SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-----------------
FORM 10-SB
GENERAL FORM FOR REGISTRATION OF SECURITIES
OF SMALL BUSINESS ISSUERS UNDER SECTION 12(b)
OR 12(g) OF THE SECURITIES EXCHANGE ACT OF 1934
SOUTHERN SECURITY FINANCIAL CORPORATION
- --------------------------------------------------------------------------------
(Exact name of Small Business Issuer in its Charter)
File No.
Delaware 65-0325364
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(State of Other Jurisdiction of I.R.S. Employer
Incorporation or Organization Identification No.
278-A New Dorp Lane, Staten Island, New York 10306-3036
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Address of Principal Executive Office) (Zip code)
718-667-9117
--------------------------
Issuer's Telephone Number
Securities to be registered under Section 12(b) of the Act:
Title of each Class Name of each Exchange on which
to be so Registered each Class is to be Registered
Securities to be registered pursuant to Section 12(g) of the Act:
Shares of Class A Voting Common Stock, $.01 par value per share
- --------------------------------------------------------------------------------
(Title of class)
<PAGE>
PART I
Item 1. Description of Business
- -------------------------------
Southern Security Financial Corporation (the "Registrant") was organized
under the Delaware Corporation Law on October 4, 1996 by Mega Holding Corp., a
Delaware corporation ("Mega"). Mega capitalized the Registrant by purchasing
602,500 shares of the Registrant's Class A Voting Common Stock, par value $.01
per share (the "Class A Stock") for $6,525. In July, 1997, Mega distributed
160,000 shares of Class A Stock to its shareholders, pro rata, in accordance
with their holdings of the common stock of Mega, distributed 340,000 shares of
Class A stock to officers, directors and consultants in partial consideration
for services rendered to Mega and retained 102,500 shares of Class A Stock.
To date, the Registrant has had no business operations, has no employees
and has generated no revenues.
The Registrant's plan of operation is to become a shell corporation with
602,500 shares of Class A Stock of record and such class of equity securities
registered under Section 12(g) of the Securities Exchange Act of 1934 (the
"Exchange Act") and then to merge (the "Merger") with Southern Security Bank
Corporation, a Florida bank holding company ("SSBC"), with the Registrant being
the surviving corporation, but under the name "Southern Security Bank
Corporation" and with the board of directors and management of SSBC. As a result
of the Merger, the holders of the shares of Class A Stock immediately prior to
the Merger would receive less than 5% of the outstanding equity securities of
SSBC and the holders of the equity securities of SSBC would receive more than
95% of the outstanding equity securities of the Registrant immediately after the
Merger.
SSBC has advised the Registrant that if the Registrant is able to position
itself in a timely manner as a "clean" shell corporation, with its Class A Stock
registered under Section 12(g) of the Exchange Act and held by at least 279
shareholders, then SSBC will enter into an appropriate merger agreement
satisfactory to it for the following purposes: (i) to cause the shareholders of
SSBC immediately prior to the Merger to receive more than 95% of the outstanding
equity securities of the surviving corporation; (ii) to cause SSBC to be
reincorporated under the Delaware Corporation Law; (iii) to cause the number of
shareholders of Class A Voting Common Stock of SSBC to be increased from
approximately 100 to approximately 379 holders of Class A Stock of the surviving
corporation; and (iv) to cause the surviving corporation to have the Class A
Stock registered under Section 12(g) of the Exchange Act. The management of SSBC
has advised the Registrant that if the Merger is consummated, it will cause the
Registrant to file a Form 8-K Report with the Securities and Exchange Commission
in order appropriately to disclose the effect of the Merger on the Registrant
and to disclose the nature and operations of the Registrant on a pro forma
basis.
If the Merger is not consummated, the Registrant may seek to effect a
similar merger with some other entity under similar terms or, if it is unable to
do so, it may dissolve.
Item 2. Management's Discussion and Analysis of Financial Condition and
Plan of Operation
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Results of Operations for the period, October 4, 1996, inception, to
June 30, 1997
- --------------------------------------------------------------------------------
Reference is made to the information contained in "Item 1. Description of
Business" which is incorporated herein by reference.
If the Merger is completed within the next twelve months, in the opinion of
Management, the Registrant will have sufficient cash available from its capital
contributions to fund its cash requirements until the Merger is consummated as
the Registrant has no plans to hire employees, lease premises or to undertake
any business operations prior to the consummation of the Merger.
Item 3. Description of Property
- -------------------------------
The Registrant owns no property or equipment. It occupies premises leased
by its major shareholder, Mega.
2
<PAGE>
Item 4. Security Ownership of Certain Beneficial Owners and Management
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(a) Securities Ownership of Certain Beneficial Owners.
---------------------------------------------------------
As of June 30, 1997, the following persons were known by the Registrant to
own of record or beneficially more than five (5%) of the voting interests of the
Registrant. Subject to the voting powers, if any, granted to holders of
Preferred Stock, and except as may otherwise be required by law, the Class A
Stock shall have the exclusive right to vote for the election of directors and
for all other purposes; and each holder of Class A Stock shall be entitled to
one vote for each share held.
Name and Address of Amount and Nature of Percent
Title of Class Beneficial Owner Beneficial Ownership of Class
- -------------- ------------------- -------------------- --------
Shares of Class Mega Holding Corp. 102,500 17.0%
A Stock 278-A New Dorp Lane
Staten Island, NY
Shares of Class Thomas Abate(1) 120,000 19.9%
A Stock 278-A New Dorp Lane
Staten Island, NY
Shares of Class James Paulsen(2) 36,000 5.9%
A Stock 278-A New Dorp Lane
Staten Island, NY
Shares of Class TGJ Associates(3) 49,000 8.1%
A Stock 231 Clarke Avenue
Staten Island, NY
- ----------------------
1. Includes 12,500 as joint tenant with Renee Abate; 1,875 shares as
custodian for Amanda Alexander; 1,875 shares as custodian for Megan Abate; 1,875
shares as custodian for Samantha Alexander; and 1,875 shares as custodian for
James Abate.
2. Includes 3,125 shares as joint tenant with Judith Paulsen.
3. Of the Shares of Common Stock owned by TGJ Associates, 23,000 shares are
beneficially owned by Thomas Abate and 23,000 shares are beneficially owned by
James Paulsen.
3
<PAGE>
(b) Securities Ownership of Management.
-------------------------------------------
Nancy Montanaro, President and Silvio Codispoti, Secretary/Treasurer, the
officers and directors of the Registrant, own the number of shares set forth
after their names.
Name and Address of Amount and Nature of Percent
Title of Class Beneficial Owner Beneficial Ownership of Class
- -------------- ------------------- -------------------- --------
Shares of Class Nancy Montanaro(4) 4,000 0.7%
A Stock 278-A New Dorp Lane
Staten Island, NY
Shares of Class Silvio Codispoti(5) 11,000 1.8%
A Stock 278-A New Dorp Lane
Staten Island, NY
- ------------------
4. Includes 875 shares as joint tenant with Paul Montanaro
5. Includes 62 shares as joint tenant with Dina Codispoti; 62 shares as
joint tenant with Denis Codispoti; and 500 shares as joint tenant with Florence
Codispoti.
Item 5. Directors, Executive Officers, Promoters and Control Persons.
- ---------------------------------------------------------------------
The following sets forth certain information concerning the directors and
executive officers of the Registrant. All directors hold office for a one year
term or until their successors are elected and have qualified. The officers
serve at the discretion of the board of directors.
Name Age Position Since
---- --- -------- -----
Nancy Montanaro 25 President and a Director 1996
Silvio Codispoti 54 Secretary and a Director 1996
Nancy Montanaro has served as administrative secretary of Mega Holding
Corp. since 1995. Prior thereto, she was an associate at Dean Witter Reynolds on
the trading floor of the New York Commodities Exchange.
Silvio Codispoti has, since 1991, served as Senior Vice-President of Mega
Holding Corp. Prior thereto, he was Vice-President in the Commercial Lending
Department of National Westminster Bank where he was employed for over 30 years.
<PAGE>
Item 6. Executive Compensation
- ------------------------------
The following table sets forth certain information concerning the
compensation paid or accrued by the Registrant for services rendered during the
period from inception, October 4, 1996 to June 30, 1997 to the President of the
Registrant and to other Officers and Directors receiving greater than $100,000
in salary and bonus.
SUMMARY COMPENSATION TABLE
Annual Compensation Long Term Compensation
Awards Payouts
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
(a) (b) (c) (d) (e) (f) (g) (h) (i)
Name Other Res- All
and Annual tricted Other
Principal Compen- Stock Options LTIP Compen-
Position Year Salary Bonus sation Awards SARs Payouts sation
($) ($) ($) (#) (#) ($) ($)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
- -------------------------------------------------------------------------------
Nancy * -0- -0- -0- -0- -0- -0- -0-
Montanaro,
President
- ------------------------------
*from inception, October 4, 1996 to June 30, 1997
</TABLE>
The Registrant has not adopted an option plan and has issued no options
since its formation.
The Registrant has no standard arrangements pursuant to which its Directors
are compensated for services provided as a director. The Registrant has no other
arrangements pursuant to which any director was compensated during the period
since its inception for any service to the Registrant as a director. The
Registrant has no employment contract with respect to any executive officer that
has resulted or will result in any payments to be received from the Registrant
based on the resignation, retirement or any other termination of such executive
officer's employment with the Registrant or from a change in control of the
Registrant or a change in such executive officer's responsibilities following
any change of control.
Item 7. Certain Relationships and Related Transactions
- ------------------------------------------------------
The Registrant, a Delaware corporation, was formed on October 4, 1996. In
October, 1996, it issued 602,500 shares of Class A Voting Common Stock, $.01 par
value per share, (the "Class A Stock") to Mega in consideration of $6,525. Mega
distributed 120,000 shares to Thomas Abate (includes shares in joint or
custodial tenancy of which he claims beneficial ownership); 36,000 shares to
James Paulsen (includes shares in joint tenancy of which he claims beneficial
ownership); 4,000 shares to Nancy Montanaro (includes shares in joint tenancy of
which she claims beneficial ownership); 11,000 shares to Silvio Codispodi,
Secretary, Treasurer (includes shares in joint tenancy of which he claims
beneficial ownership); and 49,000 shares to TGJ Associates of which 23,000
shares are beneficially owned by Thomas Abate and 23,000 shares are beneficially
owned by James Paulsen. In addition, 120,000 shares were transferred to
consultants in consideration of services rendered to Mega. Mega distributed, as
a dividend, 160,000 shares to its shareholders in proportion to their holdings.
5
<PAGE>
Item 8. Description of Securities
- ---------------------------------
The authorized capital stock of the Registrant consists of 30,000,000
shares of Class A Voting Common Stock, par value $.01 per share; 5,000,000
shares of Class B Non-Voting Common Stock, $.01 par value per share (the "Class
B Stock"); and 5,000,000 shares of Preferred Stock, $.01 par value per share
(the "Preferred Stock").
Shares of Class A Stock.
------------------------
602,500 Shares of Class A Stock are outstanding. Stockholders (i) have
general ratable rights to dividends from funds legally available therefor, when,
as and if declared by the Registrant's Board of Directors; (ii) are entitled to
share ratably in all assets of the Registrant available for distribution to
shareholders upon liquidation, dissolution or winding up of its affairs; (iii)
do not have preemptive, subscription or conversion rights, nor are there any
redemption or sinking fund provisions applicable thereto; and (iv) subject to
the voting powers, if any, granted to the holders of Preferred Stock, and except
as may otherwise be required by law, the Class A Stock shall have the exclusive
right to vote for the election of directors and for all other purposes, and each
holder of Class A Stock shall be entitled to one vote for each share held. All
Shares of Class A Stock now outstanding are fully paid and nonassessable.
Stockholders do not have cumulative voting rights. Thus, the holders of
more than 50% of such outstanding Common Shares, voting for the election of
Directors, can elect all of the Directors to be elected, if they so choose, and
in such event, the holders of the remaining Shares of Common Stock will not be
able to elect any of the Registrant's Directors.
Shares of Class B Stock.
--------------------------------
No Shares of Class B Stock are outstanding. Class B stockholders (i) have
general ratable rights to dividends from funds legally available therefor, when,
as and if declared by the Registrant's Board of Directors; (ii) are entitled to
share ratably in all assets of the Registrant available for distribution to
shareholders upon liquidation, dissolution or winding up of its affairs; (iii)
do not have preemptive, subscription or conversion rights, nor are there any
redemption or sinking fund provisions applicable thereto; and, (iv) except as
may be otherwise required by law, the Class B Stock shall have no voting rights
on any matter. Each share of Class B Stock converts to a share of Class A Stock
upon the happening of certain specified events.
Preferred Stock
----------------
The Registrant has issued no shares of Preferred Stock. The Board of
Directors of the Registrant has the authority, without further action by the
holders of the outstanding stock to issue shares of Preferred Stock from time to
time in one or more classes or series, to fix the number of shares constituting
any class or series and the stated value thereof, if different from the par
value, and to fix the terms of any such series or class, including dividend
rights, dividend rates, conversion or exchange rights, voting rights, rights and
terms of redemption (including sinking fund provisions), the redemption price
and the liquidation preference of such class or series. No preemptive rights are
granted to holder of Preferred Stock.
6
<PAGE>
Of the authorized shares of Preferred Stock, the certificate of
incorporation, as amended, authorizes the issuance of 1,200,000 shares of Series
A Preferred Stock. The Preferred Stock provides for dividends at the annual rate
of $.06 per share. No cash dividends or redemptions may be paid to any junior
shares while any shares of such Preferred Stock are outstanding. Each share
entitles the holder to one vote in all matters in which holders of Class A Stock
may vote. Holders of such shares have preferences in liquidation with respect to
holders of any junior securities. Holders have the right to convert their shares
into Shares of Class A Stock upon the happening of certain events. Holders of
Series A Preferred Stock have "piggy back" registration rights in the event a
registration statement is filed with the Securities and Exchange Commission
relating to an initial public offering of Class A Stock.
PART II
Item 1. Market Price of and Dividends on the Registrant's Common Equity and
Other Shareholder Transactions
- ---------------------------------------------------------------------------
There is no public trading market for any of the Registrant's securities,
including the Registrant's Class A Voting Common Stock, par value $.01 per share
(the "Class A Stock"). On June 30, 1997, the Class A Stock was held of record by
290 persons.
Reference is made to the information contained in "Item 1. Description of
Business," which is incorporated herein by reference. Prior to the merger, it is
not anticipated that any public trading market for the Registrant's securities
will develop. SSBC has advised the Registrant that if the merger is consummated,
it does not anticipate that there will be any immediate development of a public
trading market in its securities. If the merger is consummated, the Class A
Stock of the surviving corporation that is received by the former shareholders
of the Registrant will be "restricted securities" within the meaning of Rule 144
to the Securities Act of 1933 (the "Securities Act") and, accordingly, will only
be able to be sold or transferred upon registration under the Securities Act, or
upon compliance with a suitable exemption from such registration. SSBC has
advised the Registrant that it believes that if the merger is completed, the
basis for the future development of a public trading market in the Registrant's
Class A Stock will have been created, and that the management of SSBC may, but
will be under no obligation to, take actions to facilitate the development of a
public trading market in the Class A Stock.
Item 2. Legal Proceedings
- -------------------------
No legal proceedings are pending to which the Registrant or any of its
property is subject, nor to the knowledge of the Registrant are any other such
legal proceedings threatened.
Item 3. Changes in and Disagreement With Accountants on Accounting and
Financial Matters
- --------------------------------------------------------------------------------
None.
Item 4. Recent Sales of Unregistered Securities
- -----------------------------------------------
In October, 1996, it issued 602,500 shares of Class A stock to Mega Holding
Corp. in consideration of $6,525.
Item 5. Indemnification of Directors and Officers
- -------------------------------------------------
The personal liability of the directors of the Corporation is eliminated to
the fullest extent permitted by the provisions of Delaware General Corporation
Law.
The Delaware General Corporation Law provides for the indemnification of
the Registrant's officers, directors and corporate employees and agents under
certain circumstances as follows:
7
<PAGE>
"INDEMNIFICATION OF OFFICERS, DIRECTORS, EMPLOYEES AND AGENTS; INSURANCE.
(a) A corporation may indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(other than an action by or in the right of the corporation) by reason of the
fact that he is or was a director, officer, employee or agent of the corporation
or is or was serving at the request of the corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise, against expenses (including attorneys' fees), judgments, fines
and amounts paid in settlement actually and reasonably incurred by him in
connection with such action, suit or proceeding if he acted in good faith and in
a manner he reasonably believed to be in or not opposed to the best interests of
the corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. The termination of any
action, suit or proceeding by judgment, order, settlement, conviction, or upon a
plea of nolo contendere or its equivalent, shall not, of itself, create a
presumption that the person did not act in good faith and in a manner which he
reasonably believed to be in or not opposed to the best interests of the
corporation, and, with respect to any criminal action or proceeding, had
reasonable cause to believe that his conduct was unlawful.
(b) A corporation may indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action or
suit by or in the right of the corporation to procure a judgment in its favor by
reason of the fact that he is or was a director, officer, employee or agent of
the corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against expenses (including attorneys' fees)
actually and reasonably incurred by him in connection with the defense or
settlement of such action or suit if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
corporation and except that no indemnification shall be made in respect of any
claim, issue or matter as to which such person shall have been adjudged to be
liable to the corporation unless and only to the extent that the Court of
Chancery or the court in which such action or suit was brought shall determine
upon application that, despite the adjudication of liability but in view of all
the circumstance of the case, such person is fairly and reasonably entitled to
indemnity for such expenses which the Court of Chancery or such court shall deem
proper.
(c) To the extent that a director, officer, employee or agent of a
corporation has been successful on the merits or otherwise in defense of any
action, suit or proceeding referred to in subsections (a) and (b) of this
section, or in defense of any claim, issue or matter therein, he shall be
indemnified against expenses (including attorney's fees) actually and reasonably
incurred by him in connection therewith.
(d) Any indemnification under subsections (a) and (b) of this section
(unless ordered by a court) shall be made by the corporation only as authorized
in the specific case upon a determination that indemnification of the director,
officer, employee or agent is proper in the circumstances because he has met the
applicable standard of conduct set forth in subsections (a) and (b) of this
section. Such determination shall be made (1) by the board of directors by a
majority vote of a quorum consisting of directors who were not parties to such
action, suit or proceeding, or (2) if such a quorum is not obtainable, or, even
if obtainable a quorum of disinterested directors so directs, by independent
legal counsel in a written opinion, or (3) by the stockholders.
(e) Expenses (including attorneys' fees) incurred by an officer or director
in defending any civil, criminal, administrative or investigative action, suit
or proceeding may be paid by the corporation in advance of the final disposition
of such action, suit or proceeding upon receipt of an undertaking by or on
behalf of such director to repay such amount if it shall ultimately be
determined that he is not entitled to be indemnified by the corporation as
authorized in this section. Such expenses including attorneys' fees incurred by
other employees and agents may be so paid upon such terms and conditions, if
any, as the board of directors deems appropriate.
8
<PAGE>
(f) The indemnification and advancement expenses provided by, or granted
pursuant to, the other subsections of this section shall not be deemed exclusive
of any other rights to which those seeking indemnification or advancement
expenses may be entitled under any bylaw, agreement, vote or stockholders or
disinterested directors or otherwise, both as to action in his official capacity
and as to action in another capacity while holding such office.
(g) A corporation shall have power to purchase and maintain insurance on
behalf of any person who is or was a director, officer, employee or agent of the
corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against any liability asserted against him
and incurred by him in any such capacity or arising out of his status as such,
whether or not the corporation would have the power to indemnify him against
such liability under this section.
(h For purposes of this Section, references to "the corporation" shall
include, in addition to the resulting corporation, any constituent corporation
including (any constituent of a constituent) absorbed in a consolidation or
merger which, if its separate existence had continued, would have had power and
authority to indemnify its directors, officers and employees or agents so that
any person who is or was a director, officer, employee or agent of such
constituent corporation, or is or was serving at the request of such constituent
corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, shall stand in the same
position under this section with respect to the resulting or surviving
corporation as he would have with respect to such constituent corporation as he
would have with respect to such constituent corporation if its separate
existence had continued.
(i) For purposes of this section, references to "other enterprises" shall
include employee benefit plans; references to "fines" shall include any excise
taxes assessed on a person with respect to an employee benefit plan; and
references to "serving at the request of the corporation" shall include any
service as a director, officer, employee or agent of the corporation which
imposes duties on, or involves services by, such director, officer, employee, or
agent with respect to an employee benefit plan, its participants, or
beneficiaries and a person who acted in good faith and in a manner he reasonably
believed to be in the interest of the participants and beneficiaries of an
employee benefit plan shall be deemed to have acted in a manner "not opposed to
the best interests of the corporation" as referred to in this section.
(j) The indemnification and advancement of expenses provided by, or granted
pursuant to, this section shall, unless otherwise provided when authorized or
ratified, continue as to a person who has ceased to be a director, officer,
employee or agent and shall inure to the benefit of the heirs, executors, and
administrators of such person."
Article Ninth of the registrant's Certificate of Incorporation states:
"NINTH. Directors of the corporation shall not be liable to either the
corporation or its stockholders for monetary damages for a breach of fiduciary
duties unless the breach involves: (1) a director's duty of loyalty to the
Corporation or its stockholders; (2) acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law; (3)
liability for unlawful payments of dividends or unlawful stock purchases or
redemption by the Corporation; or (4) a transaction from which the director
derived an improper personal benefit."
9
<PAGE>
Article Eleventh of the registrant's Certificate of Incorporation states:
"ELEVENTH. The Corporation shall indemnify all persons whom it may
indemnify to the fullest extent allowed by the General Corporation Law of
Delaware."
Article IV of the registrant's bylaws states:
"The Corporation will indemnify and hold harmless to the fullest extent
authorized by the Delaware General Corporation Law, any Director, Officer, agent
or employee of the Company, against all expense, liability and loss reasonably
incurred or suffered by such person in connection with the Corporation."
<PAGE>
McManus & Co., P.C. Certified Public Accountants
- ------------------------------------------------------------------------------
188 Speedwell Avenue, Morris Plains, NJ 07950
Tel: 201-285-0012 . Fax: 201-285-0939
350 5th Avenue, Suite 1423, New York, NY 10118
To the Board of Directors and Stockholders
of Southern Security Financial Corporation:
We have audited the accompanying balance sheet of Southern Security
Financial Corporation as of June 30, 1997, and the related statements of
operations, stockholders' equity, and cash flows for the period October 4, 1996
(date of inception) to June 30, 1997. These financial statements are the
responsibility of Southern Security Financial Corporation management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, based on our audit, the financial statements referred to
above present fairly, in all material respects, the financial position of
Southern Security Financial Corporation as of June 30, 1997, and the results of
its operations, stockholders' equity, and their cash flows for the period then
ended are in conformity with generally accepted accounting principles.
/s/McManus & Co. P.C.
McManus & Co., P.C.
Certified Public Accountants
Morris Plains, New Jersey
July 16, 1997
F-1
<PAGE>
SOUTHERN SECURITY FINANCIAL CORPORATION
BALANCE SHEET
JUNE 30, 1997
ASSETS
Current Assets: $ --
--------
Other Assets:
Organization Costs 6,025
--------
Total Other Assets 6,025
--------
Total Assets $ 6,025
========
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities: $ --
--------
Stockholders' Equity:
Preferred Stock - $.01 par value
Authorized 3,800,000 shares
Issued -0- shares --
Preferred Stock (Series A) - $.01 par value
Authorized 1,200,000 shares
Issued -0- shares --
Common Stock (Class A) - $.01 par value
Authorized 30,000,000 shares
Issued 602,500 shares 6,025
Common Stock (Class B) - $.01 par value
Authorized 5,000,000 shares
Issued -0- shares --
Paid In Capital --
Retained Earnings --
-------
Total Stockholders' Equity 6,025
--------
Total Liabilities and Stockholders' Equity $ 6,025
========
See accompanying accountant's report and notes to the financial statements.
F-2
<PAGE>
SOUTHERN SECURITY FINANCIAL CORPORATION
STATEMENT OF OPERATIONS
FOR THE PERIOD OCTOBER 4, 1996 (Date of Inception) TO JUNE 30, 1997
Revenues $ --
Expenses --
--------
Net Earnings/(Loss) $ --
========
Net Earnings/(Loss) Per Share:
Weighted Average Number of
Common Shares Outstanding 602,500
Net Earnings / (Loss) $ --
See accompanying accountant's report and notes to the financial statements.
F-3
<PAGE>
SOUTHERN SECURITY FINANCIAL CORPORATION
STATEMENT OF CASH FLOWS
FOR THE PERIOD OCTOBER 4, 1996 (Date of Inception) TO JUNE 30, 1997
Cash Flow from Operating Activities:
Net Income/(Loss) $ --
Adjustments To Reconcile Net Income To Net
Cash Provided/(Used) In Operating Activities --
----------
Total Adjustments --
----------
Net Cash provided/(used) by Operating Activities --
----------
Cash Flow from Investing Activities:
(Increase)/Decrease in Organization (6,025)
-----------
Net Cash provided/(used) by Investing Activities (6,025)
-----------
Cash Flow from Financing Activities:
Issuance of Common Stock 6,025
------------
Net Cash provided/(used) by Financing Activities 6,025
------------
Net Increase/(Decrease) in Cash --
Cash at the Beginning of the Period --
------------
Cash at the End of the Period $ --
============
See accompanying accountant's report and notes to the financial statements.
F-4
<PAGE>
SOUTHERN SECURITY FINANCIAL CORPORATION
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE PERIOD OCTOBER 4, 1996 (Date of Inception) TO JUNE 30, 1997
October 4, 1996 Common Additional Total
(Date of Inception) Stock Paid In Retained Stockholders'
to June 30, 1997 (Class A) Capital Earnings Equity
----------------------- ------- ----------- -------- ------------
October 4, 1996
(Date of Inception) $ -- $ -- $ -- $ --
Issuance of Common Stock 6,025 -- -- 6,025
------ -------- -------- --------
Total Stockholders' Equity
As Of June 30, 1997 $ 6,025 $ -- $ -- $ 6,025
======= ========= ======== ========
See accompanying accountant's report and notes to the financial statements.
F-5
<PAGE>
SOUTHERN SECURITY FINANCIAL CORPORATION
NOTES TO THE FINANCIAL STATEMENTS
Note 1 - Basis of Presentation and Significant Accounting Policies
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Southern Security Financial Corporation (the Company) was incorporated as a
Delaware corporation and commenced business on October 4, 1996. The Company was
formed with the intent to negotiate a merger with a banking corporation based in
Florida. Therefore, no revenues or expenses will be generated until the merger
becomes effective.
A) Income Taxes
The Company adopted the provisions of Statement of Financial Accounting
Standards (SFAS) No. 109, "Accounting for Income Taxes", which requires a change
from the deferral method to the assets and liability method of accounting for
income taxes. Timing differences exist between book income and tax income which
relate primarily to the recognition of income.
B) Net Earnings/(Loss) Per Common Share
Net earnings/(loss) per common share is computed by dividing net
earnings/(loss) by the weighted average number of shares of common stock
outstanding during the period.
Note 2 - Common Stock:
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A) Class A Shares
At June 30, 1997, 602,500 shares of Class A Common Stock have been issued
and are outstanding. The holders of these shares are considered to have voting
rights where one share equals one vote. Additionally, this class of stock
carries with it the right to receive dividends if the Board of Directors so
chooses.
B) Class B Shares
At June 30, 1997, no shares of Class B Common Stock have been issued or are
outstanding. The holders of these shares carry no voting rights, yet they have
the right to receive dividends if the Board of Directors so chooses. Upon the
occurrence of certain events, each share of Class B Common Stock is convertible
into one share of Class A Common Stock.
F-6
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Note 3 - Preferred Stock:
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In and among itself, the Preferred Stock carries with it no natural rights.
The Preferred Stock, however, at the authorization of the Board of Directors,
may be designated into one or more series. Upon designation, the Board of
Directors will determine any and all rights that these series of Preferred Stock
shall carry.
At June 30, 1997, the Board of Directors has designated 1,200,000 shares of
the Preferred Stock as Series A Preferred Stock. Holders of Series A Preferred
Stock are considered to have voting rights where one share of stock equals one
vote. The Series A Preferred Stock is entitled to cumulative dividends at the
rate of $.06 per share. Holders of the Series A Preferred Stock will be entitled
to additional dividends in the event the Board of Directors declares and pays
dividends on the Company's Common Stock on the same basis as though the shares
of Series A Preferred Stock had been converted into shares of Common Stock.
F-7
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SIGNATURES
Pursuant to the requirements of Section 12 of the Securities Exchange Act
of 1934, the registrant has duly caused this registration statement to be signed
on its behalf by the undersigned, thereunto duly authorized.
SOUTHERN SECURITY FINANCIAL CORPORATION
(Registrant)
Date: July 16, 1997 By: /s/Nancy Montanaro
-------------------
Nancy Montanaro,
President and Principal
Executive Officer and
Principal Financial Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed by the following persons on behalf of the registrant and
in the capacities on the date(s).
/s/Nancy Montanaro
- ----------------- Director July 16, 1997
Nancy Montanaro
/s/ Silvio Codispoti
- -------------------- Director July 16, 1997
Silvio Codispoti
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Exhibits
Exhibit List
3.1 Certificate of Incorporation
3.2 Amendment to Certificate of Incorporation
3.3 Bylaws
4.1 Specimen Class A Common Stock Certificate*
27 Financial Data Schedule
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* To be supplied by amendment
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Exhibit 3.1
Certificate of Incorporation
<PAGE>
CERTIFICATE OF INCORPORATION
of
SOUTHERN SECURITY FINANCIAL CORPORATION
FIRST. The name of this Corporation is SOUTHERN SECURITY FINANCIAL
CORPORATION.
SECOND. Its registered office in the State of Delaware is to be located at
1313 N. Market Street, in the City of Wilmington, County of New Castle
19801-1151. The registered agent in charge thereof is the Company Corporation,
at the same address.
THIRD. The nature of the business, and the objects and purposes proposed to
be transacted, promoted and carried on, are to do any or all the things herein
mentioned, as fully and to the same extent as natural persons might or could do,
and in any part of the world. viz:
"The purpose of the Corporation is to engage in any lawful act or
activity for which corporations may be organized under the General
Corporation Law of Delaware."
FOURTH. The authorized capital stock of this Corporation is Thirty Million
(30,000,000) shares of Class A Common Shares, with a par value of $.01 per
share; Five Million (5,000,000) Class B Common shares, with a par value of $.01
per share, convertible into Class A Common Stock on a share-for share basis and
Five Million (5,000,000) Series A Preferred Stock, with a par value of $.01 per
share, convertible into Class A Common stock on a share-for share basis;
FIFTH. The name and mailing address of the incorporator is as follows:
NAME: ADDRESS:
Regina Cephas 1313 N. Market Street, Wilmington, DE 19801-1151
SIXTH. The power of the incorporator is to terminate upon filing of the
Certificate of Incorporation, and the name and mailing address of the person who
is to serve as the director until the first annual meeting of stockholders or
until his successor is elected and qualify is as follows:
Thomas Abate, 278-A New Dorp lane, Staten Island, NY 10306
SEVENTH. The Directors shall have power to make and to alter or amend the
By-Laws and to fix the amount to be reserved as working capital.
The By-Laws shall determine whether and to what extent the accounts and
books of this Corporation, or any of them shall be open to the inspection of the
stockholders; and no stockholder shall have any right of inspecting any account,
or book or document of this Corporation, except as conferred by law or the
By-Laws, or by resolution of the stockholders.
It is the intention that the objects, purposes and powers specified in the
Third paragraph hereof shall, except where otherwise specified in said paragraph
be nowise limited or restricted by reference to or inference from the terms of
any other clause or paragraph in this Certificate of Incorporation, but that the
objects, purposes and powers specified in the Third paragraph and in each of the
clauses or paragraphs of this charter shall be regarded as independent objects,
purposes and powers.
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EIGHTH. The Directors shall have power to make and to alter or amend the
By-Laws and to fix the amount to be reserved as working capital. The By-Laws
shall determine whether and to what extent the accounts and books of this
Corporation, or any of them shall be open to the inspection of the stockholders;
and no stockholder shall have any right of inspecting any account , or book or
document of this Corporation, except as conferred by the law or the By-Laws, or
by resolution of the stockholders.
NINTH. Directors of the corporation shall not be liable to either the
corporation or its stockholders for monetary damages for a breach of fiduciary
duties unless the breach involves: (1) a director's duty of loyalty to the
Corporation or its stockholders; (2) acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law; (3)
liability for unlawful payments of dividends or unlawful stock purchases or
redemption by the Corporation; or (4) a transaction from which the director
derived an improper personal benefit.
TENTH. The Corporation elects not to be governed by Section 203 of the
General Corporation Law of Delaware.
ELEVENTH. The Corporation shall indemnify all persons whom it may indemnify
to the fullest extent allowed by the General Corporation of Delaware.
I, THE UNDERSIGNED, for the purpose of forming a Corporation under the laws
of the State of Delaware, do make, file and record this Certificate and do
certify that the facts herein are true; and I have accordingly hereunto set my
hand.
DATED: 10-3, 1996
State of: Delaware
County of: New Castle
/s/Regina Cephas
----------------
REGINA CEPHAS
Exhibit 3.2
Amendment to Certificate of Incorporation
<PAGE>
CERTIFICATE OF AMENDMENT
OF THE
CERTIFICATE OF INCORPORATION
OF
SOUTHERN SECURITY FINANCIAL CORPORATION
Under Section 241 of the
Corporation Law of the State of Delaware
SOUTHERN SECURITY FINANCIAL CORPORATION (the "Corporation"), a corporation
organized and existing under and by virtue of the General Corporation Law of the
State of Delaware, DOES HEREBY CERTIFY:
FIRST: That the Corporation has not received any payment for any of its
stock, and this Certificate of Amendment has been adopted in accordance with
Section 241 of the General Corporation Law of the State of Delaware.
SECOND: That the Board of Directors of said Corporation adopted the
following amendments to the Certificate of Incorporation of said corporation:
That Article FOURTH of the Certificate of Incorporation be amended and, as
amended, read as follows:
"FOURTH: The number of shares of stock that this Corporation is authorized
to have outstanding at any one time is forty million (40,000,000) shares, of
which: thirty-five million (35,000,000) shares shall be common stock having a
par value of $.01 per share (the "Common Stock", of which thirty million
(30,000,000) shares shall be Class A Voting Common Stock (the "Class A Common
Stock" and five million (5,000.000) shall be Class B Non-Voting Convertible
Common Stock (the "Class B Common Stock"); and five million (5,000,000) shares
shall be preferred stock having a par value of $.01 per share (the "Preferred
Stock").
(1) Common Stock. Except as set forth in this Article FOURTH, the Class A
Common Stock and the Class B Common Stock shall have the same rights and
privileges and shall rank equally, share ratably and be identical in all
respects as to all matters.
(I) Dividends, Combinations Subdivisions and Mergers. Subject to any
preferential or other rights granted to holders of Preferred Stock, holders of
Class A Common Stock and Class B Common Stock shall be entitled to receive such
dividends and distributions, payable in cash or otherwise, as the Board of
Directors may, from time to time, declare out of assets or funds of the
Corporation legally available therefor,, provided that all such dividends and
distributions shall be paid or made in equal amounts, share for share, to the
holders of Class A Common Stock and Class B Common Stock, as if a single class.
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In case the Corporation shall, at anytime: (a) declare a dividend on the
Corporation's Common Stock payable in shares of Common Stock, (b) subdivide the
outstanding shares of Common Stock into a greater number of shares, (c) combine
the outstanding shares of Common Stock into a smaller number of shares, (d)
make a distribution on Common Stock in shares of its capital stock other than
Common Stock, or (e) issue any shares of its capital stock in a reclassification
of Common Stock (including any such reclassification in connection with a
consolidation or merger in which the Corporation is the continuing corporation),
then, as promptly as practicable after any of such events, the outstanding
shares of the Class A Common Stock and Class B Common Stock shall likewise,
proportionately and on the same per share basis, be adjusted or affected, except
that in the event any dividend on the Common Stock shall be declared in shares
of Common Stock, such dividends shall be declared at the same rate per share on
the Class A Common Stock and Class B Common Stock, as if a single class, and
each such class shall be paid with shares of the same class.
(ii) Rights on Liquidation. Subject to any preferential or other rights
granted to holders of Preferred Stock, in the event of any liquidation,
dissolution or winding up of the Corporation, whether voluntary or involuntary,
the assets of the Corporation available for distribution to stockholders shall
be distributed in equal amounts per share to the holders of the Class A Common
Stock and Class B Common Stock, as if a single class. For purposes of this
paragraph, a consolidation or merger of the Corporation with any other
corporation, or the sale, transfer or lease by the Corporation of all or
substantially all of its assets, shall not constitute or be deemed a
liquidation, dissolution or the winding-up of the Corporation.
(iii) Voting. Subject to the voting powers, if any, granted to the holders
of Preferred Stock, and except as may be otherwise required by law, the Class A
Common Stock shall have the exclusive right to vote for the election of
directors and for all other purposes, and each holder of Class A Common Stock
shall be entitled to one vote for each share held. Except as may be otherwise
required by law, the Class B Common Stock shall have no voting rights on any
matter.
<PAGE>
(iv) Conversion of Class B Common Stock. Each share of the Class B Common
Stock shall be automatically converted as a result of the occurrence of the
event specified in Paragraph (l)(iv)(c) hereof into fully paid and
non-assessable shares of the Class A Common Stock at the conversion ratio of one
share of Class A Common Stock for each share of Class B Common Stock.
(a) Within a period not to exceed thirty (30) days before the filing of a
Registration Statement (as defined in Paragraph (l)(iv)(d) below), the
Corporation shall deliver written notice to the holders of Class B Common Stock
at the address last shown on the records of the Corporation for each holder or
given by each holder to the Corporation for the purposes of notice (or, if no
such address appears or is given, at the place where the principal executive
office of the Corporation is located), notifying holders of the conversion to be
effected, specifying the date upon which the Corporation anticipates the
Registration Statement will be filed. Holders of Class B Common Stock must,
within ten (10) days of his receipt of the Corporation's notice regarding its
intent to file a Registration Statement (as defined in Paragraph (l)(iv)(d)
below), surrender at the office of any transfer agent for the Class B Common
Stock (which may be the Corporation) the certificate(s) therefor, duly endorsed
to the Corporation or in blank, and written notice stating the number of Shares
of Class B Common Stock that such holder possesses to exchange and the name(s)
and addresses in which the certificate(s) representing the newly issued Class A
Common Stock shall be issued.
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(b) Upon surrender and conversion of the Class B Common Stock, the
Corporation shall issue the certificate(s) for Class A Common Stock in the
name(s) so designated with such legends affixed or restrictions imposed as may
be required by federal, state or jurisdictional securities laws as determined by
legal counsel for the Corporation; provided that the Corporation is not advised
by its counsel that the issuance of such certificate(s) would be in violation of
federal, state or jurisdictional securities law. The Corporation shall also
affix to such certificates any documentary stamps in amounts sufficient to
satisfy any liability under Delaware law that may arise in connection with
converting Class B Common Stock into Class A Common Stock. Shares of the Series
A Preferred Stock shall be deemed to have been converted immediately prior to
the effective date of the Registration Statement (as defined in Paragraph
(l)(iv)(d) below) for which the Corporation provided notice (for purposes of
this Paragraph (l)(iv)(b), the "Conversion Date"), and the person(s) entitled to
receive shares of the Class A Common Stock issuable upon such conversion shall
be treated for all purposes as the record holder(s) of such shares of Class A
Common Stock at such time. As promptly as practicable after the Conversion Date,
the Corporation shall issue and deliver at said office the certificate(s) for
the number of full shares of the Class A Common Stock issuable upon such
conversion to the person(s) entitled to receive the same or to the nominee(s) of
such person(s).
(c) The Corporation shall at all times reserve and keep available out of
its authorized but unissued shares of Class A Common Stock, solely for the
purpose of effecting the conversion of the Class B Common Stock, the full number
of shares of Class A Common Stock then deliverable upon the conversion or
exchange of all shares of the Class B Common Stock at the time outstanding plus
accrued but unpaid dividends with respect thereto. If, at any time, the number
of authorized but unissued shares of Class A Common Stock shall not suffice to
effect the conversion of the Class B Common Stock, the Corporation shall take
such corporate action as may in the opinion of its counsel be necessary to
increase its authorized but unissued Class A Common Stock to such number of
shares as shall be sufficient for those purposes. The Corporation shall take all
such action as may be necessary to assure that all such shares of Class A Common
Stock may be so issued without violation of any applicable law or regulation,
the Articles or By-laws of the Corporation, or any agreement, instrument or
order to which the Corporation or any of its subsidiaries is then subject.
(d) The event giving rise to the automatic conversion of Class B Common
Stock into Class A Common Stock under this Paragraph (l)(iv) shall be the
effective date of a Registration Statement filed by the Corporation. For
purposes of this Paragraph (l)(iv), the term "Registration Statement" shall mean
a registration statement filed by the Corporation with the Securities Exchange
Commission (or any other Federal agency who, at the time of such filing, is
responsible for administering the Securities Act of 1933, as amended) relating
to an initial public offering and sale of the Corporation's Class A Common
Stock, other than a registration statement on Form S-4 or Form S-8. or their
successors, or any other form for a limited purpose, or any registration
statement covering only securities proposed to be issued in exchange for
securities or assets of another corporation.
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(e) The Corporation shall have the right to postpone or withdraw the
Registration Statement without obligation to any holder of Series B Common
Stock.
(v) Piggyback Registration Rights of Class B Common Stock Holders Upon
Conversion. Holders of Class B Common Stock shall have "piggyback" registration
rights provided in the same manner as contained in Paragraph (5) (vii) below,
after substituting the term "Class B Common Stock" for "Series A Preferred
Stock" in every place in Paragraph (5) (vii) where the latter term appears and
substituting the clause that reads "which will automatically converted into
shares of Class A Common Stock pursuant to Paragraph (1) (iv) above" for the
clause that reads "which may be converted into shares of Class A Common Stock
pursuant to Paragraph (5) (v) (a)" in the definition of the term "Registrable
Shares" contained in Paragraph (5) (vii) (a) (V).
(2) Preferred Stock. The Board of Directors shall have the authority to
issue the Preferred Stock from time to time, without further action by the
Corporation's stockholders, in one or more series, with designations, voting
powers, preferences and relative, participating, optional or other special
rights, and qualifications, limitations and restrictions thereof as the
Corporation's Board of Directors may determine, by resolution providing for the
issuance of shares of Preferred Stock, which may include, but shall not be
limited to, the following:
(I) The number of shares that will constitute such series and the
designation of such series.
(ii) The voting powers, full or limited, of such series or that such series
shall have no voting power.
(iii) The rate of dividends payable on such series, the time(s) when such
dividends will be payable, the preference to, or any relation to, the payment of
dividends to any other class or series of stock and whether the dividends will
be cumulative or non-cumulative.
(iv) Whether the shares of such series shall be redeemable, and if
redeemable, whether such shares shall be redeemable at the option of the
Corporation or the holder of such shares or upon the happening of a specified
event, the rate(s) or price(s) at which a redemption shall take place with such
adjustments as may be provided and any other teens or conditions of any
redemption.
(v) Whether the Corporation shall create a sinking or similar fund for the
redemption or purchase of shares and, if so, the terms and provisions that shall
govern such fund.
(vi) The rights of the holders of shares upon the liquidation, dissolution
or any distribution of the assets of the Corporation.
(vii) The rights, if any, of holders of shares, to convert such shares
into, or to exchange such shares for, shares of any other class(es) or any other
series of the same or any other class(es) of stock of the Corporation, the
prices(s) or rate(s) of exchange with such adjustments as shall be provided at
which such shares shall be convertible or exchangeable whether such rights of
conversion or exchange shall be exercisable at the option of the holder of the
shares or the Corporation or upon the happening of a specified event, and any
other terms or conditions of such conversation or exchange.
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(viii) The relative rights among each series with regard to dividends and
liquidation preferences.
(3) Adjustment of Authorized Preferred Stock. The number of authorized
shares of Preferred Stock may be increased or decreased by the affirmative vote
of the holders of a majority of the stock of the Corporation that is entitled to
vote, without requiring a class vote of the Preferred Stock or any class or
series thereof, except as may be otherwise provided in the resolution(s) fixing
the voting rights of such class or series.
(4) No Preemptive Rights. The holders of Common Stock or Preferred Stock of
the Corporation shall not be entitled, as a matter of right, to subscribe for or
purchase any part of any new or additional issue of any stock or other
securities of the Corporation.
(5) Creation of Series A Preferred Stock. There is hereby created from the
authorized but unissued shares of Preferred Stock, having a par value of $.01
per share, a series of Preferred Stock to consist of 1,200,000 shares (the
"Series A Preferred Stock") that will be offered at a price per share, to be
determined at the sole discretion of the Board of Directors, with the voting
powers, designation, preferences and relative, participating, optional or other
special rights, and the qualifications, limitations or restrictions thereof, of
the shares of such series as follows:
(i) Dividends.
(a) The annual rate of dividends on shares of the Series A Preferred Stock
shall be $0.06 per share (the "Dividend Rate"), accruing from the first day of
the calendar month next following the date of issuance. Such dividends shall be
payable in cash or, if approved by the holders of a majority of the shares of
the Series A Preferred Stock, in kind, in equal quarterly payments (as nearly as
reasonably may be possible) for each full quarterly dividend period. Dividends
payable on the Series A Preferred Stock for any period more than or less than a
full quarterly dividend period shall be computed on the basis of a 360-day year
consisting of twelve 30-day months. Dividends shall be payable, out of funds
legally available for the payment of dividends, when and as declared by the
Board of Directors, on January 1, April 1, July 1 and October 1 of each year
(each such date being called a "Dividend Payment Date") with respect to the
period ending on the day immediately preceding the Dividend Payment Date,
commencing on the first such date after the date upon which dividends begin to
accrue. Such dividends shall be paid to the holders of record of shares of the
Series A Preferred Stock as they appear in the stock records of the Corporation
on the close of business on the date specified by the Board of Directors of the
Corporation at the time such dividend is declared; provided, however, that such
date shall not be more than sixty (60) days nor less shall ten (10) days
preceding the payment date thereof. Accumulated but unpaid dividends for any
past quarterly dividend periods shall be cumulative and shall accrue, without
interest. Accumulated but unpaid dividends may be declared and paid at any time,
without reference to any regular Dividend Payment Date, to holders of record on
the close of business on the date specified by the Board of Directors at the
time such dividend is declared; provided, however, that such date shall not be
more than sixty (60) days nor less shall ten (10) days preceding the payment
date thereof. No interest, or sum of money in lieu of interest, shall be payable
in respect of any dividend payment(s) on the Series A Preferred Stock, whether
or not accumulated and unpaid.
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(b) As long as any shares of Series A Preferred Stock are outstanding, no
dividends or distributions (other than a dividend or distribution in the form of
Common Stock (as hereinafter defined) or any other capital stock of the
Corporation ranking junior to the Series A Preferred Stock as to dividends and
liquidation rights) shall be declared or paid or set apart for payment or other
distribution made upon the Common Stock of the Corporation or any other stock of
the Corporation ranking junior to the Series A Preferred Stock as to dividends
or liquidation rights, and no Common Stock or any other capital stock of the
Corporation ranking junior to the Series A Preferred Stock as to dividends or
liquidation rights shall be redeemed, purchased or otherwise acquired by the
Corporation for any consideration (except by conversion into or exchange for
capital stock of the Corporation ranking junior to the Series A Preferred Stock
as to dividends and liquidation rights) unless full cumulative dividends have
been paid (or declared and a cash, or if approved by the holders of a majority
of the shares of the Series A Preferred Stock, in kind sum sufficient for the
payment thereof set apart for such payment) of the Series A Preferred Stock for
all dividend payment periods terminating on or prior to the date of payment of
such dividends For purposes of this Paragraph (5)(i)(b), the term "Common Stock"
shall mean shares of any class of the Corporation's capital stock which is not
preferred and limited as to dividends. The foregoing restriction on redemption,
purchase or acquisition of Common Stock or any other capital stock of the
Corporation ranking junior to the Series A Preferred Stock shall not apply to
any payments made: in lieu of the issuance of fractional shares thereof (whether
upon any merger, conversion, stock dividend or otherwise); with respect to the
acquisition of any shares of Common Stock or other capital stock of the
Corporation in connection with the settlement of disputes arising out of
acquisitions by the Corporation pursuant to which such stock was issued; or with
respect to the rescission of any acquisition or disposition by the Corporation
pursuant to which such stock was issued. When dividends are not paid in full
upon the shares of the Series A Preferred Stock and other Preferred Stock
ranking on a parity as to dividends with the Series A Preferred Stock, all
dividends declared upon shares of the Series A Preferred Stock and such other
Preferred Stock ranking on a parity shall be declared pro rata so that the
amount of dividends declared per share on the Series A Preferred Stock and such
other Preferred Stock shall in all cases bear to each other the same ratio that
stated dividends per share on the shares of the Series A Preferred Stock and
such other Preferred Stock ranking on a parity with the Series A Preferred Stock
as to dividends bear to each other.
(c) In addition to the dividend provided in Paragraph (5)(i)(a) above,
holders of shares of the Series A Preferred Stock shall be entitled to a
dividend any time that a dividend is declared and paid on the Corporation's
Common Stock on the same basis as though the shares of Series A Preferred Stock
had been converted into shares of Common Stock in accordance with the provisions
of Paragraph (5)(v) below as of the record date for any such declaration of
dividends on the Common Stock.
(d) Notwithstanding the foregoing provisions of this Paragraph (5),
dividends on the Series A Preferred Stock may not be declared, paid or set apart
if the Corporation is insolvent (or would be rendered insolvent thereby), or at
such time as the terms and provisions of any law or agreement of the
Corporation, including any agreement relating to its indebtedness, specifically
prohibits such declaration, payment or setting apart for payment or provides
that such declaration, payment or setting apart for payment would constitute a
violation or breach thereof or a default thereunder; provided, however, that
nothing herein contained shall in any way or under any circumstance be construed
or deemed to require the Board of Directors to declare or the Corporation to pay
or set apart for payment any dividends on shares of the Series A Preferred Stock
at any time except to the extent expressly required hereunder, whether permitted
by any of such agreements or not.
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(ii) Voting Rights.
(a) Each share of Series A Preferred Stock shall be entitled to one vote
per share in all matters voted upon by the shareholders of the Corporation and
shall vote together with the holders of the Class A Common Stock as a single
voting group, unless voting as a separate voting group is otherwise expressly
required by these Articles of Incorporation or by law.
(b) So long as any shares of the Series A Preferred Stock remain
outstanding, the Corporation shall not, without obtaining the affirmative vote
through a meeting or the written consent without a meeting of the holders of at
least a majority in number of shares of the Series A Preferred Stock then
outstanding, voting or consenting (as the case may be) separately as a class,
adopt any amendment or supplement to its Articles of Incorporation which would
alter or change the powers, preferences or special rights of the Series A
Preferred Stock so as to affect them adversely, or create, authorize or issue
any other class or series of capital stock of the Corporation, the terms of
which shall specifically provide that such class or series shall rank prior to
the Series A Preferred Stock in respect to dividend rights or rights upon the
dissolution, liquidation or winding up of the Corporation.
(iii) Liquidation Rights.
(a) Subject to the rights of creditors, upon the dissolution, liquidation
or winding up of the Corporation, the holders of shares of the Series A
Preferred Stock shall be entitled to receive and to be paid out of the assets of
the Corporation available for distribution to its shareholders, before any
payment or distribution shall be made on any class or series of Common Stock
which ranks junior to the Series A Preferred Stock in respect of dividend rights
or on dissolution, liquidation or winding up of the Corporation, the amount of
$1.50 in cash or, if approved by the holders of a majority of the shares of the
Series A Preferred Stock, in kind, per full share, plus an amount in cash or in
kind equal to all accrued but unpaid dividends thereon to the date of final
distribution, less any amount previously distributed on such share in connection
with any such dissolution, liquidation or winding up of the affairs of the
Corporation.
(b) In the event the assets of the Corporation available for distribution
to the holders of shares of the Series A Preferred Stock upon any dissolution,
liquidation or winding up of the Corporation, whether voluntary or involuntary,
shall be insufficient to pay in full all amounts to which such holders are
entitled pursuant to this Paragraph (5)(iii), then upon such dissolution,
liquidation or winding up:
(I) with respect to any shares of any other class of capital stock of the
Corporation ranking junior to the shares of the Series A Preferred Stock, no
such distribution shall be made; and
(II) with respect to Preferred Stock of all other series, if any, ranking
on parity with the Series A Preferred Stock, the holders of the Series A
Preferred Stock and Preferred Stock of all such other series shall share ratably
in any distribution of assets.
(c) After the payment to the holders of shares of the Series A Preferred
Stock of the full preferential amounts provided for in this Paragraph (5)(iii),
such holders shall have no right or claim to any of the remaining assets of the
Corporation.
(d) None of (1) the sale, transfer or lease of all or substantially all the
property or business of the Corporation, (II) the merger or consolidation of the
Corporation into or with any other corporation, (III) the merger or
consolidation of any other corporation into or with the Corporation, or (IV) any
dissolution, liquidation, winding up or reorganization of the Corporation
immediately followed, in the case of this clause (IV), by another corporation
succeeding to the business and obligations of the Corporation, shall be deemed
to be a dissolution, liquidation or winding up, voluntary or involuntary, for
the purposes of this Paragraph (5)(iii).
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(iv) Ranking. Capital stock of any class or series of the Corporation shall
be deemed to rank as follows:
(a) Prior to shares of the Series A Preferred Stock, either as to dividends
or upon liquidation, if the holders of such stock shall be entitled to the
receipt of dividends, or of amounts distributable upon dissolution, liquidation
or winding up of the Corporation, as the case may be, in preference or priority
to the holders of shares of the Series A Preferred Stock;
(b) On a parity with shares of the Series A Preferred Stock, either as to
dividends or upon liquidation, whether or not the dividend rates, dividend
payment dates or redemption or liquidation prices per share, be different from
those of the Series A Preferred Stock, if the holders of such capital stock
shall be entitled to the receipt of dividends or of amounts distributable upon
dissolution, liquidation or winding up of the Corporation, as the case may be,
on a pro rata basis based on stated values, without preference or priority, one
over the other, as between the holders of such capital stock and the holders of
shares of the Series A Preferred Stock; and
(c) Junior to shares of the Series A Preferred Stock, either as to
dividends or upon liquidation, if such capital stock shall be any class or
series of Common Stock or if the holders of shares of the Series A Preferred
Stock shall be entitled to receipt of dividends or of amounts distributable upon
the dissolution, liquidation or winding up of the Corporation, as the case may
be, in preference or priority to the holders of shares of such class or series.
(v) Optional Conversion or Redemption. At his option, a holder of shares of
the Series A Preferred Stock may, if he so desires, elect either: upon the event
the Corporation files a Registration Statement (as defined in Paragraph
(1)(iv)(d) above), which is declared effective under the Securities Act of 1933,
as amended, to convert all of his shares into Class A Common Stock of the
Corporation (at the price and in the manner set forth in Paragraph (5)(v)(a)
below) or to cause the Corporation to buy all of his shares of Series A
Preferred Stock (at the price and in the manner set forth in Paragraph (5)(v)(b)
below); or, upon the occurrence of any of the events specified in Paragraph
(5)(viii)(b) or (c) below, to convert all of his shares into Class A Common
Stock (also at the price and in the manner set forth in Paragraph (5)(v)(a)
below).
Within a period not to exceed thirty (30) days before the filing of a
Registration Statement (as defined in Paragraph (1)(iv)(d) above), the
Corporation shall deliver written notice to the holders of Series A Preferred
Stock at the address last shown on the records of the Corporation for each
holder or given by each holder to the Corporation for the purposes of notice
(or, if no such address appears or is given, at the place where the principal
executive office of the Corporation is located), notifying such holders of the
Corporation's intent to file a Registration Statement, specifying the date upon
which the Corporation anticipates the Registration Statement will be filed. Any
election by a holder to so covert or sell his shares of Series A Preferred Stock
shall be conditioned upon, and shall not be given effect unless and until, a
declaration of the Registration Statement's effectiveness, and absent such
declaration the holder's election shall be null and void.
(a) If any holder of shares of Series A Preferred Stock elects to convert
his shares pursuant to this Paragraph (5)(v), then:
(1) Such election must be made with respect to all shares of Series A
Preferred Stock that the holder possesses at the time of such election, and all
such shares of Series A Preferred Stock shall be exchanged for fully paid and
non-assessable shares of the Corporation's Class A Common Stock.
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(11) The Class A Common Stock shall be issued upon conversion of shares of
the Series A Preferred Stock on a share-for-share basis, i.e. one share of Class
A Common Stock shall be issued upon conversion of each share of Series A
Preferred Stock. Any accumulated but unpaid dividends with respect thereto,
which are due and payable upon the date of conversion, shall be paid in cash by
the Corporation on the date of conversion or at such time as the Corporation
would normally pay dividends, in the Corporation's discretion. Accordingly, the
Series A Preferred Stock shall be convertible into Class A Common Stock on a
share for share basis, subject to adjustments of the Conversion Price as
provided below. The number of full shares issuable upon the conversion shall be
based upon the total number of shares converted. No fractional shares of Class A
Common Stock or scrip representing fractional shares of Class A Common Stock
shall be issued upon any conversion of the Series A Preferred Stock, as any
fractional shares shall instead be rounded to the nearest whole share.
(III) In order to convert shares of the Series A Preferred Stock into
shares of Class A common Stock pursuant to this Paragraph (5)(v)(a), the holder
thereof must, within ten (10) days of his receipt of the Corporation's notice
regarding its intent to file a Registration Statement (for purposes of this
Paragraph (5)(v), the "Conversion Period"), surrender at the office of any
transfer agent for the Series A Preferred Stock (which may be the Corporation)
the certificate(s) therefor, duly endorsed to the Corporation or in blank, and
give written notice to the Corporation at said office (which shall be deemed
given upon actual receipt by the Corporation) that he elects to convert such
shares and any accrued but unpaid dividends with respect thereto, stating the
number of shares of Series A Preferred Stock that such holder possesses to
exchange and the name or names (with addresses) in which the certificate or
certificates shall be issue.
(IV) Shares of the Series A Preferred Stock shall be deemed to have been
converted immediately prior to the effective date of the Registration Statement
for which the Corporation provided notice (for purposes of this Paragraph (5)
(v), the "Conversion Date"), and the person(s) entitled to receive shares of the
Class A Common Stock issuable upon such conversion shall be treated for all
purposes as the record holder(s) of such shares of Class A Common Stock at such
time. As promptly as practicable after the Conversion Date, the Corporation
shall issue and deliver at said office the certificate(s) for the number of full
shares of the Class A Common Stock issuable upon such conversion to the
person(s) entitled to receive the same or to the nominee(s) of such person(s).
(V) Upon conversion, the Corporation shall issue the certificate(s) for
Class A Common Stock in the name(s) so designated with such legends affixed or
restrictions imposed as may be required by federal, state or jurisdictional
securities laws as determined by legal counsel for the Corporation; provided
that the Corporation is not advised by its counsel that the issuance of such
certificate(s) would be in violation of federal, state or jurisdictional
securities laws. The Corporation shall also affix to such certificates any
documentary stamps in amounts sufficient to satisfy any liability under Delaware
Law that may arise in connection with any such conversion of Class B Common
Stock into Class A Common Stock.
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(VI) The Conversion Price shall be subject to adjustment as follows:
(A) In case the Corporation shall, at any time after this Statement of
Designation for the Series A Preferred Stock has been filed with the Secretary
of State of Delaware: declare a dividend on the Corporation's Class A Common
Stock payable in shares of Class A Common Stock; subdivide the outstanding
shares of Class A Common Stock into a greater number of shares; combine the
outstanding shares of Class A Common Stock into a smaller number of shares; make
a distribution On Class A Common Stock in shares of its capital stock other than
Common Stock; or issue any shares of its capital stock in a reclassification of
Class A Common Stock (including any such reclassification in connection with a
consolidation or merger in which the Corporation is the continuing corporation),
then the conversion privilege and the Conversion Price as to Class A Common
Stock in effect immediately prior to such action shall be adjusted so that the
holder of any shares of Series A Preferred Stock thereafter converted may
receive the number of shares of Class A Common Stock which such holder would
have owned immediately following such action if such holder had converted the
shares immediately prior to such action. Such adjustment shall be made
successively whenever any event listed above shall occur.
For a dividend or distribution, the adjustment shall become effective
immediately after the record date for the dividend or distribution. For a
subdivision, combination or reclassification, the adjustment shall become
effective immediately after the effective date of the subdivision, combination
or reclassification. If after an adjustment a holder of a share of Series A
Preferred Stock upon conversion of it may receive shares of two or more classes
or series of capital stock of the Corporation instead of the Class A Common
Stock, the Board of Directors shall determine the allocation of the adjusted
conversion price between or among the classes or series of capital stock. After
such allocation, the conversion prices of the classes or series of capital stock
shall thereafter be subject to adjustment on terms comparable to those
applicable to Class A Common Stock in this Paragraph (5)(v).
(B) The Corporation may, at any time, reduce the Conversion Price,
temporarily or otherwise, by any amount, so long as such reduction is for a
minimum period of twenty (20) days and is irrevocable during that period and the
Corporation notifies the holders of the Series A Preferred Stock at least
fifteen (15) days prior to the date on which the reduced Conversion Price takes
effect.
(C) No adjustments in the Conversion Price need to be made unless the
adjustment would require an increase or decrease of at least one dollar ($1.00)
in the Conversion Price. Any adjustments which are not made shall be carried
forward and taken into account in any subsequent adjustment. All calculations
under this Paragraph (5)(v)(a)(VI) shall be made to the nearest cent or to the
nearest whole share, as the case may be. Notwithstanding the first sentence of
this Paragraph (5)(v)(a)(Vl)(C), any adjustment required herein shall be made no
later than three years from the date of the transaction which mandates such
adjustment.
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(D) No adjustment in the Conversion Price shall be made because the
Corporation issues, in exchange for cash, property or services, shares of Class
A Common Stock, or any securities convertible into or exchangeable for shares of
Class A Common Stock, or securities carrying the right to purchase shares of
Class A Common Stock or such convertible or exchangeable securities.
Furthermore, no adjustment in the Conversion Price need be made under this
Paragraph (5)(v)(a)(VI) for the sale of shares of Class A Common Stock pursuant
to a Corporation plan providing for reinvestment of dividends or interest or in
the event the par value of Common Stock is changed. Anything contained herein to
the contrary notwithstanding, no adjustment in the Conversion Price or the
conversion privilege shall be made as a result of the issuance of shares of
Class A Common Stock upon or pursuant to conversion of shares of the Series A
Preferred Stock.
(E) Whenever the Conversion Price is adjusted the Corporation shall
promptly mail to holders of the Series A Preferred Stock and to the transfer
agent a notice of the adjustment briefly stating the facts requiring the
adjustment and the manner of computing it. The notice shall be conclusive
evidence that the adjustment is correct.
(F) If a state of facts shall occur which, without being specifically
controlled by the provisions of Paragraph (5)(v)(a)(VI), would not fairly
protect the conversion privilege of the Series A Preferred Stock in accordance
with the essential intent and principles of such provisions as determined in the
sole judgment of the Board of Directors, then the Board of Directors shall make
an adjustment in the application of such provisions, in accordance with such
essential intent and principles, so as to protect such conversion rights. Any
determination that the Board of Directors makes pursuant to this Subparagraph
(5)(v)(a)(VI)(F) shall be conclusive.
(VII) The issuance of certificates for shares of Class A Common Stock upon
conversion of the Series A Preferred Stock shall be made without charge to any
holder thereof for any issuance tax in respect thereto, provided that the
Corporation shall not be required to pay any tax which may be payable in respect
of any transfer involved in the issuance and delivery of any certificate in a
name other than that of such holder.
(VIII) Any shares of the Series A Preferred Stock which shall at any time
have been converted into Class A Common Stock shall, after such conversion, be
automatically retired and shall, after any necessary filing has been made with
the Secretary of State of Delaware, have the status of authorized but unissued
shares of Series A Preferred Stock.
(IX) The Corporation shall at all times reserve and keep available out of
its authorized but unissued shares of Class A Common Stock, solely for the
purpose of effecting the conversion of the Series A Preferred Stock, the full
number of shares of Class A Common Stock then delivered upon the conversion or
exchange of all shares of the Series A Preferred Stock at the time outstanding
plus accrued but unpaid dividends with respect thereto. If at any time the
number of authorized but unissued shares of Class A Common Stock shall not be
sufficient to effect the conversion of the Series A Preferred Stock, the
Corporation shall take such corporate action as may in the opinion of its
counsel be necessary to increase its authorized but unissued Class A Common
Stock to such number of shares as shall be sufficient for those purposes. The
Corporation shall take all such action as may be necessary to assure that all
such shares of Class A Common Stock may be so issued without violation of any
applicable law or regulation, the Articles or By-laws of the Corporation, or any
agreement, instrument or order to which the Corporation or any of its
subsidiaries is then subject.
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(b) If any holder of shares of Series A Preferred Stock elects to sell his
shares to the Corporation pursuant to this paragraph (5)(v), then:
(I) Such election must be made with respect to all shares of Series A
Preferred Stock that the holder possesses at the time of such election, and all
such shares of Series A Preferred Stock shall be exchanged for cash.
(II) The price at which shares of Series A Preferred Stock shall be sold to
the Corporation shall be equal to the product of the number of shares of Series
A Preferred Stock held by the holder multiplied by the sum of $1.50 per share of
Series A Preferred Stock, plus any accumulated but unpaid dividends with respect
thereto.
(III) In order to sell shares of the Series A Preferred Stock pursuant to
this Paragraph (5)(IV)(b), the holder thereof must, within the Conversion
Period, surrender at the office of any transfer agent for the Series A Preferred
Stock (which may be the Corporation) the certificate(s) therefor, duly endorsed
to the Corporation or in blank, and give written notice to the Corporation at
said office (which shall be deemed given upon actual receipt by the Corporation)
that he elects to sell such shares and any accrued but unpaid dividends with
respect thereto, stating the number of shares of Series A Preferred Stock that
such holder possesses to sell. Shares of the Series A Preferred Stock shall be
considered to have been sold immediately prior to the Conversion Date.
(IV) Unless the Corporation is in default with respect to the payment in
full of the selling price and any accrued and unpaid dividends after the
Conversion Period, then commencing with the first day after the Conversion
Period dividends on the sold shares shall cease to accrue, all rights of the
holders of such shares as stockholders of the Corporation by reason of the
ownership of such shares shall cease, and such shares shall not after the
Conversion Period be deemed to be outstanding.
(V) Any shares of the Series a Preferred Stock that at any time have been
sold to the Corporation shall, after such sale, be automatically retired and
shall have the status of authorized but unissued shares of preferred stock,
without designation as to class or series, until such shares are once again
designated as part of a particular class or series by the Board of Directors.
(VI) The Corporation shall have no obligation to establish a sinking fund
for the optional sale by any holders of the Series A Preferred Stock.
(VII) Notwithstanding the foregoing provisions of this Paragraph (5)(v),
the shares of the Series A Preferred Stock may not be sold to the Corporation in
whole or in part if the Corporation is insolvent or would be rendered insolvent
thereby, or at such time as the teens and provisions of any law specifically
prohibit such redemption or provide that such redemption would constitute a
violation thereof; provided, however, that nothing herein contained shall in any
way or under any circumstance be construed or deemed to require the Corporation
to purchase the Series A Preferred Stock at any time except to the extent
expressly required hereunder.
(vii) Piggyback Registration Rights Upon Conversion.
(a) Definitions. As used in this Paragraph (5)(vii), the following terms
shall have the following respective meanings:
(I) "Commission" means the Securities and Exchange Commission, or any other
Federal agency at the time administering the Securities Act.
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(II) "Exchange Act" means the Securities Exchange Act of 1934. as amended,
or any similar Federal statute, and the rules and regulations of the Commission
issued under such Act, as they each may, from time to time, be in effect.
(III) "Securities Act" means the Securities Act of 1933, as amended, or any
similar Federal statute, and the rules and regulations of the Commission issued
under such Act, as they each may, from time to time, be in effect.
(IV) "Registration Expenses" means the expenses described in Paragraph
(g)(lV) below.
(V) "Registrable Shares" means the shares of Series A Preferred Stock and
any other shares of Series A Preferred Stock issued or issuable in respect of
such shares (because of stock splits, stock dividends, reclassifications,
recapitalizations, or similar events, if applicable) which will may be converted
at the holder's option into shares of Class A Common Stock pursuant to Paragraph
(5)(v) above; provided, however, that the shares of Class A Common Stock which
are Registrable Shares shall cease to be Registrable Shares upon any sale of
such shares pursuant to a Registration Statement, Section 4(1) of the Securities
Act, Rule 144 under the Securities Act or otherwise.
(VI) "Registration Statement" means the registration statement described in
Paragraph (1)(iv)(d) above.
(b) Piggyback Registration.
(I) Whenever the Corporation proposes to file a Registration Statement, it
shall, within a period not be exceed thirty (30) days before the filing of such
Registration Statement, deliver written notice to the holders of Series A
Preferred Stock, at the address last shown on the records of the Corporation for
each holder or given by each holder to the Corporation for the purposes of
notice (or, if no such address appears or is given, at the place where the
principal executive office of the Corporation is located), notifying holders of
such proposed filing, specifying the date upon which the Corporation anticipates
the Registration Statement will be filed. Holders of the Series A Preferred
Stock shall have ten (10) days after the Corporation provides such notice to
provide written notice of their election to register all or a portion of their
Registrable Shares, which shall include the holder's intended method of
disposition of the Registrable Shares. The Corporation shall use its best
efforts to cause all Registrable Shares which the Corporation has been requested
by such holder(s) to register to be registered under the Securities Act to the
extent necessary to permit their sale or other disposition in accordance with
the intended methods of distribution specified in the written notice of such
holder or holders; provided that the Corporation shall have the right to
postpone or withdraw any registration effected pursuant to this Paragraph
(5)(vii) without obligation to any holder.
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(II) In connection with any offering under this Paragraph (5)(vii)
involving an underwriting, the Corporation shall not be required to include any
Registrable Shares in such underwriting unless the holders thereof accept the
terms of the underwriting as agreed upon between the Corporation and the
underwriters selected by it, and then only in such quantity as will not, in the
opinion of the underwriters, jeopardize the success of the offering by the
Corporation. If in the opinion of the managing underwriter or underwriters the
registration of all, or part of, the Registrable Shares which the holders have
requested to be included would materially and adversely affect such public
offering, then the Corporation shall be required to include in the underwriting
only that number of Registrable Shares, if any, which the managing underwriter
believes may be sold without causing such adverse effect. If the number of
Registrable Shares to be included in the underwriting in accordance with the
foregoing is less shall the total number of shares which the holders of
Registrable Shares have requested to be included, then the holders of
Registrable Shares shall participate in the underwriting pro rata based upon
their total ownership of Registrable Shares (or in any other proportion as
agreed upon by all holders of the Registrable Shares) and if any holder would
thus be entitled to include more shares than such holder requested to be
registered, the excess shall be allocated among other requesting holders pro
rata based upon their total ownership of Registrable Shares.
(C) Registration Procedures. If and when the Corporation is required by the
provisions of this Agreement to use its best efforts to effect the registration
of any of the Registrable Shares under the Securities Act, the Corporation
shall:
(I) file with the Commission a Registration Statement with respect to such
Registrable Shares and use its best efforts to cause that Registration Statement
to become and remain effective;
(II) as expeditiously as possible prepare and file with the Commission any
amendments and supplements to the Registration Statement and the prospectus
included in the Registration Statement as may be necessary to keep such
Registration Statement effective for a period of up to 120 days from the
effective date;
(III) as expeditiously as possible furnish to holders such reasonable
numbers of copies of the prospectus, including a preliminary prospectus, in
conformity with the requirements of the Securities Act, and such other documents
as the holders may reasonably request in order to facilitate the public sale or
other disposition of the Registrable Shares owned by the holders; and
(IV) as expeditiously as possible use its best efforts to register or
qualify the Registrable Shares covered by the Registration Statement under the
securities or Blue Sky laws of such states as the holders shall reasonably
request, and do any and all other acts and things that may be necessary or
desirable to enable the holders to consummate the public sale or other
disposition in such jurisdictions of the Registrable Shares owned by the holder;
provided, however, that the Corporation shall not be required in connection with
this Paragraph (5)(vii) to qualify as a foreign corporation or execute a general
consent to service of process in any jurisdiction.
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If the Corporation has delivered preliminary or final prospectuses to the
holders and after having done so the prospectus is amended to comply with the
requirements of the Securities Act, the Corporation shall promptly notify the
holders and, ii requested, the holders shall immediately cease making offers of
Registrable Shares and return all prospectuses to the Corporation. The
Corporation shall promptly provide the holders with revised prospectuses to
permit the holders to resume making offers of the Registrable Shares.
(d) Allocation of Expenses. The Corporation will pay all Registration
Expenses of all registrations under this Agreement; provided, however, that if a
registration is withdrawn at the request of the holders requesting such
registration (other than as a result of information concerning the business or
financial condition of the Corporation which is made known to the holders after
the date on which such registration was requested), the holders shall pay the
Registration Expenses of such registration pro rata in accordance with the
number of its Registrable Shares included in such registration. For purposes of
this Paragraph (5)(vii), the term "Registration Expenses" shall mean all
expenses incurred by the Corporation in complying with this Paragraph (5)(vii),
including, without limitation, all registration and filing fees, exchange
listing fees, printing expenses, fees and disbursements of counsel for the
Corporation, state Blue Sky fees and expenses, and the expense of any special
audits incident to or required by any such registration, but excluding
underwriting discounts and selling commissions attributable to the Registrable
Shares and the fees and expenses of the holder's own counsel and accountants,
which shall be borne by such holders.
(c) Indemnification. In the event of any registration of any of the
Registrable Shares under the Securities Act, pursuant to this Paragraph (5)
(vii), the Corporation will indemnify and hold harmless the seller of such
Registrable Shares against any losses, claims, damages or liabilities, joint or
several, to which such seller may become subject under the Securities Act, the
Exchange Act, state securities laws 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 or alleged untrue statement of any material
fact contained in any Registration Statement under which such Registrable Shares
was registered under the Securities Act, any preliminary prospectus or final
prospectus contained in the Registration Statement, or any amendment or
supplement to such Registration Statement, or arise out of or are based upon the
omission or alleged omission to state a material fact required to be stated
therein or necessary to make the statements therein not misleading; and the
Corporation will reimburse such seller for any legal or any other expenses
reasonably incurred by such seller in connection with investigating and
defending any such loss, claim, damage, liability or action; provided, however,
that the Corporation will not be liable in any such case to the extent that any
such loss, claim, damage, liability or expense arises out of or is based upon
any untrue statement or omission made in such Registration Statement,
preliminary prospectus or prospectus, or any such amendment or supplement, in
reliance upon and in conformity with information furnished to the Corporation by
or on behalf of such seller, specifically for use in the preparation thereof, or
as a result of the failure of such seller, or any agent of such seller, to
deliver any amendments and supplements to any Registration Statement and the
prospectus included in any such Registration Statement.
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In the event of any registration of any of the Registrable Shares under the
Securities Act pursuant to this Agreement, each seller of Registrable Shares,
severally and not jointly will indemnify and hold harmless the Corporation, each
of its directors and officers and each underwriter (if any) and each person, if
any, who controls the Corporation or any such underwriter within the meaning of
the Securities Act or the Exchange Act, against any losses, claims, damages or
liabilities, joint or several, to which the Corporation, such directors and
officers, underwriter or controlling person may become subject under the
Securities Act, Exchange Act, state securities laws or otherwise, insofar as
such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon any unsure statement or alleged untrue statement
of a material fact contained in any Registration Statement under which such
Registrable Shares were registered under the Securities Act, any preliminary
prospectus or final prospectus contained in the Registration Statement, or any
amendment or supplement to the Registration Statement, or arise out of or are
based upon any omission or alleged omission to state a material fact required to
be stated therein or necessary to make the statements therein not misleading,
and each seller of Registrable Shares will reimburse the Corporation, each of
its directors and officers, each underwriter and each controlling person,
severally and not jointly, for any legal or other expenses reasonably incurred
by the Corporation, each director and officer, each underwriter and each
controlling person in connection with investigating and defending any such loss,
claim, damage, liability or action, if the statement or omission was made in
reliance upon and in conformity with information furnished to the Corporation by
or on behalf of such seller, specifically for use in connection with the
preparation of such Registration Statement. prospectus, amendment or supplement.
Each party entitled to indemnification under this Paragraph (5) (vii) (e)
(the "Indemnified Party") shall give notice to the party required to provide
indemnification (the "Indemnifying Party") promptly after such Indemnified Party
has actual knowledge of any claim as to which indemnity may be sought, and shall
permit the Indemnifying Party to assume the defense of any such claim or any
litigation resulting therefrom; provided, that counsel for the Indemnifying
Party, who shall conduct the defense of such claim or litigation, shall be
approved by the Indemnified Party (whose approval shall not be unreasonably
withheld); and, provided, further, that the failure of any Indemnified Party to
give notice as provided herein shall not relieve the Indemnifying Party of its
obligations under this Paragraph (5) (vii). The Indemnified Party may
participate in such defense at such party's expense. No Indemnifying Party, in
the defense of any such claim or litigation shall, except with the consent of
each Indemnified Party, consent to entry of any judgment or enter into any
settlement which does not include as an unconditional term thereof the giving by
the claimant or plaintiff to such Indemnified Party of a release from all
liability in respect of such claim or litigation.
(f) Information by Holder. Each holder of Registrable Shares included in a
Registration Statement shall furnish to the Corporation such information
regarding such holder and the distribution proposed by such holder as the
Corporation may request in writing and as shall be required in connection with
any registration, qualification or compliance referred to in this Paragraph (5)
(vii).
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(g) "Stand-Off" Agreement. Each holder of Registrable Shares included in a
Registration Statement, if requested by the Corporation and an underwriter of
Common Stock or other securities of the Corporation, shall agree not to sell or
otherwise transfer or dispose of any Registrable Shares or other securities of
the Corporation held by such holder for a specified period of time (not to
exceed 180 days) before or after the effective date of a Registration Statement.
Such agreement shall be in writing in a form satisfactory to the Corporation and
such underwriter. The Corporation may impose stop transfer instructions with
respect to the Registrable Shares or other securities subject to the foregoing
restriction until the end of the stand-off period.
(viii) Notice of Certain Actions. If:
(a) the corporation takes any action which would require an adjustment in
the conversion price;
(b) the Corporation (1) consolidates or merges with another corporation
pursuant to which the Corporation is not the continuing corporation, (II) sells
or transfers all or substantially all of its assets to another corporation, or
(III) engages in a statutory exchange of securities with another corporation;
and in any of such events, stockholders of the Corporation must approve the
transaction, or
(c) there is a dissolution, liquidation or winding up of the Corporation;
then the Corporation shall mail to holders of the Series A Preferred Stock
a notice stating the proposed record date or, in the case of transactions for
which no record date need be determined, the effective date. The Corporation
shall mail the notice at least ten (10) days before the effective date of any of
the events specified in Paragraph (5)(vi)(b) above and at least twenty (70) days
before the effective date of any, of the events specified in Paragraph
(5)(vi)(c) above. A failure to mail the notice or any defect in it shall not
affect the validity of any transaction referred to in Paragraph (5)(vi) (b) or
(c).
(ix) Payments Due on Saturday, Sunday or Legal Holidays. In case a Dividend
Payment Date for the Series A Preferred Stock shall be a Saturday or Sunday the
payment of any dividend on the Series A Preferred Stock need not be made on such
date, but may be made on the next succeeding day not a Saturday or Sunday, with
the same force and effect as if made on such Dividend Payment Date.
(x) Increases/Decreases on Authorized Shares. The number of authorized
shares of the Series A Preferred Stock may be increased (but not above the total
number of authorized shares of Preferred Stock) or decreased (but nut below the
number of shares then outstanding) by further resolution duly adopted by the
Board of Directors and by filing with the Secretary of the State of Delaware a
Supplementary Statement of Designation stating that such an increase or
decrease has been so authorized.
(xi) No Other Rights. The shares of the Series A Preferred Stock shall not
have any relative, participating, optional or other special rights and powers
other than as set forth above and in the Articles of Incorporation of this
Corporation.
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<PAGE>
THIRD: That the aforesaid amendments were duly adopted in accordance with
the applicable provisions of Section 241 of the General Corporation Law of the
State of Delaware.
IN WITNESS WHEREOF, the Corporation has caused this Certificate to be
signed by Nancy Montanaro and Silvio Codispoti, its only directors, this 17 day
of January, 1997.
SOUTHERN SECURITY FINANCIAL CORPORATION
By:
/s/Nancy Montanaro
- --------------------------
Nancy Montanaro , Director
/s/ Silvio Codispoti
- --------------------------
Silvio Codispoti, Director
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
The financial data schedule consists of the unaudited balance sheet of the
Registrant as of June 30, 1997 and the related unaudited statements of
operations, cash flows and stockholders' equity for the period from inception
(October 4, 1996) to June 30, 1997.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> OCT-04-1996
<PERIOD-END> JUN-30-1997
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 500
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 6,025
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 500
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 0
<EPS-PRIMARY> .00
<EPS-DILUTED> .00
</TABLE>
