<PAGE> 1
Filed with the Securities and Exchange Commission on May 4, 2000
Registration No. 333-______
===============================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-------------------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
-------------------------
MAREX.COM, INC.
(Exact name of registrant as specified in its charter)
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FLORIDA 65-0354269
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
MAREX.COM, INC.
2701 SOUTH BAYSHORE DRIVE
5TH FLOOR
MIAMI, FLORIDA 33133
(305) 285-2003
(Address, including zip code, and telephone number,
including area code, of Registrant's
Principal Executive Offices)
-------------------------
DAVID A. SCHWEDEL, PRESIDENT
MAREX.COM, INC.
2701 SOUTH BAYSHORE DRIVE, 5TH FLOOR
MIAMI, FLORIDA 33133
(305) 285-2003
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
-------------------------
COPIES OF COMMUNICATIONS TO:
FERN WATTS, ESQ.
SHEIDA R. SAHANDY, ESQ.
GREENBERG TRAURIG, P.A.
1221 BRICKELL AVENUE
MIAMI, FLORIDA 33131
(305) 579-0500
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO
THE PUBLIC: From time to time after this Registration
Statement becomes effective.
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If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933 (the "Securities Act"), other than securities offered only in connection
with dividend or interest reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
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. [ ]
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CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
==========================================---------------------------------------------------------------------------------------
AMOUNT PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
TITLE OF CLASS OF TO BE OFFERING PRICE AGGREGATE OFFERING REGISTRATION
SECURITIES TO BE REGISTERED REGISTERED PER SHARE(1) PRICE (1) FEE
=================================================================================================================================
<S> <C> <C> <C> <C>
Common Stock, $.01 par value 3,230,762 $16.625 $53,711,418 $14,180
=================================================================================================================================
</TABLE>
(1) Estimated solely for the purposes of calculating the registration fee on
the basis of the average of the high and low sales prices of the Company's
common stock on May 3, 2000, as reported by the OTC Bulletin Board.
-------------------------
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> 2
PROSPECTUS
MAREX.COM, INC.
3,230,762 SHARES OF COMMON STOCK
($0.01 PAR VALUE)
-------------------------
The selling shareholders are offering up to an aggregate of 3,230,762
shares of our common stock. The selling shareholders may obtain their shares of
common stock by converting preferred stock issued to them in a private placement
in order to receive their underlying shares of common stock.
We will not receive any proceeds from the sale of common stock by the
selling shareholders under this prospectus.
Our common stock is traded on the over-the-counter bulletin board of
the National Association of Securities Dealers under the symbol "MRXX." On May
3, 2000, the average of the high and low sales prices of our common stock as
reported by the bulletin board was $16.625 per share.
The selling shareholders have indicated to us that they presently
intend to retain ownership of a substantial portion of their shares of common
stock. However, the selling shareholders may offer the shares through public or
private transactions, on or off the bulletin board, at prevailing market prices
or at privately negotiated prices. The selling shareholders may make sales
directly to purchasers or through agents, dealers or underwriters.
-------------------------
YOU SHOULD CAREFULLY CONSIDER THE RISK FACTORS BEGINNING ON PAGE 4 OF
THIS PROSPECTUS.
-------------------------
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these shares or determined if this
prospectus is truthful and complete. Any representation to the contrary is a
criminal offense.
THE DATE OF THIS PROSPECTUS IS MAY 4, 2000
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YOU SHOULD RELY ON THE INFORMATION CONTAINED IN THIS PROSPECTUS. WE
HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH INFORMATION DIFFERENT FROM THAT
CONTAINED IN THIS PROSPECTUS. THE SELLING SHAREHOLDERS ARE OFFERING TO SELL, AND
SEEKING OFFERS TO BUY, SHARES OF COMMON STOCK ONLY IN JURISDICTIONS WHERE OFFERS
AND SALES ARE PERMITTED. THE INFORMATION CONTAINED IN THIS PROSPECTUS IS
ACCURATE ONLY AS OF THE DATE OF THIS PROSPECTUS, REGARDLESS OF THE TIME OF
DELIVERY OF THE PROSPECTUS OR OF ANY SALE OF THE COMMON STOCK.
TABLE OF CONTENTS
PAGE
----
Prospectus Summary........................................................3
Risk Factors..............................................................4
Forward-Looking Statements................................................8
Use of Proceeds...........................................................8
Selling Shareholders......................................................9
Plan of Distribution.....................................................10
Description of Securities................................................11
Legal Matters............................................................12
Experts..................................................................12
Where You Can Find More Information......................................12
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PROSPECTUS SUMMARY
This summary highlights selected information and does not contain all
the information that is important to you. You should carefully read this
prospectus and the documents we have referred you to in "Where You Can Find More
Information" on page 12 for more information about our company and our financial
statements. In this prospectus, references to "Marex.com," "we," "our" and "us"
refer to Marex.com, Inc.
GENERAL
THE COMPANY
We operate one of the leading internet sites for the purchase and sale,
between businesses, of products related to the marine industry. Suppliers, boat
builders, boat repairmen, dealers and distributors who become members of our
system are able to use our internet site as a channel to efficiently buy or sell
marine related goods.
The first service we established was our internet trading exchange, for
which we began registering members in November 1998. The exchange allows buyers
and sellers worldwide to solicit quotes online for the purchase or sale of
equipment, parts and supplies. Members can continuously check the best available
prices as bids to buy and sell are posted on the site on a real-time basis. This
allows buyers to take advantage of spot market pricing on items which may be
overstocked or unseasonal and also allows sellers to efficiently dispose of
excess or slow moving inventory. We have recently refined our trading exchange
into an automated system that is divided into auction and classified
capabilities. Members have the option of electing to list items for a fixed
price in the classified section or to participate in an auction environment. As
of the date of this prospectus, we are in the preliminary stages of development
and have had no material revenues and a limited number of transactions by
members.
RECENT EVENTS
PRIVATE PLACEMENT OF SERIES A1 CONVERTIBLE PREFERRED STOCK. We recently
completed a private offering of 420,000 shares of our series A1 convertible
preferred stock for gross proceeds of $42,000,000. We intend to use the proceeds
generated by the offering for general corporate purposes. The shares of our
common stock issuable upon conversion of the preferred stock are those offered
by the selling shareholders in this prospectus.
STRATEGIC RELATIONSHIP AGREEMENT WITH GENMAR HOLDINGS, INC. On April
26, 2000, we entered into a Strategic Relationship Agreement with Genmar
Holdings, Inc. This agreement provides that we will develop and maintain, as a
part of our website, a system that Genmar has agreed to use exclusively for its
electronic purchases of marine related materials, components and equipment. The
term of the agreement is ten (10) years, subject to any early termination in
accordance with the terms of the agreement. In consideration for these services,
Genmar will pay transaction fees to us based upon transactions completed by
Genmar through our online procurement system. As a part of this transaction,
Genmar received and has the right to receive warrants exercisable for shares of
our common stock.
We were incorporated in Florida in September 1992 as Florida Marine
Management, Inc., changed our name to Affiliated Networks, Inc. on April 19,
1995, and then to Marex.com, Inc. on November 17, 1999. Our executive offices
are located at 2701 South Bayshore Drive, 5th floor, Miami, Florida 33133. Our
telephone number is (305) 285-2003.
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RISK FACTORS
WE URGE YOU TO CAREFULLY CONSIDER THE FOLLOWING RISK FACTORS AS WELL AS
THE OTHER INFORMATION IN THIS PROSPECTUS AND IN THE DOCUMENTS WE HAVE
INCORPORATED BY REFERENCE.
WE HAVE A LIMITED OPERATING HISTORY ON WHICH TO BASE AN INVESTMENT DECISION.
Even though Marex.com was founded in 1992, we did not launch the
internet marine exchange until November 1998. As a result, we have a limited
operating history for you to evaluate our e-commerce business and prospects. Our
prospects must be considered in light of the risks, uncertainties, expenses and
difficulties frequently encountered by companies in their early stages of
development, particularly companies in new and rapidly evolving markets such as
business-to-business, also called B2B, e-commerce.
WE HAVE A HISTORY OF LOSSES AND MAY NEVER BECOME PROFITABLE.
We have incurred losses from operations in each period since our
inception. We expect to incur substantial operating losses and have continued
negative cash flows from operations for the foreseeable future. We expect to
significantly increase our spending on sales and marketing, product development,
and general and administrative expenses. In addition, we have no material
revenues to date. We cannot assure you that we will ever generate significant
revenues. If our revenues do not increase substantially or if our expenses
increase further than we expect, we may never become profitable.
OUR QUARTERLY OPERATING RESULTS ARE VOLATILE AND COULD AFFECT OUR STOCK PRICE.
Due to our limited operating history and absence of material revenues,
we believe that period-to-period comparisons of revenues and results of
operations are not meaningful. The fluctuations in our operating results may
fall below the expectations of investors and securities analysts. Our failure to
meet these expectations will likely cause a significant decline in the market
price of our stock.
THE BUSINESS-TO-BUSINESS ELECTRONIC COMMERCE MODEL IS NOT PROVEN AND MAY NOT
BECOME WIDELY ACCEPTED.
Our B2B e-commerce model is based on the expansion of the exchange and
the launch of our other procurement solutions for B2B e-commerce within the
marine industry. This business model is new and not proven and depends upon our
ability to, among other things:
o sell purchasing solutions to marine industry participants;
o achieve high rates of adoption by customers; and
o generate significant revenues from the use of our internet-based
solutions.
We cannot be certain that the business model will be successful, that
it can achieve or sustain revenue growth, or that it can generate any profits.
The success of this business model will require, among other things, that we
develop and market solutions with broad market acceptance by users and strategic
partners. We cannot be certain that B2B e-commerce on the internet, our
e-commerce solution, or our services and brand in particular, will achieve broad
market acceptance.
IF WE FAIL TO RELEASE NEW AND SUCCESSFUL E-COMMERCE SOLUTIONS ON A TIMELY BASIS,
OUR BUSINESS WILL BE ADVERSELY AFFECTED.
We plan to introduce new e-commerce solutions to service the
requirements of marine industry participants and to increase the potential
transaction volumes. If we fail to introduce new products on a timely basis, we
may experience supplier and buyer dissatisfaction which will adversely affect
our business. In addition, any new product that does not achieve market
acceptance may cause damage to our reputation or brand name.
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COMPETITION COULD HAMPER OUR ABILITY TO EXPAND OUR MEMBER BASE, RESULTING IN
INSUFFICIENT REVENUES, WHICH WOULD ADVERSELY AFFECT OUR BUSINESS.
We perceive competition to be intense and we expect it to increase
significantly in the future. We face competition from other companies with
e-commerce offerings as well as traditional suppliers and distributors of marine
products and marine companies that have or may develop their own online
solutions. In addition, providers of online marketplaces and online auction
services that currently focus on other industries may expand their services to
include marine products. Our competitors and potential competitors may develop
superior internet solutions that achieve greater market acceptance than the
Marex.com solution. In addition, substantially all of our prospective customers
have established long-standing relationships with some competitors and potential
competitors. We cannot be certain that we can compete successfully against
current and future competitors.
OUR MARKET IS CHARACTERIZED BY RAPID TECHNOLOGICAL CHANGES AND OUR FAILURE TO
SUCCESSFULLY RESPOND TO THESE CHANGES COULD HAVE AN ADVERSE AFFECT ON US.
The market for e-commerce solutions is characterized by rapid
technological advances, evolving standards in the internet and software markets,
changes in customer requirements and frequent new product and service
introductions and enhancements. As a result, we believe that our future success
depends upon our ability to enhance current internet-based solutions and
services, to develop and introduce new solutions and services that will achieve
market acceptance, and where necessary, to integrate internet-based solutions
with customers' systems. If we do not adequately respond to the need to develop
and introduce new solutions or services, then our business will be negatively
affected. Further, we may incur significant expense to integrate purchasing
solutions with customers' systems and to maintain this integration as customers'
systems evolve. Failure to provide this integration may delay or altogether
dissuade the marine market or a particular customer from adopting our
internet-based solutions.
OUR BUSINESS WILL SUFFER IF WE FAIL TO MANAGE OUR GROWTH.
Our growth has placed, and is expected to continue to place, a
significant demand on our sales, marketing, managerial, operational, information
technology and other resources. If we cannot manage our growth effectively, our
business will be adversely affected. We expect to need a significant number of
new employees to expand our business. Our current information systems,
procedures and controls may not support expanded operations and may hinder our
ability to take advantage of the market for e-commerce purchasing solutions to
the marine industry. Also, as we hire additional people, the newly assembled
teams may not be able to work well together as a cohesive unit.
OUR BUSINESS IS DEPENDENT ON RETAINING AND HIRING QUALIFIED PERSONNEL.
Competition for senior management, experienced sales and marketing
personnel, software developers, and other employees is intense, and we cannot be
certain that we will be successful in attracting and retaining personnel. We
have experienced difficulty from time to time in hiring the personnel necessary
to support the growth of our business, and we may experience similar difficulty
in hiring and retaining personnel in the future. The loss of the services of any
executive officers or key employees could have a negative effect on the
business. Failure to obtain or retain the services of necessary executive
officers or key employees may not support existing or expanded operations, and
may hinder our ability to take advantage of the market for e-commerce purchasing
solutions to the marine industry.
WE EXPECT THE PRICE OF OUR COMMON STOCK TO BE VOLATILE.
The market price of our common stock may fluctuate significantly in
response to a number of factors, some which are beyond our control, including
the following:
o quarterly variations in operating results;
o changes in market valuation of internet commerce companies;
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o announcements of significant contracts, acquisitions, strategic
partnerships, joint ventures or capital commitments;
o loss of a major customer or strategic partner, or failure to
complete a sale to a significant customer;
o additions or departures of any key personnel;
o future sales of our common stock; and
o stock market price and volume fluctuations, particularly in light of
the recent volatility of the stock markets.
OUR GROWTH MIGHT BE INHIBITED IF WE BECOME SUBJECT TO SALES OR OTHER TAXES.
The tax treatment of the internet and e-commerce is currently
unsettled. A number of proposals have been made at the federal, state and local
level and by some foreign governments that could impose taxes on the sale of
goods and services and other internet activities. A recently enacted federal law
places a temporary moratorium on some types of taxation on internet commerce. We
cannot predict the effect of current attempts at taxing or regulating commerce
over the internet. Any legislation that substantially impairs the growth of
e-commerce could have a material adverse effect on our business, financial
condition and operating results.
THE DEGREE OF LIQUIDITY OF OUR COMMON STOCK WILL BE AFFECTED BY OUR ABILITY TO
BECOME AND MAINTAIN OUR LISTING ON THE NASDAQ STOCK MARKET.
Currently, our common stock is being quoted on the OTC Bulletin Board.
We have applied for listing on The Nasdaq Stock Market. In order to become
listed on Nasdaq, and to maintain our listing on Nasdaq, we will have to meet
and maintain minimum thresholds, potentially including net tangible asset or
market capitalization and minimum public float, as well as other requirements.
If we are not able to meet the requirements to become listed, or if we fail to
meet the maintenance requirements, we will continue to, or resume, being traded
on the OTC Bulletin Board. Generally, being traded on the OTC Bulletin Board
results in impaired liquidity not only as a result of decreased trading volume,
but also due to delays in the timing of transactions, reduction in security
analyst and news media coverage, and potential damage to our reputation.
SECURITY PROBLEMS MAY INHIBIT THE GROWTH OF INTERNET-BASED PURCHASING SOLUTIONS,
WHICH MAY HAVE AN ADVERSE AFFECT ON OUR BUSINESS AND RESULT IN LIABILITY.
A significant barrier to the adoption of e-commerce is the secure
transmission of confidential information over public networks. Users generally
are concerned with security and privacy on the internet and any publicized
security problems could inhibit the growth of the internet, and therefore
inhibit the Marex.com solution as a means of conducting transactions. If there
is a breach in our security system, we could:
o lose members;
o face liability for any losses suffered by members; and
o be required to incur significant expenditures to protect against
security breaches.
SYSTEM FAILURE MAY CAUSE INTERRUPTION OF OUR SERVICES.
The performance of our server and networking hardware and software
infrastructure is critical to our business and reputation, and affects our
ability to process transactions, provide high quality customer service and
attract and retain customers, suppliers, users and strategic partners.
Currently, our primary infrastructure and systems are located in Atlanta,
Georgia, with a redundant site at our headquarters in Miami, Florida. Any
disruption that effects both systems, whether from a natural disaster or other
event, could result in an interruption in service, fewer transactions and, if
sustained or repeated, could impair our reputation and the attractiveness of our
services.
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WE MAY REQUIRE ADDITIONAL CAPITAL AND MAY NOT HAVE ACCESS TO THAT CAPITAL.
We believe that our current capital is sufficient to meet anticipated
needs for working capital and capital expenditures for at least the next 12
months. However, if our revenues fall short of our projections or our expenses
exceed our expectations, including any decision to acquire complementary
businesses, technologies or services, we may need additional capital. It is
possible that we may not be able to raise additional capital when needed, on
terms that are favorable to us, or at all. If we are unable to raise additional
capital when needed, we may be required to cease or significantly curtail our
operations. Furthermore, any additional financing may result in dilution to our
shareholders.
OUR INABILITY TO PROTECT OUR INTELLECTUAL PROPERTY RIGHTS COULD ADVERSELY AFFECT
OUR BUSINESS.
Our intellectual property is important to us. We seek to protect
intellectual property through copyrights, trademarks, trade secrets,
confidentiality provisions in customer, supplier and strategic relationship
agreements, nondisclosure agreements with third parties, employees and
contractors. We cannot assure that measures we take to protect intellectual
property will be successful or that third parties will not develop alternative
purchasing solutions that do not infringe upon our intellectual property. In
addition, we could be subject to intellectual property infringement claims by
others. Failure to protect against misappropriation of intellectual property, or
claims that we are infringing the intellectual property of third parties could
have a negative effect on our financial condition and results of operations.
POTENTIAL GOVERNMENTAL REGULATION OF THE INTERNET AND ONLINE COMMERCE COULD HARM
OUR BUSINESS.
Due to the increasing popularity and use of the internet and other
online services, various regulatory authorities are considering laws and
regulations with respect to the internet or other online services. These laws
may cover issues such as user privacy, pricing, content copyrights, and quality
of services. Furthermore, the growth and development of the market for online
commerce may prompt more stringent consumer protection laws that may impose
additional burdens on companies like us conducting business online. The adoption
of any additional laws or regulations may decrease the growth of the internet or
other online services, which could, in turn, decrease the demand for our systems
and services and increase our cost of doing business. Moreover, the
applicability to the internet and other online services of existing laws in
various jurisdictions governing issues such as property ownership, sales and
other taxes and personal privacy is uncertain and may take years to resolve. In
addition, as our services are available over the internet in multiple states and
foreign countries, and as we have numerous members residing in these states and
foreign countries, these jurisdictions may claim that our company is required to
qualify to do business as a foreign corporation in each state and foreign
country. Failure by our company to qualify as an out-of-state or "foreign"
corporation in a jurisdiction where it is required to do so could subject our
company to taxes and penalties for the failure to qualify. Our business could be
harmed by any of these new legislations or regulations, the application of laws
and regulations from jurisdictions whose laws do not currently apply to our
business or the applications of existing laws and regulations to the internet
and other online services.
OUR RESULTS OF OPERATIONS WILL FLUCTUATE BASED ON THE CYCLICAL NATURE OF THE
MARINE INDUSTRY.
Our business is seasonal due to the impact of the buying and selling
patterns of the members that utilize our system. We believe that the second and
third quarters are the peak periods for the recreational marine industry. In
addition, the recreational marine industry is highly cyclical and is highly
affected by a number of factors, including the following:
o economic conditions,
o consumer confidence levels, and
o weather conditions.
SOME PROVISIONS OF FLORIDA LAW COULD MAKE IT DIFFICULT OR PREVENT A TAKEOVER
OF OUR COMPANY.
The State of Florida has enacted legislation that may deter or
frustrate takeovers of Florida corporations. The Florida Control Share Act
generally provides that shares acquired in excess of specified thresholds will
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not possess any voting rights unless those voting rights are approved by a
majority vote of a corporation's disinterested shareholders. The Florida
Affiliated Transactions Act generally requires supermajority approval by
disinterested directors or shareholders of specified transactions between a
public corporation and holders of more than 1.0% of the outstanding voting
shares of the corporation (or their affiliates). In addition our articles of
incorporation authorize the issuance of up to 1,000,000 shares of "blank check"
preferred stock, of which 430,000 have been designated as series A1 convertible
preferred stock, with such designations, rights and preferences as may be
determined from time to time by our board of directors. Accordingly, our board
of directors may, without shareholder approval, issue preferred stock with
dividend, liquidation, conversion, voting or other rights that could adversely
affect the voting power or other rights of the holders of our common stock. The
issuance of additional shares of preferred stock could
o make the possible takeover of our company or the removal of our
management more difficult,
o discourage hostile bids for control of our company in which
shareholders may receive premiums for their common stock,
o adversely affect the voting and other rights of the holders of the
common stock, and
o result in a decrease in the value or market price of our common
stock.
FUTURE SALES OF OUR COMMON STOCK COULD DEPRESS OUR STOCK PRICE.
As of May 3, 2000, 6,423,806 shares of our common stock were issued
and outstanding. Of these shares, 2,233,489 shares were freely tradeable without
restriction or further registration under the Securities Act unless held by an
"affiliate" of ours. The remaining 4,190,317 shares of our common stock are
"restricted securities," as that term is defined under Rule 144 promulgated
under the Securities Act, and may be sold only if registered under the
Securities Act or sold in accordance with Rule 144 or another exemption from
registration under the Securities Act. No prediction can be made as to the
effect, if any, that sales of shares of our common stock or the availability of
shares of our common stock for sale will have on the market price of our common
stock prevailing from time to time. Nevertheless, the possibility that
substantial amounts of our common stock may be sold in the public market,
particularly at prices below prevailing market prices, may adversely affect the
market price of our common stock and could impair our ability to raise capital
through the sale of our equity securities.
FORWARD-LOOKING STATEMENTS
This prospectus, including the information incorporated by reference,
contains forward-looking statements within the meaning of Federal securities
law. Terminology such as "may," "will," "expect," "anticipate," "believe,"
"estimate," "continue," "predict," or other similar words identify
forward-looking statements. These statements discuss future expectations,
contain projections of results of operations or of financial condition or state
other forward-looking information. Forward-looking statements appear in a number
of places in this prospectus and include statements regarding our intent, belief
or current expectation about, among other things, (1) trends affecting the
industry in which we operate, as well as the industries we service and (2) our
business and growth strategies, including potential acquisitions. Although we
believe that the expectations reflected in these forward-looking statements are
based on reasonable assumptions, forward-looking statements are not guarantees
of future performance and involve risks and uncertainties. Actual results may
differ materially from those predicted in the forward-looking statements as a
result of various factors, including those set forth in "Risk Factors."
USE OF PROCEEDS
We will not receive any of the proceeds from the sale of shares of
common stock by the selling shareholders under this prospectus. We have agreed
to pay all of the expenses, estimated to be approximately $55,000, related to
this offering.
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SELLING SHAREHOLDERS
The following table provides information regarding the beneficial
ownership of shares of common stock which can be obtained by the selling
shareholders by converting shares of convertible preferred stock or exercising
warrants held by them within 60 days of the date of this prospectus, and as
adjusted to reflect the sale of all of their shares, except as otherwise
provided with respect to Genmar Holdings, Inc. The information regarding
ownership of shares of common stock after the offering assumes that all of the
shares registered under this prospectus have been sold. The selling shareholders
may actually sell all, some or none of the shares held by them. We have assumed
conversion of the preferred stock into common stock at the rate of 7.69 shares
of common stock for each share of preferred stock. Under the terms applicable to
the preferred stock, except in some circumstances, no holder's preferred stock
can convert or be converted into common stock if such conversion would result in
that holder, together with its affiliates, holding greater than 4.99% of our
outstanding common stock after the conversion.
<TABLE>
<CAPTION>
OWNERSHIP OF SHARES OWNERSHIP OF SHARES
OF COMMON STOCK OF COMMON STOCK
NAME AND ADDRESS PRIOR TO OFFERING NUMBER OF AFTER OFFERING
OF SELLING ----------------------- SHARES -----------------------
SHAREHOLDERS SHARES PERCENTAGE OFFERED SHARES PERCENTAGE
------------ ------ ---------- ------- ------ ----------
<S> <C> <C> <C> <C> <C>
Brown Simpson Strategic Growth Fund,
Ltd.................................. 1,000,000 13.47% 1,000,000 0 0
152 West 57th Street, 40th Floor
New York, NY 10019
Brown Simpson Strategic Growth Fund,
L.P.................................. 538,460 7.73 538,460 0 0
152 West 57th Street, 40th Floor
New York, NY 10019
Royal Bank of Canada ................... 384,614 5.65 384,614 0 0
c/o RBC Dominion Securities Corporation
One Liberty Plaza - 2nd Floor
165 Broadway
New York, NY 10006-1404
LBI Group, Inc.......................... 384,614 5.65 384,614 0 0
c/o Lehman Brothers, Inc.
3 World Financial Center
New York, NY 10285
Genmar Holdings, Inc.................... 1,595,927 19.90 153,846 1,442,081 18.33%
100 South 5th Street, Suite 400
Minneapolis, MN 55402
Marshall Marex L.P...................... 384,614 5.65 384,614 0 0
901 North Third Street
Minneapolis, MN 55401
Ford Allen Fund - I, L.P ............... 384,614 5.65 384,614 0 0
550 Brickell Ave., Penthouse II
Miami, FL 33131
</TABLE>
Except as set forth below, none of these selling shareholders have held any
position or office or had any other material relationship with us or any of our
affiliates within the last three years.
o We have entered into a Strategic Relationship Agreement with Genmar
Holdings, Inc. Under this agreement, we will develop and maintain,
as a part of our website, a system Genmar has agreed to use
exclusively for its electronic purchases of marine related products.
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PLAN OF DISTRIBUTION
GENERAL
We are registering the shares of common stock on behalf of the
selling shareholders. All costs, expenses and fees in connection with the
registration of the shares offered by this prospectus will be borne by us, other
than brokerage commissions and similar selling expenses, if any, attributable to
the sale of shares which will be borne by the selling shareholders. Sales of
shares may be effected by selling shareholders from time to time in one or more
types of transactions, which may include block transactions, in the
over-the-counter market, on a national securities market or quotation system, in
negotiated transactions, through put or call options transactions relating to
the shares, through short sales of shares, or a combination of these methods of
sale, at market prices prevailing at the time of sale, or at negotiated prices.
These transactions may or may not involve brokers or dealers. The selling
shareholders have advised us that they have not entered into any agreements,
understandings or arrangements with any underwriters or broker-dealers regarding
the sale of their securities, nor is there an underwriter or coordinated broker
acting in connection with the proposed sale of shares by the selling
shareholders.
The selling shareholders may enter into hedging transactions with
broker-dealers or other financial institutions. In connection with those
transactions, broker-dealers or other financial institutions may engage in short
sales of the shares or of securities convertible into or exchangeable for the
shares in the course of hedging positions they assume with selling shareholders.
The selling shareholders may also enter into options or other transactions with
broker-dealers or other financial institutions which require the delivery to
those broker-dealers or other financial institutions of shares offered by this
prospectus, which shares those broker-dealer or other financial institution may
resell pursuant to this prospectus, as amended or supplemented to reflect these
transactions.
The selling shareholders may make these transactions by selling shares
directly to purchasers or to or through broker-dealers, who may act as agents or
principals. Those broker-dealers may receive compensation in the form of
discounts, concessions or commissions from selling shareholders and/or the
purchasers of shares for whom the broker-dealers may act as agents or to whom
they sell as principal, or both, which compensation as to a particular
broker-dealer might be in excess of customary commissions.
The selling shareholders and any broker-dealers that act in connection
with the sale of shares may be deemed to be "underwriters" within the meaning of
Section 2(11) of the Securities Act. Any commissions received by the
broker-dealers or any profit on the resale of the shares sold by them while
acting as principals might be deemed to be underwriting discounts or commissions
under the Securities Act. The selling shareholders may agree to indemnify any
agent, dealer or broker-dealer that participates in transactions involving sales
of the shares against various liabilities, including liabilities arising under
the Securities Act.
Because selling shareholders may be deemed to be "underwriters" within
the meaning of Section 2(11) of the Securities Act, the selling shareholders
will be subject to the prospectus delivery requirements of the Securities Act.
We have informed the selling shareholders that the anti-manipulative provisions
of Regulation M promulgated under the Exchange Act may apply to their sales in
the market.
Selling shareholders also may resell all or a portion of the shares in
open market transactions in reliance upon Rule 144 under the Securities Act,
provided they meet the criteria and conform to the requirements of Rule 144.
Upon our being notified by a selling shareholder that any material
arrangement has been entered into with a broker-dealer for the sale of shares
through a block trade, special offering, exchange distribution or secondary
distribution or a purchase by a broker or dealer, a supplement to this
prospectus will be filed, if required, pursuant to Rule 424(b) under the
Securities Act, disclosing:
o the name of that selling shareholder and of the participating
broker-dealer(s);
10
<PAGE> 12
o the number of shares involved;
o the initial price at which these shares were sold;
o the commissions paid or discounts or concessions allowed to the
broker-dealer(s), where applicable;
o that the broker-dealer(s) did not conduct any investigation to
verify the information set out or incorporated by reference in this
prospectus; and
o other facts material to the transactions.
DESCRIPTION OF SECURITIES
Our authorized capital stock consists of 25,000,000 shares of common
stock, $.01 par value, and 1,000,000 shares of preferred stock, $.01 par value.
COMMON STOCK
As of May 3, 2000, there were 6,423,806 shares of common stock
outstanding that were held of record by approximately 125 shareholders.
The holders of common stock are entitled to one vote per share on all
matters to be voted upon by the shareholders. Subject to any preferential rights
of any outstanding preferred stock holders, the holders of the common stock are
entitled to receive dividends on a pro rata basis, if any, declared from time to
time by the board of directors out of legally available funds. In the event of
our liquidation, dissolution or winding up, subject to any preferential rights
of preferred stock holders, the holders of our common stock are entitled to
share on a pro rata basis in all assets remaining after payment of liabilities.
Our common stock has no preemptive or conversion rights. There are no redemption
or sinking fund provisions applicable to the common stock. All outstanding
shares of our common stock are fully paid and nonassessable.
PREFERRED STOCK
Our board of directors has the authority to designate and issue
1,000,000 shares of preferred stock in one or more classes or series, with the
shares of each class or series to have such designations and powers, preferences
and rights, and qualifications, limitations and restrictions as shall be
determined by the board of directors with no further vote or action being taken
by the shareholders. The issuance of preferred stock may have the effect of
delaying, deferring or preventing a change in control of our company and may
adversely affect the voting power of the holders of the common stock.
Of the 1,000,000 authorized shares of preferred stock, 430,000 shares
have been designated series A1 convertible preferred stock. As of the date of
this prospectus, 420,000 shares are issued and outstanding. Each share of
the series A1 convertible preferred stock has a stated value of $100. Each
holder of the series A1 convertible preferred stock has the right to one vote
for each share of common stock into which the shares of series A1 convertible
preferred stock owned by such holder could then be converted. Specified
corporate actions can not be taken without the affirmative vote of at least 90%
of the shares of series A1 convertible preferred stock outstanding.
For liquidation purposes, the series A1 convertible preferred stock
ranks senior to all classes of common stock and PARI PASSU with any other series
of preferred stock or other of our securities that may be convertible into our
common stock. Upon liquidation, a holder of the series A1 convertible preferred
stock shall be entitled to receive, out of funds legally available therefor, and
before any distribution is made on any junior security, an amount per share
equal to the lesser of the stated value and the pro rated portion of our assets
available for distribution.
The holders of the series A1 convertible preferred stock are entitled
to receive dividends, whether in cash, property or otherwise, other than
dividends payable solely in shares of common stock, out of any assets legally
available therefor, ratably with any declaration or payment of any dividend to
11
<PAGE> 13
any of our junior securities, when, as and if declared by our board of
directors, in an amount per share equal to that which the holders would have
been entitled had they converted their shares of the series A1 convertible
preferred stock into common stock immediately prior to the payment of such
dividends. No rights to any dividends shall otherwise accrue to the holders of
the series A1 convertible preferred stock unless declared by our board of
directors.
The shares of series A1 convertible preferred stock are convertible, at
the option of the holders, into shares of our common stock based upon an
adjustable conversion formula. They are also automatically convertible into
common stock upon the occurrence of events that are described in the certificate
of designation, as amended. As of May 3, 2000, all 420,000 shares of series A1
convertible preferred stock would be convertible into approximately 3,230,769
shares of our common stock. The shares of series A1 convertible preferred stock
are also redeemable by us, at the option of the holder, in some circumstances.
LEGAL MATTERS
The validity of the shares being offered by this prospectus will be
passed upon for us by Greenberg Traurig, P.A., Miami, Florida.
EXPERTS
The financial statements incorporated by reference in this Registration
Statement on Form S-3 for the year ended December 31, 1999, have been audited by
Arthur Andersen LLP, independent certified public accountants, as indicated in
their report with respect thereto, and is included herein in reliance upon the
authority of said firm as experts in given said report. The financial statements
incorporated in this Registration Statement on Form S-3 by reference to the
Annual Report on Form 10-K for the years ended December 31, 1997 and 1998, have
been so incorporated in reliance on the report of McClain & Company, L.C.,
independent certified public accountants, given on the authority of said firm as
experts in auditing and accounting.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and current reports, proxy statements and
other information with the SEC under File No. 000-25129. You may read and copy
any document in our public files at the SEC's offices at:
o Judiciary Plaza
450 Fifth Street, N.W.
Room 1024
Washington, D.C. 20549
o 500 West Madison Street
Suite 1400
Chicago, Illinois 60606
o 3475 Lenox Road, N.E.
Suite 1000
Atlanta, Georgia 30326
and
o 7 World Trade Center
Suite 1300
New York, New York 10048.
Please call the SEC at l-800-SEC-0330 for further information on the
public reference rooms. Our SEC filings are also available to the public from
the SEC's web site at http://www.sec.gov through the SEC's electronic data
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<PAGE> 14
gathering analysis and retrieval system, EDGAR. Our common stock is traded on
the OTC Bulletin Board under the symbol "MRXX." Information about us is also
available from the National Association of Securities Dealers, Inc., 1735 K
Street, N.W., Washington, D.C. 20006.
The SEC allows us to "incorporate by reference" the information we file
with it, which means that we can disclose important information to you by
referring to those documents. The information incorporated by reference is
considered to be part of this prospectus. Later information that we file with
the SEC will automatically update and supersede this information. We incorporate
by reference the documents listed below and any future filings made with the SEC
under Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934
by us:
o Our Annual Report on Form l0-K, for the fiscal year ended December
31, 1999.
o Our Definitive Proxy Statement under Section 14(A) of the Exchange
Act filed on April 17, 2000.
o Our Current Reports on Form 8-K filed on March 8, 2000 and April 27,
2000.
We will provide to you, without charge, a copy of any and all of the
documents or information referred to above that we have incorporated by
reference in this prospectus, other than exhibits to the documents unless those
exhibits are specifically incorporated by reference into this prospectus.
Requests for copies should be directed to the following address:
Marex.com, Inc.
2701 South Bayshore Drive
5th Floor
Miami, Florida 33133
Telephone (305) 285-2003
Attn: Chief Financial Officer
This prospectus is part of a registration statement that we filed with
the SEC. You should rely only on the information incorporated by reference or
provided in this prospectus or any supplement. We have not authorized anyone
else to provide you with different information. You should not assume that the
information in this prospectus or any supplement is accurate as of any date
other than the date on the front of that document.
13
<PAGE> 15
===============================================================================
3,230,762 SHARES
MAREX.COM, INC.
COMMON STOCK
--------------------
PROSPECTUS
--------------------
MAY 4, 2000
===============================================================================
<PAGE> 16
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The Registrant will pay all of the expenses incurred in connection with
the offering described in this registration statement, other than underwriting
commissions and discounts. Such expenses are estimated to be as follows:
Securities and Exchange Commission registration fee ......... $14,180
-------
Legal fees and expenses ..................................... 25,000
-------
Transfer agent and registrar fees ........................... 0
-------
Printing expenses ........................................... 4,000
-------
Accounting fees and expenses ................................ 8,500
-------
Miscellaneous ............................................... 3,320
-------
Total ....................................................... $55,000
=======
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Registrant has authority under Section 607.0850 of the Florida
Business Corporation Act to indemnify its directors and officers to the extent
provided for in such statute. The Registrant's Amended and Restated Articles of
Incorporation and Bylaws provide that the Registrant shall indemnify and may
insure its officers and directors to the fullest extent not prohibited by law.
The Registrant has entered into an agreement with each of its directors and
executive officers wherein it has agreed to indemnify each of them to the
fullest extent permitted by law. The Registrant also maintains a policy of
directors' and officers' liability insurance that insures, subject to certain
exclusions, the Registrant's directors and officers against the cost of defense,
settlement of, payment of a judgment in connection with a proceeding, whether
actual or threatened, to which any such person may be made a party by reason of
the fact that such person is or was a director or officer of the Registrant.
ITEM 16. EXHIBITS.
EXHIBIT
NUMBER DESCRIPTION
------ -----------
3.1 Amended and Restated Articles of Incorporation (1)
3.2 Bylaws (1)
4.1 Amended and Restated Certificate of Designation
5.1 Opinion of Greenberg Traurig, P.A.
23.1 Consent of Greenberg Traurig, P.A. (contained in
Exhibit 5.1 hereto)
23.2 Consent of Arthur Andersen LLP
23.3 Consent of McClain & Company, L.C.
- -------------
(1) Previously filed as an exhibit to our Form 10-SB and Amendment No. 1 to
Form 10-SB.
II-1
<PAGE> 17
ITEM 17. UNDERTAKINGS.
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or
sales are being made, a post-effective amendment to this
Registration Statement;
(2) To include any material information with respect
to the plan of distribution not previously disclosed in this
Registration Statement or any material change to such
information in this Registration Statement;
(3) That, for the purpose of determining any
liability under the Securities Act of 1933, each such
post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered
therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof;
and
(4) To remove from registration by means of a
post-effective amendment any of the securities being
registered which remain unsold at the termination of the
offering.
(b) The undersigned Registrant hereby undertakes that, for
purposes of determining any liability under the Securities Act of 1933
(the "Securities Exchange Commission"), each filing of the Registrant's
annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 that is incorporated by reference in
the Registration Statement 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.
(c) 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 advised that in the
opinion of the Securities and Exchange Commission such indemnification
is against public policy as expressed in the Securities 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 Securities Act and will be governed by the
final adjudication of such issue.
II-2
<PAGE> 18
SIGNATURES
Pursuant to the requirements of the Securities Act, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Miami, State of Florida, on this 4th day of May,
2000.
MAREX.COM, INC.
By: /s/ KENBIAN NG
--------------------------------------
Kenbian A. Ng, Chief Financial Officer
POWER OF ATTORNEY
Each person whose signature appears below hereby appoints Kenbian Ng
his true and lawful attorney-in-fact with the authority to execute in the name
of each such person, and to file with the Securities and Exchange Commission,
together with any exhibits thereto and other documents therewith, any and all
amendments (including without limitation post-effective amendments) to this
registration statement necessary or advisable to enable the registrant to comply
with the Securities Act of 1933, as amended, and any rules, regulations and
requirements of the Securities and Exchange Commission in respect thereof, which
amendments may make such other changes in the registration statement as the
aforesaid attorney-in-fact executing the same deems appropriate.
Pursuant to the requirements of the Securities Act, this Registration
Statement has been signed by the following persons in the capacities and on the
dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ DAVID A. SCHWEDEL Chairman of the Board, Chief Executive Officer and May 4, 2000
- ------------------------------------ Director
David A. Schwedel
/s/ KENBIAN A. NG Chief Financial Officer May 4, 2000
- ------------------------------------
Kenbian A. Ng
/s/ DAN GALLAGHER
- ------------------------------------ Director May 4, 2000
Dan Gallagher
/s/ GEORGE GLAZER
- ------------------------------------ Director May 4, 2000
George Glazer
/s/ ROBERT C. HARRIS, JR.
- ------------------------------------ Director May 4, 2000
Robert C. Harris, Jr.
/s/ ROGER A. TROMBINO
- ------------------------------------ Director May 4, 2000
Roger A. Trombino
</TABLE>
II-3
<PAGE> 1
Exhibit 4.1
ARTICLES OF AMENDMENT PURSUANT TO SECTION 607.0602 OF
THE FLORIDA BUSINESS CORPORATION ACT
AMENDED AND RESTATED CERTIFICATE OF DESIGNATION,
PREFERENCES, RIGHTS AND LIMITATIONS
OF
SERIES A1 CONVERTIBLE PREFERRED STOCK, $.01 PAR VALUE
OF
MAREX.COM, INC.
MAREX.COM, INC., F/K/A AFFILIATED NETWORKS, INC., hereafter called the
"Company," a corporation organized and existing under the Florida Business
Corporation Act, does hereby certify that, pursuant to the authority conferred
upon the Board of Directors of the Company (the "Board of Directors") by the
Amended and Restated Articles of Incorporation of the Company (the "Articles of
Incorporation"), and pursuant to the provisions of ss.607.0602 of the Florida
Business Corporation Act, said Board of Directors, by actions duly taken on
February 25, 2000, adopted resolutions designating, creating, authorizing and
providing for the issuance of a series of preferred stock, par value $0.01 per
share, to be designated as Series A1 Convertible Preferred Stock, and, by
actions duly taken on March 2, 2000, increased the number of authorized shares
of the Series A1 Convertible Preferred Stock to 430,000. These actions did not
require a shareholder action and were authorized by all necessary actions of the
Board of Directors. This Amended and Restated Certificate of Designation is
intended to supersede the original Certificate of Designation for the Series A1
Convertible Preferred Stock. The Series A1 Convertible Preferred Stock has the
following designation, preferences, rights and limitations:
<PAGE> 2
AMENDED AND RESTATED CERTIFICATE OF DESIGNATION OF
SERIES A1 CONVERTIBLE PREFERRED STOCK
OF MAREX.COM, INC.
1. DESIGNATION, AMOUNT, PAR VALUE, STATED VALUE, RANK AND CERTAIN
DEFINED TERMS.
a. The preferred stock authorized under this Certificate of
Designation shall be designated as the Series A1 Convertible Preferred Stock
(the "SERIES A1 PREFERRED STOCK"), and the number of shares so designated shall
be 430,000, subject to adjustment for any stock splits, stock dividends or
similar transactions affecting the Series A1 Preferred Stock. Each share of
Series A1 Preferred Stock, par value .01 per share, shall have a stated value of
$100.00 per share (the "STATED VALUE").
b. The Series A1 Preferred Stock shall rank senior to all classes of
Common Stock and senior to or PARI PASSU with each other series of preferred
stock or class of other capital stock or instruments of the Company convertible
into Common Stock of the Company with respect to dividend distributions,
redemptions and distributions upon Liquidation.
c. Certain terms used herein are defined in Section 10 hereof.
2. DIVIDENDS. The Holders of the Series A1 Preferred Stock shall be
entitled to receive dividends, whether in cash, property or otherwise (other
than dividends payable solely in shares of Common Stock), out of any assets
legally available therefor, ratably with any declaration or payment of any
dividend to any Junior Securities of the Company, when, as and if declared by
the Board of Directors, in an amount per share equal to that which the Holders
would have been entitled had they converted such shares of Series A1 Preferred
Stock into Common Stock immediately prior to the payment of such dividends. No
rights to any dividends shall otherwise accrue to the Holders of the Series A1
Preferred Stock unless declared by the Board of Directors.
3. LIQUIDATION.
a. Upon any Liquidation, the Holders of record of the Series A1
Preferred Stock shall be entitled to receive, out of the assets of the Company
and before any distribution or payment is made upon any Junior Securities, for
each share of Series A1 Preferred Stock, an amount per share equal to the lesser
of (i) the Stated Value or (ii) the assets of the Company available for
distribution to its stockholders, distributed ratably among the Holders of the
outstanding Series A1 Preferred Stock (determined on an "as converted" basis)
and the holders of all of the outstanding capital stock of the Company.
b. The Company shall mail written notice of any such Liquidation,
not less than 45 days prior to the payment date stated therein, to each Holder.
2
<PAGE> 3
4. VOTING RIGHTS.
a. GENERAL VOTING RIGHTS. Each Holder shall have the right to one
vote for each share of Common Stock into which the shares Series A1 Preferred
Stock owned by such Holder could then be converted, and with respect to such
vote, such Holder shall have full voting rights and powers equal to the voting
rights and powers of the holders of Common Stock, and shall be entitled to
notice of any stockholders' meeting in accordance with the charter documents of
the Company, and shall be entitled to vote, together with the holders of Common
Stock, with respect to any question upon which holders of Common Stock have the
right to vote. Fractional votes shall not, however, be permitted and any
fractional voting rights available on an as-converted basis (after aggregating
all shares into which shares of Series A1 Preferred Stock held by each Holder
could be converted) shall be rounded to the nearest whole number.
b. CERTAIN LIMITATIONS. As long as any shares of Series A1 Preferred
Stock are outstanding, the Company shall not, and shall cause its subsidiaries
not to, without the affirmative vote or consent of the Holders of 90% of the
shares of the Series A1 Preferred Stock then outstanding (or, with respect to
clause (iv) only, 75% of the shares of the Series A1 Preferred Stock then
outstanding) (with shares held by the Company or any of its Affiliates not being
considered to be outstanding for this purpose) voting or consenting, as the case
may be, as one class:
(i) amend or otherwise alter this Certificate of Designation
in any manner that adversely affects the absolute or relative rights,
powers, preferences, privileges or voting rights given to the Series A1
Preferred Stock;
(ii) amend or otherwise alter the Articles of Incorporation,
bylaws or other charter documents of the Company so as to affect
adversely the absolute or relative powers, preferences or rights of the
Series A1 Preferred Stock;
(iii) increase or decrease (other than by redemption or
conversion) the total number of authorized shares of Series A1
Preferred Stock;
(iv) sell all or substantially all of its assets;
(v) avoid or seek to avoid the observance or performance of
any of the terms to be observed or performed by the Company under this
Certificate of Designation; or
(vi) enter into any agreement with respect to the foregoing.
5. CONVERSION.
a. OPTIONAL CONVERSION. Each share of Series A1 Preferred Stock
shall be convertible, at the option of the Holder thereof, at any time after
Original Issue Date, into that number of fully paid and non-assessable shares of
Common Stock as is determined by the quotient of (i) the Stated Value over (ii)
the per share Conversion Price in effect at the time of conversion, determined
as hereinafter provided. The initial per share Conversion Price shall be $13.00,
subject to adjustment from time to time as provided herein (the "CONVERSION
PRICE").
3
<PAGE> 4
b. AUTOMATIC CONVERSION.
(i) Upon the completion of a QPO, all shares of Series A1
Preferred Stock then outstanding shall, by virtue of and simultaneously
with such QPO and without any action on the part of the Holders or the
Company, be automatically converted into that number of fully paid and
non-assessable shares of Common Stock into which such shares of Series
A1 Preferred Stock would have been convertible in the event of an
optional conversion at such time pursuant to Section 5(a) hereof.
(ii) Following the one-year anniversary of the date that
Securities and Exchange Commission declares effective the Initial
Registration Statement (as defined in the Registration Rights
Agreement), if the Per Share Market Value exceeds 200% of the then
effective Conversion Price for a period of twenty (20) consecutive
Trading Days (the "TRIGGERING EVENT") all shares of Series A1 Preferred
Stock then outstanding shall, by virtue of and simultaneously with such
Triggering Event and without any action on the part of the Holders or
the Company, be automatically converted into that number of fully paid
and non-assessable shares of Common Stock into which such shares of
Series A1 Preferred Stock would have been convertible in the event of
an optional conversion at such time pursuant to Section 5(a) hereof;
PROVIDED, HOWEVER, that such Triggering Event shall not trigger the
automatic conversion of the Series A1 Preferred Stock into Common Stock
unless (i) (a) any Registration Statement required to be filed and be
effective pursuant to the Registration Rights Agreement is then in
effect and has been in effect and sales of all of the Underlying Shares
can be made thereunder for at least five (5) Business Days prior to the
Triggering Event or (b) the Underlying Shares are able to be sold
without registration pursuant to Rule 144(k) promulgated under the
Exchange Act, (ii) the Company has a sufficient number of authorized
shares of Common Stock reserved for issuance upon full conversion of
the Series A1 Preferred Stock at the then applicable Conversion Price
and (iii) the Company is not then in breach of Section 5(c) hereof.
c. MECHANICS OF CONVERSION. A Holder shall effect conversions by
surrendering to the Company, or to the Company's transfer agent, the certificate
or certificates representing the shares of Series A1 Preferred Stock to be
converted, together with a copy of the form of conversion notice attached hereto
as EXHIBIT A (the "CONVERSION NOTICE"). Each Conversion Notice shall specify the
Holder, the name or names in which the certificate or certificates for shares of
Common Stock are to be issued, the number of shares of Series A1 Preferred Stock
to be converted and the date on which such conversion is to be effected, which
date may not be prior to the date the Holder delivers such Conversion Notice by
facsimile (the "CONVERSION DATE"). If no Conversion Date is specified in a
Conversion Notice, the Conversion Date shall be the date that the Conversion
Notice is deemed delivered pursuant to Section 11. The Company shall, within
three (3) Trading Days after the receipt of the Conversion Notice, cause to be
delivered to the Holder, or to such Holder's nominee or nominees, (i) a
certificate or certificates which shall be free of restrictive legends and
trading restrictions (other than those required pursuant to the Purchase
Agreement or otherwise required by law) representing the number of shares of
Common Stock being acquired upon the conversion of shares of Series A1 Preferred
Stock and (ii) if the Holder is converting less than all the shares of Series A1
Preferred Stock represented by the certificate or certificates tendered by the
Holder with the
4
<PAGE> 5
Conversion Notice, one or more certificates representing the number of shares of
Series A1 Preferred Stock not converted. The Person or Persons entitled to
receive the shares of Common Stock issuable upon such conversion shall be
treated for all purposes as the record holder or holders of such shares of
Common Stock as of the Conversion Date. Upon request of the Holder, and in
compliance with the provisions hereof, in lieu of physical delivery of the
shares of Common Stock, provided the Company's transfer agent is participating
in the Depositary Trust Company ("DTC") Fast Automated Securities Transfer
(FAST) program, the Company shall use its best efforts to cause its transfer
agent to electronically transmit any certificate or certificates required to be
delivered to the Holder (or the Holder's nominee) under this Section 5 by
crediting the account of the Holder's (or the Holder's nominee's) Prime Broker
with DTC through its Deposit Withdrawal Agent Commission system. The time period
for delivery described herein shall apply to any such electronic transmittals.
If in the case of any Conversion Notice such certificate or certificates are not
delivered to or as directed by the applicable Holder by the tenth (10th) Trading
Day after the Conversion Date, the Holder shall be entitled at any time on or
before its receipt of such certificate or certificates thereafter to rescind
such conversion by written notice to the Company, in which event the Company
shall immediately return the certificates representing the shares of Series A1
Preferred Stock for which Common Stock was not delivered pursuant to such
conversion.
d. FAILURE TO CONVERT. If the Company fails to deliver to the Holder
(or to the Holder's nominee) such certificate or certificates pursuant to this
Section 5 on or prior to the seventh (7th) Trading Day after the Conversion Date
(the "DELIVERY DATE"), in addition to all other remedies that such Holder may
pursue hereunder or under the Purchase Agreement, the Company shall pay to such
Holder upon demand an amount in cash equal to the product of (a) the number of
shares of Common Stock required to be issued upon conversion of such shares of
Series A1 Preferred Stock, (b) the Per Share Market Value on the Conversion
Date, (c) the number of days after the three (3) Trading Day period referred to
in Section 5(c) that the Company fails to deliver such certificates and (d)
.005. For the avoidance of doubt, no Holder shall be entitled to any such
payment if the Company delivers to such Holder a certificate or certificates
representing the total number of shares of Common Stock being acquired upon
conversion of such shares of Series A1 Preferred Stock prior to the Delivery
Date.
6. RESERVATION OF SHARES. The Company covenants that it will at all
times reserve and keep available out of its authorized and unissued Common
Stock, solely for the purpose of issuance upon conversion of the Series A1
Preferred Stock and free from preemptive rights or any other actual contingent
purchase rights of Persons other than the Holders of Series A1 Preferred Stock,
not less than 100% of such number of shares of Common Stock as shall (subject to
any additional requirements of the Company as to reservation of such shares set
forth in the Purchase Agreement) be issuable (taking into account the
adjustments of Section 7 hereof) upon the conversion of all outstanding shares
of Series A1 Preferred Stock (without regard to any limitations on conversion).
The Company shall, from time to time in accordance with Florida law, take all
steps necessary to increase the authorized amount of its Common Stock if at any
time the authorized number of shares of Common Stock remaining unissued shall
not be sufficient to permit the conversion of all of the shares of the Series A1
Preferred Stock. The Company covenants that all shares of Common Stock that
shall be so issuable shall, upon issue, be duly authorized, validly issued and
fully paid, nonassessable and, subsequent to the effectiveness of the Initial
Registration Statement (as defined in the Registration Rights
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Agreement) and other than any restrictions that may be imposed thereon by the
Holder thereof, freely tradable.
7. ADJUSTMENT OF CONVERSION PRICE.
a. COMMON STOCK DIVIDENDS; COMMON STOCK SPLITS; RECLASSIFICATION. If
the Company, at any time after the Original Issue Date (i) shall pay or make a
stock dividend on its Common Stock in shares of Common Stock, (ii) subdivide
outstanding shares of Common Stock into a larger number of shares or (iii) issue
by reclassification of shares of Common Stock any shares of Common Stock of the
Company, then the Conversion Price shall be multiplied by a fraction, the
numerator of which shall be the number of shares of Common Stock outstanding
before such event and the denominator of which shall be the number of shares of
Common Stock outstanding after such event. Any adjustment made pursuant to this
Section 7(a) shall become effective immediately after the record date for the
determination of shareholders entitled to receive such dividend or distribution
and shall become effective immediately after the effective date in the case of a
subdivision or re-classification.
b. RIGHTS; WARRANTS. If the Company, at any time after the Original
Issue Date, shall fix a record date for the issuance of rights, options,
warrants or other securities to the holders of its Common Stock entitling them
to subscribe for or purchase, exchange for, convert into or otherwise acquire
shares of Common Stock, or any stock or other securities convertible into or
exchangeable for Common Stock, for no consideration or for a price per share
less than the Conversion Price, then the Conversion Price shall be multiplied by
a fraction, the numerator of which shall be the number of shares of Common Stock
outstanding immediately prior to such issuance or sale plus the number of shares
of Common Stock which the aggregate consideration received by the Company would
purchase at the Conversion Price, and the denominator of which shall be the
number of shares of Common Stock outstanding immediately prior to such issuance
or sale plus the number of additional shares of Common Stock offered for
subscription, purchase, conversion, exchange or acquisition, as the case may be.
Such adjustment shall be made whenever such rights, options, warrants or other
securities are issued, and shall become effective immediately after the record
date for the determination of shareholders entitled to receive such rights,
options, warrants or other securities.
c. SUBSCRIPTION RIGHTS. If the Company, at any time after the
Original Issue Date, shall fix a record date for the distribution to holders of
Common Stock evidence of its indebtedness or assets or rights, options, warrants
or other securities entitling them to subscribe for or purchase, convert into,
exchange for or otherwise acquire any security (excluding those referred to in
Sections 7(a) and (b) hereof), then in each such case the Conversion Price at
which the Series A1 Preferred Stock shall thereafter be convertible shall be
determined by multiplying the Conversion Price in effect immediately prior to
such record date by a fraction, the numerator of which shall be the Conversion
Price on such record date less the then fair market value at such record date of
the portion of such assets or evidence of indebtedness so distributed applicable
to one outstanding share of Common Stock as determined by the Board of Directors
in good faith, and the denominator of which shall be the Conversion Price as of
such record date; PROVIDED, HOWEVER, that in the event of a distribution
exceeding ten percent (10%) of the net assets of the
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Company, such fair market value shall be determined by an Appraiser selected in
good faith by the Holders of the Series A1 Preferred Stock; and PROVIDED,
FURTHER, that the Company, after receipt of the determination by such Appraiser,
shall have the right to select in good faith an additional Appraiser meeting the
same qualifications, in which case the fair market value shall be equal to the
average of the determinations by each such Appraiser. Such adjustment shall be
made whenever any such distribution is made and shall become effective
immediately after the record date mentioned above.
d. RECORD DATE. If the Company takes a record of the holders of
Common Stock for the purpose of entitling them (i) to receive a dividend or
other distribution payable in Common Stock, rights, options, warrants or other
securities or (ii) to subscribe for or purchase Common Stock, rights, options,
warrants or other securities, then, for the purposes of this Section 7, such
record date will be deemed to be the date of the issue or sale of the shares of
Common Stock deemed to have been issued or sold upon the declaration of such
dividend or the making of such other distribution or the date of the granting of
such right of subscription or purchase, as the case may be.
e. NOTICE OF ADJUSTMENT. Whenever the Conversion Price is adjusted
pursuant to this Section 7 the Company shall promptly deliver to the Holders a
notice setting forth the Conversion Price after such adjustment and setting
forth a brief statement of the facts requiring such adjustment. Such notice
shall be signed by the chairman, president or chief financial officer of the
Company.
f. ADJUSTMENT FOR RECLASSIFICATION, EXCHANGE AND SUBSTITUTION. If at
any time after the Original Issue Date the Common Stock issuable upon the
conversion of the Series A1 Preferred Stock is changed into the same or a
different number of shares of any class or classes of stock, whether by
recapitalization, reclassification or otherwise (other than a subdivision of its
Common Stock or dividend on it shares of Common Stock paid in shares of Common
Stock, and other than a reorganization, merger or consolidation provided for
elsewhere in this Section 7), in any such event each Holder of Series A1
Preferred Stock shall have the right thereafter to convert such stock into the
kind and amount of stock and other securities and property receivable in
connection with such recapitalization, reclassification or other change with
respect to the maximum number of shares of Common Stock into which such shares
of Series A1 Preferred Stock could have been converted immediately prior to such
recapitalization, reclassification or change, all subject to further adjustments
as provided herein or with respect to such other securities or property by the
terms thereof.
g. REORGANIZATIONS, MERGERS OR CONSOLIDATIONS. If at any time after
the Original Issue Date the Common Stock is converted into other securities or
property, whether pursuant to a reorganization, merger, consolidation or
otherwise (other than a recapitalization, subdivision, reclassification,
exchange or substitution of shares provided for elsewhere in this Section 7), as
a part of such transaction, provision shall be made so that the Holders of the
Series A1 Preferred Stock shall thereafter be entitled to receive upon
conversion thereof the number of shares of stock or other securities or property
to which a holder of the maximum number of shares of Common Stock deliverable
upon conversion would have been entitled in connection with such
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transaction, subject to adjustment in respect of such stock or securities by the
terms thereof. In any such case, appropriate adjustment shall be made in the
application of the provisions of this Section 7 with respect to the rights of
the Holders Series A1 Preferred Stock after such transaction to the end that the
provisions of this Section 7 (including adjustment of the Series A1 Conversion
Price then in effect and the number of shares issuable upon conversion of the
Series A1 Preferred Stock) shall be applicable after that event and be as nearly
equivalent as practicable. The Company shall not be a party to any
reorganization, merger or consolidation in which the Company is not the
surviving entity unless the entity surviving such transaction assumes all of the
Company's obligations hereunder.
h. ISSUANCES BELOW CONVERSION PRICE. If the Company, at any time
when any shares of Series A1 Preferred Stock are outstanding, takes any of the
actions described in this Section 7(h), the majority of the Holders shall have
the right to amend this Certificate of Designation as set forth below:
(i) issues or sells, or is deemed to have issued or sold, any
Common Stock (other than Excluded Securities);
(ii) in any manner grants, issues or sells any rights,
options, warrants, options to subscribe for or to purchase Common Stock
or any stock or other securities convertible into or exchangeable for
Common Stock (other than any Excluded Securities) (such rights, options
or warrants being herein called "OPTIONS" and such convertible or
exchangeable stock or securities being herein called "CONVERTIBLE
SECURITIES"); or
(iii) in any manner issues or sells any Convertible
Securities;
for (a) with respect to paragraph (h)(i), above, a price per share, or (b) with
respect to paragraphs h(ii) or h(iii), above, a price per share for which Common
Stock issuable upon the exercise of such Options or upon conversion or exchange
of such Convertible Securities is, less than the Conversion Price in effect
immediately prior to such issuance or sale, then, immediately after such
issuance, sale or grant, the majority of the Holders shall have the right to
amend the issuance terms of the Common Stock issuable upon conversion of the
shares of Series A1 Preferred Stock (including adjustment of the Conversion
Price) so that the issuance terms hereof are equivalent to the issuance terms of
such offering. No modification of the issuance terms shall be made upon the
actual issuance of such Common Stock upon conversion or exchange of such Options
or Convertible Securities. If there is a change at any time in (i) the exercise
price provided for in any Options, (ii) the additional consideration, if any,
payable upon the issuance, conversion or exchange of any Convertible Securities
or (iii) the rate at which any Convertible Securities are convertible into or
exchangeable for Common Stock, then immediately after such change the Holders
shall have the right to amend the issuance terms of such Common Stock issuable
upon conversion of the shares of Series A1 Preferred Stock accordingly,
including, without limitation, by reducing the Conversion Price in effect to the
Conversion Price which would have been in effect at such time had such Options
or Convertible Securities still outstanding provided for such changed exercise
price, additional consideration or changed conversion rate, as the case may be,
at the time initially granted, issued or sold; provided that no
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adjustment shall be made if such adjustment would result in an increase of the
Conversion Price then in effect.
i. EFFECT ON CONVERSION PRICE OF CERTAIN EVENTS. For purposes of
determining the adjusted Conversion Price under Section 7(h), the following
shall be applicable:
(i) CALCULATION OF CONSIDERATION RECEIVED. If any Common
Stock, Options or Convertible Securities are issued or sold or deemed
to have been issued or sold for cash, the consideration received
therefor will be deemed to be the net amount received by the Company
therefor, without deducting any expenses paid or incurred by the
Company or any commissions or compensations paid or concessions or
discounts allowed to underwriters, dealers or others performing similar
services in connection with such issue or sale. In case any Common
Stock, Options or Convertible Securities are issued or sold for a
consideration other than cash, the amount of the consideration other
than cash received by the Company will be the fair value of such
consideration, except where such consideration consists of securities
listed or quoted on a National Market, in which case the amount of
consideration received by the Company will be the arithmetic average of
the closing sale price of such security for the five (5) consecutive
Trading Days immediately preceding the date of receipt thereof. In case
any Common Stock, Options or Convertible Securities are issued to the
owners of the non-surviving entity in connection with any merger in
which the Company is the surviving entity, the amount of consideration
therefor will be deemed to be the fair value of such portion of the net
assets and business of the non-surviving entity as is attributable to
such Common Stock, Options or Convertible Securities, as the case may
be. The fair value of any consideration other than cash or securities
listed or quoted on a National Market will be determined jointly by the
Company and the Holders of a majority of the shares of Series A1
Preferred Stock then outstanding. If such parties are unable to reach
agreement within ten (10) days after the occurrence of an event
requiring valuation (the "VALUATION EVENT"), the fair value of such
consideration will be determined within forty-eight (48) hours of the
tenth (10th) day following the Valuation Event by an Appraiser selected
in good faith by the Company, and agreed upon in good faith by the
Holders of a majority of the shares of Series A1 Preferred Stock then
outstanding. The determination of such Appraiser shall be binding upon
all parties absent manifest error.
(ii) INTEGRATED TRANSACTIONS. In case any Option is issued in
connection with the issue or sale of other securities of the Company,
together comprising one integrated transaction in which no specific
consideration is allocated to such Options by the parties thereto the
aggregate consideration of the Options shall be determined by an
Appraiser selected mutually, in good faith, by the Holders of a
majority in interest of the shares of the Series A1 Preferred Stock and
the Company.
j. NOTICE OF CERTAIN EVENTS. If:
(i) the Company shall declare a dividend (or any other
distribution) on its Common Stock;
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(ii) the Company shall declare a special nonrecurring cash
dividend on or a redemption of its Common Stock;
(iii) the Company shall authorize the granting to the holders
of its Common Stock rights, options or warrants to subscribe for or
purchase any shares of capital stock of any class or of any rights;
(iv) the approval of any shareholders of the Company shall be
required in connection with any reclassification of the Common Stock or
any Change of Control Transaction; or
(v) the Company shall authorize the Liquidation of the affairs
of the Company;
then the Company shall cause to be delivered to the Holders at the address
specified herein, at least 15 (fifteen) calendar days prior to the applicable
record or effective date hereinafter specified, a notice (provided such notice
shall not include any material non-public information) stating (a) the date on
which a record is to be taken for the purpose of such dividend, distribution,
redemption, or granting of options, rights or warrants, or if a record is not to
be taken, the date as of which the holders of Common Stock of record to be
entitled to such dividend, distributions, redemption, rights, options or
warrants are to be determined or (b) the date on which such reclassification,
Liquidation or Change of Control Transaction is expected to become effective or
close, and the date as of which it is expected that holders of record of Common
Stock shall be entitled to exchange their shares of Common Stock for securities,
cash or other property deliverable in connection with such reclassification or
Change of Control Transaction. Nothing herein shall prohibit the Holders from
converting shares of Series A1 Preferred Stock held by such Holder during the
15-day period commencing on the date of such notice to the effective date of the
event triggering such notice.
k. ADJUSTMENT IN THE NUMBER OF SHARES. For the avoidance of doubt,
upon each adjustment in the Conversion Price pursuant to any provision of this
Section 7 the number of shares of Common Stock purchasable hereunder shall be
adjusted, to the nearest 1/100th of a whole share, to the product obtained by
multiplying such number of shares purchasable immediately prior to such
adjustment in the Conversion Price by a fraction, the numerator of which shall
be the Conversion Price immediately prior to such adjustment and the denominator
of which shall be the Conversion Price immediately thereafter.
l. ROUNDING. All calculations under this Section 7 shall be made to
the nearest cent or the nearest l/l00th of a share, as the case may be.
m. INCREASE OF CONVERSION PRICE. In the event that (i) each of the
conditions set forth in Section 4.2(b) of the Purchase Agreement have been
satisfied or waived by the Holders, (ii) the documents and certificates set
forth in Section 4.2(c) of the Purchase Agreement have been delivered or the
delivery thereof has been waived by the Holders and (iii) the Holders fail to
consummate the Second Closing (as defined in the Purchase Agreement), then the
Conversion Price shall be increased to $16.00 per share (subject to stock
splits, reclassifications and other similar transactions).
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n. OTHER EVENTS. If the Company grants any stock appreciation
rights, phantom stock rights or other rights with equity features (excluding the
issuance of any Excluded Securities) that adversely affects the rights of any
holder of the Series A1 Preferred Stock occurs but is not expressly provided for
by Section 7 hereof then the Company's Board of Directors will make an
appropriate adjustment in the Conversion Price so as to protect the rights of
the Holders or assigns; PROVIDED, HOWEVER, that no such adjustment will increase
the Conversion Price. In no event, other than as set forth in Section 7(m)
hereof, shall the Conversion Price be greater than the Conversion Price on the
Original Issue Date.
o. TREASURY SHARES. The number of shares of Common Stock outstanding
at any given time shall not include shares owned or held by or for the account
of the Company, if any, and the disposition of any shares so owned or held shall
be considered an issue or sale of Common Stock by the Company.
8. RESTRICTION ON CONVERSION BY EITHER THE HOLDER OR THE COMPANY.
Notwithstanding anything herein to the contrary, and except as provided in
Sections 5(b) and 9(b) hereof, in no event shall any Holder or the Company have
the right or be required to convert shares of Series A1 Preferred Stock if as a
result of such conversion the aggregate number of shares of Common Stock
beneficially owned by such Holder and its Affiliates would exceed 4.99% of the
outstanding shares of the Common Stock following such conversion. For purposes
of this Section 8, beneficial ownership shall be calculated in accordance with
Section 13(d) of the Exchange Act. The provisions of this Section 8 may be
waived by a Holder as to itself (and solely as to itself) upon not less than
sixty-five (65) days prior written notice to the Company, and the provisions of
this Section 8 shall continue to apply until such 65th day (or later, if stated
in the notice of waiver).
9. REDEMPTION. MANDATORY REDEMPTION. In case of (a) the Company's
notice to any Holder of the Series A1 Preferred Stock, including by way of
public announcement, at any time, of its intention, for any reason, not to
comply with proper requests for the conversion of any shares of Series A1
Preferred Stock into shares of Common Stock or (b) the Company's refusal to
honor a duly executed Conversion Notice delivered pursuant to Section 5 hereof
(each, a "REDEMPTION EVENT") each Holder shall have the option to require the
Company to redeem, from funds legally available therefor at the time of such
redemption, its shares of Common Stock immediately theretofore acquirable and
receivable upon the conversion of such Holder's Series A1 Preferred Stock at a
price (the "REDEMPTION PRICE") equal to, at the option of such Holder, (i) the
product of (A) the Per Share Market Value on the date the Redemption Event or,
at the option of the Holder, on the date immediately preceding the date of
payment in full by the Company of the Redemption Price (the "DETERMINATION
DATE"), and (B) the number of shares of Common Stock into which the Series A1
Preferred Stock is convertible as of such Determination Date or (ii) the product
of (A) the Stated Value and (B) the number of shares Preferred Stock then held
by such Holder. The Company shall pay the applicable Redemption Price to the
Holder of the shares of Series A1 Preferred Stock being redeemed in cash on the
Redemption Date. If the Company shall fail to pay the applicable Redemption
Price to such Holder on the Redemption Date, in addition to any remedy such
Holder may have under this Certificate of Designation and the Purchase
Agreement, such unpaid amount shall bear interest at the rate of 1.0% per month
until paid in full.
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10. DEFINITIONS. For the purposes hereof, the following terms shall
have the following meanings:
"AFFILIATE" means, with respect to any Person, (i) any other Person of
which securities or other ownership interests representing more than fifty
percent (50%) of the voting interests are, at the time such determination is
being made, owned, Controlled or held, directly or indirectly, by such Person,
or (ii) any other Person which, at the time such determination is being made, is
Controlling, Controlled by or under common Control with, such Person. As used
herein, "CONTROL", whether used as a noun or verb, refers to the possession,
directly or indirectly, of the power to direct, or cause the direction of, the
management or policies of a Person, whether through the ownership of voting
securities or otherwise.
"APPRAISER" means a nationally recognized or major regional investment
banking firm or firm of independent certified public accountants of recognized
standing.
"APPROVED STOCK PLAN" means any contract, plan or agreement which has
been approved by the Board of Directors of the Company or committee thereof,
pursuant to which the Company's securities may be issued to any employee,
officer or director of the Company; PROVIDED, that such issuance or issuances
shall not exceed the greater of 35% of the Company's outstanding capital stock
on the date thereof or 4,900,000 shares of Common Stock of the Company.
"CHANGE OF CONTROL TRANSACTION" means the occurrence of any of (i) any
acquisition or series of related acquisitions by any Person or "group" (as
described in Section 13(d)(3) of the Exchange Act) of in excess of 50% of the
voting power of the Company, (ii) the merger or consolidation of the Company
with or into another Person, unless the holders of the Company's securities
immediately prior to such transaction or series of related transactions continue
to hold at least 50% of such securities following such transaction or series of
related transactions, (iii) a sale, conveyance, lease, transfer or disposition
of all or substantially all of the assets of the Company in one or a series of
related transactions or (iv) the execution by the Company of an agreement to
which the Company is a party or by which it is bound, providing for any of the
events set forth above in clauses (i), (ii) or (iv).
"COMMON STOCK" means the Company's common stock, $.01 par value per
share, and stock of any other class into which such shares may hereafter have
been reclassified or changed.
"CONVERSION PRICE" has the meaning set forth in Section 5(a).
"CONVERTIBLE SECURITIES" has the meaning set forth in Section 7(h)(ii).
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
"EXCLUDED SECURITIES" means (i) shares of Common Stock issued or
issuable pursuant to the terms of this Certificate of Designation and the
Purchase Agreement, (ii) shares of Common Stock issued by the Company in
connection with an Approved Stock Plan, (iii) shares of Common Stock (including
options, rights and warrants) issuable upon the exercise of any options, rights
or warrants outstanding as of February 29, 2000 or set forth on Schedule 2.1(c)
of the Purchase Agreement, (iv) shares of Common Stock issued or deemed to be
issued by the
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Company in connection with a strategic acquisition, joint venture or investment
by the Company of the assets or business, or division thereof, of another Person
or (v) any other issuance of Common Stock, or any securities convertible into or
exchangeable or exercisable for Common Stock, on any day after the Original
Issue Date, in an amount fewer than 500,000 shares of Common Stock in the
aggregate.
"HOLDER" or "HOLDERS" means the holder or holders of the Series A1
Preferred Stock.
"JUNIOR SECURITIES" means all classes of Common Stock and each other
class of capital stock or preferred stock of the Company that is not, expressly
by its terms, made senior to or PARI PASSU with the Series A1 Preferred Stock.
"LIQUIDATION" means any liquidation, dissolution or winding-up of the
Company, whether voluntary or involuntary.
"NATIONAL MARKET" means the NASDAQ National Market, the NASDAQ SmallCap
Market, the New York Stock Exchange and the American Stock Exchange.
"OPTIONS" has the meaning set forth in Section 7(h)(ii) hereof.
"ORIGINAL ISSUE DATE" shall mean the date of the first issuance of any
shares of the Series A1 Preferred Stock, regardless of the number of transfers
of any particular shares of Series A1 Preferred Stock and regardless of the
number of certificates which may be issued to evidence such Series A1 Preferred
Stock, which date shall coincide with the First Closing Date, as defined in the
Purchase Agreement.
"OTCBB" means the OTC Bulletin Board of the National Association of
Securities Dealers, Inc.
"PER SHARE MARKET VALUE" means on any particular date (i) the closing
bid price per share of the Common Stock on such date on (a) the OTCBB, as
reported by the National Quotation Bureau Incorporated (or similar organization
or agency succeeding to its function of reporting prices) or (b) on the National
Market on which the Common Stock is then listed or quoted, or, if there is no
such price on such date, then the closing bid price on such exchange or
quotation system on the date nearest preceding such date, or (ii) if the Common
Stock is not then listed or quoted on the OTCBB or any National Market, the fair
market value of a share of Common Stock as determined by an Appraiser selected
in good faith by the Holders of a majority in interest of the shares of the
Series A1 Preferred Stock; PROVIDED, HOWEVER, that the Company, after receipt of
the determination by such Appraiser, shall have the right to select, in good
faith, an additional Appraiser, in which case the fair market value shall be
equal to the average of the determinations by each such Appraiser; and PROVIDED,
FURTHER that all determinations of the Per Share Market Value shall be
appropriately adjusted for any stock dividends, stock splits or other similar
transactions during such period.
"PERSON" means a means an individual or a corporation, partnership,
trust, incorporated or unincorporated association, joint venture, limited
liability company, joint stock company, government (or an agency or political
subdivision thereof) or other entity of any kind.
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"PUBLIC OFFERING" means a public offering of the shares of Common Stock
pursuant to an effective registration statement on Form S-1 or other appropriate
form (or such successor form as then in effect), underwritten by a nationally
recognized investment bank (as determined by the Company in good faith).
"PURCHASE AGREEMENT" means the Securities Purchase Agreement, dated as
of the Original Issue Date, among the Company and the original Holders of the
Series A1 Preferred Stock.
"QPO" means a Public Offering by the Company which raises gross
proceeds to the Company of at least $50,000,000, at an effective price per share
to the public of at least $26.00 as adjusted for stock splits, stock dividends
or other similar transactions.
"REGISTRATION RIGHTS AGREEMENT" means the Registration Rights
Agreement, dated as of the Original Issue Date, by and among the Company and the
original Holders.
"REGISTRATION STATEMENT" has the meaning set forth in the Registration
Rights Agreement.
"STATED VALUE" has the meaning set forth in Section 1 hereof.
"TRADING DAY" means any day on which the OTCBB or any National Market
on which the Common Stock is then listed or quoted is open for trading.
"UNDERLYING SHARES" means the shares of Common Stock into which the
Series A1 Preferred Stock are convertible in accordance with the terms hereof.
11. NOTICES. Except as otherwise provided in the event of conversion of
shares of Series A1 Preferred Stock, all notices or other communications
required hereunder shall be in writing and shall be deemed to have been received
(a) upon hand delivery (receipt acknowledged) or delivery by facsimile (with
transmission confirmation report received and with additional mailing by express
courier service made on the same day) at the address or number designated below
(if received by 5:00 p.m. EST where such notice is to be received), or the first
business day following such delivery (if received after 5:00 p.m. EST where such
notice is to be received) or (b) on the second business day following the date
of mailing by express courier service, fully prepaid, addressed to such address,
or upon actual receipt of such mailing, whichever shall first occur; and shall
be regarded as properly addressed if sent to (i) the Company, to Marex.com,
Inc., 2701 S. Bayshore Drive, Fifth Floor, Coconut Grove, Florida, 33133,
facsimile no.: (305) 285-0001, Attention: Chief Financial Officer and (ii) if
the Holders, at their respective addresses set forth in the books and records of
the Company, or such other address as any of the above may have furnished to the
other parties in writing by registered mail, return receipt requested.
12. LOST OR STOLEN CERTIFICATES. Upon receipt by the Company of
evidence reasonably satisfactory to the Company of the loss, theft, destruction
or mutilation of any stock certificates representing the shares of Series A1
Preferred Stock, and, in the case of loss, theft or destruction, of any
indemnification (and, if required by the Company, the posting of a bond)
undertaken by the Holder to the Company in customary form and, in the case of
mutilation, upon
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surrender and cancellation of such certificates representing the shares of
Series A1 Preferred Stock the Company shall execute and deliver new preferred
stock certificate(s) of like tenor and date; PROVIDED, HOWEVER, the Company
shall not be obligated to re-issue preferred stock certificates if the Holder
contemporaneously requests the Company to convert such Series A1 Preferred Stock
into Common Stock.
13. REMEDIES CHARACTERIZED; OTHER OBLIGATIONS, BREACHES AND INJUNCTIVE
RELIEF. The remedies provided in this Certificate of Designation shall be
cumulative and in addition to all other remedies available under this
Certificate of Designation, at law or in equity (including a decree of specific
performance and/or other injunctive relief), no remedy contained herein shall be
deemed a waiver of compliance with the provisions giving rise to such remedy and
nothing herein shall limit a Holder's right to pursue actual damages for any
failure by the Company to comply with the terms of this Certificate of
Designation. Amounts set forth or provided for herein with respect to payments,
conversion and the like (and the computation thereof) shall be the amounts to be
received by the Holder thereof and shall not, except as expressly provided
herein, be subject to any other obligation of the Company (or the performance
thereof). The Company acknowledges that a breach by it of its obligations
hereunder will cause irreparable harm to the Holders of the Series A1 Preferred
Stock and that the remedy at law in the event of any such breach may be
inadequate. The Company therefore agrees that, in the event of any such breach
or threatened breach, the Holders of the Series A1 Preferred Stock shall be
entitled, in addition to all other available remedies, to an injunction
restraining any breach, without the necessity of showing economic loss and
without any bond or other security being required.
14. SPECIFIC SHALL NOT LIMIT GENERAL; CONSTRUCTION. No specific
provision contained in this Certificate of Designation shall limit or modify any
more general provision contained herein. This Certificate of Designation shall
be deemed to be jointly drafted by the Company and all Purchasers (as defined in
this Purchase Agreement) and shall not be construed against any Person as the
drafter hereof.
15. FAILURE OR INDULGENCE NOT WAIVER. No failure or delay on the part
of a Holder of Series A1 Preferred Stock in the exercise of any power, right or
privilege hereunder shall operate as a waiver thereof, nor shall any single or
partial exercise of any such power, right or privilege preclude other or further
exercise thereof or of any other right, power or privilege.
16. FRACTIONAL SHARES. Upon a conversion hereunder, the Company shall
not be required to issue stock certificates representing fractions of shares of
Common Stock, but may if otherwise permitted, make a cash payment in respect of
any final fraction of a share based on the Per Share Market Value at such time.
If the Company elects not, or is unable, to make such a cash payment, the Holder
of a share of Series A1 Preferred Stock shall be entitled to receive, in lieu of
the final fraction of a share, one whole share of Common Stock.
17. PAYMENT OF TAX UPON ISSUE OF TRANSFER. The issuance of certificates
for shares of the Common Stock upon conversion of the Series A1 Preferred Stock
shall be made without charge to the Holders thereof for any documentary stamp or
similar taxes that may be payable in respect of the issue or delivery of such
certificate, provided that the Company shall not be required to pay any tax that
may be payable in respect of any transfer involved in the issuance
15
<PAGE> 16
and delivery of any such certificate upon conversion in a name other than that
of the Holders so converted, and the Company shall not be required to issue or
deliver such certificates unless or until the Person or Persons requesting the
issuance thereof shall have paid to the Company the amount of such tax or shall
have established to the satisfaction of the Company that such tax has been paid
or is not payable.
18. SHARES OWNED BY COMPANY DEEMED NOT OUTSTANDING. In determining
whether the Holders of the outstanding shares of Series A1 Preferred Stock have
concurred in any direction, consent or waiver under this Certificate of
Designation, shares of Series A1 Preferred Stock which are owned by the Company
or any other obligor thereof shall be disregarded and deemed not to be
outstanding for the purpose of any such determination; PROVIDED, that any Series
A1 Preferred Stock owned by the Holders shall be deemed outstanding for purposes
of making such a determination. Shares of the Series A1 Preferred Stock so owned
which have been pledged in good faith may be regarded as outstanding if (i) the
pledgee establishes to the satisfaction of the Holders and the Company the
pledgee's right so to act with respect to such shares and (ii) the pledgee is
not the Company or any other obligor of the Company.
19. COMMUNICATIONS. The Holders of the Series A1 Preferred Stock shall
be entitled to receive, and the Company shall deliver pursuant to Section 11
hereof, all communications sent by the Company to the holders of the Common
Stock.
20. REACQUIRED SHARES. Any shares of Series A1 Preferred Stock
redeemed, purchased, converted or otherwise acquired by the Company in any
manner whatsoever shall not be reissued as part of the Company's Series A1
Preferred Stock and shall be retired promptly after the acquisition thereof. All
such shares shall become, upon their retirement (and the filing of any
certificate required in connection therewith pursuant to the Florida Business
Corporation Act), authorized but unissued shares of preferred stock of the
Company.
21. REGISTRATION OF TRANSFER. The Company shall keep at its principal
office a register for the registration of the transfers of shares of Series A1
Preferred Stock. Upon the surrender of any certificate representing shares of
Series A1 Preferred Stock at such place, the Company shall, at the request of
the record Holder of such certificate, execute and deliver (at the Company's
expense) a new certificate or certificates in exchange therefor representing in
the aggregate the number of shares represented by the surrendered certificate.
Each such new certificate shall be registered in such name and shall represent
such number of shares as is requested by the Holder of the surrendered
certificate and shall be substantially identical in form to the surrendered
certificate.
22. NO IMPAIRMENT. The Company shall not, by amendment of its Articles
of Incorporation or through any reorganization, recapitalization, transfer of
assets, consolidation, merger, dissolution, issuance or sale of securities or
any other voluntary action, intentionally take any action to avoid or seek to
avoid the observance or performance of any of the terms to be observed or
performed hereunder by the Company, but will at all times in good faith assist
in the carrying out of all of the provisions hereof and in the taking of all
such action as may be necessary or appropriate in order to protect the rights of
the Series A1 Preferred Stock against
16
<PAGE> 17
impairment.
23. EFFECT OF HEADINGS. The section headings herein are for convenience
only and shall not affect the construction hereof.
***
(signature on following page)
17
<PAGE> 18
IN WITNESS WHEREOF, Marex.com, Inc. has caused this Amended
and Restated Certificate of Designation to be signed by its President on this
16th day of March, 2000.
By: /s/ David A. Schwedel
-------------------------------
Name: David A. Schwedel
Title: President
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<PAGE> 19
EXHIBIT A
NOTICE OF CONVERSION
AT THE ELECTION OF HOLDER
(TO BE EXECUTED BY THE REGISTERED HOLDER IN
ORDER TO CONVERT SHARES OF SERIES A1 PREFERRED
STOCK)
The undersigned hereby elects to convert the number of shares of Series
A1 Convertible Preferred Stock indicated below, into shares of common stock, par
value $.01 per share (the "Common Stock"), of Marex.com, Inc. (the "COMPANY")
according to the conditions hereof, as of the date written below. If shares are
to be issued in the name of a person other than undersigned, the undersigned
will pay all transfer taxes payable with respect thereto and is delivering
herewith such certificates and opinions as reasonably requested by the Company
in accordance therewith. No fee will be charged to the Holder for any
conversion, except for such transfer taxes, if any.
Conversion calculations:
--------------------------------------------
Date to Effect Conversion
--------------------------------------------
Number of shares of Series A1 Preferred Stock to
be Converted
--------------------------------------------
Number of shares of Common Stock to be Issued
--------------------------------------------
Applicable Conversion Price
--------------------------------------------
--------------------------------------------
Name and Address of Person to whom Shares of
Common Stock are to be Issued
--------------------------------------------
Signature
--------------------------------------------
Name
--------------------------------------------
Address
<PAGE> 1
OPINION OF GREENBERG TRAURIG EXHIBIT 5.1
GREENBERG TRAURIG, P.A.
MAY 4, 2000
Marex.com, Inc.
2701 S. Bayshore Drive, 5th Floor
Miami, Florida 33133
Ladies and Gentlemen:
We have acted as counsel for Marex.com, Inc., a Florida corporation
(the "Company"), in connection with the Company's Registration Statement on Form
S-3 (the "Registration Statement") being filed by the Company under the
Securities Act of 1933, as amended, with respect to 3,230,762 shares (the
"Shares") of the Company's common stock, par value $.01 per share (the "Common
Stock"), which may be acquired by the selling shareholders (the "Selling
Shareholders") named therein upon conversion of the shares of the Company's
Series A1 convertible preferred stock, par value $.01 per share (the "Preferred
Stock"), held by such Selling Shareholders.
In connection with the preparation of the Registration Statement and
this opinion letter, we have examined, considered and relied upon the following
documents (collectively, the "Documents"): the Securities Purchase Agreement
dated as of March 2, 2000 (the "Purchase Agreement"), by and among the Company
and the Selling Shareholders listed therein; the Company's Articles of
Incorporation (as amended) as filed with the Secretary of State of the State of
Florida; the Company's bylaws and resolutions adopted by the Company's Board of
Directors; and such other documents and matters of law as we have considered
necessary or appropriate for the expression of the opinions contained herein.
In rendering the opinions set forth below, we have assumed without
investigation the genuineness of all signatures and the authenticity of all
documents submitted to us as originals, the conformity to authentic original
documents of all documents submitted to us as copies, and the veracity of the
Documents. As to questions of fact material to the opinions hereinafter
expressed, we have relied upon the representations and warranties of the Company
made in the Documents.
Based solely upon and subject to the Documents, and subject to the
qualifications set forth below, we are of the opinion that the Shares to be sold
by the Selling Shareholders pursuant to the Registration Statement have been
duly authorized and, when issued in accordance with the terms of the Preferred
Stock will be, fully paid and nonassessable.
Although we have acted as counsel to the Company in connection with
certain other matters, our engagement is limited to certain matters about which
we have been consulted. Consequently, there may exist matters of a legal nature
involving the Company in connection with which we have not been consulted and
have not represented the Company. This opinion letter is limited to the matters
stated herein and no opinions may be implied or inferred beyond the matters
expressly stated herein. The opinions expressed herein are as of the date
hereof, and we assume no obligation to update or supplement such opinions to
reflect any facts or circumstances that may hereafter come to our attention or
any changes in law that may hereafter occur.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to us under the caption "Legal
Matters" in the prospectus contained in the Registration Statement. In giving
such consent, we do not admit that we come within the category of persons whose
consent is required by Section 7 of the Securities Act of 1933, as amended, and
the rules and regulations thereunder.
Very truly yours,
GREENBERG TRAURIG, P.A.
BY: /s/ FERN S. WATTS
--------------------------
Fern S. Watts
<PAGE> 1
EXHIBIT 23.2
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
As independent certified public accountants, we hereby consent to the
incorporation by reference in this Registration Statement of our report dated
February 21, 2000 (except with respect to the matter discussed in Note 12, as to
which the date is March 7, 2000), included in Marex.com, Inc.'s annual report on
Form 10-K for the year ended December 31, 1999, and to all references to our
Firm included in this Registration Statement.
/s/ Arthur Andersen LLP
- --------------------------
ARTHUR ANDERSEN LLP
Miami, Florida,
April 28, 2000.
<PAGE> 1
EXHIBIT 23.3
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
As independent certified public accountants, we hereby consent to the
incorporation of our report dated January 18, 1999, except for Note 3, as to
which the date is February 21, 2000, with respect to the consolidated balance
sheet of Marex.com, Inc. and Subsidiary formerly Affiliated Networks, Inc. and
Subsidiary as of December 31, 1998 and the related consolidated statements of
operations, stockholders' equity (deficit), and cash flows for the years ended
December 31, 1998 and 1997 which report appears in the annual report on Form
10-K of Marex.com and Subsidiary formerly Affiliated Networks, Inc. and
Subsidiary for the year ended December 31, 1999 and to all references to our
Firm included in or made a part of this Registration Statement.
/s/ McClain & Company, L.C.
- -----------------------------
McClain & Company, L.C.
Miami, Florida
May 4, 2000
