<PAGE>
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-SB
General Form for Registration of Securities
of Small Business Issuers
Under Section 12(b) or (g) of
the Securities Exchange Act of 1934
CYPRESS CAPITAL, INC.
(Name of Small Business Issuer)
Nevada 84-1349551
(State or Other Jurisdiction of (I.R.S. Employer Identification Number)
Incorporation or Organization)
16178 East Prentice Place, Aurora, Colorado 80015
(Address of Principal Executive Offices, Including Zip Code)
(303) 690-6787
(Issuer's Telephone Number)
Securities to be Registered Under Section 12(b) of the Act: None
Securities to be Registered Under Section 12(g) of the Act:
Common Stock, $.0001 Par Value
(Title of Class)
<PAGE>
PART I
ITEM 1. DESCRIPTION OF BUSINESS.
Cypress Capital, Inc. (the "Company"), was incorporated on July 1, 1996,
under the laws of the State of Nevada, to engage in any lawful corporate
undertaking, including, but not limited to, selected mergers and acquisitions.
The Company has been in the developmental stage since inception and has no
operations to date. Other than issuing shares to its original shareholders,
the Company never commenced any operational activities. The Board of
Directors of the Company has elected to commence implementation of the
Company's principal business purpose, described below under "Item 2, Plan of
Operation". As such, the Company can be defined as a "shell" company, whose
sole purpose at this time is to locate and consummate a merger or acquisition
with a private entity.
The proposed business activities described herein classify the Company
as a "blank check" company. Many states have enacted statutes, rules and
regulations limiting the sale of securities of "blank check" companies in
their respective jurisdictions. Management does not intend to undertake any
efforts to cause a market to develop in the Company's securities until such
time as the Company has successfully implemented its business plan described
herein. Accordingly, each shareholder of the Company has executed and
delivered a "lock-up" letter agreement, affirming that he/she will not sell
his/her respective shares of the Company's common stock until such time as the
Company has successfully consummated a merger or acquisition and the Company
is no longer classified as a "blank check" company. In order to provide
further assurances that no trading will occur in the Company's securities
until a merger or acquisition has been consummated, each shareholder has
agreed to place his/her respective stock certificate with the Company's legal
counsel, who will not release these respective certificates until such time as
legal counsel has confirmed that a merger or acquisition has been successfully
consummated. However, while management believes that the procedures
established to preclude any sale of the Company's securities prior to closing
of a merger or acquisition will be sufficient, there can be no assurances that
the procedures established herein will unequivocally limit any shareholder's
ability to sell their respective securities before such closing.
The Company's business is subject to numerous risk factors, including
the following:
NO OPERATING HISTORY OR REVENUE AND MINIMAL ASSETS. The Company has had
no operating history nor any revenues or earnings from operations. The
Company has no significant assets or financial resources. The Company will,
in all likelihood, sustain operating expenses without corresponding revenues,
at least until the consummation of a business combination. This may result in
the Company incurring a net operating loss which will increase continuously
until the Company can consummate a business combination with a profitable
business opportunity. There is no assurance that the Company can identify
such a business opportunity and consummate such a business combination.
SPECULATIVE NATURE OF COMPANY'S PROPOSED OPERATIONS. The success of the
Company's proposed plan of operation will depend to a great extent on the
operations, financial condition and management of the identified business
opportunity. While management intends to seek business combinations with
entities having established operating histories, there can be no assurance
that the Company will be successful in locating candidates meeting such
criteria. In the event the Company completes a business combination, of which
there can be no assurance, the success of the Company's operations may be
dependent upon management of the successor firm or venture partner firm and
numerous other factors beyond the Company's control.
SCARCITY OF AND COMPETITION FOR BUSINESS OPPORTUNITIES AND COMBINATIONS.
The Company is and will continue to be an insignificant participant in the
business of seeking mergers with, joint ventures with and acquisitions of
small private entities. A large number of established and well-financed
entities, including venture capital firms, are active in mergers and
acquisitions of companies which may be desirable target candidates for the
Company . Nearly all such entities have significantly greater financial
resources, technical expertise and managerial capabilities than the Company
and, consequently, the Company will be at a competitive disadvantage in
identifying possible business opportunities and successfully completing a
business combination. Moreover, the Company will also compete in seeking
merger or acquisition candidates with numerous other small public companies.
NO AGREEMENT FOR BUSINESS COMBINATION OR OTHER TRANSACTION - NO
STANDARDS FOR BUSINESS COMBINATION. The Company has no arrangement, agreement
or understanding with respect to engaging in a merger with, joint venture with
or acquisition of, a private entity. There can be no assurance the Company
will be successful in identifying and evaluating suitable business
opportunities or in concluding a business combination. Management has not
identified any particular industry or specific business within an industry for
evaluation by the Company. There is no assurance the Company will be able to
negotiate a business combination on terms favorable to the Company. The
Company has not established a specific length of operating history or a
specified level of earnings, assets, net worth or other criteria which it will
require a target business opportunity to have achieved, and without which the
Company would not consider a business combination in any form with such
business opportunity. Accordingly, the Company may enter into a business
combination with a business opportunity having no significant operating
history, losses, limited or no potential for earnings, limited assets,
negative net worth or other negative characteristics.
CONTINUED MANAGEMENT CONTROL, LIMITED TIME AVAILABILITY. While seeking
a business combination, management anticipates devoting up to twenty hours per
month to the business of the Company. The Company's sole officer has not
entered into a written employment agreement with the Company and he is not
expected to do so in the foreseeable future. The Company has not obtained key
man life insurance on either of its officers or directors. Notwithstanding
the combined limited experience and time commitment of management, loss of the
services of any of these individuals would adversely affect development of the
Company's business and its likelihood of continuing operations. See
"MANAGEMENT."
CONFLICTS OF INTEREST - GENERAL. The Company's officers and directors
participate in other business ventures which compete directly with the
Company. Additional conflicts of interest and non-arms length transactions
may also arise in the future in the event the Company's officers or directors
are involved in the management of any firm with which the Company transacts
business. Management has adopted a policy that the Company will not seek a
merger with, or acquisition of, any entity in which management serve as
officers, directors or partners, or in which they or their family members own
or hold any ownership interest. See "ITEM 5. DIRECTORS, EXECUTIVE OFFICERS,
PROMOTERS AND CONTROL PERSONS - CONFLICTS OF INTEREST."
REPORTING REQUIREMENTS MAY DELAY OR PRECLUDE ACQUISITION. Section 13 of
the Securities Exchange Act of 1934 (the "Exchange Act"), requires companies
subject thereto to provide certain information about significant acquisitions,
including certified financial statements for the company acquired, covering
one or two years, depending on the relative size of the acquisition. The time
and additional costs that may be incurred by some target entities to prepare
such statements may significantly delay or essentially preclude consummation
of an otherwise desirable acquisition by the Company. Acquisition prospects
that do not have or are unable to obtain the required audited statements may
not be appropriate for acquisition so long as the reporting requirements of
the 1934 Act are applicable.
LACK OF MARKET RESEARCH OR MARKETING ORGANIZATION. The Company has
neither conducted, nor have others made available to it, results of market
research indicating that market demand exists for the transactions
contemplated by the Company. Moreover, the Company does not have, and does
not plan to establish, a marketing organization. Even in the event demand is
identified for a merger or acquisition contemplated by the Company, there is
no assurance the Company will be successful in completing any such business
combination.
LACK OF DIVERSIFICATION. The Company's proposed operations, even if
successful, will in all likelihood result in the Company engaging in a
business combination with only one business opportunity. Consequently, the
Company's activities will be limited to those engaged in by the business
opportunity which the Company merges with or acquires. The Company's
inability to diversify its activities into a number of areas may subject the
Company to economic fluctuations within a particular business or industry and
therefore increase the risks associated with the Company's operations.
REGULATION. Although the Company will be subject to regulation under
the Securities Exchange Act of 1934, management believes the Company will not
be subject to regulation under the Investment Company Act of 1940, insofar as
the Company will not be engaged in the business of investing or trading in
securities. In the event the Company engages in business combinations which
result in the Company holding passive investment interests in a number of
entities, the Company could be subject to regulation under the Investment
Company Act of 1940. In such event, the Company would be required to register
as an investment company and could be expected to incur significant
registration and compliance costs . The Company has obtained no formal
determination from the Securities and Exchange Commission as to the status of
the Company under the Investment Company Act of 1940 and, consequently, any
violation of such Act would subject the Company to material adverse
consequences.
PROBABLE CHANGE IN CONTROL AND MANAGEMENT. A business combination
involving the issuance of the Company's common stock will, in all likelihood,
result in shareholders of a private company obtaining a controlling interest
in the Company. Any such business combination may require management of the
Company to sell or transfer all or a portion of the Company's common stock
held by them, or resign as members of the Board of Directors of the Company.
The resulting change in control of the Company could result in removal of one
or more present officers and directors of the Company and a corresponding
reduction in or elimination of their participation in the future affairs of
the Company.
REDUCTION OF PERCENTAGE SHARE OWNERSHIP FOLLOWING BUSINESS COMBINATION.
The Company's primary plan of operation is based upon a business combination
with a private concern which, in all likelihood, would result in the Company
issuing securities to shareholders of such private company. The issuance of
previously authorized and unissued common stock of the Company would result in
reduction in percentage of shares owned by present and prospective
shareholders of the Company and would most likely result in a change in
control or management of the Company.
DISADVANTAGES OF BLANK CHECK OFFERING. The Company may enter into a
business combination with an entity that desires to establish a public trading
market for its shares. A business opportunity may attempt to avoid what it
deems to be adverse consequences of undertaking its own public offering by
seeking a business combination with the Company. Such consequences may
include, but are not limited to, time delays of the registration process,
significant expenses to be incurred in such an offering, loss of voting
control to public shareholders and the inability or unwillingness to comply
with various federal and state laws enacted for the protection of investors.
TAXATION. Federal and state tax consequences will, in all likelihood,
be major considerations in any business combination the Company may undertake.
Currently, such transactions may be structured so as to result in tax-free
treatment to both companies, pursuant to various federal and state tax
provisions. The Company intends to structure any business combination so as
to minimize the federal and state tax consequences to both the Company and the
target entity; however, there can be no assurance that such business
combination will meet the statutory requirements of a tax-free reorganization
or that the parties will obtain the intended tax-free treatment upon a
transfer of stock or assets. A non-qualifying reorganization could result in
the imposition of both federal and state taxes which may have an adverse
effect on both parties to the transaction.
REQUIREMENT OF AUDITED FINANCIAL STATEMENTS MAY DISQUALIFY BUSINESS
OPPORTUNITIES. Management of the Company believes that any potential business
opportunity must provide audited financial statements for review, and for the
protection of all parties to the business combination. One or more attractive
business opportunities may choose to forego the possibility of a business
combination with the Company, rather than incur the expenses associated with
preparing audited financial statements.
ITEM 2. PLAN OF OPERATION
The Registrant intends to seek to acquire assets or shares of an entity
actively engaged in business which generates revenues, in exchange for its
securities. The Registrant has no particular acquisitions in mind and has not
entered into any negotiations regarding such an acquisition. None of the
Company's officers, directors, promoters or affiliates have engaged in any
preliminary contact or discussions with any representative of any other
company regarding the possibility of an acquisition or merger between the
Company and such other company as of the date of this registration statement.
The Company's Board of Directors intends to provide the Company's
shareholders with complete disclosure documentation concerning a potential
business opportunity and the structure of the proposed business combination
prior to consummation of the same, which disclosure is intended to be in the
form of a proxy statement. While such disclosure may include audited
financial statements of such a target entity, there is no assurance that such
audited financial statements will be available. The Board of Directors does
intend to obtain certain assurances of value of the target entity's assets
prior to consummating such a transaction, with further assurances that an
audited statement would be provided within seventy-five days after closing of
such a transaction. Closing documents relative thereto will include
representations that the value of the assets conveyed to or otherwise so
transferred will not materially differ from the representations included in
such closing documents.
The Registrant has no full time employees. The Registrant's President
has agreed to allocate a portion of his time to the activities of the
Registrant, without compensation. The President anticipates that the business
plan of the Company can be implemented by his devoting approximately 10 hours
per month to the business affairs of the Company and, consequently, conflicts
of interest may arise with respect to the limited time commitment by such
officer. See "ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL
PERSONS."
Mr. Brasel is involved with several other blank check companies, and
both directors are involved creating three other blank check companies similar
to this one. In addition, the Company's officers and directors may, in the
future, become involved with other companies which have a business purpose
similar to that of the Company. As a result, additional conflicts of interest
may arise in the future. If such a conflict does arise and an officer or
director of the Company is presented with a business opportunity under
circumstances where there may be a doubt as to whether the opportunity should
belong to the Company or another "blank check" company they are affiliated
with, they will disclose the opportunity to all such companies. If a
situation arises in which more than one company desires to merge with or
acquire that target company and the principals of the proposed target company
have no preference as to which company will merge or acquire such target
company, the company of which Mr. Brasel first became an officer and director
will be entitled to proceed with the transaction. As between the Company and
the three other companies formed on July 1, 1996, the company which first
filed a registration statement with the Securities and Exchange Commission
will be entitled to proceed with the proposed transaction. See "ITEM 5,
DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS - PREVIOUS BLIND
POOL ACTIVITIES."
The Company is filing this registration statement on a voluntary basis
because the primary attraction of the Registrant as a merger partner or
acquisition vehicle will be its status as an SEC reporting company. Any
business combination or transaction will likely result in a significant
issuance of shares and substantial dilution to present stockholders of the
Registrant.
The Articles of Incorporation of the Company provides that the Company
may indemnify officers and/or directors of the Company for liabilities, which
can include liabilities arising under the securities laws. Therefore, assets
of the Company could be used or attached to satisfy any liabilities subject to
such indemnification. See "ITEM 12, INDEMNIFICATION OF DIRECTORS AND
OFFICERS."
GENERAL BUSINESS PLAN
The Company's purpose is to seek, investigate and, if such investigation
warrants, acquire an interest in business opportunities presented to it by
persons or firms who or which desire to seek the perceived advantages of an
Exchange Act registered corporation. The Company will not restrict its search
to any specific business, industry, or geographical location and the Company
may participate in a business venture of virtually any kind or nature. This
discussion of the proposed business is purposefully general and is not meant
to be restrictive of the Company's virtually unlimited discretion to search
for and enter into potential business opportunities. Management anticipates
that it will be able to participate in only one potential business venture
because the Company has nominal assets and limited financial resources. See
Item F/S, "Financial Statements." This lack of diversification should be
considered a substantial risk to shareholders of the Company because it will
not permit the Company to offset potential losses from one venture against
gains from another.
The Company may seek a business opportunity with entities which have
recently commenced operations, or which wish to utilize the public marketplace
in order to raise additional capital in order to expand into new products or
markets, to develop a new product or service, or for other corporate purposes.
The Company may acquire assets and establish wholly-owned subsidiaries in
various businesses or acquire existing businesses as subsidiaries.
The Company anticipates that the selection of a business opportunity in
which to participate will be complex and extremely risky. Due to general
economic conditions, rapid technological advances being made in some
industries and shortages of available capital, management believes that there
are numerous firms seeking the perceived benefits of a publicly registered
corporation. Such perceived benefits may include facilitating or improving
the terms on which additional equity financing may be sought, providing
liquidity for incentive stock options or similar benefits to key employees,
providing liquidity (subject to restrictions of applicable statutes) for all
shareholders and other factors. Business opportunities may be available in
many different industries and at various stages of development, all of which
will make the task of comparative investigation and analysis of such business
opportunities extremely difficult and complex.
The Company has, and will continue to have, no capital with which to
provide the owners of business opportunities with any significant cash or
other assets. However, management believes the Company will be able to offer
owners of acquisition candidates the opportunity to acquire a controlling
ownership interest in a publicly registered company without incurring the cost
and time required to conduct an initial public offering. The owners of the
business opportunities will, however, incur significant legal and accounting
costs in connection with the acquisition of a business opportunity, including
the costs of preparing Form 8-K's, 10-K's or 10-KSB's, agreements and related
reports and documents. The Securities Exchange Act of 1934 (the "34 Act"),
specifically requires that any merger or acquisition candidate comply with all
applicable reporting requirements, which include providing audited financial
statements to be included within the numerous filings relevant to complying
with the 34 Act. Nevertheless, the officers and directors of the Company have
not conducted market research and are not aware of statistical data which
would support the perceived benefits of a merger or acquisition transaction
for the owners of a business opportunity.
The analysis of new business opportunities will be undertaken by, or
under the supervision of, the officers and directors of the Company, none of
whom is a professional business analyst. Management intends to concentrate on
identifying preliminary prospective business opportunities which may be
brought to its attention through present associations of the Company's
President and its two directors, or by the Company's shareholders. In
analyzing prospective business opportunities, management will consider such
matters as the available technical, financial and managerial resources;
working capital and other financial requirements; history of operations, if
any; prospects for the future; nature of present and expected competition; the
quality and experience of management services which may be available and the
depth of that management; the potential for further research, development, or
exploration; specific risk factors not now foreseeable but which then may be
anticipated to impact the proposed activities of the Company; the potential
for growth or expansion; the potential for profit; the perceived public
recognition or acceptance of products, services, or trades; name
identification; and other relevant factors. Management will meet personally
with management and key personnel of the business opportunity as part of their
investigation. To the extent possible, the Company intends to utilize written
reports and personal investigation to evaluate the above factors. The Company
will not acquire or merge with any company for which audited financial
statements cannot be obtained within a reasonable period of time after closing
of the proposed transaction.
Management of the Company, while not especially experienced in matters
relating to the new business of the Company, will rely upon their own efforts
and, to a much lesser extent, the efforts of the Company's shareholders, in
accomplishing the business purposes of the Company. It is not anticipated
that any outside consultants or advisors, other than the Company's legal
counsel and accountants, will be utilized by the Company to effectuate its
business purposes described herein. However, if the Company does retain such
an outside consultant or advisor, any cash fee earned by such party will need
to be paid by the prospective merger/acquisition candidate, as the Company has
no cash assets with which to pay such obligation. There have been no
contracts or agreements with any outside consultants and none are anticipated
in the future.
The Company will not restrict its search for any specific kind of firms,
but may acquire a venture which is in its preliminary or development stage,
which is already in operation, or in essentially any stage of its corporate
life. It is impossible to predict at this time the status of any business in
which the Company may become engaged, in that such business may need to seek
additional capital, may desire to have its shares publicly traded, or may seek
other perceived advantages which the Company may offer. However, the Company
does not intend to obtain funds in one or more private placements to finance
the operation of any acquired business opportunity until such time as the
Company has successfully consummated such a merger or acquisition.
ACQUISITION OF OPPORTUNITIES
In implementing a structure for a particular business acquisition, the
Company may become a party to a merger, consolidation, reorganization, joint
venture, or licensing agreement with another corporation or entity. It may
also acquire stock or assets of an existing business. On the consummation of
a transaction, it is probable that the present management and shareholders of
the Company will no longer be in control of the Company. In addition, the
Company's directors may, as part of the terms of the acquisition transaction,
resign and be replaced by new directors without a vote of the Company's
shareholders or may sell their stock in the Company. Any terms of sale of the
shares presently held by officers and/or directors of the Company will be also
afforded to all other shareholders of the Company on similar terms and
conditions. Any and all such sales will only be made in compliance with the
securities laws of the United States and any applicable state.
It is anticipated that any securities issued in any such reorganization
would be issued in reliance upon exemption from registration under applicable
federal and state securities laws. In some circumstances, however, as a
negotiated element of its transaction, the Company may agree to register all
or a part of such securities immediately after the transaction is consummated
or at specified times thereafter. If such registration occurs, of which there
can be no assurance, it will be undertaken by the surviving entity after the
Company has successfully consummated a merger or acquisition and the Company
is no longer considered a "shell" company. Until such time as this occurs,
the Company will not attempt to register any additional securities. The
issuance of substantial additional securities and their potential sale into
any trading market which may develop in the Company's securities may have a
depressive effect on the value of the Company's securities in the future, if
such a market develops, of which there is no assurance.
While the actual terms of a transaction to which the Company may be a
party cannot be predicted, it may be expected that the parties to the business
transaction will find it desirable to avoid the creation of a taxable event
and thereby structure the acquisition in a so-called "tax-free" reorganization
under Sections 368a or 351 of the Internal Revenue Code (the "Code").
With respect to any merger or acquisition, negotiations with target
company management is expected to focus on the percentage of the Company which
target company shareholders would acquire in exchange for all of their
shareholdings in the target company. Depending upon, among other things, the
target company's assets and liabilities, the Company's shareholders will in
all likelihood hold a substantially lesser percentage ownership interest in
the Company following any merger or acquisition. The percentage ownership may
be subject to significant reduction in the event the Company acquires a target
company with substantial assets. Any merger or acquisition effected by the
Company can be expected to have a significant dilutive effect on the
percentage of shares held by the Company's then-shareholders. While
management of the Company anticipates obtaining the approval of the
shareholders of the Company via a Proxy Statement, the effect will be to
assure such approval where management supports such a business transaction
because management presently controls sufficient shares of the Company to
effectuate a positive vote on the proposed transaction.
The Company will participate in a business opportunity only after the
negotiation and execution of appropriate written agreements. Although the
terms of such agreements cannot be predicted, generally such agreements will
require some specific representations and warranties by all of the parties
thereto, will specify certain events of default, will detail the terms of
closing and the conditions which must be satisfied by each of the parties
prior to and after such closing, will outline the manner of bearing costs,
including costs associated with the Company's attorneys and accountants, will
set forth remedies on default and will include miscellaneous other terms.
As stated hereinabove, the Company will not acquire or merge with any
entity which cannot provide independent audited financial statements within a
reasonable period of time after closing of the proposed transaction. The
Company is subject to all of the reporting requirements included in the 34
Act. Included in these requirements is the affirmative duty of the Company to
file independent audited financial statements as part of its Form 8-K to be
filed with the Securities and Exchange Commission upon consummation of a
merger or acquisition, as well as the Company's audited financial statements
included in its annual report on Form 10-K (or 10-KSB, as applicable). If
such audited financial statements are not available at closing, or within time
parameters necessary to insure the Company's compliance with the requirements
of the 34 Act, or if the audited financial statements provided do not conform
to the representations made by the candidate to be acquired in the closing
documents, the closing documents may provide that the proposed transaction
will be voidable, at the discretion of the present management of the Company.
COMPETITION
The Company will remain an insignificant participant among the firms which
engage in the acquisition of business opportunities. There are many
established venture capital and financial concerns which have significantly
greater financial and personnel resources and technical expertise than the
Company. In view of the Company's combined extremely limited financial
resources and limited management availability, the Company will continue to be
at a significant competitive disadvantage compared to the Company's
competitors.
ITEM 3. DESCRIPTION OF PROPERTY
The Registrant has no properties and at this time has no agreements to
acquire any properties.
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The following table sets forth, as of September 16, 1996, each person
known by the Company to be the beneficial owner of five percent or more of the
Company's Common Stock, all Directors individually and all Directors and
Officers of the Company as a group. Except as noted, each person has sole
voting and investment power with respect to the shares shown.
<TABLE>
<CAPTION>
Name and Address Amount of Beneficial
of Beneficial Owner Ownership Percentage of Class
------------------- -------------------- -------------------
<S> <C> <C>
Timothy J. Brasel 525,000<FN1> 42.0%
16178 E. Prentice Place
Aurora, CO 80015
James R. Sjoerdsma 125,000 10.0%
529 Seastorm Drive
Redwood City, CA 94065
J. J. Peirce 100,000 8.0%
5125 West Lake Avenue
Littleton, CO 80123
Chaos Systems LLC<FN2> 500,000 40.0%
950 E. Harvard, No. 500
Denver, CO 80210
Brasel Family Partners, Ltd. 200,000 16.0%
16178 E. Prentice Place
Aurora, CO 80015
Charitable Remainder Trust 75,000 6.0%
of Timothy J. Brasel
16178 E. Prentice Place
Aurora, CO 80015
Janet M. Brasel, Custodian 75,000 6.0%
for Tyler J. Brasel
16178 E. Prentice Place
Aurora, CO 80015
Janet M. Brasel, Custodian 75,000 6.0%
for Colton R. Brasel
16178 E. Prentice Place
Aurora, CO 80015
Janet M. Brasel, Custodian 50,000 4.0%
for Justin T. Brasel
16178 E. Prentice Place
Aurora, CO 80015
All Executive Officers and 650,000 52.0%
Directors as a Group
(2 Persons)
__________________
<FN>
<FN1>
Includes 75,000 shares held by the Charitable Remainder Trust of Timothy J.
Brasel; 200,000 shares held by Brasel Family Partners; and 200,000 shares held
by Janet M. Brasel as custodian for Tyler, Colton and Justin Brasel. Mr.
Brasel is a trustee for the Charitable Remainder Trust of Timothy J. Brasel
and the General Partner of Brasel Family Partners, Ltd.
<FN2>
Dr. Paul Dragul is the manager of Chaos Systems LLC.
</FN>
</TABLE>
ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS.
The Directors and Officers of the Company are as follows:
Name Age Positions and Offices Held
---- --- --------------------------
Timothy J. Brasel 37 President, Secretary, Treasurer
and Director
James R. Sjoerdsma 35 Director
In addition to the two officers and directors listed above, the
following persons could also be deemed to be promoters and/or control persons
of the Company, as those terms are defined in the Rules and Regulations
promulgated under the Securities Act of 1933, as amended:
Dr. Paul Dragul -- Shareholder
J. J. Peirce -- Shareholder
There is no family relationship between any Director or Executive
Officer of the Company.
The Company presently has no committees.
Set forth below are the names of all Directors and Executive Officers of
the Company, all positions and offices with the Company held by each such
person, the period during which he has served as such, and the business
experience of such persons during at least the last five years:
TIMOTHY J. BRASEL. Mr. Brasel has served as President, Secretary,
Treasurer and a director of the Company since July 1, 1996. He also serves
as President and a Director of four other publicly-held "shells": Universal
Capital Corp., Beechport Capital Corp.; High Hopes, Inc.; and Capital 2000,
Inc. He also serves as a director of three other companies which were formed
at the same time and for the same purpose as the Company. These companies are
Walnut Capital, Inc., Mahogany Capital, Inc. and Aspen Capital, Inc. From
March 1990 until September 1994, Mr. Brasel served as President, Secretary,
Treasurer and a Director of Prentice Capital, Inc., a publicly-held
blank-check company which completed an acquisition of Universal Footcare, Inc.
From
March 1990 until August 1993, Mr. Brasel was President, Secretary and a
Director of Brasel Ventures, Inc., a publicly-held blank-check company, which
completed an acquisition of American Pharmaceutical Company. From April 1990
to February 1992, Mr. Brasel served as President, a Director and sole
shareholder of Central Securities Transfer Corporation, a stock transfer
company which is no longer in business. From January 1989 to May 1992, Mr.
Brasel served as a Director of Coalmont, Inc., a publicly-held blank-check
company that completed an acquisition of MCC Holdings, Inc. during May 1992.
From July 1987 until May 1990, Mr. Brasel served as President of Eagle Vision,
Inc., a publicly-held blank-check company that completed an acquisition of
UMA Management Associates, Inc. From November 1988 to June 1990, he also
served as President and a Director of L.I. Inc., a publicly-held blank-check
company which completed an acquisition of Imaging Management Associates, Inc.
Since January 1987, Mr. Brasel has been President and a Director of Bleu Ridge
Consultants, Inc., a business and management consulting firm located in
Denver, Colorado. Mr. Brasel received a Bachelor of Science Degree in
Business Administration from Morningside College, Sioux City, Iowa in 1980.
JAMES R. SJOERDSMA. Mr. Sjoerdsma has served as a Director of the
Company since July 1996. He also serves as a director of three other
companies which were formed at the same time and for the same purpose as the
Company. These companies are Walnut Capital, Inc., Mahogany Capital, Inc. and
Aspen Capital, Inc. Mr. Sjoerdsma has been employed by Genencor
International, Inc., Palo Alto, California, since 1990. He currently served
as Director, Worldwide Human Resources, Research and Development for Genencor.
From 1982 until 1990, he was employed by Rockwell International as Manager of
Human Resources. Mr. Sjoerdsma has been written up in several publications
for pioneering some of the most advanced pay and people systems. He received
an MBA Degree with high honors from Novo University in 1987, and a Bachelor
of Science Degree (Cum Laude) in economics and business from Cornell College
in 1982. He received his SPHR (Senior Professional Human Resources)
certificate in 1992.
Mr. Sjoerdsma served as a director of Grason Industries, Inc., a
blank-check company, from January 1988 until March 1989, when it completed an
acquisition; he served as a director of Emerald Eagle Corp., a blank-check
company, from September 1987 until May 1992; and he served as President and a
director of Tipton Industries, Inc., a blank-check company, from April 1987
until December 1987, when it completed an acquisition.
Mr. Sjoerdsma also founded Peppy's Ice Cream, Inc., in 1987, in Palo,
Iowa. He co-owned the business until 1994 when he sold it to relocate to
California. Peppy's Ice Cream is one of the largest distributors of novelty
ice cream products in the Cedar Rapids, Iowa City and Waterloo area.
PREVIOUS BLANK-CHECK EXPERIENCE
Mr. Timothy J. Brasel, President, Secretary, Treasurer and a Director of
the Company, has been involved either as an officer or director, or both, with
twelve other blank-check companies which have completed some form of corporate
reorganization. These companies are Cambridge Ventures, Inc., Fox Ridge
Capital, Inc., Crystal Gold, Ltd., Extare Corporation, Ivory Coast, Inc., L.
I. Inc., Eagle Vision, Inc., Coalmont, Inc., Brasel Ventures, Inc., Prentice
Capital, Inc., and Eagle Eye Enterprises, Inc.
Mr. Sjoerdsma, a Director of the Company, has been involved either as an
officer or a director, or both, with three other blank-check companies which
have completed some form of corporate reorganization. These companies are
Emerald Eagle Corp., Grason Industries, Inc., and Tipton Industries, Inc.
Following is a summary of the previous blank-check companies which have
completed their public offerings:
Cambridge Ventures, Inc. ("Cambridge") closed its public offering on
March 14, 1986, and raised a total of $200,000 gross proceeds by selling
10,000,000 units at $.02 per unit. During July, 1986, Cambridge completed a
reverse acquisition of Elkins Institute in Atlanta, Inc. ("Elkins"). Elkins
owned and operated a private school in Atlanta, Georgia, which provides
technical training in the field of electronics, computer technology, and
radio/TV broadcasting. In connection with the acquisition of Cambridge,
Timothy J. Brasel sold 3,000,000 shares to principals of Elkins for a total
consideration of $9,859.
Tipton Industries, Inc. closed its public offering during October 1987
and completed a reverse acquisition of FiberChem, Inc. during December 1987.
Fox Ridge Capital, Inc. ("Fox Ridge") closed its public offering in
October, 1988, and raised a total of $600,000 in gross proceeds by selling
60,000,000 shares at $.01 per share. During March, 1989, Fox Ridge completed
a reverse acquisition of R. V. Seahawk, Inc., an oceanographic services
company which is involved in deep water search, survey and recovery
operations. In connection with the acquisition of Seahawk, Timothy J. Brasel
sold 25,000,000 shares to principals of Seahawk for a price of $.0008 per
share or $20,000 for Mr. Brasel. In addition, subsequent to the acquisition
of Seahawk, Tim Brasel sold 15,000,000 warrants to principals of Seahawk for a
price of $.0015 per warrant or $22,500.
Crystal Gold, Ltd. ("Crystal Gold") closed its public offering in
October, 1988, and raised a total of $322,500 in gross proceeds by selling
64,500,000 shares at $.005 per share. During June, 1989, Crystal Gold
completed a reverse acquisition of Morgan Medical Corp. ("Morgan"). Morgan is
engaged in the business of serving as consultant and project manager for
physicians interested in developing and operating magnetic resonance imaging,
lithography and ambulatory surgery centers. In connection with the
acquisition of Morgan, Tim Brasel sold 16,000,000 shares and 18,000,000
warrants to principals of Morgan for a total consideration of $21,334.
Grason Industries, Inc. ("Grason") closed its public offering in May,
1988, and raised a total of $407,500 in gross proceeds by selling 4,075,000
shares at $.10 per share. During March, 1989, Grason completed a reverse
acquisition of Jan & Craig's Window Factory, Ltd. ("Jan & Craig's"), a company
in the business of selling replacement windows in the New York metropolitan
area. During the period from March, 1989 through August, 1989, all of the
funds in Grason were expended. On August 30, 1989, an agreement unwinding the
acquisition was entered into between Grason and Jan & Craig's. Pursuant
thereto all of the shares issued in connection with the acquisition were
canceled and Jan & Craig's signed a note payable to Grason for $265,000. On
September 8, 1989, Jan & Craig's filed a petition under Chapter 11 of the U.S.
Bankruptcy Code. The original management of Grason was reinstated. The
transaction with Jan & Craig's was unwound because the management of Jan &
Craig's anticipated the bankruptcy filing and after discussions with prior
management of Grason, both sides agreed that it would be in the best interests
of the shareholders of Grason to unwind the transaction and attempt to find a
new merger candidate.
In connection with the acquisition of Jan & Craig's, Tim Brasel sold
450,000 shares to an associate of Jan & Craig's for a price of $.04 per share
or $18,000.
During April 1994, Grason completed a reverse acquisition of Electronic
Technology Group, Inc., a Minnesota-based computer manufacturer. Grason
changed its name to ETG International, Inc. During 1995, ETG filed for
bankruptcy.
Extare Corporation ("Extare") closed its public offering during June,
1988, and raised a total of $595,000 gross proceeds by selling 11,900,000
shares at $.05 per share. During October, 1989, Extare completed an
acquisition of NCS Acquisitions Corp. ("NCS"), a company which had a P.C.
based software system which allows credit union members to shop for
automobiles and other consumer goods at discounted prices. In connection with
the acquisition of NCS, Timothy J. Brasel sold an option to buy his B warrants
to the principal shareholder of NCS. In consideration for the option, Mr.
Brasel received $3,937.50. The option granted the holder the right to
purchase B warrants at a price of $.01 per Warrant. The option was never
exercised.
During September 1996, NCS (which had no assets and liabilities of
approximately $68,560) was sold to a former officer/shareholder and a director
of Extare. During July 1995, Extare completed an acquisition of Infi-Shield
Corporation, a Minnesota corporation which had developed a line of products
used as external protective shielding for water/sewer lines, manholes and
catch basins.
L. I. Inc. closed its public offering in May, 1989, and raised a total
of $50,000 in gross proceeds by selling 2,500,000 shares at $.02 per share.
During June, 1990, L. I. Inc. completed a reverse acquisition of Imaging
Management Associates, Inc. ("IMA"). IMA operates nine outpatient centers
that provide diagnostic imaging services. Generally, these centers provide
magnetic resonance imaging, and, in some centers, CAT Scan, mammography and
general diagnostic x-ray services. In connection with this transaction,
Timothy J. Brasel sold an option to purchase up to 966,000 units (each unit
consisting of one share of common stock and two warrants) of L. I. Inc. held
by him to two outside investors. Mr. Brasel received $4,830 for this option,
and he received an additional $4,830 on the exercise of the option.
Emerald Eagle Corp. closed its public offering in September, 1988, and
raised a total of $50,000 in gross proceeds by selling 2,500,000 Units at $.02
per Unit. Emerald Eagle did not complete an acquisition while Mr. Sjoerdsma
was a director. During May 1992, Mr. Sjoerdsma and Mr. Brasel (a principal
shareholder) and the other major shareholders sold approximately 80% of their
shares in Emerald Eagle to an outside third party who then took control of the
company. Mr. Sjoerdsma received $1,000 for his shares and Brasel Family
Partners, Ltd. received $10,200 for its shares.
Ivory Coast, Inc. closed its public offering in September, 1989, and
raised a total of $600,000 in gross proceeds by selling 6,000,000 Units at
$6.00 per Unit. During November, 1989, Ivory Coast completed an acquisition
of Continental Management Group, Inc. ("Continental"), a Florida corporation,
which had an option to acquire Musselman Steel Corporation of Tampa, Florida.
In connection with the acquisition of Continental, Mr. Brasel sold a total of
16,875,000 warrants to the principal of Continental at a price of $.001 per
warrant or a total of $16,875.
Brasel Ventures, Inc. closed its public offering in November, 1990, and
raised a total of $75,000 in gross proceeds by selling 7,500,000 Units at $.01
per Unit. During July 1993, Brasel Ventures completed a reverse acquisition
of American Pharmaceutical Company, a New Jersey corporation engaged in the
business of packaging and distributing non-prescription OTC pharmaceutical and
vitamin products.
Eagle Vision, Inc. ("Eagle Vision") closed its public offering in
January, 1990, and raised a total of $299,040 by selling 49,840 Units at $6.00
per Unit. During April, 1990, Eagle Vision completed an acquisition of UMA
Management Associates, Inc. ("UMA"), a Tampa, Florida, based company which had
an option to acquire Novadyne Corporation. In connection with the
acquisition of UMA, Mr. Brasel sold a total of 35,621,250 warrants to the
principals of UMA at an average price of $.00056 per warrant or a total of
$20,000.
Eagle Eye Enterprises, Inc. ("Eagle Eye") closed its public offering in
August 1990, and raised a total of $200,000 in gross proceeds by selling
20,000,000 shares at $.01 per share. Eagle Eye completed a reverse
acquisition of Atlas Environmental, Inc. during November 1994.
Prentice Capital, Inc. ("Prentice") closed its public offering during
August 1991, and raised a total of $75,000 in gross proceeds by selling
7,500,000 units at $.01 per unit. During September 1994, Prentice completed a
reverse acquisition of Universal Footcare, Inc., a company which is engaged in
the business of acquiring and operating podiatry clinics in Florida. In
connection with the closing of this transaction, Prentice issued 130,000
shares (after a 1 for 25 reverse split) to La Mirage Trust as consideration
for its agreement to not sell its 200,000 shares for one year from the
closing. Mr. Brasel is a trustee of La Mirage Trust.
Coalmont, Inc. ("Coalmont") closed its public offering during March
1991, and raised a total of $100,000 in gross proceeds by selling 10,000 units
at $10.00 per unit. During August 1992, Coalmont completed a reverse
acquisition of Machinery Credit Corporation, a company engaged in the business
of financing manufacturing equipment and distribution systems for
manufacturing companies and distributors. On December 31, 1993, the agreement
with Machinery Credit Corporation was rescinded because the management which
was installed in August 1992 spent all of Coalmont's money and quit filing
periodic reports with the SEC. All of the shares issued in the acquisition
were returned and canceled and the original officers and directors of Coalmont
were installed. Coalmont has since changed its name to Beechport Capital
Corp. and is currently looking for an acquisition.
CONFLICTS OF INTEREST
The Company's two officers and directors have organized three other
companies of a similar nature and with a similar purpose as the Company. In
addition, Mr. Brasel serves as President and a director of four publicly-held
shell companies which are in the same business as the Company. Consequently,
there are potential inherent conflicts of interest in Mr. Brasel and Mr.
Sjoerdsma acting as officers and directors of the Company. Insofar as the
officers and directors are engaged in other business activities, management
anticipates it will devote only a minor amount of time to the Company's
affairs. The officers and directors of the Company may in the future become
shareholders, officers or directors of other companies which may be formed for
the purpose of engaging in business activities similar to those conducted by
the Company. The Company does not currently have a right of first refusal
pertaining to opportunities that come to management's attention insofar as
such opportunities may relate to the Company's proposed business operations.
The officers and directors are, so long as they are officers or
directors of the Company, subject to the restriction that all opportunities
contemplated by the Company's plan of operation which come to their attention,
either in the performance of their duties or in any other manner, will be
considered opportunities of, and be made available to the Company and the
companies that they are affiliated with on an equal basis. A breach of this
requirement will be a breach of the fiduciary duties of the officer or
director. If a situation arises in which more than one company desires to
merge with or acquire that target company and the principals of the proposed
target company have no preference as to which company will merge or acquire
such target company, the company of which Mr. Brasel first became an officer
and director will be entitled to proceed with the transaction. As between the
Company and the three other companies formed on July 1, 1996, the company
which first filed a registration statement with the Securities and Exchange
Commission will be entitled to proceed with the proposed transaction. Except
as set forth above, the Company has not adopted any other conflict of interest
policy with respect to such transactions.
INVESTMENT COMPANY ACT OF 1940
Although the Company will be subject to regulation under the Securities
Act of 1933 and the Securities Exchange Act of 1934, management believes the
Company will not be subject to regulation under the Investment Company Act of
1940 insofar as the Company will not be engaged in the business of investing
or trading in securities. In the event the Company engages in business
combinations which result in the Company holding passive investment interests
in a number of entities, the Company could be subject to regulation under the
Investment Company Act of 1940. In such event, the Company would be required
to register as an investment company and could be expected to incur
significant registration and compliance costs. The Company has obtained no
formal determination from the Securities and Exchange Commission as to the
status of the Company under the Investment Company Act of 1940 and,
consequently, any violation of such Act would subject the Company to material
adverse consequences.
ITEM 6. EXECUTIVE COMPENSATION.
None of the Company's officers and/or directors receive any compensation
for their respective services rendered to the Company, nor have they received
such compensation in the past. They both have agreed to act without
compensation until authorized by the Board of Directors, which is not expected
to occur until the Registrant has generated revenues from operations after
consummation of a merger or acquisition. As of the date of this registration
statement, the Company has no funds available to pay directors. Further, none
of the directors are accruing any compensation pursuant to any agreement with
the Company.
It is possible that, after the Company successfully consummates a merger
or acquisition with an unaffiliated entity, that entity may desire to employ
or retain one or more members of the Company's management for the purposes of
providing services to the surviving entity, or otherwise provide other
compensation to such persons. However, the Company has adopted a policy
whereby the offer of any post-transaction remuneration to members of
management will not be a consideration in the Company's decision to undertake
any proposed transaction. Each member of management has agreed to disclose to
the Company's Board of Directors any discussions concerning possible
compensation to be paid to them by any entity which proposes to undertake a
transaction with the Company and further, to abstain from voting on such
transaction. Therefore, as a practical matter, if each member of the
Company's Board of Directors is offered compensation in any form from any
prospective merger or acquisition candidate, the proposed transaction will not
be approved by the Company's Board of Directors as a result of the inability
of the Board to affirmatively approve such a transaction.
It is possible that persons associated with management may refer a
prospective merger or acquisition candidate to the Company. In the event the
Company consummates a transaction with any entity referred by associates of
management, it is possible that such an associate will be compensated for
their referral in the form of a finder's fee. It is anticipated that this fee
will be either in the form of restricted common stock issued by the Company as
part of the terms of the proposed transaction, or will be in the form of cash
consideration. However, if such compensation is in the form of cash, such
payment will be tendered by the acquisition or merger candidate, because the
Company has insufficient cash available. The amount of such finder's fee
cannot be determined as of the date of this registration statement, but is
expected to be comparable to consideration normally paid in like transactions.
No member of management of the Company will receive any finders fee, either
directly or indirectly, as a result of their respective efforts to implement
the Company's business plan outlined herein.
No retirement, pension, profit sharing, stock option or insurance
programs or other similar programs have been adopted by the Registrant for the
benefit of its employees.
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
On July 1, 1996, the Company issued a total of 1,250,000 shares of
Common Stock to the following persons for a total of $12,500 in cash:
NAME NUMBER OF SHARES TOTAL CONSIDERATION
James R. Sjoerdsma 125,000 $ 1,250
J. J. Peirce 100,000 $ 1,000
Charitable Remainder
Trust of Timothy J.
Brasel 75,000 $ 750
Charitable Remainder
Trust of Mary Jane
Brasel 50,000 $ 500
Brasel Family Partners, Ltd. 200,000 $ 2,000
Janet M. Brasel, Custodian
for Tyler Jay Brasel 75,000 $ 750
Janet M. Brasel, Custodian
for Colton Russell Brasel 75,000 $ 750
Janet M. Brasel, Custodian
for Justin Thomas Brasel 50,000 $ 500
Chaos Systems LLC 500,000 $ 5,000
--------- -------
Total 1,250,000 $12,500
The proposed business activities described herein classify the Company
as a "blank check" company. Many states have enacted statutes, rules and
regulations limiting the sale of securities of "blank check" companies in
their respective jurisdictions. Management does not intend to undertake any
efforts to cause a market to develop in the Company's securities until such
time as the Company has successfully implemented its business plan described
herein. Accordingly, each shareholder of the Company has executed and
delivered a "lock-up" letter agreement, affirming that he/she shall not sell
his/her respective shares of the Company's common stock until such time as the
Company has successfully consummated a merger or acquisition and the Company
is no longer classified as a "blank check" company. In order to provide
further assurances that no trading will occur in the Company's securities
until a merger or acquisition has been consummated, each shareholder has
agreed to place his/her respective stock certificate with the Company's legal
counsel, who will not release these respective certificates until such time as
legal counsel has confirmed that a merger or acquisition has been successfully
consummated. However, while management believes that the procedures
established to preclude any sale of the Company's securities prior to closing
of a merger or acquisition will be sufficient, there can be no assurances that
the procedures established herein will unequivocally limit any shareholder's
ability to sell their respective securities before such closing.
ITEM 8. DESCRIPTION OF SECURITIES.
COMMON STOCK
The Company's Articles of Incorporation authorize the issuance of
100,000,000 shares of Common Stock, $.0001 par value. Each record holder of
Common Stock is entitled to one vote for each share held on all matters
promptly submitted to the stockholders for their vote. Cumulative voting for
the election of directors is not permitted by the Articles of Incorporation.
Holders of outstanding shares of Common Stock are entitled to such
dividends as may be declared from time to time by the Board of Directors out
of legally available funds; and, in the event of liquidation, dissolution or
winding up of the affairs of the Company, holders are entitled to receive,
ratably, the net assets of the Company available to stockholders after
distribution is made to the preferred stockholders, if any, who are given
preferred rights upon liquidation. Holders of outstanding shares of Common
Stock are, and all unissued shares when offered and sold will be, duly
authorized, validly issued, fully paid, and nonassessable. To the extent that
additional shares of the Company's Common Stock are issued, the relative
interests of the existing stockholders may be diluted.
PREFERRED STOCK
The Company's Articles of Incorporation authorize the issuance of
5,000,000 shares of Preferred Stock, $.0001 par value. The Board of Directors
of the Company is authorized to issue the Preferred Stock from time to time in
series and is further authorized to establish such series, to fix and
determine the variations in the relative rights and preferences as between
series, to fix voting rights, if any, for each series, and to allow for the
conversion of Preferred Stock into Common Stock. At present, no Preferred
Stock is issued or outstanding or contemplated to be issued.
DIVIDENDS
No dividends have been paid by the Company on any of its securities in
the past and such dividends are not contemplated in the foreseeable future.
PART II
ITEM 1. MARKET PRICE FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
There is no trading market for the Registrant' s Common Stock at present
and there has been no trading market to date. Management has not undertaken
any discussions, preliminary or otherwise, with any prospective market maker
concerning the participation of such market maker in the aftermarket for the
Company's securities and management does not intend to initiate any such
discussions until such time as the Company has consummated a merger or
acquisition. There is no assurance that a trading market will ever develop
or, if such a market does develop, that it will continue.
(a) MARKET PRICE. The Registrant's Common Stock is not quoted at the
present time.
Effective August 11, 1993, the Securities and Exchange Commission
adopted Rule 15g-9, which established the definition of a "penny stock," for
purposes relevant to the Company, as any equity security that has a market
price of less than $5.00 per share or with an exercise price of less than
$5.00 per share, subject to certain exceptions. For any transaction involving
a penny stock, unless exempt, the rules require: (i) that a broker or dealer
approve a person's account for transactions in penny stocks; and (ii) the
broker or dealer receive from the investor a written agreement to the
transaction, setting forth the identity and quantity of the penny stock to be
purchased. In order to approve a person's account for transactions in penny
stocks, the broker or dealer must (i) obtain financial information and
investment experience and objectives of the person; and (ii) make a reasonable
determination that the transactions in penny stocks are suitable for that
person and that person has sufficient knowledge and experience in financial
matters to be capable of evaluating the risks of transactions in penny stocks.
The broker or dealer must also deliver, prior to any transaction in a penny
stock, a disclosure schedule prepared by the Commission relating to the penny
stock market, which, in highlight form, (i) sets forth the basis on which the
broker or dealer made the suitability determination; and (ii) that the broker
or dealer received a signed, written agreement from the investor prior to the
transaction. Disclosure also has to be made about the risks of investing in
penny stocks in both public offerings and in secondary trading, and about
commissions payable to both the broker-dealer and the registered
representative, current quotations for the securities and the rights and
remedies available to an investor in cases of fraud in penny stock
transactions. Finally, monthly statements have to be sent disclosing recent
price information for the penny stock held in the account and information on
the limited market in penny stocks.
The National Association of Securities Dealers, Inc. (the "NASD"),
which administers NASDAQ, has recently made changes in the criteria for
continued NASDAQ eligibility. In order to continue to be included on NASDAQ,
a company must maintain $2,000,000 in total assets, a $200,000 market value of
its publicly-traded securities and $1,000,000 in total capital and surplus.
In addition, continued inclusion requires two market-makers and a minimum bid
price of $1.00 per share, provided, however, that if a company falls below
such minimum bid price it will remain eligible for continued inclusion on
NASDAQ if the market value of its publicly-traded securities is at least
$1,000,000 and the Company has $2,000,000 in capital and surplus.
Management intends to strongly consider undertaking a transaction with
any merger or acquisition candidate which will allow the Company's securities
to be traded without the aforesaid limitations. However, there can be no
assurances that, upon a successful merger or acquisition, the Company will
qualify its securities for listing on NASDAQ or some other national exchange,
or be able to maintain the maintenance criteria necessary to insure continued
listing. The failure of the Company to qualify its securities or to meet the
relevant maintenance criteria after such qualification in the future may
result in the discontinuance of the inclusion of the Company's securities on a
national exchange. In such events, trading, if any, in the Company's
securities may then continue in the non-NASDAQ over-the-counter market. As a
result, a shareholder may find it more difficult to dispose of, or to obtain
accurate quotations as to the market value of, the Company's securities .
(b) HOLDERS. There are nine (9) holders of the Company's Common Stock.
In July 1996, the Company issued 1,250,000 of its Common Shares to these
persons for cash at $.01 per share ($12,500). All of the issued and
outstanding shares of the Company's Common Stock were issued in accordance
with the exemption from registration afforded by Section 4(2) of the
Securities Act of 1933.
(c) DIVIDENDS. The Registrant has not paid any dividends to date, and
has no plans to do so in the immediate future.
ITEM 2. LEGAL PROCEEDINGS.
There is no litigation pending or threatened by or against the Company.
ITEM 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
The Registrant has not changed accountants since its formation and there
are no disagreements with the findings of said accountants.
ITEM 4. RECENT SALES OF UNREGISTERED SECURITIES.
During the past three years, the Registrant has sold securities which
were not registered as follows:
DATE NAME NUMBER OF SHARES CONSIDERATION
July 1, 1996 James Ray Sjoerdsma 125,000 $ 1,250.00
July 1, 1996 J. J. Peirce 100,000 $ 1,000.00
July 1, 1996 Charitable Remainder
Trust of Timothy J.
Brasel 75,000 $ 750.00
July 1, 1996 Charitable Remainder
Trust of Mary Jane
Brasel 50,000 $ 500.00
July 1, 1996 Brasel Family Partners,
Ltd. 200,000 $ 2,000.00
July 1, 1996 Janet M. Brasel, Cus-
todian for Tyler Jay
Brasel 75,000 $ 750.00
July 1, 1996 Janet M. Brasel, Cus-
todian for Colton Russell
Brasel 75,000 $ 750.00
July 1, 1996 Janet M. Brasel, Cus-
todian for Justin
Thomas Brasel 50,000 $ 500.00
July 1, 1996 Chaos Systems LLC 500,000 $ 5,000.00
--------- ----------
Total 1,250,000 $12,500.00
With respect to the sales made, the Registrant relied on Section 4(2) of
the Securities Act of 1933, as amended. No advertising or general
solicitation was employed in offering the shares. The securities were offered
for investment only and not for the purpose of resale or distribution, and the
transfer thereof was appropriately restricted.
All of the shareholders of the Company have executed and delivered a
"lock-up" letter agreement which provides that each such shareholder shall not
sell his/her respective securities until such time as the Company has
successfully consummated a merger or acquisition. Further, each shareholder
has placed his/her respective stock certificate with the Company's legal
counsel, who has been instructed not to release any of the certificates until
the Company has closed a merger or acquisition. Any liquidation by the
current shareholders after the release from the "lock-up" selling limitation
period may have a depressive effect upon the trading price of the Company's
securities in any future market which may develop.
In general, under Rule 144, a person (or persons whose shares are
aggregated) who has satisfied a two year holding period, under certain
circumstances, may sell within any three-month period a number of shares which
does not exceed the greater of one percent of the then outstanding Common
Stock or the average weekly trading volume during the four calendar weeks
prior to such sale. Rule 144 also permits, under certain circumstances, the
sale of shares without any quantity limitation by a person who has satisfied a
three-year holding period and who is not, and has not been for the preceding
three months, an affiliate of the Company.
ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The only statute, charter provision, bylaw, contract, or other arrange-
ment under which any controlling person, Director or Officer of the Registrant
is insured or indemnified in any manner against any liability which he may
incur in his capacity as such, is as follows:
(a) Section 78.751 of the Nevada Business Corporation Act provides
that each corporation shall have the following powers:
"1. A corporation may indemnify any person who was or is a party
or is threatened to be made a party to any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative, except an action by or in the right of the corporation, by
reason of the fact that he is or was a director, officer, employee or agent of
the corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise, against expenses, including
attorneys' fees, judgments, fines and amounts paid in settlement actually and
reasonably incurred by him in connection with the action, suit or proceeding
if he acted in good faith and in a manner which he reasonably believed to be
in or not opposed to the best interests of the corporation, and, with respect
to any criminal action or proceeding, had no reasonable cause to believe his
conduct was unlawful. The termination of any action, suit or proceeding by
judgment, order, settlement, conviction, or upon a plea of nolo contendere or
its equivalent, does not, of itself, create a presumption that the person did
not act in good faith and in a manner which he reasonably believed to be in or
not opposed to the best interests of the corporation, and that, with respect
to any criminal action or proceeding, he had reasonable cause to believe that
his conduct was unlawful.
2. A corporation may indemnify any person who was or is a party
or is threatened to be made a party to any threatened, pending or completed
action or suit by or in the right of the corporation to procure a judgment in
its favor by reason of the fact that he is or was a director, officer,
employee or agent of the corporation, or is or was serving at the request of
the corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise against
expenses, including amounts paid in settlement and attorneys' fees actually
and reasonably incurred by him in connection with the defense or settlement of
the action or suit if he acted in good faith and in a manner which he
reasonably believed to be in or not opposed to the best interests of the
corporation. Indemnification may not be made for any claim, issue or matter
as to which such a person has been adjudged by a court of competent
jurisdiction, after exhaustion of all appeals therefrom, to be liable to the
corporation or for amounts paid in settlement to the corporation, unless and
only to the extent that the court in which the action or suit was brought or
other court of competent jurisdiction, determines upon application that in
view of all the circumstances of the case, the person is fairly and reasonably
entitled to indemnity for such expenses as the court deems proper.
3. To the extent that a director, officer, employee or agent of
a corporation has been successful on the merits or otherwise in defense of any
action, suit or proceeding referred to in subsections 1 and 2, or in defense
of any claim, issue or matter therein, he must be indemnified by the
corporation against expenses, including attorneys' fees, actually and
reasonably incurred by him in connection with the defense.
4. Any indemnification under subsections 1 and 2, unless
ordered by a court or advanced pursuant to subsection 5, must be made by the
corporation only as authorized in the specific case upon a determination that
indemnification of the director, officer, employee or agent is proper in the
circumstances. The determination must be made:
(a) By the stockholders;
(b) By the board of directors by majority vote of a quorum
consisting of directors who were not parties to the act, suit or proceeding;
(c) If a majority vote of a quorum consisting of directors
who were not parties to the act, suit or proceeding so orders, by independent
legal counsel, in a written opinion; or
(d) If a quorum consisting of directors who were not
parties to the act, suit or proceeding cannot be obtained, by independent
legal counsel in a written opinion.
5. The certificate or articles of incorporation, the bylaws or
an agreement made by the corporation may provide that the expenses of officers
and directors incurred in defending a civil or criminal action, suit or
proceeding must be paid by the corporation as they are incurred and in advance
of the final disposition of the action, suit or proceeding, upon receipt of an
undertaking by or on behalf of the director or officer to repay the amount if
it is ultimately determined by a court of competent jurisdiction that he is
not entitled to be indemnified by the corporation. The provisions of this
subsection do not affect any rights to advancement of expenses to which
corporate personnel other than director or officers may be entitled under any
contract or otherwise by law.
6. The indemnification and advancement of expenses authorized
in or ordered by a court pursuant to this section:
(a) Does not exclude any other rights to which a person
seeking indemnification or advancement of expenses may be entitled under the
certificate or articles of incorporation or any bylaw, agreement, vote of
stockholders or disinterested directors or otherwise, for either an action in
his official capacity or an action in another capacity while holding his
office, except that indemnification, unless ordered by a court pursuant to
subsection 2 or for the advancement of expenses made pursuant to subsection 5,
may not be made to or on behalf of any director or officer if a final
adjudication establishes that his acts or omissions involved intentional
misconduct, fraud or a knowing violation of the law and was material to the
cause of action.
(b) Continues for a person who has ceased to be a
director, officer, employee or agent and inures to the benefit of the heirs,
executors and administrators of such a person."
(b) Article VII of the Registrant's Articles of Incorporation provides
in general that the Registrant is authorized to indemnify its Officers and
Directors in excess of the indemnification expressly permitted by Section
78.751 of the Nevada Business Corporation Act for breach of duty to the
corporation and its shareholders, subject only to the applicable limits upon
such indemnification as set forth in the Nevada Business Corporation Act.
PART F/S
FINANCIAL STATEMENTS.
Attached are audited financial statements for the Company for the period
ended July 5, 1996. The following financial statements are attached to this
report and filed as a part thereof. See pages F-1 through F-7.
1) Table of Contents - Financial Statements
2) Report of Independent Certified Public Accountants
3) Balance Sheet
4) Statement of Operations
5) Statement of Changes in Stockholders' Equity
6) Statement of Cash Flows
7) Notes to Financial Statements
PART IV
ITEM 1. EXHIBIT INDEX.
EXHIBIT
NUMBER DESCRIPTION LOCATION
(2) Articles of Incorporation
and Bylaws:
2.1 Articles of Incorporation Attached
2.2 Bylaws Attached
(3) Instruments Defining the
Rights of Holders:
3.1 Copies of All Lock-up Agree-
ments by the Nine Company
Shareholders Attached
(10)(a) Consents - Experts:
10.1 Consent of Schumacher &
Associates, Inc. Attached
<PAGE>
INDEX TO FINANCIAL STATEMENTS
CYPRESS CAPITAL, INC.
(A Development Stage Company)
FINANCIAL STATEMENTS
with
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Report of Independent Certified Public Accountants F-2
Financial Statements:
Balance Sheet F-3
Statement of Operations F-4
Statement of Changes in Stockholders' Equity F-5
Statement of Cash Flows F-6
Notes to Financial Statements F-7
F-1
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The Board of Directors
Cypress Capital, Inc.
Aurora, CO
We have audited the accompanying balance sheet of Cypress Capital, Inc. (a
development-stage company) as of July 5, 1996, and the related statements of
operations, stockholders' equity and cash flows for the period from July 1,
1996 (date of inception) through July 5, 1996. These financial statements are
the responsibility of the company's management. Our responsibility is to
express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the financial statements, referred to above, present fairly,
in all material respects, the financial position of Cypress Capital, Inc. (a
development-stage company) as of July 5, 1996, and the results of its
operations, changes in its stockholders' equity and its cash flows for the
period from July 1, 1996 (date of inception) through July 5, 1996 in
conformity with generally accepted accounting principles.
/s/ Schumacher & Associates, Inc.
Schumacher & Associates, Inc.
Certified Public Accountants
12835 E. Arapahoe Road
Tower II, Suite 110
Englewood, CO 80112
July 8, 1996
F-2
<PAGE>
CYPRESS CAPITAL, INC.
(A Development Stage Company)
BALANCE SHEET
July 5, 1996
ASSETS
Current Assets:
Cash $ 12,500
-----------
Total Current Assets 12,500
Organization costs 250
-----------
TOTAL ASSETS $ 12,750
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 250
-----------
Total Current Liabilities 250
TOTAL LIABILITIES 250
-----------
Stockholders' Equity:
Preferred stock, $.0001 par value
5,000,000 shares authorized,
none issued and outstanding --
Common stock, $.0001 par value
100,000,000 shares authorized,
1,250,000 issued and outstanding 125
Additional Paid In Capital 12,375
-----------
TOTAL STOCKHOLDERS' EQUITY 12,500
-----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 12,750
The accompanying notes are an integral part of the financial statements.
F-3
<PAGE>
CYPRESS CAPITAL, INC.
(A Development Stage Company)
STATEMENT OF OPERATIONS
For the Period from July 1, 1996 (date of inception)
through July 5, 1996
Revenue $ --
-----------
Expenses $ --
-----------
Net Income (Loss) $ --
-----------
Net Income (Loss) Per Share $ --
Shares Outstanding 1,250,000
The accompanying notes are an integral part of the financial statements.
F-4
<PAGE>
CYPRESS CAPITAL, INC.
(A Development Stage Company)
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
For the Period from July 1, 1996 (date of inception) through
July 5, 1996
<TABLE>
<CAPTION>
Addi-
tional Accumu-
Preferred Stock Common Stock Paid-in lated
No/Shares Amount No/Shares Amount Capital (Deficit)
Total
<S> <C> <C> <C> <C> <C> <C>
<C>
Balance at
July 1, 1996 -- $ -- -- $ -- $ -- $ --
$ --
Common Stock
issued for cash,
at inception, at
$.01 per share -- $ -- 1,250,000 $125 $12,375 $ --
$12,500
Balance at
July 5, 1996 -- $ -- 1,250,000 $125 $12,375 $ --
$12,500
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-5
<PAGE>
CYPRESS CAPITAL, INC.
(A Development Stage Company)
STATEMENT OF CASH FLOWS
For the Period from July 1, 1996 (date of inception)
through July 5, 1996
Cash Flows Operating Activities $ -
Cash Flows from Investing Activities -
Cash Flows from Financing Activities:
Issuance of common stock 12,500
----------
Net Cash Provided by Financing Activities 12,500
----------
Increase in Cash 12,500
Cash, Beginning of Period -
----------
Cash, End of Period $ 12,500
Interest Paid $ -
Income Taxes Paid $ -
The accompanying notes are an integral part of the financial statements.
F-6
<PAGE>
CYPRESS CAPITAL, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
July 5, 1996
(1) SUMMARY OF ACCOUNTING POLICIES.
A summary of the significant accounting policies consistently applied in
the preparation of the accompanying financial statements follows:
(a) DESCRIPTION OF BUSINESS. Cypress Capital, Inc. (Company) was
organized on July 1, 1996 for the purpose of engaging in any lawful business
but it is management's plan to seek a business combination. The Company is a
development-stage company since planned principal operations have not
commenced. The Company has selected May 31 as its year end.
(b) USE OF ESTIMATES IN THE PREPARATION OF FINANCIAL STATEMENTS. The
preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenue and expenses during the reporting period.
Actual results could differ from those estimates.
(c) ORGANIZATION COSTS. Costs incurred to organize the Company are
being amortized on a straight-line basis over a sixty month period.
(2) COMMON STOCK ISSUED.
During the period ended July 5, 1996 the Company issued 1,250,000
restricted shares of common stock for $12,500 cash.
(3) RELATED PARTY TRANSACTION
The Company uses the office of a shareholder at no cost. The Company
expects this arrangement to continue until the Company commences planned
operations.
F-7<PAGE>
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of 1934,
the Registrant caused this registration statement to be signed on its behalf
by the undersigned thereunto duly authorized.
CYPRESS CAPITAL, INC.
By /s/ Timothy J. Brasel
Date: September 16, 1996 Timothy J. Brasel, President
<PAGE>
ARTICLES OF INCORPORATION
OF
CYPRESS CAPITAL, INC.
KNOW ALL MEN BY THESE PRESENTS: That the undersigned incorporator being
a natural person of the age of twenty-one years or more and desiring to form a
body corporate under the laws of the State of Nevada does hereby sign, verify
and deliver in duplicate to the Secretary of State of the State of Nevada,
these Articles of Incorporation:
ARTICLE I
NAME
The name of the Corporation shall be: Cypress Capital, Inc.
ARTICLE II
PERIOD OF DURATION
The Corporation shall exist in perpetuity, from and after the date of
filing these Articles of Incorporation with the Secretary of State of the
State of Nevada unless dissolved according to law.
ARTICLE III
PURPOSES AND POWERS
1. Purposes. Except as restricted by these Articles of
Incorporation, the Corporation is organized for the purpose of transacting all
lawful business for which corporations may be incorporated pursuant to the
Nevada Business Corporation Act.
2. General Powers. Except as restricted by these Articles of
Incorporation, the Corporation shall have and may exercise all powers and
rights which a corporation may exercise legally pursuant to the Nevada
Business Corporation Act.
3. Issuance of Shares. The board of directors of the Corporation may
divide and issue any class of stock of the Corporation in series pursuant to a
resolution properly filed with the Secretary of State of the State of Nevada.
ARTICLE IV
CAPITAL STOCK
The aggregate number of shares which this Corporation shall have
authority to issue is: One Hundred Million (100,000,000) shares of $.0001 par
value each, which shares shall be designated "Common Stock"; and Five Million
(5,000,000) shares of $.0001 par value each, which shares shall be designated
"Preferred Stock" and which may be issued in one or more series at the
discretion of the Board of Directors. The Board of Directors is hereby vested
with authority to fix by resolution or resolutions the designations and the
powers, preferences and relative, participating, optional or other special
rights, and qualifications, limitations or restrictions thereof, including
without limitation the dividend rate, conversion or exchange rights,
redemption price and liquidation preference, of any series of shares of
Preferred Stock, and to fix the number of shares constituting any such series,
and to increase or decrease the number of shares of any such series (but not
below the number of shares thereof then outstanding). In case the number of
shares of any such series shall be so decreased, the shares constituting such
decrease shall resume the status which they had prior to the adoption of the
resolution or resolutions originally fixing the number of shares of such
series. All shares of any one series shall be alike in every particular
except as otherwise provided by these Articles of Incorporation or the Nevada
Business Corporation Act.
No holder of any shares of the Corporation, whether now or hereafter
authorized, shall have any preemptive or preferential right to acquire any
shares or securities of the Corporation, including shares or securities held
in the treasury of the Corporation.
ARTICLE V
VOTING RIGHTS; CUMULATIVE VOTING
Each outstanding share of Common Stock shall be entitled to one vote and
each fractional share of Common Stock shall be entitled to a corresponding
fractional vote on each matter submitted to a vote of shareholders. A
majority of the shares of Common Stock entitled to vote, represented in person
or by proxy, shall constitute a quorum at a meeting of shareholders. Except
as otherwise provided by these Articles of Incorporation or the Nevada
Business Corporation Act, if a quorum is present, the affirmative vote of a
majority of the shares represented at the meeting and entitled to vote on the
subject matter shall be the act of the shareholders. Cumulative voting shall
not be allowed in the election of directors of this Corporation.
Shares of Preferred Stock shall only be entitled to such vote as is
determined by the Board of Directors prior to the issuance of such stock,
except as required by law, in which case each share of Preferred Stock shall
be entitled to one vote.
ARTICLE VI
TRANSACTIONS WITH INTERESTED DIRECTORS OR OFFICERS
No contract or other transaction between the Corporation and one or more
of its directors or officers, or between the Corporation and any corporation,
firm or association in which one or more of its directors or officers are
directors or officers or are financially interested, shall be either void or
voidable solely because of such relationship or interest or solely because
such director or officer is present at the meeting of the board of directors
or a committee thereof which authorizes, approves, or ratifies such contract
or transaction or solely because their votes are counted for such purpose, if:
(a) The fact of such relationship or interest is disclosed or
known to the board of directors or committee and noted in the minutes, and the
board or committee authorizes, approves, or ratifies the contract or
transaction in good faith by a vote or consent sufficient for the purpose
without counting the votes or consents of such interested directors; or
(b) The fact of such relationship or interest is disclosed or
known to the shareholders entitled to vote and they authorize, approve, or
ratify such contract or transaction in good faith by a majority vote or
written consent. The votes of the common or interested directors or officers
must be counted in any such vote of stockholders; or
(c) The fact of such relationship or interest is not disclosed
or known to the director or officer at the time the transaction is brought
before the board of directors of the corporation for action; or
(d) The contract or transaction is fair and reasonable as to the
Corporation at the time it is authorized or approved.
Common or interested directors may be counted in determining the
presence of a quorum at a meeting of the board of directors or a committee
thereof which authorizes, approves, or ratifies such contract or transaction,
and if the votes of the common or interested directors are not counted at the
meeting, then a majority of the disinterested directors may authorize, approve
or ratify the contract or transaction.
ARTICLE VII
INDEMNIFICATION
The Corporation is authorized to provide indemnification of its
directors, officers, employees and agents; whether by bylaw, agreement, vote
of shareholders or disinterested directors or otherwise, in excess of the
indemnification expressly permitted by Section 78.751 of the Nevada Business
Corporation Act for breach of duty to the Corporation and its shareholders,
subject only to the applicable limits upon such indemnification as set forth
in the Nevada Business Corporation Act. Any repeal or modification of this
Article VII or Article XI shall not adversely affect any right or protection
of a director or officer of the Corporation existing at the time of such
repeal or modification.
ARTICLE VIII
ADOPTION AND AMENDMENT OF BYLAWS
The initial Bylaws of the Corporation shall be adopted by its board of
directors. Subject to repeal or change by action of the shareholders, the
power to alter, amend or repeal the Bylaws or adopt new Bylaws shall be vested
in the board of directors. The Bylaws may contain any provisions for the
regulation and management of the affairs of the Corporation not inconsistent
with law or these Articles of Incorporation.
ARTICLE IX
RESIDENT AGENT
The name of the Corporation's resident agent and the street address in
Washoe County, Nevada for such resident agent where process may be served are
The Corporation Trust Company of Nevada, One East First Street, Reno, Nevada
89501.
The resident agent may be changed in the manner permitted by law.
ARTICLE X
INITIAL BOARD OF DIRECTORS
The number of directors of the Corporation shall be fixed by the Bylaws
of the Corporation, and the number of directors of the Corporation may be
changed from time to time by consent of the Corporation's directors. The
initial board of directors of the Corporation shall consist of one (1)
director. The name and address of the person who shall serve as the initial
director until the first annual meeting of shareholders and until his
successors are elected and shall qualify are:
Timothy J. Brasel
16178 East Prentice Place
Aurora, Colorado 80015
ARTICLE XI
LIMITATION OF LIABILITY OF
DIRECTORS AND OFFICERS TO CORPORATION AND SHAREHOLDERS
No director or officer shall be liable to the Corporation or any
shareholder for damages for breach of fiduciary duty as a director or officer,
except for any matter in respect of which such director or officer (a) shall
be liable under Section 78.300 of the Nevada Business Corporation Act or any
amendment thereto or successor provision thereto; or (b) shall have acted or
failed to act in a manner involving intentional misconduct, fraud or a knowing
violation of law. Neither the amendment nor repeal of this Article, nor the
adoption of any provision in the Articles of Incorporation inconsistent with
this Article, shall eliminate or reduce the effect of this Article in respect
of any matter occurring prior to such amendment, repeal or adoption of an
inconsistent provision. This Article shall apply to the full extent now
permitted by Nevada law or as may be permitted in the future by changes or
enactments in Nevada law, including without limitation Section 78.300 and/or
the Nevada Business Corporation Act.
ARTICLE XII
INCORPORATOR
The name and address of the incorporator are: Jon D. Sawyer, 1401 17th
Street, Suite 460, Denver, Colorado 80202.
IN WITNESS WHEREOF, the above-named incorporator has signed these
Articles of Incorporation this 14th day of June, 1996.
/s/ Jon D. Sawyer
Jon D. Sawyer, Incorporator
STATE OF COLORADO )
) ss.
COUNTY OF DENVER )
On the 14th day of June, 1996 personally appeared before me, a notary
public, Jon D. Sawyer, who acknowledged before me that he executed the
foregoing Articles of Incorporation.
My commission expires: 7/21/98
/s/ Margaret A. Beck
Notary Public
1401 17th Street, Suite 460
Denver, CO 80202
<PAGE>
BYLAWS
OF
CYPRESS CAPITAL, INC.
(A Nevada corporation)
ARTICLE I
STOCKHOLDERS
1. CERTIFICATES REPRESENTING STOCK. Every holder of stock in the
corporation shall be entitled to have a certificate signed by, or in the name
of, the corporation by the Chairman or Vice-Chairman of the Board of
Directors, if any, or by the President or a Vice-President and by the
Treasurer or an Assistant Treasurer or the Secretary or an Assistant Secretary
of the corporation or by agents designated by the Board of Directors,
certifying the number of shares owned by him in the corporation and setting
forth any additional statements that may be required by the General
Corporation Law of Nevada. If any such certificate is countersigned or
otherwise authenticated by a transfer agent or transfer clerk or by a
registrar other than the corporation, a facsimile of the signature of any such
officers or agents designated by the Board may be printed or lithographed upon
such certificate in lieu of the actual signatures. In case any officer or
officers who shall have signed, or whose facsimile signature or signatures
shall have been used on, any such certificate or certificates shall cease to
be such officer or officers of the corporation before such certificate or
certificates shall have been delivered by the corporation, such certificate or
certificates may nevertheless be adopted by the corporation and be issued and
delivered as though the person or persons who signed such certificate or
certificates, or whose facsimile signature or signatures shall have been used
thereon, had not ceased to be such officer or officers of the corporation.
Whenever the corporation shall be authorized to issue more than
one class of stock or more than one series of any class of stock, and whenever
the corporation shall issue any shares of special stock, the certificates
representing shares of any such class or series or of any such special stock
shall set forth thereon the statements prescribed by the General Corporation
Law. Any restrictions on the transfer or registration of transfer of any
shares of stock of any class or series shall be noted conspicuously on the
certificate representing such shares.
The corporation may issue a new certificate of stock in place of
any certificate theretofore issued by it, alleged to have been lost, stolen or
destroyed and the Board of Directors may require the owner of any lost, stolen
or destroyed certificate, or his legal representative, to give the corporation
a bond sufficient to indemnify the corporation against any claim that may be
made against it on account of the alleged loss, theft, or destruction of any
such certificate or the issuance of any new certificate.
2. FRACTIONAL SHARE INTERESTS. The corporation shall not be obliged
to but may execute and deliver a certificate for or including a fraction of a
share. In lieu of executing and delivering a certificate for a fraction of a
share, the corporation may pay to any person otherwise entitled to become a
holder of a fraction of a share an amount in cash specified for such purpose
as the value thereof in the resolution of the Board of Directors, or other
instrument pursuant to which such fractional share would otherwise be issued,
or, if not specified therein, then as may be determined for such purpose by
the Board of Directors of the issuing corporation; or may execute and deliver
registered or bear scrip over the manual or facsimile signature of an officer
of the corporation or of its agent for that purpose, exchangeable as therein
provided for full share certificates, but such scrip shall not entitle the
holder to any rights as a stockholder except as therein provided. Such scrip
may provide that it shall become void unless the rights of the holders are
exercised within a specified period and may contain any other provisions or
conditions that the corporation shall deem advisable. Whenever any such scrip
shall cease to be exchangeable for full share certificates, the shares that
would otherwise have been issuable as therein provided shall be deemed to be
treasury shares unless the scrip shall contain other provisions for their
disposition.
3. STOCK TRANSFERS. Upon compliance with provisions restricting the
transfer or registration of transfer of shares of stock, if any, transfers or
registration of transfers of shares of stock of the corporation shall be made
only on the stock ledger of the corporation by the registered holder thereof,
or by his attorney thereunto authorized by power of attorney duly executed and
filed with the Secretary of the corporation or with a transfer agent or a
registrar, if any, and on surrender of the certificate or certificates for
such shares of stock properly endorsed and the payment of all taxes, if any,
due thereon.
4. RECORD DATE FOR STOCKHOLDERS. For the purpose of determining the
stockholders entitled to notice of or to vote at any meeting of stockholders
or any adjournment thereof, or to express consent to corporate action in
writing without a meeting, or entitled to receive payment of any dividend or
other distribution or the allotment of any rights, or entitled to exercise any
rights in respect of any change, conversion or exchange of stock or for the
purpose of any other lawful action, the directors may fix, in advance, a
record date, which shall not be more than sixty days nor less than ten days
before the date of such meeting, nor more than sixty days prior to any other
action. If no record date is fixed, the record date for determining
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 date on which
notice is given, or, if notice is waived, at the close of business on the day
next preceding the date on which the meeting is held; the record date for
determining stockholders entitled to express consent to corporate action in
writing without a meeting, when no prior action by the Board of directors is
necessary, shall be the day on which the first written consent is expressed;
and the record date for determining stockholders for any other purpose shall
be at the close of business on the day on which the Board of Directors adopts
the resolution relating thereto. A determination of stockholders of record
entitled to notice of or to vote at any meeting of stockholders shall apply to
any adjournment of the meeting; provided, however, that the Board of Directors
may fix a new record date for the adjourned meeting.
5. MEANING OF CERTAIN TERMS. As used in these Bylaws in respect of
the right to notice of a meeting of stockholders or a waiver thereof or to
participate or vote thereat or to consent to dissent in writing in lieu of a
meeting, as the case may be, the term "share" or "shares" or "share of stock"
or "shares of stock" or "stockholder" or "stockholders" refers to an
outstanding share or shares of stock and to a holder or holders of record of
outstanding shares of stock when the corporation is authorized to issue only
one class of shares of stock, and said reference is also intended to include
any outstanding share or shares of stock and any holder or holders of record
of outstanding shares of stock of any class upon which or upon whom the
Articles of Incorporation confers such rights where there are two or more
classes or series of shares of stock or upon which or upon whom the General
Corporation Law confers such rights notwithstanding that the Articles of
Incorporation may provide for more than one class or series of shares of
stock, one or more of which are limited or denied such rights thereunder;
provided, however, that no such right shall vest in the event of an increase
or a decrease in the authorized number of shares of stock of any class or
series which is otherwise denied voting rights under the provisions of the
Articles of Corporation.
6. STOCKHOLDER MEETINGS.
TIME. The annual meeting shall be held on the date and at the
time fixed, from time to time, by the directors, provided, that the first
annual meeting shall be held on a date within thirteen months after the
organization of the corporation, and each successive annual meeting shall be
held on a date within thirteen months after the date of the preceding annual
meeting. A special meeting shall be held on the date and at the time fixed by
the directors.
PLACE. Annual meetings and special meetings shall be held at such
place, within or without the State of Nevada, as the directors may, from time
to time, fix. Whenever the directors shall fail to fix such place, the
meeting shall be held at the principal office of the corporation in the State
of Nevada.
CALL. Annual meetings and special meetings may be called by the
directors or by any officer instructed by the directors to call the meeting.
NOTICE OR WAIVER OF NOTICE. Notice of all meetings shall be in
writing and signed by the President or a Vice-President, or the Secretary, or
an Assistant Secretary, or by such other person or persons as the directors
shall designate. Such notice shall state the purpose or purposes for which
the meeting is called and the time when, and the place, where it is to be
held. A copy of such notice shall be either delivered personally to, or shall
be mailed postage prepaid, to each stockholder not less than ten nor more than
sixty days before such meeting. If mailed, it shall be directed to a
stockholder at his address as it appears upon the records of the corporation.
Any stockholder may waive notice of any meeting by a writing signed by him, or
his duly authorized attorney, either before or after the meeting; and whenever
notice of any kind is required to be given under the provisions of the General
Corporation Law, a waiver thereof in writing and duly signed whether before or
after the time stated therein, shall be deemed equivalent thereto.
CONDUCT OF MEETING. Meetings of the stockholders shall be
presided over by one of the following officers in the order of seniority and
if present and acting - the Chairman of the Board, if any, the Vice-Chairman
of the Board, if any, the President, a Vice-President, or, if none of the
foregoing is in office and present and acting, by a chairman to be chosen by
the stockholders. The Secretary of the corporation, or in his absence, an
Assistant Secretary, shall act as secretary of every meeting, but if neither
the Secretary nor an Assistant Secretary is present the Chairman of the
meeting shall appoint a secretary of the meeting.
PROXY REPRESENTATION. Every stockholder may authorize another
person or persons to act for him by proxy appointed by an instrument in
writing in all matters in which a stockholder is entitled to participate,
whether by voting or participating at a meeting, or expressing consent or
dissent without a meeting. Every proxy must be executed by the stockholder or
by his attorney-in-fact. No proxy shall be valid after the expiration of six
months from the date of its creation, unless coupled with an interest or
unless the stockholder specifies in it therein the length of time for which it
is to continue in force, which in no case shall exceed seven years from the
date of its creation.
INSPECTORS. The directors, in advance of any meeting, may, but
need not, appoint one or more inspectors of election to act at the meeting or
any adjournment thereof. If an inspector or inspectors are not appointed, the
person presiding at the meeting may, but need not, appoint one or more
inspectors. In case any person who may be appointed as an inspector fails to
appear or act, the vacancy may be filled by appointment made by the directors
in advance of the meeting or at the meeting by the person presiding thereat.
Each inspector, if any, before entering upon the discharge of his duties,
shall take and sign an oath faithfully to execute the duties of inspector at
such meeting with strict impartiality and according to the best of his
ability. The inspectors, if any, shall determine the number of shares of
stock outstanding and the voting power of each, the shares of stock
represented at the meeting, the existence of a quorum, the validity and effect
of proxies, and shall receive votes, ballots or consents, hear and determine
all challenges and questions arising in connection with the right to vote,
count and tabulate all votes, ballots or consents, determine the result, and
do such acts as are proper to conduct the election or vote with fairness to
all stockholders. On request of the person presiding at the meeting, the
inspector or inspectors, if any, shall make a report in writing of any
challenge, question or matter determined by him or them and execute a
certificate of any fact found by him or them.
QUORUM. The holders of a majority of the outstanding shares of
stock or of the voting power, as the case may be, shall constitute a quorum at
a meeting of stockholders for the transaction of any business unless the
action to be taken at the meeting shall require a different proportion. The
stockholders present may adjourn the meeting despite the absence of a quorum.
VOTING. Each share of stock shall entitle the holder thereof to
one vote. In the election of directors, a plurality of the votes cast shall
elect. Any other action shall be authorized by a majority of the votes cast
except where the General Corporation Law, the Articles of Incorporation, or
these Bylaws prescribe a different percentage of votes and/or a different
exercise of voting power. In the election of directors, voting need not be by
ballot; and, except as otherwise may be provided by the General Corporation
Law, voting by ballot shall not be required for any other action.
7. STOCKHOLDER ACTION WITHOUT MEETINGS. Except as may otherwise be
provided by the General Corporation Law, any action required or permitted to
be taken by the vote of stockholders at a meeting, may be taken without a
meeting if authorized by the written consent of stockholders holding at least
a majority of the voting power; provided that if a different proportion of
voting power is required for such action at a meeting, then that proportion of
written consents shall be required. In no instance where action is authorized
by written consent need a meeting of stockholders be called or notice given.
The written consent must be filed with the minutes of the proceedings of the
stockholders. Any written consent shall be subject to the requirements of
Section 78.320 of the General Corporation Law and of any other applicable
provision of law.
ARTICLE II
DIRECTORS
1. FUNCTIONS AND DEFINITION. The business and affairs of the
corporation shall be managed by the Board of Directors of the corporation.
The Board of Directors shall have authority to fix the compensation of the
members thereof for services in any capacity. The use of the phrase "whole
Board" herein refers to the total number of directors which the corporation
would have if there were no vacancies.
2. QUALIFICATIONS AND NUMBER. Each director must be at least 18
years of age. A director need not be a stockholder or a resident of the State
of Nevada. The number of directors constituting the Board of Directors shall
be determined and may be increased or decreased, to not less than one
director, by resolution of the Board of Directors.
3. ELECTION AND TERM. Directors may be elected in the manner
prescribed by the provisions of Sections 78.320 through 78.335 of the General
Corporation Law of Nevada. The first Board of Directors shall hold office
until the first election of directors by stockholders and until their
successors are elected and qualified or until their earlier resignation or
removal. Any director may resign at any time upon written notice to the
corporation. Thereafter, directors who are elected at an election of
directors by stockholders, and directors who are elected in the interim to
fill vacancies and newly created directorships, shall hold office until the
next election of directors by stockholders and until their successors are
elected and qualified or until their earlier resignation or removal. In the
interim between elections of directors by stockholders, newly created
directorships and any vacancies in the Board of Directors, including any
vacancies resulting from the removal of directors for cause or without cause
by the stockholders and not filled by said stockholders, may be filled by the
vote of a majority of the remaining directors then in office, although less
than a quorum, or by the sole remaining director.
4. MEETINGS.
TIME. Meetings shall be held at such time as the Board shall fix,
except that the first meeting of a newly elected Board shall be held as soon
after its election as the director may conveniently assemble.
PLACE. Meetings shall be held at such place within or without the
State of Nevada as shall be fixed by the Board.
CALL. No call shall be required for regular meetings for which
the time and place have been fixed. Special meetings may be called by or at
the direction of the Chairman of the Board, if any, the Vice-Chairman of the
board, if any, or the President, or of a majority of the directors in office.
NOTICE OR ACTUAL OR CONSTRUCTIVE WAIVER. No notice shall be
required for regular meetings for which the time and place have been fixed.
Written, oral or any other mode of notice of the time and place shall be given
for special meetings in sufficient time for the convenient assembly of the
directors thereat. Notice if any need not be given to a director or to any
member of a committee of directors who submits a written waiver of notice
signed by him before or after the time stated therein.
QUORUM AND ACTION. A majority of the whole Board shall
constitute a quorum except when a vacancy or vacancies prevents such majority,
whereupon a majority of the directors in office shall constitute a quorum,
provided, that such majority shall constitute at least one-third of the whole
Board. A majority of the directors present, whether or not a quorum is
present, may adjourn a meeting to another time and place. Except as the
Articles of Incorporation or these Bylaws may otherwise provide, and except as
otherwise provided by the General Corporation Law, the act of a majority of
the directors present at a meeting at which a quorum is present shall be the
act of the Board. The quorum and voting provisions herein stated shall not be
construed as conflicting with any provisions of the General Corporation Law
and these Bylaws which govern a meeting of directors held to fill vacancies
and newly created directorships in the Board or action of disinterested
directors.
Members of the Board or of any committee which may be designated
by the Board may participate in a meeting of the Board or of any such
committee, as the case may be, by means of a conference telephone network or a
similar communications method by which all persons participating in the
meeting hear each other. Participation in a meeting by said means shall
constitute presence in person at any such meeting. Each person participating
in a meeting by such means shall sign the minutes thereof.
CHAIRMAN OF THE MEETING. The Chairman of the Board, if any, and
if present and acting, shall preside at all meetings. Otherwise, the
Vice-Chairman of the Board, if any and if present and acting, or the
President, if
present and acting, or any other director chosen by the Board, shall preside.
5. REMOVAL OF DIRECTORS. Any or all of the directors may be removed
for cause or without cause by the holders of at least two thirds of the voting
power of the outstanding stock of the corporation. One or more of the
directors may be removed for cause by the Board of Directors.
6. COMMITTEES. Whenever its number consists of two or more, the
Board of Directors may, by resolution passed by a majority of the whole Board,
designate one or more committees, each committee to consist of one or more of
the directors of the corporation and each committee to have such powers and
duties as the Board shall determine. Any such committee, to the extent
provided in the resolution or resolutions of the Board, shall have and may
exercise the powers and authority of the Board of Directors in the management
of the business and affairs of the corporation and may authorize the seal or
stamp of the corporation to be affixed to all papers on which the corporation
desires to place a seal or stamp.
7. WRITTEN ACTION. Any action required or permitted to be taken at
any meeting of the Board of Directors or of any committee thereof may be taken
without a meeting if, before or after the action, a written consent thereto is
signed by all the members of the Board or committee, as the case may be. The
written consent must be filed with the minutes of proceedings of the Board or
committee.
ARTICLE III
OFFICERS
1. OFFICERS. The corporation shall have a President, a Secretary, a
Treasurer, a Resident Agent, and, if deemed necessary, expedient or desirable
by the Board of Directors, a Chairman of the Board, a Vice-Chairman of the
Board, a Chief Executive Officer, an Executive Vice-President, one or more
other Vice-Presidents, one or more Assistant Secretaries, one or more
Assistant Treasurers, and such other officers, agents and factors with such
titles as the resolution choosing them shall designate. Each of any such
officers, agents and factors shall be chosen by the Board of Directors or
chosen in the manner determined by the Board of Directors.
2. QUALIFICATIONS. Except as may otherwise be provided in the
resolution choosing him, no officer other than the Chairman of the Board, if
any, and the Vice-Chairman of the Board, if any, need be a director.
Any two or more offices may be held by the same person, as the
directors may determine.
3. TERM OF OFFICE. Unless otherwise provided in the resolution
choosing him, each officer, except the Resident Agent, shall be chosen for a
term which shall continue until the meeting of the Board of Directors
following the next annual meeting of stockholders and until his successor
shall have been chosen and qualified. The Resident Agent shall serve until
his or its successor shall have been chosen and qualified.
Any officer may be removed, with or without cause, by the Board of
Directors or in the manner determined by the Board.
Any vacancy in any office may be filled by the Board of Directors
or in the manner determined by the Board.
4. DUTIES AND AUTHORITY. All officers of the corporation shall have
such authority and perform such duties in the management and operation of the
corporation as shall be prescribed in the resolution designating and choosing
such officers and prescribing their authority and duties, and shall have such
additional authority and duties as are incident to their office except to the
extent that such resolutions or instruments may be inconsistent therewith.
ARTICLE IV
CORPORATE OPPORTUNITY
The officers, directors and other members of management of this
Corporation shall be subject to the doctrine of "corporate opportunities" only
insofar as it applies to business opportunities in which this Corporation has
expressed an interest as determined from time to time by this Corporation's
board of directors as evidenced by resolutions appearing in the Corporation's
minutes. Once such areas of interest are delineated, all such business oppor-
tunities within such areas of interest which come to the attention of the
officers, directors, and other members of management of this Corporation shall
be disclosed promptly to this Corporation and made available to it. The Board
of Directors may reject any business opportunity presented to it and
thereafter any officer, director or other member of management may avail
himself of such opportunity. Until such time as this Corporation, through its
board of directors, has designated an area of interest, the officers,
directors and other members of management of this Corporation shall be free to
engage in such areas of interest on their own and this doctrine shall not
limit the rights of any officer, director or other member of management of
this Corporation to continue a business existing prior to the time that such
area of interest is designated by the Corporation. This provision shall not
be construed to release any employee of this Corporation (other than an
officer, director or member of management) from any duties which he may have
to this Corporation.
ARTICLE V
PRINCIPAL AND REGISTERED OFFICES
Initially, the principal office and place of business of the corporation
will be located in the State of Colorado at 16178 East Prentice Place, Aurora,
Colorado 80015. The Company's registered office in the State of Nevada is
located at The Corporation Trust Company of Nevada, 1 East First Street, Reno,
Nevada 89501. Other offices and places of business may be established from
time to time by resolution of the Board of Directors or as the business of the
corporation may require.
The corporation shall maintain at said registered office a copy of its
Articles of Incorporation, and all amendments thereto, and a copy of these
Bylaws, and all amendments thereto, as certified by the Secretary of the
corporation. The corporation shall also keep at said registered office a
stock ledger or a duplicate stock ledger, revised annually, containing the
names, alphabetically arranged, of all persons who are stockholders of the
corporation, showing their places of residence, if known, and the number of
shares held by them respectively or a statement setting out the name of the
custodian of the stock ledger or duplicate stock ledger, and the present and
complete post office address, including street and number, if any, where such
stock ledger or duplicate stock ledger is maintained.
ARTICLE VI
CORPORATE SEAL OR STAMP
The Corporate seal or stamp shall be in such form as the Board of
Directors may prescribe.
ARTICLE VII
FISCAL YEAR
The fiscal year of the corporation shall be January 1 through December
31 of each year.
ARTICLE VIII
CONTROL OVER BYLAWS
The power to amend, alter and repeal these Bylaws and to make new Bylaws
shall be vested in the Board of Directors subject to the Bylaws, if any,
adopted by the stockholders.
I HEREBY CERTIFY that the foregoing is a full, true and correct copy of
the Bylaws of Cypress Capital, Inc., a Nevada corporation, as in effect on the
date hereof.
WITNESS my hand and the seal or stamp of the corporation.
Dated this 1st day of July, 1996.
/s/ Timothy J. Brasel
(SEAL) Timothy J. Brasel, Secretary
<PAGE>
September 13, 1996
Board of Directors
Cypress Capital, Inc.
16178 East Prentice Place
Aurora, Colorado 80015
Gentlemen:
The undersigned, a beneficial owner of the $.0001 par value common stock
of Cypress Capital, Inc. (the "Company"), understands that the Company intends
to file with the U.S. Securities and Exchange Commission a registration
statement on Form 10-SB (the "Registration Statement"), for the registration
of the Company's Common Stock. As part of the disclosure included in the
Registration Statement, the Company has affirmatively stated that there will
be no trading of the Company's securities until such time as the Company
successfully implements its business plan as described in such Registration
Statement, consummating a merger or acquisition.
In order to insure that the aforesaid disclosure is adhered to, the
undersigned agrees, for the benefit of the Company, that he/she will not offer
to sell, assign, pledge, hypothecate, grant any option for the sale of, or
otherwise dispose of, directly or indirectly, any shares of Common Stock of
the Company owned by him/her, or subsequently acquired through the exercise of
any options, warrants or rights, or conversion of any other security or by
reason of any stock split or other distribution of stock, or grant options,
rights or warrants with respect to any such shares of Common Stock, until the
Company successfully closes a merger or acquisition. Furthermore, the
undersigned will permit all certificates evidencing his/her shares to be
endorsed with the appropriate restrictive legends and will consent to the
placement of appropriate stop transfer orders with the transfer agent of the
Company. Furthermore, the undersigned agrees that all certificates evidencing
his/her shares will be held by Jon D. Sawyer, P.C., legal counsel for the
Company, who will hold the certificates until the Company has completed a
merger or acquisition.
Very truly yours,
/s/ James Ray Sjoerdsma
-------------------------------------------
(Signature of Holder)
James Ray Sjoerdsma
-------------------------------------------
Please Print Name(s)
Number of Shares of
Common Stock Owned: 125,000
<PAGE>
September 13, 1996
Board of Directors
Cypress Capital, Inc.
16178 East Prentice Place
Aurora, Colorado 80015
Gentlemen:
The undersigned, a beneficial owner of the $.0001 par value common stock
of Cypress Capital, Inc. (the "Company"), understands that the Company intends
to file with the U.S. Securities and Exchange Commission a registration
statement on Form 10-SB (the "Registration Statement"), for the registration
of the Company's Common Stock. As part of the disclosure included in the
Registration Statement, the Company has affirmatively stated that there will
be no trading of the Company's securities until such time as the Company
successfully implements its business plan as described in such Registration
Statement, consummating a merger or acquisition.
In order to insure that the aforesaid disclosure is adhered to, the
undersigned agrees, for the benefit of the Company, that he/she will not offer
to sell, assign, pledge, hypothecate, grant any option for the sale of, or
otherwise dispose of, directly or indirectly, any shares of Common Stock of
the Company owned by him/her, or subsequently acquired through the exercise of
any options, warrants or rights, or conversion of any other security or by
reason of any stock split or other distribution of stock, or grant options,
rights or warrants with respect to any such shares of Common Stock, until the
Company successfully closes a merger or acquisition. Furthermore, the
undersigned will permit all certificates evidencing his/her shares to be
endorsed with the appropriate restrictive legends and will consent to the
placement of appropriate stop transfer orders with the transfer agent of the
Company. Furthermore, the undersigned agrees that all certificates evidencing
his/her shares will be held by Jon D. Sawyer, P.C., legal counsel for the
Company, who will hold the certificates until the Company has completed a
merger or acquisition.
Very truly yours,
/s/ J. J. Peirce
-------------------------------------------
(Signature of Holder)
J. J. Peirce
-------------------------------------------
Please Print Name(s)
Number of Shares of
Common Stock Owned: 100,000
<PAGE>
September 13, 1996
Board of Directors
Cypress Capital, Inc.
16178 East Prentice Place
Aurora, Colorado 80015
Gentlemen:
The undersigned, a beneficial owner of the $.0001 par value common stock
of Cypress Capital, Inc. (the "Company"), understands that the Company intends
to file with the U.S. Securities and Exchange Commission a registration
statement on Form 10-SB (the "Registration Statement"), for the registration
of the Company's Common Stock. As part of the disclosure included in the
Registration Statement, the Company has affirmatively stated that there will
be no trading of the Company's securities until such time as the Company
successfully implements its business plan as described in such Registration
Statement, consummating a merger or acquisition.
In order to insure that the aforesaid disclosure is adhered to, the
undersigned agrees, for the benefit of the Company, that he/she will not offer
to sell, assign, pledge, hypothecate, grant any option for the sale of, or
otherwise dispose of, directly or indirectly, any shares of Common Stock of
the Company owned by him/her, or subsequently acquired through the exercise of
any options, warrants or rights, or conversion of any other security or by
reason of any stock split or other distribution of stock, or grant options,
rights or warrants with respect to any such shares of Common Stock, until the
Company successfully closes a merger or acquisition. Furthermore, the
undersigned will permit all certificates evidencing his/her shares to be
endorsed with the appropriate restrictive legends and will consent to the
placement of appropriate stop transfer orders with the transfer agent of the
Company. Furthermore, the undersigned agrees that all certificates evidencing
his/her shares will be held by Jon D. Sawyer, P.C., legal counsel for the
Company, who will hold the certificates until the Company has completed a
merger or acquisition.
Very truly yours,
CHARITABLE REMAINDER TRUST OF TIMOTHY J.
BRASEL
By/s/ Timothy J. Brasel
-------------------------------------------
(Signature of Holder)
Timothy J. Brasel, Trustee
-------------------------------------------
Please Print Name(s)
Number of Shares of
Common Stock Owned: 75,000
<PAGE>
September 13, 1996
Board of Directors
Cypress Capital, Inc.
16178 East Prentice Place
Aurora, Colorado 80015
Gentlemen:
The undersigned, a beneficial owner of the $.0001 par value common stock
of Cypress Capital, Inc. (the "Company"), understands that the Company intends
to file with the U.S. Securities and Exchange Commission a registration
statement on Form 10-SB (the "Registration Statement"), for the registration
of the Company's Common Stock. As part of the disclosure included in the
Registration Statement, the Company has affirmatively stated that there will
be no trading of the Company's securities until such time as the Company
successfully implements its business plan as described in such Registration
Statement, consummating a merger or acquisition.
In order to insure that the aforesaid disclosure is adhered to, the
undersigned agrees, for the benefit of the Company, that he/she will not offer
to sell, assign, pledge, hypothecate, grant any option for the sale of, or
otherwise dispose of, directly or indirectly, any shares of Common Stock of
the Company owned by him/her, or subsequently acquired through the exercise of
any options, warrants or rights, or conversion of any other security or by
reason of any stock split or other distribution of stock, or grant options,
rights or warrants with respect to any such shares of Common Stock, until the
Company successfully closes a merger or acquisition. Furthermore, the
undersigned will permit all certificates evidencing his/her shares to be
endorsed with the appropriate restrictive legends and will consent to the
placement of appropriate stop transfer orders with the transfer agent of the
Company. Furthermore, the undersigned agrees that all certificates evidencing
his/her shares will be held by Jon D. Sawyer, P.C., legal counsel for the
Company, who will hold the certificates until the Company has completed a
merger or acquisition.
Very truly yours,
CHARITABLE REMAINDER TRUST OF MARY JANE
BRASEL
By/s/ Timothy J. Brasel
-------------------------------------------
(Signature of Holder)
Timothy J. Brasel, Trustee
-------------------------------------------
Please Print Name(s)
Number of Shares of
Common Stock Owned: 50,000
<PAGE>
September 13, 1996
Board of Directors
Cypress Capital, Inc.
16178 East Prentice Place
Aurora, Colorado 80015
Gentlemen:
The undersigned, a beneficial owner of the $.0001 par value common stock
of Cypress Capital, Inc. (the "Company"), understands that the Company intends
to file with the U.S. Securities and Exchange Commission a registration
statement on Form 10-SB (the "Registration Statement"), for the registration
of the Company's Common Stock. As part of the disclosure included in the
Registration Statement, the Company has affirmatively stated that there will
be no trading of the Company's securities until such time as the Company
successfully implements its business plan as described in such Registration
Statement, consummating a merger or acquisition.
In order to insure that the aforesaid disclosure is adhered to, the
undersigned agrees, for the benefit of the Company, that he/she will not offer
to sell, assign, pledge, hypothecate, grant any option for the sale of, or
otherwise dispose of, directly or indirectly, any shares of Common Stock of
the Company owned by him/her, or subsequently acquired through the exercise of
any options, warrants or rights, or conversion of any other security or by
reason of any stock split or other distribution of stock, or grant options,
rights or warrants with respect to any such shares of Common Stock, until the
Company successfully closes a merger or acquisition. Furthermore, the
undersigned will permit all certificates evidencing his/her shares to be
endorsed with the appropriate restrictive legends and will consent to the
placement of appropriate stop transfer orders with the transfer agent of the
Company. Furthermore, the undersigned agrees that all certificates evidencing
his/her shares will be held by Jon D. Sawyer, P.C., legal counsel for the
Company, who will hold the certificates until the Company has completed a
merger or acquisition.
Very truly yours,
BRASEL FAMILY PARTNERS, LTD.
By/s/ Timothy J. Brasel
-------------------------------------------
(Signature of Holder)
Timothy J. Brasel, General Partner
-------------------------------------------
Please Print Name(s)
Number of Shares of
Common Stock Owned: 200,000
<PAGE>
September 13, 1996
Board of Directors
Cypress Capital, Inc.
16178 East Prentice Place
Aurora, Colorado 80015
Gentlemen:
The undersigned, a beneficial owner of the $.0001 par value common stock
of Cypress Capital, Inc. (the "Company"), understands that the Company intends
to file with the U.S. Securities and Exchange Commission a registration
statement on Form 10-SB (the "Registration Statement"), for the registration
of the Company's Common Stock. As part of the disclosure included in the
Registration Statement, the Company has affirmatively stated that there will
be no trading of the Company's securities until such time as the Company
successfully implements its business plan as described in such Registration
Statement, consummating a merger or acquisition.
In order to insure that the aforesaid disclosure is adhered to, the
undersigned agrees, for the benefit of the Company, that he/she will not offer
to sell, assign, pledge, hypothecate, grant any option for the sale of, or
otherwise dispose of, directly or indirectly, any shares of Common Stock of
the Company owned by him/her, or subsequently acquired through the exercise of
any options, warrants or rights, or conversion of any other security or by
reason of any stock split or other distribution of stock, or grant options,
rights or warrants with respect to any such shares of Common Stock, until the
Company successfully closes a merger or acquisition. Furthermore, the
undersigned will permit all certificates evidencing his/her shares to be
endorsed with the appropriate restrictive legends and will consent to the
placement of appropriate stop transfer orders with the transfer agent of the
Company. Furthermore, the undersigned agrees that all certificates evidencing
his/her shares will be held by Jon D. Sawyer, P.C., legal counsel for the
Company, who will hold the certificates until the Company has completed a
merger or acquisition.
Very truly yours,
/s/ Janet M. Brasel
-------------------------------------------
(Signature of Holder)
Janet M. Brasel, Custodian for Tyler Jay
Brasel
-------------------------------------------
Please Print Name(s)
Number of Shares of
Common Stock Owned: 75,000
<PAGE>
September 13, 1996
Board of Directors
Cypress Capital, Inc.
16178 East Prentice Place
Aurora, Colorado 80015
Gentlemen:
The undersigned, a beneficial owner of the $.0001 par value common stock
of Cypress Capital, Inc. (the "Company"), understands that the Company intends
to file with the U.S. Securities and Exchange Commission a registration
statement on Form 10-SB (the "Registration Statement"), for the registration
of the Company's Common Stock. As part of the disclosure included in the
Registration Statement, the Company has affirmatively stated that there will
be no trading of the Company's securities until such time as the Company
successfully implements its business plan as described in such Registration
Statement, consummating a merger or acquisition.
In order to insure that the aforesaid disclosure is adhered to, the
undersigned agrees, for the benefit of the Company, that he/she will not offer
to sell, assign, pledge, hypothecate, grant any option for the sale of, or
otherwise dispose of, directly or indirectly, any shares of Common Stock of
the Company owned by him/her, or subsequently acquired through the exercise of
any options, warrants or rights, or conversion of any other security or by
reason of any stock split or other distribution of stock, or grant options,
rights or warrants with respect to any such shares of Common Stock, until the
Company successfully closes a merger or acquisition. Furthermore, the
undersigned will permit all certificates evidencing his/her shares to be
endorsed with the appropriate restrictive legends and will consent to the
placement of appropriate stop transfer orders with the transfer agent of the
Company. Furthermore, the undersigned agrees that all certificates evidencing
his/her shares will be held by Jon D. Sawyer, P.C., legal counsel for the
Company, who will hold the certificates until the Company has completed a
merger or acquisition.
Very truly yours,
/s/ Janet M. Brasel
-------------------------------------------
(Signature of Holder)
Janet M. Brasel, Custodian for Colton
Russell Brasel
-------------------------------------------
Please Print Name(s)
Number of Shares of
Common Stock Owned: 75,000
<PAGE>
September 13, 1996
Board of Directors
Cypress Capital, Inc.
16178 East Prentice Place
Aurora, Colorado 80015
Gentlemen:
The undersigned, a beneficial owner of the $.0001 par value common stock
of Cypress Capital, Inc. (the "Company"), understands that the Company intends
to file with the U.S. Securities and Exchange Commission a registration
statement on Form 10-SB (the "Registration Statement"), for the registration
of the Company's Common Stock. As part of the disclosure included in the
Registration Statement, the Company has affirmatively stated that there will
be no trading of the Company's securities until such time as the Company
successfully implements its business plan as described in such Registration
Statement, consummating a merger or acquisition.
In order to insure that the aforesaid disclosure is adhered to, the
undersigned agrees, for the benefit of the Company, that he/she will not offer
to sell, assign, pledge, hypothecate, grant any option for the sale of, or
otherwise dispose of, directly or indirectly, any shares of Common Stock of
the Company owned by him/her, or subsequently acquired through the exercise of
any options, warrants or rights, or conversion of any other security or by
reason of any stock split or other distribution of stock, or grant options,
rights or warrants with respect to any such shares of Common Stock, until the
Company successfully closes a merger or acquisition. Furthermore, the
undersigned will permit all certificates evidencing his/her shares to be
endorsed with the appropriate restrictive legends and will consent to the
placement of appropriate stop transfer orders with the transfer agent of the
Company. Furthermore, the undersigned agrees that all certificates evidencing
his/her shares will be held by Jon D. Sawyer, P.C., legal counsel for the
Company, who will hold the certificates until the Company has completed a
merger or acquisition.
Very truly yours,
/s/ Janet M. Brasel
-------------------------------------------
(Signature of Holder)
Janet M. Brasel, Custodian for Justin
Thomas Brasel
-------------------------------------------
Please Print Name(s)
Number of Shares of
Common Stock Owned: 50,000
<PAGE>
September 13, 1996
Board of Directors
Cypress Capital, Inc.
16178 East Prentice Place
Aurora, Colorado 80015
Gentlemen:
The undersigned, a beneficial owner of the $.0001 par value common stock
of Cypress Capital, Inc. (the "Company"), understands that the Company intends
to file with the U.S. Securities and Exchange Commission a registration
statement on Form 10-SB (the "Registration Statement"), for the registration
of the Company's Common Stock. As part of the disclosure included in the
Registration Statement, the Company has affirmatively stated that there will
be no trading of the Company's securities until such time as the Company
successfully implements its business plan as described in such Registration
Statement, consummating a merger or acquisition.
In order to insure that the aforesaid disclosure is adhered to, the
undersigned agrees, for the benefit of the Company, that he/she will not offer
to sell, assign, pledge, hypothecate, grant any option for the sale of, or
otherwise dispose of, directly or indirectly, any shares of Common Stock of
the Company owned by him/her, or subsequently acquired through the exercise of
any options, warrants or rights, or conversion of any other security or by
reason of any stock split or other distribution of stock, or grant options,
rights or warrants with respect to any such shares of Common Stock, until the
Company successfully closes a merger or acquisition. Furthermore, the
undersigned will permit all certificates evidencing his/her shares to be
endorsed with the appropriate restrictive legends and will consent to the
placement of appropriate stop transfer orders with the transfer agent of the
Company. Furthermore, the undersigned agrees that all certificates evidencing
his/her shares will be held by Jon D. Sawyer, P.C., legal counsel for the
Company, who will hold the certificates until the Company has completed a
merger or acquisition.
Very truly yours,
CHAOS SYSTEMS LLC
/s/ Paul Dragul
-------------------------------------------
(Signature of Holder)
Paul Dragul, Manager
-------------------------------------------
Please Print Name(s)
Number of Shares of
Common Stock Owned: 500,000
<PAGE>
CONSENT OF INDEPENDENT AUDITORS
Board of Directors
Cypress Capital, Inc.
Aurora, Colorado
We hereby consent to the use in the Prospectus constituting part of the
Registration Statement on Form 10-SB, and any amendments thereto, to be filed
by Cypress Capital, Inc. of our Auditors' Opinion dated July 8, 1996
accompanying the Financial Statements of Cypress Capital, Inc. as of July 5,
1996, and to the use of our name under the caption "Experts" in
the Prospectus.
/s/ Schumacher & Associates, Inc.
SCHUMACHER & ASSOCIATES, INC.
Certified Public Accountants
12835 E. Arapahoe Road
Tower II, Suite 110
Englewood, Colorado 80112
September 16, 1996
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
balance sheet and statement of operations found on pages F-2 and F-3
of the Company's Form 10-SB for the period ended July 5, 1996, and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<PERIOD-TYPE> OTHER
<FISCAL-YEAR-END> MAY-31-1997
<PERIOD-END> JUL-05-1996
<CASH> 12,500
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 12,500
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 12,500
<CURRENT-LIABILITIES> 250
<BONDS> 0
0
0
<COMMON> 125
<OTHER-SE> 12,500
<TOTAL-LIABILITY-AND-EQUITY> 12,750
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 0
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
