UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM SB-2
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
EMILY ANNIE, INC.
(Name of small business issuer in its charter)
New York 7261 13-3893213
(State or jurisdiction (Primary Standard Industrial (I.R.S. Employer
of incorporation or Classification Code Number) Identification
organization) No.)
392 Central Park West, New York, New York 10025 (212) 362-7813
(Address and telephone number of principal executive offices)
392 Central Park West, New York, New York 10025 (212) 362-7813
(Address of Principal place of business or
intended principal place of business)
Cheryl Mobley, 392 Central Park West, New York, New York (212) 663-0506
(Name, address, and telephone number of agent for service)
Approximate date of proposed sale to the public as soon as practicable after
the effective date of this Registration Statement and Prospectus.
By: Schonfeld & Weinstein, L.L.P.
63 Wall Street, (Suite 1801)
New York, New York 10005
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>
CALCULATION OF REGISTRATION FEE
Title of Each Class of Amount Proposed Proposed Amount of
Securities Being Being Maximum Maximum Registration
Registered Registered Offering Aggregate Fee
Price Per Offering
Share (1) Price(1)
40,000 $ 5.00 $ 200,000 $ 68.97
A Warrants 40,000
B Warrants 40,000
Common Stock Under- (2)
lying Class A Warrants 40,000 $ 7.00 $ 280,000 $ 96.55
Common Stock Under- (2)
lying Class B Warrants 40,000 $ 6.00 $ 240,000 $ 82.76
TOTAL $ 720,000 $248.28
(1)Estimated for purposes of computing the registration fee pursuant to Rule
457.
(2) Any additional shares issuable pursuant to a stock split, stock
dividend or similar transaction will be deemed registered by this
Registration Statement.
<PAGE>
Cross Reference Sheet Pursuant to Rule 404 (c)
Showing the Location In Prospectus of
Information Required by Items of Form SB-2
Part I. Information Required in Prospectus
Item
No. Required Item Location or Caption
1. Front of Registration Statement Front of Registration
and Outside Front Cover of Statement and outside
Prospectus front cover of Prospectus
2. Inside Front and Outside Back Inside front cover page
Cover Pages of Prospectus of Prospectus and outside
front cover page of
Prospectus
3. Summary Information and Risk Prospectus Summary;
Factors High Risk Factors
4. Use of Proceeds Use of Proceeds
5. Determination of Offering Determination of
Price Offering Price
6. Dilution Dilution
7. Selling Security Holders Not Applicable
8. Plan of Distribution Subscription and Plan of
Distribution
9. Legal Proceedings Litigation
10. Directors, Executive Officers, Management
Promoters and Control Persons
11. Security Ownership of Certain Principal Stockholders
Beneficial Owners and Management of Common Stock
12. Description of Securities Description of Securities
Part I Information Required in Prospectus Caption in Prospectus
13. Interest of Named Experts and Legal Opinions; Experts
Counsel
14. Disclosure of Commission Position Statement as
to
on Indemnification for Securities Indemnification
Act Liabilities
15. Organization Within Last Management; Certain
Five Years Transactions
16. Description of Business Proposed Business;
Executive Compensation
17. Management's Discussion and Plan of Operation
Analysis or Plan of
Operation
18. Description of Property Proposed Business
19. Certain Relationships and Related Certain Transactions
Transactions
20. Market for Common Stock and Prospectus Summary,
Related Stockholder Matters Market for the Company's
Common Stock;
Shares Eligible for
Future Sale.
21. Executive Compensation Executive Compensation
22. Financial Statements Financial Statements
23. Changes In and Disagreements Not Applicable
With Accountants on Accounting
and Financial Disclosure
<PAGE>
PROSPECTUS
EMILY ANNIE, INC.
(a New York Corporation)
A Minimum of 25,000 Units and a Maximum of 40,000 Units
Each Unit Consisting of One (1) Share of Common Stock and
One (1) Class A Redeemable Warrant and
One (1) Class B Redeemable Warrant
Emily Annie, Inc. (the "Company") hereby offers for sale a minimum of
25,000 units (the "Units")(the "Minimum Offering"), and a maximum of 40,000
Units (the "Maximum Offering") at a purchase price of $5.00 per Unit. The
Units are being offered on a "all or nothing" for the Minimum Offering, and on
a "best efforts basis" for the Maximum Offering. The offering shall be
conducted over a period of ninety (90) days (which may be extended an
additional one hundred and twenty (120) days). The offering proceeds will be
placed in an escrow account (the "Escrow Account") until the Minimum Offering
has been sold, after which they shall be released with every $5,000 received.
Each Unit consists of one (1) share of Common Stock,$.001 par value ("Common
Stock"), one (1) Class A Redeemable Common Stock Purchase Warrant (the "Class
A Warrants") and one (1) Class B Redeemable Common Stock Purchase Warrant (the
"Class B Warrants") (together, the "Warrants.") Each Class A Warrant and each
Class B Warrant shall entitle the holder(s) to purchase one (1) share of the
Company's Common Stock at a price of $7.00 and $6.00, respectively. The Class
A Warrants shall become exercisable on the closing of the Minimum Offering
(the "Closing Date") and shall remain exercisable for a period of three (3)
years from the Closing Date. The Class B Warrants shall become exercisable on
the Closing Date and shall remain exercisable for four (4) years thereafter.
A Class B Warrant may only be exercised after the corresponding Class A
Warrant has been exercised. If there is no current prospectus or if the
Common Stock underlying the Warrants is not qualified for sale in the state in
which a Warrant holder resides, such holder will not be permitted to exercise
his/her Warrants.
EMILY ANNIE, INC.
392 CENTRAL PARK WEST
NEW YORK, NEW YORK 10025
The date of this prospectus is .
THESE SECURITIES ARE HIGHLY SPECULATIVE, INVOLVE A HIGH DEGREE OF RISK,
AND SHOULD BE PURCHASED ONLY BY PERSONS WHO CAN AFFORD TO LOSE THEIR ENTIRE
INVESTMENT. SEE "HIGH RISK FACTORS" FOR SPECIAL RISKS CONCERNING THE COMPANY
AND "DILUTION" FOR INFORMATION CONCERNING DILUTION OF THE BOOK VALUE OF THE
INVESTORS' SHARES FROM THE PUBLIC OFFERING PRICE.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION, NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
THE UNITS HAVE BEEN REGISTERED ONLY IN NEW YORK, AND MAY ONLY BE TRADED
IN SUCH STATE AND THE DISTRICT OF COLUMBIA. PURCHASERS OF SUCH SECURITIES
EITHER IN THIS OFFERING OR IN ANY SUBSEQUENT TRADING MARKET WHICH MAY DEVELOP
MUST BE RESIDENTS OF NEW YORK OR THE DISTRICT OF COLUMBIA. THE COMPANY WILL
AMEND THIS PROSPECTUS FOR THE PURPOSE OF DISCLOSING ADDITIONAL STATES, IF ANY,
IN WHICH THE COMPANY'S SECURITIES ARE REGISTERED. (SEE "HIGH RISK FACTORS -
STATE LAW VIOLATIONS.")
PRIOR TO THIS OFFERING THERE HAS BEEN NO PUBLIC MARKET FOR THE UNITS,
COMMON STOCK PURCHASE WARRANTS OR COMMON STOCK OF THE COMPANY. THERE IS NO
ASSURANCE THAT ANY TRADING MARKET IN THESE SECURITIES WILL EVER DEVELOP.
Price to Proceeds to
the Public the Company(1)
Per Unit $ 5.00 $ 5.00
TOTAL MINIMUM $125,000.00 $ 125,00.00
TOTAL MAXIMUM $200,000.00 $ 200,00.00
(1) Before deducting offering expenses which include: Blue Sky fees, legal
fees, accounting fees, printing fees, filing fees, estimated at $20,000.
The Company has filed with the Securities and Exchange Commission (the
"Commission") a Registration Statement (the "Registration Statement") on Form
SB-2 under the Securities Act of 1933 with respect to the Units, the Common
Stock and the Warrants offered hereby. This prospectus does not contain all
of the information set forth in the Registration Statement, certain parts of
which are omitted in accordance with the rules and regulations of the
Commission. The Company will be subject to the reporting requirements of the
Securities Exchange Act of 1934 (the "Exchange Act"), but is currently not a
reporting company. The reports and other information filed by the Company may
be inspected and copied at the public reference facilities of the Commission
in Washington, D.C. Copies of such material can be obtained from the Public
Reference Section of the Commission, Washington, D.C., 20549, at prescribed
rates. Descriptions contained in this prospectus as to the contents of any
contract or other document filed as an exhibit to the Registration Statement
are not necessarily complete and each such description is qualified by
reference to such contract or document.
The Company intends to furnish to its stockholders, after the close of
each fiscal year, an annual report relating to the operations of the Company
and containing audited financial statements examined and reported upon by an
independent certified public accountants. In addition, the Company may
furnish to stockholders such other reports as may be authorized, from time to
time, by the Board of Directors. The Company's year end is April 30.
NO DEALER, SALESPERSON OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE
ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN
THIS PROSPECTUS, AND IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS
MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF ANY OFFER
TO BUY ANY SECURITIES IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION
WOULD BE UNLAWFUL. THE DELIVERY OF THIS PROSPECTUS SHALL NOT UNDER ANY
CIRCUMSTANCES CREATE ANY IMPLICATION THAT THERE HAS NOT BEEN ANY CHANGE IN THE
AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF.
<PAGE>TABLE OF CONTENTS
Page
PROSPECTUS SUMMARY..............................
The Company...................................
The Offering..................................
High Risk Factors.............................
Determination of Offering Price...............
Use of Proceeds...............................
SELECTED FINANCIAL INFORMATION..................
HIGH RISK FACTORS...............................
DILUTION........................................
USE OF PROCEEDS.................................
CAPITALIZATION..................................
PROPOSED BUSINESS...............................
History and Organization......................
Plan of Operation.............................
Regulation ...................................
Employees.....................................
Facilities....................................
MANAGEMENT......................................
Biography.....................................
Conflicts of Interest..........................
Executive Compensation........................
Management Involvement........................
Management Control............................
STATEMENT AS TO INDEMNIFICATION.................
MARKET FOR THE COMPANY'S COMMON STOCK...........
CERTAIN TRANSACTIONS............................
PRINCIPAL STOCKHOLDERS..........................
DESCRIPTION OF SECURITIES.......................
Units........................................
Common Stock.................................
Preferred Stock..............................
Redeemable Warrants..........................
Anti-dilution provisions of Warrants.........
Future Financing.............................
Reports to Stockholders......................
Dividends....................................
Transfer Agent and Warrant Agent.............
EXPIRATION DATE.................................
LITIGATION......................................
LEGAL OPINIONS..................................
EXPERTS.........................................
FURTHER INFORMATION.............................
FINANCIAL STATEMENTS............................ <PAGE>
PROSPECTUS SUMMARY
The following is a summary of certain information contained in this
prospectus and is qualified in its entirety by the more detailed information
and financial statements (including notes thereto) appearing elsewhere in the
prospectus and in the Registration Statement. Investors should carefully
consider the information set forth in this prospectus under the heading "High
Risk Factors".
The Company
EMILY ANNIE, INC ("Company"), was organized under the laws of the State
of New York on September 30, 1995. The Company was organized to sell and
market its primary product, the Emily Annie Serenity Keepsake Urns, which are
created in the likenesses of household pets, in which one is able to contain
the ashes of a deceased pet. Emily Annie Serenity Keepsakes Urns are
decorative memorials made of either ceramic or brass likenesses which have a
vacuumed sealed core of stainless steel which will hold the cremated ashes.
Since its incorporation, the Company's efforts have been focused on developing
its products. The Company has developed prototypes for the products, but as
of the date hereof, there have been no sales of the Emily Annie Serenity
Keepsake Urns.
Shortly following the completion of this Offering, the Company plans to
start manufacturing and marketing its products.
Since organization of the Company, its activities have been limited to
the sale of initial shares in connection with its organization and its
preparation in producing a registration statement and prospectus for its
initial public offering as well as designing its product prototype. (See
"Proposed Business.")
The Company maintains its office at 392 Central Park West, New York, New
York 10025. The Company's phone number is (212)-663-0506.
The Offering
Securities offered(1)...... A Minimum Offering of 25,000 Units,
and a Maximum Offering of 40,000 Units, at $5.00 per Unit, each Unit
consisting of One (1) share of Common Stock, One (1) Class A Warrant and One
(1) Class B Warrant, each Warrant entitling the holder thereof to purchase one
(1) share of Common Stock. The securities comprising the Units are, upon the
issuance of the Units by the Company, immediately separable and tradeable.
(See "Description of Securities".)
Common Stock outstanding
prior to the offering...... 120,000 shares.
Common Stock to be
outstanding after
the Minimum offering(1)..... 145,000 shares.
Common Stock to be
outstanding after
the Maximum Offering (1).... 160,000 shares
Warrants:
Number to be outstanding
after the Minimum
Offering(2)................ 25,000 Class A Warrants
and 25,000 Class B Warrants
Number to be outstanding
after the Maximum
Offering (2)................ 40,000 Class A Warrants and
40,000 Class B Warrants
Exercise price............. The exercise price of each Class A
Warrant is $7.00 per share and the exercise price of each Class B Warrant is
$6.00 per share, each subject to adjustment in certain circumstances. A Class
B Warrant may only be exercised after the corresponding Class A Warrant has
been exercised. (See "Description of Securities").
Exercise period............ The exercise period of both the
Class A Warrants and the Class B Warrants will commence on the Closing Date,
with the Class A Warrants expiring at 5:00 p.m., New York local time, three
years from that date, and the Class B Warrants expiring four years from the
Closing Date.
(1) Excludes (i) 50,000 shares of Common Stock reserved for issuance upon the
exercise of the Warrants in the Minimum Offering and 80,000 shares of Common
Stock in the Maximum Offering.
(2) Excludes 6,000 Units available to Joel Schonfeld and Andrea Weinstein
(the "Schonfeld Units") to purchase 6,000 Units, as well as 6,000 common
shares of common stock included in the Schonfeld Units reserved for issuance
upon exercise of the warrants included in the Schonfeld Units (the "Schonfeld
Warrants", and 12,000 shares of common stock reserved for issuance upon
exercise of the warrants included in the Underlying Units of the Schonfeld
Warrants.
High Risk Factors
Investments in the securities of the Company are highly speculative,
involve a high degree of risk, and should be purchased only by persons who can
afford to lose their entire investment. See "High Risk Factors" for special
risks concerning the Company and "Dilution" for information concerning
dilution of the book value of the investors shares from the public offering.
(See "High Risk Factors" and "Dilution.")
Determination of Offering Price
The offering price of $5.00 per Unit for the Units offered hereby and the
exercise prices of $7.00 and $6.00 for the Class A Warrants and Class B
Warrants, respectively, have been arbitrarily determined by the Company.
These prices bear no relation to the Company's assets, book value, or any
other customary investment criteria, including the Company's prior operating
history. Among factors considered by the Company in determining the offering
and exercise prices were estimates of the Company's business potential, the
limited financial resources of the Company, the amount of equity and control
desired to be retained by the present shareholders, the amount of dilution to
public investors and the general condition of the securities markets. (See
"Determination of Offering Price.")
Use of Proceeds
The proceeds of this offering shall be used by the Company to manufacture
and market its Emily Annie Serenity Keepsake Urns, as well as for general
operating expenses of the Company, including rent and officers salaries. (See
"Use of Proceeds.")
Offering Period ........ The Offering will commence on the date
herein and continue for ninety (90) days hereafter. The Offering Period may
be extended by the Company for an additional one hundred twenty (120) days
thereafter (the "Extended Offering Period.")
Escrow ................. All subscription funds received in the
Offering shall be placed in an escrow account with the Escrow Agent until the
Minimum Offering is sold. Once the Minimum Offering has been sold, the
proceeds from the Minimum Offering shall be released from escrow. Offering
proceeds received thereafter shall be held in the Escrow Account and released
to the Company in $5,000 denominations until the Maximum Offering is sold or
the Offering Period (or the Extended Offering Period) is over.
<PAGE>
Selected Financial Information
The following is a summary of the Company's consolidated financial information
and is qualified in its entirety by the unaudited financial statements and
audited balance sheet appearing herein.
Cumulative Period from
Sept. 30, 1995(date of inception) to
December 31, 1996
(audited)
Statement of Income Data:
Net Sales ............... $ - 0 -
Inventory ............... $ - 0 -
Cost of Sales ........... $ - 0 -
Product Profits ......... $ - 0 -
Organization Expenses
and Cost of Sales $ 1,886
Net Deficit $(1,886)
Net Loss Per Share $ 1.87
Shares Outstanding 120,000
As Adjusted
Minimum Maximum
Dec. 31, 1996 Offering Offering
Balance Sheet Data.........
Working Capital ......... 3,000 (92,000) (157,000)
Total Assets ............ 12,237 102,000
167,000
Long Term Debt........... - - -
Total Liabilities........ 8,103 8,000
8,000
Shareholders' Equity..... 4,134 94,000 159,000
<PAGE>
HIGH RISK FACTORS RELATING TO THE COMPANY
1. Limited Operating History; Limited Working Capital. The Company was
incorporated under the laws of the State of New York on September 30, 1995.
Since its incorporation, the Company's efforts have been focused on
structuring this offering and product development. The Company's main product
is the Emily Annie Serenity Keepsake Urn, which are urns created in the
likenesses of household pets, in which one is able to contain the ashes of a
deceased pet. Emily Annie Keepsake Urns are decorative memorials made of
either ceramic or brass likenesses which have a rubber gasket sealed core of
stainless steel which will hold the cremated ashes. Since its incorporation,
the Company's efforts have been focused on developing its products. The
Company has currently produced a prototype of the Emily Annie Keepsake Urns,
and intends to market them to veterinarians, pet crematoriums, pet stores, pet
hospitals and pet groomers.
The Company currently has limited assets and liabilities. The Company is
dependent upon proceeds from this Offering for working capital to commence
manufacturing its products and to run operations. The Company has determined
that it will need approximately $125,000 to commence manufacturing and run
operations for a twelve (12) month period. The Company is dependent on the
proceeds of the Maximum Offering, however, to run for a period of more than
twelve (12) months. The Company does not anticipate the need for additional
funding after this offering, but cannot so guarantee; nor can the Company
guarantee that such funding, if required, will be made available to the
Company on terms acceptable to the Company. The Company cannot guarantee that
even the Maximum Offering proceeds will be sufficient to run operations, and
in the event these proceeds are determined to be insufficient, the Company may
have to conduct subsequent offerings. The Company cannot assure investors
that any subsequent offerings will occur, or, in the event they do, that they
will be successful.
Prospective investors should be aware that the Company faces all risks
inherent in any development-stage business undertaking, including the
difficulties inherent in competition from entities which have greater
financial resources and experience than the Company. The likelihood of
success for the Company must be considered in light of undertaking to develop
a new product in a competitive environment. There can therefore be no
assurance that the Company's business operations will be successful, or that
it will be able to achieve revenues and projected profitability. (See "RISK
FACTORS - Start-Up Company," and "BUSINESS").
2. Dependence Upon Management. Success of the Company is dependent upon
the management efforts and expertise of its present management. The Company
will depend heavily upon the skills of its management. The death or
incapacity of any of the members of management could have a substantial
adverse effect upon the Company. While management anticipates the Company
will have sufficient personnel resources to replace the loss of any individual
on an interim basis, such loss could have significant adverse effects on the
Company and would likely require the Company to obtain other personnel to
manage and operate the Company. There can be no assurance a suitable
replacement any lost member of management could be employed or hired on terms
which are acceptable to the Company. (See "MANAGEMENT.")
3. Development Stage Company. The Company is a development stage
company, and it needs the proceeds from this Offering to commence
manufacturing operations, as well as to acquire operating assets, and hire
personnel necessary to commence operations. Until it receives the proceeds of
this Offering, the Company will continue to incur expenses without generating
any income. In addition to all the risks associated with the creation of any
new business, the Company will be subject to certain risk factors affecting
the pet care industry generally, such as competition among pet product
companies. (See "RISK FACTORS - Risks Related to the Pet Care Industry
Generally," "RISK FACTORS - Limited Operating History; Limited Working
Capital," and "BUSINESS.")
4. Competition. The Company intends to market its products to pet
crematoriums and cemeteries pet owners, veterinarians, pet hospitals and pet
shops. The Company believes it will be competing with pet cemeteries and
burial plots for the disposal of deceased pets, but is currently unaware of
any products and/or companies catering to cremated pets. The pet care
industry is highly competitive. The Company may face competition from other
pet care companies which may begin serving any of the markets which the
Company plans to serve and from new companies that may be formed to compete in
this market, including any that may be formed by any of the major pet care
companies. The Company's ability to meet price competition may depend on its
ability to operate at costs equal to or lower than its competitors or
potential competitors. There is a risk that competitors, perceiving the
Company to lack extensive capital resources, may undercut the Company's prices
or increase their service in an effort to force the Company out of business.
5. Reliance on Others. The Company intends to hire manufacturers to
manufacture the Emily Annie Serenity Keepsakes Urns. Currently, the Company
is not a party to any contracts for the manufacture of its products. There is
no guarantee that it will enter into any such contracts or that their will be
manufacturers willing and (or able to manufacture the Company's products on
terms satisfactory to the Company. The Company intends to market its products
on its own through advertisements, flyers and displays, aimed at Pet
Crematoriums and Pet Cemeteries. As the Company grows and expands its
operations, the Company may need to contract for additional services marketing
and/or manufacturing. There is no assurance that the Company will be able to
contract for all of the facilities and services it will require, and even if
entered into, these agreements may be subject to termination. The Company's
reliance upon others to provide essential services on behalf of the Company
may result in relative inflexibility in adjusting costs, and the efficiency
and timeliness of contract services may be beyond the Company's direct
control. Management expects that the Company will be required to rely on such
contractors for some time in the future. (See "BUSINESS - Contracts.")
6. Lack of Market for Securities. The Company has neither conducted,
nor have others made available to it, results of market research concerning
the feasibility of sales of the securities. Currently, there is no market for
the Company's securities, and the Company cannot guarantee that a market will
develop.
7. Control by Current Shareholders. After the completion of the Minimum
Offering, the Company's current shareholders will hold approximately 83% of
the then outstanding stock, and after the Maximum Offering, the Company's
current shareholders will hold approximately 75% of the then outstanding
stock. Thus, current shareholders will remain a majority after this
offering. (See "PRINCIPAL STOCKHOLDERS").
8. Arbitrary Offering Price. The Offering price and the terms and
conditions of the Units offered hereby have been arbitrarily determined by the
Company and bear no relationship to any recognized criterion of value
including assets, earnings or book value or the market value of the Common
Stock. (See "BUSINESS," "DESCRIPTION OF SECURITIES" and "SUBSCRIPTION AND
PLAN OF DISTRIBUTION.")
9. Escrow of Investors' Funds. Under the terms of the Offering, the
Company is offering Units on a "best efforts, all or nothing" basis as to the
first $125,000, and "best efforts" as to the additional $75,000. No
commitment exists by anyone to purchase all or any part of the shares offered
hereby. Consequently, there is no assurance that the Minimum Offering will be
sold, and subscribers' funds may be escrowed for as long as 210 days and then
returned without interest thereon or deduction therefrom, in the event the
Minimum Offering is not sold within the Offering Period or the Extended
Offering Period. Investors, therefore, will not have the use of any funds
paid for the purchase of the Company's Units during the subscription period.
In the event the Company is unable to sell the Minimum Offering within the
Offering Period or the Extended Offering Period if the Offering Period is
extended, the Offering will be withdrawn.
10. Possible Inability to Exercise Warrants. Because the Warrants
included in the Units being offered hereby may be transferred, it is possible
that the Warrants could be acquired by persons residing in states where the
Company is unable to qualify the shares of Common Stock underlying the
Warrants for sale upon exercise. Such Warrant holders would not be able to
sell their Warrants. Also, it is possible that the Company may be unable, for
unforeseen reasons, to cause a Registration Statement covering the shares
underlying the Warrants to be effective when the Warrants are exercisable. In
that event the Warrants may expire unless extended by the Company as permitted
by the Company's Warrant Agreement because a Registration Statement must be in
effect in order for Warrant holders to exercise their Warrants. (See
"Description of Securities.")
11. No Dividends. The Company was only recently organized, has no
earnings, and has paid no dividends to date. Since the Company is a
development stage company, the Company does not anticipate having any earnings
in the near future. (See "Dividends.")
12. Restricted Resale of the Securities. All 120,000 of the Company's
Common Stock presently issued and outstanding as of the date hereof are
"restricted securities" as that term is defined under the Securities Act of
1933 (the "Securities Act"), as amended, and in the future may be sold in
compliance with Rule 144 of the Securities Act, or pursuant to a Registration
Statement filed under the Securities Act. Rule 144 provides, in essence, that
a person holding restricted securities for a period of one (1) year may sell
those securities in unsolicited brokerage transactions or in transactions with
a market maker, in an amount equal to one (1%) percent of the Company's
outstanding Common Stock every three (3) months. Sales of unrestricted shares
by affiliates of the Company are also subject to the same limitation upon the
number of shares that may be sold in any three (3) month period. If all the
Units offered herein are sold, the holders of the restricted shares, and
affiliates holding unrestricted shares, may each sell 1,200 shares during any
three (3) month period after September 30, 1996. Additionally, Rule 144
requires that an issuer of securities make available adequate current public
information with respect to the issuer. Such information is deemed available
if the issuer satisfies the reporting requirements of sections 13 or 15(d) of
the Securities and Exchange Act of 1934 and of Rule 15c2-11 thereunder. Rule
144(k) also permits the termination of certain restrictions on sales of
restricted securities by persons who were not affiliates of the Company at the
time of the sale and have not been affiliates in the preceding three (3)
months. Such persons must satisfy a two (2) year holding period. There is no
limitation on such sales and there is no requirement regarding adequate
current public information. Investors should be aware that sales under Rule
144 or 144(k), or pursuant to a Registration Statement filed under the Act,
may have a depressive effect on the market price of the Company's securities
in any market which may develop for such shares.
13. Immediate Substantial Dilution. As of December 31, 1996, the net
tangible book value of the Company's Common Stock was approximately $.065 per
share, substantially less than the $5.00 per share to be paid by the public
investors, giving no value to the Warrants. In the event all the Units are
sold, public investors will sustain an immediate dilution of approximately
$4.00 per share in the book value of public investors' holdings. (See
"Dilution.")
14. Purchase of Shares. The Company's officers, directors and principal
shareholders may purchase a portion of the Units offered in this offering.
The aggregate number of Units which may be purchased by such persons shall not
exceed 20% of the number of Units sold in this offering. Such purchases may
be made in order to close the "all or nothing" offering. Units purchased by
the Company's officers, directors and principal shareholders will be acquired
for investment purposes and not with a view towards distribution.
15. State Law Violations. The Company will use its best efforts to
ensure that sales of Units will only occur in those states in which such sales
would not be a violation of any of said states laws. The Company's securities
may be sold in New York and the District of Columbia only.
16. Unknown Market for Products. While the Company believes there is a
market for its Emily Annie Keepsakes Urns, there is no guarantee that such a
market does in fact exist. Furthermore, the Company has no assurance that in
the event there is a market for its products, it will be able to capture a
substantial potion of that market.
<PAGE> DILUTION
The net tangible book value of the Company as of December 31, 1996 was
$.065. Net tangible book value is the net tangible assets of the Company
(total assets less total liabilities and intangible assets) (See "Financial
Statements.") As of December 31, 1996, there were 120,000 shares of the
Company's Common Stock outstanding (See "Certain Transactions").
Dilution represents the difference between the public offering price and
the net tangible book value per share immediately after the completion of the
public offering. Dilution arises mainly from the arbitrary decision by the
Company as to the offering price per share. In the event that any Warrants
are exercised (as to which no assurance can be given) there may be further
dilution to stockholders. The following table illustrates this dilution
(giving no value to the Warrants and assuming all Units are sold):
Public offering price per unit ......................... $5.00
Net tangible book value per share before offering........ $ .065
Net tangible book value per share after Maximum offering. $1.00
Increase per share attributable to shares offered hereby. $ .035
Dilution to public investors............................. $4.00
Money Net tangible
received for book value per
# shares shares before share before
before offering offering offering
120,000 $ 6,000 $ .065
- -------------------------------------------------------------
Total Net tangible
Total No. of Amount of Book Value
Shares After Money Received Per Share After
Maximum Offering For Shares Maximum Offering
160,000 $160,000 $1.00
- -------------------------------------------------------------
<PAGE>
Increase
Net Tangible Net tangible Per Share
Book Value Per Book Value Attributed
Share After Shares Before To Shares
Maximum Offering Offering Offered Hereby
$ 1.00 $ .065 $ .035
- -------------------------------------------------------------
Net tangible
Book Value Per
Public Offering Share After Dilution to
Price Per Share Maximum Offering Public Investors
$ 5.00 $1.00 $4.00
As of the date of this prospectus, the following table sets forth the
percentage of equity to be purchased by public investors in this offering
compared to the percentage of equity to be owned by the present stockholders,
and the comparative amounts paid for the shares by the public investors as
compared to the total consideration paid by the present stockholders of the
Company, giving no value to the Warrants and assuming all Units are sold (See
"Certain Transactions" and footnotes to "Financial Statements.")
Approx.
Percent Approx.
Total Percent
Units Shares Total Total
Purchased Outstanding(1) Consideration Consideration
New Investors 25,000
Minimum Offering 17.24% $ 125,000 95.42%
New Investors 40,000
Maximum Offering 25.00% $ 200,000 97.09%
Existing
Shareholders(1) 120,000 100% $ 6,000 4.58%
(1) 120,000 shares of common stock were sold prior to this offering at $.05
per share. (See "Certain Transactions")<PAGE>
USE OF PROCEEDS
Net proceeds to the Company of approximately $125,000 in the Minimum Offering
and approximately $200,000 in the Maximum Offering will be applied to
operating expenses of the Company, including production equipment, salaries
and office supplies. The following table sets forth management's proposed use
of such proceeds:
Application of Proceeds Minimum Maximum
Salaries $ 26,400 $ 42,000
Professional Fees $ 17,000 $ 17,000
Advertising $ 4,000 $ 7,000
Office Expenses (1) $ 20,000 $ 30,000
Working Capital $ 57,600 $104,000
Total $125,000 $200,000
(1) Based on moving of offices which the Company intends to do upon
completion of this offering.
The Company plans to apply the proceeds of the Offering to operating and
office expenses and to the commencement of manufacturing operations. In the
event the Company's plans change or its assumptions change or prove to be
inaccurate, or if the proceeds of this Offering or projected cash flow prove
to be insufficient to fund operations (due to unanticipated expense,
production cost overruns, technical problems, or difficulties or otherwise),
the Company may find it necessary or advisable to reallocate some of the
proceeds within the above-described categories, or may be required to seek
additional financing or curtail its operation. A portion of the proceeds of
this Offering allocated to working capital may, in the discretion of
management, be used to pay salaries and other administrative expenses if
revenues from operations are insufficient to pay operating expenses. The
Company has no current arrangements with respect to, or sources of, additional
financing and it is not anticipated that existing stockholders will provide
any portion of the Company's future financing requirements. There can be no
assurance that any such additional financing will be available to the Company,
or if available, on commercially reasonable terms.
Proceeds not immediately required for the purposes described above may be
invested principally in United States government securities, short-term
certificates of deposit, money market funds or other short-term
interest-bearing investments.
<PAGE>CAPITALIZATION
The following table sets forth capitalization of the Company as of December
31, 1996, and as adjusted to reflect the sale of the Units offered hereby and
the application of the estimated net proceeds of such sales.
As Adjusted
Dec 31, 1996 Minimum/Maximum
Liabilities:
Short-Term Debt ......... $ - 0 - $ - 0 -
Existing Long Term Debt . - 0 - - 0 -
Total Debt .... - 0 - - 0
- -
Shareholders' Equity:
Common Stock, $.001 par value
25,000,000 shares authorized
120,000 shares issued and
outstanding.................... 120 122 124
145,000 and 160,000 shares to
be issued and outstanding(1).... - -
- -
Additional Paid-In Capital 5,880 94,878 159,876
Accumulated Deficit ........... (1,886)(1,886)
(1,886)
Total Shareholders' Equity....... 4,134 94,082 159,080
Total Liabilities and
Stockholders' Equity .......... 4,134 94,082 159,080
Total Shareholders' Equity 4,134 94,082 159,080
Total Capitalization............. 4,134 94,082 159,080
_____________________
The Company has paid no cash dividends on its Common Stock. The Company's
present policy is to retain any earnings to finance the growth and development
of its business. Therefore, the Company does not anticipate paying cash
dividends in the foreseeable future.<PAGE>PROPOSED BUSINESS
History and Organization
The Company was organized under the laws of the State of New York on
September 30, 1995. Since inception, the primary activity of the Company has
been directed to organizational efforts and obtaining initial financing. The
Company has also designed the Emily Annie Serenity Urn, a decorative box
designed to hold pets post-cremation ashes. It is the Company's intent to
continue manufacturing these urns, and to market them through various avenues
including veterinarians, pet shows and pet specialty stores, as well as to pet
crematoriums and cemeteries. To date, the Company has manufactured a
prototype of each product, but has no sales. The Company has not entered into
any contracts or agreements for the sale or distribution of its products.
The Company's initial public offering will consist of a minimum of 25,000
Units and a maximum of 40,000 Units at a purchase price of $5.00 per Unit.
Each Unit consists of one (1) share of Common Stock, one (1) Class A Warrant
and one (1) Class B Warrant. Each Class A Warrant is exercisable at $7.00 for
one (1) share of Common Stock. Each Class B Warrant is exercisable for one
(1) share of Common Stock at an exercise price of $6.00. A Class A Warrant
must have been exercised for the corresponding Class B Warrant to be
exercised.
The Company is filing this registration statement in order to effect a
public offering for its securities. (See "Description of Securities.")
Plan of Operation
The Company was organized with the intent to design and market its sole
product, the Emily Annie Serenity Urn, urns specifically designed to contain
the post-cremated ashes of household pets. The Urns will have breed specific
designs, and display a commonly known marking for each breed. Each Emily
Annie Serenity Urn will have a core container made of metal with a rubber
gasket sealed screw on top to secure and preserve the ashes. The outer shell
will be made of ceramic-like non-breakable resin, that will be poured into
custom designed molds made exclusively for the Company.
The Company intends to design the Emily Annie Serenity Urns and to contract
out the manufacturing of its products. As of the date hereof, however, the
Company has no such contracts, nor has it engaged in any manufacturing of its
products. The Company has no sales to date. (See "RISK FACTORS").
The Company intends to market its products initially to pet crematoriums and
pet cemeteries, as well as to veterinarians and pet hospitals. The Company
expects to print brochures for display in such locations. Eventually, the
Company intends to market its products directly to pet owners.
The Company is aware of several companies engaged in a business similar to the
one the Company intends to operate, none of which designs breed-specific urns,
however. The Company believes this unique feature will distinguish it from
its competitors. The Company cannot guarantee that its competitors will not
have greater funding or more recognition than the Company, however, or that
additional companies will not enter the same market. (See "Risk Factors -
Competitors").
Employees
The Company presently has two part-time employee. The Company's employees
are all members of management whose salaries will be drawn from the proceeds
of this Offering. The Company's employees' salaries will be re-evaluated by
the Company after the Company is in operation. (See "Management - Executive
Compensation").
Facilities
The Company is presently using the office of Cheryl Mobley, located at
392 Central Park West, New York, New York 10025 as its office. There is no
cost involved to the Company. Such arrangement is expected to continue after
completion of this offering. The Company at present owns some equipment, and
intends to purchase additional equipment with the offering proceeds.
<PAGE>MANAGEMENT
The officers and directors of the Company, and further information
concerning them are as follows:
Name(1) Age Position(2)
Emily Putterman 30 President/Director
Russell McIntosh 59 Vice President/Secretary
(1) May be deemed "Promoters" of the Company, as that term is defined under
the Securities Act of 1933. These "Promoters" are the Company's only
"Promoters".
(2) All members of management have served in their respective positions since
the Company was organized.
BIOGRAPHY
Emily Putterman, 30, has been the Company's President and a director since the
Company's incorporation. Ms. Putterman has been an Assistant Adjunct
Professor at the Fashion Institute of Technology, where she teaches shoe
design, since 1989. Ms. Putterman is currently Sales and Marketing Director
for Tiny Toppers, located in New York. Ms. Putterman is a graduate of Fashion
Institute of Technology where she received her A.A.S in Footwear and Accessory
Design. She attended Parsons School of Design and is an Elected Life Member
of the Arts Student League in New York City.
Russell McIntosh, 59, has been Vice President and Secretary and a director of
the Company since its incorporation. Mr. McIntosh is a master carpenter who
specializes in restoration and refinishing of fine antique furniture, he
currently is employed by San Lorenzo Restorations and act concurrently as the
plant manager. Mr. McIntosh also has over 30 years experience as a tool and
dye maker. His craftsmanship and engraving skills are a credit to the
company.
Executive Compensation
$26,000 of the Minimum Offering, and $42,000 of the Maximum Offering proceeds
shall be allocated to management salaries. Management salaries shall be
re-evaluated once the Company commences operations.
STATEMENT AS TO INDEMNIFICATION
Section 722 of the New York Business Corporation Law provides for
indemnification of the officers, directors, employees and agents of
registrants by the Company. Pursuant to this section, the Company may
indemnify any director, officer, employee or agent of the Company who has been
made a party to an action, suit or proceeding by reason of the fact that such
person is or was an officer, director or employee or agent of the Company,
against expenses, judgements, fines and amounts paid in settlement actually
and reasonable incurred in such action, suit or proceeding. The general
effect of Section 722 of the New York Business Corporation Law is to indemnify
officers, directors, employees and agents of a company who are acting in good
faith on behalf of or for that company, against costs incurred in suits or
actions brought against such persons as a result of their relation to the
company and/or their actions on behalf of the company. Complete disclosure of
this statute is provided in Part II hereof. This information can be examined
as described in "Further Information," herein.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers or persons controlling the
registrant pursuant to the foregoing provisions, the registrant has been
informed that in the opinion of the Securities and Exchange Commission such
indemnification is against the public policy as expressed in the Securities
Act and is therefore, unenforceable.
MARKET FOR THE COMPANY'S COMMON STOCK
Prior to the date hereof, there has been no trading market for the
Company's Common Stock. There are currently four (4) holders of the Company's
outstanding Common Stock. Present shareholders will own approximately 83% of
the outstanding shares upon completion of the Minimum Offering and 75% after
the Maximum Offering, and as a result, there is little likelihood of an active
public trading market, as that term is currently understood, developing for
the shares. There can be no assurance that a trading market will develop for
the Company' securities after the offering, or at any timer thereafter. To
date, neither the Company nor anyone acting on its behalf has taken any
affirmative steps to retain or encourage any broker dealer to act as a market
maker for the Company's Common Stock. Further, there have been no discussions
or understandings, preliminary or otherwise, between the Company or anyone
acting on its behalf and any market maker regarding the participation of any
such market maker in the future trading market, if any, for the Company's
Common Stock. (See "HIGH RISK FACTORS - No Assurance of a Public Market" and
"HIGH RISK FACTORS - Control by Present Management and Shareholders.")
CERTAIN TRANSACTIONS
On October 10,1995, 120,000 shares of the Company's Common Stock were
issued to four (4) shareholders at $.05 per share for a total of $6,000. The
current breakdown of share ownership by shareholder may be found in the
section on Principal Stockholders.
PRINCIPAL SHAREHOLDERS
The following table sets forth, as of the date of this Memorandum,
certain information with respect to the Company's Common Stock owned or of
record by (i) each person who owns more than 5% of the Company's outstanding
Common Stock, (ii) each director or officer of the Company, and (iii) all
executive officers and directors as a group.
Percentages of Outstanding Shares Owned
Amount and
Nature of
Beneficial Before After Offering
Ownership Offering Minimum Maximum
Stockholder
Emily Putterman 57,600 48.00% 37.66% 34.13%
209 Columbus Ave.
New York, NY 10023
Russell McIntosh 56,400 47.00% 36.83% 33.37%
264 West 25th St.
New York, NY 10001
Joel Schonfeld 3,500 2.92% 2.41% 2.19%
63 Wall Street
New York, NY 10005
Andrea Weinstein 2,500 2.08% 1.72% 1.56%
63 Wall Street
New York, NY 10005
All Officers and 120,000 95.00% 78.62% 71.25%
Directors as a group
(2 persons)
DESCRIPTION OF SECURITIES
Units
The offering consists of up to 40,000 Units at $5.00 per Unit, each Unit
consisting of one (1) share of Common Stock, one (1) Class A Warrant and one
(1) Class B Warrant. Each Class A Warrant entitles the holder to purchase one
(1) share of Common Stock at an exercise price of $7.00 on the terms set forth
below under "Unit Warrants." Each Class B Warrant entitles the holder to
purchase one (1) share of Common Stock at an exercise price of $6.00 on the
terms set forth below under "Unit Warrants."
Common Stock
The Company is authorized to issue 25,000,000 shares of Common Stock, of
which 120,000 shares were issued and outstanding as of the date of this
prospectus. Each outstanding share of Common Stock is entitled to one vote,
either in person or by proxy, on all matters that may be voted upon by the
owners thereof at meetings of the stockholders.
The holders of Common Stock (i) have equal ratable rights to dividends
from funds legally available therefor, when, as and if declared by the Board
of Directors of the Company; (ii) are entitled to share ratably in all of the
assets of the Company available for distribution to holders of Common Stock
upon liquidation, dissolution or winding up of the affairs of the Company;
(iii) do not have preemptive, subscription or conversion rights, or redemption
or sinking fund provisions applicable thereto; and (iv) are entitled to one
non-cumulative vote per share on all matters on which stockholders may vote at
all meetings of stockholders.
All shares of Common Stock which are the subject of this offering, when
issued, will be fully paid for and non-assessable, with no personal liability
attaching to the ownership thereof. The holders of shares of Common Stock of
the Company do not have cumulative voting rights, which means that the holders
of more than 50% of such outstanding shares voting for the election of
directors can elect all of the directors of the Company if they so choose and,
in such event, the holders of the remaining shares will not be able to elect
any of the Company's directors. At the completion of the Maximum Offering,
the present officers and directors and present shareholders will beneficially
own 71.25% of the then outstanding shares. Accordingly, after completion of
this offering, the present shareholders of the Company will be in a position
to control all of the affairs of the Company.
Redeemable Warrants
Persons intending to exercise their redeemable Class A Warrants must
present the Warrant and the exercise price to the Company's Transfer Agent, in
order to receive one (1) share of Common Stock. Each Class A Warrant is
exercisable at an exercise price of $7.00 from the Closing Date of this
offering and continuing for three (3) years, at which time the Warrants
expire. The Class A Warrants are immediately detachable.
For each Class B Warrant, the holder is entitled to receive one (1) share
of Common Stock, at an exercise price of $6.00 from the Closing Date and
continuing for four (4) years thereafter, at which time the Warrants expire.
The number of shares that may be purchased upon exercise of the Warrants,
and the subscription price, may both be subject to proportionate adjustment in
the event of stock splits and stock dividends.
The Warrants are not entitled to any voting, liquidation or other rights
to which the Common Stock is entitled. Holders of the Warrants will have no
voting power and will not be entitled to any dividends. In the event of any
dissolution or winding up of the Company, the holders of the Warrants will not
be entitled to participate in a distribution of the Company's assets.
If there is no current prospectus or if the Common Stock underlying the
Warrants is not qualified for sale in the state in which a Warrant holder
resides, such holder will not be permitted to exercise his Warrants.
In the event that the Company adopts a resolution to merge, consolidate,
or sell percentages in all of its assets, prior to the expiration of the
Warrants, each Warrant holder upon exercise of his Warrants would be entitled
to receive the same treatment as the holder of any other share of Common
Stock. In the event the Company adopts a resolution for the liquidation,
dissolution, or winding up of the Company's business, the Company will give
written notice of adoption of such resolution to the registered holders of the
Warrants. Thereupon, all liquidation and dissolution rights under the
Warrants will terminate at the end of thirty (30) days from the date of the
notice to the extent not exercised within those thirty (30) days.
The Company currently has no plans, proposals, arrangements or
undertakings with respect to the sale of additional securities after the
completion of this offering or prior to the location of a Business
Combination. The only circumstances under which additional securities may be
issued would be, if the proceeds from this offering and the proceeds from the
exercise of the Warrants are insufficient to accomplish the Company's proposed
business.
The above summary does not purport to be complete. The Warrant Agreement
containing all of the terms and conditions applicable to the Warrants, has
been filed as an exhibit to the Registration Statement of which this
prospectus is a part.
Anti-Dilution Provisions of Warrants
The Warrant Price and number of Common Stock shares subject to the
Warrant shall be subject to adjustment from time to time as set forth
hereinafter.
(A) In case the Company shall declare a dividend or make any other
distribution upon any stock of the Company payable in Common Stock, then the
Warrant Prices shall be proportionately decreased as of the close of business
on the date of record of said dividend.
(B) If the Company shall at any time subdivide its outstanding Common
Stock by recapitalization, reclassification or split-up thereof, the Warrant
Price immediately prior to such subdivision shall be proportionately
decreased, and, if the Company shall at any time combine the outstanding
Common Stock by recapitalization, reclassification or combination thereof, the
Warrant price immediately prior to such combination shall be proportionately
increased. Any such adjustment to the Warrant price shall become effective
at the close of business on the record date for such subdivision or
combination.
(C) Upon any adjustment of the Warrant price as provided herein, the
number of Common Shares issuable upon exercise of this Warrant, shall be
changed to the number of shares determined by dividing (i) the aggregate
Warrant price payable for the purchase of all shares issuable upon exercise of
this Warrant immediately prior to such adjustment by (ii) the Warrant price
per share in effect immediately after such adjustment.
(D) If any capital reorganization or reclassification of the capital
stock of the Company, or consolidation or merger of the Company with another
corporation, or the sale of all or substantially all of its assets to another
corporation shall be effected in such a way that holders of Common Stock shall
be entitled to receive stock, securities, cash, or assets with respect to or
in exchange for Common Stock, then, as a condition of such reorganization,
reclassification, consolidation, merger or sale, the Company or such successor
or purchasing corporation as the case may be, shall execute with the warrant
agent a supplemental Warrant Agreement providing that each registered holder
of a Warrant shall have the right thereafter and until the expiration date to
exercise such Warrant for the kind and amount of stock securities, cash, or
assets receivable upon such reorganization, reclassification, consolidation,
merger or sale by a holder of the number of shares of Common Stock, for the
purchase of which such Warrant might have been exercised immediately prior to
such reorganization, reclassification, consolidation, merger or sale, subject
to adjustments which shall be as nearly equivalent as may be practicable to
the adjustments provided for in this section.
(E) On the Effective Date of any new Warrant price, the number of
shares as to which any Warrant may be exercised shall be increased or
decreased so that the total sum payable to the Company on the exercise of such
Warrant shall remain constant.
(F) The form of Warrant need not be changed because of any change
pursuant to this Section, and Warrants issued after such change may state the
same Warrant price and the same number of shares as it stated in the Warrants
initially issued pursuant to the Warrant Agency Agreement. However, the
Company may at any time in its sole discretion (which shall be conclusive)
make any change in the form of Warrant that the Company may deem appropriate
and that does not affect the substance thereof; and any Warrant thereafter
issued or countersigned, whether in exchange or substitution for an
outstanding Warrant or otherwise, may be in the form as so changed.
The Company acknowledges the fact that if there is any change in the
exercise price of the Warrants, a post-effective amendment will need to be
filed with the Securities and Exchange Commission prior to the commencement of
the exercise of the Warrants. In conjunction with any change in the Warrant
exercise price, notification to all market makers and public news releases
will be sent out immediately. The Company may reduce the exercise price or
extend the exercise period of the Warrants only by a vote of the majority of
the Company's Board of Directors.
The above summary does not purport to be complete. The Warrant Agreement
containing all of the terms and conditions applicable to the Unit Warrants,
has been filed as an exhibit to the Registration Statement of which this
prospectus is a part.
Reports to Stockholders
The Company intends to furnish its stockholders with annual reports
containing audited financial statements as soon as practicable at the end of
each fiscal year. The Company's fiscal year ends on April 30th.
Dividends
The Company was only recently organized, has no earnings, and has paid no
dividends to date. Furthermore, there can be no guarantee that the Company
will pay dividends in the future.
Transfer Agent and Warrant Agent
The Company has appointed Oxford Transfer & Registrar Agency, 1130 S.W.
Morrison, Suite 250, Portland, Oregon 97205, as the Transfer Agent and Warrant
Agent for the Company.
EXPIRATION DATE
This offering will expire 90 days from the date of this prospectus (or
210 days from the date of this prospectus if so extended by the Company).
LITIGATION
The Company is not presently a party to any litigation, nor to the
knowledge of management is any litigation threatened against the Company which
may materially affect the Company.
LEGAL OPINIONS
Schonfeld & Weinstein, L.L.P., 63 Wall Street, New York New York 10005,
Special Counsel to the Company, has rendered an opinion that the Units are
validly issued. Both Joel Schonfeld and his partner, Andrea Weinstein, own
stock in the Company totaling 6,000 shares of Common Stock.
EXPERTS
The financial statements included in this prospectus have been examined
by Boykoff & Bell, P.C., 2 Skyline Drive, Hawthorne, New York 10532,
independent certified public accountant, as stated in his opinion given upon
the authority of that person as an expert in accounting and auditing.
FURTHER INFORMATION
The Company has filed with the Securities and Exchange Commission (the
"Commission"), a Registration Statement on Form SB-2 with respect to this the
securities offered by this prospectus. This prospectus omits certain
information contained in the Registration Statement as permitted by the Rules
and Regulations of the Commission. Reports and other information filed by the
Company may be inspected and copied at the public reference facilities of the
Commission in Washington, D.C. Copies of such material can be obtained from
the Public Reference Section of the Commission, Washington, D.C. 20549 at
prescribed rate. Statements contained in this prospectus as to the contents
of any contract or other document referred to are not complete and where such
contract or other document is an exhibit to the Registration Statement, each
such statement is deemed qualified and amplified in all respects by the
provisions of the exhibit.
EMILY ANNIE, INC.
FINANCIAL STATEMENTS
(A Development Stage Company)
For the period from September 30, 1995(date of inception)
to December 31, 1996
<PAGE> EMILY ANNIE, INC.
(a development stage company)
CONTENTS
Independent Auditors' Report 1F
Financial
Statements:
Balance Sheet 2F
Statement of Cash Flows 3F
Statement of Operations 4F
Statement of Shareholders' Equity 5F
Notes to Financial Statements 6F-8F
INDEPENDENT AUDITORS' REPORT
Board of Directors and Shareholders
Emily Annie, Inc.
New York, New York
We have audited the accompanying balance sheet of Emily Annie, Inc., a
development stage company, as of December 31, 1996 and the related statements
of operations, shareholders' equity and cash flows for the period May 30, 1996
to December 31, 1996. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on
these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Emily Annie, Inc., a
development stage company, as of December 31, 1996, and the results if its
operations and its cash flows for the period May 30, 1996 to December 31, 1996
in conformity with generally accepted accounting
principles.
Boykoff and Bell, P.C.
Certified Public Accountants
Dated: March 15, 1997
Hawthorne, New York
1-F<PAGE>EMILY ANNIE, INC.
(a development stage company)
BALANCE SHEET
DECEMBER 31, 1996
ASSETS
CURRENT ASSETS:
Cash $ 1,890
Total current assets 1,890
OTHER ASSETS:
Organization costs (Note 2.) 10,347
Total assets $ 12,237
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 2,000
Due to shareholders (Note 3.) 5,382
Corporate taxes payable (Note 4.) 721
Total liabilities 8,103
SHAREHOLDERS' EQUITY:
Common stock, .001 par value, 25,000,000 authorized,
120,000 issued and outstanding (Note 1.) 120
Additional paid in capital (Note 1.) 5,880
Deficit accumulated during development stage <1,866>
Total shareholders' equity 4,134
Total liabilities and shareholders' equity $ 12,237
See notes to financial statements.
2-F<PAGE>EMILY ANNIE, INC.
(a development stage company)
STATEMENT OF CASH FLOWS
FOR THE PERIOD MAY 30, 1996 TO DECEMBER 31, 1996
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net loss $ <1,866>
Adjustments to reconcile net loss to
net cash provided by operating activities:
Increase in accounts payable $2,000
Increase in corporate taxes payable 721
2,721
Net cash provided by operating activities 855
CASH FLOWS FROM INVESTING ACTIVITIES:
Increase in organization costs <10,347>
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase in due to shareholders 5,382
Proceeds from sale of stock 6,000
11,382
Net increase in cash 1,890
Cash, beginning of period -0-
Cash, end of period $ 1,890
See notes to financial statements.
3-F<PAGE>EMILY ANNIE, INC.
(a development stage company)
STATEMENT OF OPERATIONS
FOR THE PERIOD MAY 30, 1996 TO DECEMBER 31, 1996
OPERATING EXPENSES:
Bank charges $ 145
Corporate taxes (Note 4) 721
Professional fees 1,000
Net loss $ <1,866>
EARNINGS PER SHARE:
Net loss per common share $ 1.87
Weighted average number of shares 120,000
See notes to financial statements.
4-F
EMILY ANNIE, INC.
(a development stage company)
STATEMENT OF SHAREHOLDERS' EQUITY
FOR THE PERIOD MAY 30, 1996 TO DECEMBER 31, 1996
SHARES AMOUNT
Initial sale of stock
October 10, 1995 120,000 $6,000
Deficit accumulated
during developmental stage <1,866>
120,000 $4,134
See notes to financial statements.
5-F
<PAGE>
EMILY ANNIE, INC.
(a development stage company)
NOTES TO FINANCIAL STATEMENTS
FOR THE PERIOD MAY 30, 1996 TO DECEMBER 31, 1996
1. ORGANIZATION OF THE COMPANY
The Company was incorporated in New York on September 30, 1995. Subsequent to
incorporation, it issued and sold 120,000 shares of Common Stock on October
10, 1995 to two (2) initial shareholders, at five cents per share.
The Company was organized to sell and market two products relating to the
containment of cremated ashes. Since its organization the companies
activities have been limited to the development of its products and the sale
of its stock. There have been no sales of its products to the public. After
the completion of its public offering the company will then begin to produce
and sell its products.
The Company's only activities to date have been the acquisition of funds from
the sale of its Common Stock. The Board of Directors has voted to authorize
the filing of a registration statement and prospectus to effect a initial
public offering in order to offer its securities to the public. As of
December 31, 1996, the Company had not yet commenced operations. The Company
conducts its operations on a calendar year.
2. SIGNIFICANT ACCOUNTING POLICIES
Organization costs
Organization costs will be amortized on a straight line basis over a five
years.
Leases
The Company has no oral or written leases or freeholds of any kind on any
physical plant. The Company presently uses the offices of Cheryl K. Mobley,
392 Central Park West, New York, New York 10025, at no cost. Such
arrangements are expected to continue until completion of this offering at
which the Company shall commence looking for larger space.
6-F
EMILY ANNIE, INC.
(a development stage company)
NOTES TO FINANCIAL STATEMENTS
FOR THE PERIOD MAY 30, 1996 TO DECEMBER 31, 1996
2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Estimates
The preparation of the financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
3. DUE TO SHAREHOLDERS
The non-interest bearing amount of $5,382 resulted from the shareholders
payment of corporate expenses from personal funds. No time period or
repayment terms have been established.
4. TAXES
Since the Company has incurred losses since inception, no provision for income
taxes is necessary. The Company has a net operating loss carried forward of
$1,866 which expires December 31, 2011.
5. ADDITIONAL INFORMATION
The Board of Directors passed a resolution authorizing the Management of the
Company to initiate steps to make a public offering of the Company's
securities, in order to raise additional capital of up to $200,000.00.
Management was granted authority to file a Registration Statement on form SB-2
with the Securities and Exchange Commission and to register the securities in
any state jurisdictions that Management felt was required and appropriate.
7-F
EMILY ANNIE, INC.
(a development stage company)
NOTES TO FINANCIAL STATEMENTS
FOR THE PERIOD MAY 30, 1996 TO DECEMBER 31, 1996
5. ADDITIONAL INFORMATION (CONTINUED)
It was furthermore resolved, that the public offering would consist of a
minimum of 25,000 and maximum of 40,000 Units to be offered at $5.00 per
unit. Each unit would consist of one (1) share of Common Stock, one (1) Class
A Warrant and one (1) Class B Warrant, with the Class A Warrants expiring
three (3) years from the closing date of this offering, and the Class B
Warrants expiring four (4) years from the closing date of this offering.
Each Class A Warrant would permit the holder to purchase one (1)
share of Common Stock for $7.00 (exercise price). Each Class B warrant would
permit the holder to purchase one (1) share of Common Stock for $6.00
(exercise price). The offering is being made on an all or none basis as to
the minimum offering, and a best efforts basis as to the maximum offering.
8-F
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 24. Indemnification of Directors and Officers
Section 722 of the New York Business Corporation Law, as amended, provides for
the indemnification of the Company's officers, directors and corporate
employees and agents under certain circumstances as follows:
(a) A corporation may indemnify any person made, or threatened to be
made, a party to an action or proceeding (other than one by or in the right of
the corporation to procure a judgment in its favor), whether civil or
criminal, including an action by or in the right of any other corporation of
any type or kind, domestic or foreign, or any partnership, joint venture,
trust, employee benefit plan or other enterprise, which any director or
officer of the corporation served in any capacity at the request of the
corporation, by reason of the fact that he, his testator or intestate, was a
director or officer of the corporation, or served such other corporation,
partnership, joint venture, trust, employee benefit plan or other enterprise
in any capacity, against judgments, fines, amounts paid in settlement and
reasonable expenses, including attorneys' fees actually and necessarily
incurred as a result of such action or proceeding, or any appeal therein, if
such director or officer acted, in good faith, for a purpose which he
reasonably believed to be in, or, in the case of service for any other
corporation or any partnership, joint venture, trust employee benefit plan or
other enterprise, not opposed to, the best interests of the corporation and,
in criminal actions or proceedings, in addition, had no reasonable cause to
believe that his conduct was unlawful.
(b) The termination of any such civil or criminal action or proceeding
by judgment, settlement, conviction or upon a plea of nolo contendere, or its
equivalent, shall not in itself create a presumption that any such director or
officer did not act, in good faith, for a purpose which he reasonably believed
to be in, or, in the case of service for any other corporation or any
partnership, joint venture, trust, employee benefit plan or other enterprise,
not opposed to, the best interests of the corporation or that he had
reasonable cause to believe that his conduct was unlawful.
(c) A corporation may indemnify any person made, or threatened to be
made, a party to an action by or in the right of the corporation to procure a
judgment in its favor by reason of the fact that he, his testator or
intestate, is or was a director or officer of the corporation, or is or was
serving at the request of the corporation as a director or officer of any
other corporation of any type or kind domestic or foreign, of any partnership,
joint venture, trust, employee benefit plan or other enterprise, against
amounts paid in settlement and reasonable expenses, including attorneys' fees,
actually and necessarily incurred by him in connection with the defense or
settlement of such action, or in connection with an appeal therein, if such
director or officer acted, in good faith, for a purpose which he reasonably
believed to be in, or, in the case of service for any other corporation or any
partnership, joint venture, trust, employee benefit plan or other enterprise,
not opposed to, the best interests of the corporation, except that no
indemnification under this paragraph shall be made in respect of (1) a
threatened action, or a pending action which is settled or otherwise disposed
of, or (2) any claim, issue or matter as to which such person shall have been
adjudged to be liable to the corporation, unless and only to the extent that
the court in which the action was brought, or if no action was brought, any
court of competent jurisdiction, determines upon application that, in view of
all the circumstances of the case, the person is fairly and reasonably
entitled to indemnity for such portion of the settlement amount and expenses
as the court deems proper.
(d) For the purpose of this section, a corporation shall be deemed to
have requested a person to serve an employee benefit plan where the
performance by such person of his duties to the corporation also imposes
duties on, or otherwise involves services by, such person to the plan or
participants or beneficiaries of the plan; excise taxes assessed on a person
with respect to an employee benefit plan pursuant to applicable law shall be
considered fines; and action taken or omitted by a person with respect to an
employee benefit plan in the performance to be in the interest of the
participants and beneficiaries of the plan shall be deemed to be for a purpose
which is not opposed to the best interests of the corporation.
The Company will, to the fullest extend permitted by Section 722 of the New
York Business Corporation Law, indemnify any and all persons whom it has the
power to indemnify against any and all of the expense, liabilities and loss,
and this indemnification shall not be deemed exclusive of any other rights to
which the indemnitees may be entitled under any By-law, agreement, or
otherwise, both as to action in his/her official capacity and as to action in
another capacity while holding such office, and shall continue as to a person
who has ceased to be a director, officer, employee or agent and shall inure to
the benefit of the heirs, executors and administrators of such persons.
The Company may, at its own expense, maintain insurance to protect itself and
any director, officer, employee or agent of the Company against any such
expense, liability or loss, whether or not the Company would have the power to
indemnify such person against such expense, liability or loss under the New
York Business Corporation Law.
Item 25. Expenses of Issuance and Distribution
The other expenses payable by the Company in connection with the issuance
and distribution of the securities being registered are estimated as follows:
Escrow Fee................................$ 250.00
Securities and Exchange Commission
Registration Fee..........................$ 312.07
Legal Fees................................$15,000.00
Accounting Fees...........................$ 2,000.00
Printing and Engraving....................$ 750.00
Blue Sky Qualification Fees and Expenses..$ 500.00
Miscellaneous.............................$ 837.93
Transfer Agent Fee........................$ 350.00
TOTAL.....................................$20,000.00
<PAGE>
Item 26. Recent Sales of Unregistered Securities
The Company issued 120,000 shares on October 10, 1996 to its initial
stockholders for $6,000.
Name/Address
Consideration Shares
Beneficial of Common Price
Owner Stock Purchased(2) Paid
Emily Putterman(1) 57,600 $ 2,880
209 Columbus Ave.
New York, NY 10023
Russell McIntosh(1) 56,400 $ 2,820
264 West 25th St.
New York, NY 10001
Joel Schonfeld(3) 3,500 $ 175
63 Wall St., Ste.1801
New York, NY 10005
Andrea Weinstein(3) 2,500 $ 125
63 Wall St., Ste 1801
New York, NY 10005
Total Officers
and Directors
((2) persons) 120,000 $ 6,000
__________________________
(1) May be deemed "Promoters" of the Company, as that term is defined
under the Securities Act of 1933.
(2) These Shares were sold under the exemption of Section 4(2) of the
Securities Act of 1933.
Neither the Company nor any person acting on its behalf offered or sold the
securities by means of any form of general solicitation or general
advertising.
Each purchaser represented in writing that he/she acquired the securities for
his own account. A legend was placed on the certificates stating that the
securities have not been registered under the Act and setting forth the
restrictions on their transferability and sale. Each purchaser signed a
written agreement that the securities will not be sold without registration
under the Act or exemption therefrom.
(3) Mr. Schonfeld is special counsel to the Company, and Ms. Weinstein
is his associate.
EXHIBITS
Item 27.
3.1 Certificate of Incorporation.
3.2 By-Laws.
4.1 Class A Warrant
4.2 Class B Warrant
4.3 Form of Warrant Agency Agreement.
4.4 Form of Escrow Agreement.
5.0 Opinion of Counsel.
24.0 Accountant's Consent to Use Opinion.
24.1 Counsel's Consent to Use Opinion.
Item 28.
UNDERTAKINGS
The registrant undertakes:
(1) To file, during any period in which offers or sales are being made,
post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10 (a) (3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after the
Effective Date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
registration statement;
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement, including
(but not limited to) any addition or deletion of managing underwriter;
(2) That, for the purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment shall be treated as a new
registration statement of the securities offered, and the offering of the
securities at that time to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any of
the securities being registered which remain unsold at the termination of the
offering.
Insofar as indemnification for liabilities arising under the Securities Act of
1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to any provisions contained in its Certificate of
Incorporation, or by-laws, or otherwise, the registrant has been advised that
in the opinion of the Securities and Exchange Commission such indemnification
is against public policy as expressed in the Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the registrant of expenses incurred or
paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities
being registered, the registrant will, unless in the opinion of its counsel
the matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether indemnification by it is against
public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
- -This Space is Intentionally Left Blank-
<PAGE>
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements of filing on Form SB-2 and authorized this
registration statement to be signed on its behalf by the undersigned, in the
City of , State of , on .
EMILY ANNIE, INC.
(Registrant)
BY:
(Signature and Title)
Emily Putterman, President
In accordance with the requirements of the Securities Act of 1933, this
registration statement was signed by the following persons in the capacities
and on the dates stated.
Emily Putterman
EMILY PUTTERMAN DATED April 24, 1997
President, Director
Russel McIntosh
RUSSELL MCINTOSH DATED April 24, 1997
Vice President, Secretary, Director
<PAGE>
CERTIFICATE OF INCORPORATION
OF
EMILY ANNIE INC.
FILED BY: JOEL SCHONFELD, ESQ.
26 Court Street, Suite 810
Brooklyn, New York 11242
<PAGE>CERTIFICATE OF INCORPORATION
EMILY ANNIE INC.
Under Section 402 of the Business Corporation Law.
The undersigned, for the purpose of forming a
corporation pursuant to Section 402 of the Business Corporation
Law of the State of New York, does hereby certify and set forth:
FIRST: The name of the corporation is Emily Annie Inc.
SECOND: The purpose for which the corporation is formed are:
To engage in any lawful act or activity for which corporations may be
organized under the business corporation law, provided that the corporation is
not formed to engage in any act
or activity which requires the act or approval of any state official,
department, board, agency or other body without such approval or consent first
being obtained.
To hold securities, invest for a private family.
To acquire by purchase, subscription, underwriting or otherwise, and to
own, hold for investment, or otherwise, and to use, sell, assign, transfer,
mortgage, pledge, exchange or otherwise dispose of real and personal property
of every sort and description and wheresoever situated, including shares of
stock, bonds, debentures, notes, script, securities, evidences of
indebtedness, contracts or obligations of any corporation or association,
whether domestic or foreign, or of any firm or individual or of the United
States or any state, territory, or dependency of the United States or any
foreign country, or any municipality or local authority within or without the
United States, and also to issue in exchange therefor, stocks, bonds or other
securities or evidences of indebtedness of this corporation and, while the
owner or holder of any such property, to receive, collect and dispose of the
interest, dividends and income on or from such property and to possess and
exercise in respect thereto all of the rights, powers and privileges of
ownership, including all voting powers thereon.
To construct, build, purchase, lease or otherwise acquire, equip, hold,
own, improve, develop, manage, maintain, control, operate, lease, mortgage,
create liens upon, sell, convey or otherwise dispose of any turn to account,
any and all plants, machinery, works, implements and things or property, real
and personal, of every kind and description, incidental to,
connected with, or suitable, necessary or convenient for any of the purposes
enumerated herein, including all or any part or
parts of the properties, assets, business and food will of any persons, firms,
associations or corporations.
The powers, rights and privileges provided in this certificate are not to
be deemed to be in limitation of similar, other or additional powers, rights
and privileges granted or permitted to a corporation by the Business
Corporation Law, it being intended that this corporation shall have all the
rights, powers and privileges granted or permitted to a corporation by such
statute.
THIRD: The office of the corporation is to be located in
New York County, New York.
FOURTH: The aggregate number of shares of which the
corporation shall have the authority to issue is 25,000,000
(.001), all of which shall be without par value.
FIFTH: The Secretary of State is designed as the
agent of the corporation upon whom process against it may be served. The post
office address to which the Secretary of State
shall mail a copy of any process against the corporation served
on him is:
JOEL SCHONFELD, ESQ.
26 Court Street, Suite 810
Brooklyn, New York 11242
SIXTH: The personal liability of directors to the corporation or its
shareholders for damages for any breach of duty in such capacity is hereby
eliminated except that such
personal liability shall not be eliminated if a judgement or other
final adjudication adverse to such director establishes that his
acts or omissions were in bad faith or involved intentional
misconduct or a knowing violation of law or that he personally gained in fact
a financial profit or other advantage to which he was not legally entitled or
that his acts violated Section 719 of
the Business Corporation Law.
IN WITNESS WHEREOF, this certificate has been
subscribed to this 25TH day of January, 1996, by the undersigned, Eric
Popkoff, Emily Putterman and Russell Mackintosh, who affirms that the
statements made herein are true under penalties of perjury.
ERIC
POPKOFF
1750 East 23rd Street Brooklyn, NY 11229
EMILY PUTTERMAN
209 Columbus Ave
New York, NY 10023
RUSSELL MACKINTOSH
264 West 25th Street
New York, NY 10017
<PAGE>
BY-LAWS
OF
EMILY ANNIE, INC.
ARTICLE I - OFFICES
The office of the Corporation shall be located in the City, County and State
designated in the Certificate of Incorporation. The Corporation may also
maintain offices at such other places within or without the United States as
the Board of Directors may, from time to time, determine.
ARTICLE II- MEETING OF SHAREHOLDERS
Section 1 - Annual Meetings:
The annual meeting of the shareholders of the Corporation shall be held within
five months after the close of the fiscal year of the Corporation, for the
purpose of electing directors, and transacting such other business as may
properly come before the meeting.
Section 2 - Special Meetings:
Special meetings of the shareholders may be called at any time by the Board of
Directors or by the President, and shall be called by the President or the
Secretary at the written request of the holders of ten per cent (10%) of the
shares then outstanding and entitled to vote thereat, or as otherwise required
under the provisions of the Business Corporation Law.
Section 3 - Place of Meetings:
All meetings of shareholders shall be held at the principal office of the
Corporation, or at such other places within or without the State of New York
as shall be designated in the notices or waivers of notice of such meetings.
Section 4 - Notice of Meetings:
(a) Written notice of each meeting of shareholders, whether annual or special,
stating
the time when and place where it is to be held, shall be served either
personally or by mail, not less than ten or more than fifty days before the
meeting, upon each shareholder of record entitled to vote at such meeting, and
to any other shareholder to whom the giving of notice may be required by law.
Notice of a special meeting shall also state the purpose or purposes for which
the meeting is called, and shall indicate that it is being issued by, or at
the direction of, the person or persons calling the meeting. If, at any
meeting, action is proposed to be taken that would, if taken, entitle
shareholders to receive payment for their shares pursuant to the Business
Corporation Act, the notice of such meeting shall include a statement of that
purpose and to that effect. If mailed, such notice shall be directed to each
such shareholder at his address, as it appears on the records of the
shareholders of the Corporation, unless he shall have previously filed with
the Secretary of the Corporation a written request that notices intended for
him be mailed to some other address, in which case, it shall be mailed to the
address designated in such request.
(b) Notice of any meeting need not be given to any person who may become a
shareholder of record after the mailing of such notice and prior to the
meeting, or to any shareholder who attends such meeting, in person or by
proxy, or to any shareholder who, in person or by proxy, submits a signed
waiver of notice either before or after such meeting. Notice of any adjourned
meeting of shareholders need not be given, unless otherwise required by
statute.
Section 5 - Quorum:
(a) Except as otherwise provided herein, or by statute, or in the Certificate
of Incorporation (such Certificate and any amendments thereof being
hereinafter collectively referred to as the "Certificate of Incorporation"),
at all meetings of shareholders of the Corporation, the presence at the
commencement of such meetings in person or by proxy of shareholders holding of
record a majority of the total number of shares of the Corporation then issued
and outstanding and entitled to vote, shall be necessary and sufficient to
constitute a quorum for the transaction of any business. The withdrawal of any
shareholder after the commencement of a meeting shall have no effect on the
existence of a quorum, after a quorum has been established at such meeting.
(b) Despite the absence of a quorum at any annual or special meeting of
shareholders, the shareholders, by a majority of the votes cast by the holders
of shares entitled to vote thereon, may adjourn the meeting. At any such
adjourned meeting at which a quorum is present, any business may be transacted
which might have been transacted at the meeting as originally called if a
quorum had been present.
_Section 6 - Voting:
(a) Except as otherwise provided by statute or by the Certificate of
Incorporation, any corporate action, other than the election of directors to
be taken by vote of the shareholders, shall be authorized by a majority of
votes cast at a meeting of shareholders by the holders of shares entitled to
vote thereon.
(b) Except as otherwise provided by statute or by the Certificate of
Incorporation, at each meeting of shareholders, each holder of record of stock
of the Corporation entitled to vote thereat, shall be entitled to one vote for
each share of stock registered in his name on the books of the Corporation.
(c) Each shareholder entitled to vote or to express consent or dissent without
a meeting, may do so by proxy; provided, however, that the instrument
authorizing such proxy to act shall have been executed in writing by the
shareholder himself, or by his attorney-in-fact thereunto duly authorized in
writing. No proxy shall be valid after the expiration of eleven months from
the date of its execution, unless the persons executing it shall have
specified therein the length of time it is to continue in force. Such
instrument shall be exhibited to the Secretary at the meeting and shall be
filed with the records of the Corporation.
(d) Any resolution in writing, signed by all of the shareholders entitled to
vote thereon, shall be and constitute action by such shareholders to the
effect therein expressed, with the same force and effect as if the same had
been duly passed by unanimous vote at a duly called meeting of shareholders
and such resolution so signed shall be inserted in the Minute Book of the
Corporation under its proper date.
ARTICLE III- BOARD OF DIRECTORS
Section 1 - Number. Election and Term of Office:
(a) The number of the directors of the Corporation shall be three (3), unless
and until otherwise determined by vote of a majority of the entire Board of
Directors. The number of Directors shall not be less than three, unless all of
the outstanding shares are owned beneficially and of record by less than three
shareholders, in which event the number of directors shall not be less than
the number of shareholders.
(b) Except as may otherwise be provided herein or in the Certificate of
Incorporation, the members of the Board of Directors of the Corporation, who
need not be shareholders, shall be elected by a majority of the votes cast at
a meeting of shareholders, by the holders of shares entitled to vote in the
election.
(c) Each director shall hold office until the annual meeting of the
shareholders next succeeding his election, and until his successor is elected
and qualified, or until his prior death, resignation or removal.
Section 2 - Duties and Powers:
The Board of Directors shall be responsible for the control and management of
the affairs, property and interests of the Corporation, and may exercise all
powers of the Corporation, except as are in the Certificate of Incorporation
or by statute expressly conferred upon or reserved to the shareholders.
Section 3 - Annual and Regular Meetings: Notice:
(a) A regular annual meeting of the Board of Directors shall be held
immediately following the annual meeting of the shareholders at the place of
such annual meeting of shareholders.
(b) The Board of Directors, from time to time, may provide by resolution for
the holding of other regular meetings of the Board of Directors, and may fix
the time and place thereof.
(c) Notice of any regular meeting of the Board of Directors shall not be
required to be given and, if given, need not specify the purpose of the
meeting; provided, however, that in case the Board of Directors shall fix or
change the time or place of any regular meeting, notice of such action shall
be given to each director who shall not have been present at the meeting at
which such action was taken within the time limited, and in the
manner set forth in paragraph ~) of Section 4 of this Article III, with
respect to special meetings, unless such notice shall be waived in the manner
set forth in paragraph (c) of such Section 4.
Section 4 - Special Meetings: Notice:
(a) Special meetings of the Board of Directors shall be held whenever called
by the President or by one of the directors, at such time and place as may be
specified in the respective notices or waivers of notice thereof.
(b) Notice of special meetings shall be mailed directly to each director,
addressed to him at his residence or usual place of business, at least two (2)
days before the day on which the meeting is to be held, or shall be sent to
him at such place by telegram, radio or cable, or shall be delivered to him
personally or given to him orally, not later than the day before the day on
which the meeting is to be held. A notice, or waiver of notice, except as
required by Section 8 of this Article III, need not specify the purpose of the
meeting.
(c) Notice of any special meeting shall not be required to be given to any
director who shall attend such meeting without protesting prior thereto or at
its commencement, the lack of notice to him, or who submits a signed waiver of
notice, whether before or after the meeting. Notice of any adjourned meeting
shall not be required to be given.
Section 5 - Chairman:
At all meetings of the Board of Directors, the Chairman of the Board, if any
and if present, shall preside. If there shall be no Chairman, or he shall be
absent, then the President shall preside, and in his absence, a Chairman
chosen by the Directors shall preside.
Section 6 - Quorum and Adjournments:
(a) At all meetings of the Board of Directors, the presence of a majority of
the entire Board shall be necessary and sufficient to constitute a quorum for
the transaction of business, except as otherwise provided by law, by the
Articles of Incorporation, or by these By-Laws. Participation of any one or
more members of the Board by means of a conference telephone or similar
communications equipment, allowing all persons participating in the meeting to
hear each other at the same time, shall constitute presence in person at any
such meeting.
(b) A majority of the directors present at the time and place of any regular
or special meeting, although less than a quorum, may adjourn the same from
time to time without notice, until a quorum shall be present.
Section 7 - Manner of Acting:
(a) At all meetings of the Board of Directors, each director present shall
have one vote, irrespective of the number of shares of stock, if any, which he
may hold.
(b) Except as otherwise provided by statute, by the Certificate of
Incorporation, or these By-Laws, the action of a majority of the directors
present at any meeting at which a quorum is present shall be the act of the
Board of Directors. Any action authorized, in writing, by all of the directors
entitled to vote thereon and filed with the minutes of the Corporation shall
be the act of the Board of Directors with the same force and effect as if the
same had been passed by unanimous vote at a duly called meeting of the Board.
Section 8 - Vacancies:
Any vacancy in the Board of Directors occurring by reason of an increase in
the number of directors, or by reason of the death, resignation,
disqualification, removal (unless a vacancy created by the removal of a
director by the shareholders shall be filled by the shareholders at the
meeting at which the removal was effected) or inability to act of any
director, or otherwise, shall be filled for the unexpired portion of the term
by a majority vote of the remaining directors, though less than a quorum, at
any regular meeting or special meeting of the Board of Directors called for
that purpose.
Section 9 - Resignation:
Any director may resign at any time by giving written notice to the Board of
Directors, the President or the Secretary of the Corporation. Unless otherwise
specified in such written notice, such resignation shall take effect upon
receipt thereof by the Board of Directors or such officer, and the acceptance
of such resignation shall not be necessary to make it effective.
Section 10 - Removal:
Any director may be removed with or without cause at any time by the
shareholders, at a special meeting of the shareholders called for that
purpose, and may be removed for cause by action of the Board.
Section 11 - Salary:
No stated salary shall be paid to directors, as such, for their services, but
by resolution of the Board of Directors a fixed sum and expenses of
attendance, if any, may be allowed for attendance at each regular or special
meeting of the Board; provided, however, that nothing herein contained shall
be construed to preclude any director from serving the Corporation in any
other capacity and receiving compensation therefor.
Section 12 - Contracts:
(a) No contract or other transaction between this Corporation and any other
Corporation shall be impaired, affected or invalidated nor shall any director
be liable in any way by reason of the fact that any one or more of the
directors of this Corporation is or are interested in, or is a director or
officer, or are directors or officers of such other Corporation, provided that
such facts are disclosed or made known to the Board of Directors.
(b) Any director, personally and individually, may be a party to or may be
interested in any contract or transaction of this Corporation, and no director
shall be liable in any way by reason of such interest, provided that the fact
of such interest be disclosed or made known to the Board of Directors, and
provided that the Board of Directors shall authorize, approve or ratify such
contract or transaction by the vote (not counting the vote of any such
director) of a majority of a quorum, notwithstanding the presence of any such
director at the meeting at which such action is taken. Such director or
directors may be counted in determining the presence of a quorum at such
meeting. This Section shall not be construed to impair or invalidate or in any
way affect any contract or other transaction which would otherwise be valid
under the law (common, statutory or otherwise) applicable thereto.
Section 13 - Committees:
The Board of Directors, by resolution adopted by a majority of the entire
Board, may from time to time designate from among its members an executive
committee and such other committees, and alternate members thereof, as they
deem desirable, each consisting of three or more members, with such powers and
authority (to the extent permitted by law) as may be provided in such
resolution. Each such committee shall serve at the pleasure of the Board. At
all meetings of a committee, the presence of all members of the committee
shall be necessary to constitute a quorum for the transaction of business,
except as otherwise provided by said resolution or by these By-laws.
Participation of any one or more members of the committee by means of a
conference telephone or similar communications equipment allowing all persons
participating in the meeting to hear each other at the same time, shall
constitute presence in person at any such meeting. Any action authorized in
writing by all of the members of a committee entitled to vote thereon and
filed with the minutes of the Committee shall be the act of the committee with
the same force and effect as if the same had been passed by unanimous vote at
a duly called meeting of the committee.
ARTICLE IV - OFFICERS
Section 1 - Number, Qualifications, Election and Term of Office:
(a) The officers of the Corporation shall consist of a President, a Secretary,
a Treasurer, and such other officers, including a Chairman of the Board of
Directors, and one or more Vice Presidents, as the Board of Directors may from
time to time deem advisable. Any officer other than the Chairman of the Board
of Directors may be, but is not required to be, a director of the Corporation.
Any two or more offices may be held by the same person.
(b) The officers of the Corporation shall be elected by the Board of
Directors at the regular annual meeting of the Board following the annual
meeting of shareholders.
(c) Each officer shall hold office until the annual meeting of the Board of
Directors next succeeding his election, and until his successor shall have
been elected and qualified, or until his death, resignation or removal.
Section 2 - Resignation:
Any officer may resign at any time by giving written notice of such
resignation to the Board of Directors, or to the President or the Secretary of
the Corporation. Unless otherwise specified in such written notice, such
resignation shall take effect upon receipt thereof by the Board of Directors
or by such officer, and the acceptance of such resignation shall not be
necessary to make it effective.
Section 3 - Removal:
Any officer may be removed, either with or without cause, and a successor
elected by the Board at any time.
Section 4 - Vacancies:
A vacancy in any office by reason of death, resignation, inability to act,
disqualification, or any other cause, may at any time be filled for the
unexpired portion of the term by the Board of Directors.
Section 5 - Duties of Officers:
Officers of the Corporation shall, unless otherwise provided by the Board of
Directors, each have such powers and duties as generally pertain to their
respective offices as well as such powers and duties as may be set forth in
these by-laws, or may from time to time be specifically conferred or imposed
by the Board of Directors. The President shall be the chief executive officer
of the Corporation.
Section 6 - Sureties and Bonds:
In case the Board of Directors shall so require, any officer, employee or
agent of the Corporation shall execute to the Corporation a bond in such sum,
and with such surety or sureties as the Board of Directors may direct,
conditioned upon the faithful performance of his duties to the Corporation,
including responsibility for negligence and for the accounting for all
property, funds or securities of the Corporation which may come into his
hands.
Section 7 - Shares of Other Corporations:
Whenever the Corporation is the holder of shares of any other corporation, any
right or power of the Corporation as such shareholder (including the
attendance, acting and voting at shareholders' meetings and execution of
waivers, consents, proxies or other instruments) may be exercised on behalf of
the Corporation by the President, any Vice President, or such other person as
the Board of Directors may authorize.
ARTICLE V - SHARES OF STOCK
Section 1 - Certificate of Stock:
(a) The certificates representing shares of the Corporation shall be in such
form as shall be adopted by the Board of Directors, and shall be numbered and
registered in the order issued. They shall bear the holder's name and the
number of shares, and shall be signed by (i) the Chairman of the Board or the
President or a Vice President, and (ii) the Secretary or Treasurer, or any
Assistant Secretary or Assistant Treasurer, and may bear the corporate seal.
(b) No certificate representing shares shall be issued until the full amount
of consideration therefor has been paid, except as otherwise permitted by law.
(c) The Board of Directors may authorize the issuance of certificates for
fractions of a share which shall entitle the holder to exercise voting rights,
receive dividends and participate in liquidating distributions, in proportion
to the fractional holdings; or it may authorize the payment in cash of the
fair value of fractions of a share as of the time when those entitled to
receive such fractions are determined; or it may authorize the issuance,
subject to such conditions as may be permitted by law, of scrip in registered
or bearer
form over the signature of an officer or agent of the Corporation,
exchangeable as therein provided for full shares, but such scrip shall not
entitle the holder to any rights of a shareholder, except as therein provided.
Section 2 - Lost or Destroyed Certificates:
The holder of any certificate representing shares of the Corporation shall
immediately notify the Corporation of any loss or destruction of the
certificate representing the same. The Corporation may issue a new certificate
in the place of any certificate theretofore issued by it, alleged to have been
lost or destroyed. On production of such evidence of loss or destruction as
the Board of Directors in its discretion may require, the Board of Directors
may, in its discretion, require the owner of the lost or destroyed
certificate, or his legal representatives, to give the Corporation a bond in
such sum as the Board may direct, and with such surety or sureties as may be
satisfactory to the Board, to indemnify the Corporation against any claims,
loss, liability or damage it may suffer on account of the issuance of the new
certificate. A new certificate may be issued without requiring any such
evidence or bond when, in the judgment of the Board of Directors, it is proper
so to do.
Section 3 - Transfers of Shares:
(a) Transfers of shares of the Corporation shall be made on the share records
of the Corporation only by the holder of record thereof, in person or by his
duly authorized attorney, upon surrender for cancellation of the certificate
or certificates representing such shares, with an assignment or power of
transfer endorsed thereon or delivered therewith, duly executed, with such
proof of the authenticity of the signature and of authority to transfer and of
payment of transfer taxes as the Corporation or its agents may require.
(b) The Corporation shall be entitled to treat the holder of record of any
share or shares as the absolute owner thereof for all purposes and,
accordingly, shall not be bound to recognize any legal, equitable or other
claim to, or interest in, such share or shares on the part of any other
person, whether or not it shall have express or other notice thereof, except
as otherwise expressly provided by law.
_Section 4 - Record Date:
In lieu of closing the share records of the Corporation, the Board of
Directors may fix, in advance, a date not exceeding fifty days, nor less than
ten days, as the record date for the determination of shareholders entitled to
receive notice of, or to vote at, any meeting of shareholders, or to consent
to any proposal without a meeting, or for the purpose of determining
shareholders entitled to receive payment of any dividends, or allotment of any
rights, or for the purpose of any other action. If no record date is fixed,
the record date for the determination of shareholders entitled to notice of or
to vote at a meeting of shareholders shall be at the close of business on the
day next preceding the day on which notice is given, or, if no notice is
given, the day on which the meeting is held; the record date for determining
shareholders for any other purpose shall be at the close of business on the
day on which the resolution of the directors relating thereto is adopted. When
a determination of shareholders of record entitled to notice of or to vote at
any meeting of shareholders has been made as provided for herein, such
determination shall apply to any adjournment thereof, unless the directors fix
a new record date for the adjourned meeting.
ARTICLE VI- DIVIDENDS
Subject to applicable law, dividends may be declared and paid out of any funds
available therefor, as often, in such amounts, and at such time or times as
the Board of Directors may determine.
ARTICLE VII- FISCAL YEAR
The fiscal year of the Corporation shall be fixed by the Board of Directors
from time to time, subject to applicable law.
ARTICLE VIII- CORPORATE SEAL
The corporate seal, if any, shall be in such form as shall be approved from
time to time by the Board of Directors.
_ARTICLE IX -AMENDMENTS
Section. 1 - By Shareholders:
All by-laws of the Corporation shall be subject to alteration or repeal, and
new by-laws may be made, by a majority vote of the shareholders at the time
entitled to vote in the election of directors.
Section 2 - By Directors:
The Board of Directors shall have power to make, adopt, alter, amend and
repeal, from time to time, by-laws of the Corporation; provided, however, that
the shareholders entitled to vote with respect thereto as in this Article IX
above-provided may alter, amend or repeal by-laws made by the Board of
Directors, except that the Board of Directors shall have no power to change
the quorum for meetings of shareholders or of the Board of Directors, or to
change any provisions of the by-laws with respect to the removal of directors
or the filling of vacancies in the Board resulting from the removal by the
shareholders. If any by-law regulating an impending election of directors is
adopted, amended or repealed by the Board of Directors, there shall be set
forth in the notice of the next meeting of shareholders for the election of
directors, the by-law so adopted, amended or repealed, together with a concise
statement of the changes made.
The undersigned Incorporator certifies the he has adopted the foregoing bylaws
as the first by-laws of the Corporation, in accordance with the requirements
of the Business Corporation Law.
Dated:_______________________________________
_________ _______________________
Incorporator
<PAGE>CLASS A WARRANT
For the Purchase of Common Stock, Par Value $.001 per Share,
of EMILY ANNIE, INC.
(Incorporated Under the Laws of the State of New York)
Void After 5 p.m. , 19
No. Warrant to Purchase Shares
THIS IS TO CERTIFY that, for value received, the warrant holder or
registered assigns, is entitled, subject to the terms and conditions
hereinafter set forth, from the Closing Date (as hereinafter defined), and at
any time prior to 5 p.m., New York Time, on , but not thereafter, to
purchase the number of shares set forth above (the "Shares") of Common Stock,
par value $.001 per share (the "Common Stock"), of Emily Annie, Inc., a New
York corporation (the "Corporation"), from the Corporation upon payment to the
Corporation of $7.00 per share (the "Purchase Price") if and to the extent
this Warrant is exercised, in whole or in part, during the period this Warrant
remains in force, and to receive a certificate or certificates representing
the Shares so purchased, upon presentation and surrender to the Corporation of
this Warrant, with the form of subscription attached hereto duly executed, and
accompanied by payment of the Purchase Price of each Share purchased. This
Warrant is one of a class of warrants ("the Warrants") initially exercisable
for the purchase of 40,000 shares of the Corporation.
ARTICLE I - TERMS OF THE WARRANT
Section 1.1. Subject to the provisions of Section 2.1 hereof,
this Warrant may be exercised at any time and from time to time during a three
(3) year period commencing from the Closing Date of this offering (the
"Exercise Commencement Date") (the "Expiration Time"). If this Warrant is not
exercised on or before the Expiration Time it shall become void, and all
rights hereunder shall thereupon cease.
Section 1.2. (1) The holder of this Warrant (the "Holder") may
exercise this Warrant, in whole or in part, upon surrender of this Warrant
with the form of subscription attached hereto duly executed, to the
Corporation's transfer Agent ("Transfer Agent"), Oxford Transfer & Registrar
Agency, 1130 S.W. Morrison, Suite 250, Portland, Oregon 97205, together with
the full purchase price for each Share to be purchased in lawful money of the
United States, or by certified check, bank draft or postal of express money
order payable in United States dollars to the order of the Corporation, and
upon compliance with and subject to the conditions set forth herein.
(2) Upon receipt of this Warrant with the form of subscription
duly executed and accompanied by payment of the aggregate Purchase Price for
the Shares for which this Warrant is then being exercised, the Corporation
shall cause to be issued certificates for the total number of whole Shares for
which this Warrant is being exercised in such denominations as are required
for delivery of such certificates to the Holder or its nominee.
(3) In case the Holder shall exercise this Warrant with respect
to less than all of the Shares that may be purchased under this Warrant, the
Corporation shall execute a new Warrant for the balance of the Shares that may
be purchased upon exercise of this Warrant and deliver such new Warrant to the
Holder.
(4) The Corporation covenants and agrees that it will pay when
due and payable any and all taxes which may be payable in respect of the issue
of this Warrant, or the issue of any Shares upon the exercise of this
Warrant. The Corporation shall not, however, be required to pay any tax which
may be payable in respect of any transfer involved in the issuance or delivery
of this Warrant or of the Shares in a name other than that of the Holder at
the time of surrender, and until the payment of such tax the Corporation shall
not be required to issue such Shares.
Section 1.3. This Warrant may be split-up, combined or exchanged
for another Warrant or Warrants of like tenor to purchase a like aggregate
number of Shares. If the Holder desires to split-up, combine or exchange this
Warrant, he shall make such request in writing delivered to the Corporation at
its corporate office and shall surrender this Warrant and any other Warrants
to be so spit-up, combined or exchanged at said office. Upon any such
surrender for a split-up, combination or exchange, the Corporation shall
execute and deliver to the person entitled thereto a Warrant or Warrants, as
the case may be, as so requested. The Corporation shall not be required to
effect any split-up, combination or exchange which will result in the issuance
of a Warrant entitling the Holder to purchase upon exercise a fraction of a
Share. The Corporation may require the Holder to pay a sum sufficient to
cover any tax or governmental charge that may be imposed in connection with
any split-up, combination or exchange of Warrants.
Section 1.4. Prior to due presentment for registration of
transfer of this Warrant, the Corporation may deem and treat the Holder as the
absolute owner of this Warrant (notwithstanding any notation of ownership or
other writing hereon) for the purpose of any exercise hereof and for all other
purposes, and the Corporation shall not be affected by any notice to the
contrary.
Section 1.5. Any assignment permitted hereunder shall be made by
surrender of this Warrant to the Transfer Agent at its principal office with
the form of assignment attached hereto duly executed and funds sufficient to
pay any transfer tax. In such event, the Corporation shall, without charge,
execute and deliver a new Warrant in the name of the assignee named in such
instrument of assignment and this Warrant shall promptly be cancelled. This
Warrant may be divided or combined with other Warrants which carry the same
rights upon presentation thereof at the corporate office of the Corporation
together with a written notice signed by the Holder, specifying the names and
denominations in which such new Warrants are to be issued.
Section 1.6. Nothing contained in this Warrant shall be
construed as conferring upon the Holder the right to vote or to consent or to
receive notice as a stockholder in respect of any meetings of stockholders for
the election of directors or any other matter, or as having any rights
whatsoever as a stockholder of the Corporation.
Section 1.7. If this Warrant is lost, stolen, mutilated or
destroyed, the Corporation shall on such reasonable terms as to indemnity or
otherwise as it may impose (which shall, in the case of a mutilated Warrant,
include the surrender thereof), issue a new Warrant of like denomination and
tenor as, and in substitution for this Warrant, which shall thereupon become
void. Any such new Warrant shall constitute an additional contractual
obligation of the Corporation, whether or not the Warrant so lost, stolen,
destroyed or mutilated shall be at any time enforceable by anyone.
Section 1.8. (1) The Corporation covenants and agrees that
at all times it shall reserve and keep available for the exercise of this
Warrant such number of authorized Shares as are sufficient to permit the
exercise in full of this Warrant.
(2) The Corporation covenants that all Shares when issued upon
the exercise of this Warrant will be validly issued, fully paid,
non-assessable and free of preemptive rights.
Section 1.9. This Warrant and the shares issuable upon exercise
of this Warrant have been registered under the Securities Act of 1933, as
amended ("the Act"), on Form SB-2, SEC File No. (the "Registration
Statement").
ARTICLE II - OTHER MATTERS
Section 2.1. The Corporation will from time to time promptly
pay, subject to the provisions of paragraph (4) of Section 1.2 hereof, all
taxes and charges that may be imposed upon the Corporation in respect of the
issuance or delivery of this Warrant or the Shares purchasable upon the
exercise of this Warrant.
Section 2.2. All the covenants and provisions of this Warrant by
or for the benefit of the Corporation shall bind and inure to the benefit of
its successors and assigns hereunder.
Section 2.3. Notices or demands pursuant to this Warrant to be
given or made by the Holder to or on the Corporation shall be sufficiently
given or made if sent by certified or registered mail, return receipt
requested, postage prepaid, and addressed, until another address is designated
in writing by the Corporation, as follows:
EMILY ANNIE, INC.
392 Central Park West
New York, New York 10005
Notices to the Holder provided for in this Warrant shall be deemed
given or made by the Corporation if sent by certified or registered mail,
return receipt requested, postage prepaid and addressed to the Holder of his
last known address as it shall appear on the books of the Corporation.
Section 2.4. The validity, interpretation and performance of
this Warrant shall be governed by the laws of the State of New York.
Section 2.5. Nothing in this Warrant expressed and nothing that
may be implied from any of the provisions hereof is intended, or shall be
construed, to confer upon, or give to, any person or corporation other than
the Corporation and the Holder any right, remedy or claim under promise or
agreement hereof, and all covenants, conditions, stipulations, promises and
agreements contained in this Warrant shall be for the sole and exclusive
benefit of the Corporation and its successors and of the Holder, its
successors and, if permitted, its assignees.
Section 2.6. The Article headings herein are for convenience
only and are not part of this Warrant and shall not affect the interpretation
thereof.
IN WITNESS WHEREOF, this Warrant has been duly executed by the
Corporation under its corporate seal as of the day of , 199 .
EMILY ANNIE, INC.
BY:
Emily Putterman, President
[CORPORATE SEAL]
Attest:
Secretary
<PAGE>CLASS B WARRANT
For the Purchase of Common Stock, Par Value $.001 per Share,
of EMILY ANNIE, INC.
(Incorporated Under the Laws of the State of New York)
Void After 5 p.m. , 19
No. Warrant to Purchase Shares
THIS IS TO CERTIFY, that, for value received, the warrant holder or
registered assigns, is entitled, subject to the terms and conditions
hereinafter set forth, from the Closing Date (as hereinafter defined), and at
any time prior to 5 p.m., New York Time, on , but not thereafter, to
purchase the number of shares set forth above (the "Shares") of Common Stock,
par value $.001 per share (the "Common Stock"), of Emily Annie, Inc., a New
York corporation (the "Corporation"), from the Corporation upon payment to the
Corporation of $6.00 per share (the "Purchase Price") if and to the extent
this Warrant is exercised, in whole or in part, during the period this Warrant
remains in force, and to receive a certificate or certificates representing
the Shares so purchased, upon presentation and surrender to the Corporation of
this Warrant, with the form of subscription attached hereto duly executed, and
accompanied by payment of the Purchase Price of each Share purchased. This
Warrant is one of a class of warrants ("the Warrants") initially exercisable
for the purchase of 40,000 shares of the Corporation.
ARTICLE I - TERMS OF THE WARRANT
Section 1.1. Subject to the provisions of Section 2.1 hereof,
this Warrant may be exercised at any time and from time to time during a four
(4) year period commencing from the Closing Date of this offering once the
corresponding Class A Warrant has been exercised (the "Exercise Commencement
Date") (the "Expiration Time"). If this Warrant is not exercised on or before
the Expiration Time it shall become void, and all rights hereunder shall
thereupon cease.
Section 1.2. (1) The holder of this Warrant (the "Holder") may
exercise this Warrant, in whole or in part, upon surrender of this Warrant
with the form of subscription attached hereto duly executed, to the
Corporation's transfer Agent ("Transfer Agent"), Oxford Transfer & Registrar
Agency, 1130 S.W. Morrison, Suite 250, Portland, Oregon 97205, together with
the full purchase price for each Share to be purchased in lawful money of the
United States, or by certified check, bank draft or postal of express money
order payable in United States dollars to the order of the Corporation, and
upon compliance with and subject to the conditions set forth herein.
(2) Upon receipt of this Warrant with the form of subscription
duly executed and accompanied by payment of the aggregate Purchase Price for
the Shares for which this Warrant is then being exercised, the Corporation
shall cause to be issued certificates for the total number of whole Shares for
which this Warrant is being exercised in such denominations as are required
for delivery of such certificates to the Holder or its nominee.
(3) In case the Holder shall exercise this Warrant with respect
to less than all of the Shares that may be purchased under this Warrant, the
Corporation shall execute a new Warrant for the balance of the Shares that may
be purchased upon exercise of this Warrant and deliver such new Warrant to the
Holder.
(4) The Corporation covenants and agrees that it will pay when due
and payable any and all taxes which may be payable in respect of the issue of
this Warrant, or the issue of any Shares upon the exercise of this Warrant.
The Corporation shall not, however, be required to pay any tax which may be
payable in respect of any transfer involved in the issuance or delivery of
this Warrant or of the Shares in a name other than that of the Holder at the
time of surrender, and until the payment of such tax the Corporation shall not
be required to issue such Shares.
Section 1.3. This Warrant may be split-up, combined or exchanged
for another Warrant or Warrants of like tenor to purchase a like aggregate
number of Shares. If the Holder desires to split-up, combine or exchange this
Warrant, he shall make such request in writing delivered to the Corporation at
its corporate office and shall surrender this Warrant and any other Warrants
to be so spit-up, combined or exchanged at said office. Upon any such
surrender for a split-up, combination or exchange, the Corporation shall
execute and deliver to the person entitled thereto a Warrant or Warrants, as
the case may be, as so requested. The Corporation shall not be required to
effect any split-up, combination or exchange which will result in the issuance
of a Warrant entitling the Holder to purchase upon exercise a fraction of a
Share. The Corporation may require the Holder to pay a sum sufficient to
cover any tax or governmental charge that may be imposed in connection with
any split-up, combination or exchange of Warrants.
Section 1.4. Prior to due presentment for registration of
transfer of this Warrant, the Corporation may deem and treat the Holder as the
absolute owner of this Warrant (notwithstanding any notation of ownership or
other writing hereon) for the purpose of any exercise hereof and for all other
purposes, and the Corporation shall not be affected by any notice to the
contrary.
Section 1.5. Any assignment permitted hereunder shall be made by
surrender of this Warrant to the Transfer Agent at its principal office with
the form of assignment attached hereto duly executed and funds sufficient to
pay any transfer tax. In such event, the Corporation shall, without charge,
execute and deliver a new Warrant in the name of the assignee named in such
instrument of assignment and this Warrant shall promptly be canceled. This
Warrant may be divided or combined with other Warrants which carry the same
rights upon presentation thereof at the corporate office of the Corporation
together with a written notice signed by the Holder, specifying the names and
denominations in which such new Warrants are to be issued.
Section 1.6. Nothing contained in this Warrant shall be
construed as conferring upon the Holder the right to vote or to consent or to
receive notice as a stockholder in respect of any meetings of stockholders for
the election of directors or any other matter, or as having any rights
whatsoever as a stockholder of the Corporation.
Section 1.7. If this Warrant is lost, stolen, mutilated or
destroyed, the Corporation shall on such reasonable terms as to indemnity or
otherwise as it may impose (which shall, in the case of a mutilated Warrant,
include the surrender thereof), issue a new Warrant of like denomination and
tenor as, and in substitution for this Warrant, which shall thereupon become
void. Any such new Warrant shall constitute an additional contractual
obligation of the Corporation, whether or not the Warrant so lost, stolen,
destroyed or mutilated shall be at any time enforceable by anyone.
Section 1.8. (1) The Corporation covenants and agrees that
at all times it shall reserve and keep available for the exercise of this
Warrant such number of authorized Shares as are sufficient to permit the
exercise in full of this Warrant.
(2) The Corporation covenants that all Shares when issued upon
the exercise of this Warrant will be validly issued, fully paid,
non-assessable and free of preemptive rights.
Section 1.9. This Warrant and the shares issuable upon exercise
of this Warrant have been registered under the Securities Act of 1933, as
amended ("the Act"), on Form SB-2, SEC File No. (the "Registration
Statement").
ARTICLE II - OTHER MATTERS
Section 2.1. The Corporation will from time to time promptly
pay, subject to the provisions of paragraph (4) of Section 1.2 hereof, all
taxes and charges that may be imposed upon the Corporation in respect of the
issuance or delivery of this Warrant or the Shares purchasable upon the
exercise of this Warrant.
Section 2.2. All the covenants and provisions of this Warrant by
or for the benefit of the Corporation shall bind and inure to the benefit of
its successors and assigns hereunder.
Section 2.3. Notices or demands pursuant to this Warrant to be
given or made by the Holder to or on the Corporation shall be sufficiently
given or made if sent by certified or registered mail, return receipt
requested, postage prepaid, and addressed, until another address is designated
in writing by the Corporation, as follows:
EMILY ANNIE, INC.
392 Central Park West
New York, New York 10005
Notices to the Holder provided for in this Warrant shall be deemed
given or made by the Corporation if sent by certified or registered mail,
return receipt requested, postage prepaid and addressed to the Holder of his
last known address as it shall appear on the books of the Corporation.
Section 2.4. The validity, interpretation and performance of
this Warrant shall be governed by the laws of the State of New York.
Section 2.5. Nothing in this Warrant expressed and nothing that
may be implied from any of the provisions hereof is intended, or shall be
construed, to confer upon, or give to, any person or corporation other than
the Corporation and the Holder any right, remedy or claim under promise or
agreement hereof, and all covenants, conditions, stipulations, promises and
agreements contained in this Warrant shall be for the sole and exclusive
benefit of the Corporation and its successors and of the Holder, its
successors and, if permitted, its assignees.
Section 2.6. The Article headings herein are for convenience
only and are not part of this Warrant and shall not affect the interpretation
thereof.
IN WITNESS WHEREOF, this Warrant has been duly executed by the
Corporation under its corporate seal as of the day of , 199 .
EMILY ANNIE, INC.
BY:
Emily Putterman, President
[CORPORATE SEAL]
Attest:
Secretary
<PAGE>
May 13, 1997
Securities and Exchange Commission
Washington, D.C.
Re: Emily Annie, Inc.
To Whom It May Concern:
Emily Annie, Inc. (the "Company") is a corporation duly incorporated and
validly existing and in good standing under the laws of the state of New
York. The Company has full corporate powers to own its property and conduct
its business, as such business is described in the prospectus. The Company is
qualified to do business as a foreign corporation in good standing in every
jurisdiction in which the ownership of property and the conduct of business
requires such qualification.
This opinion is given in connection with the registration with the Securities
and Exchange Commission of a minimum of twenty-five thousand (25,000) and a
maximum of forty thousand (40,000) Units for sale in the Company's proposed
public offering at a price of $5.00 per Unit. Each Unit consists of one (1)
share of Common Stock, one (1) Class A Warrant and one (1) Class B Warrant.
Each Warrant may be exercised to purchase one share of Common Stock. The
Class A Warrants may be exercised for a period of three (3) years after the
closing of the minimum offering, and the Class B Warrants may be exercised for
a period of four (4) years after the closing of the minimum offering.
We have acted as counsel to the Company in connection with the preparation of
the Registration Statement on Form SB-2, pursuant to which such Units are
being registered and, in so acting, we have examined the originals and copies
of the corporate instruments, certificates and other documents of the Company
and interviewed representatives of the Company to the extent we deemed it
necessary in order to form the basis for the opinion hereafter set forth. In
such examination we have assumed the genuineness of all signatures and
authenticity of all documents <PAGE>
Securities and Exchange Commission
Page Two
submitted to me as certified or photostatic copies. As to all questions of
fact material to this opinion which have not been independently established,
we have relied upon statements or certificates of officers or representatives
of the Company.
Of the 40,000 Units being registered, the 40,000 shares being sold by the
Company are now authorized but unissued shares and the 80,000 shares to be
issued upon exercise of the Warrants are now authorized but unissued.
Based upon the foregoing I am of the opinion that:
1. The 40,000 shares of Common Stock of the Company being registered for
sale by the Company, when issued and sold pursuant to this Registration
Statement will be legally issued, fully paid and non-assessable and there will
be no personal liability to the owners thereof.
2. The 40,000 Class A Warrants and the 40,000 Class B Warrants being
registered with the Securities and Exchange Commission, when sold pursuant to
this Registration Statement, will be legally issued, fully paid and
non-assessable and there will be no personal liability to the owners thereof.
3. The 80,000 shares of Common Stock of the Company to be issued upon
exercise of the Warrants being registered with the Securities and Exchange
Commission, when sold pursuant to the this Registration Statement, will be
legally issued upon exercise price therefor, fully paid and non-assessable
with no personal liability to the owners thereof.
The undersigned hereby consents to the use of this opinion in connection with
such Registration Statement and its inclusion as an exhibit accompanying such
Registration Statement.
Very truly yours,
Schonfeld & Weinstein, L.L.P.
<PAGE>
To The Board of Directors of
Emily Annie, Inc.
392 Central Park West
New York, New York 10025
Re: Emily Annie, Inc.
The undersigned does hereby consent to the use of our opinion dated May 13,
1997 to be used and filed in connection with the SB-2 Registration Statement
and Prospectus, as filed with the Securities and Exchange Commission.
Schonfeld & Weinstein, L.L.P.
Dated: May 13, 1997
New York, New York<PAGE>
BOYKOFF AND BELL, P.C.
Certified Public Accountants
2 Skyline Drive
Hawthorne, New York 10532
<PAGE>
To The Board of Directors of
Emily Annie, Inc.
Re: Emily Annie, Inc.
Boykoff & Bell, P.C., certified public accountants, do hereby consent to the
use of our opinion dated March 15, 1997 to Emily Annie, Inc. to be used and
filed in connection with the Registration Statement and Prospectus on Form
SB-2, as filed with the Securities and Exchange Commission. We also consent
to the use of my name under the caption "Experts" in the above-mentioned
Registration Statement only and specifically pertaining to the periods which
our firm prepared audited financial statements.
Boykoff and Bell, P.C.
Dated: March 15, 1997
<PAGE>
WARRANT AGENCY AGREEMENT, dated as of , 1997 (the
"Agreement") by and between EMILY ANNIE, INC., a New York corporation with
principal offices at 392 Central Park West, New York, New York 10025 (the
"Company") and OXFORD TRANSFER & REGISTRAR AGENCY, INC., 1130 S.W. Morrison,
Suite 250, Portland, Oregon 97205 (the "Warrant Agent").
W I T N E S S E T H :
WHEREAS, the Company has duly authorized the creation of an issue of
warrants to be evidenced by certificates substantially in the form of Exhibit
A and B hereto ("Warrant Certificates") each warrant ("Warrant") entitling the
registered holder thereof to purchase, subject to the provisions of the
Warrant Certificate and this Agreement, one share of the Common Stock, $.0001
par value, of the Company (the "Common Stock"); and
WHEREAS, the Company desires the Warrant Agent to act on behalf of
the Company, and the Warrant Agent is willing so to act, in connection with
the issuance, registration, transfer, exchange and replacement of the Warrant
Certificates and exercise of the Warrants; and
WHEREAS, the Company and the Warrant Agent desire to set forth in
this Agreement the terms and conditions upon which the Warrant Certificates
shall be issued, transferred, exchanged and replaced and the Warrants
exercised, and to provide for the rights of the holders of the Warrants;
NOW THEREFORE, in consideration of the premises and the mutual
agreements herein set forth, the Company and the Warrant Agent agree as
follows:
ARTICLE I
Issuance and Execution of Warrants
Section 1.01. The Company hereby appoints the Warrant Agent to
act on behalf of the Company in accordance with the provisions hereinafter in
this Agreement set forth, and the Warrant Agent hereby accepts such
appointment and agrees to perform the same in accordance with such provisions.
Section 1.02. The Warrant Certificates shall be issued in
registered form only. The text of the Warrant Certificates, including the
form of assignment and subscription to be printed on the reverse side thereof
shall be substantially in the form of Exhibit A and B hereto which text is
hereby incorporated into this Agreement by reference as though fully set forth
herein. Each Warrant Certificate shall evidence the right, subject to the
provisions of this Agreement and of such Warrant Certificate, to purchase the
number of fully paid and non-assessable shares of Common Stock stated therein,
subject to adjustment as provided in Article III.
Section 1.03. Upon the written order of the Company, signed by
the President or any Vice-President and the Secretary, Treasurer, Assistant
Secretary or Assistant Treasurer of the Company, the Warrant Agent shall issue
and register Warrants in the names and denominations specified in said order,
and will countersign and deliver Warrant Certificates evidencing the same in
accordance with said order. Each Warrant Certificate shall be executed on
behalf of the Company by the manual or facsimile signature of the President or
any Vice-President of the Company, under its corporate seal, affixed or
facsimile, attested by the manual or facsimile signature of the Secretary or
an Assistant Secretary of the Company and shall be countersigned manually by
the Warrant Agent. The Warrant Certificates shall not be valid for any
purpose unless so countersigned. In case any officer whose facsimile ceased
to be such before such Warrant Certificate is issued, it may be issued with
the same effect as if such officer had not ceased to be such at the date of
issuance.
Section 1.04. (1) The term "Warrant Holder" as used herein
shall mean any person in whose name at the time any Warrant shall be
registered upon the books to be maintained by the Warrant Agent for that
purpose.
(2) The term "Business Day" as used herein shall
mean a day other than a Saturday, Sunday or other day on which banks in the
State of New York are authorized by law to remain closed.
ARTICLE II
Warrant Price, Duration and Exercise of Warrants
Section 2.01. Persons intending to exercise their redeemable Class
A Warrants must present the Warrant and the exercise price to the Company's
Transfer Agent, in order to receive one (1) share of Common Stock. Each Class
A Warrant is exercisable at an exercise price of $7.00 from the Closing Date
of this offering and continuing for three (3) years, at which time the
Warrants expire. The Class A Warrants are immediately detachable.
For each Class B Warrant, the holder is entitled to receive one (1) share
of Common Stock, at an exercise price of $6.00 from the Closing Date and
continuing for four (4) years thereafter, at which time the Warrants expire.
Section 2.02. Subject to the provisions of Section 4.01,
paragraph (4) of Section 4.03 and the form of reverse side of the Warrant
Certificate, both Classes of Warrants may be exercised at any time prior to
the expiration date at 5:00 P.M. New York State time if such date shall be a
Business Day; and if not then at or before 5:00 P.M. New York State time on
the next following Business Day. Any Warrants not exercised during said
period shall become void and all rights thereunder and all rights in respect
thereof under this Agreement shall cease at the end of such period.
Section 2.03. (1) The Warrant Holder may exercise a Warrant,
in whole or in part, upon surrender of the Warrant Certificate, with the
exercise form thereon duly executed to the Warrant Agent at its corporate
office, together with the Warrant Price for each share of Common Stock to be
purchased in New York Clearing House funds or other funds acceptable to the
Company.
(2) Upon receipt of a Warrant Certificate with
the exercise form duly executed and accompanied by payment of the aggregate
Warrant Price for the shares of Common Stock for which the Warrant is then
being exercised, the Warrant Agent shall requisition from the transfer agent
certificates for the total number of whole shares (as provided in Section
4.04) of Common Stock for which the Warrant is being exercised in such names
and denominations as are required for delivery to the Warrant holder, and the
Warrant Agent shall thereupon deliver such certificate to or in accordance
with the instructions of the Warrant Holder. The Company covenants and agrees
that it has duly authorized and directed its transfer agent (and will
authorize and direct all its future transfer agents) to comply with all such
requests of the Warrant Agent.
(3) In case any Warrant Holder shall exercise his
Warrant with respect to less than all of the shares of Common Stock that may
be purchased under such Warrant, a new Warrant Certificate for the balance
shall be countersigned and delivered to or upon the order of such Warrant
Holder.
(4) The Company covenants and agrees that it will
pay, when due and payable, any and all taxes which may be payable in respect
of the issue of Warrants, or the issue of any shares of Common Stock upon the
exercise of Warrants. The Company shall not, however, be required to pay any
tax which may be payable in respect of any transfer involved in the issuance
or delivery of Warrant Certificates or shares of Common Stock in a name other
than that of the Warrant Holder at the time of surrender, and until the
payment of such tax, shall not be required to issue such Common Stock.
(5) The Warrant Agent shall account promptly to
the Company with respect to Warrants exercised and currently account to the
Company for moneys received by the Warrant Agent for the purchase of shares of
Common Stock upon the exercise of Warrants.
(6) The Class A Warrants and the Class B Warrants are
immediately detachable and tradeable separately.
ARTICLE III
Adjustment of Shares of Common Stock
Purchasable and of Warrant Price
Section 3.01. Subject and pursuant to the provisions of this
Section (3.01), the Warrant Price and number of Common Shares subject to this
Warrant shall be subject to adjustment from time to time as set forth
hereinafter.
(A) In case the Company shall declare a dividend or make any
other distribution upon any stock of the Company payable in Common Stock, the
Warrant Prices shall be proportionately decreased as of the close of business
on the date of record of said dividend.
(B) If the Company shall at any time subdivide its outstanding
Common Shares by recapitalization, reclassification or split-up thereof, the
Warrant Price immediately prior to such subdivision shall be proportionately
decreased, and if the Company shall at any time combine the outstanding Common
Shares by recapitalization, reclassification or combination thereof, the
Warrant Price immediately prior to such combination shall be proportionately
increased. Any such adjustment to the Warrant Price shall become effective at
the close of business on the record date for such subdivision or combination.
(C) Upon any adjustment of the Warrant Price as hereinabove
provided, the number of Common Shares issuable upon exercise of this Warrant
shall be changed to the number of shares determined by dividing (i) the
aggregate Warrant Price payable for the purchase of all shares issuable upon
exercise of this Warrant immediately prior to such adjustment by (ii) the
Warrant Price per share in effect immediately after such adjustment.
(D) If any capital reorganization or reclassification of the
capital stock of the Company, or consolidation or merger of the Company with
another corporation, or the sale of all or substantially all of its assets to
another corporation shall be effected in such a way that holders of Common
Stock shall be entitled to receive stock, securities, cash, or assets with
respect to or in exchange for Common Stock, then, as a condition of such
reorganization, reclassification, consolidation, merger or sale, the Company
or such successor or purchasing corporation as the case may be, shall execute
with the Warrant Agent a supplemental Warrant Agreement providing that each
registered holder of a Warrant shall have the right thereafter and until the
expiration date to exercise such Warrant for the kind and amount of stock
securities, cash, or assets receivable upon such reorganization,
reclassification, consolidation, merger or sale by a holder of the number of
shares of Common Stock, for the purchase of which such Warrant might have been
exercised immediately prior to such reorganization, reclassification,
consolidation, merger or sale, subject to adjustments which shall be as nearly
equivalent as may be practicable to the adjustments provided for in this
Section 3.01.
(E) On the effective date of any new Warrant Price, the number
of shares as to which any Warrant may be exercised shall be increased or
decreased so that the total sum payable to the Company on the exercise of such
Warrant shall remain constant.
(F) The form of Warrant need not be changed because of any
change pursuant to this Article, and Warrants issued after such change may
state the same Warrant Price and the same number of shares as it stated in the
Warrants initially issued pursuant to this Agreement. However, the Company
may at any time in its sole discretion (which shall be conclusive) make any
change in the form of Warrant that the Company may deem appropriate and that
does not affect the substance thereof; and any Warrant thereafter issued or
countersigned, whether in exchange or substitution for an outstanding Warrant
or otherwise, may be in the form as so changed.
ARTICLE IV
Other Provisions Relating to Rights of Warrant Holders
Section 4.01. No Warrant Holder, as such, shall be entitled to
vote or receive dividends or be deemed the holder of shares of Common Stock
for any purpose, nor shall anything contained in any Warrant Certificate be
construed to confer upon any Warrant Holder, as such, any of the rights of a
shareholder of the Company or any right to vote, give or withhold consent to
any action by the Company or any right to vote, give or withhold consent to
any action by the Company (whether upon any recapitalization, issue of stock,
consolidation, merger, conveyance or otherwise), receive notice of meetings or
other action affecting shareholders (except for notices provided for in 7.02
hereof), receive dividends or subscription rights, or otherwise, until such
Warrant shall have been exercised and the shares of Common Stock purchasable
upon the exercise thereof shall have become deliverable as provided in this
Agreement provided, however, that any such exercise on any date when the stock
transfer books of the Company shall be closed shall constitute the person or
persons in whose name or names the certificate or certificates for such shares
of Common Stock are to be issued as the record holder or holders thereof for
all purposes at the opening of business on the next succeeding day on which
such stock transfer books are open and the Warrant surrendered shall not be
deemed to have been exercised, in whole or in part as the case may be, until
such date for the purpose of determining entitlement to dividends on such
Common Stock, and such exercise shall be at the actual Warrant Price in effect
at such date.
Section 4.02. If any Warrant Certificate is lost, stolen,
mutilated or destroyed, the Company and the Warrant Agent may, on such terms
as to indemnity or otherwise as they may in their discretion impose (which
shall, in the case of a mutilated Warrant Certificate, include the surrender
thereof), issue a new Warrant Certificate of like denomination and tenor as,
and in substitution for, the Warrant Certificate so lost, stolen, mutilated or
destroyed.
Section 4.03. (1) The Company covenants and agrees that at
all times it shall reserve and keep available for exercise of Warrants such
number of authorized shares of Common Stock as shall be required to permit the
exercise in full of all outstanding Warrants and that it will make available
to the Warrant Agent from time to time a number of duly executed certificates
representing shares of Common Stock sufficient thereof.
(2) Prior to the issuance of any shares of Common
Stock upon exercise of Warrants, the Company shall secure the listing of such
shares of Common Stock upon any securities exchange upon which shares of
Common Stock are then listed.
(3) The Company covenants that all shares of
Common Stock issued on exercise of Warrants will be validly issued, fully
paid, non-assessable and free of preemptive rights and that, if the taking of
any action would cause an adjustment in the Warrant Price so that the exercise
of a Warrant while such Warrant Price is in effect would cause a share of
Common Stock to be issued at a price below its then par value, the Company
will take such action as may, in the opinion of counsel, be necessary in order
that upon exercise of the Warrants it may validly and legally issue shares of
Common Stock that are fully paid, non-assessable and free of preemptive
rights.
(4) The Company will from time to time, furnish
the Warrant Agent with current Prospectuses meeting the requirements of the
Act in sufficient quantity to permit the Warrant Agent to deliver a Prospectus
to each registered holder of a Warrant Certificate upon exercise thereof. The
Company further agrees to pay all fees, costs and expenses in connection with
the preparation and delivery to the Warrant Agent of the Prospectus and to
immediately notify the Warrant Agent in the event that (i) the Commission
shall have issued or threatened to issue any order preventing or suspending
the use of the Prospectus or suspending or revoking the exemption upon which
such Prospectus was based; (ii) at any time the Prospectus shall contain any
untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements therein not
misleading; or (iii) for any reason it shall be necessary to amend or
supplement the Prospectus in order to comply with the Act.
Section 4.04. Anything contained herein to the contrary
notwithstanding, the Company shall not be required to issue any fraction of a
share of Common Stock in connection with the exercise of any Warrant, and in
any case where the Warrant Holder would, except for the provisions of this
Section 4.04, be entitled under the terms of this Agreement to receive a
fraction of a share of Common Stock upon the exercise of a Warrant, the
Company shall, upon the exercise of the Warrant and receipt of the Warrant
Price, issue the largest number of whole shares of Common Stock to which such
Warrant or Warrants are entitled and if the Holder so elects at the time he
exercises any Warrant, he may pay in cash for an additional fractional share
in order to round out any fraction of a share of Common Stock to which he
would otherwise be entitled upon exercise into one whole share. The amount
which said Holder shall pay for such additional share shall be an amount in
cash equal to the current value of such fraction computed on the basis of the
mean between the high bid and low asked prices in the over-the-counter market
for shares of Common Stock on the last Business Day prior to the date of
exercise on which such bid and asked prices shall have been quoted as reported
by The National Quotation Bureau Incorporated, but if the Common Stock is
listed to trading on a national securities exchange (or similar central
market), on the basis of the last reported sale price for shares of Common
Stock on the principal such exchange or central market, on the last Business
Day prior to the Date of Exercise upon which such a sale shall have been
effected. If the Holder does not elect to purchase such additional fractional
share at the time he exercises such Warrant, any fractional share to which he
would otherwise be entitled upon conversion shall immediately be null and
void.
Section 4.05. Notice to Warrant Holders provided for in Section
7.02 hereof shall be deemed given or made by the Company if sent by mail,
first-class or registered, postage prepaid, addressed to the Warrant Holders
at their last known addresses as they shall appear on the register maintained
by the Warrant Agent.
ARTICLE V
Treatment of Warrant Holders
Section 5.01. Prior to due presentment for registration or
transfer of any Warrant, the Company and the Warrant Agent may deem and treat
the Warrant Holder as the absolute owner of such Warrant (notwithstanding any
notation of ownership or other writing thereon) for the purpose of any
exercise thereof and for all other purposes, and neither the Company nor the
Warrant Agent shall be affected by any notice to the contrary.
ARTICLE VI
Split-up, Combination, Exchange and Transfer of Warrants
Section 6.01. Any Warrant or Warrants may be split up, combined
or exchanged for another Warrant or Warrants to purchase a like aggregate
number of shares of Common Stock or may be transferred in whole or in part as
provided in this Section 6.01. Any Warrant Holder desiring to split up,
combine or exchange any Warrant or Warrants shall make such request in writing
delivered to the Warrant Agent at its corporate office and shall surrender the
Warrant Certificate or Certificates representing such Warrant or Warrants to
be so split up, combined or exchanged at said office. Registration of
transfers of an outstanding Warrant or outstanding Warrants shall be effected
by the Warrant agent, from time to time upon the books to be maintained by the
Warrant Agent for that purpose, upon surrender of the Warrant Certificate or
Certificates representing such Warrant or Warrants to the Warrant Agent at its
corporate office for registration of transfer, duly endorsed or accompanied by
written instruments of transfer and written instructions for transfer, all in
form satisfactory to the Company and the Warrant Agent, duly executed by the
Warrant Holder or his attorney duly authorized in writing. Upon any such
surrender for a split-up, combination, exchange or registration of transfer,
the Warrant Agent shall countersign and deliver to the person entitled thereto
a Warrant Certificate or Warrant Certificates, as the case may be, as so
requested. The Warrant Agent shall not be required to effect any registration
of transfer, split-up or exchange which will result in the issuance of a
Warrant entitling the Warrant Holder to purchase upon exercise a fraction of a
share of Common Stock or a number of whole shares of Common Stock and a
fraction of a share of Common Stock, unless one or more of the Warrants
delivered to the Warrant Agent to effect such registration of transfer,
split-up or exchange entitles the Warrant Holder to purchase upon exercise a
fraction of a share of Common Stock, and in such latter event, the Warrant
Agent shall not be required in connection with such registration of transfer,
split-up or exchange to issue more than one Warrant which entitled the Warrant
Holder thereof to acquire a fraction of a share of Common Stock or a number of
whole shares of Common Stock and a fraction of a share of Common Stock. The
Warrant Agent may require such Warrant Holder to pay a sum sufficient to cover
any tax or governmental charge that may be imposed in connection with any
split-up, combination, exchange or registration of transfer of Warrants.
ARTICLE VII
Concerning the Warrant Agent and Other Matters
Section 7.01. The Company will from time to time promptly pay,
subject to the provisions of Section 2.03, all taxes and charges that may be
imposed upon the Company or the Warrant Agent in respect of the issuance or
delivery of shares of Common Stock upon the exercise of Warrants.
Section 7.02. (1) The Warrant Agent, or any successor to it
hereafter appointed, may resign its duties and be discharged from all further
duties and liabilities hereunder after giving two weeks notice in writing to
the Company and to each registered Warrant Holder in accordance with the
provisions of Section 4.05. If the office of the Warrant Agent becomes vacant
by resignation or incapacity to act or otherwise, the Company shall appoint in
writing a successor Warrant Agent in place of the Warrant Agent. If the
Company shall fail to make such appointment within a period of 30 days after
it has been notified in writing of such resignation or incapacity by the
resigning or incapacitated Warrant Agent, then any Warrant Holder may apply to
any court of competent jurisdiction for the appointment of a successor Warrant
Agent. Any successor Warrant Agent, whether appointed by the Company or by
such a court, shall be a corporation, firm or entity having its principal
office in the United States of America, organized in good standing and doing
business under the laws of the United States of America, or any state thereof,
and authorized under such laws to exercise corporate trust or corporate agency
powers and subject to supervision or examination by Federal or State authority
and having a combined capital and surplus of not less than $35,000. The
combined capital and surplus of any such successor Warrant Agent shall be
deemed to be the combined capital and surplus as set forth in the most recent
report of its condition published at least annually pursuant to law or to the
requirements of a Federal or State supervising or examining authority. After
appointment, any successor Warrant Agent shall be vested with all the
authority, powers, rights, immunities, duties and obligations of its
predecessor Warrant Agent with like effect as if originally named as Warrant
Agent hereunder, without any further act or deed; but the former Warrant Agent
shall deliver and transfer to its successor any property at the time held by
it hereunder and, if for any reason it becomes necessary or appropriate, the
predecessor Warrant Agent shall execute and deliver, at the expense of the
Company, an instrument transferring to such successor Warrant Agent all the
authority, powers and rights of such predecessor Warrant Agent hereunder; and,
upon request of any successor Warrant Agent, the Company shall make, execute,
acknowledge and deliver any and all instruments in writing for more fully and
effectually vesting in and confirming to such successor Warrant Agent all such
authority, powers, rights, immunities, duties and obligation. Not later than
the effective date of any such appointment, the Company shall give notice
thereof to the predecessor Warrant Agent and each transfer agent for the
Common Stock, and shall forthwith give notice thereof to the Warrant Holders
in accordance with the provisions of Section 4.05. Failure to give such
notice, or any defect therein, shall not affect the validity of the
appointment of the successor Warrant Agent.
(2) Any corporation into which the Warrant Agent
may be merged or with which it may be consolidated, or any corporation
resulting from any merger or consolidation to which Warrant Agent shall be a
party, or any corporation succeeding to all or substantially all the corporate
agency business of the Warrant Agent, shall be the successor Warrant Agent
under this Agreement without any further act on the part of any of the parties
hereto, provided that such corporation would be eligible for appointment as a
successor Warrant Agent under the provisions of the preceding paragraph. In
case at the time such successor to the Warrant Agent shall succeed to the
agency created by this Agreement, and in case at that time any of the Warrant
Certificates shall have been countersigned but not delivered, any such
successor to the Warrant Agency may adopt the countersignature of the
predecessor Warrant Agent and deliver such Warrant Certificates so
countersigned; and in case at that time any of the Warrant Certificates shall
not have been countersigned, any successor to the Warrant Agent may
countersign such Warrant Certificates either in the name of the predecessor
Warrant Agent or in the name of the successor Warrant Agent; and in all such
cases such Warrant Certificates shall have the full force and effect provided
in the Warrant Certificates and in this Agreement.
In case at any time the name of the Warrant Agent shall be changed
and at such time any of the Warrant Certificates shall have been countersigned
but not delivered, the Warrant Agent may adopt the countersignature under its
prior name and deliver Warrant Certificates so countersigned; and in case at
that time any of the Warrant Certificates shall not have been countersigned,
the Warrant Agent may countersign such Warrant Certificates either in its
prior name or in its changed name; and in all such cases such Warrant
Certificates shall have the full force and effect provided in the Warrant
Certificates and in this Agreement.
Section 7.03. The Company agrees (i) that it will pay the
Warrant Agent reasonable compensation for its services hereunder and will
reimburse the Warrant Agent upon demand for all expenditures that the Warrant
Agency may reasonably incur in the execution of its duties hereunder; and (ii)
that it will perform, execute, acknowledge and deliver or cause to be
performed, executed, acknowledged and delivered all such further and other
acts, instruments and assurances as may reasonably be required by the Warrant
Agent for the carrying out or performing of the provisions of this Agreement.
Section 7.04. The Warrant Agent undertakes the duties and
obligations imposed by this Agreement upon the following terms and conditions,
by all of which the Company and the holders of the Warrants, by their
acceptance thereof, shall be bound:
A. The Statements contained herein and in the Warrant
Certificates shall be taken as statements of the Company, and the Warrant
Agent assumes no responsibility for the correctness of any of the same except
such as described the Warrant Agent or action taken or to be taken by it. The
Warrant Agent assumes no responsibility with respect to the execution,
delivery or distribution of Warrant Certificates except as herein provided;
B. The Warrant Agent shall not be responsible for any
failure of the Company to comply with any of the covenants contained in this
Agreement or in the Warrant Certificates to be complied with by the Company,
nor shall it at any time be under any duty or responsibility to any Warrant
Holder, to make or cause to be made any adjustment of the Warrant Price or of
the shares of Common Stock, or to determine whether any facts exist which may
require any of such adjustments, or with respect to the nature or extent of
any such adjustments when made, or with respect to the method employed in
making same;
C. The Warrant Agent may consult with its counsel or
other counsel satisfactory to it (including counsel for the Company) and the
opinion of such counsel shall be full and complete authorization in respect of
any action taken, suffered or omitted by it hereunder in good faith and in
accordance with the opinion of such counsel provided the Warrant Agent shall
have exercised reasonable care in the selection of such counsel;
D. The Warrant Agent shall incur no liability or
responsibility to the Company or to any Warrant Holder for any action taken in
reliance on any notice, resolution, waiver, consent, order, certificate, or
other paper, document or instrument believed by it to be genuine and to have
been signed, sent or presented by the proper party or parties;
E. The Warrant Agent shall be under no obligation to
institute any action, suit or legal proceeding or to take any other action
likely to involve expense unless the Company or one or more registered Warrant
Holders shall furnish the Warrant Agent with reasonable security and indemnity
for any costs and expenses which may be incurred. All rights of action under
this Agreement or under any of the Warrants may be enforced by the Warrant
Agent without the possession of any of the Warrant Certificates or the
production thereof at any trial or other proceeding relative thereto, and any
such action, suit or proceeding instituted by the Warrant Agent may be brought
in its name as Warrant Agent, and any recovery of judgment shall be for the
ratable benefit of the registered holders of the Warrants, as their respective
rights or interests may appear;
F. The Warrant Agent and any stockholder, director,
officer or employee of the Warrant Agent may buy, sell or deal in any of the
Warrants or other securities of the Company or become pecuniarily interested
in any transaction in which the Company may be interested or contract with or
lend money to the Company or otherwise act as fully and freely as though it
were not Warrant Agent under this Agreement. Nothing herein shall preclude
the Warrant Agent from acting in any other capacity for the Company or for any
other legal entity;
G. The Warrant Agent shall act hereunder solely as
agent and its duties shall be determined solely by the provisions hereof. The
Warrant Agent shall not be liable for anything which it may do or refrain from
doing in connection with this Agreement except for its own negligence or
willful misconduct;
H. The Warrant Agent shall not be under any
responsibility with respect to the validity of this Agreement or the execution
and delivery hereof (except the due execution hereof by the Warrant Agent) or
in respect of the validity or execution of any Warrant Certificate (except its
countersignature thereof), nor shall the Warrant Agent by any act hereunder be
deemed to make any representation or warranty as to the authorization or
reservation of any shares of Common Stock or other securities, property or
cash to be issued pursuant to this Agreement or any Warrant Certificate or as
to whether any shares of Common Stock or other securities or property will
then issued be validly issued, fully paid and non-assessable or as to the
Warrant Price or the number of, kind or amount of shares of Common Stock or
other securities, other property or cash issuable upon exercise of any
Warrant;
I. The Warrant Agent is hereby authorized and directed
to accept instructions with respect to the performance of its duties hereunder
from the President and Vice President, the Treasurer or the Secretary of the
Company, and to apply to such officers for advice or instructions in
connection with its duties, and shall not be liable for any action taken or
suffered to be taken by it in good faith in accordance with instructions of
any such officer or in good faith reliance upon any statement signed by any
one of such officers of the Company with respect to any fact or matter (unless
other evidence in respect thereof is herein prescribed) which may be deemed to
be conclusively proved and established by such signed statement;
J. The Warrant Agent shall cancel any Warrant
Certificate delivered to it for exercise, in whole or in part, or delivered to
it for registration of transfer or exchange or substitution and shall deliver
to the Company from time to time, or otherwise dispose of, such canceled
Warrant Certificate in a manner specified in writing by the Company; and
K. The Company agrees to indemnify the Warrant Agent
for, and to hold it harmless against, any loss, liability or expense,
including judgments, costs and counsel fees, for anything done or omitted by
the Warrant Agent arising out of or in connection with this Agreement, except
as a result of the Warrant Agent's negligence or bad faith.
Section 7.05. The Warrant Agent may, without the consent or
concurrence of the Warrant Holder, by supplemental agreement or otherwise,
concur with the Company in making any changes or corrections in this Agreement
that it shall have been advised by counsel (who may be counsel for the
Company) are required to cure any ambiguity or to correct any defective or
inconsistent provision or clerical omission or mistake or manifest error
herein contained, or to confer additional rights upon the Warrant Holders.
Section 7.06. All covenants and provisions of this Agreement by
or for the benefit of the Company or the Warrant Agent shall bind and inure to
the benefit of their respective successors and assigns hereunder.
Section 7.07. Forthwith upon the appointment after the date
hereof of any transfer agent other than Certificate Transfer Company, or if
any subsequent transfer agent for the Common Stock, the Company will file with
the Warrant Agent a statement setting forth the name and address of such
transfer agent.
Section 7.08. Any notice or demand authorized by this Agreement
to be given or made by the Warrant Agent or by the holder of any Warrant to or
on the Company shall be sufficiently given or made of sent by registered mail,
postage prepaid, addressed (until another addressed is filed in writing by the
Company with the Warrant Agent) as follows:
EMILY ANNIE, INC.
392 Central Park West
New York, New York 10025
Attn: Emily Putterman
Any notice or demand authorized by this Agreement to be given or made by the
holder of any Warrant or by the Company to or on the Warrant Agent shall be
sufficiently given or made of sent by registered mail, postage prepaid,
addressed (until another address is filed in writing by the Warrant Agent with
the Company), as follows:
OXFORD TRANSFER & REGISTRAR AGENCY, INC.
1130 S.W. Morrison, Suite 250
Portland, Oregon 97205
Any notice or demand authorized by this Agreement to be given or made by the
Company or the Warrant Agent to or on the Warrant Holders shall be given in
accordance with the provisions of Section 4.05.
Section 7.09. The validity, interpretation and performance of
this Agreement and of the Warrants shall be governed by the law of the State
of New York.
Section 7.10. Nothing in this Agreement expressed and nothing
that may be implied from any of the provisions hereof is intended or shall be
construed to confer upon, or give to any person or corporation other than the
parties hereto and the Warrant Holders any right, remedy or claim under
promise or agreement hereof, and all covenants, conditions, stipulations,
promises and agreements in this Agreement contained shall be for the sole and
exclusive benefit of the parties hereto and their successors and of the
Warrant Holders.
Section 7.11. A copy of this Agreement shall be available at all
reasonable times at the business offices of the Warrant Agent in Portland,
Oregon, for inspection by any Warrant Holder at which time the Warrant Agent
may require the Warrant Certificate for inspection by it.
Section 7.12. This Agreement shall terminate on the Expiration
Date, on such earlier date upon which all Warrants have been exercised, except
that the Warrant Agent shall account to the Company pursuant to Paragraph (5)
of Section 2.03 for all cash held by it. The provisions of Section 7.04 shall
survive such termination.
Section 7.13. The Article headings herein are for convenience
only and are not part of this Agreement and shall not affect the
interpretation thereof.
Section 7.14. This Agreement may be executed in any number of
counterparts, each of which so executed shall be deemed to be an original.
IN WITNESS WHEREOF, this Agreement has been duly executed by the
parties hereto under their respective seals as of the day and year first above
written.
ATTEST:
EMILY ANNIE, INC.
By:
Emily Putterman
ATTEST: OXFORD TRANSFER & REGISTRAR AGENCY, INC.
By:
<PAGE>
STATE OF NEW YORK )
) SS.:
COUNTY OF NEW YORK )
On this day of , 19 , before me personally came
EMILY PUTTERMAN, to me known, who, being by me duly sworn, did depose and say
that her address is 209 Columbus Avenue, New York, New York 10023, that she is
President of EMILY ANNIE, INC., described herein and which executed the above
instrument; that he knows that seal of said corporation; that the seal affixed
to said instrument is such corporate seal; that it was so affixed by order of
the Board of Directors of said corporation and that he signed his name thereto
by like order.
Notary Public
STATE OF )
) SS.:
COUNTY OF )
On this day of , 19 , before me personally
came , to me known, who, being duly sworn, did depose and say
that s/he resides at , that s/he is an authorized
signatory of OXFORD TRANSFER & REGISTRAR AGENCY, INC., the entity described in
and which executed the above instrument.
Notary Public
<PAGE>
ESCROW AGREEMENT (PUBLIC OFFERING)
AGREEMENT made this day of , 1997 by and among the
Issuer whose name and address appears on the Information Sheet (as defined
herein) attached to this Agreement, and Atlantic Liberty Savings, 186 Montague
Street, Brooklyn, New York 11201 (the "Escrow Agent").
W I T N E S S E T H :
WHEREAS, the Issuer has filed with the Securities and Exchange
Commission (the "Commission") a registration statement (the "Registration
Statement") covering a proposed public offering of its securities
(collectively, the "Securities", and individually, a "Share") as described on
the Information Sheet; and
WHEREAS, the Issuer proposes to offer the Securities, as agent for
the Issuer, for sale to the public on a "best efforts, all or none basis" as
to the Minimum Offering and on a "best efforts" basis as the Maximum Offering
at the price per Share all as set forth on the Information Sheet; and
WHEREAS, the Issuer proposes to establish an escrow account with the
Escrow Agent in connection with such public offering and the Escrow Agent is
willing to establish such escrow account on the terms and subject to the
conditions hereinafter set forth;
NOW THEREFORE, in consideration of the premises and mutual covenants
herein contained, the parties hereto hereby agree as follows:
1. Information Sheet. Each capitalized term not otherwise
defined in this Agreement shall have the meaning set forth for such term on
the Information Sheet which is attached to this Agreement and is incorporated
by reference herein and made a part hereof (the "Information Sheet").
2. Establishment of Escrow Account.
2.1 The parties hereto shall establish a non-interest bearing
escrow account at the office of the Escrow Agent, and bearing the designation,
set forth on the Information Sheet (the "Escrow Account").
2.2 On or before the date of the initial deposit in the Escrow
Account pursuant to this Agreement, the Issuer shall notify the Escrow Agent
in writing of the effective date of the Registration Statement (the "Effective
Date") and the Escrow Agent shall not be required to accept any amount for
deposit in the Escrow Account prior to its receipt of such notification.
2.3 The Offering Period, which shall be deemed to commence on the
Effective Date, shall consist of the number of calendar days or business days
set forth on the Information Sheet. The Offering Period shall be extended by
an Extension Period only if the Escrow Agent shall have received written
notice thereof at least five (5) business days prior to the expiration of the
Offering Period. The Extension Period, which shall be deemed to commence on
the next calendar day following the expiration of the Offering Period, shall
consist of the number of the calendar days or business days set forth on the
Information Sheet. The last day of the Offering Period, or the last day of
the Extension Period (if the Escrow Agent has received written notice thereof
as hereinabove provided), is referred to herein as the "Termination Date."
After the Termination Date, the Issuer shall not deposit, and the Escrow Agent
shall not accept, any additional amounts representing payments by prospective
purchasers.
3. Deposits in the Escrow Account.
3.1 Upon receipt, the Issuer shall promptly deposit all monies
received from investors to the Escrow Agent. All of these deposited proceeds
(the "Deposited Proceeds") shall be in the form of checks or money orders.
All checks or money orders deposited into the Escrow Account shall be made
payable to "Emily Annie, Inc., and Atlantic Liberty Savings, as Escrow
Agent." Any check or money order payable other than to the Escrow Agent as
required hereby shall be returned to the prospective purchaser, or if the
Escrow Agent has insufficient information to do so, then to the Issuer
(together with any Subscription Information, as defined below, or other
documents delivered therewith) by noon of the next business day following
receipt of such check by the Escrow Agent, and such check shall be deemed not
to have been delivered to the Escrow Agent pursuant to the terms of this
Agreement. The Deposited Proceeds and interest or dividends thereon, if any,
shall be held for the sole benefit of the purchasers of the securities.
3.2 The Deposited Proceeds shall be invested in either
(a) an obligation that constitutes a "deposit" as that term is
defined in Section (3)(1) of the Federal Deposit Insurance Act;
(b) securities of any open-end investment company registered
under the Investment Company Act of 1940 that holds itself out as a money
market fund meeting the conditions of paragraphs (c)(2), (c) (3), and (c)(4)
of Rule 2a-7 under the Investment Company Act; or
(c) securities that are direct obligations of, or obligations
guaranteed as to principal or interest by, the United States.
3.3 Simultaneously with each deposit into the Escrow Account, the
Issuer shall inform the Escrow Agent by confirmation slip or other writing of
the name and address of the prospective purchaser, the number of Securities
subscribed for by such purchaser, and the aggregate dollar amount of such
subscription (collectively, the "Subscription Information").
3.4 The Escrow Agent shall not be required to accept for deposit
into the Escrow Account checks which are not accompanied by the appropriate
Subscription Information. Checks and money orders representing payments by
prospective purchasers shall not be deemed deposited in the Escrow Account
until the Escrow Agent has received in writing the Subscription Information
required with respect to such payments.
3.5 The Escrow Agent shall not be required to accept any amounts
representing payments by prospective purchasers, whether by check or money
order, except during the Escrow Agent's regular banking hours. Any check,
money order or cash not received prior to 1:00 P.M. shall be deposited the
following business day.
3.6 Interest or dividends earned on the Deposited Proceeds, if any,
shall be held in the Escrow Account until the Deposited Proceeds are released
in accordance with the provisions of Section 4 of the Escrow Agreement. If
the Deposited Proceeds are released to a purchaser of the securities, the
purchaser shall receive interest or dividends earned, if any, on such Deposited
Proceeds up to the date of release. If the Deposited Proceeds held in the
Escrow Account are released to the Company, any interest or dividends earned
on such funds up to the date of release may be released to the Company.
3.7 The Issuer shall deposit the Securities directly into the
Escrow Account promptly upon issuance (the "Deposited Securities"). The
identity of the purchaser of the Securities shall be included on the Common
Stock and Warrant certificates.
3.8 The Deposited Securities shall be held for the sole benefit of
the purchasers. No transfer or other disposition of Securities held in the
Escrow Account or any interest related to such Securities shall be permitted
other than by will or the laws of descent and distribution, or pursuant to a
qualified domestic relations order as defined by the Internal Revenue Code of
1986, as amended, or Title I of the Employee Retirement Income Security Act,
or the rules thereunder.
3.9 The Escrow Agent shall refund any portion of the Deposited
Proceeds prior to disbursement of the Deposited Proceeds in accordance with
Section 4 hereof upon instructions in writing signed by the Issuer.
4. Disbursement from the Escrow Account.
4.1 The Deposited Proceeds may be released to the Company and the
Securities delivered to the purchaser or other registered holder only at the
same time as or after the Escrow Agent has received a signed representation
from the Company that the Minimum Offering has been sold. Thereafter, the
Escrow Agent shall release the Deposited Proceeds and the Deposited Securities
with every additional $5,000 received.
4.2 In the event that at the close of regular banking hours on the
Termination Date less than the Minimum Offering has been sold, the Escrow
Agent shall promptly refund to each prospective purchaser the amount of
payment received from such purchaser held in Escrow without interest thereon
or deduction therefrom, and the Escrow Agent shall notify the Issuer of its
distribution of the Deposited Proceeds.
4.3 In the event that at any time up to the close of banking hours
on the Termination Date at lease the Minimum Offering has been sold, the
Escrow Agent shall notify the Issuer of such fact in writing within a
reasonable time thereafter. Once the Minimum Offering is sold, the Escrow
Agent shall release all Deposited Proceeds to the Company, and all Deposited
Securities to the purchasers. Proceeds of the Offering received thereafter
shall be deposited with the Escrow Agent and released with every $5,000
received.
4.4 Upon disbursement of the Deposited Proceeds pursuant to the
terms of this Section 4, the Escrow Agent shall be relieved of all further
obligations and released from all liability under this Agreement. It is
expressly agreed and understood that in no event shall the aggregate amount of
payments made by the Escrow Agent exceed the amount of the Deposited Proceeds.
5. Rights, Duties and Responsibilities of Escrow
Agent.
It is understood and agreed that the duties of the Escrow Agent are
purely ministerial in nature, and that:
5.1 The Escrow Agent shall not be responsible for the performance
by the Issuer of its obligations under this Agreement.
5.2 The Escrow Agent shall not be required to accept from the
Issuer any Subscription Information pertaining to prospective purchasers
unless such Subscription Information is accompanied by checks or money orders
representing the payment of money, nor shall the Escrow Agent be required to
keep records of any information with respect to payments deposited by the
Issuer except as to the amount of such payments; however, the Escrow Agent
shall notify the Issuer within a reasonable time of any discrepancy between
the amount delivered to the Escrow Agent therewith. Such amount need not be
accepted for deposit in the Escrow Account until such discrepancy has been
resolved.
5.3 The Escrow Agent shall be under no duty or responsibility to
enforce collection of any check delivered to it hereunder. The Escrow Agent,
within a reasonable time, shall return to the Issuer any check received which
is dishonored, together with the Subscription Information, if any, which
accompanied such check.
5.4 The Escrow Agent shall be entitled to rely upon the accuracy,
act in reliance upon the contents, and assume the genuineness of any notice,
instruction, certificate, signature instrument or other document which is
given to the Escrow Agent pursuant to this Agreement without the necessity of
the Escrow Agent verifying the truth or accuracy thereof. The Escrow Agent
shall not be obligated to make any inquiry as to the authority, capacity,
existence or identity of any person purporting to give any such notice or
instructions or to execute any such certificate, instrument or other
document.
5.5 In the event that the Escrow Agent shall be uncertain as to its
duties or rights hereunder or shall receive instructions with respect to the
Escrow Account or the Deposited Proceeds which, in its sole determination, are
in conflict either with other instructions received by it or with any
provision of this Agreement, the Escrow Agent, at its sole option, may deposit
the Deposited Proceeds (and any other amounts that thereafter become part of
the Deposited Proceeds) with the registry of a court of competent
jurisdiction in a proceeding to which all parties in interest are joined.
Upon the deposit by the Escrow Agent of the Deposited Proceeds with the
registry of any court, the Escrow Agent shall be relieved of all further
obligations and released from all liability hereunder.
5.6 The Escrow Agent shall not be liable for any action taken or
omitted hereunder, or for the misconduct of any employee, agent or attorney
appointed by it, except in the case of willful misconduct. The Escrow Agent
shall be entitled to consult with counsel of its own choosing and shall not be
liable for any action taken, suffered or omitted by it in accordance with the
advice of such counsel.
5.7 The Escrow Agent shall have no responsibility at any time to
ascertain whether or not any security interest exists in the Deposited
Proceeds or any part thereof or to file any financing statement under the
Uniform Commercial Code with respect to the Deposited Proceeds or any part
thereof.
6. Amendment; Resignation. This Agreement may be altered or
amended only with the written consent of the Issuer and the Escrow Agent. The
Escrow Agent may resign for any reason upon seven (7) business days written
notice to the Issuer. Should the Escrow Agent resign as herein provided, it
shall not be required to accept any deposit, make any disbursement or
otherwise dispose of the Deposited Proceeds, but its only duty shall be to
hold the Deposited Proceeds for a period of not more than ten (10) business
days following the effective date of such resignation, at which time (a) if a
successor escrow agent shall have been appointed and written notice thereof
(including the name and address of such successor escrow agent) shall have
been given to the resigning Escrow Agent by the Issuer and such successor
escrow agent, the resigning Escrow Agent shall pay over to the successor
escrow agent the Deposited Proceeds, less any portion thereof previously paid
out in accordance with this Agreement, or (b) if the resigning Escrow Agent
shall not have received written notice signed by the Issuer and a successor
escrow agent, then the resigning Escrow Agent shall promptly refund the amount
in the Deposited Proceeds to each prospective purchaser without interest
thereon or deduction therefrom, and the resigning Escrow Agent shall notify
the Issuer in writing of its liquidation and distribution of the Deposited
Proceeds; whereupon, in either case, the Escrow Agent shall be relieved of all
further obligations and released from all liability under this Agreement.
Without limiting the provisions of Section 8 hereof, the resigning Escrow
Agent shall be entitled to be reimbursed by the Issuer for any expenses
incurred in connection with its resignation, transfer of the Deposited
Proceeds to a successor Escrow Agent or distribution of the Deposited Proceeds
pursuant to this Section 6.
7. Representations and Warranties. The Issuer hereby represents
and warrants to the Escrow Agent that:
7.1 No party other than the parties hereto and the prospective
purchasers have, or shall have any lien, claim or security interest in the
Deposited Proceeds or any part thereof.
7.2 No financing statement under the Uniform Commercial Code is on
file in any jurisdiction claiming a security interest in or describing
(whether specifically or generally) the Deposited Proceeds or any part
thereof.
7.3 The Subscription Information submitted with each deposit shall,
at the time of submission and at the time of the disbursement of the Deposited
Proceeds, be deemed a representation and warranty that such deposit represents
a bona fide sale to the purchaser described therein of the amount of
Securities set forth in such Subscription Information.
7.4 All of the information contained in the Information Sheet is,
as of the date hereof and will be, at the time of any disbursement of the
Deposited Proceeds, true and correct.
8. Fees and Expenses. The Escrow Agent shall be entitled to the
Escrow Agent Fee set forth in the Information Sheet, payable upon execution of
this Agreement. In addition, the Issuer agrees to reimburse the Escrow Agent
for any reasonable expenses incurred in connection with this Agreement,
including, but not limited to, reasonable counsel fees.
9. Indemnification and Contribution.
9.1 The Issuer (referred to as the "Indemnitor") agrees to
indemnify the Escrow Agent and its officers, directors, employees, agents and
shareholders (jointly and severally the "Indemnitees") against, and hold them
harmless of and from, any and all loss, liability, cost, damage and expense,
including, without limitation, reasonable counsel fees, which the Indemnitees
may suffer or incur by reason of any action, claim or proceeding brought
against the Indemnitees arising out of or relating in any way to this
Agreement or any transaction to which this Agreement relates, unless such
action, claim or proceeding is the result of the willful misconduct of the
Indemnitees.
9.2 If the indemnification provided for in this Section 9 is
applicable, but for any reasons held to be unavailable, the Indemnitor shall
contribute such amounts as are just and equitable to pay, or to reimburse the
Indemnitees for, the aggregate of any and all losses, liabilities, costs,
damages and expenses, including counsel fees, actually incurred by the
Indemnitees as a result of or in connection with, and any amount paid in
settlement of any action, claim or proceeding arising out of or relating in
any way to any actions or omissions of the Indemnitor.
9.3 Any Indemnitee which proposes to assert the right to be
indemnified under this Section 9, promptly after receipt of notice of
commencement of any action, suit or proceeding against such Indemnitee in
respect of which a claim is to be made against the Indemnitor under this
Section 9, will notify the Indemnitor of the commencement of such action, suit
or proceeding, enclosing a copy of all papers served, but the omission so to
notify the Indemnitor of any such action, suit or proceeding shall not relieve
the Indemnitor from any liability which they may have to any Indemnitee
otherwise than under this Section 9. In case any such action, suit or
proceeding shall be brought against any Indemnitee and it shall notify the
Indemnitor of the commencement thereof, the Indemnitor shall be entitled to
participate in and, to the extent that they shall wish, to assume the defense
thereof, with counsel satisfactory to such Indemnitee. The Indemnitee shall
have the right to employ its counsel in any such action, but the fees and
expenses of such counsel shall be at the expense of such Indemnitee unless (i)
the employment of counsel by such Indemnitee has been authorized by the
Indemnitor, (ii) the Indemnitee shall have concluded reasonably that there may
be a conflict of interest among the Indemnitor and the Indemnitee in the
conduct of the defense of such action (in which case the Indemnitor shall not
have the right to direct the defense of such action on behalf of the
Indemnitee) or (iii) the Indemnitor in fact shall not have employed counsel to
assume the defense of such action, in each of which cases the fees and
expenses of counsel shall be borne by the Indemnitor.
9.4 The Indemnitor agrees to provide the Indemnitees with copies of
all registration statements pre- and post-effective amendments to such
registration statements including exhibits, whether filed with the SEC prior
to or subsequent to the disbursement of the Deposited Proceeds.
9.5 The provisions of this Section 9 shall survive any termination
of this Agreement, whether by disbursement of the Deposited Proceeds,
resignation of the Escrow Agent or otherwise.
10. Governing Law and Assignment. This Agreement shall be
construed in accordance with and governed by the laws of the State of New York
and shall be binding upon the parties hereto and their respective successors
and assigns; provided, however, that any assignment or transfer by any party
of its rights under this Agreement or with respect to the Deposited Proceeds
shall be void as against the Escrow Agent unless:
(a) written notice thereof shall be given to the Escrow Agent; and
(b) the Escrow Agent shall have consented in writing to such
assignment or transfer.
11. Notices. All notices required to be given in connection with
this Agreement shall be sent by registered or certified mail, return receipt
requested, or by hand delivery with receipt acknowledged, or by the Express
Mail service offered by the United States Post Office, and addressed, if to
the Issue, at its address set forth on the Information Sheet, and if to the
Escrow Agent, Atlantic Liberty Savings, Attention: Stephen Irving.
12. Severability. If any provision of this Agreement or the
application thereof to any person or circumstance shall be determined to be
unpaid or unenforceable, the remaining provisions of this Agreement or the
application of such provision to persons or circumstances other than those to
which it is held invalid or unenforceable shall not be affected thereby and
shall be valid and enforceable to the fullest extent permitted by law.
13. Closing. The closing shall take place within 90 days of the
Effective Date unless an additional 120 days is approved by the Company, but
in no instance later than 210 days after the Effective Date.
14. Pronouns. All pronouns and any variations thereof shall be
deemed to refer to the masculine, feminine, neuter, singular, or plural as the
context may require.
15. Captions. All captions are for convenience only and shall
not limit or define the term thereof.
16. Execution in Several Counterparts. This Agreement may be
executed in several counterparts or by separate instruments and all of such
counterparts and instruments shall constitute one agreement, binding on all of
the parties herein.
17. Entire Agreement. This Agreement constitutes the entire
agreement between the parties hereto with respect to the subject matter hereof
and supersedes all prior agreements and understandings (written or oral) of
the parties in connection herewith.
<PAGE>
IN WITNESS WHEREOF, the undersigned have executed this Agreement as
of the day and year first above written.
THE ISSUER: EMILY ANNIE, INC.
By:
Emily Putterman, President
ESCROW AGENT: ATLANTIC LIBERTY SAVINGS
By:
<PAGE> ATLANTIC LIBERTY SAVINGS
ESCROW AGREEMENT INFORMATION SHEET
1. The Company
Emily Annie, Inc.
392 Central Park West
New York, New York
State of incorporation or organization: New York
2. The Underwriter
Self-Underwriting
State of incorporation or organization:
3. The Securities
Description of the Securities to be offered (e.g., shares of or warrants
for common stock, debentures, units consisting of shares and warrants, etc.):
Units consisting of one share of common stock, one class A warrant, and one
class B warrant.
4. Type of Offering
Registration Statement filed on form SB-2
Offering Statement filed pursuant to Regulation C of the General Rules and
Regulations under the Securities Act of 1933.
5. Minimum Offering : $ 125,000
Maximum Offering : $ 200,000
6.Plan of Distribution of the Securities
Offering Period: 90 (calendar days)
Extension Period: 120 (calendar days)
Collection Period, if any: -0- (calendar days)
7. The Escrow Account
Title of the Escrow Account: Emily Annie, Inc. ESCROW ACCOUNT.
8. Escrow Account Fee
Amount due on execution of the Escrow Agreement: $
Fee for each check disbursed pursuant to the terms of the
Escrow Agreement (unsuccessful offering): $
Fee for each subscriber in excess of the first fifty subscribers:
$
Fee for each check returned pursuant to the terms of the Escrow Agreement:
$
All other fees will be negotiated on the basis of service
requirements.
