U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10SB
GENERAL FORM FOR REGISTRATION OF SECURITIES
OF
SMALL BUSINESS ISSUERS
Under Section 12(b) or (g) of
The Securities Exchange Act of 1934
MEGA HOLDING CORP.
(Name of Small Business Issuer in its charter)
New York 13-2793653
(State or other jurisdiction (I.R.S. Employer ID No.)
of incorporation or organization)
278A New Dorp Lane, Staten Island, New York 10306
(Address of principal executive offices)
Issuer's telephone number (718) 667-9117
Securities to be registered under Section 12(b) of the Act: None
Title of each class Name of each exchange on which
to be so registered each class is to be registered
Not applicable Not Applicable
Securities to be registered under Section 12(g) of the Act:
Common Stock, $.01 par value
Title of Class
<PAGE>
MEGA HOLDING CORP.
Form 10SB
Table of Contents Page
PART I
Item 1. Description of Business 1
Item 2. Management's Discussion and Analysis 4
or Plan of Operations
Item 3. Description of Property 4
Item 4. Security Ownership of Certain Beneficial 5
Owners and Management
Item 5. Directors, Executive Officers, Promoters
and Control Persons 6
Item 6. Executive Compensation 7
Item 7. Certain Relationships and Related Transactions 8
Item 8. Description of Securities 8
PART II
Item 1. Market Price of and Dividends on the Registrant's
Common Equity and Other Stockholder 8
Matters
Item 2. Legal Proceedings 9
Item 3. Changes in and Disagreements with Accountants 9
Item 4. Recent Sales of Unregistered Securities 9
Item 5. Indemnification of Directors and Officers 9
PART III
Item 1. Index to Exhibits 9
Item 2. Description of Exhibits 9
PART F/S
Financial Statements Fl
Signature Page
<PAGE>
Item 1. DESCRIPTION OF BUSINESS
Business Development
Mega Holding Corp. was incorporated in the State of New York as Serina-Denise
Associates, Inc. on March 31, 1970, with an authorized capitalization of 200 of
common stock shares without par value. On October 26, 1973, Serina-Denise
Associates, Inc. changed its name to Mega Holding Corp. (the "Company") and
increased its authorized capital to 2,000,000 shares of common stock, $.01 par
value.
On or about November 17, 1981, Real-Med Industries, Inc. ("Real-Med"), a
publicly held corporation, acquired all of the Company's issued and outstanding
shares in exchange for the issuance of 4,000,000 of Real-Med's authorized but
unissued shares on the basis of 26.663 shares of Real-Med for 1 share of the
Company. Contemporaneous with this transaction, Real-Med effected a name change
to Mega Energy Corp. and increased its authorized capital to 20,000,000 shares,
$.01 par value.
On or about June 1, 1983, Mega Energy Corp., changed its name to Megatron
Holding Corp. ("Megatron"), amended its certificate of incorporation to increase
the number of authorized shares to 200,000,000 and approved a forward
stock-split of 10 for 1. In 1986, Megatron effected a 1 for 20 reverse split of
all of its outstanding shares and entered into an agreement with an individual
to acquire various of his assets in consideration for the issuance of 15,000,000
of its authorized but unissued common shares such that at the conclusion of the
transaction, there were 17,500,000 issued and outstanding shares of Megatron. On
or about February 20, 1987, the Company's Board of Directors and Shareholders
voted to amend the Certificate of Incorporation to increase the Company's
authorized capital to 20,000,000 shares of common stock $.01 par value. From and
after such date, Management of the Company operated on the assumption that the
Certificate of Amendment to the Certificate of Incorporation had been duly
filed, and that the Company was authorized to issue 20,000,000 shares of common
stock $.01 par value. Accordingly, based on the assumption that the Certificate
of Amendment had been duly filed, the Company issued 3,615,000 shares of its
common stock in the following transactions.
On or about February 20, 1987, certain shareholders of Megatron returned 32% of
their respective shares of Megatron to the Megatron's Treasury and agreed to a 1
for 20 reverse stock split, and in exchange, received an equivalent number of
the Company's shares. In June 1988, Interactive Businesses, Inc., a Delaware
corporation ("Interactive") issued a total of 3,615,000 of its authorized but
unissued common shares to acquire all of the issued and outstanding shares of
the Company. With the consent of Megatron, the Mega Holding Corp. name was
reactivated. Thereafter, certain shareholders of Interactive donated their
Interactive shares to Interactive's Treasury, and received in exchange
therefore, the equivalent number of shares of the Company held by Interactive.
As a result of such transactions, the Company presently has 267 shareholders of
record with a total of 3,615,000 shares outstanding. On November 19, 1996 the
Company filed a Certificate of Amendment to the Certificate of Incorporation
memorializing the Amendment which had been approved in 1987, increasing the
Company's authorized capital to 20,000,000 shares of common stock $.01 par
value.
<PAGE>
Business of Issuer
Since 1987, the Company has been licensed by the New York State Banking
Department as a mortgage broker, dealing in both residential and commercial
mortgages. The Company's license is renewed annually upon payment of the
appropriate licensing fee. The Company also conducts commercial mortgage
brokerage throughout the United States on a co-brokerage basis with brokers who
are licensed to do business in such states. The Company's fees for its services
as a mortgage broker vary with each transaction. The fees are computed as a
percentage (point) of the amount of the mortgage. The number of points charged
vary with each transaction depending on a variety of factors such as, the
applicant's credit, value of the property and term and type of mortgage loan.
The Company also provides investment banking services and acts as a financial
consultant. Such services include arranging financing for private placements,
mergers and acquisitions and rendering strategic business advisory services to
businesses. Most of the Company's clients use a combination of these services.
For example, the Company may raise capital for a given client and receive fees
for such service and then continue to participate with the client in a
consulting role, receiving additional fees for such services. Very often the
Company's fees are taken as stock in the client company or the fees are a
combination of cash and stock. In addition, the Company may begin a relationship
with a client on an advisory basis and proceed to provide acquisition or
financing services to the client.
In the process of providing financing activities and investment banking
services, the Company typically performs due diligence and assists the client in
preparing business plans, which plans include an analysis of the client's
business, its history, the market for its products, the competitive environment
in which the client operates and a breakdown of how the funds will be used.
Funds are raised through private placements to select groups of institutional
investors and/or sophisticated individual investors who conduct their own
investigations prior to participating.
The Company's investment banking services are generally not dependent upon a
single client or a few clients, the loss of one or more of which could have a
material adverse effect on the business and operations of the Company. Thus, the
Company's revenues from investment banking and mortgage banking are not
dependent on any one or few clients on an ongoing basis from year to year.
2
<PAGE>
Investment banking and mortgage banking revenues and sales activities are
generated by the Company's executive officers through personal contacts. The
Company conducts no advertising. All its clients come from referrals from former
clients, from attorneys and accountants who have been involved in transactions
with the Company on behalf of clients or other brokers, and, from time to time,
various banks with which the Company does business.
The Company encounters significant competition in all aspects of its business
and competes directly with many other mortgage brokers and investment banking
firms, a significant number of which are larger and more widely known than the
Company. Such other companies may offer their clients a more extensive range of
financial services, have substantially greater financial resources, and may have
greater operating efficiency than the Company. In addition, many of the larger
companies with whom the Company competes are able to dedicate significant
resources to the extent of advertising, active solicitation of potential clients
and distribution of investment research publications (the clarity of which are
considered in the investment banking industry to be important to business
development and retention of clients). The Company also competes with a number
of small regional investment firms which may offer a wider range of services
than the Company.
The Company's business and revenues are determined by consummation of
contemplated transactions and, given the foregoing, are not necessarily
seasonal.
As of December 31, 1995, the Company employed seven full-time employees at its
sales office located in Staten Island, New York. All of the employees are
executives of the Company.
In 1973, the Company purchased a coal mine located in Palisades Colorado. The
Company thereafter disposed of its interest in such mine to Powderhorn
International, Inc., a professional mine operator, retaining a royalty interest.
In September, 1994, a dispute with Powderhorn International over the royalty was
resolved. As a result of such settlement, Powderhorn will pay the Company
additional royalties totalling $624,044. Such amount is to be paid at the rate
of $12,750 per annum, payable on January 1st of each year as a non-production
royalty. In addition, the Company is to receive a royalty of four & one-quarter
cents ($.0425) per ton of coal for each ton over 300,000 tons produced per year,
which royalty is due and payable in January of each year.
3
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Conditions and Results
of Operation
The following discussion of the results of operations and financial condition
should be read in conjunction with the audited financial statements and related
notes appearing subsequently under the caption "Financial Statements".
Overview
Past revenues have been derived principally from commissions on mortgage
brokerage and investment banking activities, and royalties from Powderhorn
International. Future income is dependent on management's ability to generate
new business in the mortgage brokerage and investment banking segments of its
business, which are more particularly discussed in Item 1, above.
Management anticipates that sales, gross profit and income from operations will
continue to increase in fiscal 1997 at a greater rate that in 1996. This
increase will result from an anticipated increase in both the Company's mortgage
brokerage business and to a greater extent an increase in the Company's
investment banking activities. This increase in activity, in turn, should
generate more cash flow and net profit, thereby reducing their effect on cash
used from operations and net income.
Results of Operations
During fiscal 1996, the Company principally provided for its cash needs through
normal operations of its business as more particularly discussed in Item 1,
above.
Fiscal Period Twelve Months Ended August 31, 1996 Compared to Twelve Months
Ended August 31, 1995.
Net sales for twelve months ending August 31, 1996, compared to the twelve
months ended August 31, 1995 increased approximately 60.4% from $201,533 to
$509,609. This increase was due primarily to the initial royalty payment of
$190,000 pursuant to the settlement of the Powderhorn dispute.
Item 3. Description of Properties
The Company maintains its principal executive offices at 278A New Dorp Lane,
Staten Island, NY in an approximately 1,300 square foot office facility pursuant
to a lease originally entered into in January, 1984, and thereafter renewed
periodically. The current renewal term expires on January 31, 1999. The annual
rental is $8,400 per annum ($700 per month) plus tenant's proportionate share of
Real Estate Taxes and escalations for the subject premises in the amount of
$602.29 per month for a total annual rental of $15,627.48
4
<PAGE>
Item 4. Security ownership of certain Beneficial Owners and Management
The following table sets forth information as of August 31, 1996, with respect
to (1) any person known by the Company to own beneficially more than 5% of the
Company's Common Stock; (2) the Company's Common Stock beneficially owned by
each officer and director of the Company, and; (3) the total of the Company's
Common Stock beneficially owned by the Company' s officers and directors as a
group.
Name & Address of Shares
Beneficial Owner Beneficially Owned Percent
Thomas M. Abate 1,173,405 32.5%
231 Clarke Avenue
Staten Island, NY 10306
James D. Paulsen 367,000 10.2%
511 East 80th Street
New York, NY 10021
T.G.J. & Associates 638,000 17.6%
618 74th Street
Brooklyn, New York 11209
Emco Enterprises 230,000 6.4%
1388 Paterson Pland Road
Secaucus, NJ 07094
Silvio Codispoti 126,000 3.5%
115 Sylvia Street
Staten Island, NY 10312
John Catricola 140,000 3.9%
79 Belfast Avenue
Staten Island, NY 10306
Nancy Montanaro 42,000 1.2%
88 Rivington Avenue
Staten Island, NY 10314
John M. Seroor 102,500 2.8%
11 Emerson Road
Somerset, NJ 08873
All Officers and Directors
As a Group (6 Persons) 1,950,905 54%
5
<PAGE>
Item 5. Directors, Executive Officers, Promoters and Control Persons
Name Age Position
Thomas M. Abate 60 President and Director
James D. Paulsen 58 Executive Vice President, Secretary
and Director
John M. Seroor 67 Treasurer and Director
Silvio Codispoti 54 Senior Vice President
John Catricola 52 Vice President
Nancy Montanaro 24 Asst. Secretary
Thomas M. Abate, has been President and Director of the Company from its
inception and has served as Chairman of the Board of Directors of Megatron
Holding Corp. (OTC) from 1983 to 1987. He was the Manhattan Area Manager of the
U.S. Treasury Department, SB Division from 1974 to 1984. Mr. Abate attended
Wagner College, Columbia Institute, College of Staten Island and The New York
Institute of Finance.
James D. Paulsen, has been Executive Vice President and Director of the Company
since 1991, and has been associated with the Company from its inception. He was
an officer of AIG Risk Management, Inc and American Home Assurance Co. from 1977
to 1991. He is a graduate of The City University of New York and The College of
Insurance.
Silvio Codispoti, has been Senior Vice President of the Company since 1991.
Prior to that, he was a Vice President, Commercial Lending with National
Westminster Bank, USA. His career with National Westminster spanned over thirty
years. Mr. Codispoti is a graduate of Bernard M. Baruch College (CCNY) where he
earned an AAS in Accounting and BBA in Finance.
John Catricola, has been Vice President of the Company since 1992. He was
President of JAC Associates, Inc. from 1982 to 1985 and prior to 1982 he was
associated with various brokerage firms. Mr. Catricola is a graduate of The New
York Institute of Finance.
Nancy Montanaro, has been Administrative Secretary of the Company since 1995.
Prior to that, she was an associate for Dean Witter Reynolds on the trading
floor of The New York Commodities Exchange.
6
<PAGE>
John M. Seroor, has been Treasurer & Director of the Company since its
inception. From 1963 to 1968 he was a chemist for the Food and Drug
Administration in Cincinnati, Ohio and Brooklyn, New York, and from 1968 to 1994
he was a quality control manager for Carter-Wallace, Inc. Mr. Seroor graduated
from the University of Connecticut where he earned a BA in Chemistry.
Item 6. Executive Compensation
The following table shows all the cash compensation paid by the Company as well
as certain other compensation paid during the fiscal years indicated, to the
Chief Executive Officer for such period in all capacities in which he served. No
other Executive Officer received total annual salary and bonus in excess of
$100,000.
<TABLE>
<CAPTION>
Long term compensation
Annual Compensation Awards Payouts
------------------- ------ -------
(a) (b) (c) (d) (e) (f) (g) (h) (i)
Other Securities
Name Annual Restricted Underlying All other
Compen- stock Options/ LTIP compen-
Principal sation Awards(s) SARs(#) Pay outs sation
Position Year Salary($) Bonus($) ($) ($) ($) ($)
- -------- ---- --------- -------- ------ -------- ------- -------- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Thomas M. Abate 1996 N/A N/A N/A N/A N/A N/A 75,000 shares of QCS Corp
President at f/m/v $.50 per share;
46,000 shares of ARXA
International Energy,
Inc. at f/m/v/ $.50 per
share; 50,000 shares of
Hiawatha Industries Inc.
(Restricted) no market
value
Thomas M. Abate 1995 20,000 shares of Capital
President Comuncations Corp. at
f/m/v of $.5O per share;
40,000 shares of First
Nordic Equity Partners
Corp. at f/m/v $.10 per
share; 30,000 shares of
Republic International
Corp. at f/m/v $.50 per
share
Thomas M. Abate 1994 55,000 shares of AWEC
President Resources, Inc. at f/m/v
$.50 per share; 20,OO0
shares of Sherman Goelz &
Associates at f/m/v $.1O
per share
</TABLE>
7
<PAGE>
Item 7. Certain Relationships and Related Transactions
During the two years prior to the date of this registration statement, there
were no transactions, and there are no proposed transactions to which the
Company was or is to be a party in which any of its directors, executive
officers, principal shareholders identified above under Item 4 or any member of
the immediate family of any such person has or is to have direct or indirect
material interest.
Item 8. Description of Securities
Common Stock
The Company is authorized to issue twenty million (20,000,000) Shares of Common
Stock, $.01 par value per Share. Each outstanding Share of Common Stock is
entitled to one vote, either in person or by proxy, on all matters that may be
voted upon by the owners thereof at meetings of the stockholders.
At present, the holders of Common Stock (i) have equal ratable rights to
dividends from funds legally available therefor, when, and if declared by the
Board of Directors of the Company; (ii) are entitled to Share ratably in all of
the assets of the Company available for distribution to holders of Common Stock
upon liquidation, dissolution or winding up of the affairs of the Company; (iii)
do not have preemptive, subscription or conversion rights, or redemption or
sinking fund provisions applicable thereto; and (iv) are entitled to one
non-cumulative vote per Share on all matters on which stockholders may vote at
all meetings of stockholders.
PART II
Item 1. Market Price of and Dividends on Registrant's Common Equity and Related
Stockholder Matters
(a) Marketing Information - There is presently no public trading for the
Company's stock, and the Company does not intend that there will be any public
trading in the near future.
(b) Holders - The approximate number of record holders of the Company's
Common Stock as of August 31, 1996 was 267. The aggregate number of shares of
common stock outstanding as of August 31, 1996 was 3,615,000 shares.
(c) Dividends - The Company has not paid or declared any dividends upon its
Common Stock since its inception, and does not contemplate or anticipate paying
any cash dividends on its common stock in the foreseeable future. However, the
Company does plan in the future, to distribute a portion of the shares that it
receives in transactions with clients as dividends to the Company's
shareholders.
8
<PAGE>
Item 2. Legal Proceedings.
The Company is not presently a party to any material litigation.
Item 3. Changes in and Disagreements with Accountants.
There have been no changes in or disagreements with accountants with respect to
accounting and/or financial disclosure.
Item 4. Recent Sales of Unregistered Securities.
There have been no recent sales of unregistered securities of the Company.
Item 5. Indemnification of Directors and Officers.
There are no statutes, charter provisions, By-Laws, contract or other agreements
that insure or indemnify a controlling person director or officer of the issuer.
PART III
Items 1&2. Index to Exhibits and Description of Exhibits.
Exhibits
2.a Certificate of Incorporation
2.b Amendments to Certificate of Incorporation
2.c By-Laws
9
<PAGE>
MEGA HOLDING CORP.
FINANCIAL STATEMENTS
AUGUST 31, 1996
<PAGE>
To the Board of Directors and Stockholders
of Mega Holding Corp.
We have audited the accompanying balance sheet of Mega Holding Corp. as of
August 31, 1996 and 1995, and the related statements of earnings, stockholder's
equity, and cash flows for the years ended August 31, 1996, 1995 and 1994. These
financial statements are the responsibility of Mega Holding Corp.'s management.
Our responsibility is to express an opinion on these financial statements based
on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, based on our audit, the financial statements referred to above
present fairly, in all material respects, the financial position of Mega Holding
Corp. as of August 31, 1996 and 1995, and the results of their operations,
stockholder's equity, and their cash flows for the years ended August 31, 1996,
1995 and 1994 in conformity with generally accepted accounting principles.
September 25, 1996
/s/ McManus & Co., P.C.
- -----------------------
McManus & Co., P.C.
Certified Public Accountants
<PAGE>
<TABLE>
<CAPTION>
MEGA HOLDING CORP.
BALANCE SHEET
FOR THE YEAR ENDED AUGUST 31, 1996 AND 1995
ASSETS
1996 1995
---- ----
<S> <C> <C>
Current Assets:
Cash ...................................... $ 4,682 $ 25,769
Accounts Receivable ....................... 43,500 198,762
Royalties Receivable (Note 2) ............. 12,750 12,750
Notes Receivable (Note 3) ................. 35,000 --
----------- -----------
Total Current Assets ................. 95,932 237,281
Property and Equipment
Office Equipment at cost (Note 1) ......... 51,415 51,048
Less: Accumulated Depreciation ....... (31,360) (23,513)
----------- -----------
Total Property, Plant and Equipment .. 20,055 27,535
Investments and Other Assets:
Marketable Securities (Note 4) ............ 218,747 --
Notes Receivable (Note 3) ................. 100,000 100,000
Restricted Securities at par value (Note 5) 30,000 --
Royalties Receivable (Note 2) ............. 585,794 399,782
----------- -----------
Total Investments & Other Assets ..... 934,541 499,782
----------- -----------
Total Assets .................................... $ 1,050,528 $ 764,598
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts Payable .......................... $ 6,257 $ 9,000
----------- -----------
Total Current Liabilities ............ 6,257 9,000
Long - Term Liabilities:
Deferred Taxes (Note 8) ................... 72,168 14,936
----------- -----------
Total Long term Liabilities .......... 72,168 14,936
Commitments and Contingent Liabilities (Note 6)
Stockholder's Equity:
Common Stock-$.01 par value
Authorized 20,000,000 shares
Issued 3,615,000 shares .............. 36,150 36,150
Paid In Capital ........................... 488,616 488,616
Retained Earnings ......................... 447,337 215,996
----------- -----------
Total Stockholder's Equity ........... 972,103 740,662
----------- -----------
Total Liabilities and Stockholders' Equity ...... $ 1,050,528 $ 764,598
=========== ===========
</TABLE>
See accompanying accountants report and notes to the financial statements.
<PAGE>
<TABLE>
<CAPTION>
MEGA HOLDING CORP.
STATEMENT OF EARNINGS
FOR THE YEAR ENDED AUGUST 31, 1996, 1995 & 1994
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Net Sales ............................................... $ 509,609 $ 201,573 $ 344,223
Cost Of Sales ........................................... 90,419 39,408 132,960
----------- ----------- -----------
Gross Profit ......................................... 419,190 162,165 211,263
----------- ----------- -----------
General and Administrative Expenses:
Advertising .......................................... 500 552 --
Commissions .......................................... 288,594 140,266 102,690
Depreciation ......................................... 7,847 9,006 4,147
Dues and Subscriptions ............................... 275 275 575
Licenses and Application Fees ........................ 1,153 74 1,219
Miscellaneous ........................................ 7,611 8,793 337
Office Expense ....................................... 6,722 10,954 11,463
Outside Services ..................................... -- -- 1,845
Professional Fees .................................... 3,784 24,779 2,910
Rent ................................................. 15,765 5,714 15,054
Taxes ................................................ 1,746 3,885 440
Telephone and Utilities .............................. 7,910 8,872 7,288
Travel and Entertainment ............................. 26,483 19,824 2,713
----------- ----------- -----------
Total Operating Expenses ................................ 368,390 232,994 150,681
----------- ----------- -----------
Earnings/(Loss) Before Gains on Marketable Securities,
Extraordinary Income, and Taxes ...................... 50,800 (70,829) 60,582
Unrealized Holding Gain on Marketable Securities (Note 4) 102,334 -- --
----------- ----------- -----------
Earnings/(Loss) Before Extraordinary Income and Taxes . 153,134 (70,829) 60,582
----------- ----------- -----------
Extraordinary Income (Note 7) ........................... 150,475 166,754 --
----------- ----------- -----------
Earnings Before Income Taxes ............................ 303,609 95,925 60,582
Provision For Income Taxes .............................. 72,168 14,936 7,853
----------- ----------- -----------
Net Earnings ............................................ $ 231,441 $ 80,990 $ 52,729
Net Earnings/(Loss) Per Share:
Net Earnings/(Loss) Before Extraordinary Item ........ $ 0.04 $ (0.02) $ 0.02
Net Earnings/Loss) ................................... $ 0.06 $ 0.02 $ 0.01
Weighted Average Number of Common Shares Outstanding . 3,615,000 3,615,000 3,615,000
</TABLE>
See accompanying accountant's report and notes to the financial statements.
<PAGE>
<TABLE>
<CAPTION>
MEGA HOLDING CORP.
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE YEAR ENDED AUGUST 31, 1996, 1995 & 1994
Additional Total
September 1, 1994 Common Paid In Retained Stockholders'
To August 31, 1996 Stock Capital Earnings Equity
- ------------------ ----- ------- -------- ------
<S> <C> <C> <C> <C>
September 1, 1996 ........ $ 36,150 $ 488,616 $ 82,177 $ 606,943
Net Earnings 1994 ........ 52,729 52,729
---------- ----------- ----------- -----------
Total Stockholders' Equity
As Of August 31, 1994 .... 36,150 488,616 134,906 659,672
Net Earnings 1995 ........ 80,990 80,990
---------- ----------- ----------- -----------
Total Stockholders' Equity
As Of August 31, 1995 .... 36,150 488,616 215,896 740,662
Net Earnings 1996 ........ 231,441 231,441
---------- ----------- ----------- -----------
Total Stockholders' Equity
As Of August 31, 1996 .... $ 36,150 $ 488,616 $ 447,337 $ 972,103
========== =========== =========== ===========
</TABLE>
See accompanying accountant's report and notes to the financial statements.
<PAGE>
<TABLE>
<CAPTION>
MEGA HOLDING CORP.
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED AUGUST 31, 1996, 1995 & 1994
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Cash Flow from Operating Activities:
Net Income .............................................. $ 231,441 $ 80,990 $ 52,729
Adjustments To Reconcile Net Income To Net
Cash Provided/(Used) In Operating Activities:
Depreciation ........................................ 7,847 9,006 4,147
(Increase)/Decrease in accounts receivable .......... 155,262 155,052 (5,381)
(Increase)/Decrease in royalties Receivable ......... (186,012) (412,532) --
Increase/(Decrease) in accounts payable ............. (2,743) 9,000 7,213
Increase/(Decrease) in deferred taxes ............... 57,232 7,083 7,853
----------- ----------- -----------
Total Adjustments ................................... 31,586 (232,391) 13,832.
----------- ----------- -----------
Net Cash provided/(used) by Operating Activities ........ 263,027 (151,401) 66,561
Cash Flow from Investing Activities:
(Purchase)/Disposal of property, plant & equipment (367) 66,934 (20,735)
(Increase)/Decrease in marketable securities ........ (218,747) 814 --
(Increase)/Decrease in restricted securities ........ (30,000) -- --
----------- ----------- -----------
Net Cash provided/(used) by Investing Activities ........ (249,114) 67,748 (20,735)
Cash Flow from Financing Activities:
Increase/(Decrease) in notes & dividends receivable (35,000) -- --
----------- ----------- -----------
Net Cash provided/(used) by Financing Activities ........ (35,000) -- --
Net Increase/(Decrease) in Cash ............................. (21,087) (83,653) 45,826
Cash at the Beginning of the Year ........................... 25,769 109,422 63,596
----------- ----------- -----------
Cash at the End of the Year ................................. $ 4,682 $ 25,769 $ 109,422
=========== =========== ===========
</TABLE>
See accompanying accountant's report and notes to the financial statements.
<PAGE>
MEGA HOLDING CORP.
NOTES TO THE FINANCIAL STATEMENTS
Note 1 - Basis of Presentation and Significant Accounting Policies.
Mega Holding Corp. (the Company) incorporated as a New York corporation
and commenced business on March 31, 1970. The Company offers its
services to corporations that are seeking banking and investment
banking relationships. The Company charges a fee for these services and
at times earns an equity interest in these companies. Fees are also
earned from clients that wish to go public and/or raise capital. The
Company is licensed and registered with the New York State Banking
Department as a mortgage broker wherein it earns fees. In addition, the
Company receives royalties from Powderhorn Incorporated (a subsidiary
of Peabody Coal Company) located in Palisade, Colorado.
A) Property and Equipment
Property and equipment are carried at cost less accumulated
depreciation. Depreciation is calculated by using the modified
accelerated cost recovery system as provided by the tax reform act of
1986 for property acquired after December 31, 1986. The recovery
classifications are five years for furniture and fixtures and office
equipment.
Expenditures for maintenance and repairs are charged to income as
incurred.
B) Marketable Securities
In May 1993, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 115, "Accounting for Certain
Investments in Debt and Equity Securities," effective for fiscal years
beginning after December 15, 1993. This statement considers debt
securities that the Company has both the positive intent and ability
to hold to maturity are carried at amortized cost. Debt securities
that the Company does not have the positive intent and ability to hold
to maturity and all marketable equity securities are classified as
available-for-sale or trading securities and are carried at fair
market value. Unrealized holding gains and losses on securities
classified as available-for-sale are carried as a separate component
of stockholders' equity. Unrealized holding gains and losses on
securities classified as trading are reported in earnings. Management
determines the appropriate classification of marketable equity and
debt securities at the time of purchase and reevaluates such
designation as of each balance sheet date.
<PAGE>
MEGA HOLDING CORP.
NOTES TO THE FINANCIAL STATEMENTS
Note 1 - Basis of Presentation and Significant Accounting Policies (continued)
C) Income Taxes
The Company adopted the provisions of Statement of Financial
Accounting Standards (SFAS) No. 109, "Accounting for Income Taxes",
which requires a change from the deferral method to the assets and
liability method of accounting for income taxes. Timing differences
exist between book income and tax income which relate primarily to the
recognition of income.
D) Net Earnings/(Loss) Per Common Share
Net earnings/(loss) per common share is computed by dividing net
earnings/(loss) by the weighted average number of shares of common
stock outstanding during the period.
Note 2 - Royalties Receivable
On September 29, 1994, the Company resolved a royalty dispute whereby
Powderhorn Incorporated will pay the Company additional royalties
totaling $624,044 of which, in 1995, $198,762 is classified as accounts
receivable due to the nature of the settlement. This amount will be
payable at $12,750 per annum for non-production royalty and an 8.5%
royalty should production resume.
Note 3 - Notes Receivable
In 1993, the Company entered into a loan agreement with AWEC for the
sum of $100,000. This loan is non-interest bearing and due in 1998.
With this note, the Company has two(2) options. Option one maintains
the Company carry the note to maturity and receive face value. Option
two gives the Company the right to convert the outstanding note
receivable into AWEC common stock at fair market value. This right may
be exercised at the Company's option during 1997.
In 1996, the Company received notes from Bonsangue and Nocito companies
in the amounts of $30,000 and $5,000 respectively. Both notes are
non-interest bearing and are considered current.
<PAGE>
MEGA HOLDING CORP.
NOTES TO THE FINANCIAL STATEMENTS
Note 4 - Marketable Securities
As discussed in Note 1, the Company adopted the provisions of
Statement of Financial Accounting Standards (SFAS) No. 115,
"Accounting for Certain Investments in Debt and Equity Securities." At
August 31, 1996, all of the Company's marketable equity securities are
classified as trading securities.
The current marketable securities represents an equity investment in
various corporations which the Company considers as trading securities.
The securities had an original cost of $116,488. At the balance sheet
date, the market value was $218,747. The difference between the cost
and fair market value represents an unrealized holding gain and is
included in current earnings.
Note 5 - Restricted Securities
The Company owns various securities that are restricted by the
Securities and Exchange Commission from sale. These restricted
securities are carried at par value totaling $30,000.
Note 6 - Commitments and Contingent Liabilities
The Company is engaged in a three year lease for its office space in
the amount of $1,302.29 per month. This non-cancelable lease begins
January 1, 1996 and expires December 31, 1999
Note 7 - Extraordinary Income
On September 29, 1994, the Company resolved a royalty dispute whereby
Powderhorn Incorporated will pay Mega Holding Corp. additional
royalties totaling $624,044. In addition to the annual income due from
these royalties, the Company recognized extraordinary income in the
amounts of $166,754 and $150,475 from this transaction for the years
1995 and 1996 respectively.
<PAGE>
MEGA HOLDING CORP.
NOTES TO THE FINANCIAL STATEMENTS
Note 8 - Income Taxes
As discussed in Note 1, the Company adopted the provisions of
Statement of Financial Standards (SFAS) No. 109 "Accounting for Income
Taxes". Implementation of SFAS 109 did not have a material cumulative
effect on prior periods nor did it result in a change to the current
year's provision.
A) The effective tax rate for the Company is reconcilable to statutory
tax rates as follows:
August 31,
1996 1995 1994
% % %
U.S. Federal Statutory Tax Rate 34 34 34
Effective Timing Difference (34) (34) (34)
----- ----- -----
Effective Tax Rate -- -- --
B) Deferred income taxes are provided for differences between financial
statement and income tax reporting. The principal difference is the
manner in which income is recognized for financial and income tax
reporting purposes.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 12 of the Securities Exchange Act of
1934, the Registrant has duly caused this registration statement to be signed on
its behalf by the undersigned, thereunto duly authorized.
MEGA HOLDING CORP.
/s/ THOMAS M. ABATE
-------------------
By: Thomas M. Abate, President
Dated: November 8, 1996
<PAGE>
CERTIFICATE OF INCORPORATION
OF SERINA-DENISE ASSOCIATES INC.
Under Section 402 of the Business Corporations Law.
IT IS HEREBY CERTIFIED THAT:
1. The name of the proposed corporation is
SERINA-DENISE ASSOCIATES INC.
2. The purpose or purposes for which this corporation is formed, are as
follows, to wit:
The accumulation and loan of money, by lending the capital of the
company and such other funds as it may from time to time lawfully acquire,
to various borrowers upon such personal security or security of personal
property as may be agreed upon between the Corporation and borrowers and by
re-lending in like manner funds arising from such loans when paid, but the
Corporation shall not have banking or discounting privileges.
To loan its own money; to act as agent, or broker in procuring money
for loans, to endorse, guarantee the payment of, but, sell and otherwise
deal in notes, open accounts, accounts receivable and other similar
evidences of debt.
To buy, loan money upon, sell transfer assign, borrow money upon and
pledge as collateral, and otherwise deal as principal, agent or broker in
bills of lading, warehouse receipts, evidence of deposit and storage of
personal property, bonds, stocks, promissory notes, commercial paper
accounts, invoices, choses in action, interest in estates, contracts,
mortgages on real or personal property, pledges of personal property, and
other evidence of indebtedness of persons, firms or corporations, and
owning, holding, or conveying such real estate as may be necessary in the
operation of its business, and purchasing, acquiring and holding shares of
stock in other corporations, domestic and foreign, and doing all things
incidental thereto; to do a general brokerage business, to buy, sell and
deal in all kinds of listed and unlisted stocks and bonds on commission; to
act as agent or factor for any person, firm or corporation. But not for the
purpose of carrying on the business of banking, insurance or the operation
of railroads or the discounting of bills and notes, or the buying and
selling of bills of exchange.
The corporation, in furtherance of its corporate purposes above set forth,
shall have all of the powers enumerated in Section 202 of the Business
Corporation Law, subject to any limitations provided in the Business Corporation
Law or any other statute of the State of New York.
<PAGE>
3. The office of corporation is to be located in the Borough of Manhattan,
County of New York, City and State of New York.
4. The aggregate number of shares which the corporation shall have the
authority to issue is two hundred (200) shares of no par value.
5. The Secretary of State is designated as agent of the Corporation upon
whom process against it may be served. The post office address to which the
Secretary of State shall mail a copy of any process against the corporation
served upon him is:
c/o Thomas M. Abate
231 Clarke Avenue
Richmondtown
Staten Island, NY
The undersigned Incorporator is over the age of twenty-one years.
IN WITNESS WHEREOF, this certificate has been executed this 25th day of
March, 1970.
/s/ Bernhard W. Baruch
----------------------
Bernhard W. Baruch
BERNHARD W. BARUCH
16 Court Street
Brooklyn, New York
STATE OF NEW YORK)
COUNTY OF KINGS) ss:
On this 25th day of March,, 1970, before me personally came BERNHARD W.
BARUCH, to me know to be the person described in and who executed the foregoing
certificate of incorporation, and he thereupon duly acknowledged to me that he
executed the same.
/s/ Benjamin L. Langsam
-----------------------
Benjamin L. Langsam
Notary Public, State of New York
24-2253450 Qual in Kings Courts
Commission Expires March 30, 1971
<PAGE>
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
SERINA-DENISE ASSOCIATES INC.
(Under Section 805 of the Business Corporation Law)
We, the undersigned, President and Secretary, respectively, of
Serina-Denise Associates Inc. hereby certify:
1. The name of the corporation is
SERINA-DENISE ASSOCIATES IN.
2. The Certificate of Incorprotation was filed the Department of State on
March 31, 1970.
3. The Certificate of Incorporation is amended:
(a) To change the corporate name. Paragraph "1" of the Certificate, which
sets forth the name of the corporation, is amended to read:
"1. The name of the corporation is
MEGA HOLDING CORP."
(b) To change the number of shares from 200 without par value, all of one
class, to 2,000,000, each having a par value of $.01. By amending Paragraph "4"
to read:
"4. The total number of shares that may be issued by the
corporation is 2,000,000 shares, each of which shall have a par
value of $.01 and shall all be of the same class."
4. The number of shares issued is 182, each without par value. Each of said
shares, without par value, shall be changed resulting with 91,000 of said shares
issued and outstanding, into 500 shares, each having a par value of $.01//
Eighteen shares, each without par value, presently authorized but unissued are
hereby cancelled and eliminated.
5. The amendment to the Certificate of Incorporation is authorized by the
affirmative vote of the holders of a majority of the shares entitled to vote at
a meeting of shareholders.
IN WITNESS WHEREOF, this Certificate of Amendment has been executed this
13th day of September, 1973. The undersigned affirm that the statements
contained herein are true under the penalties of perjury.
/s/ GERALD R. CHABERT
---------------------
GERALD R. CHABERT
(President)
/s/ JAMES D. PAULSEN
--------------------
JAMES D. PAULSEN
(Secretary)
STATE OF NEW YORK )
COUNTY OF RICHMOND ) SS.:
On the 13th day of September, 1973, before me personally came GERALD R.
CHABERT, to me known to be the person described in and who executed the
foregoing Certificate of Amendment and he thereupon duly acknowledged to me that
he executed the name.
/s/
----------------------
STATE OF NEW YORK )
COUNTY OF NEW YORK ) SS.:
On the 14th day of September, 1973, before me personally came JAMES D.
PAULSEN, to me known to be the person described in and who executed the
foregoing Certificate of Amendment and he thereupon duly acknowledged to me that
he executed the name.
/s/ HARVEY M. SKLAVER
----------------------
HARVEY M. SKLAVER
Notary Public, State of New York
No. 30-9035840
Qualified in Nassau County
Commission Expires March 30, 1974
<PAGE>
Certificate of Amendment of the Certificate of Incorporation
of
MEGA HOLDING CORP.
Under Section 805 of the Business Corporation Law
It is hereby certified that:
FIRST: The name of the corporation is MEGA HOLDING CORP.
SECOND: The certificate of incorporation of the corporation was filed by
the Department of State on March 31, 1970, under the name: SERINA-DENISE
ASSOCIATES, INC.
THIRD: The amendment of the certificate of incorporation of the Corporation
effected by this certificate of amendment is as follows.
To authorize the issuance of an additional 18,000,000 shares of common
stock with a par value of 1 cent ($.01) each.
FOURTH: To accomplish the foregoing amendment, Article 4 of the certificate
of incorporation of the corporation, relating to its authorized stock, is hereby
amended to read as follows:
"4. The corporation shall have authority to issue 20,000,000 shares of
common stock with a par value of 1 cent ($.01) each."
FIFTH: The foregoing amendment of the certificate of incorporation of the
corporation was authorized by the vote at a meeting of the Board of Directors of
the corporation, followed by the vote of the holders of at least a majority of
all of the outstanding shares of the corporation entitled to vote on the said
amendment of the certificate of incorporation.
IN WITNESS WHEREOF, we have subscribed this document on the date set forth
below and do hereby affirm, under the penalties of perjury, that the statements
contained therein have been examined by us and are true and correct.
<PAGE>
Date: November 19, 1996.
/s/ THOMAS M. ABATE
-------------------
Thomas M. Abate, President
and
/s/ JAMES D. PAULSEN
--------------------
James D. Paulsen, Secretary
<PAGE>
BY-LAWS
OF
Mega Holding Corp.
ARTICLE I - OFFICES
The office of the Corporation shall be located in the City, County and State
designated in the Certificate of Incorporation. The Corporation may also
maintain offices at such other places within or without the United States as the
Board of Directors may, from time to time, determine.
ARTICLE II - MEETING OF SHAREHOLDERS
Section 1 - Annual Meetings:
The annual meeting of the shareholders of the Corporation shall be held within
five months after the close of the fiscal year of the Corporation, for the
purpose of electing directors, and transacting such other business as may
properly come before the meeting.
Section 2 - Special Meetings:
Special meetings of the shareholders may be called at any time by the Board of
Directors or by the President, and shall be called by the President or the
Secretary at the written request of the holders of twenty-five per cent (25%) of
the shares then outstanding and entitled to vote thereat, or as otherwise
required under the provisions of the Business Corporation Law.
Section 3 Place of Meetings:
All meetings of shareholders shall be held at the principal office of the
Corporation, or at such other places within or without the State of New York as
shall be designated in the notices or waivers of notice of such meetings.
By-Laws - 1
<PAGE>
Section 4 - Notice of Meetings:
(a) Written notice of each meeting of shareholders, whether annual or special,
stating the time when and place where it is to be held, shall be served either
personally or by mail, not less than ten or more than fifty days before the
meeting, upon each shareholder of record entitled to vote at such meeting, and
to any other shareholder to whom the giving of notice may be required by law.
Notice of a special meeting shall also state the purpose or purposes for which
the meeting is called, and shall indicate that it is being issued by, or at the
direction of, the person or persons calling the meeting. If, at any meeting,
action is proposed to be taken that would, if taken, entitle shareholders to
receive payment for their shares pursuant to the Business Corporation Law, the
notice of such meeting shall include a statement of that purpose and to that
effect. If mailed, such notice shall be directed to each such shareholder at his
address, as it appears on the records of the shareholders of the Corporation,
unless he shall have previously filed with the Secretary of the Corporation a
written request that notices intended for him be mailed to some other address,
in which case, it shall be mailed to the address designated in such request.
(b) Notice of any meeting need not be given to any person who may become a
shareholder of record after the mailing of such notice and prior to the meeting,
or to any shareholder who attends such meeting, in person or by proxy, or to any
shareholder who, in person or by proxy, submits a signed waiver of notice either
before or after such meeting. Notice of any adjourned meeting of shareholders
need not be given, unless otherwise required by statute.
Section 5 - Quorum:
(a) Except as otherwise provided herein, or by statute, or in the Certificate of
Incorporation (such Certificate and any amendments thereof being hereinafter
collectively referred to as the "Certificate of Incorporation"), at all meetings
of shareholders of the Corporation, the presence at the commencement of such
meetings in person or by proxy of shareholders holding of record a majority of
the total number of shares of the Corporation then issued and outstanding and
entitled to vote, shall be necessary and sufficient to constitute a quorum for
the transaction of any business. The withdrawal of any shareholder after the
commencement of a meeting shall have no effect on the existence of a quorum,
after a quorum has been established at such meeting.
(b) Despite the absence of a quorum at any annual or special meeting of
shareholders, the shareholders, by a majority of the votes cast by the holders
of shares entitled to vote thereon, may adjourn the meeting. At any such
adjourned meeting at which a quorum is present, any business may be transacted
which might have been transacted at the meeting as originally called if a quorum
had been present.
By-Laws - 2
<PAGE>
Section 6 - Voting:
(a) Except as otherwise provided by statute or by the Certificate of
Incorporation, any corporate action, other than the election of directors to be
taken by vote of the shareholders, shall be authorized by a majority of votes
cast at a meeting of shareholders by the holders of shares entitled to vote
thereon.
(b) Except as otherwise provided by statute or by the Certificate of
Incorporation, at each meeting of shareholders, each holder of record of stock
of the Corporation entitled to vote thereat, shall be entitled to one vote for
each share of stock registered in his name on the books of the Corporation.
(c) Each shareholder entitled to vote or to express consent or dissent without a
meeting, may do so by proxy; provided, however, that the instrument authorizing
such proxy to act shall have been executed in writing by the shareholder
himself, or by his attorney-in-fact thereunto duly authorized in writing. No
proxy shall be valid after the expiration of eleven months from the date of its
execution, unless the persons executing it shall have specified therein the
length of time it is to continue in force. Such instrument shall be exhibited to
the Secretary at the meeting and shall be filed with the records of the
Corporation.
(d) Any resolution in writing, signed by all of the shareholder entitled to vote
thereon, shall be and constitute action by such shareholders to the effect
therein expressed, with the same force and effect as if the same had been duly
passed by unanimous vote at a duly called meeting of shareholders and such
resolution so signed shall be inserted in the Minute Book of the Corporation
under its proper date.
ARTICLE III - BOARD OF DIRECTORS
Section 1 Number, Election and Term of office:
(a) The number of the directors of the Corporation shall be seven (7), unless
and until otherwise determined by vote of a majority of the entire Board of
Directors. The number of Directors shall not be less than three, unless all of
the outstanding shares are owned beneficially and of record by less than three
shareholders, in which event the number of directors shall not be less than the
number of shareholders.
By-Laws - 3
<PAGE>
(b) Except as may otherwise be provided herein or in the Certificate of
Incorporation, the members of the Board of Directors of the Corporation, who
need not be shareholders, shall be elected by a majority of the votes cast at a
meeting of shareholders, by the holders of shares entitled to vote in the
election.
(c) Each director shall hold office until the annual meeting of the shareholders
next succeeding his election, and until his successor is elected and qualified,
or until his prior death, resignation or removal.
Section 2 - Duties and Powers:
The Board of Directors shall be responsible for the control and management of
the affairs, property and interests of the Corporation, and may exercise all
powers of the Corporation, except as are in the Certificate of Incorporation or
by statute expressly conferred upon or reserved to the shareholders.
Section 3 - Annual and Regular Meetings; Notice:
(a) A regular annual meeting of the Board of Directors shall be held immediately
following the annual meeting of the shareholders, at the place of such annual
meeting of shareholders.
(b) The Board of Directors, from time to time, may provide by resolution for the
holding of other regular meetings of the Board of Directors, and may fix the
time and place thereof.
(c) Notice of any regular meeting of the Board of Directors shall not be
required to be given and, if given, need not specify the purpose of the meeting;
provided, however, that in case the Board of Directors shall fix or change the
time or place of any regular meeting, notice of such action shall be given to
each director who shall not have been present at the meeting at which such
action was taken within the time limited, and in the manner set forth in
paragraph (b) of Section 4 of this Article III, with respect to special
meetings, unless such notice shall be waived in the manner set forth in
paragraph (c) of such Section 4.
Section 4 - Special Meetings; Notice:
(a) Special meetings of the Board of Directors shall be held whenever called by
the President or by one of the directors, at such time and place as may be
specified in the respective notices or waivers of notice thereof.
By-Laws - 4
<PAGE>
(b) Notice of special meetings shall be mailed directly to each director,
addressed to him at his residence or usual place of business, at least two (2)
days before the day on which the meeting is to be held, or shall be sent to him
at such place by telegram, radio or cable, or shall be delivered to him
personally or given to him orally, not later than the day before the day on
which the meeting is to be held. A notice, or waiver of notice, except as
required by Section 8 of this Article III, need not specify the purpose of the
meeting.
(c) Notice of any special meeting shall not be required to be given to any
director who shall attend such meeting without protesting prior thereto or at
its commencement, the lack of notice to him, or who submits a signed waiver of
notice, whether before or after the meeting. Notice of any adjourned meeting
shall not be required to be given.
Section 5 - Chairman:
At all meetings of the Board of Directors, the Chairman of the Board, if any and
if present, shall preside. If there shall be no Chairman, or he shall be absent,
then the President shall preside, and in his absence, a Chairman chosen by the
Directors shall preside.
Section 6 - Quorum and Adjournments:
(a) At all meetings of the Board of Directors, the presence of a majority of the
entire Board shall be necessary and sufficient to constitute a quorum for the
transaction of business, except as otherwise provided by law, by the Certificate
of Incorporation, or by these By-Laws.
(b) A majority of the directors present at the time and place of any regular or
special meeting, although less than a quorum, may adjourn the same from time to
time without notice, until a quorum shall be present.
Section 7 - Manner of Acting:
(a) At all meetings of the Board of Directors, each director present shall have
one vote, irrespective of the number of shares of stock, if any, which he may
hold.
(b) Except as otherwise provided by statute, by the Certificate of
Incorporation, or these By-Laws, the action of a majority of the directors
present at any meeting at which a quorum is present shall be the act of the
Board of Directors.
By-Laws - 5
<PAGE>
Section 8 - Vacancies:
Any vacancy in the Board of Directors occurring by reason of an increase in the
number of directors, or by reason of the death, resignation, disqualification,
removal (unless a vacancy created by the removal of a director by the
shareholders shall be filled by the shareholders at the meeting at which the
removal was effected) or inability to act of any director, or otherwise, shall
be filled for the unexpired portion of the term by a majority vote of the
remaining directors, though less than a quorum, at any regular meeting or
special meeting of the Board of Directors called for that purpose.
Section 9 - Resignation:
Any director may resign at any time by giving written notice to the Board of
Directors, the President or the Secretary of the Corporation. Unless otherwise
specified in such written notice, such resignation shall take effect upon
receipt thereof by the Board of Directors or such officer, and the acceptance of
such resignation shall not be necessary to make it effective.
Section 10 - Removal:
Any director may be removed with or without cause at any time by the
shareholders, at a special meeting of the shareholders called for that purpose,
and may be removed for cause by action of the Board.
Section 11 - Salary:
No stated salary shall be paid to directors, as such, for their services, but by
resolution of the Board of Directors a fixed sum and expenses of attendance, if
any, may be allowed for attendance at each regular or special meeting of the
Board; provided, however, that nothing herein contained shall be construed to
preclude any director from serving the Corporation in any other capacity and
receiving compensation therefor.
Section 12 - Contracts:
(a) No contract or other transaction between this Corporation and any other
Corporation shall be impaired, affected or invalidated, nor shall any director
be liable in any way by reason of the fact that any one or more of the directors
of this Corporation is or are interested in, or is a director or officer, or are
directors or officers of such other Corporation, provided that such facts are
disclosed or made known to the Board of Directors.
By-Laws - 6
<PAGE>
(b) Any director, personally and individually, may be a party to or may be
interested in any contract or transaction of this Corporation, and no director
shall be liable in any way by reason of such interest, provided that the fact of
such interest be disclosed or made known to the Board of Directors, and provided
that the Board of Directors shall authorize, approve or ratify such contract or
transaction by the vote (not counting the vote of any such director) of a
majority of a quorum, notwithstanding the presence of any such director at the
meeting at which such action is taken. Such director or directors may be counted
in determining the presence of a quorum at such meeting. This Section shall not
be construed to impair or invalidate or in any way affect any contractor other
transaction which would otherwise be valid under the law (common, statutory or
otherwise) applicable thereto.
Section 13 - Committees:
The Board of Directors, by resolution adopted by a majority of the entire Board,
may from time to time designate from among its members an executive committee
and such other committees, and alternate members thereof, as they deem
desirable, each consisting of three or more members, with such powers and
authority (to the extent permitted by law) as may be provided in such
resolution. Each such committee shall serve at the pleasure of the Board.
ARTICLE IV - OFFICERS
Section 1 - Number, Qualifications, Election and Term of Office:
(a) The officers of the Corporation shall consist of a President, a Secretary, a
Treasurer, and such other officers, including a Chairman of the Board of
Directors, and one or more Vice Presidents, as the Board of Directors may from
time to time deem advisable. Any officer other than the Chairman of the Board of
Directors may be, but is not required to be, a director of the Corporation. Any
two or more offices may he held by the same person.
By-Laws - 7
<PAGE>
(b) The officers of the Corporation shall be elected by the Board of Directors
at the regular annual meeting of the Board following the annual meeting of
shareholders.
(c) Each officer shall hold office until the annual meeting of the Board of
Directors next succeeding his election, and until his successor shall have been
elected and qualified, or until his death, resignation or removal.
Section 2 - Resignation:
Any officer may resign at any time by giving written notice of such resignation
to the Board of Directors, or to the President or the Secretary of the
Corporation. Unless otherwise specified in such written notice, such resignation
shall take effect upon receipt thereof by the Board of Directors or by such
officer, and the acceptance of such resignation shall not be necessary to make
it effective.
Section 3 - Removal:
Any officer may be removed, either with or without cause, and a successor
elected by the Board at any time.
Section 4 - Vacancies:
A vacancy in any office by reason of death, resignation, inability to act,
disqualification, or any other cause, may at any time be filled for the
unexpired portion of the term by the Board of Directors.
Section 5 - Duties of Officers:
Officers of the Corporation shall, unless otherwise provided by the Board of
Directors, each have such powers and duties as generally pertain to their
respective offices as well as such powers and duties as may be set forth in
these by-laws, or may from time to time be specifically conferred or imposed by
the Board of Directors. The President shall be the chief executive officer of
the Corporation.
By-Laws - 8
<PAGE>
Section 6 - Sureties and Bonds:
In case the Board of Directors shall so require, any officer, employee or agent
of the Corporation shall execute to the Corporation a bond in such sum, and with
such surety or sureties as the Board of Directors may direct, conditioned upon
the faithful performance of his duties to the corporation, including
responsibility for negligence and for the accounting for all property, funds or
securities of the Corporation which may come into his hands.
Section 7 - Shares of Other Corporations:
Whenever the Corporation is the holder of shares of any other corporation, any
right or power of the Corporation as such shareholder (including the attendance,
acting and voting at shareholders' meetings and execution of waivers, consents,
proxies or other instruments) may be exercised on behalf of the Corporation by
the President, any Vice President, or such other person as the Board of
Directors may authorize.
ARTICLE V - SHARES OF STOCK
Section I - Certificate of Stock:
(a) The certificates representing shares of the Corporation shall be in such
form as shall be adopted by the Board of Directors, and shall be numbered and
registered in the order issued. They shall bear the holder's name and the number
of shares, and shall be signed by (i) the Chairman of the Board or the President
or a Vice President, and (ii) the Secretary or Treasurer, or any Assistant
Secretary or Assistant Treasurer, and may bear the corporate seal.
(b) No certificate representing shares shall be issued until the full amount of
consideration therefor has been paid, except as otherwise permitted by law.
(c) The Board of Directors may authorize the issuance of certificates for
fractions of a share which shall entitle the holder to exercise voting rights,
receive dividends and participate in liquidating distributions, in proportion to
the fractional holdings; or it may authorize the payment in cash of the fair
value of fractions of a share as of the time when those entitled to receive such
fractions are determined; or it may authorize the issuance, subject to such
conditions as may be permitted by law,of scrip in registered or bearer form over
the signature of an officer or agent of the Corporation, exchangeable as therein
provided for full shares, but such scrip shall not entitle the holder to any
rights of a shareholder, except as therein provided.
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Section 2 - Lost or Destroyed Certificates:
The holder of any certificate representing shares of the Corporation shall
immediately notify the Corporation of any loss or destruction of the certificate
representing the same. The Corporation may issue a new certificate in the place
of any certificate theretofore issued by it, alleged to have been lost or
destroyed. On production of such evidence of loss or destruction as the Board of
Directors in its discretion may require, the Board of Directors may, in its
discretion, require the owner of the lost or destroyed certificate, or his legal
representatives, to give the Corporation a bond in such sum as the Board may
direct, and with such surety or sureties as may be satisfactory to the Board, to
indemnify the Corporation against any claims, loss, liability or damage it may
suffer on account of the issuance of the new certificate. A new certificate may
be issued without requiring any such evidence or bond when, in the judgment of
the Board of Directors, it is proper so to do.
Section 3 - Transfers of Shares:
(a) Transfers of shares of the Corporation shall be made on the share records of
the Corporation only by the holder of record thereof, in person or by his duly
authorized attorney, upon surrender for cancellation of the certificate or
certificates representing such shares, with an assignment or power of transfer
endorsed thereon or delivered therewith, duly executed, with such proof of the
authenticity of the signature and of authority to transfer and of payment of
transfer taxes as the Corporation or its agents may require.
(b) The Corporation shall be entitled to treat the holder of record of any share
or shares as the absolute owner thereof for all purposes and, accordingly, shall
not be bound to recognize any legal, equitable or other claim to, or interest
in, such share or shares on the part of any other person, whether or not it
shall have express or other notice thereof, except as otherwise expressly
provided by law.
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Section 4 - Record Date:
In lieu of closing the share records of the Corporation, the Board of Directors
may fix, in advance, a date not exceeding fifty days, nor less than ten days, as
the record date for the determination of shareholders entitled to receive notice
of, or to vote at, any meeting of shareholders, or to consent to any proposal
without a meeting, or for the purpose of determining shareholders entitled to
receive payment of any dividends, or allotment of any rights, or for the purpose
of any other action. If no record date is fixed, the record date for the
determination of shareholders entitled to notice of or to vote at a meeting of
shareholders shall be at the close of business on the day next preceding the day
on which notice is given, or, if no notice is given, the day on which the
meeting is held; the record date for determining shareholders for any other
purpose shall be at the close of business on the day on which the resolution of
the directors relating thereto is adopted. When a determination of shareholders
of record entitled to notice of or to vote at any meeting of shareholders has
been made as provided for herein, such determination shall apply to any
adjournment thereof, unless the directors fix a new record date for the
adjourned meeting.
ARTICLE VI - DIVIDENDS
Subject to applicable law, dividends may be declared and paid out of any funds
available therefor, as often, in such amounts, and at such time or times as the
Board of Directors may determine.
ARTICLE VII - FISCAL YEAR
The fiscal year of the Corporation shall be fixed by the Board of Directors from
time to time, subject to applicable law.
ARTICLE VIII - CORPORATE SEAL
The corporate seal, if any, shall be in such form as shall be approved from time
to time by the Board of Directors.
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ARTICLE - IX - AMENDMENTS
Section 1 - By Shareholders.
All by-laws of the Corporation shall be subject to alteration or repeal, and new
by-laws may be made, by a majority vote of the shareholders at the time entitled
to vote in the election of directors.
Section 2 - By Directors:
The Board of Directors shall have power to make, adopt, alter, amend and repeal,
from time to time, by-laws of the Corporation; provided, however, that the
shareholders entitled to vote with respect thereto as in this Article IX
above-provided may alter, amend or repeal by-laws made by the Board of
Directors, except that the Board of Directors shall have no power to change the
quorum for meetings of shareholders or of the Board of Directors, or to change
any provisions of the bylaws with respect to the removal of directors or the
filling of vacancies in the Board resulting from the removal by the
shareholders. If any bylaw; regulating an impending election of directors is
adopted, amended or repealed by the Board of Directors, there shall be set forth
in the notice of the next meeting of shareholders for the election of directors,
the by-law so adopted, amended or repealed, together with a concise statement of
the changes made. /s/ ------------ Incorporator
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