Modification and Amendment.
(a) The Plan (but not Options previously granted under the Plan) shall terminate
ten (10) years from the earlier of the date of its adoption by the Board of
Directors or the date on which the Plan is approved by the affirmative vote of
the holders of a majority of the outstanding shares of capital stock of the
Company entitled to vote thereon, and no Option shall be granted after
termination of the Plan.
(b) The Plan may at any time be terminated and from time to time be modified or
amended by the affirmative vote of the holders of a majority of the outstanding
shares of the capital stock of the Company present, or represented, and entitled
to vote at a meeting duly held in accordance with the applicable laws of the
State of Delaware.
(c) The Board of Directors of the Company may at any time terminate the Plan or
from time to time make such modifications or amendments of the Plan as it may
deem advisable; provided, however, that the Board of Directors shall not (i)
modify or amend the Plan in any way that would disqualify any ISO issued
pursuant to the Plan as an Incentive Stock Option or (ii) without approval by
the affirmative vote of the holders of a majority of the outstanding
<PAGE>
shares of the capital stock of the Company present, or represented, and entitled
to vote at a meeting duly held in accordance with the applicable laws of the
State of Delaware, increase (except as provided by Paragraph 8) the maximum
number of Common Shares as to which Options may be granted under the Plan or
change the class of persons eligible to Options under the Plan.
(d) No termination, modification or amendment of the Plan may adversely affect
the rights conferred by any Options the consent of the Optionee thereof.
11. Effectiveness of the Plan.
The Plan shall become effective upon adoption by the Board of Directors. The
Plan shall be subject to approval by the affirmative vote of the holders of a
majority of the outstanding shares of the capital stock of the Company entitled
to vote thereon within one year following adoption of the Plan by the Board of
Directors, and all Options granted prior to such approval shall be subject
thereto. In the event such approval is withheld, the Plan and all Options which
may have been granted thereunder shall become null and void.
12. Not a Contract of Employment.
Nothing contained in the Plan or in any stock option agreement executed pursuant
hereto shall be deemed to confer upon any individual to whom an Option is or may
be granted hereunder any right to remain in the employ of, or in another
relationship with, the relationship with, the Company.
13. Miscellaneous.
(a) Nothing contained in the Plan or in any stock option agreement executed
pursuant hereto shall be deemed to confer upon any individual to whom an Option
is or may be granted hereunder any right to remain in the employ of, or other
relationship with, the Company.
(b) If an Option has been granted under the Plan, additional Options may be
granted from time to time to the Optionee, and Options may be granted from time
to time to one or more individuals who have not previously been granted options.
(c) Nothing contained in the Plan shall be construed to limit the right of the
Company to grant options otherwise than under the Plan in connection with the
acquisition of the business and assets of any corporation, firm, person or
association, including options granted to employees thereof who become employees
of the Company, nor shall the provisions of the Plan be to limit the right of
the Company to grant options Otherwise than under the Plan for other proper
corporate purposes.
(d) The Company shall have the right to require the Optionee to pay the Company
the cash amount of any taxes the Company is required to withhold in connection
with the exercise of an Option.
(e) No award under this Plan shall be taken into account in determining an
Optionee's compensation for purposes of an employee benefit plan of the Company.
EMPLOYMENT AGREEMENT
AGREEMENT, made effective as of the __th day of __________, 1998 by and
between NORTELCO NORDIC AS, a Norwegian corporation having a place of business
in Oslo, Norway (the "Company") and BJORN NYSTED (hereinafter called
"Employee").
WITNESSETH
WHEREAS, the Corporation wishes to employ said Employee, and Employee
wishes to maintain employment with the Company, all upon the terms and
conditions herein contained.
NOW, THEREFORE, in consideration of the covenants herein contained, the
parties hereto agree as follows:
1. Employment.
The Company hereby employs Employee and the Employee agrees to be
employed by the Company to serve as the Company's President and Chief Executive
Officer. Employee shall devote a sufficient amount of his business time,
attention and skills to the business and affairs of the Company. Employee shall
faithfully and diligently discharge his duties hereunder pursuant to and in
accordance with the policies established by the Board of Directors of the
Company.
2. Term of Employment.
Except in the case of earlier termination, as hereinafter specifically
provided, the term of this Agreement shall be for five (5) years, commencing on
April __, 1998.
3. Salary
During the term of this Agreement, the Company shall pay to Employee,
and Employee shall accept, for all services which may be rendered by him
pursuant to this Agreement, including, without limitation, acting as a director
of the Company, a salary to be determined by the Board of Directors, but no less
than One Hundred Sixty Thousand Dollars ($160,000) per annum, payable in
accordance with the regular payroll policy of the Company, or at such other
times as may be mutually agreed upon between the Company and Employee. In no
event shall Employee's salary be reduced during the term of this Agreement below
One Hundred Sixty Thousand Dollars ($160,000), except in the case of termination
of this Agreement as herein provided.
4. Expenses
The Company shall reimburse Executive for all reasonable and actual
business expenses incurred by him in connection with his service to the Company,
upon submission by him of appropriate vouchers and expense account reports.
<PAGE>
5. Benefits
In addition to the salary and bonus to be paid to Executive hereunder,
the Company shall maintain medical insurance for the benefit of the Executive
and his immediate family members and such other benefits as are extended to
active executive employees of the Company.
6. Termination.
(a) Anything in this Agreement contained to the contrary
notwithstanding, Employee's employment hereunder shall terminate prior to the
Termination Date: (i) immediately upon the death of Employee; or (ii)
immediately upon any act of willful misconduct or breach of trust by Employee
against the Company; or (iii) immediately upon the conviction of the Employee
for the commission of a criminal act; or (iv) immediately in the event of drug
or alcohol abuse by the Employee: or (v) after notice and time to cure as herein
provided, upon the failure of Employee to devote sufficient of his business time
to the Corporation as provided in Paragraph 1 hereof, except by reason of
disability or sickness.
(b) In the event of the termination of Employee's employment hereunder,
pursuant to the provisions of clause (v) of Paragraph 5(a), not less than twenty
(20) days' written notice of such termination shall be given by the Company to
the Employee, which notice shall specify the basis for and the effective date of
termination and shall provide that during such twenty-day period, Employee shall
have an opportunity to cure such breach.
(c) In the event Employee is unable, because of mental or physical
disability, to substantially perform his duties hereunder for an aggregate of
ninety (90) days in any twelve-month period, his compensation hereunder shall
cease until he is again able to perform his duties hereunder on a full-time
basis.
(d) In addition to the foregoing, the Company may terminate this
Agreement on twelve (12) months notice to the Employee, and the Employee may
terminate this Agreement on six (6) months notice to the Company.
7. Payment Upon Termination Pursuant to Paragraph 7.
In the event that Employee's employment hereunder is terminated
pursuant to the provisions of Paragraph 7 above, Employee shall be paid his
salary and accrued bonus, if any, pursuant to Paragraphs 3 and 4 above, to the
effective date of termination, in satisfaction of all the Company's obligations
and payment due and owing by the Company to Employee.
8. Amendment.
This Agreement may only be amended by a written instrument executed by
each of the parties hereto.
9. Entire Agreement.
This Agreement constitutes the entire agreement of the parties hereto with
respect to the
<PAGE>
subject matter hereof, and supersedes all prior agreements and understandings of
the parties hereto, oral and written, with respect to the subject matter hereof.
10. Applicable Law.
This Agreement shall be governed by the laws of Norway applicable to
contracts made and to be wholly performed therein.
IN WITNESS WHEREOF, this Agreement has been executed and delivered by
the parties hereto as of the date first above written.
NORDIC EQUITY PARTNERS CORP.
By:_____________________________
- --------------------------------
Bjorn Nysted
EMPLOYMENT AGREEMENT
AGREEMENT, made effective as of the __th day of _______________, 1998
by and between NORTELCO NORDIC AS, a Norwegian corporation having a usual place
of business in Oslo, Norway (the "Company") and TORE STRAND (hereinafter called
"Employee").
WITNESSETH
WHEREAS, the Corporation wishes to employ said Employee, and Employee
wishes to maintain employment with the Company, all upon the terms and
conditions herein contained.
NOW, THEREFORE, in consideration of the covenants herein contained, the
parties hereto agree as follows:
1. Employment.
The Company hereby employs Employee and the Employee agrees to be
employed by the Company to serve as the Company's Chief Financial Officer,
Treasurer and Secretary. Employee shall faithfully and diligently discharge his
duties hereunder pursuant to and in accordance with the policies established by
the Board of Directors of the Company.
2. Term of Employment.
Except in the case of earlier termination, as hereinafter specifically
provided, the term of this Agreement shall be for five (5) years, commencing on
April __, 1998.
3. Salary
During the term of this Agreement, the Company shall pay to Employee,
and Employee shall accept, for all services which may be rendered by him
pursuant to this Agreement, a salary to be determined by the Board of Directors,
but no less than Eighty Two Thousand Dollars ($82,000) per annum, payable in
accordance with the regular payroll policy of the Company, or at such other
times as may be mutually agreed upon between the Company and Employee. In no
event shall Employee's salary be reduced during the term of this Agreement below
Eighty Two Thousand Dollars ($82,000), except in the case of termination of this
Agreement as herein provided.
4. Expenses
The Company shall reimburse Executive for all reasonable and actual
business expenses incurred by him in connection with his service to the Company,
upon submission by him of appropriate vouchers and expense account reports.
5. Benefits
In addition to the salary and bonus to be paid to Executive hereunder,
the Company shall maintain medical insurance for the benefit of the Executive
and his immediate family members
<PAGE>
and such other benefits as are extended to active executive employees of
the Company.
6. Termination.
(a) Anything in this Agreement contained to the contrary
notwithstanding, Employee's employment hereunder shall terminate prior to the
Termination Date: (i) immediately upon the death of Employee; or (ii)
immediately upon any act of willful misconduct or breach of trust by Employee
against the Company; or (iii) immediately upon the conviction of the Employee
for the commission of a criminal act; or (iv) after notice and time to cure as
herein provided, upon the failure of Employee to devote sufficient of his
business time to the Corporation as provided in Paragraph 1 hereof, except by
reason of disability or sickness.
(b) In the event of the termination of Employee's employment hereunder,
pursuant to the provisions of clause (v) of Paragraph 7(a), not less than twenty
(20) days' written notice of such termination shall be given by the Company to
the Employee, which notice shall specify the basis for and the effective date of
termination and shall provide that during such twenty-day period, Employee shall
have an opportunity to cure such breach.
(c) In the event Employee is unable, because of mental or physical
disability, to substantially perform his duties hereunder for an aggregate of
ninety (90) days in any twelve-month period, his compensation hereunder shall
cease until he is again able to perform his duties hereunder on a full-time
basis.
(d) In addition to the foregoing, the Company may terminate this
Agreement on twelve (12) months notice to the Employee, and the Employee may
terminate this Agreement on six (6) months notice to the Company.
7. Payment Upon Termination Pursuant to Paragraph 7.
In the event that Employee's employment hereunder is terminated
pursuant to the provisions of Paragraph 7 above, Employee shall be paid his
salary and accrued bonus, if any, pursuant to Paragraphs 3 and 4 above, to the
effective date of termination, in satisfaction of all the Company's obligations
and payment due and owing by the Company to Employee.
8. Amendment.
This Agreement may only be amended by a written instrument executed by
each of the parties hereto.
9. Entire Agreement.
This Agreement constitutes the entire agreement of the parties hereto
with respect to the subject matter hereof, and supersedes all prior agreements
and understandings of the parties hereto, oral and written, with respect to the
subject matter hereof.
10. Applicable Law.
<PAGE>
This Agreement shall be governed by the laws of Norway applicable to
contracts made and to be wholly performed therein.
IN WITNESS WHEREOF, this Agreement has been executed and delivered by
the parties hereto as of the date first above written.
NORDIC EQUITY PARTNERS CORP.
By:_____________________________
- --------------------------------
Tore Strand
Consultant Agreement
Consultant Agreement, made effective as of as of __________, 1998
between Norttelco Nordic AS (the "Corporation"), and Goran Haggqvist (the
"Consultant").
Whereas, the Corporation wishes to assure itself of the services of the
Consultant for the period provided in this Agreement, and the Consultant is
willing to provide its services to the Corporation for the period under the
terms and conditions hereinafter provided.
Now, Therefore, Witnesseth, that for and in consideration of the
premises and of the mutual promises and covenants herein contained, the parties
hereto agree as follows:
1. Engagement
The Corporation agrees to and does hereby engage the Consultant, and
the Consultant agrees to and does hereby accept engagement by the Corporation in
connection with the operation of the business and affairs of the Corporation,
for a three (3) year period commencing on _________, 1998 and ending on _______,
2001. The period during which Consultant shall serve in such capacity shall be
deemed the "Engagement Period" and shall hereinafter be referred to as such.
2. Services
2.1 The Consultant shall render to the Corporation the services
described below, with respect to which the Consultant shall apply his best
efforts and devote such time as shall be reasonably necessary to perform his
duties hereunder and advance the interests of the Corporation. The Consultant
shall report to the chief executive officer of the Corporation and to such
persons as the chief executive officer shall direct.
2.2 The services to be rendered by the Consultant to the Corporation
shall include the following:
2.2.1 Corporate Planning
a. Develop an in-depth familiarization with the
Corporation's business objectives and bring to its
attention potential or actual opportunities which
meet those objectives or logical extensions thereof.
b. Alert the Corporation to new or emerging high
potential forms of production and distribution which
could either be acquired or developed internally.
c. Comment on the Corporation's corporate development
including such factors as position in competitive
environment, financial performances vs. competition,
strategies, operational viability, etc.
<PAGE>
d. Identify prospective suitable merger or acquisition
partners for the Corporation, perform appropriate
diligence investigations with respect thereto, advise
the Corporation with respect to the desirability of
pursuing such prospects, and assist the Corporation
in any negotiations which may ensue therefrom.
2.2.2 Financial Public Relations
a. Review and comments upon the Corporation's annual and
quarterly reports and other financial publications.
b. Bring to the Corporation's attention outstanding
examples of financial presentation in other
industries, including both overall reporting and
portions of reports.
c. Review and comment upon the Corporation's financial
public relations plan.
d. Keep the Corporation informed on any externally
originated information disseminated about it.
2.2.3 Business Strategies
a. Evaluate business strategies and recommend changes
where appropriate.
b. Critically evaluate the Corporation's performance in
view of its corporate planning and business
objectives.
2.2.4 Shareholder Relations
a. Review, comment on and advise the Corporation as to
responses to communications from shareholders.
b. Assist the Corporation in improving its shareholder
relations by developing long range programs for
shareholder communication.
c. Advise the Corporation as to selection of suitable
public relations counsel.
3. Compensation. For the services and duties to be rendered and performed
by the Consultant during the Engagement Period and in consideration of
the Consultant's having entered into his agreement, the Corporation
agrees to pay the Consultant an aggregate of $____________, which sum
shall be payable in equal monthly installments.
2
<PAGE>
4. Secrets
Consultant agrees that any trade secrets or any other like information
of value relating to the business of the Corporation or any of its affiliates
has an ownership interest of more than twenty-five percent (25%), including but
not limited to, information relating to inventions, disclosures, processes,
systems, methods, formulae, patents, patent application, machinery, materials,
research activities and plans, costs of production, contract forms, prices
volume of sales, promotional methods, list of names or classes of customers,
which he has heretofore acquired during his engagement by the Corporation or any
of its affiliates or which he may hereafter acquire during the Engagement Period
as the result of any disclosures to him, or in any other way, shall be regarded
as held by the Consultant in a fiduciary capacity solely for the benefit of the
Corporation, its successors or assigns, and shall not at any time, either during
the term of this Agreement or thereafter, be disclosed, divulged, furnished, or
made accessible by the Consultant to anyone, or be otherwise used by his except
in the regular course of business of the Corporation or its affiliates.
5. Assignment
This Agreement may be assigned by the Corporation as part of the sale
of substantially all of its business, provided, however, that the purchaser
shall expressly assume all obligations of the Corporation under this Agreement.
Further, this Agreement may be assigned by the Corporation to an affiliate,
provided that any such affiliate shall expressly assume all obligation of the
Corporation under this Agreement, and provided further that the Corporation
shall then fully guarantee the performance of the Agreement by such affiliate.
Consultant agrees that if this Agreement is so assigned, all the terms and
conditions of this Agreement shall be between assignee and himself with the same
force and effect as if said Agreement had been made with such assignee in the
first instance. This Agreement shall not be assigned by the Consultant without
the express written consent of the Corporation.
6. Survival of Certain Agreements
The covenants and agreements set forth in Article 4 and Article 5 shall
survive the expiration of the Engagement Period and shall all survive
termination of this Agreement and remain in full force and effect regardless of
the cause of such termination.
7. Notices
7.1 All notices permitted to be given hereunder shall be delivered by
hand, telecopier, or recognized courier service to the party to whom such notice
is required or permitted to be given hereunder. Any notices delivered to the
address designated for such delivery by such party, notwithstanding the refusal
of such party or other person to accept such delivery.
7.2 Any notice to the Corporation or to any assignee of the Corporation
shall be addressed as follows:
3
<PAGE>
Bjorn Nysted, President
Nordic Equity Partners
Ryensvingen 3
P.O. Box 116 Manglerud
0612 Oslo, Norway
7.3 Any notice to Consultant shall be addressed as follows:
7.4 Either party may change the address to which notice is to be
addressed, by notice as provided herein.
8. Applicable Law
This Agreement shall be interpreted and enforced in accordance with the
laws of New York.
9. Interpretation
Whenever possible, each Article of this Agreement shall be interpreted
in such manner as to be effective and valid under applicable law, but if any
Article is unenforceable or invalid under such law, such Article shall be
ineffective only to the extent of such unenforceability or invalidity, and the
remainder of such Article and the balance of this Agreement shall in such event
continue to be binding and in full force and effect.
In Witness Whereof, the parties hereto have executed the above
Agreement as of the day and year first above written:
NORTELCO NORDIC AS
/s/ Bjorn Nysted
By: ------------------------------------------------
/s/ Goron Haggquist
- ------------------------------------
Goran Haggqvist
4
Exhibit 10.5
AGREEMENT
---------
This agreement, made and entered into this 12th day of May, 1994, is by and
between UNIVERSAL COMMODITY TRADING GROUP S.A. as seller (hereinafter referred
to as "the Seller") and SHERMAN, GOELZ & ASSOCIATES (under name change to First
Nordic Equity Partners Corp) as buyer (hereinafter reffered to as "the Buyer").
WHEREAS: Universal Commodity Trading Group S.A. owns 80%, or 1,920 shares of the
total 2,400 shares of common stock, par value NOK 1,000:-, issued and
outstanding in the Norwegian company NORTELCO A/S, registered in Norway No:
954543323 (hereinafter referred to as "the Company").
WHEREAS: The Buyer is willing to buy all 1,920 shares owned by the Seller.
WHEREAS: The Seller is willing to sell all the 1,920 shares the Buyer is willing
to purchase.
WHEREAS: The Buyer have conducted a due dilligence of the Company and its
subsidiaries.
NOW, THEREFORE, in consideration of the mutual agreement hereinafter set forth,
the parties hereto, intending to be bound hereby, agree as follows:
1). Upon and subject to the terms and conditions set forth in this agreement,
the Seller hereby agrees to sell to the Buyer on the Closing date provided for
in section 2 hereof, free and clear of all liens, pledges and encumbrances of
every kind, character and descriptions whatsoever, 1,920 shares of the issued
and outstanding shares of the Company's common stock.
2). (a). The sale and purchase provided for in this agreement shall be
consummated at a closing to be held at the offices of Hagginvest AB, Stockholm,
Sweden ("the Agent"), on the 26th day of May, 1994 ("Closing date", "Closing");
and after all conditions precedent to the consummation thereof have been
satisfied or at such other date, time and place as the Seller and Buyer mutually
agree upon.
(b). At the Closing the Seller shall deliver to the Buyer: (i) certificates
evidencing and representing of the issued and outstanding shares of Common Stock
of the Copmany, all of which are being sold hereunder, duly endorsed in blank or
accompanied by stock powers duly executed in blank, with signatures guaranteed,
in proper form for transfer; (ii) a copy of the articles of incorporation of the
Company and its subsidiaries and all, if any, amendments thereto, a copy of the
Company's and the subsidiaries certificates of incorporation; (iii) correct and
complete copies of the by-laws, minutes of directors meetings or consent to
action by the shareholders of the Company and its subsidiaries, and similar
corporate documents of the Company and the subsidiaries.
3). The consideration to be paid to the Seller by the Buyer for 1,920 shares of
the issued and outstanding Common Stock of the Company, shall be NOK
30,000,000:-, inclusive of all commissions due. Such purchase price shall be
paid as follows:
<PAGE>
(a). Five Million Five Hundred Thousand Norwegian Crowns (5,500,000: -) in
cash at the closing, the cash consideration shall be paid by the Buyer to, a
by the Agent, nominated bank account on behalf of the Seller.
(b). Six Million Seven Hundred Thousand Norwegian Crowns (NOK 6,700,000:-)
shall be paid in the form of shares of the Buyer's Common Stock, before or
latest by 25.10.94, the amount of shares the Seller shall receive shall be
determined by the trading price of the Buyer's Common Stock on either the NASD
bullentin board, the AMEX Stock Exchange, New York or the NASDAQ Stock Exchange,
Whasington. Irrespectively of whichever of the mentioned market places the
Buyer's Common Stock is at that date trading and at which price it is trading,
the Seller shall receive the equivalent amount in USD of NOK 6,700,000 in shares
of the Buyer's Common Stock. EX formula: Trading price / $6,00 = 151,927 shares
/ (exchange rate NOK/USD = 7,35), 151,927 x $6,00 = $911,562 x 7,35 = NOK
6,700,000.
(c). The remaining balance of the purchase price i.e. NOK 17,800,000:-,
shall be paid by the Buyer in cash latest by 31.12.94, the Seller shall receive
an interest of 12% p.a. on the outstanding balance, interest payments shall
irrevocably be made by the Buyer on a regular monthly basis to the Seller's
nominated bank account, commencing 25.06.94, and running until the outstanding
balance of the purchase price have been fully paid. The 1,920 shares of Common
Stock in Nortelco A/S purchased by the Buyer pursuant to this agreement, shall
be pledged to the Seller as collateral for the Buyers fulfillment of its
obligations under this agreement (exhibit "A", Pledge Agreement).
4). The Seller have good and marketable title to the issued and outstanding
Common Stock of the Company to be transferred and the absolute right hereunder
and necessary authority to sell, assign and transfer all of said stock to the
Buyer, free and clear of all liens, claims, pledges and encumbrances of any
kind.
5). The Seller / Company will, on or before Closing, provide the Buyer with
audited consolidated financial statements for fiscal years ended December 31,
1990, 1991, 1992 and 1993, further, the Seller / Company shall provide the Buyer
with unaudited consolidated financial statements for the first quarter 1994,
including the financial statements for the recently acquired subsidiaries
Audiatur AB, Audiatur A/S and Dynatech AB.
6). Prior to the Closing Date, the Seller will not, except with written prior
consent of the Buyer, permit the Company to declare or pay dividend, issue or
authorize the issuance of any stock, declare any stock split, or issue any other
security convertible into stock or any warranty or option or right for the
purchase of any stock, sell or otherwise dispose of any asset, except in the
ordinary course of business or borrow money or incur any debt or other
obligation, will not permit the Company to be a party to any merger,
consolidation, reorganization or recapitalization, and the Seller will cause the
Company to conduct its affairs in the usual and ordinary course of business.
7). The Seller will on Closing Date provide the Buyer with up to date (day
before Closing) unaudited financial statements for the Company and its
subsidiaries, guaranteeing and evidencing that there have been no adverse change
in the financial condition, operations, properties and assets of the Company or
the subsidiaries since the Buyer cuncluded its due dilligence work.
<PAGE>
8). The Seller and the Buyer shall bear their own expenses and costs in
connection with this agreement and the transactions contemplated herein.
9). This instrument contains the entire agreement between the parties hereto
with respect to the transactions contemplated hereby and shall not be changed or
terminated except by written amendment signed by the parties hereto.
10). This agreement shall be construed in accordance with and goverened by
English law, any dispute arising from this agreement, which the parties
themselvs can not resolve, shall be referred to Arbitration in London.
Stockholm, as above
/s/ Kjell G. Lowgren /s/ Mats U. Hartling
- - ---------------------------- ------------------------
Kjell G. Lowgren Mats U. Hartling
Universal Commodity Trading Group S.A. Sherman, Goelz & Associates
Seller Buyer
<PAGE>
STOCK PURCHASE AGREEMENT
This agreement, made and entered into this 4th day of October, 1994, is by and
between Universal Commodity Trading Group S.A. as seller (hereinafter referred
to as "the Seller") and First Nordic Equity Partners Corp. (formerly Sherman,
Goelz & Associates) as buyer (hereinafter referred to as "FNEPC" or "the
Buyer").
Whereas: University Commodity Trading Group S.A. has sold 1,920 shares (or 80%)
of the total 2,400 shares of Common Stock issued and outstanding in the
Norwegian company Nortelco AS, registered in Norwas No 954543323, (hereinafter
referred to as "the Company") to FNEPC.
Whereas: The original purchase agreement drawn up by the parties hereto was
signed by the parties on May 12, 1994.
Whereas: The parties now have agreed to amend the original terms and conditions
for the sale (as incorporated hereinto), and subsequently, by signing this
agreement, declared the original purchase agreement and exhibit "A" attached
thereto, dated May 12, 1994, null and void.
Whereas: The Seller has received NOK 5,500,000 in cash, as downpayment for the
shares sold and transferred to FNEPC.
Whereas: The Buyer has conducted a due diligence of the Company and its
subsidiaries, and received in his possession all documentation concerning the
Company and its subsidiaries, their business and affairs, such as books,
bankaccounts, articles of incorporation, by-laws, registration certificates etc.
Now, therefore, in consideration of the mutual agreement hereinafter set forth,
the parties hereto agree as follows:
1) Upon and subject to the terms and conditions set forth in this agreement, the
Seller hereby agrees to sell to the Buyer, free and clear of all liens, pledges
and encumbrances of every kind, character and description whatsoever, 1,920 (or
80%) of the total outstanding 2,400 shares of Common Stock in the Company.
2) The consideration to be paid to the Seller by the Buyer for the 1,920 shares
of the Company's Common Stock, shall be NOK (Norwegian Crowns) 16,000,000:-
inclusive of all commissions etc. Such purchase price has been paid/shall be
paid as follows:
a) A downpayment of NOK 5,500,000:- (Five Million Five Hundred Thousand) in
cash has been paid by the Buyer and received by the Seller.
b) The balance of NOK 10,500,000:- shall be paid by the Buyer in form of
580,803 shares of the Buyer's Common Stock (par value $.001), the Seller shall
receive said number of shares within 60 calendar days from the date of this
agreement.
3) The Seller has good and marketable title to the 1,920 shares of the Common
Stock of the Company to be transferred and the absolute ritht hereunder and
necessary authority to sell, assign and transfer all of said stock to the Buyer,
free and clear of all liens, claims, pledges and encumbrances of any kind.
<PAGE>
4) This instrument contains the entire agreement between the parties hereto with
respect to the transactions contemplated hereby and shall not be changed or
terminated except by written amendment signed by the parties hereto.
5) This agreement shall be construed in accordance with, and governed by,
English law, any dispute arising from this agreement, which the parties hereto
can not resolve themselves, shall be referred to Arbitration in London.
Stockholm as above
/s/ Mats Hartling /s/ Mats Hartling
- - ----------------------------- ----------------------------------
Mats Hartling Mats Hartling
Universal Commodity Trading Group S.A. First Nordic Equity Partners Corp.
Seller Buyer
<PAGE>
STOCK PURCHASE AGREEMENT
This agreement, made and entered into this 23rd day of November, 1994, is by and
between Universal Commodity Trading Group, S.A. (hereinafter referred to as "the
Seller") and First Nordic Equity Partners Corp. (hereinafter referred to as
"FNEPC" or "the Buyer").
WHEREAS, pursuant to a Stock Purchase Agreement dated May 12, 1994 (the
"Original Stock Purchase Agreement"), annexed hereto as Exhibit
1, Universal Commodity Trading Group, S.A. agreed to sell 1,920
shares (or 80%) of the total 2,400 shares (the "Shares") of
common stock issued and outstanding in the Norwegian company
Nortelco AS, registered in Norway as No. 954543323 (hereinafter
referred to as the "Company"), to FNEPC; and
WHEREAS, pursuant to a subsequent Stock Purchase Agreement dated October
4, 1994 (the "Second Stock Purchase Agreement"), annexed hereto
as Exhibit 2, by and between the Seller and FNEPC, the parties
agreed that the Original Stock Purchase Agreement was null and
void and the terms and conditions of the purchase of the 1,920
Shares of the Company by FNEPC from the Seller would be governed
by the Second Purchase Agreement; and
WHEREAS, the Seller and FNEPC now desire to have the Second Purchase
Agreement declared null and void, and enter into this stock
purchase agreement (the "Agreement") setting forth the terms and
conditions of the FNEPC purchase of the Shares; and
WHEREAS, the Seller has previously received from the Buyer Norwegian
Crowns ("NOK") 5,500,000 in cash, as down payment for the Shares
sold and transferred to FNEPC;
NOW THEREFORE, in consideration of the mutual agreement hereinafter
set forth, the parties hereto, intending to be bound hereby,
agree as follows:
1. Upon, and subject to, the terms and conditions set forth in this agreement,
the Seller hereby agrees to sell to the Buyer, free and clear
of all liens, pledges and encumbrances of every kind, character and
description whatsoever, 1,920 (or 80%) of the total outstanding 2,400
shares of common stock of the Company.
2. The consideration to be paid to the Seller by the Buyer for the 1,920
Shares of the Company's common stock shall be NOK 16,000,000, inclusive of
all commissions and other payments. Such purchase price has been paid/shall
be paid as follows:
a. An initial cash payment of NOK 5,500,000 (five million five hundred
thousand). The parties hereby acknowledge and represent that such payment
has been made by the Buyer and received by the Seller.
b. The balance of NOK 10,500,000 (ten million five hundred thousand) shall
be paid by the Buyer in form of 580,803 shares of the Buyer's common stock,
par value $.001. The Seller hereby agrees that, as a condition to the
issuance of such Shares, the Buyer shall complete the attached document
annexed hereto as Exhibit A. The Seller shall receive such number of Shares
within 60 calendar days from the date of this agreement.
3. The Seller hereby represents and warrants that it has good and marketable
title to the 1,920 Shares of the common stock of the company to be
transferred pursuant to this Agreement, and has the absolute right and
necessary authority to sell, assign and transfer all of said Shares to the
Buyer, free and clear of all liens, claims, pledges and encumbrances of any
kind. The Seller also hereby represents and warrants that it has taken all
action necessary to sell the Shares to the Buyer.
<PAGE>
4. This instrument contains the entire agreement between the parties hereto
with respect to the transactions contemplated hereby, and shall not be
changed or terminated except by written amendment signed by the parties
hereto.
5. The parties hereby agree that this Agreement supersedes all agreements
between the parties, oral or otherwise, including the Original Stock
Purchase Agreement and the Second Stock Purchase Agreement (collectively,
the "Previous Agreements"), and that the Previous Agreements are hereby
null and void and without further effect.
6. This agreement shall be construed in accordance with, and governed by, New
York law.
UNIVERSAL COMMODITY TRADING GROUP, S.A.
By: /s/ Mats Hartling
FIRST NORDIC EQUITY PARTNERS CORP.
By: /s/ Goran Haggqvist
<PAGE>
Exhibit A
Gentlemen:
The undersigned entity who is acquiring 580,803 shares of common stock ("the
Shares") of First Nordic Equity Partners Corp, a Nevada corporation (the
"Company"), pursuant to a Stock Purchase Agreement dated November 23, 1994, by
and between the Company and the undersigned, hereby acknowledges, represents,
warrants, and covenants as follows:
1. The Shares being acquired have not been registered under the Securities Act
of 1933, as amended (the "Act") and are not freely tradeable. The Shares
must be held indefinitely, unless either a registration statement with
respect to the shares is filed and declared effective under the Act or an
exemption from the registration requirements of the Act is available.
2. The Company has no obligation to register any or all of the Shares under
the Act for distribution or sale. The Company has not agreed with anyone to
comply with Regulation A or any other exemption under the Act respecting
the resale or other transfer of the Shares.
3. The Shares are being acquired for investment purposes only for the
undersigned's own account and not with a view to sale or resale,
distribution (as that term is defined in the Act), or transfer, or to
offers in connection therewith. When the shares have been issued to the
undersigned, no other person will have a beneficial interest in the Shares.
4. The Company will affix a legend in substantially the following form to the
certificates evidencing the shares:
"The securities represented by this certificate have not been registered
under the Securities Act of 1933, as amended, and may not be sold, pledged,
hypothecated, donated, or otherwise transferred, wether or not for
consideration, unless either the shares have been registered under said Act
or an exemption from such registration requirement is available. If the
shares are to be sold or transferred pursuant to an exemption from the
registration requirements, the Company may require a written opinion of
counsel, satisfactory to counsel for the Company, to the effect that
registration is not required and that such transfer will not violate the
Act or applicable state securities law."
5. Prior to any proposed sale, pledge, hypothecation, gift or other transfer,
for value or otherwise, of any or all of the shares or of any interest
therein (hereinafter, a "transfer"), the undersigned shall give written
notice to the Company describing the transfer, unless the shares have
first been registered under the Act. The undersigned shall not effect any
transfer unless and until (a) the Company receives an opinion of the
undersigned's counsel that the shares have been registered under the Act,
or in form and substance acceptable to counsel for the Company, that the
transfer may be effected without registration under the Act, and without
registration or qualification under applicable state securities laws, and
(b) satisfaction of such other conditions as may be required by counsel to
the Company in order to assure compliance with the Act and with applicable
state securities laws.
Very truly yours,
UNIVERSAL COMMODITY TRADING GROUP, S.A.
By: /s/ Mats Hartling
-----------------------------------
<PAGE>
PLEDGE AGREEMENT, EXHIBIT A
---------------------------
First Nordic Equity Partners Corp (formerly Sherman, Goelz & Associates) (FNEPC)
C/O Nathan International, One Dag Hammarskjold Plaza, New York, N.Y. 10017, USA,
hereby irrevocably pledges all of its 1,920 shares of Common Stock in the
Norwegain company Nortelco A/S, registered in Norway No: 954543323, to the
seller of said shares, Universal Commodity Trading Group S.A. (UCTGSA), as
collateral for all its obligations under the purchase agreement of which this
pledge agreement forms an integral part. The Shares will be pledged to UCTGSA as
long as any debt whatsoever remains outstanding (including any interest),
whereafter the Shares will be free of any liens, pledges or encumbrances
whatsoever and in the sole possession and ownership of FNEPC. FNEPC are under no
circumstances allowed in any way to use the Shares as collateral for any other
purpose whatsoever, until UCTGSA have received full payment for the shares in
accordance with the purchase agreement. Should FNEPC not fulfill its
obligations, i.e. payment of the outstanding balance of the purchase price,
under the purchase agreement, shall all shares acquired by FNEPC under the
purchase agreement unconditionally, irrevocably and free of cost to UCTGSA be
transferred back to the seller (UCTGSA), unless the parties does not, in
writing, otherwise agree. UCTGSA shall have the undisputed and unconditional
right to retain all consideration paid by FNEPC for the Shares to this date as
compensation should FNEPC default on the purchase agreement.
Stockholm May 12, 1994
/s/ Mats U. Hartling
--------------------
Mats U. Hartling
President
First Nordic Equity Partners Corp.
Exhibit 10.6
AGREEMENT
---------
This agreement, made and entered into this 16th day of May, 1994, is by and
between OVINGTON INVESTMENTS LIMITED as seller (hereinafter referred to as "the
Seller") and SHERMAN, GOELZ & ASSOCIATES (under name change to First Nordic
Equity Partners Corp) as buyer (hereinafter referred to as "the Buyer").
WHEREAS: Ovington Investments Limited owns 100%, or all 3000 shares, par value
SEK 100:-, of common stock issued and outstanding in the Swedish company
STOREBRO MACHINE AB, registered in Sweden No: 556327-9146 (hereinafter referred
to as "the Company").
WHEREAS: The Buyer is willing to buy all 3000 shares owned by the Seller.
WHEREAS: The Seller is willing to sell all the 3000 shares the Buyer is willing
to purchase.
WHEREAS: The Buyer have conducted a due diligence of the Company.
NOW, THEREFORE, in consideration of the mutual agreement hereinafter set forth,
the parties hereto, intending to be bound hereby, agree as follows:
1). Upon and subject to the terms and conditions set forth in this agreement,
the seller hereby agrees to sell to the Buyer on the Closing date provided for
in section 2 hereof, free and clear of all liens, pledges and encumbrances of
every kind, character and descriptions whatsoever, all 3000 issued and
outstanding shares of common stock in the Company.
2). (a). The sale and purchase provided for in this agreement shall be
consummated at a closing to be held at the offices of Hagginvest AB, Stockholm,
Sweden ("the Agent"), on the 27th day of May, 1994 ("Closing date", "Closing") ;
and after all conditions precedent to the consummation thereof have been
satisfied or at such other date, time and place as the Seller and Buyer mutually
agree upon.
(b). At the Closing the Seller shall deliver to the Buyer: (i) certificates
evidencing and representing of the issued and outstanding shares of Common Stock
of the Company, all of which are being sold hereunder, duly endorsed in blank or
accompanied by stock powers duly executed in blank, with signatures guaranteed,
in proper form for transfer; (ii) a copy of the articles of incorporation of the
Company and all, if any, amendments thereto, and a copy of the Company's
certificate of incorporation; (iii) correct and complete copies of the by-laws,
minutes of directors meetings or consent to action by the shareholders of the
Company and similar corporate documents of the Company.
<PAGE>
3). The consideration to be paid to the Seller by the Buyer for the issued and
outstanding 3000 shares of the Company's Common Stock, shall be SEK
15,000,000:-, inclusive of all commissions due. Such purchase price shall be
paid as follows:
(a). One Million Nine Hundred Seventy Five Thousand Swedish Crowns in cash
at the closing, the cash consideration shall be paid by the Buyer to, a by the
Agent, nominated bank account on behalf of the Seller.
(b). The remaining balance of the purchase price i.e. SEK 13,025,000:-,
shall be paid by the Buyer in cash latest by 31.12.94, the Seller shall receive
an interest of 12% p.a. on the outstanding balance, interest payments shall
irrevocably be made by the Buyer on a regular monthly basis to the Seller's
nominated bank account, commencing 25.06.94, and running until the outstanding
balance of the purchase price have been fully paid. The 3000 shares of Common
Stock in Storebro Machine AB purchased by the Buyer pursuant to this agreement,
shall be pledged to the Seller as collateral for the Buyers fulfillment of its
obligations under this agreement (exhibit "A", Pledge Agreement).
4). The Seller have good and marketable title to the issued and outstanding
Common Stock of the Company to be transferred and the absolute right hereunder
and necessary authority to sell, assign and transfer all of said stock to the
Buyer, free and clear of all liens, claims, pledges and encumbrances of any
kind.
5). The Seller / Company will, on or before Closing, provide the Buyer with
audited financial statements for fiscal years ended December 31, 1991, 1992 and
1993, further, the Seller / Company shall provide the Buyer with unaudited
financial statements for the first quarter 1994.
6) . Prior to the Closing Date, the Seller will not, except with written prior
consent of the Buyer, permit the Company to declare or pay dividend, issue or
authorize the issuance of any stock, declare any stock split, or issue any other
security convertible into stock or any warranty or option or right for the
purchase of any stock, sell or otherwise dispose of any asset, except in the
ordinary course of business or borrow money or incur any debt or other
obligation, will not permit the Company to be a party to any merger,
consolidation, reorganization or recapitalization, and the Seller will cause the
Company to conduct its affairs in the usual and ordinary course of business.
7). The Seller shall on Closing Date provide the Buyer with up to date (day
before Closing) unaudited financial statements for the Company, guaranteeing and
evidencing that there have been no adverse change in the financial condition,
operations, properties and assets of the Company since the Buyer concluded its
due diligence.
8). The Seller and the Buyer shall bear their own expenses and costs in
connection with this agreement and the transactions contemplated herein.
<PAGE>
9). This instrument contains the entire agreement between the parties hereto
with respect to the transactions contemplated hereby and shall not be changed or
terminated except by written amendment signed by the parties hereto.
10). This agreement shall be construed in accordance with and governed by
English law, any dispute arising from this agreement, which the parties hereto
can not resolve themselves, shall be referred to Arbitration in London.
Stockholm, as above
/s/ Peter Janson /s/ Mats U. Hartling
- - ---------------------------- -------------------------
Peter Janson Mats U. Hartling
Ovington Investments Limited Sherman, Goelz & Assoc.
Seller Buyer
By Power of Attorney
<PAGE>
STOCK PURCHASE AGREEMENT
This agreement, made and entered into this 4th day of October, 1994, is by and
between OVINGTON INVESTMENTS LTD as seller (hereinafter referred to as "the
Seller") and FIRST NORDIC EQUITY PARTNERS CORP. (formerly Sherman, Goelz &
Associates) as buyer (hereinafter referred to as "FNEPC" or "the Buyer").
WHEREAS: OIL has sold all 3,000 shares of Common Stock issued and outstanding in
the Swedish company Storebro Machine AB, registered in Sweden as no 556327-9146
(hereinafter referred to as "the Company") to FNEPC.
WHEREAS: The original purchase agreement drawn up by the parties hereto was
signed by the parties on May 16, 1994.
WHEREAS: The parties now have agreed to amend the original terms and conditions
for the sale (as incorporated hereinto), and subsequently, by signing this
agreement, declared the original purchase agreement and exhibit "A" attached
thereto, dated May 16, 1994, null and void.
WHEREAS: The Seller has received SEK 1,975,000 in cash, as downpayment for the
shares sold and transferred to FNEPC.
WHEREAS: The Buyer has conducted a due diligence of the Company and its
subsidiaries, and received in his possession all documentation concerning the
Company and its subsidiaries, their business and affairs, such as books, bank
accounts, articles of incorporation, by-laws, registration certificates etc.
NOW, THEREFORE, in consideration of the mutual agreement hereinafter set forth,
the parties hereto agree as follows:
1) Upon and subject to the terms and conditions set forth in this agreement, the
Seller hereby agrees to sell to the Buyer, free and clear of all liens, pledges
and encumbrances of every kind, character and description whatsoever, all 3,000
issued and outstanding shares of Common Stock in the Company.
2) The consideration to be paid to the Seller by the Buyer for the issued and
outstanding shares of the Company's Common Stock, shall be SEK (Swedish Crowns)
12,000,000:- inclusive of all commissions etc. Such purchase price has been
paid/shall be paid as follows:
a) A downpayment of SEK 1,975,000:- (One Million Nine Hundred and
Seventy-five Thousand) in cash has been paid by the Buyer and received by the
Seller.
b) The balance of SEK 10,025,000:- (Ten Million Twenty-five Thousand) shall
be paid by the Buyer in form of 490,197 shares of the Buyer's Common Stock (par
value $.001), the Seller shall receive said number of shares within 60 calendar
days from the date of this agreement.
3) The Seller has good and marketable title to the 3,000 shares of the Common
Stock of the Company to be transferred and the absolute right hereunder and
necessary authority to sell, assign and transfer all of said stock to the Buyer,
free and clear of all liens, claims, pledges and encumbrances of any kind.
<PAGE>
4) This instrument contains the entire agreement between the parties hereto with
respect to the transactions contemplated hereby and shall not be changed or
terminated except by written amendment signed by the parties hereto.
5) This agreement shall be construed in accordance with, and governed by,
English law, any dispute arising from this agreement, which the parties hereto
can not resolve themselves, shall be referred to Arbitration in London.
Stockholm, as above
/s/ Goran Haggqvist /s/ Mats Hartling
- - -------------------------- ---------------------------
Goran Haggqvist Mats Hartling
Ovington Investments Ltd. First Nordic Equity Partners Corp.
Seller Buyer
<PAGE>
STOCK PURCHASE AGREEMENT
This agreement, made and entered into this 23rd day of November, 1994, is by and
between Ovington Investments Ltd (hereinafter referred to as "the Seller") and
First Nordic Equity Partners Corp. (hereinafter referred to as "FNEPC" or "the
Buyer").
WHEREAS, pursuant to a Stock Purchase Agreement dated May 16, 1994 (the
"Original Stock Purchase Agreement"), annexed hereto as Exhibit
1, Ovington Investments Ltd agreed to sell 3,000 shares (or 100%)
of the outstanding shares (the "Shares") of common stock issued
and outstanding in the Swedish company Storebro Machine AB,
registered in Sweden as No. 556327-9146 (hereinafter referred to
as the "Company"), to FNEPC; and
WHEREAS, pursuant to a subsequent Stock Purchase Agreement dated October
3, 1994 (the "Second Stock Purchase Agreement"), annexed hereto
as Exhibit 2, by and between the Seller and FNEPC, the parties
agreed that the Original Stock Purchase Agreement was null and
void and the terms and conditions of the purchase of the 3,000
Shares of the Company by FNEPC from the Seller would be governed
by the Second Purchase Agreement; and
WHEREAS, the Seller and FNEPC now desire to have the Second Purchase
Agreement declared null and void, and enter into this stock
purchase agreement (the "Agreement") setting forth the terms and
conditions of the FNEPC purchase of the Shares; and
WHEREAS, the Seller has previously received from the Buyer Swedish Crowns
("SEK") 1,975,000.- in cash, as down payment for the Shares sold
and transferred to FNEPC;
NOW THEREFORE, in consideration of the mutual agreement hereinafter
set forth, the parties hereto, intending to be bound hereby,
agree as follows:
1. Upon, and subject to, the terms and conditions set forth in this agreement,
the Seller hereby agrees to sell to the Buyer, free and clear of all liens,
pledges and encumbrances of every kind, character and description
whatsoever, 3,000 (or 100%) of the total outstanding shares of common stock
of the Company.
2. The consideration to be paid to the Seller by the Buyer for the 3,000
Shares of the Company's common stock shall be SEK 12,000,000.-, inclusive
of all commissions and other payments. Such purchase price has been
paid/shall be paid as follows:
a. An initial cash payment of SEK 1,975,000.- (one million nine hundred and
seventyfive thousand). The parties hereby acknowledge and represent that
such payment has been made by the Buyer and received by the Seller.
b. The balance of SEK 10,025,000.- (ten million twentyfive thousand) shall
be paid by the Buyer in form of 490,197 shares of the Buyer's common stock,
par value $.001. The Seller hereby agrees that, as a condition to the
issuance of such Shares, the Buyer shall complete the attached document
annexed hereto as Exhibit A. The Seller shall receive such number of Shares
within 60 calendar days from the date of this agreement.
3. The Seller hereby represents and warrants that it has good and marketable
title to the 3,000 Shares of the common stock of the company to be
transferred pursuant to this Agreement, and has the absolute right and
necessary authority to sell, assign and transfer all of said Shares to the
Buyer, free and clear of all liens, claims, pledges and encumbrances of any
kind. The Seller also hereby represents and warrants that it has taken all
action necessary to sell the Shares to the Buyer.
<PAGE>
4. This instrument contains the entire agreement between the parties hereto
with respect to the transactions contemplated hereby, and shall not be
changed or terminated except by written amendment signed by the parties
hereto.
5. The parties hereby agree that this Agreement supersedes all agreements
between the parties, oral or otherwise, including the Original Stock
Purchase Agreement and the Second Stock Purchase Agreement (collectively,
the "Previous Agreements"), and that the Previous Agreements are hereby
null and void and without further effect.
6. This agreement shall be construed in accordance with, and governed by, New
York law.
OVINGTON INVESTMENTS LTD
By: /s/ Goran Haggqvist
-------------------------------
FIRST NORDIC EQUITY PARTNERS CORP.
By: /s/ Goran Haggqvist /s/ Kjell Sjostrand
-------------------------------------------
<PAGE>
EXHIBIT A
Gentlemen:
The undersigned entity who is acquiring 490,197 shares of common stock ("the
Shares") of First Nordic Equity Partners Corp., a Nevada corporation (the
"Company"), pursuant to a Stock Purchase Agreement dated November 23, 1994, by
and between the Company and the undersigned, hereby acknowledges, represents,
warrants, and covenants as follows:
1. The Shares being acquired have not been registered under the Securities
Act of 1933, as amended (the "Act") and are not freely tradeable. The
Shares must be held indefinitely, unless either a registration statement
with respect to the shares is filed and declared effective under the Act or
an exemption from the registration requirements of the Act is available.
2. The Company has no obligation to register any or all of the Shares under
the Act for distribution or sale. The Company has not agreed with anyone to
comply with Regulation A or any other exemption under the Act respecting
the resale or other transfer of the Shares.
3. The Shares are being acquired for investment purposes only for the
undersigned's own account and not with a view to sale or resale,
distribution (as that term is defined in the Act), or transfer, or to
offers in connection therewith. When the shares have been issued to the
undersigned, no other person will have a beneficial interest in the Shares.
4. The Company will affix a legend in substantially the following form to the
certificates evidencing the shares:
"The securities represented by this certificate have nor been registered
under the Securities Act of 1933, as amended, and may not be sold, pledged,
hypothecated, donated, or otherwise transferred, whether or not for
consideration, unless either the shares have been registered under said Act
or an exemption from such registration requirement is available. If the
shares are to be sold or transferred pursuant to an exemption from the
registration requirements, the Company may require a written opinion of
counsel, satisfactory to counsel for the Company, to the effect that
registration is not required and that such transfer will not violate the
Act or applicable state securities law."
5. Prior to any proposed sale, pledge, hypothecation, gift or other transfer,
for value or otherwise, of any or all of the shares or of any interest
therein (hereinafter, a "transfer"), the undersigned shall give written
notice to the Company describing the transfer, unless the shares have
first been registered under the Act. The undersigned shall not effect any
transfer unless and until (a) the Company receives an opinion of the
undersigned's counsel that the shares have been registered under the Act,
or in form and substance acceptable to counsel for the Company, that the
transfer may be effected without registration under the Act, and without
registration or qualification under applicable state securities laws, and
(b) satisfaction of such other conditions as may be required by counsel to
the Company in order to assure compliance with the Act and with applicable
state securities laws.
Very truly yours,
OVINGTON INVESTMENTS LTD
By: /s/ [ILLEGIBLE]
--------------------------
<PAGE>
PLEDGE AGREEMENT, EXHIBIT A
---------------------------
First Nordic Equity Partners Corp (formerly Sherman, Goelz & Associates) (FNEPC)
C/O Nathan International, One Dag Hammarskjold Plaza, New York, N.Y. 10017, USA,
hereby irrevocably pledges all of its 3,000 shares of Common Stock in the
Swedish company Storebro Machine AB, registered in Sweden No: 556327-9146, to
the seller of said shares, Ovington Investments Limited (OIL), as collateral for
all its obligations under the purchase agreement, of which this pledge agreement
forms an integral part. The Shares will be pledged to OIL as long as any debt
whatsoever remains outstanding (including any interest), whereafter the Shares
will be free of any liens, pledges or encumbrances whatsoever and in the sole
possession and ownership of FNEPC. FNEPC are under no circumstances allowed in
any way to use the Shares as collateral for any other purpose whatsoever, until
OIL have received full payment for the shares in accordance with the purchase
agreement. Should FNEPC not fulfill its obligations, i.e. payment of the
outstanding balance of the purchase price, under the purchase agreement, shall
all shares acquired by FNEPC under the purchase agreement unconditionally,
irrevocably and free of cost to OIL be transferred back to the seller (OIL),
unless the parties does not, in writing, otherwise agree. OIL shall have the
undisputed and unconditional right to retain all consideration paid by FNEPC for
the Shares to this date as compensation should FNEPC default on the purchase
agreement.
Stockholm May 16, 1994
/s/ Mats U. Hartling
--------------------
Mats U. Hartling
First Nordic Equity Partners Corp.
Exhibit 10.7
STOREBRO MACHINE AB
TRANSLATION
Between the companies MWD-Vertriebs GmbH, Heerstrasse 30, D-89079
Vohringen-Illerberg (hereafter referred to as MWD) and Storebro Machine AB, P.O.
Box 19. S-590 83 Storebro (hereafter referred to as STM) the following agreement
has been made:
AGENCY AGREEMENT
- ---------------
Clause 1 - Object of the Agency
CNC-lathe-program in standard and special design as well as the conventional
lathe-model "SB-N".
Clause 2 - District of the Agency
Post code areas 6-7-8 as well as 90, 91, 92, 93, 94, 95, 96, 97 and 98.
Additional districts on inquiry and after approval. (by STM)
Clause 3 - Competitors/competing manufacture
Beyond the existing agency programmes "Angelini" and "Padovani", no additional
CNC-Machine products may be included, offered or sold under the programme.
Clause 4 - Sales budget
The sales budget for the following calendar year shall be established two to
three months before the end of the current calendar year.
Clause 5 - Firm orders
An order consisting of at least 12 CNC machines with delivery dates shall be
guaranteed for each calandar year.
Clause 6 - Purchase prices
The purchase prices shall be agreed upon before the placing of the firm, annual
order.
Clause 7 - Sales prices
The sales price shall be determined by agreement between MWD and STM.
<PAGE>
STOREBRO MACHINE AB
Clause 8 - Terms of delivery
The terms of delivery are free customer's address inclusive of packaging.
Clause 9 - Terms of payment
By bank comfirmation on proof of preparedness to deliver.
Clause 10 - Guarantees
The guarantee period is twelve months or 3000 working hours counting from the
date of putting into service. For demonstration machines or machines in stock
the guarantee period is based on the date of delivery from Storebro.
Repairs to Storebro machines may be performed only by MWD during the gaurantee
period.
Clause 11 - Provisions concerning putting into service
The putting into service must be performed by STM according to the record
(protocol) of putting into service. A copy of the record shall after completion
be sent to STM without delay.
Clause 12 - Performance of work during the guarantee period
Work during the guarantee period relating to control system, electricity,
electronics as well as mechanics may only be performed after approval by STM and
under an assignment number. STM will refuse to pay for work performed without an
assignment number.
Clause 13 - Exhibitions and advertisement
Exhibitions, advertisement and similar activities where STM participates
financially or in some other form, must be approved in writing by STM. Amounts
that are invoiced without this approval will not be accepted.
Clause 14 - Special terms and conditions
All special terms and conditions must be confirmed in writing.
<PAGE>
STOREBRO MACHINE AB
Clause 15 - Period of validity
This agreement shall be valid for one calendar year. If neither of the
contracting parties cancels the agreement three months before the end of the
calendar year, the period of validity will be extended by one calendar year.
Clause 16 - Immediate termination
If one of the contracting parties is fundamentally in breach of any part of this
agreement and does not immediately remedy this breach at the request of the
other party, this agreement shall be terminated with immediate effect. The
agreement shall also be terminated forthwith in case of suspension of payments
or bankruptcy.
Clause 17 - Return of documentation
If this agreement is terminated for any reason, all technical documentation
shall be returned (to STM)
Clause 18 - Discharge/Termination
STM agrees to invoice all business made within the area of the agency through
MWD.
Notice of termination shall be given by registered letter.
This agreement has been drawn up in duplicate.
Storebro, 23 September 1995 Illerberg, 4 October 1995
STOREBRO MACHINE AB MWD Vertriebs GmbH
EXHIBIT 21.1
Subsidiaries of the Registrant
STATE OR OTHER JURISDICTION OF
NAME INCORPORATION OR ORGANIZATION
- ---- -----------------------------
Storebro Machine AB Sweden
Nortelco Nordic AS Norway
Nortelco AS* Norway
Nortelco System -
Teknikk AS* Norway
Nortelco AB* Sweden
Brannteknikk AS** Norway
---------
* wholly-owned subsidiaries of Nortelco Nordic AS
** wholly-owned subsidiary of Nortelco AS
Exhibit 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the reference to our firm under the caption "Experts" and to
the use of our report dated November 10, 1998 in the Registration Statement
(Form S-1) and related prospectus of Nordic Equity Partneres Corp. for the
registration of 1,100,000 shares of its Common Stock and 1,650,000 Redeemable
Common Stock Purchase Warrants.
/s/ Ernst & Young
Ernst & Young AS
Oslo, Norway
November 10, 1998
[KOMNAES & HUSER ANS LETTERHEAD]
November 11, 1998
To the
Board of Directors
Nordic Equity Partners Corp.
RE: Nordic Equity Partners Corp.
Gentlemen:
Please be adivsed that we consent to the use of our name and to all
references to our firm included in your Registration Statement and Prospectus
filed with the Securities and Exchange Commission.
Sincerely,
KOMNAES & HUSER ANS
By:
/s/ KOMNAES & HUSER ANS
[FALKS ADVOKATBYRA LETTERHEAD]
November 11, 1998
To the
Board of Directors
Nordic Equity Partners Corp.
RE: Nordic Equity Partners Corp.
Gentlemen:
Please be adivsed that we consent to the use of our name and to all
references to our firm included in your Registration Statement and Prospectus
filed with the Securities and Exchange Commission.
Sincerely,
FALKS ADVOKATBYRA HB
By:
/s/ FALKS ADVOKATBYRA HB
