As filed with the Securities and Exchange Commission on May 30, 1997
Registration No.
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM SB-2
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Franks' Express, Inc.
--------------------------------------------
(Name of small business issuer in its charter)
Colorado 7389 84-1170846
---------------------------- --------------------------- ---------------
(State or jurisdiction of (Primary Standard Industrial (IRS Employer
incorporation or organization) Classification Code Number) Identification
No.)
12146 East Amherst Circle
Aurora, Colorado, 80014
(303) 695-9554
------------------------------------------------------------------------
(Address and telephone number of Registrant's principal executive offices)
Charles Burton
2903 South Uinta Street
Denver, Colorado 80231
(303) 696-7523
--------------------------------------------------------
(Name, address, and telephone number of agent for service)
Copy to:
David M. Summers, Esq.
5670 Greenwood Plaza Boulevard, Suite 422
Englewood, Colorado 80111
(303) 220-5420
Approximate date of proposed sale to the public: As soon as practicable after
this Registration Statement becomes effective.
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CALCULATION OF REGISTRATION FEE
- -----------------------------------------------------------------------------------------------------
Title of each Proposed maximum Proposed maximum
class of securities Amount to offering price aggregate offering Amount of
to be registered be registered per unit price registration fee
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common shares 100,000 $1.00 $100,000 $100.00
- -----------------------------------------------------------------------------------------------------
</TABLE>
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.
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CROSS REFERENCE SHEET
Showing location in Prospectus of information
required by Part 1 of Form SB-2
Item Number and Caption Prospectus Heading
----------------------- ------------------
<S> <C> <C>
1. Front of Registration Statement and Outside Front Cover Page of Prospectus
Outside Front Cover of Prospectus
2. Inside Front and Outside Back Cover Inside Front and Outside Back Cover of
Pages of Prospectus Prospectus
3. Summary Information and Risk Factors Prospectus Summary; Risk Factors
4. Use of Proceeds Use of Proceeds
5. Determination of Offering Price Outside Front Cover Page of Prospectus;
Plan of Distribution
6. Dilution Dilution
7. Selling Security Holders Not Applicable
8. Plan of Distribution Outside Front Cover of Prospectus;
Plan of Distribution
9. Legal Proceedings Legal Proceedings
10. Directors, Executive Officers, Management
Promoters and Control Persons
11. Security Ownership of Certain Security Ownership of Management and
Beneficial Owners and Management Principal Shareholders
12. Description of Securities Description of Securities
13. Interest of Named Experts and Counsel Legal Matters
14. Disclosure of Commission Position on Not Applicable
Indemnification for Securities Act
Liabilities
15. Organization Within Last Five Years Not Applicable
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Item Number and Caption Prospectus Heading
----------------------- ------------------
16. Description of Business Business; Marketing Plan
17. Management's Discussion and Analysis Management's Discussion and Analysis of
or Plan of Operation Financial Conditions and Plan of Operation
18. Description of Property Business - Executive Offices
19. Certain Relationships and Related Certain Relationships and Related
Transactions Party Transactions
20. Market for Common Equity and Related Outside Front Cover Page of Prospectus;
Stockholder Matters Risk Factors; Plan of Distribution; Description
of Securities
21. Executive Compensation Executive Compensation
22. Financial Statements Index to Financial Statements
23. Changes In and Disagreements With Not Applicable
Accountants on Accounting and
Financial Disclosure
3
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PROSPECTUS
Franks' Express, Inc.
(a Colorado Corporation)
12146 East Amherst Circle
Aurora, Colorado 80014
50,000 Shares Minimum/100,000 Shares Maximum of Common Stock
Franks' Express, Inc., a Colorado corporation (the "Company") is offering
for sale a minimum of 50,000 shares and a maximum of 100,000 shares of its
$.0001 par value common stock ("Shares"). The Shares are being offered and sold
primarily by officers and directors of the Company. The Company's sole
independent consultant may assist the Company's officers and directors as part
of his substantial and continuing duties pursuant to contractual arrangements
with the Company. Registered broker-dealers may also participate in the
offering. If less than the minimum amount of Shares are sold within four (4)
months from the date of this Prospectus, all funds received by the Company from
subscribers will be promptly returned without interest or deduction for
expenses. (See "PLAN OF DISTRIBUTION.")
THESE ARE SPECULATIVE SECURITIES, INVOLVING A HIGH DEGREE OF RISK AND IMMEDIATE
AND SUBSTANTIAL DILUTION. THESE SECURITIES SHOULD ONLY BE PURCHASED BY PERSONS
WHO CAN AFFORD TO LOSE THEIR ENTIRE INVESTMENT.
(See "RISK FACTORS.")
The offering price of the Shares has been determined by the Company without
regard to any traditional established criteria of value. The price was selected
because the Company believes the Shares can best be sold at this price. Although
the Company intends to seek to have its common stock listed on the NASD Bulletin
Board following this offering, there is no market for the Company's common stock
as of the date of this Prospectus, and there can be no assurance that a public
market for the Company's common stock will develop, or if so developed, will be
sustained to any extent. (See "RISK FACTORS" and "DESCRIPTION OF SECURITIES.")
- --------------------------------------------------------------------------------
Price to Public Commissions(1) Proceeds to Company(2)
- --------------------------------------------------------------------------------
Per Share $1.00 $.10 $.90
Minimum $ 50,000.00 $ 5,000.00 $45,000.00
Maximum $100,000.00 $10,000.00 $90,000.00
- --------------------------------------------------------------------------------
(See Footnotes to the table on the following page).
The date of this Prospectus is May 23, 1997
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(1) The offering is being sold by officers and directors of the Company to whom
no commission or other offering renumeration will be paid. Registered
broker-dealers are also permitted to make sales of Shares. The Company may
pay commissions of up to ten percent (10%) of any offering proceeds raised
by one or more registered broker-dealers or their representatives. The
table has been prepared using the assumption that the maximum commission
will be paid on all Shares sold. No commission will be paid for any Shares
sold by officers and directors of the Company. No commission or other
offering remuneration will be paid to the Company's independent consultant.
(2) Proceeds to Company have been computed after deduction of the maximum
commissions, and prior to the deduction of other offering expenses
estimated to be approximately $10,000. Proceeds from the sale of Shares
will be deposited in escrow by noon of the business day following receipt
thereof at Norwest Bank, 7700 East Belleview Avenue, Englewood, Colorado
80121. In the event that 50,000 Shares, having a subscription price of
$50,000 are not sold within four (4) months from the effective date of this
Prospectus, all proceeds raised will be promptly returned to investors
without interest, and without deducting any expenses incurred in connection
with this offering. In the event the minimum offering amount is raised
prior to the end of the four (4) month offering period, the Company may, at
its discretion, close the offering, or continue the offering until the
expiration of the four (4) month offering period or until the maximum
offering amount ($100,000) is raised, whichever occurs first. In the event
the minimum offering is sold, any monies held in escrow will be released to
the Company upon the Company's request. (See "PLAN OF DISTRIBUTION.")
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION, NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
THE COMPANY'S OFFICERS, DIRECTORS, AND EXISTING SHAREHOLDERS MAY PURCHASE A
PORTION OF THE SHARES OFFERED BY THIS PROSPECTUS UPON THE SAME TERMS AND
CONDITIONS AS OTHER INVESTORS IN THIS OFFERING. THE AGGREGATE NUMBER OF SHARES
WHICH MAY BE PURCHASED BY SUCH OFFICERS, DIRECTORS AND EXISTING SHAREHOLDERS,
HOWEVER, SHALL NOT EXCEED 50% OF THE NUMBER OF SHARES SOLD IN THIS OFFERING TO
OTHER INVESTORS.
The Shares are offered by the Company, subject to prior sale, allotment,
acceptance, withdrawal, cancellation or modification of the offering. Any
modification to the offering will be made by means of an amendment to the
Prospectus. The Company reserves the right to withdraw or cancel the offering
without notice, and to reject any orders, in whole or in part, for the purchase
of any of the offered Shares.
The Company will make available to its shareholders an Annual Report on
Form 10-K containing financial information audited and reported upon by
independent certified public accountants, and it may also provide unaudited
quarterly or other interim reports as it deems appropriate. The Company is a
"reporting company" under the Securities Exchange Act of 1934 and will comply
with the periodic reporting requirements of the Securities Exchange Act of 1934.
When such reports, proxy statements and other information are filed by the
Company with the Securities and Exchange Commission (the "Commission"), they
will be available for inspection and copying at the Public Reference section of
the Commission at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549, and the regional offices of the Commission
5
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at Citicorp Center 300 West Madison Street, Suite 1400, Chicago, Illinois 10048,
at prescribed rates. The Commission maintains a Web site that contains reports,
proxy and information statements and other information regarding issuers that
file electronically with the Commission.The address of the Web site is
(http://www.sec.gov).
The Company will provide without charge to each person who receives this
Prospectus, upon written or oral request of such person, a copy of any of the
information that was incorporated by reference in the Prospectus (excluding
exhibits to the information that is incorporated by reference, unless the
exhibits are themselves specifically incorporated by reference), by directing
written requests to Mr. Charles Burton at 2903 South Uinta Street, Denver,
Colorado 80231, and oral requests to Mr. Burton at (303) 696-7523.
ADDITIONAL INFORMATION
----------------------
A registration statement on Form SB-2, including amendments thereto,
relating to the Shares offered by this Prospectus has been filed by the Company
with the Securities and Exchange Commission in Washington, D.C. This Prospectus
does not contain all of the information set forth in the registration statement
and the exhibits and schedules to such registration statement. For further
information with respect to the Company and the Shares offered by this
Prospectus, reference is made to such registration statement, exhibits and
schedules. Statements contained in this Prospectus as to the contents of any
contract or other document referred to in this Prospectus are not necessarily
complete, and in each instance reference is made to the copy of such contract or
other document filed as an exhibit to the registration statement, each such
statement being qualified in all respects by such reference. A copy of the
registration statement may be inspected without charge at the Commission's
principal offices in Washington, D.C., and copies of all or any part thereof may
be obtained from the Commission upon the payment of certain fees prescribed by
the Commission.
Reports to Shareholders. Pursuant to the requirements of the Securities
Exchange Act of 1934, the Company will make available annual reports to
shareholders which will include audited financial statements reported on by its
certified public accountants. In addition, the Company may make available
quarterly or other interim reports to shareholders containing unaudited
financial statements or financial information.
6
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TABLE OF CONTENTS
-----------------
Page
----
PROSPECTUS SUMMARY ....................................................... 1
RISK FACTORS.............................................................. 2
USE OF PROCEEDS........................................................... 6
DILUTION.................................................................. 7
PLAN OF DISTRIBUTION...................................................... 8
LEGAL PROCEEDINGS........................................................ 10
MANAGEMENT............................................................... 10
SECURITY OWNERSHIP OF MANAGEMENT AND
PRINCIPAL SHAREHOLDERS..................................................12
DESCRIPTION OF SECURITIES................................................ 13
BUSINESS................................................................. 14
MARKETING PLAN........................................................... 15
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND PLAN OF OPERATION........................................ 16
CERTAIN RELATIONSHIPS AND RELATED PARTY
TRANSACTIONS........................................................... 18
EXECUTIVE COMPENSATION................................................... 19
LEGAL MATTERS............................................................ 20
TRANSFER AGENT........................................................... 20
EXPERTS.................................................................. 20
INDEX TO FINANCIAL STATEMENTS............................................F-1
7
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PROSPECTUS SUMMARY
------------------
The following summary is qualified in its entirety by the more detailed
information and financial statements (including the notes to the same) appearing
elsewhere in this Prospectus.
The Company. The Company was incorporated under the laws of the State of
Colorado on May 17, 1991, for the purpose of engaging in the retail food service
business. The Company closed its restaurants and retail ice cream and candy shop
in November of 1993 and has not conducted any material business activities since
that time. The Company intends to engage in the business of consulting with
small to medium sized businesses, helping them assess their current financial
position and future financial needs, and assisting them in acquiring sufficient
funds, both privately and publicly, to grow and expand their business, products,
and services. In light of its management's special expertise in the restaurant
business, the Company also expects to offer business consulting services to
restaurants and other food service establishments. The Company's principal
offices are located at 12146 East Amherst Circle, Aurora, Colorado 80014. Its
telephone number is (303) 695-9554.
The Offering. Pursuant to this Prospectus, the Company is offering up to
100,000 shares of its common stock at the offering price of $1.00 per Share.
(See "PLAN OF DISTRIBUTION" and "DESCRIPTION OF SECURITIES.")
Securities Presently Outstanding: No. of Shares
- --------------------------------- -------------
Common Stock (shares): ..........................................1,000,000
Securities Being Registered:
- ----------------------------
Minimum Common Stock (shares): .....................................50,000
Maximum Common Stock (shares): ....................................100,000
Securities to be Outstanding After this Offering:
- -------------------------------------------------
Minimum Offering of Common Stock (shares): ......................1,050,000(1)
Maximum Offering of Common Stock (shares): ......................1,100,000(1)
(1) Includes 1,000,000 shares of common stock currently owned by the officers
and directors of the Company and certain other shareholders. (See "SECURITY
OWNERSHIP OF MANAGEMENT AND PRINCIPAL SHAREHOLDERS.")
8
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Use of Proceeds. Assuming only the minimum amount of the offering is sold
and all of the Shares sold are by participating broker-dealers, the net proceeds
derived from the sale of the Shares (after deduction of the sales commissions
and other offering expenses), will be applied over the next twelve (12) months
substantially as follows: approximately $15,000 will be used to repay loans made
to the Company to fund expenses associated with this offering, approximately
$8,083 for deficit capital restoration, approximately $18,417 to expand the
Company's client base, development products and services pay for services
rendered in the normal course of business, and pay general office expenses, and
approximately $3,500 to seek additional forms of funding to further the
Company's business. (See "USE OF PROCEEDS" and "BUSINESS.")
RISK FACTORS
------------
These securities involve an extremely high degree of risk. Prospective
purchases should consider carefully, among other factors set forth in the
Prospectus, the following:
Limited Operating History, Limited Revenues, and Operating Losses. The
Company has no operating history in the financial and food service consulting
business. The Company is in a new developmental stage and all of the substantial
risks inherent in the commencement of a new business enterprise with new
management are present at this stage of the Company's development. At this time,
the Company has no revenues, has incurred operating losses as a result of the
costs associated with its internal capital structure reorganization and this
offering, and there can be no assurance that the Company will be able to achieve
profitable operations. The notes to the Company's financial statements disclose
the Company's current financial status and its plans to obtain additional funds
required for its continued business operations. (See "FINANCIAL STATEMENTS.")
Success Dependent on Management. Success of the Company will depend on the
active participation of its officers and directors and their successful
endeavors to further the Company's business goals. If present management were to
fail to diligently pursue the goals of the Company, it would adversely affect
development of the Company's business and its likelihood of continuing
operations. All of the Company's officers and directors have other commitments
and it is not presently contemplated that any of them will devote full time to
the Company's affairs. However, it is anticipated that Mr. Charles Burton, the
Company's President, will devote a significant amount of his time to help the
Company develop and achieve its stated goals and purposes, and that all of the
other officers will devote such time as may be necessary to supervise and assist
in the achievement of the Company's business goals. In addition, the Company has
enlisted the assistance of Richard H. Steinberg who provides services as a
consultant to the Company as an independent contractor. Mr. Steinberg is
expected to devote such time as may be necessary to assist the Company in
achieving its business objectives. (See "MANAGEMENT.")
Limited Assets and the Need for the Proceeds of this Offering. The Company
has limited assets and requires the proceeds from this offering to provide
capital to continue its operations, to seek other sources of capital for the
2
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Company's operations, and to further develop and market the Company's services.
Without the proceeds from this offering, it is doubtful the Company will be able
to continue as a going concern. While management estimates that the net proceeds
from this offering, together with expected income to be derived from its
consulting service business, will be sufficient to meet the Company's cash
requirements for at least 12 months from the conclusion of this offering, the
Company may be forced to seek additional funds or other business opportunities,
which may include merging or combining with another company that has greater
financial resources. There can be no assurance that the Company will be able to
successfully raise additional funds at an acceptable cost, if at all, or pursue
any other business development activities. (See "USE OF PROCEEDS.")
Business Development and Expansion Risks. The Company is implementing a
business plan pursuant to which it intends to become a business consulting
operation, expand its list of clients, and increase its market area. The
expenses arising in connection with these activities will be charged against
income as they are incurred and, accordingly, will have a negative impact upon
the Company's results of operations, until such time as such expenses are offset
by increased revenues, of which there can be no assurance. (See "USE OF
PROCEEDS" and "BUSINESS.")
Operating Hazards and Uninsured Risks. The Company does not presently have
insurance of any kind. There can be no assurance that the Company will in the
future choose to, or be able to, adequately insure itself, or its officers and
directors, against the risks attendant to its contemplated business activities.
If the Company incurs uninsured losses or liabilities, the Company's funds
available for operations will be reduced, its assets might even be lost, and its
ability to continue as a going concern could be compromised.
Competition. There is no assurance that others will not develop similar or
superior consulting services, or duplicate the Company's present consulting
services. The Company presently faces substantial competition from other persons
and entities offering similar services, many of which are well established and
have significantly greater financial and other resources than the Company. No
assurance can be given that the Company will be able to compete successfully.
(See "MARKETING PLAN - Competition.")
Conflicts of Interest. The Company's officers and directors are engaged in
other businesses, and may become, in their individual capacity, officers,
directors, controlling shareholders and/or partners of additional entities
engaged in a variety of businesses. Therefore, potential conflicts of interest
exist, including, among other things, time, effort and corporate opportunity
involved in participation with such other business entities. The amount of time
which some of the Company's officers and directors will be able to devote to the
Company's businesses may be limited. In addition, independent consultants
engaged by the Company are, or may be, engaged in other business activities,
some of which may be deemed to be competitive with the Company. For example, Mr.
Richard H. Steinberg, the Company's sole independent consultant, regularly
provides to other companies consulting services of a similar nature to those he
provides to the Company. He is also part owner of a recently organized
consulting firm that assists companies who desire to raise capital in public
securities markets. (See "CERTAIN RELATIONSHIPS AND RELATED PARTY
TRANSACTIONS.")
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General Business Risks. Future periods may be impacted by various
competitive factors, including competition from other persons or entities
providing similar consulting services. In addition, the Company's results of
operations could be affected in a particular period by business interruptions or
costs associated with events beyond the control of the Company. The Company's
business can also be adversely impacted by fluctuations in general economic
conditions. Other considerations that can have a potentially significant impact
on the Company's operations include: inability to develop a viable customer
base, loss of a principal customer; inability to obtain funding in a timely
manner, changes in government regulations; lack of market demand for the
Company's proposed services; a decline in the demand for the Company's
consulting services; the ability to maintain relationships on favorable terms
which provide business opportunities to the Company; the timing of requests for
consulting services; the timely availability of capital; and cancellation or
rescheduling of services by a customer experiencing financial difficulties.
Lack of Public Market for Company's Common Stock. No market for the
Company's common stock presently exists. There can be no assurance that any
market can be developed, or if developed, sustained. The investment community
could show little or no interest in the Company in the future. As a result,
purchasers of the Company's common stock may have difficulty liquidating their
investment in such if they desire to do so.
Going Concern Risk. The Company does not have significant cash or a source
of significant revenues to cover its operating costs and allow it to continue as
a going concern. The Company's ability to continue as a going concern will
depend on the Company's ability to successfully complete this offering, to raise
additional capital through other means, or to find another suitable business
opportunity.
Dilution. As a result of the sale of the Shares, purchasers of such Shares
will suffer immediate substantial dilution in the price of $1.00 per Share
purchased by them of approximately $.9806 per Share (98%), if the minimum amount
of the offering is sold. Conversely, the Company's present shareholders will
receive an immediate benefit of approximately $.082 per share from the sale of
the Shares if the maximum amount of the offering is sold. (See "DILUTION.")
Public Will Bear Risk Of Loss. The capital required by the Company to repay
its existing debt and any debt that may be incurred in the future, continue its
operations and expand its business is being sought principally from the proceeds
of this offering. Therefore, public investors will bear virtually all of the
risk of the Company's existing debt and contemplated, continued and expanded
operations.
Dividends. No dividends have been paid on the Company's securities since
its inception in 1991 and no dividends are contemplated at any time in the
foreseeable future. Investors who anticipate the need for immediate dividends
from their investments should refrain from purchasing any of the Shares offered
by this Prospectus. (See "DESCRIPTION OF SECURITIES.")
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Best Efforts Offering. The Shares offered hereby are being offered on a
best efforts basis, and no individual or firm is committed to purchase or sell
any of the Shares offered by this Prospectus. There is no assurance that any
portion of the Shares so offered will be sold. The Company's legal counsel will
act as an escrow agent until at least 50,000 Shares have been sold in this
offering and proceeds from such sales been deposited into the escrow account
established for the offering. In the event that a minimum of 50,000 Shares are
not sold within four (4) months of the effective date of this Prospectus, funds
will be promptly returned to investors without interest and without any
deduction for expenses incurred in connection with this offering. Therefore,
there is a risk than an investor could invest money in the Company for as long
as four (4) months and have his or her investment returned without interest.
After 50,000 Shares have been sold, the escrowed funds will be transmitted to
the Company at its discretion. Thereafter, Shares will be issued to investors
and no refunds will be made after such time. (See "PLAN OF DISTRIBUTION.")
Shares Eligible for Future Sale. In exchange for cash or services, a total
of 1,000,000 shares of the Company's $.0001 par value common stock were issued
by the Company prior to the date of this Prospectus (after giving effect to its
stock split). A total of 1,000,000 shares of the Company's outstanding common
stock are "restricted securities" and under certain circumstances may in the
future be sold in compliance with Rule 144 adopted under the Securities Act of
1933, as amended (the "1933 Act"), which provides, in general, that such
restricted securities can not be sold in the open market until two years after
the date of original purchased unless they are registered under the 1933 Act.
Future sales of those shares could depress that market price of the Common Stock
in any market which may exist. (See "DESCRIPTION OF SECURITIES.")
Effect of Penny Stock Reform Act and Rule 15g-9: Possible Inability to Sell
the Company's Securities in the Secondary Market. The Shares will become subject
to the Penny Stock Reform Act.
(a) Penny Stock Reform Act. In October 1990 Congress enacted the "Penny
Stock Reform Act of 1990" (the "'1990 Act") in response to fraudulent practices
prevalent in many penny stock transactions. Pursuant to Rule 3a51-1 of the
Securities and Exchange Act of 1934 (the "1934 Act") a security is defined as a
"penny stock" unless it is (i) a reported security (i.e., listed on certain
national securities exchanges); (ii) a security registered or approved for
registration and traded on a national securities exchange that meets certain
guidelines, where the trade is effected through the facilities of that national
exchange; (iii) a security listed on NASDAQ; (iv) a security of an issuer that
meets certain minimum financial requirements ("net tangible assets" in excess of
$2,000,000 or $5,000,000, respectively, depending on whether the issuer has been
continuously operating for more or less than three years, or "average revenue"
of at least $6,000,000 for the last three years); or (v) a security with a price
of at least $5.00 per share in the transaction in question or a security that
has a bid quotation (as defined in the Rule) of at least $5.00 per share.
5
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Pursuant to the 1990 Act, prior to effecting a transaction in a penny
stock, brokers and/or dealers are required to provide investors with written
disclosure documents containing information concerning various matters relating
to the market for penny stocks, as well as specific information about the
subject security and the transaction involving the purchase and sale of that
security (e.g., price quotes and broker-dealer and associated person
compensation). Subsequent to the transaction, the broker-dealer is required to
deliver monthly or quarterly statements containing specific information about
the subject security. These added disclosure requirements will most likely
negatively affect the ability of purchasers of securities in this offering to
sell their securities in the secondary market even if one should develop in the
future.
(b) Rule 15g-9. Rule 15g-9 promulgated under the 1934 Act imposes
additional sales practice requirements on broker-dealers who sell penny stocks
to persons other than established customers. For transactions covered by such
rule, the broker-dealer must make a special suitability determination for the
purchaser and receive the purchaser's written agreement to the transaction prior
to the sale. Consequently, this rule may also affect the ability of purchasers
in this offering to sell their securities in any secondary market.
Control by Management. Upon completion of this Offering the Company's
officers and directors will directly or indirectly own approximately 86.4% of
the issued and outstanding capital stock, if the maximum amount of the offering
is sold. If only the minimum amount of the offering is sold the Company's
officers and directors will own 92.7% of the Company's issued and outstanding
capital stock. They will therefore effectively control between 86.4% and 92.7%
of the Company's voting capital stock. The foregoing percentages will be
increased to the extent that any Shares are purchased by officers and directors
in this offering. There are no cumulative voting rights provided in the
Company's Articles of Incorporation. Accordingly, the Company's current
management, if they act as a group, will be able to elect all of the Company's
directors and continue to control the Company for the foreseeable future. (See
"SECURITY OWNERSHIP OF MANAGEMENT AND PRINCIPAL SHAREHOLDERS" and "DESCRIPTION
OF SECURITIES.")
USE OF PROCEEDS
---------------
The net proceeds to be realized by the Company from this offering if only
the minimum amount being offered is sold will be approximately $45,000, assuming
the maximum commission is paid on all of the Shares sold. In the event the
maximum offering is sold, the Company will receive net proceeds of approximately
$90,000, assuming the maximum commission is paid on all of the Shares sold. The
Company presently has a deficit of approximately $8,083. After the deficit is
reduced to zero, management estimates that the net proceeds of this offering
together with any revenues from operations, will still be sufficient to meet the
Company's cash requirements for at least 12 months from the conclusion of this
offering. Management anticipates the net proceeds of this offering will be used
substantially, and in the order of priority, shown below:
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Assuming Minimum Assuming Maximum
Description Offering Sold Offering Sold
- --------------------------------------------------------------------------------
Deficit Capital Restoration $ 8,083 $ 8,083
Loan Repayment $15,000 $15,000
Expansion of Client Base,
Services Rendered, and
General Office Expenses: $14,000 $47,500
Product Development: $ 4,417 $ 9,417
Search for Other Funding: $ 3,500 $10,000
Total: $45,000 $90,000
The amounts set forth in the use of proceeds table merely indicate the
proposed use of proceeds, and actual expenditures may very substantially from
these estimates depending upon market and economic conditions after completion
of the offering. The Company may, in the future, seek additional funds through
loans, other financing arrangements, or merger and consolidation with other
companies having greater financial resources. Pending expenditures of the
proceeds from this offering for the foregoing purposes, the Company may make
temporary investments in government securities, money market accounts, insured
certificates of deposit or insured banking accounts.
DILUTION
--------
The following table summarizes, as of May 23, 1997, the comparative
ownership of existing shareholders to potential new investors.
<TABLE>
<CAPTION>
Current Equity or Average Price
Shares Owned Total Consideration per
------------ -------------------
Number % Amount % Shares
- ---------------------------------------------------------------------------------------------------------------------
Present Shareholders(2)
<S> <C> <C> <C> <C> <C> <C>
Minimum Offering 1,000,000 100 $(8,083) (1) 95.2 ($.0081)
Maximum Offering 1,000,000 100 $(8,083) (1) 90.9 ($.0081)
New Investors(2)
Minimum Offering 50,000 0 $ 50,000 4.8 $1.00
Maximum Offering 100,000 0 $100,000 9.1 $1.00
</TABLE>
(1) Shareholder equity as of May 23, 1997, which is expected to continue to
decline to some extent as additional expenses for this offering are
incurred.
(2) Assumes that none of the present shareholders purchase any additional
shares in this offering.
7
14
<PAGE>
The pro forma net tangible book value of the Company as of May 23, 1997 was
($19,183) or approximately ($.0192) per share. Pro forma net tangible book value
per share represents the Company's total tangible assets less its total
liabilities divided by the number of shares of its common stock outstanding.
Pro forma net tangible book value dilution per share represents the
difference between the amount paid per share by purchasers of common stock in
this offering and the pro forma net tangible book value per share of common
stock as adjusted to give effect to this offering. After giving effect to the
sale of the minimum (50,000) Shares of common stock offered by the Company at an
assumed public offering price of $1.00, the adjusted pro forma net tangible book
value of the Company as of May 23, 1997 would have been approximately $25,817 or
$.0246 per share of common stock. This represents an immediate increase in pro
forma net tangible book value of $.0438 per share to existing shareholders and
an immediate dilution of $.9754 per share to new investors in this offering.
After giving effect to the sale of the maximum (100,000) Shares of Common Stock
offered by the Company in this offering at an assumed public offering price of
$1.00 per Share, the as adjusted pro forma net tangible book value of the
Company as of May 23, 1997 would have been approximately $70,817 or $.0644 per
Share of common stock. This represents an immediate increase in pro forma net
tangible book value of $.0836 per share to existing shareholders and an
immediate dilution of $.9356 per Share to new investors in this offering. The
following table illustrates the dilution per share to new investors as of May
23, 1997:
<TABLE>
<CAPTION>
Assumes Assumes
Minimum Maximum
Offering Offering
-------- --------
<S> <C> <C>
Assumed initial public offering price per Share $1.00 $1.00
Pro forma net tangible book value per Share as of May 23, 1997 $(.0192) $(.0192)
Increase in pro forma net tangible book value per
Share attributable to new shareholders $.0438 $.0836
As adjusted net tangible book value per Share after offering $.0246 $.0644
Dilution per Share to new shareholders $.9754 $.9356
</TABLE>
- ----------
(See "DESCRIPTION OF SECURITIES.")
PLAN OF DISTRIBUTION
--------------------
Selling the Shares of the Offering. The officers and directors of the
Company have been authorized by the Company to sell the Shares of the Company's
common stock pursuant to this Prospectus to any and all suitable investors of
age in any state in which these securities have been registered, and shall take
no commission or other offering renumeration of any kind for doing so.
Consultants engaged by the Company may assist the officers and directors, but
will not be paid any commission or transaction based compensation. To the extent
that Shares are sold by registered broker-dealers, however, the Company will pay
a 10% commission to such registered broker-dealers. Investors may purchase
Shares by filing out a subscription agreement and delivering to the selling
officer or director a check payable to Franks' Express, Inc. Escrow Account, for
the amount of the purchase price.
8
15
<PAGE>
The Company has not entered into an underwriting agreement with any
broker-dealer. However, broker-dealers who desire to participate in the sale of
the Shares may do so by notifying the National Association of Securities Dealers
(NASD) of their intent to do so, and entering into a Selected Dealers Agreement
with the Company. The Selected Dealers Agreement includes provisions for mutual
indemnification against certain civil liabilities arising under the Securities
Act of 1933, as amended. For any Shares sold by participating broker-dealers,
the Company will pay a sales commission of ten percent (10%) of the sales price.
The Shares are offered by the Company subject to prior sale, when, as and if
delivered to and accepted by the Company, and subject to approval of certain
matters by legal counsel. The Company reserves the right to withdraw, cancel or
modify such offer and any offer, in whole or in part. Delivery of the Shares
will be made to investors promptly upon acceptance and the satisfaction of
escrow conditions relating to completion of the minimum offering amount.
Determination of the Offering Price. As of the date of this Prospectus,
there is no public market for the Company's common stock. The offering price of
the Shares was determined by the Company without regard to any traditional or
established criteria of value. In determining the offering price and the number
of shares to be offered, the Company considered such factors as the financial
condition of the Company, its net tangible book value, its business prospects,
and the general condition of the securities market. The offering price of $1.00
per Share was established by the Company, in part because the Company believes
that the price of $1.00 would be the easiest price at which to sell the Shares.
Accordingly, the offering price set forth on the cover page of this Prospectus
should not be considered an indication of the actual value of the Company. The
price bears no relation to the Company's assets, book value, earnings or net
worth or any other traditional valuation criteria. There is also no assurance
that an active trading market for the Company's securities will develop or, if
developed, will continue, such that subscribers will be able to resell their
Shares following this offering. The Company's common stock has never been traded
on any exchange or market prior to this offering, and has been privately held.
Shareholders of Record. On May 23, 1997, there were six holders of record
of the Company's common stock.
Dividends. The Company has never paid dividends on the Company's common
stock. The Board of Directors of the Company presently intends to pursue a
policy of retaining earnings, if any, for use in the Company's operations and to
finance expansion of its business activities. With respect to the Company's
common stock, the declaration and payment of dividends in the future, of which
there can be no assurance, will be determined by the Company's Board of
Directors in light of conditions then existing, including the Company's
earnings, financial condition, capital requirements and other factors. There are
presently no dividends which are accrued or owing with respect to any of the
Company's outstanding capital stock and none are expected to be paid in the
forseeable future.
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16
<PAGE>
LEGAL PROCEEDINGS
-----------------
There are no legal proceedings or pending litigation to which the Company
is a party or against any of its officers or directors as a result of their
activities associated with the business of the Company.
MANAGEMENT
----------
The Company has no knowledge of any arrangement or understanding in
existence between any officer named below or any other person pursuant to which
any such officer was or is to be elected to such office or offices. All officers
of the Company serve at the pleasure of the Company's Board of Directors. All
officers of the Company will hold office until the next annual Meeting of the
Board of Directors of the Company. There is no person who is not a designated
officer who is expected to make any significant contribution to the business of
the Company, except independent contractors as are, or may be engaged by the
Company to provide consulting services.
The following sets forth biographical information for at least the past
five years as to the business experience of each officer and director of the
Company and their age and positions with the Company:
President: Charles Burton, age 47, currently serves as President and
Director of the Company, a position he has held since April 15, 1997. Mr. Burton
served as Secretary and a Director of the Company from January 2, 1997 until
April 15, 1997, when he was elected President.
Mr. Burton is a graduate of Kenyon College where he obtained a bachelors
degree in Political Science in 1971. From 1972 to 1976, Mr. Burton served as a
special assistant to George Clark Martin, President of the National Association
of Home Builders in Louisville, Kentucky. From 1977 to 1985, Mr. Burton was
employed as a licensed securities broker with S. W. Devanney and Co., Inc. in
Denver, Colorado. He was employed with Kober Financial Inc. from 1985 to 1988 as
a wholesale securities trader. Thereafter, Mr. Burton was employed by
Fitzgerald, Talman, Inc. as a wholesale securities trader for the remainder of
1988. In 1989, Mr. Burton became self-employed as a financial consultant. His
consulting experience included rendering advice with respect to mergers and
acquisitions, and assisting various companies in developing public trading
abilities. During this time, Mr. Burton also served as President of Wild Creek
Oil Company, Inc. From 1992 to 1993, he was employed by Paramount Investments
International, Inc. as a wholesale trader. In 1993 he left Paramount to devote
his efforts to development of LPR Cybertek, Inc., an internet financial services
company located in Denver, Colorado, where he was co-owner and Vice-President.
In May of 1996, he assisted with the merger of Wild Creek Holding Company, Inc.,
a publicly traded company, with TNB, an international trading and export
concern. Mr. Burton continues to operate his independent financial consulting
service business.
10
17
<PAGE>
Secretary and Director. Roger D. Jones, age 31, currently serves as
Secretary and a Director of the Company. Mr. Jones has served as a Director of
the Company since January 2, 1997 and prior to taking over duties as Secretary
of the Company, Mr. Jones served as its interim Company President from January
2, 1997 until April 15, 1997.
Mr. Jones graduated from Lake Forest College Lake Forest, Illinois in 1987
with a bachelors degree in history. Since that time, Mr. Jones has been employed
by the McDonald's Corporation in various capacities. Mr. Jones relocated to
Aurora, Colorado in April of 1988. Mr. Jones attended the highly regarded
Hamburger University sponsored by the McDonald's Corporation in 1992, where
course work included studies in advertising, marketing, restaurant profit and
loss statements, restaurant layout and maintenance. In December of 1992, Mr.
Jones became the Restaurant Manager for McDonald's in Aurora, Colorado. Mr.
Jones has also assisted McDonald's Corporation's Regional Training Department,
training assistant managers from the seven-state Rocky Mountain Region.
Treasurer and Director: Sandra S. Steinberg, age 46, has been a Director of
the Company since its inception in 1991. She currently serves as the Treasurer
of the Company, a position she has held since January 2, 1997. Mrs. Steinberg
served as the President of the Company from 1991 until January 2, 1997, which
included the period when the Company operated three retail food eateries which
sold primarily hot dogs and related items, and a significant period where the
Company did not actively conduct business activities.
Mrs. Steinberg obtained her securities broker's license in 1985 and was
employed for a period of two months by Tri-Securities, a brokerage firm located
in Englewood, Colorado that specialized in sale of stocks and bonds. Thereafter,
Mrs. Steinberg became a registered representative with J. W. Gant, a position
she held until October of 1986. She was associated with Guildcor Financial Inc.
from October of 1986 until January of 1988, where she also sold securities. Mrs.
Steinberg was then employed by Capital Securities for approximately 11 months in
1988. She left that position to become President and Chairman of the Board and
Directors of Franks for the Memories, Inc., where she supervised the business
operations of its food service business retailing hot dogs. When Franks'
Express, Inc. was formed to facilitate additional restaurant and food service
locations, Mrs. Steinberg became responsible for supervision of the restaurant
and food service operations of both corporations.
Consultant: Richard H. Steinberg, age 48, currently acts as a consultant to
the Company. He has served as an officer and director of several companies,
including Vice President, Secretary and Treasurer of Priority Development, Ltd.,
a security holdings and development company, a position which he has held since
1987. Mr. Steinberg is a graduate of the University of Northern Illinois where
he obtained a bachelors degree in marketing in 1971. From 1971 through 1982, Mr.
Steinberg held various management positions with F. W. Woolworth/Woolco
Department Stores. During the period from 1982 to 1986 and was employed for
various security companies in registered representative capacities, including
Vantage Securities, Tri Securities, and J. W. Gant. Mr. Steinberg also worked as
an office manager for StarVideo Productions, Inc., a video production company,
from July 1986 to 1987, when he left to become associated with Priority
11
18
<PAGE>
Development, Ltd. Thereafter, Mr. Steinberg was employed by Franks for the
Memories, Inc. and served as Treasurer and an Operations Manager until 1994,
when it ceased conducting active business operations. Mr. Steinberg also served
as Secretary and Treasurer of Franks' Express, Inc. during the period it was
dormant, from November 27, 1993 until January 2, 1997. Beginning in 1993, Mr.
Steinberg also worked as a concert promoter for 2 B Announced Presents, Inc., a
concert promotion and production company. Currently Mr. Steinberg serves as
Chairman of the Board of Directors of 2 B Announced Presents, Inc. and as its
Treasurer and Chief Financial Officer.
SECURITY OWNERSHIP OF MANAGEMENT
AND PRINCIPAL SHAREHOLDERS
--------------------------
As of May 23, 1997 there were 1,000,000 shares of the Company's common
stock issued and outstanding. The following table sets forth, as of May 23,
1997, the common stock ownership of each person known by the Company to be the
beneficial owner of ten percent or more of the Company's outstanding capital
stock. It also sets forth, as of May 23, 1997, the share ownership of each
director and executive officer of the Company, and all of its officers and
directors as a group. Each person has sole voting and investment power with
respect to the shares shown.
<TABLE>
<CAPTION>
Percentage of Outstanding Shares
After After
No. of Date Before Minimum Maximum
Shares(1) Acquired Offering Offering Offering
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Charles Burton . . . . . . . . . . . 100,000 4/15/97 10.00% 9.75% 9.09%
2903 South Uinta Street
Denver, Colorado 80231
Roger D. Jones . . . . . . . . . . . 5,000 4/15/97 0.50% 0.49% 0.45%
1519 South Telluride Street
Aurora, Colorado 80017
Sandra S. Steinberg. . . . . . . . . 745,000(2) 6/18/91 174.50% 72.68% 67.72%
12146 East Amherst Circle
Aurora, Colorado 80014
All officers and directors as a . . . 850,000 85.00% 82.92% 77.27%
group (3 persons)
</TABLE>
(1) Rule 13d-3, promulgated under the 1934 Act which concerns the determination
of beneficial owners of securities, includes as beneficial owners of
securities, among others, any person who directly or indirectly, through
any contract, arrangement, understanding relationship or otherwise has, or
shares, voting power and/or investment power with respect to such
securities; and, any person who has the right to acquire beneficial
ownership of such security within 60 days through means, including, but not
limited to, the exercise of any option, warrant or conversion of a
security. Any securities not outstanding which are subject to such options,
warrants or conversion privileges are deemed to be outstanding for the
purpose of computing the percentage of outstanding securities of the class
owned by such person, but shall not be deemed to be outstanding for the
purpose of computing the percentage of the class by any other person.
12
19
<PAGE>
(2) Excludes an aggregate of 100,000 shares owned by Mrs. Steinberg's children,
Daniel C. Steinberg (50,000 shares) and Jamie L. Steinberg (50,000 shares),
for which Mrs. Steinberg disclaims any beneficial ownership interest. All
common shares owned by the officers, directors and principal shareholders
listed above are "restricted or control securities" and, as such, are
subject to limitations on resale. Such shares may be sold pursuant to SEC
Rule 144 under certain circumstances. These are no contractual arrangements
or pledges of the Company's securities, known to the Company, which may at
a subsequent date result in a change of control of the Company.
DESCRIPTION OF SECURITIES
-------------------------
Capitalization. The Company's authorized capital stock consists of
100,000,000 shares of $.0001 par value common stock and 10,000,000 shares of
.0001 par value preferred stock. No preferred stock has been issued by the
Company.
Common Stock. All shares of common stock have equal voting rights and are
not assessable. Voting rights are not cumulative, and, therefore, the holders of
more than 50% of the common stock of the Company would be able to elect all of
the directors of the Company.
Upon liquidation, dissolution or winding up of the Company, the assets of
the Company, after the payment of liabilities and after the satisfaction of all
priority claims by holders of the Company's preferred stock (assuming preferred
stock is issued in the future), will be distributed pro rata to the holders of
the common stock. The holders of the common stock do not have preemptive rights
to subscribe for any securities of the Company, and have no right to require the
Company to redeem or purchase their shares. The shares of common stock presently
outstanding are, and the shares of common stock to be sold pursuant to this
offering will be, upon issuance, fully paid and nonassessable.
Holders of common stock are entitled to share equally in dividends when,
as, and if declared by the Board of Directors of the Company, out of funds
legally available therefor, after payment of any dividends then owing to the
holders of the Company's preferred stock, if any is outstanding. The Company has
not paid any cash dividends on its common stock, and it is unlikely that any
such dividends will be declared or paid in the foreseeable future.
Preferred Stock. The Company is authorized to issue 10,000,000 shares of
preferred stock, $.0001 par value. The preferred stock may be issued in series
from time to time with such designation, rights, preferences and limitations as
the Board of Directors of the Company may determine by resolution. The rights,
preferences and limitations of separate series of preferred stock may differ
with respect to such matters as may be determined by the Board of Directors,
including, without limitation, the rate of dividends, amounts payable on
liquidation, sinking fund provisions (if any), conversion rights (if any), and
voting rights. It is therefore possible that preferred stock might be issued
which would grant dividend preferences and liquidation preferences to preferred
shareholders superior to those of the holders of common stock.
Unless the nature of a particular transaction and applicable statutes
require such approval, the Board of Directors has the authority to issue
preferred shares without shareholder approval. The issuance of preferred stock
may have the effect of delaying or preventing a change in control of the
Company.
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<PAGE>
BUSINESS
--------
Introduction. While the Company itself has had no prior experience in the
business of offering financial and food service consulting services, certain
officers, directors and consultants utilized by the Company have significant
experience in these areas. Management has studied the needs of food service
establishments and other small to medium-sized businesses, including the
financial and other problems they face at various stages of their development.
The Company believes it can assist such businesses in working through the
challenges they face.
History and Organization. The Company was formed as a Colorado corporation
on May 17, 1991 for the purpose of facilitating expansion of the hot dog and
retail food service business then being conducted through Franks for the
Memories, Inc., a Colorado corporation. Franks for the Memories, Inc. had owned
and operated a hot dog food service business since July of 1988. The Company was
formed in connection with establishment of a new business location and
operation. Franks for the Memories, Inc. and Franks' Express, Inc. continued to
engage in the food service hot dog business and expanded by opening an ice cream
and candy shop in downtown Denver in 1991. The retail hot dog businesses of both
entities were coordinated by the same management team. Retail food service
operations of both Franks for the Memories, Inc. and the Company ceased in
November of 1993. Franks for the Memories, Inc. pursued other business ventures,
but the Company remained dormant until an internal reorganization in January of
1997. The Company intends to conduct business as a financial and food service
consulting firm, and seek out and assist clients in evaluating their present
business and financial condition and future business and financial needs. The
Company expects to assist selected clients in furthering their business plans
and goals.
Business Plans. The Company believes that education regarding financial
matters is one of the most vital services that it can provide to its clients,
although it also has special expertise specific to the food service industry.
For example, the officers and directors of the Company have found that many
small businesses have limited knowledge of financial markets and the various
available methods to raise capital needed to fund development of their
businesses. Many small to medium size businesses are also unaware of how to
properly present themselves to the financial community in connection with their
business development or expansion activities. The Company advocates having
audits and legal documents prepared in a suitable manner by firms who are
capable, recognized by the financial community at large, and possesses special
expertise with regard to methods aimed at minimizing costs associated with these
activities. The Company plans to produce and market various tools aimed at
educating businesses about a wide variety of matters, which may include
alternative sources of financing, the steps necessary to prepare for and
successfully complete a private placement and/or public offering; preparing for
and presenting themselves in a favorable light to the financial community,
alternative sources of financing, defining and isolating suitable, realistic
markets for their products and/or services, use of cost accounting, and
preparation of marketing materials. The Company believes there is a need for
such services and that it will be able to create a profitable business providing
these services.
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<PAGE>
Executive Offices. The Company's executive offices are presently located at
12146 East Amherst Circle, Aurora, Colorado 80014. The Company's telephone
number is (303) 695-9554.
MARKETING PLAN
--------------
Marketing Objectives. The Company plans to market its services through the
efforts of its officers, directors and independent consultants. At the present
time, Mr. Richard H. Steinberg is the only consultant who has been engaged by
the Company, but the Company plans to identify and engage others as its business
develops. Certain of the Company's officers, directors, and its principal
consultant have experience in financial consulting and are aware of the
tremendous number of small to medium-sized businesses that need assistance and
guidance concerning product development, marketing, financial matters, as well
as information and advice concerning financial markets. The Company plans to
contact potential clients directly by telephone and/or mail in an aggressive
marketing effort for their business.
The Company's management also realizes the importance of establishing and
maintaining certain key relationships with professionals in the business
community (i.e., lawyers, accountants, stockbrokers, bankers, transfer agents,
financial printers, etc.) who often have as clients, or know of potential
clients that would be, the types of clients the Company would be interested in
assisting. It is anticipated that referrals will be made to the Company by such
professionals. Therefore, the officers and directors of the Company plan to
develop as many of these types of key relationships as possible, as well as
maintain and nurture pre-existing key relationships. The Company also expects to
use additional independent consultants for this purpose. The Company plans to
have its representatives attend trade shows and conventions where attractive
consulting opportunities might be encountered. Through such efforts the Company
believes it can create a profitable operation in the food service and financial
consulting business.
Market Area. It is anticipated that the Company's primary market for its
services will be the continental United States and Canada. However, the Company
will entertain any international opportunities presented to it.
Competition. The Company faces significant competition from other companies
engaged in businesses which are the same or similar to the Company's business.
The Company believes that many of these competitors have significantly greater
financial and other resources than the Company. The Company is aware that it may
also face competition from future entrants into the consulting services industry
and in the markets the Company plans to serve. There is also no assurance that
the Company's services will meet with public acceptance. The Company will strive
to achieve significant name recognition in the domestic marketplace and may
change its name in the future to accomplish this objective.
General Business Risks. The Company's results of operations could be
affected in any given period by business interruptions or unplanned costs
associated with events beyond the Company's control and general economic
conditions. Other events that could potentially have a significant impact on the
Company's operations include the inability to obtain appropriate, substantial
15
22
<PAGE>
clients in a timely manner; loss of a principal customer; changes in
governmental regulations which may affect or seek to regulate financial or food
service consulting businesses; no, or minimal, market demand for the Company's
services; difficulty in developing and maintaining certain relationships
providing favorable terms and opportunities to the Company; availability of
capital required by the Company; cancellation or rescheduling of orders for
services by a customer experiencing financial difficulties; and the timing of
expenditures in anticipation of increased sales.
Employees. As of the date of this Prospectus, the Company has no full-time
employees. The daily business affairs of the Company have been, and it is
anticipated that in foreseeable future will be, carried out by the officers and
directors of the Company who provide services on a part-time, as needed, basis.
To the extent that the Company's business grows, however, the Company may hire
additional personnel it deems necessary to carry on its proposed business
activities.
Consultants. The Company has engaged the services of Richard H. Steinberg
and entered into a two year Consulting Agreement which commenced on January 2,
1997. The Company has agreed to pay Mr. Steinberg $1,000 per month for services
rendered under this Consulting Agreement. The Company will consider engaging
other independent consultants in conjunction with anticipated expansion of its
business activities.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND PLAN OF OPERATION
-----------------------------------------
Overview. Franks' Express, Inc., was formed on May 17, 1991 and is
currently developing its food service and financial consulting business.
Specifically, the Company expects to specialize in consulting with and assessing
the current financial condition and future financial needs of food service
establishments and other small to medium-sized businesses. The Company also
hopes to assist such businesses in defining and isolating viable markets for
their products and/or services, devising and implementing effective marketing
strategies, and working through the financial challenges which most companies
face.
The Company hopes to expand its client base rapidly, because it believes
there are many small to medium-sized food service and other businesses that will
desire the Company's services. Many small businesses lack knowledge and
expertise about financial markets and the complexities often involved in raising
the funds to expand and grow their businesses successfully. In addition, such
businesses often lack the expertise to develop successful marketing strategies.
The officers and directors of the Company believe that they can successfully
guide their prospective clients through the current maze of regulation and
complexity that currently exists in the financial markets. One of the Company's
goals is to educate their clients about the operation of financial markets;
alternative methods for obtaining funds needed to grow and expand their
businesses, determining product viability, forecasting accurate and realistic
costs of doing business, defining and isolating appropriate markets, and
developing and implementing effective marketing strategies.
16
23
<PAGE>
Revenue. The Company has derived no revenues from its operations since
November of 1993. The Company may exchange its consulting services for equity
positions in businesses operated by its clients, subject to performance
criteria. The Company anticipates that future revenues will be generated from
two primary sources: (1) consulting fees; (2) appreciation of equity positions
which may be taken by the Company in its clients' businesses in exchange for
providing consulting services. Initial consulting fees are expected to be
relatively small and paid during a short period of time, while the Company
evaluates the needs of the particular client, and assesses the client's needs
and the suitability of the client as a long-term client for the Company. If the
Company determines that a specific client is desirable to retain as a long-term
client, a longer-term agreement will be negotiated, whereby regular monthly or
contingent consulting fees will be paid by the client to the Company.
Cost of Operations. The Company's recent material expenses have been
primarily those incurred in connection with this offering, including legal fees,
accounting fees, printing costs and filing fees.
General and Administrative. The Company anticipates that general and
administrative costs will consist primarily of supervisory and administrative
fees for services rendered, professional fees, consulting service fees,
telephone charges, general and customary office expenses, employee salaries,
travel expenses, and other miscellaneous costs. Management will strive for cost
efficiency in each of these areas.
Other Income (Expenses). The Company anticipates that its income will be
derived primarily from the sources it has described above, however, it
anticipates exploring all other reasonable business opportunities which may
arise.
Provision for Income Taxes. Since the Company has not actively conducted
business since November of 1993, no provision has been made for income taxes,
and the Company has previously paid all income taxes due for prior periods.
Net Income (Loss) From Operations. Since its resumption of active business
operations in January of 1997, the Company has incurred a net loss from
operations primarily due to the costs incurred by the Company's in connection
with this offering. While the Company can provide no assurance that a particular
outcome will be achieved, the Company believes it can achieve a net profit from
operations after successful completion of this offering.
Liquidity and Capital Reserves. Successful completion of this offering is
expected to provide the Company with additional working capital. The Company
believes the net proceeds from the sale of common stock in this offering,
together with anticipated cash flow from operations, will be sufficient to meet
its working capital needs for at least the next twelve (12) months if the
minimum amount is raised in this offering and longer if the maximum amount is
raised in this offering.
17
24
<PAGE>
Future Financing Opportunities. In addition to funds anticipated to be
provided from operations to finance its business activities, the Company will
continue to be willing to entertain discussions for the purpose of entering into
joint ventures, mergers or other similar arrangements aimed at increasing the
financial strength of the Company. While no assurance can be provided by the
Company that its efforts in this area will be successful, the Company plans to
explore and actively pursue other funding or business opportunities, which may
include a merger with a suitable company seeking access to public securities
markets. Agreements for other types of financing arrangements will only be
entered into if, in the Company's opinion, they provide a less expensive and
more stable form of financing for the Company's long term growth and
development.
Additional Considerations. To the extent the Company is able to obtain
additional capital for its use and purposes, many business strategies now in the
planning and pre-implementation stage could proceed. New and larger
opportunities could then be considered, and more businesses could be located and
acquired as clients. In addition, the Company would be positioned to take
advantage of business opportunities involving larger contingent fee arrangements
and would be able to invest its time and resources in such opportunities as they
may arise. Such development could favorably and directly impact any future gross
profit and net income. It is impossible, however, to predict the impact of such
developments on any future revenues, gross profit, and net income.
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
----------------------------------------------------
Related Party Transactions. There have been no related party transactions,
other than the issuance of shares of the Company's common stock to the officers,
directors and principal shareholders. The Company entered into a two year
consulting agreement with Richard H. Steinberg, who is the spouse of the
principal shareholder of the Company. Fees for legal services have been incurred
in connection with internal restructuring the Company and preparation of the
Company's registration statement which includes this Prospectus. (See "SECURITY
OWNERSHIP OF MANAGEMENT and EXECUTIVE COMPENSATION.")
Resolving Conflicts of Interest. The Board of Directors (the "Board") has
determined that the directors of the Company are required to disclose all
conflicts of interest and all corporate opportunities to the entire Board. Any
transaction involving a conflict of interest engaged in by the Company shall be
on terms not less favorable that could be obtained from an unrelated third
party. A director will only be allowed to pursue a corporate opportunity in the
event it is first disclosed to the Board and the Board determines that it is not
in the Company's best interest to pursue the particular corporate opportunity.
(See "RISK FACTORS - Conflicts of Interest.")
EXECUTIVE COMPENSATION
----------------------
As of the date of this Prospectus, none of the Company's executive officers
or directors have received any form of monetary compensation from the Company
since November of 1993 other than minimal reimbursements for actual expenses
incurred on behalf of the Company.
18
25
<PAGE>
However, as the Company's business grows, it is anticipated that the Company
will fairly compensate its officers and directors for their time and efforts,
based on rates that are competitive in the industry, after due consideration of
the financial condition and future prospectus of the Company.
Summary Compensation Table. There are no stock awards, restricted stock
awards, stock options, stock appreciation rights, long-term incentive plan
compensation or similar rights which have been granted to any of the Company's
executive officers or directors. The Company has no retirement, pension profit
sharing, stock option, or other plans covering any of its officers and
directors. The Company may adopt one or more stock options plans in the future.
Employment Contracts. The Company presently has no employment contracts
with any of its officers and directors.
Consulting Contracts. The Company has entered into a Consulting Agreement
with Richard H. Steinberg, whereby Mr. Steinberg has agreed to provide a variety
of consulting services to the Company in exchange for payments of $1,000 per
month during a two year term which commenced on January 2, 1997. To date, the
Company has accrued all payments due to Mr. Steinberg, and anticipates using
proceeds derived from this offering to bring payments under that agreement
current.
Purchases by Officers, Directors and Principal Shareholders. Officers,
directors, and principal shareholders of the Company and persons associated with
them may purchase up to fifty percent (50%) of the Shares being offered pursuant
to this Prospectus, in a manner consistent with the public offering of the
Company's Shares. It is not intended, however, for the proceeds from this
offering to be utilized, directly or indirectly, by anyone, including the
Company's officers and directors, to purchase any of the Shares offered. To the
extent such persons purchase Shares in the offering, the minimum number of
Shares required to be purchased by the general public will be reduced by like
amount. Purchase of Shares in this offering by officers and directors will
result in the Company's current management increasing its control of the
Company. Consequently, this offering could close with a substantially greater
percentage of shares being held by present shareholders and with lesser
participation by the general public than would otherwise be the case. (See
"PROSPECTUS SUMMARY" and "SECURITY OWNERSHIP OF MANAGEMENT AND PRINCIPAL
SHAREHOLDERS.")
LEGAL MATTERS
-------------
Attorneys. The legality of the securities of the Company offered hereby
will be passed on for the Company by David M. Summers, Esq., 5670 Greenwood
Plaza Boulevard, Suite 422, Englewood, Colorado 80111. Mr. Summers presently
owns 50,000 shares of the Company's outstanding capital stock, representing 5%
of its current outstanding capital stock, which was acquired from Mrs. Sandra
Steinberg for $1,250 on April 15, 1997.
19
26
<PAGE>
TRANSFER AGENT
--------------
The Company has retained Corporate Stock Transfer, 370 17th Street, Suite
2350, Denver, Colorado 80202, as transfer agent for the Company's common stock.
EXPERTS
-------
The financial statements as of March 31, 1997, and for the period then
ended, included in this Prospectus have been audited by Janet Loss, C.P.A.,
P.C., 9101 East Kenyon Avenue, Suite 2000, Denver, Colorado 80237, independent
public accountants, as stated in their report appearing herein and elsewhere in
the registration statement, and have been so included in reliance upon such
report given upon the authority of that firm as experts in accounting and
auditing.
20
27
<PAGE>
FRANKS' EXPRESS, INC.
AUDIT REPORT
March 31, 1997
Index to Financial Statements
-----------------------------
Page
Independent Auditor's Report........................................... F-2
Balance Sheet.......................................................... F-3
Statement of Operations................................................ F-4
Statement of Stockholders' Equity...................................... F-5
Statement of Cash Flows................................................ F-6
Notes to Financial Statements.......................................... F-7
Janet Loss, C.P.A., P.C.
Certified Public Accountant
9101 East Kenyon Avenue, Suite 2000
Denver, Colorado 80237
F-1
28
<PAGE>
Janet Loss, C.P.A., P.C.
Certified Public Accountant
9101 East Kenyon Avenue, Suite 2000
Denver, Colorado 80237
(303) 220-0227
Board of Directors
Franks' Express, Inc.
I have audited the accompanying balance sheet of Franks' Express Inc. as of
March 31, 1997, and the related statements of operations, shareholders' equity
(deficit) and cash flow for the three months ended March 31, 1997. These
financial statements are the responsibility of the Company's management. My
responsibility is to express an opinion on these financial statements based on
my audit.
I conducted my audit in accordance with generally accepted accounting standards.
These standards require that I plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the overall
financial statement presentation. I believe that my audit provides a reasonable
basis for my opinion.
In my opinion, the financial statements referred to alone present fairly, in all
material respects, the financial position of Franks' Express, Inc. as of March
31, 1997, and the results of its operation and it's cash flows for the three
months ended March 31, 1997.
/S/ JANET LOSS, C.P.A., P.C.
- ------------------------------------
Janet Loss, C.P.A., P.C.
May 5, 1997
F-2
29
<PAGE>
FRANKS' EXPRESS, INC.
BALANCE SHEET
-------------
March 31, 1997
--------------
ASSETS
------
CURRENT ASSETS:
Cash in checking $ 2,505
OTHER ASSETS:
IPO asset 2,534
-------
TOTAL ASSETS $ 5,039
=======
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
CURRENT LIABILITIES:
Accounts Payable $ 534
Accrued Interest 19
Accrued Expenses 3,000
Loan, Stockholder 5,000
Advances 125
-------
TOTAL CURRENT LIABILITIES $ 8,678
-------
STOCKHOLDERS' EQUITY (DEFICIT):
Common stock, no par value
100,000 shares authorized,
1000 shares issued and
outstanding $ 5,000
Deficit (8,639)
-------
TOTAL STOCKHOLDERS' EQUITY (DEFICIT) (3,639)
-------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY (DEFICIT) $ 5,039
=======
The accompanying notes are an integral part of the financial statements.
F-3
30
<PAGE>
FRANKS' EXPRESS, INC.
STATEMENT OF OPERATIONS
-----------------------
For the Three Months Ended March 31, 1997
-----------------------------------------
REVENUES: $ 0
-------
OPERATING EXPENSES:
Accounting 600
Bank charges 21
Consulting fees 3,000
Interest expense 19
-------
TOTAL OPERATING EXPENSES 3,640
-------
NET (LOSS) $(3,640)
=======
NET (LOSS) PER SHARE $ (3.64)
=======
The accompanying notes are an integral part of the financial statements.
F-4
31
<PAGE>
<TABLE>
<CAPTION>
FRANKS' EXPRESS, INC.
STATEMENT OF STOCKHOLDERS' EQUITY
---------------------------------
FOR THE THREE MONTHS ENDED MARCH 31, 1997
-----------------------------------------
Total
Common Common Stockholders
Stock Stock Equity
Number of Amount (Deficit) (Deficit)
--------- ------ --------- ---------
<S> <C> <C> <C> <C>
Balance, 1,000 $5,000 ($4,999) $1
January 1, 1997
Net Loss For
Three Months
Ended
March 31, 1997 (3,640) (3,640)
- ---------------------------------------------------------------------------------------
Balance
March 31, 1997
1,000 $5,000 $(8,639) $(3,639)
==============================================================================
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-5
32
<PAGE>
FRANKS' EXPRESS, INC.
STATEMENT OF CASH FLOW
----------------------
For the Three Months Ended March 31, 1997
-----------------------------------------
Cash Flows From Operating Activities:
- -------------------------------------
Net (loss) $(3,640)
Changes in operating assets & Liabilities
Increase in Current Liabilities 8,678
-------
Net cash provided by Operating Activities $(5,038)
Cash Flows From (to) Investing Activities:
IPO Expenditures (2,534)
-------
NET INCREASE IN CASH $ 2,504
CASH, BEGINNING OF THE PERIOD 1
-------
CASH, END OF THE PERIOD $ 2,505
=======
The accompanying notes are an integral part of the financial statements.
F-6
33
<PAGE>
NOTES TO FINANCIAL STATEMENTS
NOTE I - HISTORY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
- ---------------------------------------------------------------
Franks' Express, Inc., a Colorado Corporation, was incorporated May 17, 1991,
for the purpose of engaging in the restaurant business. The Company ceased its
restaurant operations in November of 1993 and has been inactive until 1997. In
1997, the company is in the process of beginning operations in the consulting
business with medium sized businesses.
Year End
--------
The Company has elected a calendar year-end.
Accounting Method
-----------------
The Company records income and expenses on the accrual method.
NOTE II - COMMITMENTS
- ---------------------
The Company has a two-year consulting service agreement commencing January 2,
1997. The Company has agreed to pay $1,000 per month for consulting services as
well as all customary and reasonable pre-approved business expenses related to
performance of the Contractor's obligations under this agreement.
NOTE III - SUBSEQUENT EVENT
- ---------------------------
On April 30, 1997, the Company issued a 1,000 to 1 forward stock split for
common stock. Thus, the total common stock authorized changed from 100,000 to
100,000,000, and from no par value to $.0001 par value.
NOTE IV - RELATED PARTIES
- -------------------------
The Company maintains its office in space provided by the Company's treasurer
pursuant to an oral agreement on a rent free basis with reimbursement for out of
pocket expenses, such as telephone. The Company has accrued consulting fees of
$3,000 to be paid to a related party.
NOTE V - GOING CONCERN
- ----------------------
The accompanying financial statements have been prepared in conformity with
generally accepted accounting principles, which contemplate continuation of the
Company as a going concern. The Company's ability to continue as a going concern
is dependent upon the Company's ability to obtain financing.
F-7
34
<PAGE>
======================================== ===================================
NO DEALER, SALESPERSON OR ANY OTHER
PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY
REPRESENTATIONS IN CONNECTION WITH THIS
OFFERING OTHER THAN THOSE CONTAINED IN
THIS PROSPECTUS AND, IF GIVEN OR MADE, $100,000
SUCH INFORMATION OR REPRESENTATIONS MUST
NOT BE RELIED ON AS HAVING BEEN
AUTHORIZED BY THE COMPANY. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER FRANKS' EXPRESS, INC.
TO SELL OR SOLICITATION OF AN OFFER TO
BUY ANY SECURITY OTHER THAN THE
SECURITIES OFFERED BY THIS PROSPECTUS, 100,000 SHARES
OR AN OFFER TO SELL OR A SOLICITATION OF
AN OFFER TO BUY ANY SECURITIES BY ANY
PERSON IN ANY JURISDICTION IN WHICH SUCH
OFFER OR SOLICITATION IS NOT AUTHORIZED
OR IS UNLAWFUL. THE DELIVERY OF THIS
PROSPECTUS SHALL NOT UNDER ANY
CIRCUMSTANCES CREATE ANY IMPLICATION
THAT THE INFORMATION HEREIN IS CORRECT
AS OF ANY TIME SUBSEQUENT TO THE DATE OF
THIS PROSPECTUS.
TABLE OF CONTENTS
-----------------
PAGE
----
PROSPECTUS SUMMARY .....................1
RISK FACTORS........................... 2
USE OF PROCEEDS........................ 6
DILUTION............................... 7
PLAN OF DISTRIBUTION................... 8
LEGAL PROCEEDINGS..................... 10
MANAGEMENT............................ 10
SECURITY OWNERSHIP OF MANAGEMENT
AND PRINCIPAL SHAREHOLDERS.............12 PROSPECTUS
DESCRIPTION OF SECURITIES............. 13
BUSINESS.............................. 14
MARKETING PLAN........................ 15
MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION
AND PLAN OF OPERATION................. 16
CERTAIN RELATIONSHIPS AND RELATED
PARTY TRANSACTIONS...................18
EXECUTIVE COMPENSATION................ 19
LEGAL MATTERS......................... 20
TRANSFER AGENT........................ 20
EXPERTS............................... 20
INDEX TO FINANCIAL STATEMENTS.........F-1
UNTIL , 1997 (25 DAYS AFTER THE
DATE OF THIS PROSPECTUS), ALL DEALERS
EFFECTING TRANSACTIONS IN THE REGISTERED
SECURITIES, WHETHER OR NOT PARTICIPATING , 1997
IN THIS DISTRIBUTION, MAY BE REQUIRED TO ----------
DELIVER A PROSPECTUS. THIS IS IN
ADDITION TO THE OBLIGATION OF DEALERS TO
DELIVER A PROSPECTUS WHEN ACTING AS
UNDERWRITERS AND WITH RESPECT TO THEIR
UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.
======================================== ===================================
35
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 24. Indemnification of Directors and Officers.
Section 7-3-101.5 of the Colorado Revised Statutes enables a Colorado
corporation to indemnify its officers, directors, employees and agents
liabilities, damages, costs and expenses for which they are liable in their
Official Capacities (as defined by this statute) if they acted in good faith and
had no reasonable basis to believe their conduct was not in the best interest of
the Registrant or was illegal.
Article IX of Registrant's Articles of Incorporation limits the liability
of directors to the fullest extent provided by Colorado law.
Article V of the Registrant's Bylaws provide indemnification to officers,
directors, employees and agents to the fullest extent provided by Colorado law.
The Form of Selected Dealers Agreement attached hereto as Exhibit 1.1
provides indemnification to officers and directors of the Registrant under
certain conditions.
Item 25. Other Expenses of Issuance and Distribution.
SEC registration fee ................................$ 100
National Association of Securities
Dealers, Inc. Fee ................................. 100
State qualification expenses
(including legal fees) ............................ 100*
Printing expenses.................................... 500*
Legal fees and expenses.............................. 12,000*
Auditors' fees and expenses ......................... 2,000*
Transfer agent and registrar fees ................... 1,500*
NASDAQ listing fee................................... 6,100*
Miscellaneous expenses .............................. 500*
--------
Total ...............................................$22,900
- -----------
* Estimated
Item 26. Recent Sales of Unregistered Securities.
Not Applicable
II-1
36
<PAGE>
Item 27. Exhibits
Exhibit
Number Description of Exhibits
------ -----------------------
1.1 Form of Selected Dealers Agreement
1.2 Escrow Agreement
3.1 Restated and Amended Articles of Incorporation
3.2 By-Laws
5.1* Opinion of David M. Summers, Esq. regarding legality
10.1 Consulting Agreement with Richard H. Steinberg
23.1* Consent of David M. Summers, Esq
23.2 Consent of Janet Loss, C.P.A., P.C.
- -----------------
*To be filed by amendment.
Item 28. Undertakings.
Insofar as indemnification for liabilities arising under the Securities Act
of 1993 (the "Act") may be permitted to directors, officers and controlling
persons of the small business issuer pursuant to the foregoing provisions, the
small business issuer 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 small
business issuer of expenses incurred or paid by a director, officer or
controlling person of the small business issuer 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 small business
issuer 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 such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issue.
The small business issuer will:
(1) For determining any liability under the Securities Act, treat the
information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the small business issuer under the Rule 424(b)(1) or (4) or
497(h) under the Securities Act as part of this registration statement as of the
time the Commission declared it effective.
II-2
37
<PAGE>
(2) For determining any liability under the Securities Act, treat each
post-effective amendment that contains a form of prospectus as a new
registration statement for the securities offered in the registration statement,
and that offering of the securities at that time as the initial bona fide
offering of those securities.
II-3
38
<PAGE>
SIGNATURES
Pursuant to 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 of the undersigned, in the city of Englewood, State
of Colorado on May 23, 1997.
Franks' Express, Inc.
By: /s/ CHARLES BURTON
---------------------------------
Charles Burton, President
In accordance with the requirements of the Securities Act of 1933, this
Form SB-2 Registration Statement was signed by the following persons in the
capacities and on the dates indicated.
/S/ CHARLES BURTON
Date: May 23, 1997 -------------------------------------------
Charles Burton, President, Chief Executive
Officer, Principal Financial Officer and
Director
/S/ ROGER D. JONES
Date: May 23, 1997 -------------------------------------------
Roger D. Jones, Secretary and Director
/S/ SANDRA S. STEINBERG
Date: May 23, 1997 -------------------------------------------
Sandra S. Steinberg, Treasurer, Principal
Accounting Officer and Director
39
<PAGE>
- --------------------------------------------------------------------------------
SECURIITES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FRANKS' EXPRESS, INC.
EXHIBITS
TO
FORM SB-2
REGISTRATION STATEMENT
Under
The Securities Act of 1933
- --------------------------------------------------------------------------------
40
<PAGE>
EXHIBIT INDEX
Exhibit No. Title Page
1.1 Selected Dealers Agreement.............................. 42
1.2 Escrow Agreement........................................ 47
3.1 Restated and Amended Articles of Incorporation.......... 51
3.2 By-Laws................................................. 58
5.0 Opinion of David M. Summers, Esq. regarding legality.... --
10.1 Consulting Agreement with Richard H. Steinberg ......... 96
23.1 Consent of David M. Summers, Esq........................ --
23.2 Consent of Janet Loss, C.P.A., P.C...................... 104
41
Exhibit No. 1.1
FRANKS' EXPRESS, INC.
SELECTED DEALERS AGREEMENT
--------------------------
Ladies and Gentlemen:
1. Franks' Express, Inc. (the "Company"), the issuer in the enclosed
Prospectus, has agreed to offer on a best-efforts basis, subject to the terms
and conditions of the Prospectus, 50,000 shares minimum and 100,000 shares
maximum of the Company's $.0001 par value common stock (the "Shares"). The
Shares are more particularly described in the enclosed Prospectus, additional
copies of which will be supplied in reasonable quantities upon request.
2. The Company is offering a part of the Shares to Selected Dealers as
principal, including you, who are members of the National Association of
Securities Dealers, Inc. at a price of $1.00 per Share, from which a concession
of up to ten percent (10%) or ($0.10) per share, may be paid, This offering is
made subject to the issuance and delivery of the Shares and their acceptance by
the Company, to the approval of legal matters by counsel and to the terms and
conditions as set forth in this agreement, and may be made on the basis of the
reservation of Shares and allotment against subscriptions and is not joint, but
several. All purchase of Shares by you will be for your own account or as an
agent of the purchaser. You agree to reoffer all shares purchased by you for
your own account to the public on the terms and conditions contained in this
agreement and in the Registration Statement. All Shares which you may purchase
as agent of a purchaser shall be sold to the purchaser on the terms and
conditions contained in this agreement and in the Registration Statement. You
agree that you will not offer any of the Shares to any of your partners,
shareholders, officers or employees, or members of their families, until orders
from bonafide customers and investors are first satisfied.
3. We will advise you by written or telegraphic confirmation of the method
and terms of the offering. Acceptances of any reserved shares received at the
office of Franks' Express Inc. (the "Company") after the time specified therefor
in the written confirmation and any application for additional Shares will be
subject to rejection in whole or in part. Subscription records may be closed by
us at any time in our discretion without notice and the right is reserved to
reject any subscription whole or in part, but notification of allotments against
and rejections of subscriptions will be made as promptly as practicable.
4. You agree that upon sale of your allotment and receipt of payment
therefor, you will promptly transmit, within the meaning of Rule 15c2-4 of the
Securities and Exchange Commission promulgated pursuant to the Securities
Exchange Act of 1934, all proceeds from such sales to us.
5. The entire proceeds from the sale of the first 50,000 Shares in the
offering ("minimum escrow deposit") will be deposited into an escrow account
maintained at Norwest Bank, Englewood, Colorado. David M. Summers, Attorney At
Law, will act as escrow agent ("Escrow Agent"). If the minimum escrow deposit
has not been deposited within four (4)
42
<PAGE>
months from the date of the Company's definitive Prospectus, the full amount
paid will be refunded to the purchasers. No certificates evidencing the Shares
will be issued unless and until the minimum escrow deposit has been deposited
and such funds have been delivered to the Company. If the minimum escrow deposit
is deposited within the time period provided above, all amounts so deposited
will be delivered to the Company. No commissions will be paid by the Company or
concessions allowed by the Company unless and until the minimum escrow deposit
has been deposited into escrow and such funds have been delivered to the
Company.
6. Payment for any Shares which you shall sell under this agreement shall
be made by you at the rate of $1.00 per Share payable to "Franks' Express, Inc.
Escrow Account." The concession shall be paid to you within two (2) days after
closing. Certificates for the securities shall be delivered as soon as
practicable after delivery instructions are received by the Company.
7. If an Order is rejected or if a payment is received which proves
insufficient or worthless, any compensation paid to the Selected Dealer shall be
returned either by the Selected Dealer's remittance in cash or by a charge
against the account of the Selected Dealer, as the Company may elect.
8. You are advised that a Registration Statement in respect to the Shares,
filed under the Securities Act of 1933, has become effective. Each Selected
Dealer in selling Shares pursuant to this agreement agrees that it will comply
with the applicable requirements of the Securities Act of 1933 and of the
Securities Exchange Act of 1934 and any applicable rules and regulations issued
under said Acts. No person is authorized by the Company to give any information
or to make any representations other than those contained in the Prospectus in
connection with the sale of the Shares. Nothing contained in this agreement
shall render the Selected Dealers partners with the Company or with one another,
or agents of the Company.
9. Upon application to us, you will be informed as to the states in which
we have been advised by counsel the Shares have been qualified for sale or are
exempt under the respective securities or blue sky laws of such states, but we
have not assumed and will not assume any obligation or responsibility as to the
right of any Selected Dealer to sell Shares in any state.
10. The Company shall have full authority to take such action as we may
deem advisable in respect of all matters pertaining to the offering or arising
under such offering. The Company shall not be under any liability to you, except
such as may be incurred under the Securities Act of 1933 and the rules and
regulations thereunder, except for lack of good faith and except for obligations
assumed by us in this agreement, and no obligation on our part not specifically
set forth in this agreement shall be implied or inferred from this agreement.
11. The Company agrees to indemnify and to hold harmless the Selected
Dealers and each person, if any, who controls the Selected Dealers within the
meaning of Section 15 of the Securities Act of 1933, as amended, from and
against any and all losses, claims, damages, or liabilities to which the
Selected Dealers or controlling persons thereof may become subject under the
2
43
<PAGE>
Act, or otherwise, insofar as such losses, claims, damages, or liabilities (or
actions in respect thereof) arise out of or are based upon any untrue statement
of material fact contained in the Registration Statement or Prospectus or other
documents filed with the Securities and Exchange Commission, or arising out of
or based upon any omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, and
will reimburse the Selected Dealers or controlling persons thereof for any legal
or other expenses reasonably incurred in connection with investigating or
defending any such action or claim, provided, however, that the Company shall
not be liable in any such case to the extent that any such loss, claim, damages,
or liability arises out of or is based upon any untrue statement made in
reliance upon information furnished to the Company by the Selected Dealer in
writing expressly for use in the aforesaid Registration Statement, Prospectus,
or other documents. Any Selected Dealer shall, within ten (10) days after
receiving written notice of the commencement of any action against it or against
any person controlling it in respect of which indemnity may be sought from the
Company, notify the Company in writing of the commencement thereof. The failure
of the Selected Dealer so to notify the Company of any such action may relieve
the Company from any liability which it may have to the Selected Dealer or any
person controlling it on account of the foregoing indemnity. The Company shall
be entitled to participate in (and to the extent it shall desire, to direct) the
defense thereof at its own expense; but such defense shall be conducted by
counsel of good standing satisfactory to the Selected Dealer or the controlling
persons thereof.
12. The Selected Dealer hereby agrees to indemnify and to hold harmless the
Company and each person, if any, who controls the Company, within the meaning of
Section 15 of the Securities Act of 1933, as amended (the "Act"), from and
against any and all losses, claims, damages, or liabilities, joint or several,
to which the Company may become subject under the Act, or any other statute, or
at common law, and to reimburse persons indemnified above for any legal or other
expense (including the cost of any investigation and preparation) incurred by
them in connection with any litigation, whether or not resulting in any
liability, but only insofar as such losses, claims, damages, or liabilities
arise out of or are based upon any untrue statement or alleged untrue statement
of a material fact contained in the Registration Statement or any amendment
thereto or any application or other document filed in any state or other
jurisdiction in order to qualify the Shares under the blue sky or securities
laws thereof, or the omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements therein
not misleading, to the extent that such information is supplied by the Selected
Dealer to the Company for inclusion therein, or are based upon alleged
misrepresentations or omissions to state material facts in connection with
statements made by the Selected Dealer or the Selected Dealer's salesmen orally
or by other means, or the failure of a Selected Dealer to deliver a Prospectus;
and the Selected Dealer will reimburse the Company for any legal or other
expenses reasonably incurred in connection with the investigation of or the
defending of any such claim or action. The Company shall, after receiving the
first Summons or other legal process disclosing the nature of the action being
served upon the Company, in any proceeding in respect of which indemnity may be
sought by the Company hereunder, promptly notify the Selected Dealer in writing
of the commencement thereof. In case any such litigation is brought against the
Company, the Company shall notify the Selected Dealer of the commencement
3
44
<PAGE>
thereof to the extent the Selected Dealer shall be entitled to participate in
(and, to the extent the Selected Dealer shall wish, to direct) the defense
thereof at the Selected Dealer's own expense, but such defense shall be
conducted by counsel of good standing satisfactory to the Company. If the
Selected Dealer shall fail to provide such defense, the Company may defend such
action at the Selected Dealer's cost and expense. The Selected Dealer's
obligation under this paragraph shall survive the termination of this agreement.
13. The Company may over-allot in arranging for sales of the Shares to the
Selected Dealers and in the purchase and sale of Shares for long or short
account.
14. Selected Dealers will be governed by the conditions of this agreement
until it is terminated. This Agreement will terminate at the close of business
six (6) months after the date hereof, and in our discretion may be terminated at
any earlier time. Notwithstanding the termination of this Agreement, you shall
remain liable to the extent provided by law for your proportionate amount of any
claim, demand or liability which may be asserted against you alone, or against
you together with other dealers selling Shares upon the terms specified in this
agreement, or against us, based upon the claim that the Selected Dealers, or any
of them, constitute an association, an unincorporated business or other separate
entity.
15. It is understood that we assume no obligation or responsibility with
respect to the right of any Selected Dealer or other person to sell the Shares
in any jurisdiction, notwithstanding any information which we may furnish as to
the states under the blue sky or securities laws of which it is believed the
Shares may be sold.
16. Your attention is directed to the following: (a) Article III, Section 1
of the Rules of Fair Practice of the National Association of Securities Dealers,
Inc. and the interpretations of said Section promulgated by the Board of
Governors of such Association, including the interpretation with respect to
"Free-Riding and Withholding'" (b) Section 10(b) of the Securities Exchange Act
of 1934 and Rule 10b-6 of the general rules and regulations promulgated under
said Act; (c) Securities Act Release #3907; (d) Securities Act Release #4150;
and (e) Section 15(c) of the Securities Exchange Act of 1934 and Rule 15c2-4 of
the general rules and regulations promulgated under said Act. You, by signing
this Agreement, acknowledge that you are familiar with the cited law, rules and
releases, and agree that you will not directly and/or indirectly violate any
provisions of applicable law in connection with your participation in the
distribution of the Shares.
17. By accepting this Agreement, the Selected Dealer has assumed full
responsibility for thorough and proper training of its representatives in all
features of and concerning the selling methods to be used in connection with the
offer and sale of the Shares, giving special emphasis to the principles of full
and fair disclosure to prospective investors, suitability, and the prohibitions
against "Free-Riding and Withholding."
4
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18. In the event that you agree to offer Shares in accordance with the
terms of this agreement, please confirm such agreement by completing and signing
the form provided for that purpose on the enclosed duplicate of this agreement
and return it to us promptly.
19. All communications from you should be addressed to us at the office of
Franks' Express, Inc., 12146 East Amherst Circle, Aurora, Colorado 80014. Any
notice from us to you shall be deemed to have been duly given if mailed or
telegraphed to you at the address to which this letter is mailed.
20. This Agreement may not be assigned by the Selected Dealer without the
Company's express written consent. This Agreement will terminate upon the
termination of the offering, except that either party may terminate this
Agreement at any time by giving written notice to the other.
Very truly yours,
FRANKS' EXPRESS, INC.
By:
-----------------------------
Charles Burton, President
Accepted On:
-----------------------------
Firm Name:
------------------------------
By:
-------------------------------------
Position:
-------------------------------
Address:
---------------------------------
- -----------------------------------------
Telephone Number:
------------------------
IRS Employer Identification Number:
- -----------------------------------------
Share Allocation:
-----------------------
5
46
ESCROW AGREEMENT
The undersigned shall deliver to David M. Summers, Esq. (the "Escrow
Agent") the items set forth in Schedule A, to be deposited in an escrow account
at Norwest Bank in Englewood, Colorado, and held by the Escrow Agent subject to
the terms and conditions set forth in Schedule B and in General Provisions (this
"Agreement").
SCHEDULE A
(Deposits)
Deposits shall include all checks, drafts, wire transfers, loan proceeds or
other funds received by the Escrow Agent from or on behalf of any person
subscribing for shares of common stock of Franks' Express, Inc. It is
anticipated that checks will be made payable to Franks' Express, Inc. Escrow
Account.
SCHEDULE B
(Special Instructions)
The Escrow Agent shall hold for distribution all funds received from
persons subscribing for shares of common stock of Franks' Express, Inc. (the
"Depositor(s)") until the date which is four months after the date that the
Registration Statement of Franks' Express, Inc. dated as of May 23, 1997 has
been declared effective by the Securities and Exchange Commission, or such
earlier date as may be provided to the Escrow Agent (the "Final Subscription
Date"). In no event, however, shall the Final Subscription Date be extended to a
date after May 23, 1998.
All funds deposited in escrow shall be invested immediately in a
non-interest bearing account at Norwest Bank in Englewood, Colorado as
designated by Franks' Express, Inc.
If the amount of funds deposited in escrow is less than $50,000 three days
after the Final Subscription Date, the Escrow Agent shall return to the
Depositors all of the deposited funds in amounts equal to each Depositor's
respective deposit, without interest.
If the amount of funds deposited in escrow is greater than or equal to
$50,000 on any date during the term of this Agreement, the Escrow Agent shall
pay to Franks' Express, Inc. at its direction, or its order, up to the total
amount of funds deposited in the escrow, together with any additional funds as
may be deposited in the escrow after the date of such distribution.
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<PAGE>
If the funds deposited in escrow are not withdrawn from Escrow on or before
May 23, 1998, the Escrow Agent shall return to each Depositor all of the
deposited funds in amounts equal to each Depositor's respective deposit without
interest.
GENERAL PROVISIONS
Section 1. These instructions may be altered, amended, modified or revoked
by writing only, signed by all of the parties to this Agreement, and approved by
the Escrow Agent.
Section 2. No assignment, transfer, conveyance or hypothecation of any
right, title or interest in and to the subject matter of this Escrow shall be
binding upon the Escrow Agent unless written notice thereof shall be served upon
the Escrow Agent and all fees, costs and expenses incident to such transfer of
interest shall have been paid.
Section 3. Any notice required or desired to be given by the Escrow Agent
to any party to this Agreement may be given by mailing the same addressed to
such party at the address that appears below each party's signature and notice
so mailed shall for all purposes be as effective three business days after
depositing such notice in the mail as though served upon such party in person.
Section 4. The Escrow Agent shall not be personally liable for any act that
it may do or omit to do under this Agreement as such agent, while acting in good
faith and in the exercise of its own best judgment; and any act done or omitted
by it pursuant to the advice of its own attorneys shall be conclusive evidence
of such good faith.
Section 5. The Escrow Agent is expressly authorized to disregard any and
all notices or warnings given by any of the parties to this Agreement, or by any
other person or corporation, excepting only orders or process of court, and is
expressly authorized to comply with and obey any and all orders, judgments or
decrees of any court, and in case the Escrow Agent obeys or complies with any
such order, judgment or decree of any court it shall not be liable to any of the
parties to this Agreement or to any other person, firm or corporation by reason
of such compliance, notwithstanding any such order, judgment or decree be
subsequently reversed, modified, annulled, set aside or vacated, or found to
have been entered without jurisdiction. The Escrow Agent is expressly authorized
to refuse to make distributions to Franks' Express, Inc. if for any reason the
Escrow Agent believes that such distribution would result in the violation of
any securities law, rule, regulation or order of any jurisdiction or regulatory
body.
Section 6. In consideration of the acceptance of this escrow by the Escrow
Agent, Franks' Express, Inc. agrees to indemnify and hold it harmless as to any
liability by it incurred to any other person or corporation by reason of its
having accepted the same, or in connection herewith, and to reimburse it for all
its expenses, including, among other things, counsel fees and court costs
incurred in connection herewith; and that the Escrow Agent shall have a first
and prior lien upon all deposits made pursuant to this Agreement to secure the
performance of said agreement of indemnity.
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Section 7. The Escrow Agent shall not be liable in any respect on account
of the identity, authority, or rights of the parties executing or delivering or
purporting to execute or deliver these instructions or any documents or papers
deposited or called for in this Agreement.
Section 8. In the event of any dispute between the parties hereto as to the
facts of default, the validity or meaning of these instructions or any other
fact or matter relating to the transaction between the paries, the Escrow Agent
is instructed as follows:
(a) That it shall be under no obligation to act, except under process or
order of court, or until it has been adequately indemnified to its full
satisfaction, and shall sustain no liability for its failure to act pending
such process or court order or indemnification;
(b) That it may in its sole and absolute discretion, deposit the property
described in Schedule A or so much of it as remains in its hands with any
court, interplead the parties to this Agreement, and upon so depositing
such property and filing its complaint in interpleader it shall be relieved
of all liability under the terms of this Agreement as to the property so
deposited, and furthermore, the parties to this Agreement for themselves,
their heirs, legal representatives, successors and assigns, submit
themselves to the jurisdiction of said court and appoint the then clerk, or
acting clerk, of said court as their agent for the service of all process
in connection with such proceedings.
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<PAGE>
Section 9. If the deposits made pursuant to this Agreement are not
withdrawn on or before May 23, 1998, the Escrow Agent may mail the same to the
Depositors at their respective addresses delivered with such deposits or at the
most recent address shown on the records of the Escrow Agent and thereupon be
relieved of all liability under this Agreement.
Section 10. The provisions of these instructions shall be binding upon the
legal representatives, heirs, successors and assigns of the parties to this
Agreement.
Section 11. The undersigned has been informed of the potential conflicts of
interest which could be created by this Agreement, in view of the fact that
David M. Summers has provided securities law advice to the undersigned. The
undersigned has had the opportunity to seek independent legal counsel, as
recommended by David M. Summers, and hereby waives such conflicts related to
this Agreement to the extent that such conflicts should arise in the future.
IN WITNESS WHEREOF, the undersigned have affixed their signatures as of May
23, 1997.
FRANKS' EXPRESS, INC., a Colorado
corporation
By: /S/ CHARLES BURTON
-----------------------------------------
Charles Burton, President
Accepted:
/S/ DAVID M. SUMMERS
----------------------------------------
David M. Summers, Attorney at Law
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RESTATED AND AMENDED
ARTICLES OF INCORPORATION
OF
FRANKS' EXPRESS, INC.
ARTICLE I
NAME
The name of the corporation is:
Franks' Express, Inc.
ARTICLE II
PERIOD OF DURATION
The corporation shall have perpetual duration. The corporate existence
began on May 17, 1991.
Each reference to the Colorado Business Corporation Act in these Articles
means the Colorado Business Corporation Act of 1993 as it may be amended from
time to time during the corporate existence, unless otherwise stated.
ARTICLE III
PURPOSE
The purpose for which the corporation is organized shall be the transaction
of any lawful business for which corporations may be incorporated pursuant to
the Colorado Business Corporation Act.
ARTICLE IV
AUTHORIZED CAPITAL
The aggregate number of shares which the corporation has authority to issue
is 110,000,000. The authorized shares consist of 100,000,000 shares of common
stock with a par value of $.0001 per share, such class being designated "common
stock," and 10,000,000 shares of preferred stock with a par value of $.0001 per
share, such class being designated "preferred stock." The preferences,
limitations, and relative rights of the common stock and the preferred stock are
as stated in this Article.
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Common Stock
------------
Dividends. Dividends may be paid upon the common stock to the extent and in
the manner permitted by law, as and when declared by the board of directors,
except that so long as any share of preferred stock is outstanding the
corporation shall not pay any dividend on the common stock (other than a
dividend payable only in shares of capital stock of the corporation), make any
other distribution on any outstanding share of common stock, or redeem, purchase
or otherwise acquire any outstanding share of common stock if at the time of
making such payment, distribution, redemption, purchase or acquisition the
corporation is in default with respect to either any dividend payable on any
share of preferred stock or any obligation to redeem or purchase any share of
preferred stock. Dividends may be paid upon the common stock in shares of any
one or more series of preferred stock.
Distribution in Liquidation. Upon the liquidation, dissolution, or winding
up of the corporation, after paying or adequately providing for the payment of
all of its obligations and for the preferential distribution to the holders of
any shares of preferred stock then outstanding, the corporation shall distribute
the remainder of its assets, either in cash or in kind, pro rata to the holders
of the common stock.
Voting Rights; Denial of Cumulative Voting. Each outstanding share of
common stock shall be entitled to one vote and each outstanding fractional share
of common stock shall be entitled to a corresponding fractional vote on each
matter submitted to a vote of shareholders. Cumulative voting shall not be
allowed in the election of directors.
Preferred Stock
---------------
Issuance in Series. The board of directors is authorized to divide the
preferred stock into series by setting the number of shares initially
constituting the series and the distinctive designation of that series
(notwithstanding the setting of the number of shares constituting a particular
series upon the initiation of each series, the board of directors may from time
to time authorize the issuance of additional shares of the same series or may
reduce the number of shares constituting such series) and, within the
limitations prescribed by law and those set forth in these Articles, to fix and
determine the relative rights and preferences of the shares of any series of
preferred stock with respect to:
(a) The rate of dividend, if any, on the shares of the series, the time of
payment of dividends, whether dividends are cumulative, and the date from
which any dividends shall accrue;
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<PAGE>
(b) Whether the shares of the series may be redeemed and, if so, the
redemption price and the terms and conditions of redemption;
(c) The amount payable upon the shares of the series in the event of
involuntary liquidation;
(d) The amount payable upon the shares of the series in the event of
voluntary liquidation;
(e) Sinking fund or other provisions, if any, for the redemption or
purchase of shares of the series;
(f) The terms and conditions on which the shares of the series may be
converted, if the shares of the series are issued with the privilege of
conversion; and
(g) Voting powers, if any.
All shares of preferred stock shall be identical except as otherwise provided in
this Article or in the resolutions of the board of directors fixing and
determining the relative rights and preferences of the one or more series of
preferred stock, but all shares of each series shall be identical.
Redemption and Conversion. Any share of any series of preferred stock which
has been redeemed (whether through the operation of a sinking fund or otherwise)
or converted shall have the status of an authorized and unissued share of
preferred stock and may be reissued as a part of the series of which it was
originally a part or may be reissued as a part of another series of preferred
stock established by the board of directors.
Preferential Distribution in Liquidation. Upon the liquidation,
dissolution, or winding up of the corporation, the holders of the preferred
stock then outstanding shall be entitled to receive the respective amounts per
share fixed by the board of directors for the various series before any of the
assets of the corporation are distributed to the holders of the common stock. If
the assets of the corporation distributable to the holders of the preferred
stock have a value which is less than the full amount so fixed for the various
series, such assets shall be distributed among the holders of the various series
of preferred stock in accordance with any preferences among the series that may
have been established by the board of directors or, to the extent that no such
preferences shall have been established, pro rata among the holders of all of
the series of preferred stock. After distribution of the preferential amounts
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<PAGE>
required to be distributed to the holders of the preferred stock then
outstanding, the holders of the common stock shall be entitled, to the exclusion
of the holders of the preferred stock, to share in all remaining assets of the
corporation. For the purposes of this Article and any statement filed pursuant
to law setting forth the designation, relative rights and preferences of any
series of preferred stock, the voluntary sale, lease, exchange, or transfer (for
cash, securities, or other consideration) of all or substantially all of the
assets of the corporation to any transferee, or its consolidation or merger with
any other corporation or corporations, shall not be deemed to be a liquidation,
dissolution, or winding up of the corporation.
ARTICLE IV
VOTING
Denial of Preemptive Rights. No shareholder shall have any preemptive or
preferential right to acquire any shares or other securities of the corporation,
including shares or securities held in the treasury of the corporation and
securities either convertible into or carrying rights to subscribe to or acquire
shares or other securities of the corporation.
Quorum of Shareholders. A quorum at any meeting of shareholders for the
purpose of each matter to be voted upon shall consist of the holders of a
majority of the shares entitled to vote upon the matter, represented in person
or by proxy.
Regular Shareholder Vote. At any meeting of shareholders at which a quorum
exists for the purpose of any matter to be voted upon, the affirmative vote of a
majority of the shares represented at the meeting and entitled to vote on the
matter shall be the act of the shareholders unless a greater affirmative vote is
required by the Colorado Business Corporation Act or another provision of these
Articles.
Shareholder Voting on Extraordinary Corporate Actions. An affirmative vote
of a majority of all shares entitled to vote shall be required to (a) adopt any
proposed amendment to these Articles, (b) authorize the corporation to lend
money to, guarantee the obligations of and otherwise assist the directors of the
corporation or the directors of any other corporation in which the majority of
the voting capital stock is owned by the corporation, (c) approve any plan of
merger or consolidation of the corporation with one or more other corporations,
(except no vote of the shareholders of this corporation shall be required if no
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<PAGE>
vote is required by the Colorado Business Corporation Act with respect to such
merger or consolidation) or any plan of exchange under which the shares of the
corporation would be acquired, (d) authorize the sale, lease, exchange, or other
disposition of all or substantially all of the property and assets of the
corporation not in the usual and regular course of its business (including the
granting of consent to the disposition of substantially all of the property and
assets of an entity controlled by the corporation), or (e) adopt a resolution
either to dissolve the corporation or to revoke voluntary dissolution
proceedings.
Unequal Voting Rights. If unequal voting rights exist between two or more
classes or series of shares entitled to vote on any matter, each reference in
these Articles to a stated portion of the shares entitled to vote on the matter,
without reference to a single class or series, shall mean shares entitled to
vote, regardless of class or series, which cumulatively represent the same
portion of the total number of votes entitled to be cast on the matter.
ARTICLE V
REGISTERED OFFICE, REGISTERED AGENT
AND PRINCIPAL OFFICE
Registered Office. The street address of the initial registered office of
the corporation is 2903 South Uinta Street, Denver, Colorado 80017.
Registered Agent. The name of the current registered agent at the
registered office of the corporation is Charles Burton. A separate written
consent of the initial registered agent to the appointment as registered agent
has previously been delivered for filing with the Colorado Secretary of State.
Principal Office. The address of the principal office of the corporation is
12146 East Amherst Circle, Aurora, Colorado 80014.
ARTICLE VI
BOARD OF DIRECTORS
Management. The corporate powers shall be exercised by or under the
authority of, and the business and affairs of the corporation shall be managed
under the direction of, a board of directors. The number of directors
constituting the full board of directors shall be established from time to time
in the bylaws of the corporation.
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<PAGE>
Directors. The number of directors constituting the current board of
directors is three. The names and addresses of the persons who are currently
serving as directors until the next annual meeting of shareholders or until
their successors are elected and qualified are:
Name Address
---- -------
Sandra S. Steinberg 12146 East Amherst Circle
Aurora, Colorado 80014
Charles Burton 2903 South Uinta Street
Denver, Colorado 80231
Roger D. Jones 1519 South Telluride Street
Aurora, Colorado 80017
ARTICLE VII
LIMITATION OF LIABILITY
No director of the corporation shall have any liability to the corporation
or to its shareholders for monetary damages for breach of fiduciary duty as a
director, except to the extent such exemption from liability is not permitted
under the Colorado Business Corporation Act. Any repeal or modification of the
foregoing sentence shall not adversely affect any right or protection of a
director with respect of any act or omission occurring prior to such repeal or
modification.
ARTICLE VIII
RIGHT OF DIRECTORS
TO CONTRACT WITH CORPORATION
It being the express purpose and intent of this Article to permit the
corporation to buy from, sell to, or otherwise deal with other corporations,
firms, associations, or entities of which any or all of the directors of the
corporation may be directors, officers, or members or in which any or all of
them may have pecuniary interests, no contract or other transaction between the
corporation and one or more of its directors or any other corporation, firm,
association, or entity in which one or more of its directors are directors or
officers or are financially interested shall be either void or voidable solely
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<PAGE>
because of such relationship or interest or solely because such directors are
present at the meeting of the board of directors or a committee of the board
which authorizes, approves, or ratifies such contract or transaction or solely
because their votes are counted for such purpose if:
1. The material facts of such relationship or interest are disclosed or
known to the board of directors or committee which authorizes, approves, or
ratifies the contract or transaction by a vote or consent of a majority of
disinterested directors without counting the votes or consents of such
interested directors;
2. The material facts of such relationship or interest are disclosed or
known to the shareholders entitled to vote and they authorize, approve, or
ratify such contract or transaction by vote or written consent; or
3. The contract or transaction is fair and reasonable to the corporation.
Furthermore, common or interested directors may be counted in determining the
presence of a quorum at a meeting of the board of directors or a committee of
the board which authorizes, approves, or ratifies such contract or transaction.
ARTICLE IX
INDEMNIFICATION
The corporation shall indemnify to the fullest extent permitted by
applicable law in effect from time to time, any person (and that person's estate
and personal representative) who is a party or is threatened to be made a party
to any threatened, pending, or completed action, suit, or proceeding by reason
of the fact that such person is or was a director, officer, employee, or agent
of the corporation, or while a director of the corporation is or was serving at
its request as a director, officer, partner, trustee, employee, or agent of, or
in any similar managerial or fiduciary position of, another foreign or domestic
corporation or any individual, partnership, limited liability company, joint
venture, trust, other enterprise or employee benefit plan. The corporation shall
also indemnify any person who is serving or has served the corporation as a
director, officer, employee, fiduciary, or agent (and that person's estate and
personal representative) to the extent and in the manner provided in any bylaw,
resolution of the shareholders or directors, contract, or otherwise, so long as
such provision is legally permissible.
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BYLAWS
OF
FRANKS' EXPRESS, INC
Prepared By: David M. Summers, Esq.
58
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TABLE OF CONTENTS
Page
----
PREAMBLE
ARTICLE I - Shareholders
Section 1.1. Annual Meeting of Shareholders...... 1
Section 1.2. Special Meeting of Shareholders..... 1
Section 1.3. Record Date for Determination of
Shareholders........................ 2
Section 1.4. Voting List.......................... 3
Section 1.5. Notice to Shareholders............... 4
Section 1.6. Quorum............................... 6
Section 1.7. Voting Entitlement of Shares......... 7
Section 1.8. Proxies; Acceptance of Votes and
Consents............................ 7
Section 1.9. Waiver of Notice..................... 8
Section 1.10. Action by Shareholders Without
a Meeting........................... 8
Section 1.11. Meetings by Telecommunications....... 9
ARTICLE II - Directors
Section 2.1. Authority of the Board of Directors.. 9
Section 2.2. Number...............................10
Section 2.3. Qualification........................10
Section 2.4. Election.............................10
Section 2.5. Term.................................10
Section 2.6. Resignation..........................10
Section 2.7. Removal..............................10
Section 2.8. Vacancies............................11
Section 2.9. Meetings.............................12
Section 2.10. Notice of Special Meeting............12
Section 2.11. Quorum...............................13
Section 2.12. Waiver of Notice.....................13
Section 2.13. Attendance by Telephone..............14
Section 2.14. Demand Assent to Action..............14
Section 2.15. Action by Directors Without a
Meeting.............................15
ARTICLE III - Committees of the Board of Directors
Section 3.1. Committees of the Board of
Directors...........................15
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ARTICLE IV - Officers
Section 4.1. General..............................17
Section 4.2. Term.................................18
Section 4.3. Removal and Resignation..............18
Section 4.4. President............................18
Section 4.5. Vice President.......................19
Section 4.6. Secretary............................19
Section 4.7. Assistant Secretary..................20
Section 4.8. Treasurer............................20
Section 4.9. Assistant Treasurer..................21
Section 4.10. Compensation.........................21
ARTICLE V - Indemnification
Section 5.1. Definitions..........................22
Section 5.2. Authority to Indemnify Directors.....23
Section 5.3. Mandatory Indemnification of
Directors...........................25
Section 5.4. Advance of Expenses to Directors.....25
Section 5.5. Court-Ordered Indemnification of
Directors...........................26
Section 5.6. Determination and Authorization of
Indemnification of Directors........27
Section 5.7. Indemnification of Officers,
Employees, Fiduciaries, and Agents..29
Section 5.8. Insurance............................30
Section 5.9. Notice to Shareholders of
Indemnification of Director.........30
ARTICLE VI - Shares
Section 6.1. Certificates.........................31
Section 6.2. Transfer of Shares...................32
Section 6.3. Shares Held for Account of Another...32
ARTICLE VII - Miscellaneous
Section 7.1. Corporate Seal.......................33
Section 7.2. Fiscal Year..........................33
Section 7.3. Receipt of Notices by the
Corporation.........................34
Section 7.4. Amendment of Bylaws..................34
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CHRONOLOGY
Date Sections Amended Certifying Signature
---- ---------------- --------------------
January 2, 1997 Original Adoption
-------------------------------
Secretary
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PREAMBLE
These Bylaws contain provisions for the regulation and management of the
affairs of the Corporation. They are based in part upon provisions of the
Colorado Business Corporation Act and the Corporation's Articles of
Incorporation. If these Bylaws conflict with the Colorado Business Corporation
Act or the Corporation's Articles of Incorporation, as the result of subsequent
changes in the Colorado Business Corporation Act, an intervening amendment of
the Corporation's Articles of Incorporation or otherwise, the Colorado Business
Corporation Act and the Corporation's Articles of Incorporation shall govern.
Therefore, when using these Bylaws, reference should also be made to the then
current provisions of the Colorado Business Corporation Act and the
Corporation's Articles of Incorporation.
ARTICLE I
SHAREHOLDERS
Section 1.1. Annual Meeting of Shareholders. The annual meeting of
shareholders shall be held on the date and at the time and place fixed from time
to time by the Board of Directors; provided, however, that the first annual
meeting shall be held on a date that is within six months after the close of the
first fiscal year of the Corporation, and each successive annual meeting shall
be held on a date that is within the earlier of six months after the close of
the last fiscal year or fifteen months after the last annual meeting.
Section 1.2. Special Meeting of Shareholders. A special meeting of
shareholders for any purpose or purposes, may be called by the Board of
Directors or the President. The Corporation shall also hold a special meeting of
shareholders in the event it receives, in the manner specified in Section 7.3,
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one or more written demands for the meeting, stating the purpose or purposes for
which the meeting is to be held, signed and dated by the holders of shares
representing not less than one-tenth (1/10) of all of the votes entitled to be
cast on any issue at the meeting. Special meetings shall be held at the
principal office of the Corporation or at such other place as the Board of
Directors or the President may determine.
Section 1.3. Record Date for Determination of Shareholders.
(a) In order to make a determination of shareholders (1) entitled to
notice of or to vote at any meeting of shareholders or at any adjournment
of a meeting of shareholders, (2) entitled to demand a special meeting of
shareholders, (3) entitled to take any other action, (4) entitled to
receive payment of a share dividend or a distribution, or (5) for any other
purpose, the Board of Directors may fix a future date as the record date
for such determination of shareholders. The record date may be fixed not
more than seventy (70) days before the date of the proposed action.
(b) Unless otherwise specified when the record date is fixed, the time
of day for determination of shareholders shall be as of the Corporation's
close of business on the record date.
(c) A determination of shareholders entitled to be given notice of or
to vote at a meeting of shareholders is effective for any adjournment of
the meeting unless the Board of Directors fixes a new record date, which
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the Board of Directors shall do if the meeting is adjourned to a date more
than one hundred twenty (120) days after the date fixed for the original
meeting.
(d) If no record date is otherwise fixed, the record date for
determining shareholders entitled to be given notice of and to vote at an
annual or special meeting of shareholders is the day before the first
notice is given to shareholders.
(e) The record date for determining shareholders entitled to take
action without a meeting pursuant to Section 1.10 is the date a writing
upon which the action is taken is first received by the Corporation.
Section 1.4. Voting List.
(a) After a record date is fixed for a meeting of shareholders, the
Secretary shall prepare a list of the names of all the Corporation's
shareholders who are entitled to be given notice of the meeting. The list
shall be arranged by voting groups and within each voting group by class or
series of shares, shall be alphabetical within each class or series, and
shall show the address of, and the number of shares of each such class and
series that are held by, each shareholder.
(b) The list of shareholders shall be available for inspection by any
shareholder, beginning the earlier of ten days before the meeting for which
the list was prepared or two business days after notice of the meeting is
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given and continuing through the meeting, and any adjournment thereof, at
the Corporation's principal office or at a place identified in the notice
of the meeting in the city where the meeting will be held.
(c) The Secretary shall make the list of shareholders available for
inspection at the meeting, and any shareholder or agent or attorney of a
shareholder is entitled to inspect the list at any time during the meeting
or any adjournment.
Section 1.5. Notice to Shareholders.
(a) The Secretary shall give notice to shareholders of the date, time,
and place of each annual and special meeting of shareholders no fewer than
ten (10) nor more than sixty (60) days before the date of the meeting;
except that, if the Corporation's Articles of Incorporation are to be
amended to increase the number of authorized shares, at least thirty (30)
days' notice shall be given. Except as other wise required by the Colorado
Business Corporation Act, the Secretary shall be required to give such
notice only to shareholders entitled to vote at the meeting.
(b) Notice of an annual meeting of shareholders need not include a
description of the purpose or purposes for which the meeting is called
unless a purpose of the meeting is to consider an amendment to the
Corporation's Articles of Incorporation, a restatement of the Articles of
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Incorporation, a plan of merger or share exchange, disposition of
substantially all of the property of the Corporation, consent by the
Corporation to the disposition of property by another entity, or
dissolution of the Corporation.
(c) Notice of a special meeting of shareholders shall include a
description of the purpose or purposes for which the meeting is called.
(d) Notice of a meeting of shareholders shall be in writing and shall
be given:
(1) by deposit in the United States mail, properly addressed to
the shareholders' address of the shareholder shown in the
Corporation's current record of shareholders, first class postage
prepaid, and, if so given, shall be effective when mailed, or
(2) by telegraph, teletype, electronically transmitted facsimile,
electronic mail, mail, or private carrier or by personal delivery to
the shareholder, and, if so given, shall be effective when actually
received by the shareholder.
(e) If an annual or special meeting of shareholders is adjourned to a
different date, time, or place, notice need not be given of the new date,
time, or place if the new date, time, or place is announced at the meeting
before adjournment; provided, however, that, if a new record date for the
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adjourned meeting is fixed pursuant to Section 1.3(c), notice of the
adjourned meeting shall be given to persons who are shareholders as of the
new record date.
(f) If three successive notices are given by the Corporation, whether
with respect to a meeting of shareholders or otherwise, to a shareholder
and such notices are returned as undeliverable, no further notices to such
shareholder shall be necessary until another address for the shareholder is
made known to the Corporation.
Section 1.6. Quorum. Shares entitled to vote as a separate voting group may
take action on a matter at a meeting only if a quorum of those shares exists
with respect to that matter. A majority of the votes entitled to be cast on the
matter by the voting group shall constitute a quorum of that voting group for
action on the matter. If a quorum does not exist with respect to any voting
group, the President or any shareholder or proxy that is present at the meeting,
whether or not a member of that voting group, may adjourn the meeting to a
different date, time, or place, and notice need not be given of the new date,
time, or place if the new date, time, or place is announced at the meeting
before adjournment (except as provided in the next sentence). If a new record
date for the adjourned meeting is or must be fixed pursuant to Section 1.3(c),
however, notice of the adjourned meeting shall be given pursuant to Section 1.5
to persons who are shareholders as of the new record date. At any adjourned
meeting at which a quorum exists, any matter may be acted upon that could have
been acted upon at the meeting originally called, provided, however, that, if
new notice is given of the adjourned meeting, then such notice shall state the
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purpose or purposes of the adjourned meeting sufficiently to permit action on
such matters. Once a share is represented for any purpose at a meeting,
including the purpose of determining that a quorum exists, it is deemed present
for quorum purposes for the remainder of the meeting and for any adjournment of
that meeting, unless a new record date is or shall be set for that adjourned
meeting.
Section 1.7. Voting Entitlement of Shares. Except as stated in the
Corporation's Articles of Incorporation, each outstanding share, regardless of
class, is entitled to one vote, and each fractional share is entitled to a
corresponding fractional vote, on each matter voted on at a meeting of
shareholders.
Section 1.8. Proxies; Acceptance of Votes and Consents.
(a) A shareholder may vote either in person or by proxy.
(b) An appointment of a proxy is not effective against the Corporation
until the appointment is received by the Corporation. An appointment is
valid for eleven months unless a different period is expressly provided in
the proxy appointment form.
(c) The Corporation may accept or reject any appointment of a proxy,
revocation of appointment of a proxy, vote, consent, waiver, or other
writing purportedly signed by or for a shareholder, if such acceptance or
rejection is in accordance with the provisions of Sections 7-107-203 and
7-107-205 of the Colorado Business Corporation Act.
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Section 1.9. Waiver of Notice.
(a) A shareholder may waive any notice required by the Colorado
Business Corporation Act, the Articles of Incorporation or these Bylaws,
whether before or after the date or time stated in the notice as the date
or time when any action will occur or has occurred. The waiver shall be in
writing, be signed by the shareholder entitled to the notice, and be
delivered to the Corporation for inclusion in the minutes or filing with
the corporate records, but such delivery and filing shall not be conditions
of the effectiveness of the waiver.
(b) A shareholder's attendance at a meeting waives objection to lack
of notice or defective notice of the meeting, unless the shareholder at the
beginning of the meeting objects to holding the meeting or transacting
business at the meeting because of lack of notice or defective notice. The
shareholder also waives objection to consideration of a particular matter
at the meeting that is not within the purpose or purposes described in the
meeting notice, unless the shareholder objects to consideration of the
matter when it is presented.
Section 1.10. Action by Shareholders Without a Meeting. Any action required
or permitted to be taken at a meeting of shareholders may be taken without a
meeting if all of the shareholders entitled to vote on such action consent to
such action in writing. Action taken pursuant to this Section shall be effective
when the Corporation has received writings containing a description of the
action and the consent so given, signed by all of the shareholders entitled to
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vote on such action. Action taken pursuant to this Section shall be effective as
of the date the last writing necessary to give effect the action is received by
the Corporation, unless all of the writings necessary to effect the action
specify another date, which may be before or after the date the writings are
received by the Corporation. Such action shall have the same effect as action
taken at a meeting of shareholders and may be described as such in any document.
Any shareholder who has signed a writing describing and consenting to action
taken pursuant to this Section may revoke such consent by a writing signed by
the shareholder describing the action and stating that the shareholder's prior
consent to such action is revoked, if such writing is received by the
Corporation before the action becomes effective.
Section 1.11. Meetings by Telecommunications. Any or all of the
shareholders may participate in an annual or special meeting of shareholders by,
or the meeting may by conducted through the use of, any means of communication
by which all persons participating in the meeting may hear each other during the
meeting. A shareholder participating in a meeting by this means is deemed to be
present in person at the meeting.
ARTICLE II
DIRECTORS
Section 2.1. Authority of the Board of Directors. The corporate powers
shall be exercised by or under the authority of, and the business and affairs of
the Corporation shall be managed under the direction of, a board of directors.
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Section 2.2. Number. The number of directors shall be fixed by resolution
of the Board of Directors from time to time and may be increased or decreased by
resolution adopted by the Board of Directors from time to time, but no decrease
in the number of directors shall have the effect of shortening the term of any
incumbent director.
Section 2.3. Qualification. Directors shall be natural persons at least
eighteen (18) years of age, but need not be residents of the State of Colorado
or shareholders of the Corporation.
Section 2.4. Election. The Board of Directors shall be elected at the
annual meeting of the shareholders or at a special meeting of shareholders
called for that purpose.
Section 2.5. Term. Each director shall be elected to hold office until the
next annual meeting of shareholders and until the director's successor is
elected and qualified.
Section 2.6. Resignation. A director may resign at any time by giving
written notice of his or her resignation to any other director or (if the
director is not also the corporate secretary) to the Secretary of the
Corporation. The resignation shall be effective when it is received by the other
director or Secretary, as the case may be, unless the notice of resignation
specifies a later effective date. Acceptance of such resignation shall not be
necessary to make it effective unless the notice of resignation so provides.
Section 2.7 Removal. Any director may be removed by the shareholders, with
or without cause, at a meeting called for that purpose. The notice of the
meeting shall state that the purpose, or one on the purposes, of the meeting is
removal of the director. A director may be removed only if the number of votes
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cast in favor of removal exceeds the number of votes cast against removal. If
cumulative voting for directors applies at the time of the proposed removal, the
director may not be removed if the number of votes sufficient to elect the
director under cumulative voting is voted against such removal.
Section 2.8 Vacancies.
(a) If a vacancy occurs on the Board of Directors, including a vacancy
resulting from an increase in the number of directors:
(1) The shareholders may fill the vacancy at the next annual
meeting or at a special meeting called for that purpose; or
(2) The Board of Directors may fill the vacancy; or
(3) If the directors remaining in office constitute fewer than a
quorum of the Board of Directors, they may fill the vacancy by the
affirmative vote of a majority of all the directors remaining in
office.
(b) Notwithstanding the provisions of Section 2.8(a) above, if the
vacant office was held by a director elected by a voting group of
shareholders, then, if one or more of the remaining directors were elected
by the same voting group, only such directors are entitled to vote to fill
the vacancy if it is filled by directors, and they may do so by the
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affirmative vote of a majority of such directors remaining in office; and
only the holders of shares of that voting group are entitled to vote to
fill the vacancy if it is filled by the shareholders.
(c) A vacancy that will occur at a specific later date, by reason of a
resignation that will become effective at a later date under Section 2.6 or
otherwise, may be filled before the vacancy occurs, but the new director
may not take office until the vacancy occurs.
Section 2.9. Meetings. The Board of Directors may hold regular or special
meetings within the State of Colorado or outside the State of Colorado. The
Board of Directors may, by resolution, establish dates, times and places for
regular meetings, which may thereafter be held without further notice. Special
meetings may be called by the President or by any two directors and shall be
held a the principal office of the Corporation unless another place is consented
to by every director. At any time when the Board of Directors consists of a
single director, that director may act at any time, date, or place without
notice.
Section 2.10 Notice of Special Meeting. Notice of a special meeting shall
be given to every director at least twenty four (24) hours before the time of
the meeting, stating the date, time, and place of the meeting. The notice need
not describe the purpose of the meeting. Notice may be given orally to the
director, personally or by telephone or other wire or wireless communication.
Notice may also be given in writing by telegraph, teletype, electronically
transmitted facsimile, electronic mail, mail, or private carrier. Notice shall
be effective at the earliest of the time it is received; five days after it is
deposited in the United States mail, properly addressed to the last address for
the director shown on the records of the Corporation, first class postage
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prepaid; or the date shown on the return receipt if mailed by registered or
certified mail, return receipt requested, postage prepaid, in the United States
mail and if the return receipt is signed by the director to which the notice is
addressed.
Section 2.11. Quorum. Except as provided in Section 2.8, a majority of the
number of directors fixed in accordance with these Bylaws shall constitute a
quorum for the transaction of business at all meetings of the Board of
Directors. The act 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, except as
otherwise specifically required by law.
Section 2.12. Waiver of Notice.
(a) A director may waive any notice of a meeting before or after the
time and date of the meeting stated in the notice. Except as provided by
Section 2.12(b), the waiver shall be in writing and shall be signed by the
director. Such waiver shall be delivered to the Secretary for filing with
the corporate records, but such delivery and filing shall not be conditions
of the effectiveness of the waiver.
(b) A director's attendance at, or participation in, a meeting waives
any required notice to him or her of the meeting unless, at the beginning
of the meeting, or promptly upon his or her later arrival, the director
objects to holding the meeting or transacting business at the meeting
because of lack of notice or defective notice and does not thereafter vote
for or assent to action taken at the meeting.
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Section 2.13. Attendance by Telephone. One or more directors may
participate in a regular or special meeting by, or conduct the meeting through
the use of, any means of communication by which all directors participating may
hear each other during the meeting. A director participating in a meeting by
this means is deemed to be present in person at the meeting.
Section 2.14. Deemed Assent to Action. A director who is present at a
meeting of the Board of Directors when corporate action is taken shall be deemed
to have assented to all action taken at the meeting unless:
(1) The director objects at the beginning of the meeting, or promptly
upon his or her arrival, to holding the meeting or transacting business at
the meeting and does not thereafter vote for or assent to any action taken
at the meeting;
(2) The director contemporaneously requests that his or her dissent or
abstention as to any specific action taken be entered in the minutes of the
meeting; or
(3) The director causes written notice of his or her dissent or
abstention as to any specific action to be received by the presiding
officer of the meeting before adjournment of the meeting or by the
Secretary (or, if the director is the Secretary, by another director)
promptly after adjournment of the meeting.
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The right of dissent or abstention pursuant to this Section 2.14 as to a
specific action is not available to a director who votes in favor of the action
taken.
Section 2.15. Action by Directors Without a Meeting. Any action required or
permitted by law to be taken at a meeting of the Board of Directors may be taken
without a meeting if all members of the Board of Directors consent to such
action in writing. Action shall be deemed to have been so taken by the Board of
Directors at the time the last director signs a writing describing the action
taken, unless, before such time, any director has revoked his or her consent by
a writing signed by the director and received by the Secretary or any other
person authorized by these Bylaws or the Board of Directors to receive such a
revocation. Such action shall be effective at the time and date it is so taken
unless the directors establish a different effective time or date. Such action
has the same effect as action taken at a meeting of directors and may be
described as such in any document.
ARTICLE III
COMMITTEES OF THE BOARD OF DIRECTORS
Section 3.1. Committees of the Board of Directors.
(a) Subject to the provisions of Section 7-109-106 of the Colorado
Business Corporation Act, the Board of Directors may create one or more
committees and appoint one or more members of the Board of Directors to
serve on them. The creation of a committee and appointment of members to it
shall require the approval of a majority of all the directors in office
when the action is taken, whether or not those directors constitute a
quorum of the Board of Directors.
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(b) The provisions of these Bylaws governing meetings, action without
meeting, notice, waiver of notice, and quorum and voting requirements of
the Board of Directors apply to committees of the Board of Directors and
their members as well.
(c) To the extent specified by resolution adopted from time to time by
a majority of all the directors in office when the resolution is adopted,
whether or not those directors constitute a quorum of the Board of
Directors, each committee shall exercise the authority of the Board of
Directors with respect to the corporate powers and the management of the
business and affairs of the Corporation; except that a committee shall not:
(1) Authorize distributions;
(2) Approve or propose to shareholders action that the Colorado
Business Corporatio n Act requires to be approved by shareholde rs;
(3) Fill vacancies on the Board of Directors or on any of its
committees;
(4) Amend the Corporation's Articles of Incorporation pursuant to
Section 7-110-102 of the Colorado Business Corporation Act;
(5) Adopt, amend, or repeal bylaws;
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(6) Approve a plan of merger not requiring shareholder approval;
(7) Authorize or approve reacquisition of shares, except
according to a formula or method prescribed by the Board of Directors;
or
(8) Authorize or approve the issuance or sale of shares, or a
contract for the sale of shares, or determine the designation and
relative rights, preferences, and limitations of a class or series of
shares; except that the Board of Directors may authorize a committee
or an officer of the Corporation to do so within limits specifically
prescribed by the Board of Directors.
(d) The creation of, delegation of authority to, or action by, a
committee does not alone constitute compliance by a director with
applicable standards of conduct.
ARTICLE IV
OFFICERS
Section 4.1. General. The Corporation shall have as officers a president, a
secretary, and a treasurer, who shall be appointed by the Board of Directors.
The Board of Directors may appoint as additional officers a chairman and other
officers of the Board of Directors. The Board of Directors, the President, and
such other subordinate officers as the Board of Directors may authorize from
time to time, acting singly, may appoint as additional officers one or more vice
presidents, assistant secretaries, assistant treasurers, and such other
subordinate officers as the Board of Directors, the President, or such other
appointing officers deem necessary or appropriate. The officers of the
Corporation shall hold their offices for such terms and shall exercise such
authority and perform such duties as shall be determined from time to time by
these Bylaws, the Board of Directors, or (with respect to officers whom are
appointed by the President or other appointing officers) the persons appointing
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them; provided, however, that the Board of Directors may change the term of
offices and the authority of any officer appointed by the President or other
appointing officers. Any two or more offices may be held by the same person. The
officers of the Corporation shall be natural persons at least eighteen (18)
years of age.
Section 4.2. Term. Each officer shall hold office from the time of
appointment until the time of removal or resignation pursuant to Section 4.3 or
until such officer's death.
Section 4.3. Removal and Resignation. Any officer appointed by the Board of
Directors may be removed at any time by the Board of Directors. Any officer
appointed by the President or other appointing officer may be removed at any
time by the Board of Directors or by the person appointing the officer. Any
officer may resign at any time by giving written notice of resignation to any
director (or to any director other than the resigning officer if the officer is
also a director), to the President, to the Secretary, or to the officer who
appointed the officer. Acceptance of such resignation shall not be necessary to
make it effective, unless the notice of resignation so provides.
Section 4.4. President. The President shall preside at all meetings of
shareholders, and the President shall also preside at all meetings of the Board
of Directors unless the Board of Directors has appointed a chairman, vice
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chairman, or other officer of the Board of Directors and has authorized such
person to preside at meetings of the Board of Directors instead of the
President. Subject to the direction and control of the Board of Directors, the
President shall be the chief executive officer of the Corporation and as such
shall have general and active management of the business of the Corporation and
shall see that all orders and resolutions of the Board of Directors are carried
into effect. The President may negotiate, enter into, and execute contracts,
deeds, and other instruments of behalf of the Corporation as are necessary and
appropriate to the conduct to the business and affairs of the Corporation or as
are approved by the Board of Directors. The President shall have such additional
authority and duties as are appropriate and customary for the office of
president and chief executive officer, except as the same may be expanded or
limited by the Board of Directors from time to time.
Section 4.5. Vice President. The Vice President, if any, or, if there are
more than one, the vice presidents in the order determined by the Board of
Directors or the President (or, if no such determination is made, in the order
of their appointment), shall be the officer or officers next in seniority after
the President. Each vice president shall have such authority and duties as are
prescribed by the Board of Directors or the President. Upon the death, absence,
or disability of the President, the Vice President, if any, or, if there are
more than one, the vice presidents in the order determined by the Board of
Directors or the President, shall have the authority and duties of the
President.
Section 4.6. Secretary. The Secretary shall be responsible for the
preparation and maintenance of minutes of the meetings of the Board of Directors
and of the shareholders and of the other records and information required to be
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kept by the Corporation under Section 7-116-101 of the Colorado Business
Corporation Act and for authenticating records of the Corporation. The Secretary
shall also give, or cause to be given, notice of all meetings of the
shareholders and special meetings of the Board of Directors, keep the minutes of
such meetings, have charge of the corporate seal and have authority to affix the
corporate seal to any instrument requiring it (and, when so affixed, it may be
attested by the Secretary's signature), be responsible for the maintenance of
all other corporate records and files and for the preparation and filing of
reports to governmental agencies (other than tax returns), and have such other
authority and duties as are appropriate and customary for the office of
secretary, except as the same may be expanded or limited by the Board of
Directors from time to time.
Section 4.7. Assistant Secretary. The Assistant Secretary, if any, or, if
there are more than one, the assistant secretaries in the order determined by
the Board of Directors or the Secretary (or, if no such determination is made,
in the order of their appointment) shall, under the supervision of the
Secretary, perform such duties and have such authority as may be prescribed from
time to time by the Board of Directors or the Secretary. Upon the death,
absence, or disability of the Secretary, the Assistant Secretary, if any, or, if
there are more than one, the assistant secretaries in the order designated by
the Board of Directors or the Secretary (or, if no such determination is made,
in the order of their appointment), shall have the authority and duties of the
Secretary.
Section 4.8. Treasurer. The Treasurer shall have control of the funds and
the care and custody of all stocks, bonds, and other securities owned by the
Corporation, and shall be responsible for the preparation and filing of tax
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returns. The Treasurer shall receive all moneys paid to the Corporation and,
subject to any limits imposed by the Board of Directors, shall have authority to
give receipts and vouchers, to sign and endorse checks and warrants in the
Corporation's name and on the Corporation's behalf, and give full discharge for
the same. The Treasurer shall also have charge of disbursement of funds of the
Corporation, shall keep full and accurate records of the receipts and
disbursements, and shall deposit all moneys and other valuable effects in the
name and to the credit of the Corporation in such depositories as shall be
designated by the Board of Directors or the President. The Treasurer shall have
such additional authority and duties as are appropriate and customary for the
office of treasurer, except as the same may be expanded or limited by the Board
of Directors from time to time.
Section 4.9. Assistant Treasurer. The Assistant Treasurer, if any, or, if
there are more than one, the assistant treasurers in the order determined by the
Board of Directors or the Treasurer (or, if no such determination is made, in
the order of their appointment) shall, under the supervision of the Treasurer,
have such authority and duties as may be prescribed from time to time by the
Board of Directors or the Treasurer. Upon the death, absence, or disability of
the Treasurer, the Assistant Treasurer, if any, or if there are more than one,
the assistant treasurers in the order determined by the Board of Directors or
the Treasurer (or, if no such determination is made, in the order of their
appointment), shall have the authority and duties of the Treasurer.
Section 4.10. Compensation. Officers shall receive such compensation for
their services as may be authorized or ratified by the Board of Directors.
Election or appointment of an officer shall not of itself create a contractual
right to compensation for services performed as such officer.
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ARTICLE V
INDEMNIFICATION
Section 5.1. Definitions. As used in this Article:
(a) "Corporation" includes any domestic or foreign entity that is a
predecessor of the Corporation by reason of a merger or other transaction
in which the predecessor's existence ceased upon consummation of the
transaction.
(b) "Director" means an individual who is or was a director of the
Corporation and an individual who, while a director of the Corporation, is
or was serving at the Corporation's request as a director, officer,
partner, trustee, employee, fiduciary, or agent of another domestic or
foreign corporation or other person or of an employee benefit plan. A
director shall be considered to be serving an employee benefit plan at the
Corporation's request if his or her duties to the Corporation also impose
duties on, or otherwise involve services by, the director to the plan or to
participants in, or beneficiaries of, the plan. "Director" includes, unless
the context requires otherwise, the estate or personal representative of a
director.
(c) "Expenses" includes counsel fees.
(d) "Liability" means the obligation incurred with respect to a proceeding
to pay a judgment, settlement, penalty, fine, including an excise tax
assessed with respect to an employee benefit plan, or reasonable expenses.
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(e) "Official capacity" means, when used with respect to a director, the
office of director in the Corporation and, when used with respect to a
person other than a director as contemplated in Section 5.7, the office in
the Corporation held by the officer or the employment, fiduciary, or agency
relationship undertaken by the employee, fiduciary, or agent on behalf of
the Corporation. "Official capacity" does not include service for any other
domestic or foreign corporation or other person or employee benefit plan.
(f) "Party" includes an individual who was, is, or is threatened to be made
a named defendant or respondent in a proceeding.
(g) "Proceeding" means any threatened, pending, or completed action, suit,
or proceeding, whether civil, criminal, administrative, or investigative
and whether formal or informal.
Section 5.2. Authority to Indemnify Directors.
(a) Except as provided Section 5.2(d), the Corporation may indemnify a
person made a party to a proceeding because the person is or was a director
against liability incurred in the proceeding if:
(1) The person conducted himself or herself in good faith; and
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(2) The person reasonably believed:
(A) In the case of conduct in an official capacity with the
Corporation, that his or her conduct was in the Corporation's
best interests; and
(B) In all other cases, that his or her conduct was at least not
opposed to the Corporation's best interests; and
(3) In the case of any criminal proceeding, the person had no
reasonable cause to believe his or her conduct was unlawful.
(b) A director's conduct with respect to an employee benefit plan for a
purpose the director reasonably believed to be in the interests of the
participants in or beneficiaries of the plan is conduct that satisfies the
requirement of Section 5.2(a)(2)(B). A director's conduct with respect to
an employee benefit plan for a purpose that the director did not reasonably
believe to be in the interests of the participants in or beneficiaries of
the plan shall be deemed not to satisfy the requirement of Section
5.2(a)(1).
(c) The termination of a proceeding by judgment, order, settlement,
conviction, or upon a plea of nolo contendere or its equivalent is not, of
itself, determinative that the director did not meet the standard of
conduct described in this Section 5.2.
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(d) The Corporation may not indemnify a director under this Section 5.2:
(1) In connection with a proceeding by or in the right of the
Corporation in which the director was adjudged liable to the
Corporation; or
(2) In connection with any other proceeding charging that the director
derived an improper personal benefit, whether or not involving action
in an official capacity, in which proceeding the director was adjudged
liable on the basis that he or she derived an improper personal
benefit.
(e) Indemnification permitted under this Section 5.2 in connection with a
proceeding by or in the right of the Corporation is limited to reasonable
expenses incurred in connection with the proceeding.
Section 5.3. Mandatory Indemnification of Directors. The Corporation shall
indemnify a person who was wholly successful, on the merits or otherwise, in
defense of any proceeding to which the person was a party because the person is
or was a director, against reasonable expenses incurred by him or her in
connection with the proceeding.
Section 5.4. Advance of Expenses to Directors.
(a) The Corporation may pay for or reimburse the reasonable expenses
incurred by a director who is a party to a proceeding in advance of the
final disposition of the proceeding if:
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(1) The director furnishes the Corporation a written affirmation of
the director's good-faith belief that he or she has met the standard
of conduct described in Section 5.2.
(2) The director furnishes the Corporation a written undertaking,
executed personally or on the director's behalf, to repay the advance
if it is ultimately determined that he or she did not meet such
standard of conduct; and
(3) A determination is made that the facts then known to those making
the determination would not preclude indemnification under this
Article.
(b) The undertaking required by Section 5.4(a)(2) shall be an unlimited
general obligation of the director, but need not be secured and may be
accepted without reference to financial ability to make repayment.
(c) Determinations and authorizations of payments under this Section 5.4
shall be made in the manner specified in Section 5.6.
Section 5.5. Court-Ordered Indemnification of Directors. A director who is
or was a party to a proceeding may apply for indemnification to the court
conducting the proceeding or to another court of competent jurisdiction. On
receipt of an application, the court, after giving any notice the court
considers necessary, may order indemnification in the following manner:
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(1) If the court determines that the director is entitled to
mandatory indemnification under Section 5.3, the court shall order
indemnification, in which case the court shall also order the
Corporation to pay the director's reasonable expenses incurred to
obtain court-ordered indemnification.
(2) If it determines that the director is fairly and reasonably
entitled to indemnification in view of all the relevant circumstances,
whether or not the director met the standard of conduct set forth in
Section 5.2(a) or was adjudged liable in the circumstances described
in Section 5.2(d), the court may order such indemnification as the
court deems proper; except that the indemnification with respect to
any proceeding in which liability shall have been adjudged in the
circumstances described in Section 5.2(d) is limited to reasonable
expenses incurred in connection with the proceeding and reasonable
expenses incurred to obtain court-ordered indemnification.
Section 5.6. Determination and Authorization of Indemnification of
Directors.
(a) The Corporation may not indemnify a director under Section 5.2 unless
authorized in the specific case after a determination has been made that
indemnification of the director is permissible under the circumstances
because the director has met the standard of conduct set forth in Section
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5.2. The Corporation shall not advance expenses to a director under Section
5.4 unless authorized in the specific case after the written affirmation
and undertakings required by Sections 5.4(a)(1) and 5.4(a)(2) are received
and the determination required by Section 5.4(a)(3) has been made.
(b) The determination required by Section 5.6(a) shall be made:
(1) By the Board of Directors by a majority vote of those present at a
meeting at which a quorum is present, and only those directors not
parties to the proceeding shall be counted in satisfying the quorum;
or
(2) If a quorum cannot be obtained, by a majority vote of a committee
of the Board of Directors designated by the Board of Directors, which
committee shall consist of two or more directors not parties to the
proceeding; except that directors who are parties to the proceeding
may participate in the designation of directors for the committee.
(c) If the quorum cannot be obtained as contemplated in Section 5.6(b)(1),
and a committee cannot be established under Section 5.6(b)(2) if a quorum
is obtained or a committee is designated, if a majority of the directors
constituting such quorum or such committee so directs, the determination
required to be made by Section 5.6(a) shall be made:
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(1) By independent legal counsel selected by a vote of the Board of
Directors or the committee in the manner specified in Section
5.6(b)(1) or 5.6(b)(2), or, if a quorum of the full Board of Directors
cannot be obtained and a committee cannot be established, by
independent legal counsel selected by a majority vote of the full
Board of Directors; or
(2) By the shareholders.
(d) Authorization of indemnification and advance of expenses shall be made
in the same manner as the determination that indemnification or advance of
expenses is permissible; except that, if the determination that
indemnification or advance of expenses is permissible is made by
independent legal counsel, authorization of indemnification and advance of
expenses shall be made by the body that selected such counsel.
Section 5.7. Indemnification of Officers, Employees, Fiduciaries,
and Agents.
(a) An officer is entitled to mandatory indemnification under Section 5.3
and is entitled to apply for court-ordered indemnification under Section
5.5, in each case to the same extent as a director;
(b) The Corporation may indemnify and advance expenses to an officer,
employee, fiduciary, or agent of the Corporation to the same extent as to a
director; and
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(c) The Corporation may also indemnify and advance expenses to an officer,
employee, fiduciary, or agent who is not a director to a greater extent
than is provided in these Bylaws, if not inconsistent with public policy,
and if provided for by general or specific action of its Board of Directors
or shareholders or by contract.
Section 5.8. Insurance. The Corporation may purchase and maintain insurance
on behalf of a person who is or was a director, officer, employee, fiduciary, or
agent of the Corporation or who, while a director, officer, employee, fiduciary,
or agent of the Corporation, is or was serving at the request of the Corporation
as a director, officer, partner, trustee, employee, fiduciary, or agent of
another domestic or foreign corporation or other person or of an employee
benefit plan, against any liability asserted against or incurred by the person
in that capacity or arising out of his or her status as a director, officer,
employee, fiduciary, or agent, whether or not the Corporation would have the
power to indemnify the person against the same liability under Section 5.2, 5.3,
or 5.7. Any such insurance may be procured from any insurance company designated
by the Board of Directors, whether such insurance company is formed under the
laws of the State of Colorado or any other jurisdiction of the United States or
elsewhere, including any insurance company in which the Corporation has equity
or any other interest, through stock ownership or otherwise.
Section 5.9. Notice to Shareholders of Indemnification of Director. If the
Corporation indemnifies or advances expenses to a director under this Article in
connection with a proceeding by or in the right of the Corporation, the
Corporation shall give written notice of the indemnification or advance to the
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shareholders with or before the notice of the next meeting of shareholders. If
the next shareholder action is taken without a meeting at the instigation of the
Board of Directors, such notice shall be given to the shareholders at or before
the time the first shareholder signs a writing consenting to such action.
ARTICLE VI
SHARES
Section 6.1. Certificates. Certificates representing shares of the capital
stock of the Corporation shall be in such form as is approved by the Board of
Directors and shall be signed by (a) the President or any Vice President, and by
(b) the Secretary or an assistant secretary or the Treasurer or an assistant
treasurer. All certificates shall be consecutively numbered, and the names of
the owners, the number of shares, and the date of issue shall be entered on the
books of the Corporation. Each certificate representing shares of the
Corporation shall state upon its face:
(a) That the Corporation is organized under the laws of the State of
Colorado;
(b) The name of the person to whom issued;
(c) The number and class of the shares and the designation of the
series, if any, that the certificate represents;
(d) The par value, if any, of each share represented by the
certificate; and
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(e) Any restrictions imposed by the Corporation upon the transfer of
the shares represented by the certificate.
Section 6.2. Transfer of Shares. Transfers of shares shall be made on the
books of the Corporation only upon presentation of the certificate or
certificates representing such shares properly endorsed by the person or persons
appearing upon the face of such certificate to be the owner, or accompanied by a
proper transfer or assignment separate from the certificate, except as may
otherwise be expressly provided by the statutes of the State of Colorado or by
order of a court of competent jurisdiction. The officers or transfer agents of
the Corporation may, in their discretion, require a signature guaranty before
making any transfer. The Corporation shall be entitled to treat the person in
whose name any shares are registered on its books as the owner of those shares
for all purposes and shall not be bound to recognize any equitable or other
claim or interest in the shares on the part of any other person, whether or not
the Corporation shall have notice of such claim or interest.
Section 6.3. Shares Held for Account of Another. The Board of Directors may
adopt by resolution a procedure whereby a shareholder of the Corporation may
certify in writing to the Corporation that all or a portion of the shares
registered in the name of such shareholder are held for the account of a
specified person or persons. The resolution shall set forth:
(a) The classification of shareholders who may certify;
(b) The purpose or purposes for which the certification may be made;
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(c) The form of certification and information to be contained in such
certification;
(d) If the certification is with respect to a record date or closing
of the stock transfer books, the time after the record date or the closing
of the stock transfer books within which the certification must be received
by the Corporation; and
(e) Such other provisions with respect to the procedure as are deemed
necessary or desirable. Upon receipt by the Corporation of a certification
complying with the procedure, the persons specified in the certification
shall be deemed, for the purpose or purposes set forth in the
certification, to be the holders of record of the number of shares
specified in place of the shareholder making the certification.
ARTICLE VII
MISCELLANEOUS
Section 7.1. Corporate Seal. The Board of Directors may adopt a seal,
circular in form and bearing the name of the Corporation and the words "Seal"
and "Colorado," which, when adopted, shall constitute the seal of the
Corporation. The seal may be used by causing it or a facsimile of it to be
impressed, affixed, manually reproduced, or rubber stamped with indelible ink.
Section 7.2. Fiscal Year. The Board of Directors may, by resolution, adopt
a fiscal year for the Corporation.
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Section 7.3. Receipt of Notices by the Corporation. Notices, shareholder
writings consenting to action, and other documents or writings shall be deemed
to have been received by the Corporation when they are received:
(a) At the registered office of the Corporation in the State of
Colorado;
(b) At the principal office of the Corporation (as that office is
designated in the most recent document filed by the Corporation with the
Secretary of State for the State of Colorado designating a principal
office) addressed to the attention of the Secretary of the Corporation;
(c) By the Secretary of the Corporation wherever the Secretary may be
found; or
(d) By any other person authorized from time to time by the Board of
Directors, the President, or the Secretary to receive such writings,
wherever such person is found.
Section 7.4. Amendment of Bylaws. These Bylaws may at any time, and from
time to time, be amended, supplemented, or repealed by the Board of Directors.
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CONSULTING SERVICES AGREEMENT
-----------------------------
THIS CONSULTING SERVICES AGREEMENT (this "Agreement"), dated as of January
2, 1997, is between FRANKS' EXPRESS, INC., a Colorado corporation ("Franks'
Express") and Richard H. Steinberg (the "Contractor").
Recitals
--------
A. The Contractor is in the business of providing services of benefit to
Franks' Express and Franks' Express desires to engage the services of the
Contractor under terms and conditions specified in this Agreement.
B. Franks' Express and the Contractor intend that their relationship not be
considered an employer-employee relationship and desire to set forth the basic
terms of the understandings between them in this Agreement.
Agreement
---------
IN CONSIDERATION of the foregoing recitals, other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, and
the mutual covenants set forth below, Franks' Express and the Contractor agree
as follows:
ARTICLE I
NATURE AND SCOPE OF SERVICES
Section 1.1 Engagement. Franks' Express hereby agrees to engage the
services of the Contractor and the Contractor hereby agrees to provide services
to Franks' Express on the terms and conditions set forth in this Agreement.
Section 1.2 Nature of Services. The Contractor shall provide services to
Franks' Express, as more fully described in Exhibit A, attached to and made a
part of this Agreement by this reference, as that Exhibit may be amended from
time to time by written agreement signed on behalf of Franks' Express and by the
Contractor.
Section 1.3 Commencement. The consulting services rendered by the
Contractor under the terms and conditions of this Agreement shall commence on
January 2, 1997.
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Section 1.4 Compliance with Applicable Laws. In performing services under
this Agreement, the Contractor shall comply with any and all applicable laws,
rules, orders, and regulations of any governmental or quasi-governmental agency
having jurisdiction over the activities of the Contractor or the business
activities of Franks' Express.
ARTICLE II
RELATION OF THE PARTIES
Section 2.1 Independent Contractor Status. At all times the Contractor
shall be considered for all purposes to be an independent contractor. The
Contractor shall not be considered an agent or employee of Franks' Express for
any purpose.
Section 2.2 Contractor Responsible For Own Taxes. The Contractor shall not
be entitled to participate in any plans, arrangements or distributions by
Franks' Express pertaining to or in connection with any benefits for regular
employees of Franks' Express, including, but not limited to, FICA contributions
and income tax withholdings. The Contractor shall be responsible for the payment
of all applicable taxes and the filing of all applicable tax reports and returns
with the appropriate government entities with respect to any income derived by
the Contractor pursuant to this Agreement.
Section 2.3 Contractor Responsible For Own Insurance. The Contractor shall
be responsible for providing his or her own insurance, including, without
limitation, liability insurance and workman's compensation.
Section 2.4 Independent Discretion. The Contractor shall use independent
discretion as to the means by which the duties described in Exhibit A are
accomplished. The methods and procedures for performing the services pursuant to
this Agreement are within the exclusive control of the Contractor.
Section 2.5 No Joint Venture. Franks' Express and the Contractor
acknowledge that nothing in this Agreement shall constitute them as partners or
joint venturers in the performance of any activities contemplated by this
Agreement.
Section 2.6 No Warranties Authorized. In connection with performance of
Contractor's obligations under this Agreement, the Contractor shall make no
warranties, oral or written, concerning any aspect of the business operations of
Franks' Express which are not provided to the Contractor, in writing, by Franks'
Express.
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ARTICLE III
COMPENSATION FOR SERVICES
Section 3.1 Service Fee. As compensation for the performance of the
Contractor's services under this Agreement, Franks' Express shall pay to the
Contractor a service fee of One Thousand and no/100 Dollars ($1,000) per month.
Section 3.2 Pre-Approved Expense Reimbursement. Franks' Express shall pay
for all customary, reasonable and pre-approved business expenses related to
performance of the Contractor's obligations under this Agreement. The Contractor
shall keep good and sufficient records of all expenses for which reimbursement
is requested. Payments for such reimbursements shall be made by Franks' Express
on a monthly basis. All single item expenses exceeding $100.00 and all aggregate
expenses exceeding $500.00 incurred in any given month must be pre-approved in
writing by Franks' Express.
ARTICLE IV
TERM AND TERMINATION
Section 4.1 Term. The term of this Agreement shall commence on January 2,
1997 and shall continue for a term of two years, unless terminated pursuant to
other provisions of this Agreement.
Section 4.2 Termination for Cause. Franks' Express may terminate this
Agreement for "cause" without prior written notice delivered to the Contractor.
For purposes of this Agreement, the term "cause" shall include, without
limitation: the Contractor's fraud, dishonesty, incompetence, willful
misconduct, breach of fiduciary duty involving personal profit, intentional
failure to perform duties assigned under this Agreement, willful violation of
any rule, law, regulation (other than traffic violations or similar offenses) or
a material breach of any term or condition of this Agreement.
Section 4.3 Termination for Disability. Franks' Express may, by a decision
of the President of Franks' Express, with the concurrence of the Board of
Directors of Franks' Express, terminate this Agreement on account of the
Contractor's disability, provided that Franks' Express shall have the absolute
obligation to continue to pay to the Contractor (or his or her estate or
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personal representative, as the case may be) an amount equal to the compensation
previously earned by the Contractor prior to the date of termination, on the
condition that the Contractor or the Contractor's representative sign an
agreement releasing Franks' Express from all further liability under this
Agreement, and Franks' Express shall have no further obligations under this
Agreement.
Section 4.4 Termination upon Death. This Agreement shall terminate upon the
Contractor's death, and Franks' Express shall have no further obligations under
this Agreement, provided that Franks' Express shall have the absolute obligation
to continue to pay to the Contractor (or his or her estate or personal
representative, as the case may be) an amount equal to the compensation
previously earned by the Contractor prior to the date of termination, and
Franks' Express shall have no further obligations under this Agreement.
Section 4.5 Termination by the Contractor. The Contractor may terminate the
Contractor's obligations under this Agreement as follows:
(a) upon the expiration of 10 days after the Contractor has given written
notice to Franks' Express that the Contractor has determined that Franks'
Express has breached any material term or condition of this Agreement,
unless Franks' Express shall have cured such breach to the satisfaction of
the Contractor within the 10 day period; or
(b) upon the expiration of 20 days after Franks' Express has been given
written notice by the Contractor that the Contractor has elected to
terminate this Agreement for any other reason.
ARTICLE V
CONFIDENTIALITY
Section 5.1 Confidential Information. During the term of this Agreement,
the Contractor may have access to and become familiar with various trade
secrets, techniques, inventions, processes, and compilations of information and
records which are owned, in whole or in part, by Franks' Express and which are
regularly used in the operation of its business, as well as various other types
of confidential information concerning Franks' Express' business and operations.
The Contractor shall not disclose any such trade secrets or other confidential
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information, nor use any of such trade secrets or other confidential
information, during the term of this Agreement or thereafter, except as required
in the course of performing Contractor's duties under this Agreement. All files,
records, documents, equipment, and similar items relating to Franks' Express'
business, whether prepared by the Contractor or otherwise coming into his or her
possession, shall remain the exclusive property of Franks' Express and, except
as may be required during the course of performance of Contractor's duties under
this Agreement, shall not be removed by the Contractor from the premises of
Franks' Express without the prior written consent of the President of Franks'
Express.
ARTICLE VI
MISCELLANEOUS PROVISIONS
Section 6.1 No Assignment. This Agreement and all rights, benefits, duties
and obligations under this Agreement shall not be subject to execution,
attachment or similar process and, in the absence of written permission from
Franks' Express, may not be assigned, delegated, transferred, pledged or
hypothecated. Any such assignment, delegation, transfer, pledge, hypothecation,
execution, attachment or similar process, to the extent permitted by law, shall
be null, void and of no effect whatsoever, unless the written consent of Franks'
Express and the Contractor shall have first been obtained.
Section 6.2 Arbitration. If any controversy arises out of events or
provisions relating to or included within this Agreement other than violation of
the provisions of Article V, the same shall be arbitrated in accordance with the
Commercial Arbitration Rules of the American Arbitration Association in effect
at the time of the dispute. Judgment on such arbitration award may be entered in
any court having jurisdiction.
Section 6.3 Severability. Whenever possible, each provision of this
Agreement shall be interpreted in such manner as to be valid and effective under
applicable law, but if any provision of this Agreement is found to be prohibited
or invalid under applicable law, such provision shall be ineffective to the
extent of such prohibition or invalidity without invalidating the remainder of
such provision or the remaining provisions of this Agreement.
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Section 6.4 Notices. All notices, requests, demands and other
communications under this Agreement shall be in writing and shall be deemed to
have been duly given if personally delivered or if mailed by United States
certified or registered mail, prepaid, to a party at the address for such party
contained in this Agreement or such other address as shall be provided in
writing by either party to the other.
Section 6.5 Successors and Assigns. This Agreement shall inure to the
benefit of the Contractor, his or her heirs, personal representatives and
assigns (if any) or its successors and assigns (if any), as the case may be, and
Franks' Express, its successors and assigns.
Section 6.6 Governing Law. This Agreement is made under, shall be construed
in accordance with, and shall be governed by the laws of the State of Colorado
as applied to contracts made and performed solely within the State of Colorado.
Section 6.7 Waiver and Modification. Any waiver, alteration or modification
of any of the provisions of this Agreement shall be valid only if made in
writing and signed by the parties to this Agreement. The failure of either party
to enforce at any time, or for any period of time, any of the provisions of this
Agreement shall not be construed as a waiver of such provisions or of the right
of such party to enforce each and every provision of this Agreement in the
future.
Section 6.8 Indemnification. The Contractor agrees to indemnify and hold
harmless Franks' Express from any and all claims, losses or damage (including
any amount paid in reasonable settlement of litigation, either threatened or
pending) and all costs and expenses (including legal fees and other expenses
reasonable incurred in investigating or defending against litigation, either
threatened or pending) incurred by Franks' Express arising out of the
Contractor's performance of duties under this Agreement.
Section 6.9 Headings. The headings and captions contained in this Agreement
are for convenience only and are not to be construed as a part of this
Agreement.
Section 6.10 Entire Agreement. This Agreement constitutes and embodies the
entire understanding and agreement of the parties to this Agreement and, except
as otherwise provided in this Agreement, there are no other agreements or
understandings, written or oral, in effect between the Contractor and Franks'
Express (or any other person or entity) specifically relating to the substance
of this Agreement.
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Section 6.11 Counterparts. This instrument may be executed in counterparts,
each of which shall be deemed an original, but both of which taken together
shall constitute one and the same instrument.
IN WITNESS WHEREOF, Franks' Express and the Contractor have executed this
Agreement as of the day and year first above written.
FRANKS' EXPRESS, INC.
By: /S/ ROBER D. JONES
---------------------------------------
Roger D. Jones, President
THE CONTRACTOR
/S/ RICHARD H. STEINBERG
-------------------------------------------
Richard H. Steinberg
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EXHIBIT A
Nature of Services
------------------
Duties and Obligations
----------------------
The Contractor shall perform the following services for Franks' Express:
1. Evaluate, advise and assist the Company with development and execution
of the Company's business plan.
2. Provide, on an as needed basis, food service and financial consulting to
customers of the Company.
3. Analyze sources of available capital to be used for pursuit of the
Company's business plan and expansion activities.
4. Assist the officers and directors of the Company with preparation and
filing of a registration statement with the Securities and Exchange Commission
to register shares of its common stock for sale to the public.
5. Assist the officers and directors of the Company with the offering and
sale of shares of the Company's common stock in compliance with applicable laws,
rules and regulations.
6. Serve as a liaison between the Company and its attorneys, accountants,
transfer agents, financial printers and other consultants.
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CONSENT OF JANET LOSS, C.P.A., P.C.
We consent to the reference of our firm under the caption "Experts" and to
the use of our report on the consolidated financial statements of Franks
Express, Inc., dated March 31, 1997 in the Registration Statement (Form SB-2)
and related Prospectus of Franks' Express, Inc. for the registration of shares
of its common stock.
Denver, Colorado
May 23, 1997
JANET LOSS, C.P.A., P.C.
By: /S/ JANET LOSS
-------------------------------------
Jane Loss
Certified Public Accountant
104
