<PAGE>
As filed with the Securities and Exchange Commission on November 6, 1996
Registration No. 333-__________
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------------
FORM SB-2
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
-----------------------
EMERGING GROWTH ACQUISITION
CORPORATION I
(Exact Name of Registrant as Specified in its Charter)
Delaware 6799 06-1461855
- ------------------------ ---------------------------- ----------------------
(State of Incorporation (Primary Standard Industrial (I.R.S. Employer
Classification Code Number) Identification Number)
660 Steamboat Road
Greenwich, Connecticut 06830
(203) 861-7750
(Address and telephone number of Registrant's principal executive offices)
-----------------------
Ronald B. Koenig
Emerging Growth Acquisition Corporation I
660 Steamboat Road
Greenwich, Connecticut 06830
(203) 861-7750
(Name, address and telephone number of agent for service)
-----------------------
Please send a copy of all communications to:
Rubi Finkelstein, Esq.
Orrick, Herrington & Sutcliffe LLP
666 Fifth Avenue
New York, New York 10103
(212) 506-5000
(212) 506-5151 (fax)
-----------------------
Approximate date of commencement of proposed sale to the public: As
soon as practicable after the effective date of this Registration Statement.
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to
Rule 434, please check the following box. [ ]
-----------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
================================================================================================================================
Proposed Maximum Proposed Maximum
Title of Shares Amount to be Offering Price Aggregate Amount of
to be Registered Registered Per Share Offering Price(1) Registration Fee
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock $.001 166,332 $0.88 $146,372.16 $100.00
par value
================================================================================================================================
</TABLE>
(1) Estimated solely for the purpose of calculating the amount of the
registration fee in accordance with Rule 457 under the Securities Act.
-----------------------
The Registrant hereby amends this Registration Statement on such date
or dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
<PAGE>
EMERGING GROWTH ACQUISITION CORPORATION I
Cross-Reference Sheet
Showing Location in Prospectus of Part I Items of Form SB-2
<TABLE>
<CAPTION>
Item and Caption in Form SB-2 Location in Prospectus
<S> <C>
1. Front of Registration Statement and Outside
Front Cover Page of Prospectus................... Forepart of the Registration Statement; Outside Front
Cover Page of Prospectus
2. Inside Front and Outside Back Cover Pages
of Prospectus.................................... Inside Front and Outside Back Cover Pages of
Prospectus
3. Summary Information and Risk Factors............. Prospectus Summary; Risk Factors; Selected
Financial Data
4. Use of Proceeds.................................. Use of Proceeds; Capitalization
5. Determination of Offering Price.................. Risk Factors; Plan of Distribution
6. Dilution......................................... Dilution
7. Selling Security Holders......................... Not Applicable
8. Plan of Distribution............................. Outside Front Cover Page of Prospectus; Plan of
Distribution
9. Legal Proceedings................................ Business
10. Directors, Executive Officers, Promoters
and Control Persons.............................. Management; Principal Stockholders
11. Security Ownership of Certain Beneficial
Owners and Management............................ Principal Stockholders
12. Description of Securities........................ Description of Securities
13. Interests of Named Experts and Counsel........... Legal Matters; Experts
14. Disclosure of Commission Position
on Indemnification for Securities Act
Liabilities...................................... Management
15. Organization Within Last Five Years.............. The Company; Management's Discussion and
Analysis of Financial Condition and Results of
Operations; Business; Certain Transactions
16. Description of Business.......................... Prospectus Summary; Risk Factors; Management's
Discussion and Analysis of Financial Condition and
Results of Operations; Business
17. Management's Discussion and Analysis or
Plan of Operation................................ Management's Discussion and Analysis of Financial
Condition and Results of Operations
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Item and Caption in Form SB-2 Location in Prospectus
<S> <C>
18. Description of Property.......................... Business
19. Certain Relationships and Related
Transactions..................................... Certain Transactions; Principal Stockholders
20. Market for Common Equity and Related
Stockholder Matters.............................. Outside Front Cover Page of Prospectus; Prospectus
Summary; Dilution; Description of Securities
21. Executive Compensation........................... Management
22. Financial Statements............................. Financial Statements
23. Changes in and Disagreements with
Accountants on Accounting and Financial
Disclosure....................................... Not Applicable
</TABLE>
<PAGE>
PROSPECTUS
166,332 Shares of Common Stock
EMERGING GROWTH ACQUISITION CORPORATION I
Emerging Growth Acquisition Corporation I (the "Company") is a newly
organized corporation the objective of which is to acquire an interest in an
operating business. The 166,332 shares of Common Stock are offered by the
Company on a "best efforts, all or none" basis (the "Offering"). Pending the
payment for not less than all of the shares of Common Stock, all proceeds of the
Offering will be deposited in a non-interest bearing escrow account. See "Plan
of Distribution."
Prior to this Offering, there has been no public market for the Common
Stock and no market is expected to develop as a result of the escrow
requirements of Rule 419. See "Description of Securities--Escrow of Shares."
Pursuant to Rule 2720 of the National Association of Securities Dealers Inc.,
Conduct Rules ("Rule 2720 of the NASD"), the initial public offering price for
the Common Stock has been determined by negotiation between the Company and
Keane Securities Co., Inc. ("Keane" or the "Qualified Independent Underwriter"),
and does not necessarily bear any direct relationship to the Company's assets,
operations, book or other established criteria of value.
------------------------------------
THE SECURITIES OFFERED HEREBY INVOLVE A HIGH DEGREE OF RISK AND
IMMEDIATE DILUTION. SEE "RISK FACTORS" ON PAGE 12 AND "DILUTION."
------------------------------------
THE COMPANY HAS MADE APPLICATION TO REGISTER THE SHARES OF COMMON STOCK
FOR SALE ONLY IN NEW YORK STATE, AND, IF APPROVED, MAY ONLY BE TRADED IN SUCH
STATE. PURCHASERS OF SUCH SECURITIES EITHER IN THIS OFFERING OR IN ANY
SUBSEQUENT TRADING MARKET WHICH MAY DEVELOP MUST BE RESIDENTS OF SUCH STATE. THE
COMPANY WILL AMEND THIS PROSPECTUS FOR THE PURPOSE OF DISCLOSING ADDITIONAL
STATES, IF ANY, IN WHICH THE COMPANY'S SECURITIES WILL HAVE BEEN REGISTERED.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
=============================================================================================================================
Price Underwriting Proceeds
to Discounts and to
Public Commissions (1) Company
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Per Share of Common Stock........................... $.88 $0 $.88
- -----------------------------------------------------------------------------------------------------------------------------
Total (2)........................................... $146,372 $0 $146,372
=============================================================================================================================
</TABLE>
(1) The Company will distribute the shares of Common Stock directly to the
public without the services of an underwriter or a placement agent. The
Company is an affiliate of Capital Growth International, L.L.C. and
International Capital Growth, Ltd., NASD members. Keane is acting as a
Qualified Independent Underwriter as that term is defined in Rule 2720
of the NASD. As such, Keane will act as manager of this Offering and
will be paid a fee of $15,000 and receive warrants to purchase 16,663
shares of Common Stock in consideration for its services and expenses.
The offering of the shares will terminate not later than 30 days from
the date of this prospectus, unless the Company and the Qualified
Independent Underwriter agree to extend the Offering for an additional
30 day period (such date, as extended, the "Termination Date"). The
Company has entered into an escrow agreement with Continental Stock
Transfer & Trust Company to hold any proceeds from this Offering in a
non-interest bearing escrow account subject to certain terms and
conditions. If subscriptions for all of the shares offered hereby have
not been received and accepted by the Company by the Termination Date,
no shares will be sold, and all funds held in escrow will be returned
promptly to investors without interest thereon or deduction therefrom.
See "Plan of Distribution."
(2) Before deducting expenses of approximately $50,000 payable by the Company.
The date of this prospectus is ________, 1996
<PAGE>
______________________________
______________________________
FURTHER INFORMATION
The Company intends to furnish to its stockholders Annual Reports
containing financial statements audited and reported on by its independent
public accounting firm.
3
<PAGE>
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by reference to, and
should be read in conjunction with, the more detailed information and financial
statements (including the notes thereto) appearing elsewhere in this prospectus.
Each prospective investor is urged to read this prospectus in its entirety.
The Company
Business Objectives
Emerging Growth Acquisition Corporation I (the "Company") was formed in
the State of Delaware on July 18, 1996. The Company was formed as a "blind pool"
or "blank check" company to serve as a vehicle to acquire an interest in an
operating business ("Business") which Company's management ("Management")
believes offers the opportunity for the generation of earnings and asset growth.
Industry in the United States is experiencing historic change and
becoming increasingly competitive. This competition stems not only from both
domestic and foreign companies, but also for limited resources such as
management and access to capital. The Company will seek to (i) acquire an
interest in an early stage company with significant expansion opportunities and
(ii) provide this company with consulting advice.
The merger by an operating company into a blind pool as a method of
financing offers a number of advantages to traditional financing alternatives
such as an initial public offering ("IPO"). These advantages include the speed
with which capital is raised, lower financing costs, and reduced risk in terms
of commencing but not completing a financing.
A Business will be selected for acquisition only after careful
investigation and research. The experience and expertise of Management and its
directors will be used to evaluate products, markets, industry trends, financial
requirements, competition and the entrepreneurial and management group
associated with a prospective Business. Management's experience in investment
banking, particularly corporate finance, requires the ongoing and comprehensive
evaluation of various companies, markets, industry trends and other economic
factors in order to prudently serve institutional and retail clients in
brokerage and advisory capacities, consult with companies regarding growth
opportunities and strategic planning and offer related financial services. Such
investment banking activities often require Management to evaluate businesses in
various industries for the purpose of acting as an underwriter or placement
agent for financing arrangements. Further, nonaffiliated third parties acting as
finders may introduce such prospective businesses to the Company.
The acquisition of the Business may be effected by merger, exchange of
capital stock, stock or asset acquisition or other similar type of
reorganization ("Business Combination"), using cash (to be derived from the
proceeds of this Offering and further financings if necessary), equity, debt or
a combination thereof. To date, the Company's efforts have been limited to
organizational activities. The implementation of the Company's business plan is
dependent upon the successful consummation of this Offering. See "Proposed
Business."
Characteristics of an Acquisition Company
The Company is a newly organized "blind pool" or "blank check" company
incorporating the investor safeguards set forth below. Immediately after the
consummation of a Business Combination, these safeguards will no longer be
applicable.
4
<PAGE>
Offering Proceeds Held in Trust
The gross proceeds of this Offering will be $146,372. After deduction
of the fee payable to the Qualified Independent Underwriter, the proceeds,
before deduction of other expenses, will be $131,372. Ninety percent (90%) of
such amount, or $118,235, will be placed in an interest bearing escrow account
("Escrow Account"). The Escrow Account will not be released until the earlier of
(A) such time as (i) the Company has entered into an agreement with respect to a
Business Combination; (ii) the Company has filed a post-effective amendment to
its registration statement which post-effective amendment has been declared
effective; (iii) the prospectus contained in the post-effective amendment has
been sent to the Company's stockholders; (iv) each purchaser of securities in
this Offering has been given no fewer than 20 and no more than 45 business days
from the effective date of the prospectus to elect whether to remain as an
investor; and (v) the Business Combination has been consummated; or (B) the
liquidation of the Company.
Fair Market Value of Target Business
The Company will not acquire an interest in a Business unless the fair
market value of such Business, as determined by the Board of Directors of the
Company based upon standards generally accepted by the financial community, such
as earnings and potential therefor, cash flow and book value ("Fair Market
Value"), is at least 80% of the net assets of the Company at the time of such
acquisition. If the Company determines that the financial statements of a
proposed Business do not clearly indicate that the Business has a sufficient
Fair Market Value, the Company will obtain an opinion from an independent
investment banking firm (which is a member of the National Association of
Securities Dealers (the "NASD") with respect to the satisfaction of such
criteria. The Company currently does not anticipate that such investment banking
firm will have had any prior affiliate relationship with the Company. The
Company will not be required to obtain an opinion from an investment banking
firm as to Fair Market Value if the Company determines that the Business does
have sufficient Fair Market Value.
Stockholder Approval of Business Combination
The Company, after signing a definitive agreement for the acquisition
of an interest in a Business, but prior to the consummation of any Business
Combination, will submit such transaction to the Company's stockholders for
their approval, even if the nature of the acquisition is such as would not
ordinarily require stockholder approval under applicable state law. In the event
that 20% or more of the stockholders of the Company (excluding, for this
purpose, those persons who were stockholders prior to this Offering) vote
against the Business Combination, the Company will not consummate such Business
Combination. The Company will proceed with the Business Combination only if 20%
or more of the stockholders of the Company do not vote against the Business
Combination and a majority of all of the outstanding shares of the Company vote
in favor of the Business Combination. All of the Company's stockholders prior to
this Offering, including all of the officers and directors of the Company
("Initial Stockholders"), have agreed to vote their shares of Common Stock in
accordance with the vote of the majority in interest of all other stockholders
of the Company ("Public Stockholders") with respect to any Business Combination.
Redemption Rights
At the time the Company seeks stockholder approval of any potential
Business Combination, the Company will offer each Public Stockholder the right
to have his shares of Common Stock redeemed if such stockholder votes against
the Business Combination and such Business Combination is approved and
consummated. The per share redemption price will be equal to the amount in the
Escrow Account as of the record date for determination of stockholders entitled
to vote on such Business Combination (inclusive of any after-tax interest
thereon) divided by the number of shares held by the Public Stockholders. It is
anticipated that the funds to be distributed to the Public Stockholders who have
their shares redeemed will
5
<PAGE>
be distributed promptly after the consummation of a Business Combination. The
Initial Stockholders have waived their respective rights to participate in any
liquidation until after the Public Stockholders have received their entire
original investment in the Company. Any remaining proceeds shall be distributed
to the Initial Stockholders in proportion to their respective equity interests
in the Company.
Escrow of Shares
The shares of Common Stock offered hereby, together with the shares
held by the Initial Stockholders, will be placed in the Escrow Account with
Continental Stock Transfer & Trust Company, as escrow agent, until the earlier
of (A) such time as (i) the Company has entered into an agreement with respect
to a Business Combination; (ii) the Company has filed a post-effective amendment
to its registration statement which post-effective amendment has been declared
effective; (iii) the prospectus contained in the post-effective amendment has
been sent to the Company's stockholders; (iv) each purchaser of securities in
this Offering has been given no fewer than 20 and no more than 45 business days
from the effective date of the prospectus to elect whether to remain as an
investor; and (v) the Business Combination has been consummated; or (B) the
liquidation of the Company. During such escrow period, the stockholders will not
be able to sell or otherwise transfer their respective shares of Common Stock,
except by will or the laws of descent and distribution, or pursuant to a
qualified domestic relations order.
Liquidation if No Business Combination
In the event that the Company does not consummate a Business
Combination within 18 months from the date of this prospectus, the Company will
be dissolved and will distribute to all Public Stockholders in proportion to
their respective equity interests in the Company, an aggregate sum equal to the
amount in the Escrow Account, inclusive of any after-tax interest thereon. The
Initial Stockholders have waived their respective rights to participate in any
liquidation distribution until after the Public Stockholders have received their
entire original investment in the Company. Any remaining proceeds shall be
distributed to the Initial Stockholders in proportion to their respective equity
interests in the Company.
A Public Stockholder shall be entitled to receive funds from the Escrow
Account only in the event of a liquidation or in the event he seeks redemption
of his shares in connection with a Business Combination which he voted against
and which is actually consummated by the Company. In no other circumstances
shall a Public Stockholder have any right or interest of any kind in or to the
Escrow Account.
The Offering
------------
Securities Offered...................... 166,332 shares of Common Stock.
Common Stock Outstanding
Prior to the Offering................... 166,332 shares
Common Stock to be
Outstanding After the Offering.......... 332,664 shares
Use of Proceeds
The Company intends to apply substantially all of the net proceeds of
this Offering to acquire an interest in a Business, including identifying and
evaluating prospective acquisition candidates, selecting the Business and
structuring, negotiating and consummating the Business Combination. The gross
proceeds of this Offering will be $146,372. After deduction of the fee payable
to the Qualified Independent Underwriter, the proceeds, before deduction of
other expenses, will be $131,372. Ninety
6
<PAGE>
percent (90%) of such amount, or $118,235, will be held in the Escrow Account.
The Escrow Account will not be released until the earlier of (A) such time as
(i) the Company has entered into an agreement with respect to a Business
Combination; (ii) the Company has filed a post-effective amendment to its
registration statement which has been declared effective; (iii) the prospectus
contained in the post-effective amendment has been sent to the Company's
stockholders; (iv) each purchaser of securities in this Offering has been given
no fewer than 20 and no more than 45 business days from the effective date of
the prospectus to elect whether to remain as an investor; and (v) the Business
Combination has been consummated; or (B) the liquidation of the Company. The
proceeds not held in the Escrow Account will be used (i) to pay for business,
legal and accounting due diligence expenses on prospective Businesses; and (ii)
for the general administrative expenses of the Company, including legal and
accounting fees and administrative support expenses in connection with the
Company's reporting obligations to the Securities and Exchange Commission. See
"The Company" and "Use of Proceeds."
Risk Factors
The securities offered hereby involve a high degree of risk. See
"Risk Factors."
Summary Financial Information
The summary financial information set forth below is derived from the
more detailed financial statements appearing elsewhere in this prospectus. This
information should be read in conjunction with such financial statements,
including the notes thereto.
<TABLE>
<CAPTION>
Statement of Operations Data: July 18, 1996 (Inception)
to September 30, 1996
-------------------------
<S> <C>
Income.................................................... $ 0
Net (loss)................................................ (1,968)
Net (loss) per common share............................... (.01)
Weighted average number of shares outstanding............. 166,332
</TABLE>
<TABLE>
<CAPTION>
September 30, 1996
--------------------------------------------------
Actual As Adjusted (1)
------------------ -----------------------
<S> <C> <C>
Balance Sheet Data:
Working capital $71,218 $167,590(2)
Total assets $73,186 $169,558(2)
Total liabilities $1,968 $ 1,968
Stockholders' equity $71,218 $167,590(3)
</TABLE>
7
<PAGE>
- ---------
(1) Gives effect to the sale of the shares of Common Stock offered hereby
and receipt and initial application of the net proceeds therefrom.
(2) Includes $118,235 being held in the Escrow Account which is only
available to the Company only upon the consummation of a Business
Combination within the time period described in this prospectus. If a
Business Combination is not so consummated, the Company will be
dissolved and the proceeds held in the Escrow Account will be
distributed to the Public Stockholders. The Initial Stockholders have
waived their respective rights to participate in any liquidation
distribution until after the Public Stockholders have received their
entire original investment in the Company. Any remaining net proceeds
shall be distributed to the Initial Stockholders in proportion to their
respective equity interests in the Company. See "Investors' Rights and
Substantive Protection under Rule 419--Deposit of Offering Proceeds and
Securities" and "Characteristics of an Acquisition Company--Offering
Proceeds Held in Escrow."
(3) In the event the Company consummates a Business Combination, the
redemption rights afforded the Public Stockholders may result in the
redemption by the Company of up to 19.99% of the aggregate number of
shares held by the Public Stockholders at a per share redemption price
equal to the amount in the Escrow Account as of the record date for
determination of stockholders entitled to vote on the Business
Combination (inclusive of any after-tax interest thereon) divided by
the number of shares held by the Public Stockholders.
8
<PAGE>
THE COMPANY
The Company is a newly organized "blind pool" or "blank check" company
incorporated under the laws of the State of Delaware on July 18, 1996. The
Company's objective is to acquire an interest in an operating business. To date,
the Company's efforts have been limited to organizational activities. The
implementation of the Company's business plan is dependent upon the successful
consummation of this Offering. The Company's office is located at the office of
Capital Growth International, L.L.C. at 660 Steamboat Road, Greenwich,
Connecticut 06830 and its telephone number is (203) 861-7750.
INVESTORS' RIGHTS AND SUBSTANTIVE PROTECTION UNDER RULE 419
Deposit of Offering Proceeds and Securities
Rule 419 ("Rule 419") under the Rules and Regulations of the Securities
Act of 1933, as amended ("Securities Act") requires that any proceeds received
from investors in an offering, after deduction for any underwriting commissions,
underwriting expenses and dealer allowances, and any securities purchased by
investors in the offering, be deposited into an escrow or trust account
("Deposited Funds" and "Deposited Securities", respectively) governed by an
agreement which contains certain terms and provisions specified by the Rule.
Under Rule 419, any Deposited Funds will be released to the Company and any
Deposited Securities will be released to the investors only after the Company
has met the following three basic conditions. First, the Company must execute
one or more agreements for acquisition(s) of business(es) and asset(s) meeting
certain prescribed criteria. Second, the Company must file a post-effective
amendment to the registration statement which includes the terms of a
reconfirmation offer that must contain conditions prescribed by the rules. The
post-effective amendment must also contain information regarding the acquisition
candidate(s) and business(es), including audited financial statements. Third,
the Company must conduct the reconfirmation offer and satisfy all of the
prescribed conditions, including the condition that a certain minimum number of
investors must elect to remain investors. After the Company submits a signed
representation to the escrow agent that the requirements of Rule 419 have been
met and after consummation of the acquisition(s), the escrow agent may release
any Deposited Funds and Deposited Securities.
Accordingly, the Company has entered into an escrow agreement with
Continental Stock Transfer & Trust Company, a federally insured depositary
institution (the "Escrow Agent") which provides that:
(1) Any net proceeds are to be deposited into the Escrow Account
maintained by the Escrow Agent promptly upon receipt. Rule 419 permits 10% of
any Deposited Funds to be released to the Company prior to the reconfirmation
offering. Any Deposited Funds and the dividends or interest thereon, if any, are
to be held for the sole benefit of the investors and can only be invested in
bank deposits, in money market mutual funds or federal government securities or
securities for which the principal or interest is guaranteed by the federal
government.
(2) All securities issued in connection with the offering and any other
securities issued with respect to such securities, including securities issued
with respect to stock splits, stock dividends or similar rights are to be
deposited directly into the Escrow Account promptly upon issuance. The identity
of the investors is to be included on the stock certificates or other documents
evidencing the Deposited Securities. The Deposited Securities held in the Escrow
Account are to remain as issued and deposited are to be held for the sole
benefit of the investors' who retain the voting rights, if any, with respect to
the Deposited Securities held in their names. The Deposited Securities held in
the Escrow Account may not be transferred, disposed of nor any interest created
therein other than by will or the laws of descent and distribution, or pursuant
to a qualified domestic relations order as defined by the Internal Revenue Code
of 1986 or Table 1 of the Employee Retirement Income Security Act.
(3) Any warrants, convertible securities or other derivative securities
relating to Deposited Securities held in the Escrow Account may be exercised or
converted in accordance with their terms; provided however, that the securities
received upon exercise or conversion together with any cash or
9
<PAGE>
other consideration paid in connection with the exercise or conversion are to be
promptly deposited into the Escrow Account.
Prescribed Acquisition Criteria
Rule 419 requires that before any Deposited Funds and Deposited
Securities can be released, the Company must first execute one or more
agreements to acquire an interest in Business(es) or assets meeting certain
specific criteria. The Agreements(s) must provide for the acquisition of an
interest in businesses or assets for which the fair value of the business
represents at least 80% of the maximum offering proceeds, including funds
received or to be received from the exercise or conversion of any derivative
securities, but excluding any underwriting commissions, underwriting expenses
and dealer allowances payable to non-affiliates. It is expected that the fair
value of any business(es) or asset(s) of value which are acquired by the Company
will satisfy the foregoing criteria. The Agreement(s) will be subject to a
condition that at least 80% in interest of the Public Stockholders must elect to
reconfirm their investment; provided that the acquisition(s) will be consummated
if that number of investors do reconfirm their investment.
Post-Effective Amendment
Once the Agreement(s) governing the acquisition(s) of an interest in
one or more Business(es) meeting the above criteria has been executed, Rule 419
requires the Company to update the registration statement with a post-effective
amendment. The post-effective amendment must contain information about the
proposed acquisition candidate(s) and business(es) including audited financial
statements, the results of this Offering and the use of any funds to be
disbursed from the Escrow Account. The post-effective amendment must also
include the terms of the reconfirmation offer mandated by Rule 419. The
reconfirmation offer must include certain prescribed conditions which must be
satisfied before any Deposited Funds and Deposited Securities can be released
from escrow.
Reconfirmation Offering
The reconfirmation offer must commence after the effective date of the
post-effective amendment. Pursuant to Rule 419, the terms of the reconfirmation
must include the following conditions:
(1) The prospectus contained in the post-effective amendment will be
sent to each investor whose securities are held in securities are held in the
Escrow Account within 5 business days of the effective date of the
post-effective amendment.
(2) Each investor will have no fewer than 20 and no more than 45
business days from the effective date of the post-effective amendment to notify
the Company in writing that the investor elects to remain an investor.
(3) If the Company does not receive written notification from any
investor within 45 business days following the effective date, a pro rata
portion of any Deposited Funds (and any related interest or dividends) held in
the Escrow Account on such investor's behalf will be returned to the investor
within 5 business days by first class mail or other equally prompt means.
(4) The acquisition(s) will be consummated only if at least 80% in
interest of the Public Stockholders elect to reconfirm their investment.
(5) If one or more consummated acquisitions has not occurred by the
date 18 months from the date of this prospectus any Deposited Funds held in the
Escrow Account and any after-tax interest thereon shall be returned to all
investors on a pro rata basis within 5 business days by first class mail or
other equally prompt means.
10
<PAGE>
Release of Deposited Securities and Deposited Funds
Any Deposited Funds may be released to the Company and Deposited
Securities may be released to the investors, only at the same time as and after:
(1) The Escrow Agent has received a signed representation from the
Company and any other evidence acceptable by the Escrow Agent that:
(a) The Company has executed an agreement for the
acquisition(s) of an interest in a Business(es) for which the fair
market value of the Business represents at least 80% of any offering
proceeds and has filed the required post-effective amendment;
(b) The post-effective amendment has been declared effective,
that the mandated reconfirmation offer having the conditions prescribed
by Rule 419 has been completed and that the Company has satisfied all
of the prescribed conditions of the reconfirmation offer.
(2) The acquisition(s) of the Business(es) is(are) consummated.
11
<PAGE>
RISK FACTORS
The securities offered hereby involve a high degree of risk. Each
prospective investor should carefully consider the following risk factors
inherent in and affecting the business of the Company and this Offering before
making an investment decision.
Recently Organized Company; No Present Source of Revenues
The Company, which was incorporated on July 18, 1996 and is in the
development stage, has not as yet attempted to evaluate, or had any discussions
with, any prospective acquisition candidates. Additionally, the Company has no
plans, arrangements or understandings with any prospective acquisition
candidates. To date, the Company's efforts have been limited to organizational
activities. It will not generate any revenues (other than interest income on the
proceeds of this Offering) until, at the earliest, the consummation of a
Business Combination.
Possible Liquidation of the Company
In the event that the Company does not consummate a Business
Combination within 18 months from the date of this prospectus, the Company will
be dissolved and will distribute to all Public Stockholders in proportion to
their respective equity interests in the Company, an aggregate sum equal to the
amount in the Escrow Account, inclusive of any after-tax interest thereon. It is
likely that, in the event of any such liquidation, the per share liquidation
distribution will be less than the initial per share public offering price as a
consequence of the expenses of this Offering and the anticipated costs which
will be incurred by the Company in seeking a Business Combination. The Initial
Stockholders have waived their respective rights to participate in any
liquidation distribution until after the Public Stockholders have received their
entire original investment in the Company. Any remaining proceeds shall be
distributed to the Initial Stockholders in proportion to their respective equity
interests in the Company.
A Public Stockholder shall be entitled to receive funds from the Escrow
Account only in the event of a liquidation or in the event he seeks redemption
of his shares in connection with a Business Combination which he voted against
and which is actually consummated by the Company. In no other circumstances
shall a Public Stockholder have any right or interest of any kind in or to the
Escrow Account. See "Characteristics of an Acquisition Company."
Unascertainable Risks of Business; Uncertain Structure of Business Combination
Since the Company has not yet identified a prospective Business, there
is no basis for investors in this Offering to evaluate the possible merits or
risks of the Business operations. To the extent the Company consummates a
Business Combination with a financially unstable company, or a company in its
early stage of development or growth, or without established sales or earnings,
the Company will become subject to all of the risks inherent in the operation of
such a Business. Although Management of the Company will endeavor to evaluate
the risks inherent in any particular Business, there can be no assurance that
the Company will properly ascertain all such risks. Furthermore, the structure
of a Business Combination with a Business, which may take the form of a merger,
exchange of capital stock or stock or asset acquisition, cannot be presently
determined since the Company has not had any preliminary contacts, discussions
or understandings with representatives of any prospective Business regarding the
possibility of a Business Combination. See "Proposed Business--Selection of
Business and Structuring a Business Combination."
Discretionary Use of Proceeds; Absence of Substantive Disclosure Relating to
Business Combination
The Company's Management has broad discretion with respect to the
specific application of the net proceeds of this Offering, although
substantially all of the net proceeds of this Offering are intended to be
generally applied toward consummating a Business Combination with a Business. As
of the date of this prospectus, since the Company has not yet identified a
prospective Business, investors in this
12
<PAGE>
Offering do not currently have any substantive information available for advance
consideration of any Business Combination. Notwithstanding the foregoing, in
connection with seeking stockholder approval of a Business Combination, the
Company intends to furnish its stockholders with a post-effective amendment to
the registration statement of which this prospectus is a part, which will
include a description of the operations of the Business and audited historical
financial statements thereof. Such post-effective amendment will be filed with
and subject to the review of the Securities and Exchange Commission.
Limited Ability to Evaluate Management of Target Business
While the Company's ability to successfully effect a Business
Combination will be dependent upon certain of its key personnel, the future role
of such personnel in the Business cannot presently be stated with any certainty.
While it is possible that certain of the Company's key personnel will remain
associated in some capacities with the Business following a Business
Combination, such key personnel may not devote their full efforts to the affairs
of the Business. Moreover, there can be no assurance that such personnel will
have significant experience or knowledge relating to the operations of the
particular Business. Furthermore, although the Company intends to closely
scrutinize the management of a prospective Business in connection with
evaluating the desirability of effecting a Business Combination, there can be no
assurance that the Company's assessment of such management will prove to be
correct. In addition, there can be no assurance that such future management will
have the necessary skills to manage a public company intending to embark on a
program of business development. The Company may also seek to recruit additional
managers to supplement the incumbent management of the Business. There can be no
assurance that the Company will have the ability to recruit such additional
managers, or that such additional managers will have the requisite skills
necessary to enhance the incumbent management. See "Proposed Business--Selection
of Business and Structuring a Business Combination."
Dependence upon Key Personnel
The ability of the Company to consummate a Business Combination will be
largely dependent upon the efforts of the officers, directors and stockholders
of the Company. The Company has not entered into employment agreements with any
of such personnel or obtained any "key person" life insurance on their lives.
The loss of the services of such key personnel could have a material adverse
effect on the Company's ability to successfully achieve its business objectives.
None of the officers, directors or stockholders of the Company will be required
to commit his full time to the affairs of the Company. Furthermore, none of the
officers, directors or stockholders of the Company has previously been involved
in any company formed solely for the purpose of effecting a Business
Combination. See "Management."
Conflict of Interest
None of the Company's officers or directors is required to commit his
full time to the affairs of the Company and each has a full-time position
elsewhere. There is no requirement for any of the officers or directors to
devote even a substantial amount of time to the Company's business. Accordingly,
such personnel will have conflicts of interest in allocating management time
among various business activities. The officers and directors of the Company may
be involved in other acquisition funds with activities similar to those to be
undertaken by the Company and there can be no assurance that they will offer all
suitable prospective Businesses to the Company before any acquisition fund with
which they may be affiliated. Such persons may have conflicts of interest in
determining to which entity a particular business opportunity should be
presented. In general, officers and directors of a corporation incorporated
under the laws of the State of Delaware are required to present certain business
opportunities to such corporation. Accordingly, as a result of multiple business
affiliations, certain of the Company's officers, directors and stockholders may
have similar legal obligations to present certain business opportunities to
multiple entities. There can be no assurance that any of the foregoing conflicts
will be resolved in favor of the Company. See "Management--Conflicts of
Interest."
13
<PAGE>
Need for Additional Financing
The Company believes that the proceeds of this Offering may not be
sufficient to allow it to consummate a Business Combination. However, inasmuch
as the Company has not yet identified any prospective Business, the Company
cannot ascertain with any degree of certainty the capital requirements for any
particular transaction. In the event that the net proceeds of this Offering
prove to be insufficient, either because of the size of the Business Combination
or the depletion of the available net proceeds in search of a Business, or
because the Company becomes obligated to redeem a significant number of shares
from dissenting stockholders, the Company will be required to seek additional
financing. There can be no assurance that such financing would be available on
acceptable terms, if at all. To the extent that such additional financing proves
to be unavailable when needed to consummate a particular Business Combination,
the Company would, in all likelihood, be compelled to restructure the
transaction or abandon that particular Business Combination and seek an
alternative Business. In addition, in the event of the consummation of a
Business Combination, the Company may require additional financing to fund the
operations or growth of the Business. Any financings involving the sale of
equity may result in future dilution to the Company's then stockholders. The
failure by the Company to secure such additional financing could have a material
adverse effect on the continued development or growth of the Business. None of
the Company's officers, directors or stockholders is required to provide any
financing to the Company in connection with a Business Combination. See
"Proposed Business--Selection of Business and Structuring a Business
Combination."
Probable Lack of Business Diversification
The Fair Market Value of the Company's Business will represent at least
80% of the net assets of the Company at the time of its acquisition.
Accordingly, the prospects for the Company's success may be entirely dependent
upon the future performance of the Business and the Company may not have the
resources to diversify its operations or benefit from the possible spreading of
risks or offsetting of losses.
Competition
The Company expects to encounter intense competition from other
entities having business objectives similar to those of said Company. Many of
these entities, including venture capital firms, other "blind pool" or "blank
check" companies, large industrial and financial institutions, and small
business investment companies are well-established and have extensive experience
in connection with identifying and effecting Business Combinations directly or
through affiliates. Many of these competitors possess greater financial,
technical, human and other resources than the Company and there can be no
assurance that the Companies will have the ability to compete successfully. The
Company's financial resources will be extremely limited in comparison with those
of its many competitors. This inherent competitive limitation may compel the
Company to select certain less attractive Business Combination prospects. There
can be no assurance that such prospects will permit the Company to achieve its
stated business objectives.
Authorization of Additional Securities
The Company's Certificate of Incorporation authorizes the issuance of
10,000,000 shares of Common Stock. Upon completion of this Offering, there will
be 9,667,336 authorized but unissued shares of Common Stock available for
issuance. The Company's Board of Directors has the power to issue any or all of
such shares without stockholder approval. Although the Company has no
commitments as of the date of this prospectus to issue any shares of Common
Stock other than as described in this prospectus, the Company will, in all
likelihood, issue a substantial number of additional shares in connection with a
Business Combination. To the extent that additional shares of Common Stock are
issued, dilution to the interests of the Company's stockholders will occur. The
Company's Certificate of Incorporation also authorizes the issuance of 1,000,000
shares of preferred stock ("Preferred Stock") with such designations, rights and
preferences as may be determined from time to time by the Board of Directors.
The Board of Directors is empowered, without stockholder approval, to issue
Preferred Stock with dividend, liquidation, conversion, voting or other rights
which could adversely affect the voting
14
<PAGE>
power or other rights of the holders of the Company's Common Stock. The Company
may issue some or all of such shares in connection with a Business Combination.
In addition, the Preferred Stock could be utilized, under certain circumstances,
as a method of discouraging, delaying or preventing a change in control of the
Company. Although the Company has no commitments as of the date of this
prospectus to issue any shares of Preferred Stock, there can be no assurance
that the Company will not do so in the future. See "Description of Securities."
Control by Management
Upon consummation of this Offering, the Initial Stockholders (including
all of the Company's officers and directors) will collectively own 50% of the
then issued and outstanding shares of Common Stock for which they paid $.44 per
share. It is unlikely that there will be an annual meeting of stockholders to
elect new directors prior to the consummation of a Business Combination, in
which case all of the current directors will continue in office until their
successors are duly elected and qualified. The Initial Stockholders, because of
their ownership position in the Company, will continue to control the Company at
least until the consummation of a Business Combination. In addition, affiliates
and/or relatives of the Initial Stockholders are not prohibited from purchasing
shares of Common Stock in this Offering and if they do, no assurance can be
given that the Initial Stockholders will not influence the vote of such
affiliates in connection with a Business Combination. The Company has been
informed that no affiliate or relative of any of the Initial Stockholders
intends to purchase shares of Common Stock in this Offering.
Immediate Dilution; Disparity of Consideration
This Offering involves an immediate dilution of $.38 per share between
the pro forma net tangible book value per share after the Offering of $.50 and
the initial public offering price of $.88 per share. The Initial Stockholders
acquired their shares of Common Stock at a discount to the IPO price and,
accordingly, new investors will bear significant risks inherent in an investment
in the Company. See "Dilution."
Investment Company Act Considerations
The regulatory scope of the Investment Company Act of 1940 ("Investment
Company Act"), which was enacted principally for the purpose of regulating
vehicles for pooled investments in securities, extends generally to companies
engaged primarily in the business of investing, reinvesting, owning, holding or
trading in securities. The Investment Company Act may, however, also be deemed
to be applicable to a company which does not intend to be characterized as an
investment company but which, nevertheless, engages in activities which may be
deemed to be within the definitional scope of certain provisions of the
Investment Company Act. The Company believes that its anticipated principal
activities, which will involve acquiring control of an operating company, will
not subject the Company to regulation under the Investment Company Act.
Nevertheless, there can be no assurance that the Company will not be deemed to
be an investment company, particularly during the period prior to a Business
Combination. In the event the Company is deemed to be an investment company, the
Company may become subject to certain restrictions relating to the Company's
activities, including restrictions on the nature of its investments and the
issuance of securities. In addition, the Investment Company Act imposes certain
requirements on companies deemed to be within its regulatory scope, including
registration as an investment company, adoption of a specific form of corporate
structure and compliance with certain burdensome reporting, record-keeping,
voting, proxy, disclosure and other rules and regulations. In the event of
characterization of the Company as an investment company, the failure by the
Company to satisfy regulatory requirements, whether on a timely basis or at all,
would, under certain circumstances, have a material adverse effect on the
Company.
Dividends Unlikely
The Company has not paid any dividends on its Common Stock to date and
does not intend to pay dividends prior to the consummation of a Business
Combination. The payment of dividends after
15
<PAGE>
any Business Combination will be contingent upon the Company's revenues and
earnings, if any, capital requirements and general financial condition. The
payment of any dividends subsequent to a Business Combination will be within the
discretion of the Company's then Board of Directors. It is the present intention
of the Board of Directors to retain all earnings, if any, for use in the
Company's business operations and, accordingly, the Board of Directors does not
anticipate declaring any dividends in the foreseeable future. See "Description
of Securities--Dividends."
Public Market; Arbitrary Determination of Offering Price
Prior to this Offering, there has been no public market for the Common
Stock and no market is expected to develop as a result of the escrow
requirements of Rule 419. When the escrow terminates, there can be no assurance
that a market for the Common Stock will develop or be sustained and no
prediction can be made as to the effect, if any, that market sales of restricted
shares of Common Stock or the availability of such shares for sale will have on
the market prices from time to time. As a result, an investment in the shares of
Common Stock offered hereby may be totally illiquid and investors may not be
able to liquidate their investment readily or at all when they desire to sell.
The initial offering price of the shares of Common Stock offered hereby has been
arbitrarily determined by negotiation between the Company and the Qualified
Independent Underwriter and bears no relation to any established valuation
criteria. See "Plan of Distribution."
Low Priced Stock Disclosure Requirements
The shares of Common Stock offered hereby are considered low priced
securities under rules promulgated under the Exchange Act of 1934, as amended.
Under these rules, broker-dealers participating in transactions in low priced
securities must first deliver a risk disclosure document which describes the
risks associated with such stocks, the broker-dealer's duties, the customer's
rights and remedies, and certain market and other information, and make a
suitability determination approving the customer for low priced stock
transactions based on the customer's financial situation, investment experience
and objectives. Broker-dealers must also disclose these restrictions in writing
and provide monthly account statements to the customer, and obtain specific
written consent of the customer. With these restrictions, the likely effect of
designation as a low priced stock is to decrease the willingness of
broker-dealers to make a market for the stock, to decrease the liquidity of the
stock and increase the transaction cost of sales and purchases of such stocks
compared to other securities.
Escrow of Investors' Funds
Under the terms of this Offering, the Company is offering the shares of
Common Stock on a "best efforts, all or none basis." As such, the shares of
Common Stock will be offered until all of the securities are sold or the
offering period ends, whichever first occurs, unless the Offering is terminated
earlier by the Company. Therefore, no commitment exists by anyone to purchase
all or any part of the shares of Common Stock offered hereby. Consequently,
there is no assurance that all of the shares of Common Stock offered hereby will
be sold, and subscribers' funds may be escrowed for so long as 70 days (the 30
day Offering period plus an additional 30 day extension period and 10 business
days to permit clearance of funds in escrow) and then returned promptly without
interest thereon, in the event all of the shares of Common Stock offered hereby
are not sold prior to the Termination Date. Investors, therefore will not have
the use of any funds paid for the purchase of the shares of Common Stock during
the Offering period. In the event the Company is unable to sell all of the
shares of Common Stock offered hereby within the Offering period, the Offering
will be withdrawn. See "Plan of Distribution."
16
<PAGE>
USE OF PROCEEDS
The gross proceeds of this Offering are estimated to be $146,372. After
deduction of the fee payable to the Qualified Independent Underwriter, the
proceeds, before deduction of other expenses, will be $131,372. The Company will
use substantially all of the net proceeds of this Offering to acquire an
interest in a Business, including identifying and evaluating prospective
acquisition candidates, selecting the Business, and structuring, negotiating and
consummating the Business Combination. The Company will not acquire a Business
unless the Fair Market Value of such business is greater than 80% of the net
assets (assets less liabilities) of the Company at the time of such acquisition.
Ninety percent (90%) of the proceeds, or $118,235, will be held in the
Escrow Account. The Escrow Account will not be released until the earlier of (A)
such time as (i) the Company has entered into an agreement with respect to a
Business Combination; (ii) the Company has filed a post-effective amendment to
its registration statement which post-effective amendment has been declared
effective; (iii) the prospectus contained in the post-effective amendment has
been sent to the Company's stockholders; (iv) each purchaser of securities in
this Offering has been given no fewer than 20 and no more than 45 business days
from the effective date of the prospectus, to elect whether to remain an
investor; and (v) the Business Combination is consummated; or (B) the
liquidation of the Company. If a Business Combination is consummated, any amount
in the Escrow Account not paid as consideration to the sellers of the Business
may be used to finance the operations of the Business or to effect other
acquisitions, such determination to be made by the then Board of Directors of
the Company. If a Business Combination is not consummated, since all of the
Initial Stockholders have waived their respective rights to participate in the
required liquidation distribution until after the Public Stockholders have
received their entire original investment in the Company, all of the assets of
the Company which may be distributed upon such liquidation may be distributed to
the Public Stockholders. The Escrow Agent is only authorized to invest the funds
in certain government securities and to disburse the funds from the account upon
receipt of instructions from the Company; it has no other duties or obligations.
The proceeds not held in the Escrow Account will be used (i) for other
expenses of this Offering (approximately $35,000); (ii) to pay for business,
legal and accounting due diligence expenses on prospective Businesses; and (iii)
for the general and administrative expenses of the Company, including legal and
accounting fees and administrative support expenses in connection with the
Company's reporting obligations to the Securities and Exchange Commission. The
Company believes that such proceeds together with the Company's current
resources and advances to be made, as needed, by the Initial Stockholders, will
allow the Company to operate for at least the next 18 months, assuming that a
Business Combination is not consummated during that time. No compensation will
be paid to any officer, director, stockholder or affiliate of the Company until
after the consummation of a Business Combination. Since the role, if any, of
present management after a Business Combination is uncertain, the Company has no
ability to determine what remuneration, if any, will be paid to such persons
after a Business Combination.
A Public Stockholder shall be entitled to receive funds from the Escrow
Account only in the event of a liquidation or in the event he seeks redemption
of his shares in connection with a Business Combination which he voted against
and which is actually consummated by the Company. In no other circumstances
shall a Public Stockholder have any right or interest of any kind in or to the
Escrow Account.
17
<PAGE>
DILUTION
The difference between the public offering price per share of Common
Stock and the pro forma net tangible book value per share of Common Stock of the
Company after this Offering constitutes the dilution to investors in this
Offering. Net tangible book value per share is determined by dividing the net
tangible book value of the Company (total tangible assets less total
liabilities) by the number of outstanding shares of Common Stock. At September
30, 1996, the net tangible book value of the Company was $71,218, or $.43 per
share of Common Stock. After giving effect to the sale of 166,332 shares of
Common Stock offered hereby (less estimated expenses of this Offering), the pro
forma net tangible book value of the Company at September 30, 1996, would have
been $167,590 or $.50 per share, representing an immediate increase in net
tangible book value of approximately $.07 per share to the Initial Stockholders
and an immediate dilution of $.38 per share to the Public Stockholders.
The following table illustrates the dilution to the Public Stockholders
on a per share basis, rounded to the nearest hundredth:
<TABLE>
<CAPTION>
<S> <C> <C>
Public offering price............................................................................ $.88
Net tangible book value before this Offering......................................... $.43
Increase attributable to Public Stockholders......................................... .07
----
Pro forma net tangible book value after this Offering............................................ .50
---
Dilution to Public Stockholders.................................................................. $.38
====
</TABLE>
The following table sets forth, with respect to the Initial
Stockholders and the Public Stockholders, a comparison of the number and
percentage of shares of Common Stock acquired from the Company, the amount and
percentage of consideration paid and the average price per share:
<TABLE>
<CAPTION>
Shares Purchased Total Consideration
---------------------- ---------------------------- Average Price
Number Percentage Amount Percentage Per Share
------ ---------- ------ ---------- -------------
<S> <C> <C> <C> <C> <C>
Initial Stockholders............ 166,332 50% $ 73,186 33.3% $.44
Public Stockholders............. 166,332 50% 146,372 66.7% $.88
------- --- -------- ----
332,664 100% 219,558 100%
======= === ======== ====
</TABLE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
The Company is a newly organized "blind pool" or "blank check" company,
the objective of which is to acquire an interest in an operating business. To
date, the Company's efforts have been limited to organizational activities.
Substantially all of the Company's working capital needs subsequent to
this Offering will be attributable to the identification, evaluation and
selection of a suitable Business and, thereafter, to structure, negotiate and
consummate a Business Combination with such Business. Such working capital needs
are expected to be satisfied from the Company's current resources, the proceeds
of this Offering not deposited in the Escrow Account, and advances, as needed,
from the Initial Stockholders.
18
<PAGE>
CAPITALIZATION
The following table sets forth the capitalization of the Company at
September 30, 1996 and as adjusted to give effect to the sale of the shares of
Common Stock offered hereby.
<TABLE>
<CAPTION>
September 30, 1996
-----------------------------
Actual As Adjusted
------ -----------
<S> <C> <C>
Long-Term Debt................................................................. $ -0- $ -0-
------ ------
Stockholders' Equity:
Preferred Stock, $.001 par value, 1,000,000 shares
authorized; none issued or outstanding..................................... --- ---
Common Stock, $.001 par value, 10,000,000 shares
authorized; 166,332 shares issued and outstanding;
332,664 shares issued and outstanding, as adjusted......................... 166 332
Additional Paid-In Capital................................................... 73,020 169,226
Accumulated Deficit.......................................................... (1,968) (1,968)
Total Stockholders' Equity............................................... $ 71,218 $167,258
-------- --------
Total Capitalization..................................................... $ 71,218 $167,258
======== ========
</TABLE>
In the event the Company consummates a Business Combination, the
redemption right afforded to the Public Stockholders may result in the
redemption by the Company of up to 19.99% of the aggregate number of shares held
by the Public Stockholders at a per share redemption price equal to the amount
in the Escrow Account as of the record date for the determination of
stockholders entitled to vote on the Business Combination (inclusive of any
after-tax interest thereon) divided by the number of shares held by the Public
Stockholders.
CHARACTERISTICS OF AN ACQUISITION COMPANY
The Company is a newly organized "blind pool" or "blank check" company
incorporating the following selected investor safeguards. Immediately after the
consummation of a Business Combination, these safeguards will no longer be
applicable.
Offering Proceeds Held in Escrow
The gross proceeds of this Offering will be $146,372. After deduction
of the fee payable to the Qualified Independent Underwriter, the proceeds,
before deduction of other expenses, will be $131,372. Ninety percent (90%) of
such amount, or $118,235, will be placed in the Escrow Account. The Escrow
Account will not be released until the earlier of (A) such time as (i) the
Company has entered into an agreement with respect to a Business Combination;
(ii) the Company has filed a post-effective amendment to its registration
statement which post-effective amendment has been declared effective; (iii) the
prospectus contained in the post-effective amendment has been sent to the
Company's stockholders; (iv) each purchaser of securities in this Offering has
been given no fewer than 20 and no more than 45 business days from the effective
date of the prospectus to elect whether to remain an investor; and (v) the
Business Combination is consummated; or (B) the liquidation of the Company.
19
<PAGE>
Fair Market Value of Target Business
The Company will not acquire a Business unless the fair market value of
such Business, as determined by the Board of Directors of the Company based upon
standards generally accepted by the financial community, such as earnings and
potential therefor, cash flow and book value is at least 80% of the net assets
of the Company at the time of such acquisition. If the Company determines that
the financial statements of a proposed Business do not clearly indicate that the
Business has a sufficient Fair Market Value, the Company will obtain an opinion
from an independent investment banking firm (which is a member of the NASD) with
respect to the satisfaction of such criteria. The Company currently does not
anticipate that such investment banking firm will have had any prior affiliate
relationship with the Company. The Company will not be required to obtain an
opinion from an investment banking firm as to Fair Market Value if the Company
determines that the Business does have sufficient Fair Market Value.
Stockholder Approval of Business Combination
The Company, after signing a definitive agreement for the acquisition
of a Business, but prior to the consummation of any Business Combination, will
submit such transaction to the Company's stockholders for their approval, even
if the nature of the acquisition is such as would not ordinarily require
stockholder approval under applicable state law. In the event that 20% or more
in interest of the stockholders of the Company (excluding, for this purpose,
those persons who were stockholders prior to this Offering) vote against the
Business Combination, the Company will not consummate such Business Combination.
The Company will proceed with the Business Combination only if 20% or more in
interest of the stockholders of the Company do not vote against the Business
Combination and a majority of all of the outstanding shares of the Company voted
in favor of the Business Combination. All of the Company's stockholders prior to
this Offering, including all of the Initial Stockholders, have agreed to vote
their shares of Common Stock in accordance with the vote of the majority in
interest of all Public Stockholders with respect to any Business Combination.
Redemption Rights
At the time the Company seeks stockholder approval of any potential
Business Combination, the Company will offer each Public Stockholder the right
to have his shares of Common Stock redeemed if such stockholder votes against
the Business Combination and the Business Combination is approved and
consummated ("Redeeming Stockholders"). The per share redemption price will be
equal to the amount in the Escrow Account as of the record date for
determination of stockholders entitled to vote on such Business Combination
(inclusive of any after-tax interest thereon), divided by the number of shares
held by the Public Stockholders ("Redemption Price"). Concurrently with the
consummation of the Business Combination, the Trustee, as directed by the
Company, will distribute to the Company's transfer agent an amount equal to the
Redemption Price multiplied by the number of shares owned by the Redeeming
Stockholders. As soon as practicable thereafter, the transfer agent will then
distribute such amount to the Redeeming Stockholders as their respective
interests may appear. The Initial Stockholders have waived their respective
rights to participate in any liquidation until after the Public Stockholders
have received their entire original investment in the Company. Any remaining net
proceeds shall be distributed to the Initial Stockholders in proportion to their
respective equity interests in the Company.
Escrow of Shares
The shares of Common Stock will be placed in the Escrow Account with
Continental Stock Transfer & Trust Company, as escrow agent, until the earlier
of (A) such time as (i) the Company has
20
<PAGE>
entered into an agreement with respect to a Business Combination; (ii) the
Company has filed a post-effective amendment to its registration statement which
post-effective amendment has been declared effective; (iii) the prospectus
contained in the post-effective amendment has been sent to the Company's
stockholders; (iv) each purchaser of securities in this Offering has been given
no fewer than 20 and no more than 45 business days from the effective date of
the prospectus to elect whether to remain an investor; and (v) the Business
Combination is consummated; or (B) the liquidation of the Company. During such
escrow period, the Public Stockholders will not be able to sell or otherwise
transfer their respective shares of Common Stock except by will or the laws of
descent and distribution or pursuant to a qualified domestic relations order.
Liquidation if No Business Combination
In the event that the Company does not consummate a Business
Combination within 18 months from the consummation of this Offering, the Company
will be dissolved and will distribute to all Public Stockholders in proportion
to their respective equity interests in the Company, an aggregate sum equal to
the amount in the Escrow Account, inclusive of any after-tax interest thereon.
The Initial Stockholders have waived their respective rights to participate in
any liquidation distribution until after the Public Stockholders have received
their entire original investment in the Company. Any remaining net proceeds
shall be distributed to the Initial Stockholders in proportion to their
respective equity interests in the Company.
A Public Stockholder shall be entitled to receive funds from the Escrow
Account only in the event of a liquidation or in the event he seeks redemption
of his shares in connection with a Business Combination which he voted against
and which is actually consummated by the Company. In no other circumstances
shall a Public Stockholder have any right or interest of any kind in or to the
Escrow Account.
21
<PAGE>
PROPOSED BUSINESS
The Company is a newly organized "blind pool" or "blank check" company,
the objective is to acquire an interest in an operating business.
General
The Company's success will be dependent upon the success of acquiring
an interest in an operating business. It is anticipated that the net proceeds of
this Offering will be substantially utilized in the acquisition of a Business
within 18 months after the date of this prospectus. However, Management
anticipates that although the Company's current resources, the proceeds of this
Offering and advances, as needed, from the Initial Stockholders will be
sufficient to meet the Company's financial requirements during such period,
additional financing will be required to implement the target company's business
plan. Such funding may be in the form of the issuance of debt or equity
securities of the Company, or bank loans or lines of credit. If additional
equity is issued, dilution could result to the Company's then stockholders. See
"Risk Factors--Need for Additional Financing."
Selection of Business and Structuring a Business Combination
The activities of the Company will be overseen by its Board of
Directors, all of whom are also executive officers. The Company also expects to
rely upon the expertise of its founding stockholders who are not directors. The
company believes that the technical skills and expertise of its Initial
Stockholders, their collective access to acquisition opportunities and ideas,
their industry and academic contacts and their proven management abilities will
enable the Company to identify and effect an acquisition. See "Management."
The Company anticipates that acquisition candidates will be brought to
its attention from the Initial Stockholders and their affiliates, as well as
from various unaffiliated sources, including securities broker-dealers,
investment bankers, bankers and other members of the financial community. While
the Company does not presently anticipate engaging the services of professional
firms that specialize in business acquisitions on any formal basis, the Company
may engage such firms in the future, in which event the Company may pay a
finder's fee or other compensation. The Company may pay a finder's fee or
commission to an Initial Stockholder or an affiliated entity for such service.
See "Management--Conflicts of Interest."
The objective of the Company is to acquire an interest in an operating
Business. The Business to be acquired must have a Fair Market Value equal to at
least 80% of the net assets of the Company at the time of acquisition, as
determined by the Board of Directors of the Company. Subject to this limitation,
Management of the Company will have virtually unrestricted flexibility in
identifying and selecting an acquisition candidate. The Business may, among
other things, be either a single corporation, several corporations enjoying a
parent-subsidiary or "sister" company relationship, or a division of a large
corporation.
The Company's goal will be to seek to acquire a Business with
significant long term earnings growth potential and a strong management team. It
is anticipated that the Company will acquire a Business which is an emerging
growth company and either (i) in the development stage, and not currently
generating revenues or earnings, or (ii) generating a modest amount of revenues
and/or earnings but where significant upside still exists.
22
<PAGE>
In evaluating a prospective target business, management will consider
the following material factors:
o growth potential;
o experience and skill of management and availability of additional personnel;
o industry prospects;
o capital requirements;
o financial condition and results of operations of the business;
o stage of development of business products or services;
o degree of current or potential market acceptance of the products, processes
or services;
o proprietary features and degree of intellectual property or other protection
of the products, processes or services; and
o costs associated with consummating the business combination.
It is anticipated that an acquisition will be of an interest in an
ongoing business which either (i) does not need additional capital and solely
seeks the benefits of public ownership; or (ii) needs additional capital to
implement its business plan. As individual acquisitions have not been
identified, it is difficult to identify the amount of capital which a company
may require. However, the range is anticipated to be between $1.0 million and
$15.0 million.
The investors in this Offering will, in all likelihood, neither receive
nor otherwise have the opportunity to evaluate any financials or other
information which will be made available to the Company in connection with
selecting potential acquisition of an interest in a Business until after the
Company has selected such Business. As a result, investors in this Offering will
be almost entirely dependent on the judgment of Management in connection with
the selection of a potential acquisition of an interest of a Business. See "Risk
Factors--Discretionary Use of Proceeds; Absence of Substantive Disclosure
Relating to Business Combination."
The Company, prior to the consummation of any merger or acquisition of
interests of a Business will submit such proposed transaction to its
stockholders for their approval where the Company is required to do so under
Delaware General Corporation Law. The proposed transaction will also be
submitted to all of the Company's present stockholders, including the Company's
current officers and directors, which have agreed as of the date of this
prospectus to vote their respective shares of Common Stock in accordance with
the vote of the majority of all nonaffiliated future stockholders of the Company
with respect to any such proposal for the acquisition of an interest of a
Business. The Company will provide its stockholders with complete disclosure
documentation concerning a target company and its business. The information
provided to the Company's stockholders will include, among other items, a brief
description of the target company's business, a summary of the terms of the
transaction, reasons for engaging in the transaction, the accounting treatment
of the transaction, audited financial statements for the Company and the target
company and pro forma financial information giving effect to the transaction.
See "Risk Factors--Discretionary Use of Proceeds; Absence of Substantive
Disclosure Relating to Business Combination."
23
<PAGE>
In connection with its evaluation of a prospective Business, Management
anticipates that it will conduct an extensive due diligence review which will
encompass, among other things, meetings with incumbent management and inspection
of facilities, as well as review of financial or other information which will be
made available to the Company. The Company will not acquire a Business if
audited financial statements cannot be obtained for such Business. Additionally,
Management will provide the Public Stockholders with audited financial
statements of the prospective Business as part of the post-effective amendment
sent to the Public Stockholders to assist them in assessing the Business. The
time and costs required to identify, evaluate and select a Business (including
conducting a due diligence review) and to structure and consummate the Business
Combination (including preparing requisite documents for filing pursuant to
applicable securities laws) cannot presently be ascertained with any degree of
certainty. Any costs incurred in connection with the identification and
evaluation of a prospective Business with which a Business Combination is not
ultimately consummated will result in a loss to the Company and reduce the
amount of capital available to otherwise consummate a Business Combination.
Competition
In identifying, evaluating and selecting a Business, the Company
expects to encounter intense competition from other entities having a business
objective similar to that of the Company. Many of these entities are well
established and have extensive experience in connection with identifying and
effecting Business Combination directly or through affiliates. Many of these
competitors possess greater financial, technical, personnel and other resources
than the Company and there can be no assurance that the Company will have the
ability to compete successfully. The Company's financial resources will be
relatively limited when contrasted with those of many of it competitors. This
inherent competitive limitation may compel the Company to select certain less
attractive Business Combination prospects. Further, the Company's obligation to
redeem shares of Common Stock held by Public Stockholders in certain
circumstances may place the Company at a competitive disadvantage in
successfully negotiating a Business Combination. See "Risk
Factors--Competition."
Facilities
Capital Growth International, L.L.C., an affiliate of the Company, has
agreed that, until the acquisition of an interest in a Business, it will make a
small amount of office space, as well as certain office and secretarial
services, available to the Company, as may be required by the Company from time
to time, at no cost to the Company.
Employees
As of the date of this prospectus, the Company has no salaried
employees.
24
<PAGE>
MANAGEMENT
Directors and Executive Officers
The directors and executive officers of the Company are as follows:
<TABLE>
<CAPTION>
Name Age Position
- --------------------- --- ------------------------------------
<S> <C> <C>
Ronald B. Koenig 62 Chairman of the Board and Chief
Executive Officer and Director
Stanley Hollander 58 President and Director
Alan L. Jacobs 54 Chief Operating Officer and Director
Michael S. Jacobs 31 Chief Financial Officer
Jay J. Matulich 41 Secretary and Treasurer
</TABLE>
All Directors and Officers have held their respective positions since
July 1996. Directors and officers are elected annually and serve for one year or
until their successors are duly elected and qualified. It is anticipated that
the officers will each devote as much time to the Company as is necessary or
advisable to carry out their duties. During the early stages of the Company's
operations, Management will undertake the responsibilities of researching
industries, forecasting trends and evaluating and selecting prospective
Businesses which may be potential acquisition candidates. After the acquisition
of an interest in a Business, Management may provide professional advisory
services, particularly in corporate finance, consult on certain matters and
oversee the Business' operations and management. The Company may also, after it
acquires interests in several Business, employ additional management personnel
and/or consultants with specific skills and experience related to the Company's
Business who are expected to spend all or nearly all of their time with the
Company compensate such persons in accordance with their respective positions
and responsibilities. As of the date of this prospectus, there are no contracts,
agreements or understandings between any prospective employee, consultant or
other person or entity and any companies that are searching for "blind pool" or
"blank check" companies with which to merge.
Ronald B. Koenig
Since September 1996, Mr. Koenig has been chairman of the board,
president and C.E.O. of International Capital Growth, Ltd. Since 1993, Mr.
Koenig has been chairman and co-founder of U.S. Sachem and now its successor
Capital Growth International, L.L.C. From 1989 to 1993, Mr. Koenig was a senior
managing director and department head of corporate finance at Gruntal and Co.,
Incorporated. From 1974 to 1985, Mr. Koenig was a managing director and from
1985 to 1989 chairman of the board of Ladenberg Thalman and Co., Inc. From 1972
to 1974, he served as vice president, institutional sales at Jas. H. Oliphant
and Co. From 1968 to 1972, he was at Leif Werle and Co., an NYSE specialist
firm. Mr. Koenig was educated at the University of Pennsylvania (Wharton School)
and holds a B.S. in economics. Mr. Koenig presently serves on the Wharton School
Undergraduate Executive Board and is on the business advisory board to the
Sterling National Bank of New York.
Stanley Hollander
Since September 1996, Mr. Hollander has been senior managing director
and a director of International Capital Growth, Ltd. Since 1993, Mr. Hollander
has been president, C.E.O. and co-founder of Sachem and since 1996 its
successor Capital Growth International, L.L.C. From 1989 to
25
<PAGE>
1993 he served as a managing director and joint head of corporate finance at
Gruntal and Co., Inc. From 1985 to 1989 he was a managing director of investment
banking at Ladenberg Thalman and Co., Inc. From 1979 to 1985 he was co-owner and
vice president of Zemex Electronics-Stanlee, distributors of consumer
electronics. From 1959 to 1979, Mr, Hollander was president of All Brand
Appliances Brandsmart, distributors of consumer electronics. Mr. Hollander was
educated at the University of Alabama. Mr. Hollander is currently a director of
Specialized Health Products Inc., a publicly traded company.
Alan L. Jacobs
Since September 1996, Mr. Jacobs has been executive vice president and
a director of International Capital Growth, Ltd. Since February 1995, Mr. Jacobs
has been senior managing director of Capital Growth International, L.L.C. From
1992 to 1995, Mr. Jacobs was senior vice president and associate director of
investment banking at Josephthal Lyon and Ross Incorporated. From 1985 to 1991,
Mr. Jacobs was a managing director of investment banking at Ladenberg Thalman
and Co., Inc. From 1982 to 1984, he was director of investment banking at
Schaenen Jacobs Etheredge and Co., Inc. From 1966 to 1982, Mr Jacobs practiced
corporate and securities law in New York and Boston. Mr. Jacobs was educated at
Franklin and Marshall College and Columbia Law School and holds A.B. and J.D.
degrees. Mr. Jacobs is chief executive officer and a director of Boca Raton
Capital Corporation, a publicly traded company.
Michael S. Jacobs
Since September 1996, Mr. Jacobs has been a senior vice president,
secretary and treasurer of International Capital Growth, Ltd. Since February
1995, Mr. Jacobs has been a senior vice president of Sachem and since 1996 its
successor Capital Growth International, L.L.C. From 1993 to 1995 he was a vice
president of investment banking at Josephthal Lyon and Ross, Incorporated, New
York and from 1990 to 1993, Mr. Jacobs was an associate in corporate finance at
Gruntal and Co. From 1989 to 1990, Mr. Jacobs was a financial analyst at
Ladenberg Thalman and Co., Inc. Educated at New York University's Stern School
of Business and Emory University he holds an M.B.A. in finance and a B.B.A.
degree.
Jay J. Matulich
Since September 1996, Mr. Matulich has been a senior vice president of
International Capital Growth, Ltd. Since October 1994, Mr. Matulich has been a
senior vice president of Sachem and since 1996 its successor Capital Growth
International, L.L.C. From May 1990 to October 1994, Mr. Matulich was a vice
president of Gruntal and Co., Inc. From 1989 to May 1990, Mr. Matulich served as
an associate in the Shansby Group, a San Francisco based leveraged buy-out firm.
From 1986 to 1989, Mr. Matulich was a senior manager at Arthur Young and Co.,
accountants in the merger and acquisitions group. Educated at Brigham Young
University, Mr. Matulich has a B.A. degree. Mr. Matulich is a director of both
BioSafe Int., Inc. and Specialized Health Products Inc., which are publicly
traded companies.
Executive Compensation
Prior to the consummation of a Business Combination, if any, none of
the Company's officers, directors and stockholders will receive any
compensation. However, certain of the Company's officers, directors or
stockholders or their respective affiliates may receive consulting or finder's
fees in connection with introducing the Company to, or evaluating, or providing
additional financing for, a Business.
26
<PAGE>
Conflicts of Interest
None of the Company's officers or directors is required to commit his
full time to the affairs of the Company and each has a full-time position
elsewhere. There is no requirement for any of the officers or directors to
devote even a substantial amount of time to the Company's business. Accordingly,
such personnel will have conflicts of interest in allocating management time
among various business activities. The officers and directors of the Company may
be involved with other acquisition funds with activities similar to those to be
undertaken by the Company and there can be no assurance that they will offer all
suitable prospective Businesses to the Company before any other acquisition
fund. In general, officers and directors of a corporation incorporated under the
laws of the State of Delaware are required to present certain business
opportunities to such corporation. Accordingly, as a result of multiple business
affiliations, certain of the Company's officers, directors and stockholders may
have similar legal obligations to present certain business opportunities to
multiple entities. There can be no assurance that any of the foregoing conflicts
will be resolved in favor of the Company.
To minimize potential conflicts of interest, the Company will not
consummate a Business Combination with an entity which is affiliated with any
Initial Stockholder. However, an Initial Stockholder or an entity with which he
is affiliated may entitled to receive finder's or consulting fees in the event
that he or it originates a Business Combination.
Furthermore, in connection with any stockholder vote relating to
approval of a Business Combination, all of the Initial Stockholders have agreed
to vote their respective shares of Common Stock in accordance with the vote of
the majority in interest of the Public Stockholders, and have agreed to waive
any redemption rights they might have in connection with such a vote. In
addition, the Initial Stockholders have waived their respective rights to
participate in any liquidation distribution until after the Public Stockholders
have received their entire original investment in the Company. Any remaining net
proceeds shall be distributed to the Initial Stockholders in proportion to their
respective equity interests in the Company.
27
<PAGE>
PRINCIPAL STOCKHOLDERS
The following table sets forth certain information regarding beneficial
ownership of the Company's Common Stock as of October 31, 1996, and as adjusted
to reflect the sale of the shares of Common Stock offered hereby by (i) each
stockholder known by the Company to be the beneficial owner of more than 5% of
the outstanding Common Stock, (ii) each director of the Company and (iii) all
directors and officers as a group. Except as otherwise indicated, the Company
believes that the beneficial owners of the Common Stock listed below, based on
information furnished by such owners, have sole investment and voting power with
respect to such shares, subject to community property laws where applicable.
Such shares of Common Stock will be deposited into escrow upon consummation of
this Offering. See "Description of Securities--Escrow of Shares."
<TABLE>
<CAPTION>
Percentage Beneficially Owned
--------------------------------
Number of Before After
Principal Stockholders (1) Shares Offering Offering
- -------------------------- -------- -------- --------
<S> <C> <C> <C>
Ronald B. Koenig 39,541 23.8% 11.9%
Stanley Hollander 39,541 23.8 11.9
Navenby Investments, Inc. 31,225 18.8 9.4
Alan L. Jacobs 26,025 15.6 7.8
Helix Investments Inc. 10,000 6.0 3.0
Michael S. Jacobs 10,000 6.0 3.0
Jay J. Matulich 10,000 6.0 3.0
All Officers and Directors as a Group
(5 persons) 125,107 75.2 37.6%
</TABLE>
- -------------
(1) Each stockholder's address is c/o the Company, 660 Steamboat Road,
Greenwich, Connecticut 06830.
CERTAIN TRANSACTIONS
In July 1996, the Company issued an aggregate of 166,332 shares of
Common Stock to the Initial Stockholders for an aggregate purchase price of
$73,186.
Capital Growth International, L.L.C., an affiliate of the Company, has
agreed that until the acquisition of the Business, it will make a small amount
of office space, as well as certain office and secretarial services available to
the Company, as may be required by the Company from time to time, at no cost to
the Company.
28
<PAGE>
DESCRIPTION OF SECURITIES
General
The Company is authorized to issue 10,000,000 shares of Common Stock,
par value $.001 per share, and 1,000,000 shares of Preferred Stock, par value
$.001 per share. As of the date of this prospectus, 166,332 shares of Common
Stock are outstanding, held of record by seven persons. No shares of Preferred
Stock are currently outstanding.
Common Stock
The holders of Common Stock are entitled to one vote for each share
held of record on all matters to be voted on by stockholders. There is no
cumulative voting with respect to the election of directors, with the result
that the holders of more than 50% of the shares voted for the election of
directors can elect all of the directors then being elected. The holders of
Common Stock are entitled to receive dividends when, as and if declared by the
Board of Directors out of funds legally available therefor. In the event of
liquidation, dissolution or winding up of the Company, the holders of Common
Stock (except for the Initial Stockholders who have agreed to waive their rights
to share in any distribution relating to a liquidation of the Company due to the
failure of the Company to consummate a Business Combination within 18 months
from the date of this prospectus) are entitled to share ratably in all assets
remaining available for distribution to them after payment of liabilities and
after provision has been made for each class of stock, if any, having preference
over the Common Stock. Holders of shares of Common Stock, as such, have no
conversion, preemptive or other subscription rights, and except as described
under "Characteristics of an Acquisition Company--Redemption Rights," there are
no redemption provisions applicable to the Common Stock. All of the outstanding
shares of Common Stock are, and the shares of Common Stock included in the
shares of Common Stock, when issued and paid for as set forth in this
prospectus, will be, fully paid and nonassessable.
Escrow of Shares
The shares of Common Stock offered hereby, and the shares of Common
Stock held by the Initial Stockholders, will be placed in escrow with
Continental Stock Transfer & Trust Company, as escrow agent, until the earlier
of (A) such time as (i) the Company has entered into an agreement with respect
to a Business Combination; (ii) the Company has filed a post-effective amendment
to its registration statement which post-effective amendment has been declared
effective; (iii) the prospectus contained in the post-effective amendment has
been sent to the Company's stockholders; (iv) each purchaser of securities in
this Offering has been given no fewer than 20 and no more than 45 business days
from the effective date of the prospectus to elect whether to remain as an
investor; and (v) the Business Combination has been consummated; or (B) the
liquidation of the Company. During such escrow period, the stockholders will not
be able to sell or otherwise transfer their respective shares of Common Stock,
except by will or the laws of descent and distribution, or pursuant to a
qualified domestic relations order.
Preferred Stock
The Company's Certificate of Incorporation authorizes the issuance of
1,000,000 shares of Preferred Stock with such designations, rights and
preferences as may be determined from time to time by the Board of Directors.
Accordingly, the Board of Directors is empowered, without stockholder approval,
to issue Preferred Stock with dividend, liquidation, conversion, voting or other
rights which could adversely affect the voting power or other rights of the
holders of the Company's Common Stock. The Company may issue some or all of such
shares in connection with a Business Combination. In
29
<PAGE>
addition, the Preferred Stock could be utilized, under certain circumstances, as
a method of discouraging, delaying or preventing a change in control of the
Company. Although the Company has no commitments as of the date of this
prospectus to issue any shares of Preferred Stock. there can be no assurance
that the Company will not do so in the future.
Dividends
The Company has not paid any dividends on its Common Stock to date and
does not intend to pay dividends prior to the consummation of a Business
Combination. The payment of dividends after any such Business Combination will
be contingent upon the Company's revenues and earnings, if any, capital
requirements and general financial condition. The payment of any dividends
subsequent to a Business Combination will be within the discretion of the
Company's then Board of Directors. It is the present intention of the Board of
Directors to retain all earnings, if any, for use in the Company's business
operations and, accordingly, the Board does not anticipate declaring any
dividends in the foreseeable future.
Transfer Agent
The transfer agent and registrar for the Common Stock is Continental
Stock Transfer & Trust Company, 2 Broadway, New York, New York 10004.
Shares Eligible for Future Sale
Upon the consummation of this Offering, the Company will have 332,664
shares of Common Stock outstanding. Subject to the escrow requirements of Rule
419 (See "Description of Securities--Escrow of Shares") 166,332 shares will be
freely tradeable without restriction or further registration under the
Securities Act, except for any shares purchased by an "affiliate" of the Company
(in general, a person who has a control relationship with the Company), which
will be subject to limitations of Rule 144 promulgated under the Securities Act.
All of the remaining 166,332 shares are deemed to be "restricted securities", as
that term is defined under Rule 144 promulgated under the Securities Act, in
that such shares were issued in private transactions not involving a public
offering. None of such shares will be eligible for sale under Rule 144 prior to
July 1998.
In general, under Rule 144 as currently in effect, subject to the
satisfaction of certain other conditions, a person, including an affiliate of
the Company (or persons whose shares are aggregated), who has owned restricted
shares of Common Stock beneficially for at least two years is entitled to sell
in brokerage transactions, within any three-month period, a number of shares
equal to the greater of 1% of the total number of outstanding shares of the same
class or the average weekly trading volume during the four calendar weeks
preceding the sale. A person who has not been an affiliate of the Company for at
least the three months immediately preceding the sale and who has beneficially
owned shares of Common Stock for at least three years is entitled to sell such
shares under Rule 144 without regard to any of the limitations described above.
Prior to this Offering, there has been no market for the Common Stock
and no market is expected to develop as a result of the escrow requirements of
Rule 419. When the escrow terminates, there can be no assurance that a market
will develop or be sustained, and no prediction can be made as to the effect, if
any, that market sales of restricted shares of Common Stock or the availability
of such shares for sale will have on the market prices prevailing from time to
time. Nevertheless, the possibility that substantial amounts of Common Stock may
then be sold in the public market may adversely affect
30
<PAGE>
prevailing market prices for the Common Stock and could impair the Company's
ability to raise capital through the sale of its equity securities.
PLAN OF DISTRIBUTION
The Company is offering the shares of Common Stock for sale. The shares
of Common Stock will be sold on a "best efforts, all or none basis."
Subscriptions to purchase all of the shares of Common Stock offered hereby, if
any, must be received within a period of 30 days from the date of this
prospectus unless the Company and Qualified Independent Underwriter agree to
extend the Offering for an additional 30 day period. The Company may allocate
among or reject any subscriptions, in whole or in part.
The Company will distribute the shares of Common Stock directly to the
public without the services of an underwriter or a placement agent. The shares
of Common Stock will be offered and sold by the Company's officers and
directors, without compensation.
Those subscribing to purchase shares of Common Stock must complete a
subscription agreement, a form of which is included as an appendix to this
prospectus. All funds received by the Company with respect to the shares of
Common Stock that may be sold will, promptly following receipt by the Company,
be deposited in an Escrow Account with Continental Stock & Transfer Company
pursuant to the terms of the Escrow Agreement. In the event that subscriptions
for all of the shares of Common Stock offered hereby are not received within the
permitted time period, all funds will be promptly refunded to the subscribers,
in full, without interest and deduction therefrom. Certificates for the shares
of Common Stock will be issued to purchasers only if the proceeds from the sale
of all of the shares of Common Stock are released from escrow. However, such
certificates will be non-transferable and will be placed in an escrow account
pursuant to Rule 419. See "Description of Securities--Escrow of Shares." The
funds in escrow will be held for the benefit of subscribers until released to
the Company. Until certificates for the shares of Common Stock are delivered to
the Escrow Agent for the benefit of the purchasers thereof, such purchasers will
be deemed subscribers only and not stockholders.
Determination of Offering Price
Since the Company is an affiliate of Capital Growth International,
L.L.C. and International Capital Growth, Ltd., both NASD members, the Offering
is being made in conformity with certain applicable provisions of Rule 2720 of
the NASD. Accordingly, the initial public offering price of the shares of Common
Stock may not be higher than as recommended by an independent investment banking
firm which qualifies as a "qualified independent underwriter" and "which shall
also participate in the preparation of the registration statement and prospectus
. . . and which shall exercise the usual standards of due diligence." Keane is
acting as a "qualified independent underwriter" and will be paid a fee of
$15,000 and receive warrants to purchase 16,663 shares of Common Stock at an
exercise price per share equal to 120% of the initial public offering price per
share in consideration for its services and expenses.
The price of the shares of Common Stock offered hereby has been
determined by negotiation between the Company and the Qualified Independent
Underwriter while taking into consideration anticipated book values and use of
proceeds and without any relation to the Company's assets, historical operating
income or trading price (there being no operating income or trading market for
the Company's securities before this Offering) or other generally accepted
criteria of value. Consideration has also been given to valuations made in
offering of other companies with a similar business plan.
31
<PAGE>
Pursuant to Rule 2720 of the NASD, Keane, a member of the NASD, is
required, in acting as a "qualified independent underwriter," to undertake to
the NASD the legal responsibilities and liabilities of an underwriter under the
Securities Act, specifically including those inherent in Section 11 thereof. The
Company will indemnify Keane against such liabilities, if any, to the extent
permitted by law.
The offering price set forth on the cover page of this Prospectus
should not be considered an indication of the actual value of the Common Stock
of the Company. After completion of this Offering, such price will vary as a
result of market conditions and other factors.
LEGAL MATTERS
The legality of the shares of Common Stock offered hereby has been
passed upon for the Company by Orrick, Herrington & Sutcliffe LLP, 666 Fifth
Avenue, New York, New York.
EXPERTS
The financial statements included in this prospectus have been audited
by Arnold G. Greene, an independent certified public accountant as indicated in
his report with respect thereto, and are included herein in reliance upon the
authority of said firm as experts in accounting and auditing in giving said
report.
ADDITIONAL INFORMATION
The Company has filed with the Securities and Exchange Commission (the
"Commission"), Washington, D.C. 20549, a registration statement on Form SB-2
(together with all amendments and exhibits thereto, the "Registration
Statement") under the Securities Act of 1933, as amended (the "Securities Act").
This Prospectus does not contain all of the information set forth in the
Registration Statement, certain parts of which are omitted from this Prospectus
in accordance with the Commission's rules and regulations. For further
information, reference should be made to the Registration Statement and to the
exhibits filed thereto. For further information with respect to the Company and
the Common Stock, reference is made to the Registration Statement and the
exhibits and schedules thereto which may be inspected without charge or copied
at the public reference facilities of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549, 7 World Trade Center, 13th Floor, New York, New York
10048 and Citicorp Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661. Copies of such material can be obtained from the Commission's
Public Reference Section at prescribed rates. Registration statements
transmitted through the Commission's Electronic Data Gathering, Analysis and
Retrieval System are also publicly available through the Commission's Internet
site on the World Wide Web (http://www.sec.gov). Descriptions contained in this
Prospectus as to the contents of any contract or other documents filed as an
exhibit to the Registration Statement are not necessarily complete and each such
description is qualified by reference to such contract or document.
32
<PAGE>
INDEX TO FINANCIAL STATEMENTS
Accountant's Report..........................................................F-2
Primary financial statements:
Balance Sheet.......................................................F-3
Statement of Operations.............................................F-4
Statement of Cash Flows.............................................F-5
Statement of Stockholders Equity....................................F-6
Notes to Financial Statements.......................................F-7
F-1
<PAGE>
ARNOLD G. GREENE
CERTIFIED PUBLIC ACCOUNTANT
866 UNITED NATIONS PLAZA
NEW YORK, N.Y. 10017
---
(212) 751-6910
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors and
Stockholders of
EMERGING GROWTH ACQUISITION CORPORATION I
I have audited the accompanying balance sheet of Emerging Growth Acquisition
Corporation I as of September 30, 1996 and the related statements of operations
and cash flows for the period July 18, 1996 (date of inception) through
September 30, 1996. These financial statements are the responsibility of the
Company's management. My responsibility is to express an opinion on these
financial statements based on my audit.
I conducted my audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the overall
financial statement presentation. I believe that my audit provides a reasonable
basis for my opinion.
In my opinion, the financial statements referred to above present fairly, in all
material respects, the financial condition of Emerging Growth Acquisition
Corporation I as of September 30, 1996, and the results of its operations and
its cash flows for the period July 18, 1996 (date of inception) to September 30,
1996 in conformity with generally accepted accounting principles.
/s/ Arnold G. Greene
October 11, 1996
F-2
<PAGE>
EMERGING GROWTH ACQUISITION CORPORATION I
BALANCE SHEET
SEPTEMBER 30, 1996
- --------------------------------------------------------------------------------
ASSETS
Current assets:
Cash in bank $ 73,186
--------
Total assets $ 73,186
========
LIABILITIES AND STOCKHOLDERS EQUITY
Current liabilities:
Accrued expenses $ 1,968
-------
Total liabilities 1,968
Stockholders equity:
Common stock, par value $.001
authorized 10,000,000 shares;
outstanding 166,332 shares. $ 166
Additional paid-in-capital 73,020
Retained earnings (Deficit) (1,968)
-------
Total stockholders equity 71,218
--------
Total liabilities and stockholders equity $ 73,186
========
See Notes to Financial Statements
F-3
<PAGE>
EMERGING GROWTH ACQUISITION CORPORATION I
STATEMENT OF OPERATIONS
FOR THE PERIOD JULY 18, 1996 (DATE OF INCEPTION)
THROUGH SEPTEMBER 30, 1996
- --------------------------------------------------------------------------------
Income $ -0-
General and administrative expenses:
Professional fees $1,500
Filing fees 468
------
Total expenses 1,968
Income (loss) (1,968)
See Notes to Financial Statements
F-4
<PAGE>
EMERGING GROWTH ACQUISITION CORPORATION I
STATEMENT OF CASH FLOWS
FOR THE PERIOD JULY 18, 1996 (DATE OF INCEPTION)
THROUGH SEPTEMBER 30, 1996
- --------------------------------------------------------------------------------
Resources provided:
Issuance of common stock $ 73,186
Increase in accrued expenses 1,968
--------
Total resources provided 75,154
Resources applied:
Net loss (1,968)
--------
Increase 73,186
Cash-beginning of year -0-
--------
Cash-September 26, 1996 $ 73,186
========
See Notes to Financial Statements
F-5
<PAGE>
EMERGING GROWTH ACQUISITION CORPORATION I
STATEMENT OF STOCKHOLDERS EQUITY
FOR THE PERIOD JULY 18, 1996 (DATE OF INCEPTION)
THROUGH SEPTEMBER 30, 1996
- --------------------------------------------------------------------------------
Additional Deficit
Common Paid-In for the
Stock Capital Period TOTAL
------ ---------- ------- -----
Issuance of 166,332
shares of Common Stock $166 $73,020 $73,186
Net Loss (1,968) (1,968)
---- ------- ------- -------
$166 $73,020 ($1,968) $71,218
==== ======= ======== =======
F-6
<PAGE>
EMERGING GROWTH ACQUISITION CORPORATION I
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1996
- --------------------------------------------------------------------------------
1. Summary of significant accounting policies:
Organization - The company was organized under the laws of the
State of Delaware on July 18, 1996. The company was formed to
serve as a vehicle to acquire an interest in an operating
business which offers the opportunity for earnings and growth.
Income taxes - Income taxes are based on the net income of the
company.
2. Capital stock - The company is authorized to issue 10,000,000
shares of Common Stock par value $.001. In August 1996, the
corporation received $73,186 in exchange for issuing 166,332
shares of its common stock.
The company is also authorized to issue 1,000,000 shares of
preferred stock, par value $.001. No shares of preferred stock
are currently outstanding.
3. Other transactions - An affiliate of the company, Capital
Growth International, LLC, has agreed to provide a small
amount of office space at no charge until the acquisition of
the business.
F-7
<PAGE>
================================================================================
No dealer, salesperson or any other individual has been authorized to give any
information or to make any representations not contained in this prospectus in
connection with the offer made by this prospectus, and, if given or made, such
information or representations must not be relied on as having been authorized
by the Company or any of the Underwriters. This prospectus does not constitute
an offer to sell or solicitation of an offer to buy by anyone in any
jurisdiction in any jurisdiction in which such offer or solicitation is not
authorized, or in which the person making such offer or solicitation is not
qualified to do so, or to any person to whom it unlawful to make such offer or
solicitation. Neither the delivery of this prospectus nor any sale made
hereunder shall, under any circumstances, create any implication that there has
been no change in the affairs of the Company or that the information herein is
correct as of any time subsequent to its date.
----------------
TABLE OF CONTENTS
Page
----
PROSPECTUS SUMMARY........................................................ 4
THE COMPANY............................................................... 4
INVESTORS' RIGHTS AND SUBSTANTIVE
PROTECTION UNDER RULE 419............................................... 9
RISK FACTORS.............................................................. 12
USE OF PROCEEDS........................................................... 17
DILUTION.................................................................. 18
MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS............................................... 18
CAPITALIZATION............................................................ 19
CHARACTERISTICS OF AN ACQUISITION
COMPANY................................................................. 19
PROPOSED BUSINESS......................................................... 22
MANAGEMENT................................................................ 25
PRINCIPAL STOCKHOLDERS.................................................... 28
CERTAIN TRANSACTIONS...................................................... 28
DESCRIPTION OF SECURITIES................................................. 29
PLAN OF DISTRIBUTION...................................................... 31
LEGAL MATTERS............................................................. 32
EXPERTS................................................................... 32
ADDITIONAL INFORMATION.................................................... 32
INDEX TO FINANCIAL STATEMENTS............................................. F-1
----------------
Until __________, 1996 (25 days after the date of this prospectus), all dealers
effecting transactions in the Common Stock, whether or not participating in this
distribution, may be required to deliver a Prospectus. This is in addition to
the obligations of dealers to deliver a Prospectus when acting as underwriters
and with respect to their unsold allotments or subscriptions.
================================================================================
<PAGE>
================================================================================
166,332 shares of Common Stock
EMERGING GROWTH
ACQUISITION
CORPORATION I
__________
PROSPECTUS
__________
, 1996
================================================================================
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 24. Indemnification of Directors and Officers.
Section 102(b) of the Delaware General Corporation Law (the "DGCL")
permits a provision in the certificate of incorporation of each corporation
organized thereunder eliminating or limiting, with certain exceptions, the
personal liability of a director to the corporation or its stockholders for
monetary damages for certain breaches of fiduciary duty as a director. The
Certificate of Incorporation of the Registrant eliminates the personal liability
of directors to the fullest extent permitted by the DGCL.
Section 145 of the DGCL ("Section 145"), in summary, empowers a
Delaware corporation, within certain limitations, to indemnify its officers,
directors, employees and agents against expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement, actually and reasonably
incurred by them in connection with any nonderivative suit or proceeding, if
they acted in good faith and in connection with any nonderivative suit or
proceeding, if they acted in good faith and in a manner they reasonably believed
to be in or not opposed to the best interest of the corporation, and, with
respect to a criminal action or proceeding, had no reasonable cause to believe
their conduct was unlawful.
With respect to derivative actions, Section 145 permits a corporation
to indemnify its offices, directors, employees and agents against expenses
(including attorneys' fees) actually and reasonably incurred in connection with
the defense or settlement of such action or suit, provided such person meets the
standard of conduct described in the preceding paragraph, except that no
indemnification is permitted in respect of any claim where such person has been
found liable to the corporation, unless the Court of Chancery or the court in
which such action or suit was brought approves such indemnification and
determines that such person is fairly and reasonably entitled to be indemnified.
Reference is made to Article 13 of the Certificate of Incorporation of
the Registrant for the provisions which the Registrant has adopted relating to
indemnification of officers, directors, employees and agents.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been informed that, in the opinion of the Securities and Exchange
Commission, such indemnification is against public policy as expressed in the
Act and is, therefore, unenforceable.
Item 25. Other Expenses of Issuance and Distribution.
The following table sets forth the costs and expenses, other than fees
to the Qualified Independent Underwriter, payable by the Company in connection
with the sale of the securities being registered. All amounts are estimates
except the SEC registration fee and the NASD filing fee.
SEC Registration Fee..................................... $100
NASD Filing Fee.......................................... $515
Printing Costs........................................... *
Legal Fees and Expenses................................... *
Accounting Fees and Expenses.............................. *
Blue Sky Fees and Expenses................................ *
II-1
<PAGE>
Transfer Agent and Registrar Fees......................... *
Miscellaneous............................................. *
----
Total............................................. $ *
====
Item 26. Recent Sales of Unregistered Securities.
In July 1996, the Company sold 166,332 shares of unregistered Common
Stock for consideration, paid in cash, in the aggregate amount of $73,186 to
seven purchasers.
The issuances described above were deemed exempt from registration
under the Securities Act in reliance on Section 4(2) of the Securities Act as
transactions by an issuer not involving any public offering. The recipients of
securities in each such transaction represented their intentions to acquire the
securities for investment only and not with a view to or for sale in connection
with any distribution thereof and appropriate legends were affixed to the share
certificates issued in such transactions. All recipients had adequate access,
through their relationships with the Company, to information about the
Registrant.
Item 27. Exhibits and Financial Statement Schedules.
(a) Exhibits
1.0 Form of Qualified Independent Underwriter Agreement.
3.1 Certificate of Incorporation of the Registrant.
3.2 By-Laws of the Registrant.
4.1 Specimen Common Stock Certificate.*
4.2 Form of Warrant Agreement including Form of Warrant Certificate.*
4.3 Form of Escrow Agreement.
5.1 Opinion of Orrick, Herrington & Sutcliffe LLP.*
5.2 Opinion of Qualified Independent Underwriter.*
23.1 Consent of Orrick, Herrington & Sutcliffe LLP (included in Exhibit 5.1).*
23.2 Consent of Arnold G. Greene, Independent Auditors.
24 Power of Attorney (included on page II-4).
- -------------
* To be filed by Amendment.
II-2
<PAGE>
Item 28. Undertakings.
The undersigned Registrant hereby undertakes that it shall:
(1) File, during any period in which it offers or sells securities, a
post effective amendment to the registration statement to:
(i) Include any prospectus required by Section 10(A)(3) of the
Securities Act of 1933 as amended (the "Securities Act");
(ii) Reflect in the prospectus any facts or events which,
individually or together, represent a fundamental change in the
information in the registration statement. Notwithstanding the
foregoing, any increase or decrease in the volume of securities
offered (if the total value of securities offered would not
exceed that which was registered) and any deviation from the
low or high end of the estimated maximum offering cause may be
reflected in the form of the prospectus filed with the
commission pursuant to Rule 424(b) if, in the aggregate, the
changes in the volume and the price represent no more than a
20% change in the maximum aggregate offering price set forth in
the "Calculation of Registration Fee" table in the effective
registration statement;
(iii) Include any additional or changed material information on the
plan of distribution.
(2) For determining liability under the Securities Act, that each
post-effective amendment as a new registration statement of the securities
offered, and the offering of the securities at that time to be the initial bona
fide offering.
(3) File a post-effective amendment to remove from registration any of
the securities that remain unsold at the end of the offering.
(4) For purposes of determining any liability under the Securities Act,
the information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h)
under the Act shall be deemed to be part of this registration statement as of
the time it was declared effective.
(5) For the purpose of determining any liability under the Act, each
post-effective amendment that contains a form of prospectus shall be deemed to
be a new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Act, may
be permitted to directors, officers and controlling persons of the Registrant
pursuant to the foregoing provisions or otherwise, the Registrant has been
advised that, in the opinion of the Securities and Exchange Commission, such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expenses incurred
or paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question of whether such indemnification by it is against
public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
The Registrant hereby undertakes to provide to the Placement Agent at
the closing, certificates in such denominations and registered in such names as
required by the Placement Agent to permit prompt delivery to each purchaser.
II-3
<PAGE>
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, as
amended, the registrant certifies that it has reasonable grounds to believe that
it meets all of the requirements for filing on Form SB-2 and has duly caused
this Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of New York, State of New York, on the 3
day of November 1996.
EMERGING GROWTH ACQUISITION
CORPORATION I
By: /s/ Ronald B. Koenig
-----------------------------------
Ronald B. Koenig
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENT, that the persons whose signatures
appear below each severally constitutes and appoints Ronald B. Koenig, as true
and lawful attorney-in-fact and agent, with full powers of substitution and
resubstitution, for them in their name, place and stead, in any and all
capacities, to sign any and all amendments (including pre-effective and
post-effective amendments) to this Registration Statement, any registration
statement relating to the same offering as this Registration Statement that is
to be effective upon filing pursuant to Rule 462(b) under the Securities Act of
1933, and to file the same, with all exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange Commission, granting unto
said attorney-in-fact and agent, full power and authority to do and perform each
and every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as they might or could do in
person, hereby ratifying and confirming all which said attorney-in-fact and
agent, or his substitute or substitutes, may lawfully do, or cause to be done by
virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this registration statement has been signed below by the following persons in
the capacities and on the dates indicated.
Signature Title Date
- --------------------- ------------------------------- ----------------
Ronald B. Koenig
Chairman of the Board and Chief
Executive Officer and Director
/s/ Ronald B. Koenig (Principal Executive Officer) November 3, 1996
- ---------------------
Stanley Hollander
/s/ Stanley Hollander President and Director November 3, 1996
- ---------------------
Alan L. Jacobs
Chief Operating Officer and
/s/ Alan L. Jacobs Director November 3, 1996
- ---------------------
Michael S. Jacobs
Chief Financial Officer
(Principal Financial and
/s/ Michael S. Jacobs Accounting Officer) November 3, 1996
- ---------------------
II-4
<PAGE>
EXHIBIT INDEX
1.0 Form of Qualified Independent Underwriter Agreement.
3.1 Certificate of Incorporation of the Registrant.
3.2 By-Laws of the Registrant.
4.1 Specimen Common Stock Certificate.*
4.2 Form of Warrant Agreement including Form of Warrant Certificate.*
4.3 Form of Escrow Agreement.
5.1 Opinion of Orrick, Herrington & Sutcliffe LLP.*
5.2 Opinion of Qualified Independent Underwriter.*
23.1 Consent of Orrick, Herrington & Sutcliffe LLP (included in Exhibit 5.1).*
23.2 Consent of Arnold G. Greene, Independent Auditors.
24 Power of Attorney (included on page II-4).
- -------------
* To be filed by Amendment.
<PAGE>
FORM OF
EMERGING GROWTH ACQUISITION CORPORATION I
166,332 Shares
Common Stock, $.001 par value
"QUALIFIED INDEPENDENT UNDERWRITER" AGREEMENT
New York, New York
October __, 1996
The undersigned, Emerging Growth Acquisition Corporation I (the
"Company"), a Delaware corporation, hereby agrees with Keane Securities Co.,
Inc. ("Keane") as follows:
1. Introduction. The Company proposes to issue and sell to the
public, without the assistance of an underwriter or a placement agent, 166,332
shares of common stock, $.001 par value, of the Company (the "Common Stock")
(the "Offering"). Pursuant to Rule 2720 of the National Association of
Securities Dealers, Inc. (the "NASD") Conduct Rules ("Rule 2720") the Company,
as an affiliate of NASD members, may participate in the Offering only if the
price at which the Shares is to be offered to the public is no higher than the
price recommended by a "Qualified Independent Underwriter" (as such phrase is
defined by Rule 2720) who participates in the preparation of the registration
statement and prospectus relating to the Offering and exercises customary
standards of due diligence with respect thereto.
As hereinafter used, the term "Registration Statement" means
the registration statement on Form SB-2 (No. 333-_______) (including the related
preliminary prospectus, financial statements, exhibits and all other documents
to be filed as a part thereof or incorporated therein) for the registration of
the offer and sale of the Shares under the Securities Act of 1933, as amended,
and the rules and regulations thereunder (collectively, the "Act"), filed with
he Securities and Exchange Commission (the "Commission"), and any amendments
thereto, and the term "Prospectus" means the prospectus including any
preliminary or final prospectus (including the form of final prospectus as filed
with the Commission) pursuant to Rule 424(b) under the Act and any amendments or
supplements thereto, to be used in connection with the Offering.
2. Rule 2720 Requirement. Keane hereby confirms its agreement
as set forth in Rule 2720 and represents that, as appropriate, it satisfies or
will satisfy at the times designated in Rule 2720 the other requirements set
forth herein.
3. Consent. Keane hereby consents to be named in the
Registration Statement and Prospectus as having acted as the "Qualified
Independent Underwriter." Except as permitted by the immediately preceding
sentence or to the extent required by law, all references to Keane in the
Registration Statement or Prospectus or in any other filing, report, document,
release or other communication prepared, issued or transmitted in connection
with the Offering by the Company or any corporation controlling, controlled by
or under common control with the Company, or by any director, officer, employee,
representative or agent of any thereof, shall be subject to Keane's prior
written consent with respect to form and substance.
<PAGE>
4. Fees and Expenses. In consideration for Keane acting as
Qualified Independent Underwriter for the Offering, the Company hereby agrees to
pay Keane a fee of fifteen thousand dollars ($15,000) and issue Keane warrants
to purchase 16,663 shares of Common Stock on the first closing of the sale of
the Shares offered by the Prospectus. Such warrants shall have a five-year
duration and an exercise price equal to 120% of the initial public offering
price per share. If, for whatever reason, it is determined that the Offering
shall not proceed, Keane shall not be entitled to receive the above-mentioned
fee and warrants but shall be paid in full for its expenses and any amount
payable to Keane under Section 7 hereof promptly following any such
determination.
5. Material Facts. The Company represents and warrants to
Keane that at the time the Registration Statement or any amendment or supplement
thereto becomes effective, the Registration Statement and, at the time the
Prospectus is filed with the Commission (including any preliminary prospectus
and the form of prospectus filed with the Commission pursuant to Rule 424(b))
and at all times subsequent thereto, to and including the date on which payment
for and delivery of the Shares (such date being referred to herein as the
"Closing Date"), the Prospectus (as amended or supplemented if it shall have
been so amended or supplemented) will contain all material statements which are
required to be stated therein in accordance with the Act and will conform to all
other requirements of the federal securities laws, and will not, on such dates,
include any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading. The Company further represents and warrants that any further filing,
report, document, release or communication which in any way refers to Keane or
to the services to be performed by it pursuant to this Agreement will not
contain any untrue or misleading statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading.
6. Availability of Information. The Company hereby agrees to
provide Keane, at the Company's expense, all information and documentation with
respect to the Company's business, financial condition and other matters as
Keane may deem relevant, including, without limitation, copies of all
correspondence with the Commission, certificates of its officers, opinions of
its counsel and comfort letters from its auditors. The above mentioned
certificates, opinions of counsel and comfort letters shall be provided to Keane
as it may request on the effective date of the Registration Statement and on the
closing date of the Offering. The Company will make reasonably available to
Keane, its auditors, counsel, and officers and directors to discuss with Keane
any aspect of the Company or its business which Keane may deem relevant. In
addition, the Company, at Keane's request, will cause to be delivered to Keane,
copies of any certificates, opinions, letters and reports and shall cause the
person issuing such certificates, opinions, letters or reports to authorize
Keane to rely thereon to the same extent as if addressed directly to Keane. The
Company represents and warrants to Keane that all such information and
documentation provided pursuant to this paragraph 6 will not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements therein not misleading. In addition, the Company will promptly
advise Keane of all telephone conversations with the Commission which relate to
or may affect the Offering.
2
<PAGE>
7. Indemnification.
(a) Subject to the conditions set forth below, the Company and
International Capital Growth, Ltd., an affiliate of the Company ("ICG") hereby
agree that they will indemnify and hold Keane and each officer, partner,
employee or representative of Keane and each person controlling, controlled by
or under common control with Keane within the meaning of Section 15 of the Act
or Section 20 of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), or the rules and regulations thereunder (individually, an "Indemnified
Person") harmless from and against any and all loss, claim, damage, liability,
cost or expense whatsoever (including, but not limited to, any and all legal
fees and other expenses and disbursements incurred in connection with
investigating, preparing to defend or defending any action, suit or proceeding,
including any inquiry or investigation, commenced or threatened, or any claim
whatsoever or in appearing or preparing for appearance as a witness in any
action, suit or proceeding including any inquiry, investigation or pretrial
proceeding such as a deposition) to which such Indemnified Person may become
subject under the Act, the Exchange Act, or other federal or state statutory law
or regulation at common law or otherwise, arising out of, based upon, or in any
way related or attributed to (i) this Agreement, (ii) any untrue statement or
alleged untrue statement of a material fact contained in the Registration
Statement or Prospectus or any other filing report, document, release or
communication, whether oral or written referred to in paragraph 5 hereof or the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, (iii)
any application or other document executed by the Company or based upon written
information furnished by the Company filed in any jurisdiction in order to
qualify the Shares under the securities or Blue Sky laws thereof, or the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, (iv)
the breach of any representation or warranty made by the Company in this
Agreement, or (v) the performance by Keane as the "Qualified Independent
Underwriter" pursuant to this Agreement unless as a direct result of Keane's
gross negligence, bad faith or willful misfeasance. The Company and ICG further
agree that upon demand by an Indemnified Person at any time or from time to
time, they will promptly reimburse such Indemnified Person for, any loss, claim,
damage, liability, cost or expense as to which the Company has indemnified such
person pursuant hereto. Notwithstanding the foregoing provisions of this
paragraph 7, any such payment or reimbursement by the Company and ICG of fees,
expenses or disbursements incurred by an Indemnified Person in any proceeding in
which a final judgment by a court of competent jurisdiction (after all appeals
or the expiration of time to appeal) is entered against such Indemnified Person
as a direct result of such person's gross negligence, bad faith or willful
misfeasance will be promptly repaid to the Company and ICG.
(b) Promptly after receipt by an Indemnified Person under
paragraph (a) above of notice of the commencement of any action, such
Indemnified Person will, if a claim in respect thereof is to be made against the
Company under paragraph (a), notify the Company and ICG in writing of the
commencement thereof; but the omission to so notify the Company and ICG will not
relieve the Company and ICG from any liability which either may have to any
Indemnified Person otherwise than under this paragraph 7. In case any such
action is brought against any Indemnified Person, and such Indemnified Person
notifies the Company and ICG of the commencement thereof, the Company and ICG
will be entitled to participate therein and, to
3
<PAGE>
the extent that they may elect by written notice delivered to the Indemnified
Person promptly after receiving the aforesaid notice from such Indemnified
Person, to assume the defense thereof with counsel reasonably satisfactory to
such Indemnified Person: provided, however, that if the defendants in any such
action include both the Indemnified Person and the Company and ICG or any
corporation controlling, controlled by or under common control with the Company
or ICG, or any director, officer, employee, representative or agent of any
thereof, and the Indemnified Person shall have reasonably concluded that there
may be legal defenses available to it which are different from or additional to
those available to such other defendant, the Indemnified Person shall have the
right to select separate counsel to represent it. Upon receipt by the
Indemnified Person of notice from the Company and ICG setting forth the
Company's and ICG's irrevocable election to assume the defense of such action
and approval by the Indemnified Person of such counsel, the Company and ICG will
not be liable to such Indemnified Person under this paragraph 7 for any fees of
counsel subsequently incurred by such Indemnified Person in connection with the
defense thereof (other than the reasonable costs of investigation subsequently
incurred by such Indemnified Person) unless (x) the Indemnified Person shall
have employed separate counsel in accordance with the provision of the next
preceding sentences, (y) the Company and ICG, within a reasonable time after
notice of commencement of the action, shall not have employed counsel reasonably
satisfactory to the Indemnified Person to represent the Indemnified Person, or
(z) the Company and ICG shall have authorized in writing the employment of
counsel for the Indemnified Person at the expense of the Company and ICG, and
except that, if clause (x) or (z) is applicable, such liability shall be only in
respect of the counsel referred to in such clause (x) or (z).
(c) In order to provide for just and equitable contribution in
circumstances in which the indemnification provided for in paragraph (a) of this
paragraph 7 is due in accordance with its terms but is for any reason held by a
court to be unavailable from the Company and ICG to Keane on grounds of policy
or otherwise, the Company and ICG and Keane shall contribute to the aggregate
losses, claims, damages and liabilities (including legal or other expenses
reasonably incurred in connection with investigation or defending of same) to
which the Company and ICG and Keane may be subject in such proportion so that
Keane is responsible for that portion represented by the percentage that its fee
under this Agreement bears to the aggregate public offering price appearing on
the cover page of the Prospectus and the Company and ICG are responsible for the
balance, except as the Company and ICG may otherwise agree to reallocate a
portion of such liability with respect to such balance with any other person;
provided, however, that (y) in no case shall Keane be responsible for any amount
in excess of the fee set forth in paragraph 4 above and (z) no person guilty of
fraudulent misrepresentation within the meaning of Section 11(f) of the Act
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. For purposes of this paragraph (c), any person
controlling, controlled by or under common control with Keane, or any partner,
director, officer, employee, representative or any agent of any thereof, shall
have the same rights to contribution as Keane and each person who controls the
Company within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act, each officer of the Company who shall have signed the Registration
Statement and each director of the Company shall have the same rights to
contribution as the Company and ICG, subject in each case to clause (y) of this
paragraph (c). Any party entitled to contribution will, promptly after receipt
of notice of commencement of any action, suit or proceeding against such party
in respect of which a claim
4
<PAGE>
for contribution may be made against the other party under this paragraph (c),
notify such party from whom contribution may be sought, but the omission to so
notify such party shall not relieve the party from whom contribution may be
sought from any other obligation it or they may have hereunder or otherwise than
under this paragraph (c). The indemnity and contribution agreements contained in
this paragraph 7 shall remain operative and in full force and effect regardless
of any investigation made by or on behalf of any Indemnified Person or any
termination of this Agreement.
8. Outside Directors. The Company hereby covenants that upon
consummation of a Business Transaction, as such term is defined in the Company's
Registration Statement and Prospectus, the board of directors of the surviving
company will include at least two independent directors that are reasonably
acceptable to Keane.
9. Authorization by Company. The Company represents and
warrants to Keane that this Agreement has been duly authorized, executed and
delivered by the Company and constitutes a valid and binding obligation of the
Company.
10. Notice. Whenever notice is required to be given pursuant
to this Agreement, such notice shall be in writing and shall be mailed by first
class mail, postage prepaid, addresses (a) if to Keane, at 50 Broadway, New
York, New York 10004, Attention: Walter D. O'Hearn, Jr. and (b) if to the
Company or ICG, at 660 Steamboat Road, Greenwich, Connecticut 06839, Attention:
Michael Jacobs.
11. Governing Law. This Agreement shall be construed (both as
to validity and performance) and enforced in accordance with and governed by the
laws of the State of New York applicable to agreements made and to be performed
wholly within such jurisdiction.
12. Parties. This Agreement shall inure solely to the benefit
of and shall be binding upon, Keane and the Company (and ICG with respect to
paragraph 7 hereof) and the controlling persons, directors and officers referred
to in paragraph 7 hereof, and their respective successors, legal representative
and assigns, and no other person shall have or be construed to have any legal or
equitable right, remedy or claim under or in respect of or by virtue of this
Agreement or any provision herein contained.
5
<PAGE>
If the foregoing correctly sets forth the understanding between Keane
and the Company, please so indicate in the space provided below for that purpose
whereupon this letter shall constitute a binding agreement between us.
EMERGING GROWTH ACQUISITION KEANE SECURITIES CO., INC.
CORPORATION I
By: _______________________________ By: __________________________________
INTERNATIONAL CAPITAL GROWTH, LTD.
(A party solely to Section 7 of this Agreement)
By: _______________________________
6
<PAGE>
Exhibit 3.1
CERTIFICATE OF INCORPORATION
OF
EMERGING GROWTH ACQUISITION CORPORATION I
Pursuant to Section 102 of the General
Corporation Law of the State of Delaware
---------------------
FIRST: The name of the corporation is Emerging Growth
Acquisition Corporation I (the "Corporation").
SECOND: The registered office of the Corporation in the State
of Delaware is located at 1013 Centre Road, Wilmington, County of New Castle,
Delaware 19805. The name and address of the Corporation's registered agent is
Corporation Service Company, 1013 Centre Road, Wilmington, Delaware 19805.
THIRD: The purpose of the Corporation is to engage in any
lawful act or activity for which corporations may now or hereafter be organized
under the General Corporation Law of the State of Delaware.
FOURTH: The aggregate number of shares of stock which the
Corporation shall have the authority to issue is eleven million (11,000,000)
shares of capital stock consisting of:
(a) Ten million (10,000,000) shares of common stock, with each
of such shares having a par value of $.001 per share (the "Common Stock"); and
(b) One million (1,000,000) shares of preferred stock, with
each of such shares having a par value of $.001 per share (the "Preferred
Stock").
PART A
COMMON STOCK
(a) Each share of Common Stock issued and outstanding shall be
identical in all respects one with the other, and no dividends
shall be paid on any shares of Common Stock unless the same
dividend is paid on all shares of Common Stock outstanding at
the time of such payment.
<PAGE>
(b) Except for and subject to those rights expressly granted
to the holders of the Preferred Stock, or except as may be
provided by the General Corporation Law of the State of
Delaware, the holders of Common Stock shall have exclusively
all other rights of stockholders including, but not by way of
limitation, (i) the right to receive dividends, when, as and
if declared by the Board of Directors out of assets lawfully
available therefor, and (ii) in the event of any distribution
of assets upon liquidation, dissolution or winding up of the
Corporation or otherwise, the right to receive ratably and
equally all the assets and funds of the Corporation remaining
after payment to the holders of the Preferred Stock of the
Corporation of the specific amounts which they are entitled to
receive upon such liquidation, dissolution or winding up of
the Corporation as herein provided.
(c) In the event that the holder of any share of Common Stock
shall receive any payment of any dividend on, liquidation of,
or other amounts payable with respect to, any shares of Common
Stock, which he is not then entitled to receive, he will
forthwith deliver the same in the form received to the holders
of shares of the Preferred Stock as their respective interests
may appear, or the Corporation if no shares of Preferred Stock
are then outstanding, and until so delivered will hold the
same in trust for such holders or the Corporation.
(d) Each holder of shares of Common Stock shall be entitled to
one vote for each share of such Common Stock held by him, and
voting power with respect to all classes of securities of the
Corporation shall be vested solely in the Common Stock, other
than as specifically provided in the Corporation's Certificate
of Incorporation, as it may be amended from time to time, and
except for and subject to those rights expressly granted to
the holders of the Preferred Stock.
(e) No stockholder shall be entitled to a preemptive right to
purchase or subscribe for any unissued stock of any class or
any additional shares of any class to be issued by reason of
any increase in the authorized capital stock of the
Corporation.
PART B
PREFERRED STOCK
Authority is hereby vested in the Board of Directors of the
Corporation to provide for the issuance of Preferred Stock and
in connection therewith to fix by resolution providing for the
issue of
2
<PAGE>
such series, the number of shares to be included and such of
the designations, powers, preferences and relative
participating, optional or other special rights,
qualifications, limitations or restrictions of such series,
including, without limitation, rights of redemption or
conversion into Common Stock, to the fullest extent now or
hereafter permitted by the Delaware General Corporation Law.
FIFTH: The name and mailing address of the sole incorporator
is Michael J. Zeidel, c/o Orrick, Herrington & Sutcliffe, 666 Fifth Avenue, New
York, New York 10103.
SIXTH: The Corporation shall have perpetual existence.
SEVENTH: The Corporation specifically elects not to be subject
to the provisions of Section 203 of the General Corporation Law of the State of
Delaware, as the same may be amended, supplemented or restated from time to
time.
EIGHTH: The board of directors is expressly authorized to
adopt, amend or repeal the by-laws of the Corporation.
NINTH: Elections of directors need not be by written ballot
unless the by-laws of the Corporation shall otherwise provide.
TENTH: Special meetings of the stockholders of the Corporation
may only be called by the board of directors of the Corporation upon the request
of any two directors, by the holders of one-third or more of the outstanding
Common Stock, or by the duly elected officers of the Corporation.
ELEVENTH: Whenever a compromise or arrangement is proposed
between the Corporation and its creditors or any class of them and/or between
the Corporation and its stockholders or any class of them, any court of
equitable jurisdiction within the State of Delaware may, on the application in a
summary way of the Corporation or of any creditor or stockholder thereof or on
the application of any receiver or receivers appointed for the Corporation under
the provisions of Section 291 of Title 8 of the Delaware Code or on the
application of trustees in dissolution or of any receiver or receivers appointed
for the Corporation under the provisions of Section 279 of Title 8 of the
Delaware Code order a meeting of the creditors or class of creditors, and/or of
the stockholders or class of stockholders of the Corporation, as the case may
be, to be summoned in such manner as the said court directs. If a majority in
number representing three-fourths in value of the creditors or class of
creditors, and/or of the stockholders or class of stockholders of the
Corporation, as the case may be, agree to any compromise or arrangement and to
any reorganization of the Corporation as a consequence of such compromise or
arrangement, the said compromise or arrangement and the said reorganization
shall, if sanctioned by the court to which said application has been made, be
binding on all the creditors or class of creditors, and/or on all of the
stockholders or class of stockholders of the Corporation, as the case may be,
and also on the Corporation.
3
<PAGE>
TWELFTH: The Corporation reserves the right to amend, alter,
change or repeal any provision contained in this Certificate of Incorporation,
in the manner now or hereafter prescribed by statute or by this Certificate of
Incorporation, and all rights conferred upon stockholders herein are granted
subject to this reservation.
THIRTEENTH: No director of the Corporation shall be liable to
the Corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director, except for liability (i) for any breach of the director's
duty of loyalty to the Corporation or its stockholders, (ii) for acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of law, (iii) under Section 174 of the General Corporation Law of the
State of Delaware, or (iv) for any transaction from which the director derived
an improper personal benefit.
FOURTEENTH: Except as may otherwise be specifically provided
in this Certificate of Incorporation, no provision of this Certificate of
Incorporation is intended by the Corporation to be construed as limiting,
prohibiting, denying or abrogating any of the general or specific powers or
rights conferred under the General Corporation Law upon the Corporation, upon
its stockholders, bondholders and security holders, and upon its directors,
officers and other corporate personnel, including, in particular, the power of
the Corporation to furnish indemnification to directors and officers in the
capacities defined and prescribed by the General Corporation Law and the defined
and prescribed rights of said persons to indemnification as the same are
conferred under the General Corporation Law. The Corporation shall, to the
fullest extent permitted by the laws of the State of Delaware, including, but
not limited to Section 145 of the General Corporation Law of the State of
Delaware, as the same may be amended and supplemented, indemnify any and all
directors and officers of the Corporation and may, in the discretion of the
board of directors, indemnify any and all other persons whom it shall have power
to indemnify under said Section or otherwise under Delaware law, from and
against any and all of the expenses, liabilities or other matters referred to or
covered by said Section. The indemnification provisions contained in the
Delaware General Corporation Law shall not be deemed exclusive of any other
rights to which those indemnified may be entitled under any By-Law, agreement,
resolution of stockholders or disinterested directors, or otherwise, and shall
continue as to a person who has ceased to be a director, officer, employee or
agent, both as to action in his official capacity and as to action in another
capacity while holding such office, and shall inure to the benefit of the heirs,
executors and administrators of such person.
FIFTEENTH: The number of directors constituting the Board of
Directors shall be determined by the Board of Directors, subject to the by-laws
of the Corporation. Any vacancy in the Board of Directors, whether arising from
death, resignation, removal (with or without cause), an increase in the number
of directors or any other cause, may be filled by the vote of either a majority
of the directors then in office, though less than a quorum, or by the
stockholders at the next annual meeting thereof or at a special meeting called
for such purpose. Stockholders may not apply to request that the Delaware Court
of Chancery summarily order an election to be held to fill any vacancies in the
Board of Directors whether or not, at the time of filling any vacancy or any
newly created directorship, the directors then in office shall constitute less
than a majority of the whole Board of Directors as constituted immediately prior
to any such vacancy or increase. Each director so elected shall hold office
until the next
4
<PAGE>
meeting of the stockholders in which the election of directors is in the regular
order of business and until his successor shall have been elected and qualified.
IN WITNESS WHEREOF, I have hereunto set my hand this 18th
day of July, 1996 and I affirm that the foregoing certificate is my act and deed
and that the facts stated herein are true.
/s/ Michael J. Zeidel
------------------------------
Michael J. Zeidel, Sole Incorporator
c/o Orrick, Herrington & Sutcliffe
666 Fifth Avenue
New York, New York 10103
5
<PAGE>
Exhibit 3.2
BY-LAWS
OF
EMERGING GROWTH ACQUISITION CORPORATION I
ARTICLE I
OFFICES
Section 1.1. Registered Office. The registered office of the
Corporation in the State of Delaware shall be located at 1013 Centre Road in the
City of Wilmington, County of New Castle. The name of its registered agent is
Corporation Service Company.
Section 1.2. Other Offices. The Corporation may also have
offices at such other places, both within and without the State of Delaware, as
the Board of Directors may from time to time determine, or the business of the
Corporation may require.
Section 1.3. Books and Records. The books and records of the
Corporation may be kept within or without the State of Delaware as the Board of
Directors may from time to time determine, or the business of the Corporation
may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
Section 2.1. Time and Place of Meetings. All meetings of the
stockholders for the election of directors or for any other purpose shall be
held at such place, either within or without the State of Delaware, on such date
and at such time as may be determined from time to time by the Board of
Directors. Any adjourned session of any meeting of the stockholders shall be
held at the place designated in the vote of adjournment.
Section 2.2. Annual Meeting. The annual meeting of
stockholders shall be held at such date and time as shall be designated from
time to time by the Board of Directors and stated in the notice of the meeting,
at which they shall elect Board of Directors and transact such other business as
may properly come before the meeting.
Section 2.3. Special Meetings. A special meeting of the
stockholders may be called at any time by the Board of Directors upon the
request of any two directors, by the holders of one-third or more of the
outstanding Common Stock, or by the duly elected officers of the Corporation. A
special meeting of the stockholders shall be called by the secretary, or in the
case of the death, absence, incapacity or refusal of the secretary, by an
assistant secretary
<PAGE>
or some other officer, upon application of a majority of the directors. Any such
application shall state the purpose or purposes of the proposed meeting. Any
such call shall state the place, date, hour, and purposes of the meeting.
Section 2.4. Notice of Meetings. Except as otherwise provided
by law, a written notice of each meeting of stockholders stating the place, date
and hour thereof and, in the case of a special meeting, the purposes for which
the meeting is called, shall be given not less than ten nor more than sixty days
before the meeting to each stockholder entitled to vote thereat, and to each
stockholder who, by law, by the certificate of incorporation or by these
by-laws, is entitled to notice, by leaving such notice with him or at his
residence or usual place of business, or by depositing it in the United States
mail, postage prepaid, and addressed to such stockholder at his address as it
appears in the records of the Corporation. Such notice shall be given by the
secretary, or by an officer or person designated by the Board of Directors, or
in the case of a special meeting by the officer calling the meeting. As to any
adjourned session of any meeting of stockholders, notice of the adjourned
meeting need not be given if the time and place thereof are announced at the
meeting at which the adjournment was taken except that if the adjournment is for
more than thirty days or if after the adjournment a new record date is set for
the adjourned session, notice of any such adjourned session of the meeting shall
be given in the manner heretofore described. No notice of any meeting of
stockholders or any adjourned session thereof need be given to a stockholder if
a written waiver of notice, executed before or after the meeting or such
adjourned session by such stockholder, is filed with the records of the meeting
or if the stockholder attends such meeting without objecting at the beginning of
the meeting to the transaction of any business because the meeting is not
lawfully called or convened. Neither the business to be transacted at, nor the
purpose of, any meeting of the stockholders or any adjourned session thereof
need be specified in any written waiver of notice.
Section 2.5. Quorum of Stockholders. At any meeting of the
stockholders a quorum as to any matter shall consist of a majority of the votes
entitled to be cast on the matter, except where a larger quorum is required by
law, by the certificate of incorporation or by these by-laws. Any meeting may be
adjourned from time to time by a majority of the votes properly cast upon the
question, whether or not a quorum is present. If a quorum is present at an
original meeting, a quorum need not be present at an adjourned session of that
meeting. Shares of its own stock belonging to the Corporation or to another
corporation, if a majority of the shares entitled to vote in the election of
directors of such other corporation is held, directly or indirectly, by the
corporation, shall neither be entitled to vote nor be counted for quorum
purposes; provided, however, that the foregoing shall not limit the right of any
corporation to vote stock, including but not limited to its own stock, held by
it in a fiduciary capacity.
Section 2.6. Action by Vote. When a quorum is present at any
meeting, a plurality of the votes properly cast for election to any office shall
elect to such office and a majority of the votes properly cast upon any question
other than an election to an office shall decide the question, except when a
larger vote is required by law, by the certificate of incorporation or by these
by-laws. No ballot shall be required for any election unless requested by a
stockholder present or represented at the meeting and entitled to vote in the
election.
2
<PAGE>
Section 2.7. Action Without a Meeting. Unless otherwise
provided in the certificate of incorporation, any action required or permitted
to be taken by stockholders for or in connection with any corporate action may
be taken without a meeting, without prior notice and without a vote, if a
consent or consents in writing, setting forth the action so taken, shall be
signed by the holders of outstanding stock having not less than the minimum
number of votes that would be necessary to authorize or take such action at a
meeting at which all shares entitled to vote thereon were present and voted and
shall be delivered to the Corporation by delivery to its registered office in
Delaware by hand or certified or registered mail, return receipt requested, to
its principal place of business or to an officer or agent of the Corporation
having custody of the book in which proceedings of meetings of stockholders are
recorded. Each such written consent shall bear the date of signature of each
stockholder who signs the consent. No written consent shall be effective to take
the corporate action referred to therein unless written consents signed by a
number of stockholders sufficient to take such action are delivered to the
Corporation in the manner specified in this paragraph within sixty days of the
earliest dated consent so delivered.
If action is taken by consent of stockholders and in
accordance with the foregoing, there shall be filed with the records of the
meetings of stockholders the writing or writings comprising such consent.
If action is taken by less than unanimous consent of
stockholders, prompt notice of the taking of such action without a meeting shall
be given to those who have not consented in writing and a certificate signed and
attested to by the secretary that such notice was given shall be filed with the
records of the meetings of stockholders.
In the event that the action which is consented to is such as
would have required the filing of a certificate under any provision of the
General Corporation Law of the State of Delaware, if such action had been voted
upon by the stockholders at a meeting thereof, the certificate filed under such
provision shall state, in lieu of any statement required by such provision
concerning a vote of stockholders, that written consent has been given under
Section 228 of said General Corporation Law and that written notice has been
given as provided in such Section 228.
Section 2.8. Proxy Representation. Every stockholder may
authorize another person or persons to act for him by proxy in all matters in
which a stockholder is entitled to participate, whether by waiving notice of any
meeting, objecting to or voting or participating at a meeting, or expressing
consent or dissent without a meeting. Every proxy must be signed by the
stockholder or by his attorney-in-fact. No proxy shall be voted or acted upon
after three years from its date unless such proxy provides for a longer period.
A duly executed proxy shall be irrevocable if it states that it is irrevocable
and if, and only as long as, it is coupled with an interest sufficient in law to
support an irrevocable power. A proxy may be made irrevocable regardless of
whether the interest with which it is coupled is an interest in the stock itself
or an interest in the Corporation generally. The authorization of a proxy may
but need not be limited to specified action, provided, however, that if a proxy
limits its authorization to a meeting or meetings of stockholders, unless
otherwise specifically provided such proxy shall entitle the
3
<PAGE>
holder thereof to vote at any adjourned session but shall not be valid after the
final adjournment thereof.
Section 2.9. Inspectors. The directors or the person presiding
at the meeting may, but need not, appoint one or more inspectors of election and
any substitute inspectors to act at the meeting or any adjournment thereof. Each
inspector, 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 inspectors shall make a report in writing of any
challenge, question or matter determined by them and execute a certificate of
any fact found by them.
Section 2.10. List of Stockholders. The secretary shall
prepare and make, at least ten days before every meeting of stockholders, a
complete list of the stockholders entitled to vote at such meeting, arranged in
alphabetical order and showing the address of each stockholder and the number of
shares registered in his name. The stock ledger shall be the only evidence as to
who are stockholders entitled to examine such list or to vote in person or by
proxy at such meeting.
ARTICLE III
BOARD OF DIRECTORS
Section 3.1. Number. The Board of Directors of the Corporation
shall consist of one or more members. The number of directors may be increased
at any time or from time to time by the stockholders or by the directors by vote
of a majority of the directors then in office. The number of directors may be
decreased to any number permitted by the foregoing at any time either by the
stockholders or by the directors by vote of a majority of the directors then in
office, but only to eliminate vacancies existing by reason of the death,
resignation or removal of one or more directors. Directors need not be
stockholders.
Section 3.2. Tenure. Except as otherwise provided by law, by
the certificate of incorporation or by these by-laws, each director shall hold
office until the next annual meeting of the stockholders in which the election
of directors is in the regular order of business and until his successor is
elected and qualified, or until his earlier death, resignation, removal or
disqualification.
Section 3.3. Powers. The business and affairs of the
Corporation shall be managed by or under the direction of the Board of Directors
who shall have and may exercise all the powers of the Corporation and do all
such lawful acts and things as are not, by law, the
4
<PAGE>
certificate of incorporation or these by-laws, directed or required to be
exercised or done by the stockholders.
Section 3.4. Resignations and Vacancies. Any director may
resign at any time upon written notice to the Corporation. Vacancies and any
newly created directorships resulting from any increase in the number of
directors may be filled by vote of the stockholders at the next annual meeting
thereof or at a special meeting called for such purpose, or by a majority of the
directors then in office, although less than a quorum, or by a sole remaining
director. When one or more directors shall resign from the Board, effective at a
future date, a majority of the directors then in office, including those who
have resigned, shall have power to fill such vacancy or vacancies, the vote or
action by writing thereon to take effect when such resignation or resignations
shall become effective. The directors shall have and may exercise all their
powers notwithstanding the existence of one or more vacancies in their number,
subject to any requirements of law or of the certificate of incorporation or of
these by-laws as to the number of directors required for a quorum or for any
vote or other actions.
Section 3.5. Committees. The Board of Directors may, by vote
of a majority of the whole Board, designate one or more committees, each
committee to consist of one or more of the directors. The Board may designate
one or more directors as alternate members of any such committee who may replace
any absent or disqualified member at any meeting of the committee. In the
absence or disqualification of any member of such committee and his alternate,
if any, the member or members thereof present at any meeting and not
disqualified from voting, whether or not constituting a quorum, may unanimously
appoint another member of the Board of Directors to act at the meeting in the
place of any such absent or disqualified member. Any such committee, to the
extent provided in the resolution of the Board of Directors, shall have and may
exercise all the powers and authority of the Board of Directors in the
management of the business and affairs of the Corporation, including the power
to authorize the seal of the Corporation to be affixed to all papers which
require it, but no such committee shall have the power or authority in reference
to amending the certificate of incorporation (except that a committee may, to
the extent authorized in the resolution or resolutions providing for the
issuance of shares of stock adopted by the Board of Directors, fix the
designations and any of the preferences or rights of such shares relating to
dividends, redemption, dissolution, any distribution of assets of the
Corporation or the conversion into, or the exchange of such shares for, shares
of any other class or classes or any other series of the same or any other class
or classes of stock of the Corporation or fix the number of shares of any series
of stock or authorize the increase or decrease of the shares of any series),
adopting an agreement of merger or consolidation, recommending to the
stockholders the sale, lease or exchange of all or substantially all of the
Corporation's property and assets, recommending to the stockholders a
dissolution of the Corporation or a revocation of a dissolution, or amending the
by-laws of the Corporation; and, unless the resolution, by-laws, or certificate
of incorporation expressly so provide, no such committee shall have the power or
authority to declare a dividend, to authorize the issuance of stock, or to adopt
a certificate of ownership and merger. Except as the Board of Directors may
otherwise determine, any committee may make rules for the conduct of its
business, but unless otherwise provided by the Board of Directors or such rules,
its business shall be conducted as nearly as may be in the same manner as is
provided by these by-laws for the conduct of business by the Board of Directors.
Each
5
<PAGE>
committee shall keep regular minutes of its meetings and report the same to the
Board of Directors upon request.
Section 3.6. Regular Meetings. Regular meetings of the Board
of Directors may be held without call or notice at such places within or without
the State of Delaware and at such times as the Board of Directors may from time
to time determine, provided that notice of the first regular meeting following
any such determination shall be given to absent directors. A regular meeting of
the directors may be held without call or notice immediately after and at the
same place as the annual meeting of stockholders.
Section 3.7. Special Meetings. Special meetings of the Board
of Directors may be held at any time and at any place within or without the
State of Delaware designated in the notice of the meeting, when called by the
chairman of the Board, if any, the president, or by one-third or more in number
of the directors, reasonable notice thereof being given to each director by the
secretary or by the chairman of the Board, if any, the president or any one of
the directors calling the meeting.
Section 3.8. Notice. It shall be reasonable and sufficient
notice to a director to send notice by mail at least forty-eight hours or by
telegram at least twenty-four hours before the meeting addressed to him at his
usual or last known business or residence address or to give notice to him in
person or by telephone at least twenty-four hours before the meeting. Notice of
a meeting need not be given to any director if a written waiver of notice,
executed by him before or after the meeting, is filed with the records of the
meeting, or to any director who attends the meeting without protesting prior
thereto or at its commencement the lack of notice to him. Neither notice of a
meeting nor a waiver of a notice need specify the purposes of the meeting.
Section 3.9. Quorum. At any meeting of the directors, a
majority of the total number of directors then in office shall constitute a
quorum; a quorum shall not in any case be less than one-third of the total
number of directors constituting the whole Board. Any meeting may be adjourned
from time to time by a majority of the votes cast upon the question, whether or
not a quorum is present, and the meeting may be held as adjourned without
further notice.
Section 3.10. Action by Vote. Except as may be otherwise
provided by law, by the certificate of incorporation or by these by-laws, when a
quorum is present at any meeting the vote of a majority of the directors present
shall be the act of the Board of Directors.
Section 3.11. Action Without a Meeting. Any action required or
permitted to be taken at any meeting of the Board of Directors, or any committee
thereof, may be taken without a meeting if all the members of the Board or of
such committee, as the case may be, consent thereto in writing, and such writing
or writings are filed with the minutes of proceedings of the Board or of such
committee. Such consent shall be treated for all purposes as the act of the
Board or of such committee, as the case may be.
Section 3.12. Participation in Meetings by Conference
Telephone. Members of the Board of Directors, or any committee designated by the
Board, may participate in a meeting
6
<PAGE>
of such Board or committee by means of conference telephone or similar
communications equipment by means of which all persons participating in the
meeting can hear each other, or by any other means permitted by law. Such
participation shall constitute presence in person at such meeting.
Section 3.13. Compensation. In the discretion of the Board of
Directors, each director may be paid such fees for his services as director and
be reimbursed for his reasonable expenses incurred in the performance of his
duties as director as the Board of Directors from time to time may determine.
Nothing contained in this section shall be construed to preclude any director
from serving the Corporation in any other capacity and receiving reasonable
compensation therefor.
Section 3.14. Interested Directors and Officers.
(a) No contract or transaction between the Corporation and one
or more of its directors or officers, or between the Corporation and any other
corporation, partnership, association, or other organization in which one or
more of the Corporation's directors or officers are directors or officers, or
have a financial interest, shall be void or voidable solely for this reason, or
solely because the director or officer is present at or participates in the
meeting of the Board or committee thereof which authorizes the contract or
transaction, or solely because his or their votes are counted for such purpose,
if:
(i) the material facts as to his relationship or
interest and as to the contract or transaction are disclosed or are
known to the Board of Directors or the committee, and the Board or
committee in good faith authorizes the contract or transaction by the
affirmative votes of a majority of the disinterested directors, even
though the disinterested directors be less than a quorum; or
(ii) the material facts as to his relationship or
interest and as to the contract or transaction are disclosed or are
known to the stockholders entitled to vote thereon, and the contract or
transaction is specifically approved in good faith by vote of the
stockholders; or
(iii) the contract or transaction is fair as to the
Corporation as of the time it is authorized, approved or ratified, by
the Board of Directors, a committee thereof, or the stockholders.
(b) Common or interested directors may be counted in
determining the presence of a quorum at a meeting of the Board of Directors or
of a committee which authorizes the contract or transaction.
7
<PAGE>
ARTICLE IV
OFFICERS AND AGENTS
Section 4.1. Principal Officers. The principal officers of the
Corporation shall be a president and a secretary, and such other officers, if
any, as the Board of Directors from time to time may, in its discretion, elect
or appoint including, without limitation, a chairman of the Board, one or more
vice presidents and a treasurer. The Corporation may also have such agents, if
any, as the Board of Directors from time to time may in its discretion choose.
Any officer may be but none need be, a director or stockholder. Any two or more
offices may be held by the same person. Any officer or agent of the Corporation
may be required by the Board of Directors to secure the faithful performance of
his duties to the Corporation by giving bond in such amount and with sureties or
otherwise as the Board of Directors may determine.
Section 4.2. Powers. Subject to law, to the certificate of
incorporation and to the other provisions of these by-laws, each officer shall
have, in addition to the duties and powers herein set forth, such duties and
powers as are commonly incident to his office and such additional duties and
powers as the Board of Directors may from time to time designate.
Section 4.3. Election. The officers shall be elected by the
Board of Directors at the first meeting of the Board and annually thereafter. At
any time or from time to time the directors may delegate to any officer their
power to elect or appoint any other officer or any agents.
Section 4.4. Tenure. Each officer shall hold office until his
respective successor is elected and qualified, or until he sooner dies, resigns,
is removed or becomes disqualified. Each agent shall retain his authority at the
pleasure of the directors, or the officer by whom he was appointed or by the
officer who then holds agent appointive power.
Section 4.5. Chairman of the Board of Directors; President and
Vice President. The chairman of the Board, if any, shall have such duties and
powers as shall be designated from time to time by the Board of Directors.
Unless the Board of Directors otherwise specifies, the chairman of the Board, or
if there is none the chief executive officer, shall preside, or designate the
person who shall preside, at all meetings of the stockholders and of the Board
of Directors.
Unless the Board of Directors otherwise specifies, the
president shall be the chief executive officer and shall have direct charge of
all business operations of the Corporation and, subject to the control of the
directors, shall have general charge and supervision of the business of the
Corporation.
Any vice presidents shall have such duties and powers as shall
be set forth in these by-laws or as shall be designated from time to time by the
Board of Directors or by the president.
8
<PAGE>
Section 4.6. Treasurer and Assistant Treasurers. Unless the
Board of Directors otherwise specifies, the treasurer shall be the chief
financial officer of the Corporation and shall be in charge of its funds and
valuable papers, and shall have such other duties and powers as may be
designated from time to time by the Board of Directors or by the president. If
no controller is elected, the treasurer shall, unless the Board of Directors
otherwise specifies, also have the duties and powers of the controller.
Any assistant treasurers shall have such duties and powers as
shall be designated from time to time by the Board of Directors, the president
or the treasurer.
Section 4.7. Secretary and Assistant Secretaries. The
secretary shall record all proceedings of the stockholders, of the Board of
Directors and of committees of the Board of Directors in a book or series of
books to be kept therefor and shall file therein all actions by written consent
of stockholders or directors. In the absence of the secretary from any meeting,
an assistant secretary, or if there be none or he is absent, a temporary
secretary chosen at the meeting, shall record the proceedings thereof. Unless a
transfer agent has been appointed, the secretary shall keep or cause to be kept
the stock and transfer records of the Corporation, which shall contain the names
and record addresses of all stockholders and the number of shares registered in
the name of each stockholder. He shall have such other duties and powers as may
from time to time be designated by the Board of Directors or the president.
Any assistant secretaries shall have such duties and powers as
shall be designated from time to time by the Board of Directors, the president
or the secretary.
ARTICLE V
RESIGNATIONS AND REMOVALS
Section 5.1. Any director or officer may resign at any time by
delivering his resignation in writing to the chairman of the Board, if any, the
president, or the secretary or to a meeting of the Board of Directors. Such
resignation shall be effective upon receipt unless specified to be effective at
some other time, and without in either case the necessity of it being accepted
unless the resignation shall so state. A director (including persons elected by
directors to fill vacancies in the Board) may be removed from office with or
without cause by the vote of the holders of a majority of the shares issued and
outstanding and entitled to vote in the election of directors. The Board of
Directors may at any time remove any officer either with or without cause. The
Board of Directors may at any time terminate or modify the authority of any
agent. No director or officer resigning and (except where a right to receive
compensation shall be expressly provided in a duly authorized written agreement
with the Corporation) no director or officer removed shall have any right to any
compensation as such director or officer for any period following his
resignation or removal, or any right to damages on account of such removal,
whether his compensation be by the month or by the year or otherwise; unless, in
the case of a resignation, the directors, or, in the case of removal, the body
acting on the removal, shall in their or its discretion provide for
compensation.
9
<PAGE>
ARTICLE VI
VACANCIES
Section 6.1. If the office of the president or the treasurer
or the secretary becomes vacant, the directors may elect a successor by vote of
a majority of the directors then in office. If the office of any other officer
becomes vacant, any person or body empowered to elect or appoint that officer
may choose a successor. Each such successor shall hold office for the unexpired
term and, in the case of the president, the treasurer and the secretary, until
his successor is chosen and qualified or in each case until he sooner dies,
resigns, is removed or becomes disqualified. Any vacancy of a directorship shall
be filled as specified in Section 3.4 of these by-laws.
ARTICLE VII
CAPITAL STOCK
Section 7.1. Stock Certificates. Each stockholder shall be
entitled to a certificate stating the number and the class and the designation
of the series, if any, of the shares held by him, in such form as shall, in
conformity to law, the certificate of incorporation and the by-laws, be
prescribed from time to time by the Board of Directors. Such certificate shall
be signed by the chairman or vice chairman of the Board, if any, or the
president or a vice president and by the treasurer or an assistant treasurer or
by the secretary or an assistant secretary. Any or all of the signatures on such
certificate may be a facsimile. In case an officer, transfer agent, or registrar
who has signed or whose facsimile signature has been placed upon such
certificate shall have ceased to be such officer, transfer agent, or registrar
before such certificate is issued, it may be issued by the Corporation with the
same effect as if he were such officer, transfer agent, or registrar at the date
of its issue.
Section 7.2. Loss of Certificates. In the case of the alleged
theft, loss, destruction or mutilation of a certificate of stock, the
Corporation may issue a new certificate of stock or uncertificated shares in
place thereof, upon such terms, including receipt from the owner of such
certificate, or his legal representative, of a bond sufficient to indemnify the
Corporation against any claim that may be made against it on account thereof, as
the Board of Directors may prescribe.
ARTICLE VIII
TRANSFER OF SHARES OF STOCK
Section 8.1. Transfer on Books. Subject to the restrictions,
if any, stated or noted on the stock certificate, shares of stock may be
transferred on the books of the Corporation by the surrender to the Corporation
or its transfer agent of the certificate therefor properly endorsed or
accompanied by a written assignment and power of attorney properly
10
<PAGE>
executed, with necessary transfer stamps affixed, and with such proof of the
authenticity of signature as the Board of Directors or the transfer agent of the
Corporation may reasonably require. Except as may be otherwise required by law,
by the certificate of incorporation or by these by-laws, the Corporation shall
be entitled to treat the record holder of stock as shown on its books as the
owner of such stock for all purposes, including the payment of dividends and the
right to receive notice and to vote or to give any consent with respect thereto
and to be held liable for such calls and assessments, if any, as may lawfully be
made thereon, regardless of any transfer, pledge or other disposition of such
stock until the shares have been properly transferred on the books of the
Corporation.
It shall be the duty of each stockholder to notify the
Corporation of his post office address and any and all changes thereto.
Section 8.2. Record Date and Closing Transfer Books. In order
that the Corporation may determine the stockholders entitled to notice of or to
vote at any meeting of stockholders or any adjournment thereof, the Board of
Directors may fix a record date, which record date shall not precede the date
upon which the resolution fixing the record date is adopted by the Board of
Directors, and which record date shall not be more than sixty nor less than ten
days before the date of such meeting. If no such record date is fixed by the
Board of Directors, the record date for determining the stockholders entitled to
notice of or to vote at a meeting of stockholders shall be at the close of
business on the day next preceding the day on which notice is given, or, if
notice is waived, at the close of business on the day next preceding the day on
which the meeting is held. A determination of stockholders of record entitled to
notice of or to vote at a meeting of stockholders shall apply to any adjournment
of the meeting; provided, however, that the Board of Directors may fix a new
record date for the adjourned meeting.
In order that the Corporation may determine the stockholders
entitled to consent to corporate action in writing without a meeting, the Board
of Directors may fix a record date, which record date shall not precede the date
upon which the resolution fixing the record date is adopted by the Board of
Directors, and which date shall not be more than ten days after the date upon
which the resolution fixing the record date is adopted by the Board of
Directors. If no such record date has been fixed by the Board of Directors, the
record date for determining stockholders entitled to consent to corporate action
in writing without a meeting, when no prior action by the Board of Directors is
required by the General Corporation Law of the State of Delaware, shall be the
first date on which a signed written consent setting forth the action taken or
proposed to be taken is delivered to the Corporation by delivery to its
registered office in Delaware by hand or by certified or registered mail, return
receipt requested, to its principal place of business or to an officer or agent
of the Corporation having custody of the book in which proceedings of meetings
of stockholders are recorded. If no record date has been fixed by the Board of
Directors and prior action by the Board of Directors is required by the General
Corporation Law of the State of Delaware, the record date for determining
stockholders entitled to consent to corporate action in writing without a
meeting shall be at the close of business on the day on which the Board of
Directors adopts the resolution taking such prior action.
In order that the Corporation may determine the stockholders
entitled to receive payment of any dividend or other distribution or allotment
of any rights or to exercise any rights
11
<PAGE>
in respect of any change, conversion or exchange of stock, or for the purpose of
any other lawful action, the Board of Directors may fix a record date, which
record date shall not precede the date upon which the resolution fixing the
record date is adopted, and which record date shall be not more than sixty days
prior to such payment, exercise or other action. If no such record date is
fixed, the record date for determining stockholders for any such purpose shall
be at the close of business on the day on which the Board of Directors adopts
the resolution relating thereto.
ARTICLE IX
CORPORATE SEAL
Section 9.1. Subject to alteration by the directors, the seal
of the Corporation shall consist of a flat-faced circular die with the word
"Delaware" and the name of the Corporation cut or engraved thereon, together
with such other words, dates or images as may be approved from time to time by
the directors.
ARTICLE X
EXECUTION OF PAPERS
Section 10.1. Except as the Board of Directors may generally
or in particular cases authorize the execution thereof in some other manner, all
deeds, leases, transfers, contracts, bonds, notes, checks, drafts or other
obligations made, accepted or endorsed by the Corporation shall be signed by the
Chairman of the Board, if any, the president, a vice president or the secretary.
ARTICLE XI
FISCAL YEAR
Section 11.1. The fiscal year of the Corporation shall end on
December 31.
ARTICLE XII
AMENDMENTS
Section 12.1. These by-laws may be adopted, amended or
repealed by vote of a majority of the directors then in office, if such power is
conferred upon the Board by the certificate of incorporation or by law, or by
vote of a majority of the stock outstanding and entitled to vote. Any by-law,
whether adopted, amended or repealed by the stockholders or directors, may be
amended or reinstated by the stockholders or the directors.
12
<PAGE>
FORM OF
ESCROW AGREEMENT
AGREEMENT made this __ day of October, 1996, by and among the Company
whose name and address appear on the Information Sheet (as defined herein)
attached to this Agreement and Continental Stock Transfer & Trust Company (A
Limited Purpose Trust Company) with offices at 2 Broadway, New York, New York
10004 (the "Escrow Agent").
W I T N E S S E T H:
WHEREAS, the Company, proposes to offer for sale (the "Offering")
certain securities of the Company in the form of shares of Common Stock (the
"Shares"), pursuant to Rule 419 of the Securities and Exchange Act of 1933, as
amended, as set forth on the Information Sheet. The offer and sale of the Shares
are being registered under the Securities Act. The Offering is being managed by
Keane Securities Co. Inc., the Qualified Independent Underwriter (the "QIU").
The purchase price per Share is $.88 as determined by the Company and the QIU.
WHEREAS, the Company and the QIU propose to establish an escrow account
(the "Escrow Account"), to which subscription monies which are received by the
Escrow Agent from the Company or the QIU in connection with the Initial Public
Offering of the Company's securities are to be credited, and the Escrow Agent is
willing to establish the Escrow Account on the terms and subject to the
conditions hereinafter set forth; and
WHEREAS, the Escrow Agent has an agreement with Chase Manhattan Bank to
establish a special bank account into which the subscription monies, which are
received by the Escrow Agent from the Company or the QIU and credited to the
Escrow Account, are to be deposited;
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, the parties hereto hereby agree as follows:
1. Information Sheet. Each capitalized term not otherwise defined in
this Agreement shall have the meaning set forth for such term on the information
sheet which is attached to this Agreement as Exhibit A and is incorporated by
reference herein and made a part hereof (the "Information Sheet").
<PAGE>
2. Establishment of the Bank Account.
2.1 The Escrow Agent shall establish a non-interest-bearing bank
account at the branch of Chase Manhattan Bank selected by the Escrow Agent, and
bearing the designation set forth on the Information Sheet (heretofore defined
as the "Bank Account"). The purpose of the Bank Account is for (a) the deposit
of all subscription monies (checks, cash or wire transfers) which are received
by the Company or the QIU from prospective purchasers of the Shares and are
delivered by the Company or the QIU to the Escrow Agent, (b) the holding of
amounts of subscription monies which are collected through the banking system,
and (c) the disbursement of collected funds, all as described herein.
2.2 The initial offering period (the "Initial Offering Period"), which
shall be deemed to commence on the date of the prospectus for the Company's
initial public offering, shall consist of the number of calendar days or
business days set forth on the Information Sheet. The Initial Offering Period
shall be extended by an Extension Period only if the Escrow Agent shall have
received written notice thereof at least three (3) business days prior to the
expiration of the Initial Offering Period. The Extension Period, which shall be
deemed to commence on the next calendar day following the expiration of the
Initial Offering Period, shall consist of the number of calendar days or
business days set forth on the Information Sheet (the period commencing on the
date of the Prospectus for the Company's initial public offering, as the same
may be extended, is referred to as the "Offering Period"). The last day of the
Initial Offering Period, or the last day of the Extension Period (if the Escrow
Agent has received written notice thereof as hereinabove provided), is referred
to herein as the "Termination Date." After the Termination Date, neither the
Company nor the QIU shall deliver, and the Escrow Agent shall not accept, any
additional amounts representing additional payments by prospective purchasers.
3. Deposits to the Bank Account.
3.1 The Company and the QIU shall promptly deliver to the Escrow Agent
all monies which they receive from prospective purchasers of the Shares, which
monies shall be in the form of checks, cash, or wire transfers. Upon the Escrow
Agent's receipt of such monies, they shall be credited to the Escrow Account.
All checks delivered to the Escrow Agent shall be made payable to "CST&T AAF
Emerging Growth Acquisition Corporation I." Any check payable other than to the
Escrow Agent as required hereby shall be returned to the prospective purchaser,
or if the Escrow Agent has insufficient information to do so, then to the
Company or the QIU (together with any Subscription Information, as such term is
defined below, or other documents delivered therewith) by noon of the next
business day following receipt of such check by the Escrow Agent, and such check
shall be deemed not to have been delivered to the Escrow Agent pursuant to the
terms of this Agreement; provided, however, that any check delivered to the
Escrow Agent which is made payable to "Emerging Growth Acquisition Corporation
I" or the like and endorsed by the Escrow Agent "for deposit only" into the Bank
Account and so deposited into the Bank Account, shall be considered Escrow
Amounts (as defined below) for the purposes of this Agreement.
2
<PAGE>
3.2 Promptly after receiving subscription monies as described in
Section 3.1 hereof, the Escrow Agent shall deposit the same into the Bank
Account. Amounts of monies so deposited are hereinafter referred to as "Escrow
Amounts." The Escrow Agent shall cause Chase Manhattan Bank to process all
Escrow Amounts for collection through the banking system. Simultaneously with
each deposit to the Escrow Account, the Company or the QIU shall inform the
Escrow Agent in writing of the name and address of the prospective purchaser,
the social security or taxpayer identification number of the prospective
purchaser, the amount of Shares subscribed for by the prospective purchaser, and
the aggregate dollar amount of such subscription (collectively, the
"Subscription Information"), which shall be retained by the Escrow Agent as set
forth herein.
3.3 The Escrow Agent shall not be required to accept for credit to the
Escrow Account or for deposit into the Bank Account checks which are not
accompanied by the appropriate Subscription Information. Wire transfers and cash
representing payments by prospective purchasers shall not be deemed deposited in
the Escrow Account until the Escrow Agent has received in writing the
Subscription Information required with respect to such payments.
3.4 The Escrow Agent shall not be required to accept in the Escrow
Account any amounts representing payments by prospective purchasers, whether by
check, cash or wire, except during the Escrow Agent's regular business hours.
3.5 As used herein, the term "Fund" shall refer only to those Escrow
Amounts which have been deposited in the Bank Account, which have cleared the
banking system and which have been collected by the Escrow Agent.
3.6 If the proposed offering is terminated before the Termination Date,
the Escrow Agent shall refund any portion of the Fund prior to disbursement of
the Fund in accordance with Article 4 hereof upon instructions in writing signed
by the Company and the QIU.
4. Disbursement from the Bank Account.
4.1 The Escrow Agent shall promptly disburse the Fund by drawing checks
upon or issuing wires from the Bank Account in accordance with instructions in
writing signed by the Company and the QIU as to the disbursement of the Fund, in
such form as attached to this Agreement as Exhibit B (the "Instructions"),
promptly after it receives such Instructions. The Escrow Agent shall be entitled
to Escrow Agent Fees as set forth on the Information Sheet.
4.2 Upon disbursement of the Fund pursuant to the terms of this Article
4, the Escrow Agent shall be relieved of all further obligations and released
from all liability under this Agreement. It is expressly agreed and understood
that in no event shall the aggregate amount of payments made by the Escrow Agent
exceed the amount of the Fund.
3
<PAGE>
5. Rights, Duties and Responsibilities of Escrow Agent. It is
understood and agreed that the duties of the Escrow Agent are purely ministerial
in nature, and that:
5.1 The Escrow Agent shall notify the Company and the QIU on a daily
basis, of the Escrow Amounts which have been deposited in the Bank Account and
of the amounts, constituting the Fund, which have cleared the banking system and
have been collected by the Escrow Agent.
5.2 The Escrow Agent shall not be required to accept from the Company
or the QIU any Subscription Information pertaining to prospective purchasers
unless such Subscription Information is accompanied by checks, cash, or wire
transfers meeting the requirements of Section 3.1 hereof, nor shall the Escrow
Agent be required to keep records of any information with respect to payments
deposited by the Company or the QIU except with respect to the Subscription
Information; however, the Escrow Agent shall notify the Company or the QIU, as
applicable, within a reasonable time of any discrepancy between the amount set
forth in any Subscription Information and the amount delivered to the Escrow
Agent therewith. Such amount need not be accepted for deposit in the Escrow
Account until such discrepancy has been resolved.
5.3 The Escrow Agent shall be under no duty or responsibility to
enforce collection of any check delivered to it hereunder. The Escrow Agent,
within a reasonable time, shall return to the Company or the QIU any check
received which is dishonored, together with the Subscription Information, if
any, which accompanied such check.
5.4 The Escrow Agent shall be entitled to rely upon the accuracy, act
in reliance upon the contents, and assume the genuineness of any notice,
instruction, certificate, signature, instrument or other document which is given
to the Escrow Agent pursuant to this Agreement without the necessity of the
Escrow Agent verifying the truth or accuracy thereof. The Escrow Agent shall not
be obligated to make any inquiry as to the authority, capacity, existence or
identity of any person purporting to give any such notice or instructions or to
execute any such certificate, instrument or other document.
5.5 If the Escrow Agent is uncertain as to its duties or rights
hereunder or shall receive instructions with respect to the Bank Account, the
Escrow Amounts or the Fund which, in its sole determination, are in conflict
either with other instructions received by it or with any provision of this
Agreement, it shall be entitled to hold the Escrow Amounts, the Fund, or a
portion thereof, in the Bank Account pending the resolution of such uncertainty
to the Escrow Agent's sole satisfaction, by final judgment of a court or courts
of competent jurisdiction or otherwise; or the Escrow Agent, at its sole
discretion, may deposit the Fund (and any other Escrow Amounts that thereafter
become part of the Fund) with the clerk of a court of competent jurisdiction in
a proceeding to which all parties in interest are joined. Upon the deposit by
the
4
<PAGE>
Escrow Agent of the Fund with the clerk of any court, the Escrow Agent shall be
relieved of all further obligations and released from all liability hereunder.
5.6 The Escrow Agent shall not be liable for any action taken or
omitted hereunder, or for the misconduct of any employee, agent or attorney
appointed by it, except in the case of willful misconduct or gross negligence.
The Escrow Agent shall be entitled to consult with counsel of its own choosing
and shall not be liable for any action taken, suffered or omitted by it in
accordance with the advice of such counsel.
5.7 The Escrow Agent shall have no responsibility at any time to
ascertain whether or not any security interest exists in the Escrow Amounts, the
Fund or any part thereof or to file any financing statement under the Uniform
Commercial Code with respect to the Fund or any part thereof.
6. Amendment; Resignation. This Agreement may be altered or amended
only with the written consent of the Company, the QIU and the Escrow Agent. The
Escrow Agent may resign for any reason upon three (3) business days' written
notice to the Company and the QIU. Should the Escrow Agent resign as herein
provided, it shall not be required to accept any deposit, make any disbursement
or otherwise dispose of the Escrow Amounts or the Fund, but its only duty shall
be to hold the Escrow Amounts until they clear the banking system and the Fund
for a period of not more than five (5) business days following the effective
date of such resignation, at which time (a) if a successor escrow agent shall
have been appointed and written notice thereof (including the name and address
of such successor escrow agent) shall have been given to the resigning Escrow
Agent by the Company and the QIU and such successor escrow agent, then the
resigning Escrow Agent shall pay over to the successor escrow agent the Fund,
less any portion thereof previously paid out in accordance with this Agreement;
or (b) if the resigning Escrow Agent shall not have received written notice
signed by the Company and the QIU and a successor escrow agent, then the
resigning Escrow Agent shall promptly refund the amount in the Fund to each
prospective purchaser, without interest thereon or deduction therefrom, and the
resigning Escrow Agent shall promptly notify the Company and the QIU in writing
of its liquidation and distribution of the Fund; whereupon, in either case, the
Escrow Agent shall be relieved of all further obligations and released from all
liability under this Agreement. Without limiting the provisions of Article 8
hereof, the resigning Escrow Agent shall be entitled to be reimbursed by the
Company for any reasonable expenses incurred in connection with its resignation,
transfer of the Fund to a successor escrow agent or distribution of the Fund
pursuant to this Article 6.
7. Representations and Warranties. The Company hereby represents and
warrants to the Escrow Agent that, to its knowledge:
5
<PAGE>
7.1 No party other than the parties hereto and the prospective
purchasers have, or shall have, any lien, claim or security interest in the
Escrow Amounts or the Fund or any part thereof.
7.2 No financing statement under the Uniform Commercial Code is on file
in any jurisdiction claiming a security interest in or describing (whether
specifically or generally) the Escrow Amounts or the Fund or any part thereof.
7.3 The Subscription Information submitted with each deposit shall, at
the time of submission and at the time of the disbursement of the Fund, be
deemed a representation and warranty that such deposit represents a bona fide
payment by the purchaser described therein for the amount of Shares set forth in
such Subscription Information.
7.4 All of the information contained in the Information Sheet is, as of
the date hereof, and will be, at the time of any disbursement of the Fund, true
and correct.
8. Fees and Expenses. The Escrow Agent shall be entitled to the Escrow
Agent Fees set forth on the Information Sheet, payable as and when stated
therein. In addition, the Company agrees to reimburse the Escrow Agent for any
reasonable expenses incurred in connection with the Escrow Agent's performance
under this Agreement, including, but not limited to, reasonable counsel fees.
The Escrow Agent shall have a lien upon the Fund to the extent of its fees for
services as Escrow Agent.
9. Indemnification and Contribution.
9.1 The Company agrees to indemnify the Escrow Agent and its officers,
directors, employees, agents and shareholders (collectively referred to as the
"Indemnitees") against, and hold them harmless of and from, any and all loss,
liability, cost, damage and expense, including, without limitation, reasonable
counsel fees, which the Indemnitees may suffer or incur by reason of any action,
claim or proceeding brought against the Indemnitees arising out of or relating
in any way to this Agreement or any transaction to which this Agreement relates,
unless such action, claim or proceeding is the result of the willful misconduct
or gross negligence of the Indemnitees.
9.2 If the indemnification provided for in Section 9.1 is applicable,
but for any reason is held to be unavailable, the Indemnitors shall contribute
such amounts as are just and equitable to pay, or to reimburse the Indemnitees
for, the aggregate of any and all losses, liabilities, costs, damages and
expenses, including, without limitation, reasonable counsel fees, actually
incurred by the Indemnitees as a result of or in connection with, and any amount
paid in settlement of, any action, claim or proceeding arising out of or
relating in any way to any actions or omissions of the Indemnitors.
6
<PAGE>
9.3 The provisions of this Article 9 shall survive any termination of
this Agreement, whether by disbursement of the Fund, resignation of the Escrow
Agent or otherwise.
10. Governing Law and Assignment. This Agreement shall be construed in
accordance with and governed by the laws of the State of New York and shall be
binding upon the parties hereto and their respective successors and assigns;
provided, however, that any assignment or transfer by any party of its rights
under this Agreement or with respect to the Escrow Amounts or the Fund shall be
void as against the Escrow Agent unless: (a) written notice thereof shall be
given to the Escrow Agent; and (b) the Escrow Agent shall have consented in
writing to such assignment or transfer.
11. Notices. All notices required to be given in connection with this
Agreement shall be sent by registered or certified mail, return receipt
requested, or by hand delivery with receipt acknowledged, or by the Express Mail
service offered by the United States Post Office, and addressed, if to the
Company, at its respective address set forth on the Information Sheet, and if to
the Escrow Agent, at its address set forth above, to the attention of the Trust
Department.
12. Severability. If any provision of this Agreement or the application
thereof to any person or circumstance shall be determined to be invalid or
unenforceable, the remaining provisions of this Agreement or the application of
such provision to persons or circumstances other than those to which it is held
invalid or unenforceable shall not be affected thereby and shall be valid and
enforceable to the fullest extent permitted by law.
13. Execution in Several Counterparts. This Agreement may be executed
in several counterparts or by separate instruments, and all of such counterparts
and instruments shall constitute one agreement, binding on all of the parties
hereto.
14. Entire Agreement. This Agreement constitutes the entire agreement
between the parties hereto with respect to the subject matter hereof and
supersedes all prior agreements and understandings (written or oral) of the
parties in connection therewith.
7
<PAGE>
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the day and year first above written.
EMERGING GROWTH ACQUISITION CONTINENTAL STOCK TRANSFER
CORPORATION I, & TRUST COMPANY,
the Company as Escrow Agent
By: _____________________________ By: _____________________________
Name: Name:
Title: Title:
KEANE SECURITIES CO., INC.
as Qualified Independent Underwriter
By: ____________________________________
Name:
Title:
8
<PAGE>
EXHIBIT A
ESCROW AGREEMENT INFORMATION SHEET
1. The Company
Name: Emerging Growth Acquisition Corporation I
Address: 660 Steamboat Road
Greenwich, CT 06830
Jurisdiction of incorporation or organization: Delaware
2. The Qualified Independent Underwriter
Name: Keane Securities Company, Inc.
Address: Fifty Broadway
New York, NY 10004
Jurisdiction of incorporation or organization. Delaware
3. The Shares
Description of the Shares to be offered: One hundred sixty-six thousand
three hundred thirty-two (166,332) Shares of Common Stock, no par value.
The purchase price per Share is $.88.
4. Plan of Distribution of the Shares
Offering Period: 30 calendar days or the sale of all Shares.
Extension Period: if any, 30 calendar days.
Closing period: 7 business days after the closing of the Offering Period
or thereafter as soon as the Escrow Amounts have cleared the banking
system in the normal course of business.
5. Term of Escrow Agreement
Offering Period, Extension Period, if any, and Closing Period
6. Title of Escrow Account:
CST&T AA Emerging Growth Acquisition Corporation I
7. Escrow Agent Fees
Amount due on execution of the Escrow Agreement $1,000 and $1,000 upon
completion of the escrow, fee includes one closing
Fee for each additional closing: $500
Fee for each check disbursed pursuant to the terms of the Escrow
Agreement: $10.00
Fee for each check returned pursuant to the terms of the Escrow
Agreement: $10.00
<PAGE>
EXHIBIT B
FORM OF AUTHORIZATION
CONTINENTAL STOCK TRANSFER & TRUST COMPANY
2 Broadway
New York, New York 10004
TO WHOM IT MAY CONCERN:
The undersigned hereby direct you to issue checks or wire funds upon
presentation of wire instructions from the CST&T f/b/o EGACI Escrow Account as
follows:
Name Amount
---- ------
1. Keane Securities Co., Inc. $15,000
Representing the fee payable to the
Qualified Independent Underwriter
for services and expenses rendered.
2. Emerging Growth Acquisition Corporation I $
Representing the proceeds of the Initial
Public Offering of the Company's
securities.
3. EGACI Escrow Account established pursuant $
to Rule 419 of the Securities Act of 1933, as
amended.
Representing 90% of the net process of the
Initial Public Offering of the Company's
Securities.
Date: ______________, 1996
EMERGING GROWTH ACQUISITION CORPORATION I
_____________________________________________
Name:
Title:
KEANE SECURITIES CO., INC.
______________________________________________
Name:
Title:
<PAGE>
Exhibit 23.2
[Letterhead of Arnold G. Greene CPA]
CONSENT OF INDEPENDENT ACCOUNTANT
To The Board of Directors of
Emerging Growth Acquisition Corporation I
I have issued my report dated October 11, 1996 accompanying the financial
statements of Emerging Growth Acquisition Corporation I, included in the
Registration Statement on Form SB-2 and the related Prospectus (the Registration
Statement).
I consent to the use of my report, as stated above in the Registration
Statement. I also consent to the use of my name and the statements with respect
to me as appearing under the heading "Experts" in the Registration Statement.
Arnold G. Greene
/s/ Arnold G. Greene
- --------------------
New York, New York
October 12, 1996
<PAGE>
[Letterhead of Orrick, Herrington & Sutcliffe LLP]
WRITER'S DIRECT LINE
(212) 506-5141
November 6, 1996
VIA EDGAR
- ---------
Securities and Exchange Commission
Judiciary Plaza
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: Emerging Growth Acquisition Corporation I
on Form SB-2 for Registration of Common Stock
Ladies and Gentlemen:
On behalf of Emerging Growth Acquisition Corporation I, a
Delaware corporation (the "Company"), we hereby submit in electronic format for
filing with the Securities and Exchange Commission (the "Commission"), pursuant
to the Securities Act of 1933, as amended (the "Securities Act"), one complete
copy of the Company's Registration Statement on Form SB-2 (the "Registration
Statement") for the registration of 166,332 shares of the Company's Common
Stock, par value $0.001 per share, together with one complete copy of the
exhibits listed in the Registration Statement as filed therewith.
The Company has previously transmitted to Mellon Bank a
certified check in the amount of $100.00 in payment of the applicable
registration fee.
Should any member of the Commission's staff have any questions
concerning the enclosed materials or desire any further information or
clarification with respect to the Registration Statement, please do not hesitate
to contact me (tel: 212-506-5141) or Rubi Finkelstein of this office (tel:
212-506-5380).
Very truly yours,
/s/ Michael J. Zeidel
---------------------------
MJZ:akr Michael J. Zeidel
Enclosures
cc: Michael S. Jacobs
Walter D. O'Hearn Jr.
Rubi Finkelstein, Esq.
