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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-1
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
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SAXON ACQUISITION CORP.
(Name of small business issuer in its charter)
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<S> <C> <C>
Delaware 6200 11-3391961
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(State or other jurisdiction (Primary Standard Industrial I.R.S. Employer
of incorporation or organization) Classification Code Number) Identification No.)
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Nicholas J. Seccafico Jr.
Saxon Acquisition Corp.
33 Eleventh Avenue
Huntington Station, N.Y. 11746
(516)423-8280
(Address and telephone number of principal executive offices)
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Nicholas J. Seccafico Jr.
Saxon Acquisition Corp.
33 Eleventh Avenue
Huntington Station, N.Y. 11746
(516) 423-8280
(Address and (Name, address and telephone number of agent for service)
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Copies of all communications should be sent to:
Steven Morse, Esq.
Lester Morse P.C.
111 Great Neck Road
Great Neck, NY 11021
(516) 487-1446
Approximate date of commencement of proposed sale of the securities to the
public: As soon as practicable after this Registration Statement becomes
effective. [X]
IF any of the securities being registered on this form are to be offered on a
delayed basis pursuant to Rule 415 under the Securities Act of 1933, check the
following box. [X]
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration number of the earlier effective registration statement for the same
offering.
If the delivery of the Prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]
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CALCULATION OF REGISTRATION FEE
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Proposed
Maximum Proposed Maximum
Amount to Offering Aggregate Offering
Title of Each Class of Securities to be be Price Per Price (1) Amount of
Registered Registered Share (1) Registration Fee
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<S> <C> <C> <C> <C>
Shares of Common Stock, par value 2,465,735 $ .4054 $ 999,609 $ 302.91
$.OO1 per share ("Common Stock")
(2)
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Totals $ 999,609 $ 302.91
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(1) Total estimated solely for the purpose of determining the registration
fee pursuant to Rule 457(f)(2) based upon the book value of the
Registrant.
(2) Includes 2,465,735 shares owned by NJS Acquisition Corp. to be
distributed to its stockholders of record as described in the
Prospectus.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SECTION 8(a), MAY
DETERMINE.
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SAXON ACQUISITION CORP.
CROSS-REFERENCE SHEET TO PROSPECTUS ON FORM S-1
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ITEM Form S-1 Caption Location in Prospectus
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<S> <C> <C>
1. Forepart of the Registration Statement
and Outside Front Cover Page of Prospectus Outside Front Cover Page
2. Inside Front and Outside Back Cover Available Information;
Pages of Prospectus Inside Front Cover Pages
3. Summary Information, Risk Factors and Prospectus Summary;
Ratio of Earnings to Fixed Charges Risk Factors
4. Use of Proceeds Use of Proceeds
5. Determination of Offering Price Cover Page; Plan of Distribution/
Market Information
6. Dilution Not Applicable
7. Selling Security Holders Not Applicable
8. Plan of Distribution Plan of Distribution/Market Information;
Outside Front Cover Page
9. Description of Securities to be Registered Description of Common Stock
10. Interest of Named Experts and Counsel Legal Matters; Experts
11. Information with Respect to the Registrant:
(a) Description of Business Business
(b) Description of Property Business
(c) Legal Proceedings Business
(d) Market Price of and Dividends Description of Common Stock;
on the Registrant's Common Equity Dividend Policy; Plan of Distribution/
and Related Stockholder Matters Market Information
(e) Financial Statements Financial Statements
(f) Selected Financial Data Selected Financial Data
(g) Supplementary Financial Information Not Applicable
(h) Management's Discussion and Analysis Management's Discussion and Analysis of
of Financial Condition and Results of Financial Condition and Results
of Operations of Operations
(i) Disagreements with Accountants on
Accounting and Financial Disclosure Not applicable
(j) Directors and Executive Officers Management
(k) Executive Compensation Executive Compensation
(l) Security Ownership of Certain Security Ownership of
Beneficial Owners and Management Management and Others
(m) Certain Relationships and
Related Transactions Certain Transactions
12. Disclosure of Commission Position
on Indemnification for Securities
Act Liabilities Executive Compensation
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SUBJECT TO COMPLETION _____, 1997. PROSPECTUS
SAXON ACQUISITION CORP.
2,465,735 SHARES OF COMMON STOCK
As of the date of this Prospectus, Saxon Acquisition Corp. ("Saxon")
is a wholly-owned subsidiary of NJS Acquisition Corporation ("NJS") and has
2,465,735 shares of Common Stock issued and outstanding (the "Saxon Common
Stock"). As of the date of this Prospectus, NJS has 9,862,940 shares of Saxon
Common Stock issued and outstanding. This Prospectus relates to the
distribution by NJS of all of its outstanding 2,465,735 shares of Saxon Common
Stock to the stockholders of NJS. Each NJS stockholder of record as of the
close of business on October __, 1997 (the "Record Date"), will receive on
November __, 1997 (the "Payment Date") 0.25 shares of Saxon Common Stock for
each outstanding share of NJS Common Stock (the "Conversion Ratio"). No
fractional shares will be issued and all fractional amounts will be disregarded.
No offering price is indicated herein since the recipients of the NJS
distribution will not pay anything in order to receive such distribution. Prior
to NJS' distribution of its Saxon Common Stock, there has been no public market
for the Saxon Common Stock and there can be no assurance that such a market for
the Saxon Common Stock will develop after the Payment Date or that, if
developed, it will be sustained. Saxon intends to have a broker/dealer
registered with the National Association of Securities Dealers, Inc. ("NASD")
file a 15c2-11 application to attempt to list Saxon's Common Stock for trading
on the NASD Over-The-Counter Electronic Bulletin Board.
THESE SECURITIES INVOLVE A HIGH DEGREE OF RISK AS DESCRIBED HEREIN.
FOR A DISCUSSION OF CERTAIN MATERIAL FACTORS THAT SHOULD BE CONSIDERED IN
CONNECTION WITH THE RECEIPT OF SAXON COMMON STOCK FROM NJS. SEE "RISK FACTORS"
BEGINNING ON PAGE 5.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THE PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The expenses of this Offering, estimated at $70,000, are being
paid by NJS.
THE DATE OF THE PROSPECTUS IS _________, 1997
The following legend should appear in red on the left side of this page:
------------------------------------------------------------------------
"Information contained herein is subject to completion or amendment. A
Registration Statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the Registration Statement becomes
effective. This Prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there by any sale of these securities
in any State in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such State."
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NO DEALER, SALESMAN OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION, OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS, IN CONNECTION WITH THE OFFERING DESCRIBED HEREIN, AND IF GIVEN OR
MADE, NO SUCH INFORMATION OR REPRESENTATION MAY BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY SAXON. THE DELIVERY OF THIS PROSPECTUS AT ANY TIME DOES NOT IMPLY
THAT THERE HAS BEEN NO CHANGE IN THE INFORMATION SET FORTH HEREIN OR IN THE
AFFAIRS OF SAXON SINCE THE DATE AS OF WHICH SUCH INFORMATION IS GIVEN. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR SOLICITATION OF AN OFFER TO
BUY ANY SECURITY OTHER THAN THE SECURITIES OFFERED HEREBY, OR AN OFFER TO SELL
OR SOLICITATION OF AN OFFER TO BUY SUCH SECURITIES IN ANY JURISDICTION IN WHICH
SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH
OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO OR TO ANY PERSON TO WHOM SUCH
OFFER OR SOLICITATION WOULD BE UNLAWFUL.
UNTIL _______, 1998, ALL DEALERS EFFECTING TRANSACTIONS IN THE
REGISTERED SECURITIES, WHETHER OR NOT PARTICIPATING IN THIS DISTRIBUTION, MAY BE
REQUIRED TO DELIVER A PROSPECTUS. THIS IS IN ADDITION TO THE OBLIGATION OF
DEALERS TO DELIVER A PROSPECTUS WITH RESPECT TO THEIR SOLICITATIONS TO PURCHASE
THE SECURITIES OFFERED HEREBY.
AVAILABLE INFORMATION
Prior to this Offering, Saxon is not a reporting company under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"). As a result
of the distribution of securities by NJS to its stockholders of its shares of
Saxon Common Stock, Saxon will become subject to the informational requirements
of Section 15(d) of the Exchange Act and in accordance therewith will file
periodic reports and other information with the Securities and Exchange
Commission (the "SEC"). The Registration Statement, of which this Prospectus
forms a part, as well as reports and other information filed by Saxon may be
inspected and copied at the public reference facilities maintained by the SEC at
450 Fifth Street, N.W., Washington, DC 20549 and at the SEC's regional offices
at 500 West Madison Street, Suite 1400, Chicago, Illinois 60661-2511 and 7 World
Trade Center, New York, NY 10048. Copies of such material can be obtained at
prescribed rates from the Public Reference Section of the SEC at 450 Fifth
Street, N.W., Washington, DC 20549. Material filed electronically through Edgar
(Electronic Data Gathering Analysis and Retrieval System) may also be accessed
through the SEC's home page on the World Wide WEB at http://www.sec.gov.
Saxon intends to furnish its stockholders with annual reports
containing audited financial statements examined and reported upon by an
independent certified public accounting firm and to make available copies of
quarterly reports containing unaudited financial statements. Saxon's fiscal
year end is May 31.
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TABLE OF CONTENTS
Page
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Prospectus Summary
Risk Factors
Use of Proceeds
Selected Financial Data
Management's Discussion and Analysis
of Financial Condition and Results of
Operations
Business
Management
Executive Compensation
Certain Transactions
Security Ownership of Management and Others
Description of Common Stock
Shares Eligible for Future Sale
Plan of Distribution/Market Information
Legal Matters
Experts
Additional Information
Index to Financial Statements
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PROSPECTUS SUMMARY
THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY, AND MUST BE
READ IN CONJUNCTION WITH, THE MORE DETAILED INFORMATION APPEARING ELSEWHERE IN
THE PROSPECTUS.
THE COMPANY
Saxon Acquisition Corp. ("Saxon") was formed under the laws of the
State of Delaware on July 9, 1997 as a wholly-owned subsidiary of NJS
Acquisition Corporation ("NJS"). On November 7, 1996, NJS formed Dupont
Securities Group, Inc. ("Dupont") as a wholly-owned subsidiary under the laws of
the State of New York to engage in the securities business. On July 28, 1997,
NJS transferred its entire stock ownership in Dupont to Saxon. Currently,
Saxon's only business is through the operations of Dupont, a broker-dealer
registered with the United States Securities and Exchange Commission ("SEC") and
the National Association of Securities Dealers, Inc. ("NASD"). As of August 19,
1997, Dupont is licensed to do business in 21 states. All references to "the
Company" include Saxon and its wholly-owned subsidiary, Dupont.
Dupont commenced operations as a new broker-dealer on June 10, 1997.
Dupont has a clearing agreement with Oscar Gruss & Son Incorporated to act as
its clearing agent on a fully disclosed basis. The term fully disclosed means
that the clearing firm maintains the customer accounts, i.e. it holds the
customer funds and securities', issues account statements, executes customer
trades on the exchanges in which it is a member, receives and safeguards funds
and securities and handles the regulation of credit extension, confirmations and
preparation of monthly account statements.
Dupont anticipates in the future managing and participating in public
offerings, private placements pursuant to Regulation D of the Securities Act of
1933 as amended (the "Securities Act")and other corporate finance transactions.
Dupont effects transactions in equity and debt securities as agent, although it
intends to also effect transactions as principal, trade for its own account and
to make markets in various over-the-counter stocks. Currently, Dupont's
restriction letter with the NASD requires that Dupont will seek NASD District
Office No. 10 review and permission before it engages in its first private
placement activity and it will not make markets in more than 10 issues without
the prior approval of NASD District Office No. 10. Dupont has also agreed with
the NASD that all trade executions will be handled solely by qualified trading
department personnel under the direct supervision of the registered principal
responsible for the firm's trading department. See "Business."
Saxon's principal office is located at 33 Eleventh Avenue, Huntington
Station, New York 11746 and its telephone no. is (516) 423-8280.
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THE OFFERING
Securities Offered This Prospectus relates to the distribution by NJS of all
of its outstanding 2,465,735 shares of Saxon Common Stock
to the stockholders of NJS. Each NJS stockholder of record
as of the close of business on October __, 1997 (the
"Record Date"), will receive on November __, 1997 (the
"Payment Date") 0.25 shares of Saxon Common Stock for each
outstanding share of NJS Common Stock (the "Conversion
Ratio").
Common Stock
outstanding 2,465,735 shares
Risk Factors The Saxon Common Stock offered hereby involves a high
degree of risk to investors. Persons receiving the Saxon
Common Stock should review carefully and consider the
information contained in the Prospectus and particularly
the items set forth under "Risk Factors."
RISK FACTORS
AN INVESTMENT IN SAXON'S COMMON STOCK INVOLVES A HIGH DEGREE OF RISK.
PERSONS RECEIVING FROM NJS A DISTRIBUTION OF THE SAXON COMMON STOCK SHOULD
CONSIDER CAREFULLY THE FOLLOWING RISK FACTORS, IN ADDITION TO OTHER INFORMATION
CONTAINED IN THIS PROSPECTUS, IN EVALUATING AN INVESTMENT IN THE SAXON COMMON
STOCK.
DEVELOPMENT STAGE COMPANY/DEPENDENCE UPON DUPONT
Saxon is a development stage company that was formed on July 9, 1997 to own
Dupont. The Company is wholly dependent upon the success of Dupont's brokerage
operations. Dupont was formed on November 7, 1996 and commenced operations as a
licensed broker-dealer on June 10, 1997. As a consequence, the Company's
operations are subject to many of the risks inherent in the establishment of a
new business enterprise. The likelihood of the success of the Company must be
considered in light of the problems, expenses, complications and delays
frequently encountered in connection with a firm commencing its business
operations. There can be no assurance that the Company will be profitable.
See "Business."
NATURE OF BROKERAGE BUSINESS
The Company's stock brokerage, securities trading and investment and
merchant banking business, by its nature, is subject to various risks,
particularly those arising from volatile markets, including the risk of losses
resulting from the underwriting of securities,
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customers' inability to meet commitments (such as margin obligations), market-
making activities, customer fraud, employee misconduct and errors, mistakes in
the processing of securities transactions and litigation.
Dupont, like other securities firms, is directly affected by national and
international economic and political conditions, broad trends in business and
finance, legislation and regulation affecting the national and international
financial and business communities and securities markets, changes in securities
laws, the level of volatility of interest rates and substantial fluctuations in
volume and price levels in the securities markets. Reduced volume of securities
transactions and reduced market liquidity generally result in lower revenues
from principal transactions and commissions, while decreases in the number of
new issues or merger and acquisition activity generally result in lower revenues
from investment banking. Lower price levels of securities may result in losses
from declines in the market value of securities held in trading positions. In
periods of reduced sales and trading or investment banking activity,
profitability may be adversely affected because certain expenses remain
relatively fixed. In addition, the securities industry is exposed to risk of
loss from clearance and processing problems which may be especially acute during
periods of heavy trading volume. See "Business."
NEED FOR ADDITIONAL FUNDS
The Company's capital and operational requirements cannot be predicted with
certainty and are subject to modification from time to time in the future, in
part based upon events which may be beyond its control. The Company may require
additional debt or equity funds in the future to continue or expand Dupont's
brokerage, trading and investment banking activities. No assurances can be given
that such additional funds will be available on terms acceptable the Company, if
at all. The failure to obtain such additional funds may cause the Company to
cease or curtail operations and result in the complete loss of any value of the
Saxon Common Stock. See "Business."
DEPENDENCE UPON KEY MANAGEMENT AND PERSONNEL
The Company is highly dependent upon Nicholas J. Seccafico, Jr., its
President. The loss of Mr. Seccafico's services could have a material adverse
effect on the Company. The Company does not carry key-man life insurance on the
life of Mr. Seccafico and does not have an employment contract with him. The
Company's operations are also dependent upon Dupont retaining and recruiting
qualified personnel to act as principals, supervisory personnel and registered
representatives. No assurances can be given that the Company will be successful
in this regard. See "Management."
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NET CAPITAL REQUIREMENTS
As a broker-dealer registered with the SEC, Dupont is subject to the SEC's
net capital rule, which is designed to measure the general financial integrity
and liquidity of a broker-dealer. The net capital rule imposes certain
restrictions on a firm's operations. Compliance with the net capital rule limits
those operations of securities firms which require intensive use of their
capital, such as underwriting commitments and principal trading activities, and
limits the ability of securities firms to pay dividends. There can be no
assurance that Dupont will maintain adequate net capital, or that its net
capital will not fall below requirements established by the NASD or the SEC and
subject Dupont to disciplinary action by those agencies in the form of fines,
censure, suspension, expulsion or the termination of business entirely.
LEGAL PROCEEDINGS AND LITIGATION POTENTIAL
Many aspects of Dupont's business involve substantial risks of liability.
Underwriters are subject to substantial potential liability for material
misstatements and omissions in prospectuses and other communications with
respect to public and private underwritten offerings. There has been an
increased incidence of litigation in the securities industry in recent years,
including class action law suits which generally seek substantial damages. Any
litigation, whether or not meritorious, could consume significant resources of
Dupont and could substantially effect its ability to carry on normal business
operations.
RELIANCE ON CLEARING BROKERS
Dupont incurs obligations to its customers which are supported by
obligations to it from its clearing agent, through which all of Dupont's
accounts will be settled. Maintenance of a clearing relationship entails a risk
of unreconciled differences, especially in periods of high trading volume. The
inability of the clearing agent to meet its obligations could result in
substantial losses to Dupont and the loss of the investors' entire investment.
Any disruption in Dupont's relationship with its clearing agent would have an
adverse effect on Dupont's ability to conduct its business. See "Business."
RISKS ASSOCIATED WITH INVESTMENT BANKING ACTIVITIES
Dupont's participation in a private placement pursuant to Regulation D of
the Securities Act or in an underwriting syndicate or a selling group involves
both financial and regulatory risks. An underwriter in a public offering may
incur losses if it is unable to resell the securities it has committed to
purchase, or if it is forced to liquidate its commitment at less than the
purchase price. In addition, under federal securities laws, other laws and court
decisions with respect to underwriters' liabilities and limitations on the
indemnification of underwriters by issuers, an underwriter is subject to
substantial potential liability for misstatements or omissions of material facts
in prospectuses and other communications with respect to such offerings. Acting
as managing underwriter increases these risks. Underwriting commitments
constitute a charge against net capital and Dupont's ability to make
underwriting commitments may be limited by the requirement that
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it must at all times be in compliance with the Net Capital Rule. Generally, in
addition to the net capital requirements referred to above, Dupont must have
additional or excess capital equal to 30% of the aggregate offering price less
aggregate commissions to effectuate a firm underwriting commitment. See
"Business."
LIMITATIONS ON AND SPECIAL FACTORS RELATING TO MARKET-MAKING ACTIVITIES
In the future, Dupont intends to trade for its own account, effect
transactions as principal and to make a market in one or more over-the-counter
securities. Trading profits or losses depend upon the skills of employees in
market-making activities, the capital allocated to positions in securities, the
volatility of the securities markets, and the general trend of prices in the
securities markets. Trading as a principal requires the commitment of
substantial capital and creates opportunities for profit as well as the risk of
loss due to market fluctuations. There can be no assurance that employees of
Dupont will generate profits in market making and trading activities for Dupont.
See "Business."
NARROW PRODUCT LINE
The investment banking, trading and brokerage activities of Dupont are
limited to a relatively small number of financial services, investment products,
and issuing companies. Although Dupont expects to expand its brokerage and
investment banking activities in the future to include more companies, there can
be no assurance that it will be able to do so. Reliance upon a limited set of
revenue sources significantly increases Dupont's vulnerability to poor
performance in any one of its single products or business services. See
"Business."
FLUCTUATING VOLUME AND PRICES OF SECURITIES
Dupont and the securities industry in general are directly affected by
national and international economic and political conditions, broad trends in
business and finance, legislation and regulation effecting the national and
international financial and business communities and securities markets,
currency values, changes in securities laws, the level of volatility of interest
rates and substantial fluctuations in volume and price levels in the securities
markets. Dupont and the securities industry in general are subject to other
risks, including, but not limited to, risks of loss from the underwriting of
securities, counterparty (a party to which Dupont has credit or performance
exposure) failures to meet commitments, customer fraud, employee errors or
misconduct and litigation. In addition, price fluctuations may cause losses on
securities positions. In the event that Dupont expands its investment banking
activities and more frequently serves as manager or co-manager of public
offerings of securities, it would be expected to make increased commitments of
capital to market-making activities in securities of those issuers. The
anticipated additional concentration of capital in the securities of those
issuers held in inventory will increase the risk of loss from reductions in the
market price of such securities. Since Dupont's trading profits will be derived
from the difference between the purchase price of a security and the sale price,
declining prices generally result in reduced revenues. In addition, Dupont will
charge a commission on each transaction in which it
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acts as an agent, and therefore low trading volume will result in reduced
revenues. Under these conditions, profitability is adversely affected since many
costs, other than commission compensation and bonuses, are fixed.
The securities industry is subject to substantial fluctuations in volume
and price levels of securities transactions. These fluctuations can occur on a
daily basis, as well as over longer periods, as a result of local, national and
international economic and political events and as a result of trends in
business and finance. Reduced volume and prices generally result in lower
commissions and investment banking revenues, as well as the possibility of
significant trading and may affect Dupont particularly acutely in light of the
non-diversified nature of its activities and the degree to which many of its
expenses are fixed. Dupont will be subject to each of such influences, and there
can be no assurance that it will successfully overcome those risks associated
with the securities business. See "Business."
COMPETITION
All aspects of Dupont's business are highly competitive. In its brokerage
activities, Dupont competes directly with national broker-dealers, which are
large, well-known firms with substantially greater financial and personnel
resources than Dupont. Dupont competes with many other financial institutions
for key personnel, including salespeople, managers and other key persons. Many
of Dupont's competitors conduct extensive advertising and actively solicit
potential clients in order to increase their business. Dupont also competes with
a number of smaller regional brokerage firms as well as discount brokerage firms
which offer lower commission rates to their customers. In recent years,
institutions such as large commercial banks, insurance companies and financial
service companies have begun offering to their customers some of the same
services Dupont offers, and as a result the competitive environment for
brokerage firms such as Dupont may be adversely affected. See "Business."
LICENSES
Dupont is a general securities broker-dealer and registered with the SEC,
the NASD and the Securities Investor Protection Corporation ("SIPC"). In
addition, Dupont is licensed in 21 states and it intends to obtain licenses as a
broker-dealer in other states in which it intends to conduct business. There can
be no assurance that Dupont will be able to obtain such additional licenses, or
that once obtained, it will maintain licensing in all required states, in which
case Dupont's operations may be significantly impaired. Although the current
principals of Dupont, namely, Louis Galeotafiore, and Michael F. Franzese,
intend to maintain their respective NASD licenses with Dupont, there can be no
assurance that such principals will remain so registered and, therefore, there
can be no assurance that Dupont would not be adversely affected if the
principals left.
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REGULATION
The business of Dupont is subject to regulation by various state and
federal regulatory authorities which are charged with protecting the integrity
of the securities and financial markets and protecting the interests of
consumers. The SEC and the NASD, among others, may conduct administrative
proceedings which can result in censure, fine, suspension or expulsion of a
broker-dealer, its officers or employees. Both the SEC and the NASD have
stringent rules governing the operations of securities firms including the rules
with respect to the net capital requirements of securities firms. The principal
purpose of regulation and discipline of broker/dealers is the protection of
customers and securities markets rather than the protection of creditors and
stockholders of broker-dealers. In addition, Dupont is required to comply with
all state licensing and other rules and regulations applicable to the brokerage
business. For example, certain states restrict unsolicited phone calls from
stockbrokers. Given that a portion of Dupont's brokerage business may be
obtained through unsolicited phone calls, such regulations may have an adverse
effect on Dupont's ability to expand its client base. Failure to comply with any
of these laws, rules and regulations would have a material adverse effect upon
Dupont. Further, the continued compliance with such regulations will create a
continuing and significant financial expense. No assurances can be given that
Dupont will be able to comply with all SEC, NASD and state rules and regulations
and, in the event it is unsuccessful, the investors in this offering may lose
their entire investment. See "Business."
LACK OF PUBLIC MARKET
As of the date hereof, there is no public market for Saxon's Common Stock.
After NJS completes its distribution of Saxon's Common Stock on the Payment Date
to its shareholders of record on the Record Date, Saxon will attempt to obtain a
broker/dealer registered with the NASD to file a 15(c)2-11 application with the
NASD in order for the Saxon Common Stock to trade on the over-the-counter NASD
Electronic Bulletin Board. The Company will also seek to obtain other market
makers for the Saxon Common Stock. No assurances can be given that Saxon's
efforts to develop a public market for its Common Stock will be successful or,
if successful, that there will be an established market for Saxon's Common Stock
in the future. See "Plan of Distribution/Market Information."
CONTROL BY PRINCIPAL SHAREHOLDERS
Following the completion of NJS' distribution of Saxon Common Stock on the
Payment Date to its stockholders of record on the Record Date, Nicholas
Seccafico, Jr., and Lindo Garuffi including members of their immediate families
(the "Control Group"), will beneficially own and control approximately 45% of
the outstanding Saxon Common Stock. Such Control Group may be in a position to
influence the election of the Board of Directors of the Company and other
stockholder matters. See "Security Ownership of Management and Others."
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NO DIVIDENDS AND NONE ANTICIPATED
The payment by the Company of cash dividends on its Common Stock, if any,
in the future rests within the discretion of its Board of Directors and will
depend, among other things, upon the Company's earnings, its capital
requirements and its financial condition as well as other relevant factors. The
Company has not paid or declared any cash dividends upon its Common Stock since
its inception and, by reason of its present financial status and its
contemplated future financial requirements, does not contemplate or anticipate
making any cash distributions upon its Common Stock in the foreseeable future.
See "Description of Common Stock."
SHARES ELIGIBLE FOR FUTURE SALE
After the Payment Date, Saxon's officers and directors will beneficially
own and control 1,469,985 shares (including options to purchase 800,000 shares)
of Saxon's Common Stock. Such persons may sell their shares of Common Stock of
Saxon in compliance with Rule 144 of the Securities Act. Ordinarily, under Rule
144, a person holding restricted securities for a period of one year may, every
three months thereafter, sell in ordinary brokerage transactions or in
transactions directly with a market maker, an amount of shares equal to the
greater of one percent of the Company's then-outstanding Common Stock or the
average weekly trading volume in the same securities during the four calendar
weeks prior to such sale. However, since 669,985 shares of Common Stock issued
to Saxon's officers and directors are registered herein for distribution to
them, the one-year holding period will not apply to these shares and sales can
be made commencing 90 days after the date hereof pursuant to Rule 144. The
remaining 800,000 shares beneficially owned by the control group pursuant to
outstanding options will likely be registered in the future pursuant to a Form
S-8 Registration Statement. See "Shares Eligible for Future Sale."
"PENNY STOCK" REGULATIONS
The SEC has adopted regulations under the Exchange Act which generally
define a "penny stock" to be any equity security that has a market price (as
defined in the Exchange Act) of less than $5.00 per share or an exercise price
of less than $5.00 per share, subject to certain exceptions. If the Saxon
Common Stock is not traded on a National Market Exchange or NASDAQ, the Saxon
Common Stock may be deemed to be a "penny stock" and become subject to rules
that impose additional sales practice requirements on broker-dealers who sell
such securities. For any transaction involving a penny stock, unless exempt,
the rules require delivery, prior to the transaction, of a disclosure schedule
prepared by the SEC relating to the penny stock market. The broker-dealer also
must disclose the commissions payable to both the broker-dealer and the
registered representative, current quotations for the Saxon Common Stock
information on the limited market in penny stocks and, if the broker-dealer is
the sole market maker, the broker-dealer must disclose this fact and the broker-
dealer's presumed control over the market. In addition, the broker-dealer must
obtain a written acknowledgment from the customer that such disclosure
information was provided and must retain such
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acknowledgment for at least three years. Further, monthly statements must be
sent disclosing current price information for the penny stock held in the
account. Such rules may adversely effect a market from developing in the Saxon
Common Stock and, if developed, the ability of broker-dealers to sell the Saxon
Common Stock.
LIMITATION ON DIRECTOR LIABILITY
As permitted by Delaware corporation law, the Company's Certificate of
Incorporation limits the liability of Directors to the Company or its
stockholders to monetary damages for breach of a Director's fiduciary duty
except for liability in certain instances. As a result of the Company's charter
provision and Delaware law, stockholders may have a more limited right to
recover against Directors for breach of their fiduciary duty other than as
existed prior to the enactment of the law. See "Management-Limitation of
Directors' Liability; Indemnification."
ABSENCE OF INDEPENDENT DIRECTORS
The Company has two directors each of whom are an officer and/or principal
stockholder of the Company. The absence of outside or disinterested directors
may result in less objectivity and an increased risk for conflicts of interest
with respect to decisions made by the Board of Directors. See "Management."
COMPANY WILL NOT RECEIVE PROCEEDS FROM SALES BY NJS STOCKHOLDERS
This Prospectus relates to Saxon Common Stock to be distributed by NJS to
its stockholders. The Company will not receive any proceeds from the
distribution or subsequent sale of the Saxon Common Stock by NJS stockholders.
See "Use of Proceeds."
USE OF PROCEEDS
The Company will not realize any proceeds from the completion of NJS'
distribution of its Saxon Common Stock on the Payment Date to NJS stockholders
of record on the Record Date. The expenses of this Offering, estimated at
$70,000, will be paid by NJS.
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SELECTED FINANCIAL DATA
Saxon was formed on July 9, 1997 under the laws of the State of Delaware.
As of July 9, 1997, Saxon had no operations and was formed at a cost of
approximately $342. Between the date of inception and August 15, 1997, Saxon
issued 2,465,735 shares of Common Stock to NJS at a cost of $10,000. See
"Certain Transactions."
The following selected information has been derived from the historical
financial statements of Dupont, the Company's wholly-owned subsidiary, included
elsewhere in this Prospectus and should be read in conjunction therewith,
including the notes thereto.
INCOME STATEMENT DATA:
Period From
November 7, 1996
(Inception) to
May 31, 1997
--------------------
Revenues (Dividend Income) $18,408
Operating Expenses 38,471
Net Loss (20,063)
BALANCE SHEET DATA:
May 31, 1997
--------------------
Working Capital $764,639
Total Assets 861,651
Total Liabilities 14,504
Stockholders' Equity 847,147
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Saxon was formed under the laws of the State of Delaware on July 9, 1997
and Dupont was formed under the laws of the State of New York on November 7,
1996. Saxon is a holding company whose entire operations will be conducted
through Dupont. On June 10, 1997, Dupont commenced initial operations as a
broker/dealer. Prior to that date, planned principal operations of Dupont had
not commenced, and it had no revenues, earnings or history of operations.
Dupont's activities from inception through June 10, 1997 consisted of: filing
necessary incorporation and organization documents, filings made with the SEC,
NASD and state securities commissions of various documents to become a
registered broker/dealer authorized to conduct business in various states and
entering into a clearing agreement with a clearing firm as described under
"Business." During this period, NJS contributed $750,000 to Dupont as a capital
contribution. This financing provided the monies Dupont needed to become
licensed as a broker-dealer and to commence operations. In June 1975, the
Financial Accounting Standards Board, in its Statement No. 7, set forth
guidelines for identifying an enterprise in the development stage and the
standards of financial accounting and reporting applicable to such an
enterprise. In the opinion of the Company, its activities from the inception of
Dupont in November 1996 through July 18, 1997, the balance sheet date of the
Saxon financial statements included herein, fall within the referenced
guidelines. Accordingly, the Company has reported its activities in accordance
with the aforesaid Statement of Financial Accounting Standards No. 7.
LIQUIDITY AND CAPITAL RESOURCES AND PLAN OF OPERATIONS
Dupont anticipates in the future managing and participating in public
offerings, private placements pursuant to Regulation D of the Securities Act and
other corporate finance transactions. Dupont effects transactions in equity and
debt securities as agent, although it intends to also effect transactions as
principal, trade for its own account and to make markets in various over-the-
counter stocks. Currently, Dupont's restriction letter with the NASD requires
that Dupont will seek NASD District Office No. 10 review and permission before
it engages in its first private placement activity and it will not make markets
in more than 10 issues without the prior approval of NASD District Office No.
10. Dupont has also agreed with the NASD that all trade executions will be
handled solely by qualified trading department personnel under the direct
supervision of the registered principal responsible for the firm's trading
department.
Since the inception of Dupont, NJS has contributed a total of $750,000 as a
capital contribution in order to fund the initial operations of Dupont. While
Management believes that these funds provide sufficient capital liquidity and
capital resources for Dupont to operate its business over the next 12-15 months,
additional financing may become necessary to participate in underwritings and
expanded market making and trading activities. The Company's capital and
operational requirements cannot be predicted with
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certainty and are subject to modification from time to time in the future, in
part based upon events which may be beyond its control. No assurances can be
given that such additional funds will be available on terms acceptable the
Company, if at all.
BUSINESS
INTRODUCTION
Saxon's only business is conducted through the operations of Dupont.
Dupont commenced operations as a new broker-dealer on June 10, 1997. Dupont has
a clearing agreement with Oscar Gruss & Son Incorporated to act as its clearing
agent on a fully disclosed basis. The term fully disclosed means that the
clearing firm maintains the customer accounts, i.e. it holds the customer funds
and securities', issues account statements, executes customer trades on the
exchanges in which it is a member, receives and safeguards funds and securities
and handles the regulation of credit extension, confirmations and preparation of
monthly account statements. Customers making payment for their trades issue
checks payable to the clearing firm. Dupont is licensed to do business in 21
states.
Dupont's principal offices is located at 270 Greenwich Avenue,
Greenwich, CT 06830. Dupont employs 3 registered representatives, serving
primarily high net worth individuals and institutional investors.
Dupont anticipates in the future managing and participating in public
offerings, private placements pursuant to Regulation D of the Securities Act and
other corporate finance transactions. Dupont effects transactions in equity and
debt securities as agent, although it intends to also effect transactions as
principal, trade for its own account and to make markets in various over-the-
counter stocks. Currently, Dupont's restriction letter with the NASD requires
that Dupont will seek NASD District Office No. 10 review and permission before
it engages in its first private placement activity and it will not make markets
in more than 10 issues without the prior approval of NASD District Office No.
10. Dupont has also agreed with the NASD that all trade executions will be
handled solely by qualified trading department personnel under the direct
supervision of the registered principal responsible for the firm's trading
department.
OPERATIONS OF DUPONT
Securities Brokerage
- --------------------
To support the services provided to individual and institutional
investors, Dupont effects transactions in equity and debt securities as agent
and intends to effect transactions as principal, trade for its own account and
make a market in a number over-the-counter stocks.
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Agency Business
- ---------------
Dupont acts on an agency basis in securities transactions for
individual and institutional investors. Such transactions generate securities
commission revenues. Commissions are charged on both exchange and over-the-
counter agency transactions for individual customers in accordance with a
schedule which Dupont has formulated, which may change from time to time. In
certain cases, discounts from the schedule may be granted to customers. Dupont's
securities commissions primarily result from executing transactions in listed
and over-the-counter stocks and bonds.
Principal Transactions
- ----------------------
Dupont will act as a principal in executing trades in over-the-counter
equity securities. When transactions are executed by Dupont on a principal
basis, Dupont will receive, in lieu of commissions, mark-ups or mark-downs
which constitute revenues from principal transactions. Inventories of over-the-
counter securities will at times be carried to facilitate sales to customers and
other dealers.
The level of positions carried in Dupont's trading accounts may
fluctuate significantly. The size of the securities positions on any one date
may not be representative of Dupont's exposure on any other date because the
securities positions vary substantially depending upon economic and market
conditions, the allocation of capital among types of inventories, underwriting
commitments, customer demands and trading volume. The aggregate value of
inventories that the Company may carry is limited by certain requirements of the
SEC's Net Capital Rule as described herein.
Dupont intends to make a market, in effect maintaining firm bid and
offer prices, in common stocks which are traded on the NASD's Automated
Quotation System and common stocks which are traded on the NASD's Electronic
Bulletin Board. The amount of stocks that Dupont intends to make a market at
any one time will fluctuate and Dupont may increase the number of stocks in
which it will make a market without NASD consent to up to 10. In the event that
Dupont desires to make a market in more than 10 securities, it is required to
seek permission of its local NASD district office and obtain consent prior to
making a market in additional equity securities.
Dupont's principal transactions expose it to risk because securities
positions are subject to fluctuations in market value and liquidity. Each trader
registered with Dupont will be subject to internal position limits and Dupont
will review regularly the age and composition of its securities positions.
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INVESTMENT BANKING
General
- -------
It is anticipated that Dupont will manage and participate in public
offerings of securities, private offerings of securities pursuant to Regulation
D of the Securities Act and engage in other corporate finance type transactions.
Underwriting
- ------------
Dupont anticipates in the future engaging in underwriting activities,
including managing and participating in public offerings of equity and/or debt
securities. Certain risks are involved with the underwriting of securities.
Underwriting syndicates agree to purchase securities at a discount from the
initial public offering price. If the securities must be sold below the
syndicate cost, the underwriters are exposed to losses on the securities that
they have committed to purchase. An underwriter may additionally be exposed to
substantial potential liability for material misstatements or omissions of fact
in the prospectus used to describe the securities being offered.
Regulation D Offerings
- ----------------------
Dupont expects to engage in the sale of securities pursuant to
Regulation D of the Securities Act, both as placement agent and as a
participating broker-dealer in offerings which other broker-dealers firms act as
placement agent. Certain risks are involved in the placement of securities
pursuant to Regulation D of the Securities Act. Dupont may be exposed to
substantial potential liability for material misstatements or omissions of fact
in the placement memorandum used to described the securities being offered.
Corporate Finance
- -----------------
In addition to its underwriting and Regulation D sales of securities,
it is anticipated that Dupont will generate fees by providing advice to
corporate clients on a wide range of financial matters, including mergers and
acquisitions, divestitures, private placements, bridge financings, financial
planning and corporate reorganizations and recapitalizations.
Clearing Arrangements and Customer Credit
- -----------------------------------------
Dupont does not maintain its own customer accounts or provide customer
credit. Dupont utilizes, on a fully disclosed basis, the services of Oscar Gruss
& Son Incorporated ("Oscar Gruss"). Oscar Gruss, pursuant to a clearing
agreement dated April 4, 1997, on a fee basis, processes all securities
transactions and maintain the accounts of its customers. Customer accounts are
protected through ("SIPC") for up to $500,000, of which coverage for cash
balances is limited to $100,000. Oscar Gruss has also made arrangements to
protect customer accounts up to an additional $3,000,000 beyond the coverage
protected through SIPC. The services of the clearing agent include billing,
credit control, receipt, and custody and delivery of securities. The clearing
agent provides
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operational support necessary to process, record, and maintain securities
transactions for Dupont's brokerage and distribution activities. The clearing
agent provides these services to Dupont and its customers at a total cost which
is less than it would cost Dupont to process such transactions on its own.
The clearing firm lends funds to Dupont's customers through the use of
margin credit. These loans are made to customers on a secured basis, with the
clearing firm maintaining collateral in the form of saleable securities, cash or
cash equivalents. Under the terms of the clearing agreement with the clearing
firm, Dupont indemnifies the clearing firm on any loss of these credit
arrangements.
Dupont's clearing agreement with Oscar Gruss can be canceled by either
party upon 60 days prior written notice. Dupont's clearing agreement provides
for certain events of default and various terms and conditions. One of such
requirements is that the broker-dealer clearing through it must maintain minimum
deposits in cash and securities. Dupont's clearing agreement with Oscar Gruss
requires Dupont to maintain a minimum deposit in cash and securities of $50,000
and must maintain net capital of at least $100,000. Nevertheless, the NASD
requires a minimum net capital in excess of $100,000 in order for Dupont to make
any markets.
Net Capital Rule
- ----------------
Dupont is subject to an SEC Regulation known as the "Net Capital
Rule" which is designed to measure the financial integrity and liquidity of a
broker-dealer. The Rule requires that a minimum amount of its assets be
relatively liquid and imposes a duty on a broker-dealer of prompt notification
to the SEC and NASD if the broker-dealer is not in compliance. Net Capital is
essentially defined as net worth (assets minus liabilities) plus certain
qualifying subordinated loans, less various mandatory deductions. Such
deductions result from excluding assets not readily convertible into cash and
from conservative valuation of certain other assets. Among such mandatory
deductions are adjustments (called "haircuts") in the market value of securities
to reflect the possibility of a market decline prior to disposition. The Net
Capital Rule as applied to Dupont requires that the ratio of aggregate
indebtedness, as defined by the rule, to net capital not exceed fifteen to one.
Moreover, Dupont is required to maintain a minimum net capital of 12.5% of
aggregate indebtedness or $100,000, whichever is greater under the SEC capital
rule. Compliance with the Net Capital Rule, as well as other financial
requirements, will limit those operations of the Company which require the
intensive use of capital, such as firm commitment offerings, trading and other
market making activities. As of July 31, 1997, net capital and aggregate
indebtedness change from day-to-day, but as of May 31, 1997, Dupont had net
capital of $754,639. $750,000 of these funds were provided to Dupont by NJS as
a capital contribution. See "Certain Transactions."
Regulatory Matters
- ------------------
The securities business is subject to extensive regulation under
federal and state laws. The principal purpose of regulation of broker-dealers
is the protection of customers
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and the securities markets rather than protection of creditors, shareholders and
partners of broker-dealers. The SEC is the federal agency charged with
administration of federal securities laws. Much of the regulation of broker-
dealers, however, has been delegated to self-regulatory organizations ("SRO),
principally the National Association of Securities Dealers ("NASD") and the
national securities exchanges, such as the NEW YORK STOCK EXCHANGE ("NYSE") and
AMERICAN STOCK EXCHANGE ("AMEX"). The self-regulatory organizations adopt rules
(subject to approval by the SEC) which governs the industry. These SRO's also
conduct periodic examinations of member broker-dealers. Securities firms are
also subject to regulation by state securities administrators in states in which
they are registered. Other regulations to which broker-dealers are subject
cover all aspects of the securities business, including sales methods, trading
practices among broker-dealers, capital structure of securities firms, record
keeping and the conduct of directors, officers and employees. Additional
legislation, changes in rules promulgated by the SEC and by SRO's, or changes in
the interpretation or enforcement of existing laws and rules often directly
affect the method of operation and profitability of brokers and dealers. The
SEC, the SRO's and state securities commissions may conduct administrative
proceedings which, after appropriate hearings and an appeal process, can result
in censure, fine, issuance of cease-and-desist orders or suspension or expulsion
of a broker-dealer, its officers or employees, any of which could have a
material adverse effect on the business of such broker-dealer.
Dupont is registered as a Broker-Dealer with the SEC, is a member of
the NASD, is licensed as a broker-dealer in many states and intends to register
as a broker-dealer in additional states as needed. If for any reason Dupont's
ability to register in additional states is foreclosed or otherwise limited, its
business operations can be adversely affected.
COMPETITION
Competition in the securities brokerage and investment banking
business is highly intense. Dupont competes directly with discount and full-
service brokerage firms and commercial banks, almost all of which are
established, have substantially greater financial and other resources, and have
achieved greater public acceptance than Dupont. Commercial banks presently
provide many of the services offered by brokerage firms and may provide more in
the future. Dupont will be a minor factor in the United States securities
brokerage industry.
FACILITIES
Dupont has a one year lease of approximately 1,000 square feet of
space in Greenwich, CT pursuant to which it is paying a monthly base rental of
approximately $500. Dupont also has a three year lease of approximately 3,000
square feet of space in Oyster Bay, NY at a monthly base rental of approximately
$1,000. Since July 1997, Saxon utilizes the office of Nicholas J. Seccafico,
Jr. rent free at 33 Eleventh Avenue, Huntington Station, NY 11746.
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LEGAL PROCEEDINGS
There are currently no legal proceedings pending or, to the best of
Management's knowledge, threatened against the Company.
MANAGEMENT
DIRECTORS, EXECUTIVE OFFICERS AND KEY EMPLOYEES
The names of the directors and executive officers of Saxon are as follows:
Name Age Position
- ---- --- --------
Nicholas J. Seccafico, Jr. 58 President, Chief Financial Officer,
Director
Lindo Garuffi 65 Secretary, Treasurer, Director
Set forth below is a biographical description of each director and
executive officer of Saxon based upon information supplied by them:
Nicholas J. Seccafico, Jr. has been an officer and director of Saxon since
July 1997. Since May 1995, Mr. Seccafico has been an officer and director of NJS
and was an officer and director of the Company from its inception in March 1988
through November 1989. Since 1977, Mr. Seccafico has been president and chief
executive officer of a manufacturing based technology coating company. Since
1992, Mr. Seccafico has been founder and chief executive officer of Pathfinder
International Group, Inc., a company which services include investment banking,
business evaluation and merger and acquisition development. He has worked in
areas of development, production, marketing and selling cutting technologies.
He has owned and assisted in the development of environmental remediation
companies (emphasis on lead paint testing and bioremediation) and mariculture.
Mr. Seccafico has served as an investment banker and business consultant to a
U.S. lead testing company and an investment banker and business partner to West
Indies Mariculture. Mr. Seccafico also developed the IBIS Program (International
Business Incubation Systems) and introduced this Program to the Long Island
Association Program. He developed proprietary cost effective research and
business development services that allow small and medium sized companies to
analyze finance and implement global ventures. Mr. Seccafico is a Trustee at
Dowling College, Oakdale, NY.
Lindo Garuffi has been an officer and director of the Company since July
1997. Since May 1995, Mr. Garuffi has been an officer and director of NJS. For
the past 20 years, Mr. Garuffi is co-founder, president and chief executive
officer of Associated Marble Industry, Inc., a company that developed an
international network of quarry suppliers. Mr. Garuffi has extensive
international business experience throughout Europe, Africa and the Middle East.
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The names of the directors and executive officers of Dupont are as follows:
Name Age Position
- ---- --- --------
Michael F. Franzese 53 President, Chief Executive Officer, Director
Louis Galeotafiore 54 Treasurer, Secretary, Director
Set forth below is a biographical description of each director and
executive officer of Dupont based upon information supplied by them:
Michael F. Franzese has been President, Chief Executive Officer and a
Director of Dupont since its inception in November 1996. From 1991 to
November, 1996, Mr. Franzese served as a consultant to government dealers, banks
and brokerage firms. From May 1996 to November 1996, he was a registered
representative of American Classic Financial Co. and Senior Vice President at
NFS Services Inc. from August 1995 to November 1996. From February 1992 to June
1993, he was a consultant to Berkeley Securities Corp. From May 1991 to August
1995, he was President and Chief Executive Officer of Michael Franzese &
Associates. At Dupont, he is a Registered Representative (Series 7 and 63),
General Securities Principal (Series 24) and Municipal Principal (Series 53).
Mr. Franzese serves as the Compliance Officer at Dupont.
Louis Galeotafiore has been Treasurer, Secretary and Director of Dupont
since its inception in November 1996. Mr. Galeotafiore has over 33 years of
experience in the securities brokerage business, having held positions at
various firms. From October 1993 to October 1996, he was a branch manager at
Midwood Securities and prior thereto from September 1990 to October 1993, he was
a registered representative at R.J. Forbes. At Dupont, he is the Registered
Options Principal (Series 4), Registered Representative (Series 7 and 63),
General Securities Principal (Series 24) and Financial Principal (Series 27).
Mr. Galeotafiore serves as the Branch Manager at Dupont.
All directors of the Company hold office until the next annual meeting of
shareholders of the Company or until their successors are elected and qualified.
Executive officers hold offices at the pleasure of the Board and until their
successors are elected and qualified, subject to earlier removal by the Board of
Directors.
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FOUNDER/CONTROL PERSON
NJS may be deemed to be a founder or control person of Saxon. Prior to the
Payment Date, NJS owns 100% of the outstanding Common Stock. NJS has not been
involved in any legal proceedings since its inception in 1987.
EXECUTIVE COMPENSATION
From the inception of the Company to the date of this Prospectus, no
compensation has been to Saxon's Chief Executive Officer or any other officer
except for the stock options granted to Nicholas J. Seccafico Jr. and Lindo
Garuffi in September, 1997 as described under "Stock Option Plan." From the
inception of Dupont in November 1996 through May 31, 1997, the last day of
Dupont's fiscal year, no executive officer of Dupont was paid salary and bonus
of $100,000 or more.
Stock Option Plan
- -----------------
The Company has adopted a Stock Option Plan covering 1,000,000 Common Stock
(subject to adjustment to cover stock splits, stock dividends, recapitalizations
and other capital adjustments) for employees, including officers and directors
and consultants of the Company. The Plan provides that options to be granted
under the Plan will be designated as incentive stock options or non-incentive
stock options by the Board of Directors or a committee thereof, which also will
have discretion as to the persons to be granted options, the number of shares
subject to the options and the terms of the options. Options designated as
incentive stock options are intended to receive incentive stock option tax
treatment pursuant to Section 422 of the Internal Revenue Code of 1986, as
amended.
The Plan provides that all options granted thereunder shall be exercisable
during a period of no more than 10 years from the date of grant (five years for
incentive stock options granted to holders of 10% or more of the outstanding
shares of common stock), depending upon the specific stock option agreement and
that the option exercise price for incentive stock options shall be at least
equal to 100% of the fair market value of Common Stock on the date of grant
(110% for options granted to holders of 10% or more of the outstanding shares of
Common Stock), but in no event less than the initial public offering price of
the Company's proposed public offering. Pursuant to the provisions of the Plan,
the aggregate fair market value (determined on the date of grant) of the shares
of the Common Stock for which incentive stock options are first exercisable
under the terms of the Plan by an option holder during any one calendar year
cannot exceed $100,000.
Currently, the Plan provides that if the employment of an optionee is
terminated other than by reason of death, disability or retirement at age 65,
any incentive stock options granted to the optionee will immediately terminate.
If employment is terminated by reason of disability or retirement at age 65, the
optionee may, within one year from the date of termination, in the event of
termination by reason of disability, or three months from the date of
termination, in the event of termination by reason of retirement at age 65,
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<PAGE>
exercise the incentive stock option (but not after the normal termination date
of the option). If employment is terminated by death, the person or persons to
whom the optionee's rights under the incentive stock option are transferred by
will or the laws of descent and distribution have similar rights of exercise
within three months after such death (but not after the normal termination date
of the option). Any termination provisions of non-statutory stock options will
be fixed by the board of directors or a committee thereof.
Options are not transferable otherwise than by will or the laws of descent
and distribution and during the optionee's lifetime are exercisable only by the
optionee. Shares subject to options which expire or terminate may be the
subject of future options. The Plan will terminate in 2007. On September 11,
1997, the Company granted non-qualified stock options to purchase a total of
800,000 shares of its Common Stock at an exercise price of $.10 per share over a
term of five years. Nicholas J. Seccafico Jr. and Lindo Garuffi each received
options to purchase 400,000 shares. These options are immediately exercisable.
EMPLOYMENT AGREEMENTS
None of the Company's officers and directors have any employment contracts
with the Company.
DIRECTOR COMPENSATION
None of the Company's directors have received any compensation from the
Company except as described under "Executive Compensation." Payment of
compensation in the future will be at the sole discretion of the Board of
Directors of the Company.
LIMITATION OF DIRECTORS' LIABILITY; INDEMNIFICATION
Pursuant to Saxon's By-Laws, Saxon must, to the fullest extent permitted by
the General Corporation Law of the State of Delaware (the "GCL"), as amended
from time to time, indemnify all persons (e.g., directors and officers) whom it
may indemnify pursuant thereto and to advance expenses incurred in defending any
proceeding for which such right to indemnification is applicable, provided that,
if the GCL so requires, the indemnitee must provide Saxon with an undertaking to
repay all amounts advanced if so determined by a final judicial decision.
Saxon's Certificate of Incorporation contains a provision eliminating, to the
full extent permitted by Delaware law, the personal liability of Saxon's
directors for monetary damages for breach of a fiduciary duty. By virtue of
this provision, under current Delaware law, a director of Saxon will not be
personally liable for monetary damages for breach of his fiduciary duty as a
director, except for liability for (i) any breach of his duty of loyalty to
Saxon or to its stockholders, (ii) acts or omissions not in good faith or which
involve intentional misconduct or a knowing violation of law, (iii) dividends or
stock purchases or redemptions that are unlawful under Delaware law and (iv) any
transaction from which he derives an improper personal benefit. This provision
of Saxon's Certificate of Incorporation pertains only to breaches of duty by
directors as directors and not in any other corporate capacity such as officers,
and limits liability only for breaches
23
<PAGE>
of fiduciary duties under Delaware corporate law and not for violations of other
laws such as the federal securities laws. As a result of the inclusion of such
provision, stockholders may be unable to recover monetary damages against
directors for actions taken by them that constitute negligence or gross
negligence or that are in violation of their fiduciary duties, although it may
be possible to obtain injunctive or other equitable relief with respect to such
actions. The inclusion of this provision in Saxon's Certificate of
Incorporation may have the effect of reducing the likelihood of derivative
litigation against directors, and may discourage or deter stockholders or
management from bringing a lawsuit against directors for breach of their duty of
care, even though such an action if successful, might otherwise have benefitted
Saxon and its stockholders.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers or controlling persons of the Company
pursuant to the foregoing provisions, or otherwise, the Company has been advised
that in the opinion of the Commission, such indemnification is against public
policy as expressed in the Securities Act and is, therefore, unenforceable.
CERTAIN TRANSACTIONS
On July 10, 1997 and August 15, 1997, Saxon sold 100 shares and 2,465,635
shares, respectively, of Saxon's Common Stock to NJS for a total purchase price
of $10,000. This Prospectus relates to the distribution by NJS of all of its
outstanding 2,465,735 shares of Saxon Common Stock to the stockholders of NJS.
See "Plan of Distribution/Market Information."
On July 28, 1997, NJS transferred its entire ownership of Dupont's
outstanding common stock to Saxon as a capital contribution. Prior thereto, NJS
made a $750,000 contribution to the capital of Dupont.
24
<PAGE>
SECURITY OWNERSHIP OF MANAGEMENT AND OTHERS
As of the date of this Prospectus, NJS owns 2,465,735 shares of Saxon's
Common Stock, representing 100% of Saxon's outstanding Common Stock. Nicholas
J. Seccafico Jr. and Lindo Garuffi each own options to purchase 400,000 shares
of Saxon's Common Stock equivalent to 14% of the outstanding shares of Saxon.
After the Payment Date, Saxon's Common Stock will be distributed to NJS
stockholders of record on the Record Date. The following table sets forth
certain information as of the Payment Date regarding the beneficial ownership of
Saxon's Common Stock by: (i) all persons known by Saxon to own beneficially
more than 5% of Saxon's Common Stock; (ii) each director and officer of Saxon
individually; and (iii) all directors and officers of Saxon as a group.
PERCENTAGE OF
COMMON STOCK
AMOUNT AND OUTSTANDING
NATURE OF AFTER
NAME AND ADDRESS OF BENEFICIAL PAYMENT DATE
BENEFICIAL OWNER (1) OWNERSHIP (2)
- -----------------------------------------------------------------
Nicholas J. Seccafico, Jr.
33 Eleventh Ave.
Huntington Station, NY 11746 (4) 620,000 21.6%
- -----------------------------------------------------------------
Lindo Garuffi
92 Parsons Blvd.
Malba, NY 11357 (3) (4) 849,985 29.7%
- -----------------------------------------------------------------
All officers and
directors
as a group
(2 persons) 1 ,469,985 45.0%
- -----------------------------------------------------------------
_________________
(1) Unless otherwise indicated below, all shares are owned beneficially and of
record.
(2) Based upon 2,465,735 shares of Saxon Common Stock outstanding.
(3) Includes shares of Saxon Common Stock owned by members of Lindo Garuffi's
family.
(4) The table includes options to purchase 400,000 shares of Saxon's Common
Stock to be granted to each of Messrs. Seccafico and Garuffi. See
"Executive Compensation."
25
<PAGE>
DESCRIPTION OF COMMON STOCK
Saxon's Certificate of Incorporation (the "Certificate of Incorporation")
authorizes the issuance of 20,000,000 shares of Common Stock, $.001 par value.
The following is a brief description of Saxon's Common Stock. The rights of the
stockholders of Saxon are established by its Certificate of Incorporation, the
Bylaws, and laws of the State of Delaware. The descriptions set forth below are
intended as summaries only and are qualified in their entirety by reference to
the Certificate of Incorporation, the Bylaws, and the relevant Delaware law.
COMMON STOCK
The authorized Common Stock of Saxon consists of 20,000,000 shares of
Common Stock, par value $.001 per share. As of the date of this Prospectus,
2,465,735 shares of Saxon Common Stock were outstanding. Holders of shares of
the Saxon Common Stock are entitled to one vote per share on all matters to be
voted upon by the stockholders and are not entitled to cumulative voting for the
election of directors. Holders of shares of Saxon Common Stock are entitled to
receive ratably such dividends, if any, as may be declared from time to time by
the Board of Directors out of funds legally available therefor. However, it is
the present intention of Saxon not to pay any cash dividends, but to reinvest
earnings, if any, into the Company. In the event of liquidation, dissolution or
winding up of Saxon, the holders of shares of Saxon Common Stock are entitled to
share ratably in all assets after payment of any preference to the holders of
Preferred Stock, if any. Shares of Saxon Common Stock have no preemptive,
conversion or other subscription rights. There are no redemption or sinking
fund provisions applicable to the Saxon Common Stock.
ANTI-TAKEOVER STATUTE
Section 203 of the Delaware General Corporation Law provides that if a
person acquires 15% or more of the stock of a Delaware corporation, he becomes
an "interested stockholder" and may not engage in a "business combination" with
that corporation for a period of three years. The term "business combination"
includes a merger, a sale of assets, or a transfer of stock. The three year
moratorium may be terminated if any of the following conditions are met: (1)
the Board of Directors approved the acquisition of stock or the business
combination before the person became an interested stockholder, (2) the
interested stockholder acquired 85% of the outstanding voting stock in such
transaction, excluding in the determination of outstanding stock is any stock
owned by individuals who are officers and directors of the corporation and any
stock owned by certain employee stock plans, or (3) the business combination is
approved after the person became an interested stockholder by two-thirds of the
voting stock which is not owned by the interested stockholder.
26
<PAGE>
SHARES ELIGIBLE FOR FUTURE SALE
After the Payment Date, Saxon's officers and directors will beneficially
own and control 1,469,985 shares (including options to purchase 800,000 shares)
of Saxon's Common Stock. Such persons may sell their shares of Common Stock of
Saxon in compliance with Rule 144 of the Securities Act. Ordinarily, under Rule
144, a person holding restricted securities for a period of one year may, every
three months thereafter, sell in ordinary brokerage transactions or in
transactions directly with a market maker, an amount of shares equal to the
greater of one percent of the Company's then-outstanding Common Stock or the
average weekly trading volume in the same securities during the four calendar
weeks prior to such sale. However, since 669,985 shares of Common Stock issued
to Saxon's officers and directors are registered herein for distribution to
them, the one-year holding period will not apply to these shares and sales can
be made commencing 90 days after the date hereof pursuant to Rule 144. The
remaining 800,000 shares beneficially owned by the control group pursuant to
outstanding options will likely be registered in the future pursuant to a Form
S-8 Registration Statement.
PLAN OF DISTRIBUTION/MARKET INFORMATION
As of the date of this Prospectus, Saxon is a wholly-owned subsidiary of
NJS and has 2,465,735 shares of Common Stock issued and outstanding. As of the
date of this Prospectus, NJS has 9,862,940 shares of Common Stock issued and
outstanding. This Prospectus relates to the distribution by NJS of all of its
outstanding 2,465,735 shares of Saxon Common Stock to the stockholders of NJS.
Each NJS stockholder of record as of the close of business on October __, 1997
(the "Record Date"), will receive on November __, 1997 (the "Payment Date") 0.25
shares of Saxon Common Stock for each outstanding share of NJS Common Stock (the
"Conversion Ratio"). No fractional shares will be issued and all fractional
amounts will be disregarded. After the Payment Date, NJS will not own any Saxon
Common Stock except for shares not distributed by virtue of disregarding
fractional amounts. While this Prospectus covers solely the above referenced
distribution, it is anticipated that persons who are not affiliates of the
Company who receive the distribution of the Saxon Common Stock, and assuming
that a market does develop for the Saxon Common Stock, of which no assurances
can be given, will be able to offer and sell the Saxon Common Stock in regular
brokerage transactions in the over-the-counter market or, directly or to brokers
or to dealers, or in private sales or negotiated transactions, or otherwise, at
prices relating to the then prevailing market prices. See "Shares Eligible for
Future Sale."
No offering price is indicated herein since the recipients of the NJS
distribution will not pay anything in order to receive such distribution. Prior
to NJS' distribution of its issued and outstanding Saxon Common Stock, there has
been no public market for the Saxon Common Stock and there can be no assurance
that such a public market for the Common Stock will develop after the Payment
Date or that, if developed, it will be sustained. Saxon intends to have a
broker/dealer registered with the NASD file a 15c2-11 application to attempt to
list Saxon's Common Stock for trading on the NASD Over-The-Counter Electronic
Bulletin Board.
27
<PAGE>
LEGAL MATTERS
The validity of the issuance of the Securities offered hereby will be
passed upon for the Company by the law firm of Lester Morse P.C. Members of the
family of Lester Morse will own, upon the completion of this Offering,
approximately 1% of the outstanding shares.
EXPERTS
Saxon's balance sheet and notes thereto as of July 18, 1997 and Dupont's
financial statements and notes thereto as of May 31, 1997 included in this
Prospectus, have been audited by Baron & Baron, independent certified public
accountants, to the extent and for the periods set forth in their report
appearing elsewhere herein, which are included in reliance upon the authority of
said firm as experts in auditing and accounting.
ADDITIONAL INFORMATION
The Company has filed with the Commission in Washington, D.C., a
Registration Statement on Form S-1, File No. 333-____ (of which this Prospectus
is a part) under the Securities Act with respect to the Securities offered
hereby. This Prospectus does not contain all of the information set forth in
the Registration Statement and the exhibits thereto. For further information
about the Company and the distribution of securities contemplated herein,
reference is made to the Registration Statement and to the exhibits filed as a
part thereof. The statements contained in this Prospectus are not necessarily
complete and, in each instance, reference is made to a copy of the relevant
contract or document filed as an exhibit to the Registration Statement, each
statement being qualified in any and all respects by such reference. The
Registration Statement, including exhibits, may be inspected without charge at
the Public Reference facilities of the Commission located at Room 1024,
Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 10549, and at the
offices of the Commission located at the Northeast Regional Office, 7 World
Trade Center, 13th Floor, New York, NY 10048 and the Midwest Regional Office,
Northwestern Atrium Center, 500 West Madison Street, Room 1400, Chicago, IL
60661, and copies of such material can be obtained upon request and payment of
the appropriate fee from the Public Reference Section of the Commission located
at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549.
Material filed electronically through Edgar (Electronic Data Gathering Analysis
and Retrieval System) may also be accessed through the SEC's home page on the
World Wide WEB at http://www.sec.gov.
28
<PAGE>
SAXON ACQUISITION CORP.
TABLE OF CONTENTS
JULY 18, 1997
<TABLE>
<CAPTION>
Page
----
<S> <C>
Independent Auditors' Report 1
Balance Sheet 2
Notes to Financial Statements 3-5
</TABLE>
<PAGE>
[LETTERHEAD OF BARON & BARON]
INDEPENDENT AUDITORS' REPORT
Board of Directors
Saxon Acquisition Corp.
Greenwich, CT
We have audited the accompanying balance sheet of Saxon Acquisition Corp. as of
July 18, 1997. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Saxon Acquisition Corp. as of
July 18, 1997, in conformity with generally accepted accounting principles.
/s/ Baron & Baron
New York, NY
August 15, 1997
<PAGE>
Page 2
SAXON ACQUISITION CORP.
BALANCE SHEET
JULY 18, 1997
A S S E T S
Current assets:
Subscription receivable $9,991
======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities $ -
------
Stockholders' equity:
Common stock, .001 par value
20,000,000 shares authorized;
2,465,735 issued and outstanding $4,931
Paid-in capital 5,060
------
$9,991
======
The accompanying notes are an integral
part of the financial statements.
<PAGE>
Page 3
SAXON ACQUISITION CORP.
NOTES TO FINANCIAL STATEMENTS
JULY 18, 1997
1. Organization:
Saxon Acquisition Corp. (the "Company") was incorporated in the state of
Delaware on July 9, 1997. The Company is a wholly owned subsidiary of NJS
Acquisition Corporation.
On July 28, 1997 subsequent to the balance sheet date; NJS Acquisition
Corporation transferred its entire stock ownership in Dupont Securities
Group, Inc. ("Dupont") to the Company.
Dupont was incorporated in the state of New York on November 7, 1996 to
engage in the brokerage and investment advisory business. Dupont began
operations on June 10, 1997.
2. Summary of significant accounting policies:
a. Cash and cash equivalents:
Cash and cash equivalents include time deposits, certificates of deposit
and all highly liquid debt instruments with original maturities of three
months or less.
b. Marketable securities:
The Company has adopted Statement of Financial Accounting Standards
("SFAS") No. 115, "Accounting for Certain Investments in Debt and Equity
Securities". The Company's investment securities are classified as
"trading securities". Accordingly, securities are carried at market value
with any unrealized gains and losses being included in income. Realized
gains or losses are computed based on the average cost of the securities
sold.
c. Property and equipment:
Property and equipment are stated at cost. Depreciation is computed over
the useful lives of the assets using the straight-line method.
Leasehold improvements are amortized over the remaining lease term.
Expenditures for repairs and maintenance are charged to operations in the
period incurred.
d. Income taxes:
The provision for income taxes is computed on the pre-tax income of the
Company. Deferred taxes result from the future tax consequences
associated with temporary differences between the amount of assets and
liabilities recorded for tax and financial accounting purposes.
<PAGE>
Page 4
SAXON ACQUISITION CORP.
NOTES TO FINANCIAL STATEMENTS
JULY 18, 1997
2. Summary of significant accounting policies: (Continued)
e. Concentrations of credit risk:
Financial instruments that potentially subject the Company to
significant concentrations of credit risk consist principally of cash
investments. The Company places its cash investments with high quality
financial institutions in an effort to minimize the credit risk.
f. Earnings per share:
The Computation of earnings per share is based on the average number of
outstanding common shares.
3. Subsequent event:
On July 28, 1997 the Company's parent (NJS Acquisition Corporation)
transferred its entire stock ownership in Dupont Securities Group, Inc.
("Dupont") to the Company.
Information from Dupont's audited financial statements as of May 31, 1997
reflected the following information:
BALANCE SHEET
ASSETS
<TABLE>
<CAPTION>
Current assets:
<S> <C>
Cash and cash equivalents $769,143
Prepaid expenses 10,000
--------
Total current assets 779,143
Property and equipment 79,708
Security deposits 2,800
--------
$861,651
========
</TABLE>
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
Current liabilities:
<S> <C>
Accounts payable and accrued expenses $ 14,504
--------
Stockholders' equity:
Common stock 750,000
Additional paid-in capital 117,210
Accumulated deficit (20,063)
--------
847,147
--------
$861,651
========
</TABLE>
<PAGE>
Page 5
SAXON ACQUISITION CORP.
NOTES TO FINANCIAL STATEMENTS
JULY 18, 1997
3. Subsequent event: (Continued)
STATEMENT OF OPERATIONS
(period from November 7, 1996
(inception) to May 31, 1997)
Dividend income $ 18,408
Operating expenses 38,471
--------
Net loss $(20,063)
========
Dupont began operations on June 10, 1997 (note 1). Unaudited pro-forma
financial information for the two months ended July 31, 1997 reflected the
following:
STATEMENT OF OPERATIONS
Revenues $ 4,172
Operating expenses 33,751
--------
Net loss $(29,579)
========
<PAGE>
DUPONT SECURITIES GROUP, INC.
FINANCIAL STATEMENTS
MAY 31, 1997
<PAGE>
DUPONT SECURITIES GROUP, INC.
TABLE OF CONTENTS
November 7, 1996 (Inception) to May 31, 1997
<TABLE>
<CAPTION>
Page
-----
<S> <C>
Independent Auditors' Report 1
Balance Sheet 2
Statement of Operations 3
Statement of Stockholders' Equity 4
Statement of Cash Flows 5
Notes to Financial Statements 6-8
Supporting Schedules:
Computation of Net Capital Pursuant to Rule 15c3-1 9
Computation for Determination of the Reserve
Requirements and Information Relating to
Possession or Control Requirements for Brokers
and Dealers Pursuant to Rule 15c3-3 10
Reconciliation of the Audited Computation of Net
Capital and Focus Report - Part IIA Pursuant
to Rule 17A-5 11
Independent Auditors' Supplementary Report on
Internal Accounting Control 12-13
</TABLE>
<PAGE>
INDEPENDENT AUDITORS' REPORT
Board of Directors
Dupont Securities Group, Inc.
Greenwich, CT
We have audited the accompanying balance sheet of Dupont Securities Group, Inc.
as of May 31, 1997, and the related statements of operations, stockholders'
equity and cash flows for the period from November 7, 1996 (inception) to May
31, 1997. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Dupont Securities Group, Inc.
as of May 31, 1997, and the results of their operations and their cash flows for
the period from November 7, 1996 (inception) to May 31, 1997, in conformity with
generally accepted accounting principles.
Our audit was conducted for the purpose of expressing an opinion on the basic
financial statements taken as a whole. The information contained on pages 9
through 11, inclusive, is presented for purposes of additional analysis and is
not a required part of the basic financial statements, but is supplementary
information required by Rules 15c3-1, 15c3-3 and 17a-5 of the Securities and
Exchange Commission. Such information has been subjected to the auditing
procedures applied in the audit of the basic financial statements and, in our
opinion, is fairly stated in all material respects in relation to the basic
financial statements taken as a whole.
New York, NY
June 27, 1997
-1-
<PAGE>
DUPONT SECURITIES GROUP, INC.
BALANCE SHEET
May 31, 1997
<TABLE>
<CAPTION>
ASSETS
CURRENT ASSETS
<S> <C>
Cash and cash equivalents $ 769,143
Prepaid expenses 10,000
----------
Total current assets 779,143
----------
Property and equipment (Note 3) 79,708
Security deposits 2,800
----------
$ 861,651
==========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and accrued expenses $ 14,504
----------
Stockholders' equity:
Common stock (Note 4) 750,000
Additional paid-in-capital 117,210
Accumulated deficit (20,063)
----------
847,147
----------
$ 861,651
==========
</TABLE>
The Accompanying Notes are an Integral Part of the Financial Statements
<PAGE>
DUPONT SECURITIES GROUP, INC.
STATEMENT OF OPERATIONS
Period from November 7, 1996 (inception) to May 31, 1997
<TABLE>
<S> <C>
Revenues:
Dividend income $ 18,408
----------
Expenses:
Regulatory and licensing fees 12,618
Professional fees 16,718
Other operating expenses 7,935
----------
37,271
----------
Loss before provision for income taxes (18,863)
Provision for income taxes 1,200
----------
Net loss $ (20,063)
==========
</TABLE>
The Accompanying Notes are an Integral Part of the Financial Statements
-3-
<PAGE>
DUPONT SECURITIES GROUP, INC.
STATEMENT OF STOCKHOLDERS' EQUITY
period from November 7, 1996 (inception) to May 31, 1997
<TABLE>
<CAPTION>
Additional
Paid-
Total Common Stock in-Capital (Deficit)
-------- ------------ ----------- ---------
<S> <C> <C> <C> <C>
November 7, 1996 (inception) $ - $ - $ - $ -
Issuance of common stock 750,000 750,000 - -
Contribution of capital 117,210 - 117,210 -
Net loss (20,063) - - (20,063)
-------- ----------- ----------- ---------
May 31, 1997 $847,147 $ 750,000 $ 117,210 $ (20,063)
======== =========== =========== =========
</TABLE>
The Accompanying Notes are an Integral Part of the Financial Statements
-4-
<PAGE>
DUPONT SECURITIES GROUP, INC.
STATEMENT OF CASH FLOWS
period from November 7, 1996 (inception) to May 31, 1997
<TABLE>
<S> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (20,063)
Adjustments to reconcile net loss to net cash
used by operating activities:
Changes in assets and liabilities:
Prepaid expenses and other assets (12,800)
Accounts payable and accrued expenses 14,504
----------
Net cash used by operating activities (18,359)
----------
CASH FLOWS USED BY INVESTING ACTIVITIES
Capital expenditures (79,708)
----------
CASH FLOWS USED BY FINANCING ACTIVITIES
Issuance of common stock and capital contributions 867,210
----------
Net increase in cash and cash equivalents 769,143
CASH AND CASH EQUIVALENTS, beginning of period -
----------
CASH AND CASH EQUIVALENTS, end of period $ 769,143
==========
</TABLE>
The Accompanying Notes are an Integral Part of the Financial Statements
-5-
<PAGE>
DUPONT SECURITIES GROUP, INC.
NOTES TO FINANCIAL STATEMENTS
May 31, 1997
NOTE 1. ORGANIZATION
The Company was incorporated in the State of New York on November 7, 1996
to engage in the brokerage and investment advisory business. The Company
is a wholly owned subsidiary of NJS Acquisition Corporation. The Company
began operations on June 10, 1997.
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a. Cash and cash equivalents:
Cash and cash equivalents include time deposits, certificates of
deposit and all highly liquid debt instruments with original
maturities of three months or less.
b. Marketable securities:
The Company has adopted Statement of Financial Accounting Standards
("SFAS") No. 115, "Accounting for Certain Investments in Debt and
Equity Securities". The Company's investment securities are classified
as "trading securities". Accordingly, securities are carried at market
value with any unrealized gains and losses being included in income.
Realized gains or losses are computed based on the average cost of the
securities sold.
c. Property and equipment:
Property and equipment are stated at cost. Depreciation is computed
over the useful lives of the assets using the straight-line method.
Leasehold improvements are amortized over the remaining lease term.
Expenditures for repairs and maintenance are charged to operations in
the period incurred.
d. Income taxes:
The provision for income taxes is computed on the pre-tax income of
the Company. Deferred taxes result from the future tax consequences
associated with temporary differences between the amount of assets and
liabilities recorded for tax and financial accounting purposes.
e. Concentrations of credit risk:
Financial instruments that potentially subject the Company to
significant concentrations of credit risk consist principally of cash
investments. The Company places its cash investments with high quality
financial institutions in an effort to minimize the credit risk.
-6-
<PAGE>
DUPONT SECURITIES GROUP, INC.
NOTES TO FINANCIAL STATEMENTS
May 31, 1997
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, (CONTINUED)
f. Revenue recognition:
Consulting and advisory fee revenue was recognized when services
provided were substantially completed.
Transactions in securities and related commission expense are recorded
on a trade date basis.
g. Start-up costs:
The Company expensed all start-up costs associated with the
development of its brokerage and investment advisory business. The
Company began operations on June 10, 1997.
NOTE 3. PROPERTY AND EQUIPMENT
<TABLE>
<S> <C>
Computer equipment $ 43,629
Furniture and office equipment 23,555
Leasehold improvements 12,524
---------
79,708
Less accumulated depreciation and amortization -
---------
$ 79,708
=========
</TABLE>
The property and equipment was placed in service on June 10, 1997 which is
the date the Company began operations.
NOTE 4. STOCKHOLDERS' EQUITY
At May 31, 1997, the Company was authorized to issue 200 shares of common
stock with no par value. At that date 100 shares were issued and
outstanding.
NOTE 5. NET CAPITAL REQUIREMENTS
As a registered broker/dealer, the Company is subject to the Securities
and Exchange Commission's net capital rule which requires that the Company
maintain a minimum net capital as defined, of 12.5% of aggregate
indebtedness or $100,000, whichever is greater.
Net capital and aggregate indebtedness change from day-to-day, but, as of
May 31, 1997, the Company had net capital of $754,639 which exceeded
requirements by $654,639.
-7-
<PAGE>
DUPONT SECURITIES GROUP, INC.
NOTES TO FINANCIAL STATEMENTS
May 31, 1997
NOTE 6. LEASE COMMITMENT
The Company leases office facilities pursuant to the terms and conditions
of a one year and three year three month lease.
At May 31, 1997, the minimum future rental commitments under
noncancellable leases payable over the remaining lives of the leases are:
<TABLE>
<S> <C>
Year ending May 31, 1998 $37,850
1999 33,600
2000 33,600
</TABLE>
-8-
<PAGE>
DUPONT SECURITIES GROUP, INC.
COMPUTATION OF NET CAPITAL REQUIREMENTS
PURSUANT TO RULE 15C3-1
May 31, 1997
<TABLE>
<S> <C>
Credits:
Stockholders' equity $ 847,147
Debits:
Non-allowable assets:
Prepaid expenses and other assets 12,800
Property and equipment 79,708
----------
Net capital 754,639
Minimum net capital requirements - greater of 12.5% of aggregate
indebtedness or $100,000 100,000
----------
Net capital in excess of requirements $ 654,630
==========
Ratio of aggregate indebtedness to net capital 1.9%
==========
Aggregate indebtedness:
Accounts payable and accrued expenses $ 14,504
==========
</TABLE>
The Accompanying Notes are an Integral Part of the Financial Statements
-9-
<PAGE>
DUPONT SECURITIES GROUP, INC.
COMPUTATION FOR DETERMINATION OF
THE RESERVE REQUIREMENTS AND INFORMATION RELATING TO
POSSESSION OR CONTROL REQUIREMENTS FOR BROKERS
AND DEALERS PURSUANT TO RULE 15C3-3
May 31, 1997
As of May 31, 1997, the Company has not effected any transactions for anyone
defined as a customer under Rule 15c3-3. Accordingly, there are no items to
report under the requirements of this rule.
-10-
<PAGE>
DUPONT SECURITIES GROUP, INC.
RECONCILIATION OF THE AUDITED COMPUTATION OF
NET CAPITAL AND FOCUS REPORT - PART IIA
PURSUANT TO RULE 17a-5
May 31, 1997
<TABLE>
<S> <C>
Net capital per focus report Part IIA $ 769,143
Accounts payable and accrued expenses (14,504)
----------
Net capital 754,639
==========
</TABLE>
-11-
<PAGE>
DUPONT SECURITIES GROUP, INC.
INDEPENDENT AUDITORS' SUPPLEMENTARY REPORT ON
INTERNAL ACCOUNTING CONTROL
May 31, 1997
<PAGE>
INDEPENDENT AUDITORS' SUPPLEMENTARY REPORT
ON INTERNAL ACCOUNTING CONTROL
Board of Directors
Dupont Securities Group, Inc.
Greenwich, CT
In planning and performing our audit of the financial statements of Dupont
Securities Group, Inc. for the period from November 7, 1996 (inception) to May
31, 1997, we considered its internal control structure, including procedures for
safeguarding securities, in order to determine our auditing procedures for the
purpose of expressing our opinion on the financial statements and not to provide
assurance on the internal control structure.
We also made a study of the practices and procedures followed by the Company in
making the periodic computations of aggregate indebtedness and net capital under
rule 17a-3(a)(11) and the procedures for determining compliance with the
exemptive provisions of rule 15c3-3. We did not review the practices and
procedures followed by the Company in making the quarterly securities
examinations, counts, verifications and comparisons, and the recordation of
differences required by rule 17a-13 or in complying with the requirements for
prompt payment for securities under section 8 of Regulation T of the Board of
Governors of the Federal Reserve System, because the Company does not carry
security accounts for customers or perform custodial functions relating to
customer securities.
The management of the Company is responsible for establishing and maintaining an
internal control structure and the practices and procedures referred to in the
preceding paragraph. In fulfilling this responsibility, estimates and judgments
by management are required to assess the expected benefits and related costs of
internal control structure policies and procedures and of the practices and
procedures referred to in the preceding paragraph and to assess whether those
practices and procedures can be expected to achieve the Commission's above
mentioned objectives. Two of the objectives of an internal control structure and
the practices and procedures are to provide management with reasonable, but not
absolute, assurance that assets for which the Company has responsibility are
safeguarded against loss from unauthorized use or disposition and that
transactions are executed in accordance with management's authorization and
recorded properly to permit preparation of financial statements in conformity
with generally accepted accounting principles. Rule 17a-5(g) lists additional
objectives of the practices and procedures listed in the preceding paragraph.
Because of inherent limitations in any internal control structure or the
practices and procedures referred to above, errors or irregularities may occur
and not be detected. Also, projection of any evaluation of them to future
periods is subject to the risk that they may become inadequate because of
changes in conditions or that the effectiveness of their design and operation
may deteriorate.
Our consideration of the internal control structure would not necessarily
disclose all matters in the internal control structure that might be material
weaknesses under standards established by the American Institute of Certified
Public Accountants. A material weakness is a condition in which the design or
operation of the specific internal control structure elements does not reduce to
a relatively low level the risk that errors or irregularities in amounts that
would be material in relation to the financial statements being audited may
occur and not be detected within a timely period by employees in the normal
course of performing their assigned functions. However, we noted no matters
involving the internal control structure, including procedures for safeguarding
securities, that we consider to be material weaknesses as defined above.
-12-
<PAGE>
We understand that practices and procedures that accomplish the objectives
referred to in the second paragraph of this report are considered by the
Commission to be adequate for its purposes in accordance with the Securities
Exchange Act of 1934 and related regulations, and that practices and procedures
that do not accomplish such objectives in all material respects indicate a
material inadequacy for such purposes. Based on this understanding and on our
study, we believe that the Company's practices and procedures were adequate at
May 31, 1997, to meet the Commission's objectives.
This report recognizes that it is not practicable in an organization the size of
the Company's to achieve all the divisions of duties and cross-checks generally
included in a system of internal accounting control and that alternatively
greater reliance must be placed on surveillance by management.
This report is intended solely for the use of management, the Securities and
Exchange Commission, the National Association of Securities Dealers, Inc. and
other regulatory agencies which rely on Rule 17a-5(g) under the Securities
Exchange Act of 1934, and should not be used for any other purpose.
New York, NY
June 27, 1997
-13-
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 13. Other Expenses of Issuance and Distribution
-------------------------------------------
Securities and Exchange Commission
Registration fee $ 302.91
Printing of Prospectus and Certificates 10,000.00
Legal fees and expenses (including blue sky) **
Accountants' fees and expenses **
Fees and expenses of Transfer Agent 5,000.00*
Miscellaneous **
----------
Total $70,000.00*
==========
_______________
* Estimated
** To be Supplied by Amendment
Item 14. Indemnification of Directors and Officers
-----------------------------------------
The Registrant's Certificate of Incorporation contains a provision which,
in substance, eliminates the personal liability of the directors of the
Registrant and its stockholders for monetary damages for breaches of their
fiduciary duties as directors to the fullest extent permitted by Delaware law.
By virtue of this provision, under current Delaware law a director of the
Registrant will not be personally liable for monetary damages for breach of his
fiduciary duty, except for liability for (a) breach of his duty of loyalty to
the Registrant or to its stockholders, (b) acts or omissions not in good faith
or that involve intentional misconduct or a knowing violation of law, (c)
dividends or stock repurchases or redemptions that are unlawful under Delaware
laws and (d) any transaction from which he receives an improper personal
benefit. This provision pertains only to breaches of duty by directors as
directors and not in any other corporate capacity, such as officers, and limits
liability only for breaches of fiduciary duties under Delaware corporate law and
not for violations of other laws such as the federal securities laws. As a
result of the inclusion of such provision, stockholders may be unable to recover
monetary damages against directors for actions taken by them that constitute
negligence or gross negligence or that are in violation of their fiduciary
duties, although it may be possible to obtain injunctive or other equitable
relief with respect to such actions. The inclusion of this provision in the
Registrant's Certificate of Incorporation may have the effect of reducing the
likelihood of derivative litigation against directors, and may discourage or
deter stockholders or Management from bringing a lawsuit against directors for
breach of their duty of care, even though such an action, if successful, might
otherwise have benefitted the Registrant and its stockholders.
II-1
<PAGE>
The General Corporation Law of Delaware provides generally that a
corporation may indemnify any person who was or is a party to or is threatened
to be made a party to any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative, or investigative in nature
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) and, in a proceeding not by or in
the right of the corporation, judgments, fines and amounts paid in settlement,
actually and reasonably incurred by him in connection with such suit or
proceeding, if he acted in good faith and in a manner 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 reason to believe his conduct was
unlawful. Delaware law further provides that a corporation will not indemnify
any person against expenses incurred in connection with an action by or in the
right of the corporation if such person shall have been adjudged to be liable
for negligence or misconduct in the performance of his duty to the corporation
unless and only to the extent that the court in which such action or suit was
brought shall determine that, despite the adjudication of liability but in view
of all the circumstances of the case, such person is fairly and reasonably
entitled to indemnity for the expenses which such court shall deem proper.
The indemnification and advancement of expenses provided by, or granted
pursuant to Delaware Corporation Law is not be deemed exclusive of any other
rights to which those seeking indemnification or advance of expenses may be
entitled under any bylaw, agreement, vote of stockholders of disinterested
directors or otherwise, both as to action in his official capacity and as to
action in another capacity while holding such office.
Article IX of the Registrant's By-Laws provides that the officers and
directors of the Registrant shall be entitled to indemnification to the maximum
extent permitted by Delaware law.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission,
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment of the Registrant of expenses incurred
or paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
II-2
<PAGE>
Item 15. Recent Sales of Unregistered Securities
---------------------------------------
On July 10, 1997 and August 15, 1997, Saxon sold 100 shares and
2,465,635 shares respectively, of Saxon's Common Stock to NJS Acquisition
Corporation ("NJS") for a total purchase price of $10,000.
Exemption is claimed on the sale of an aggregate of 2,465,735 shares
of the Registrant's Common Stock to NJS Acquisition Corp. pursuant to Section
4(2) of the Securities Act of 1933, as amended, inasmuch as the sale was made to
the founder of the Registrant.
Item 16. Exhibits and Financial Statement Schedules
------------------------------------------
(a) Exhibits. The following exhibits have been previously filed unless
otherwise noted.
Exhibit No. Description
----------- -----------
3.1 Articles of Incorporation of Registrant*
3.2 By-Laws of Registrant*
4.1 Specimen of Common Stock**
5 Opinion re: legality **
10.1 Clearing Agreement dated April 4, 1997 between Dupont
Securities Group, Inc. and Oscar Gruss & Son Incorporated**
10.2 Lease for Facilities in Connecticut**
10.3 Dupont lease for facilities in New York **
10.4 Stock Option Plan*
11 Earnings per share - See notes to financial statements
21 Subsidiaries of Registrant - (See "Prospectus Summary"
included in the Prospectus which forms a part of this
Registration Statement.)
23 Consent of Baron & Baron*
27 Selected Financial Data*
_______________
* Filed herewith.
** To be filed by amendment..
II-3
<PAGE>
(b) Financial Statement Schedules - Not applicable.
Item 17. Undertakings
------------
The undersigned Registrant hereby further undertakes:
(1) To file, during any period in which it offers or sells securities, a
post-effective amendment to this Registration Statement to:
(i) Include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) Reflect in the prospectus any facts or events which,
individually or together, represent a fundamental change in the information in
the registration statement; and
(iii) Include any additional or changed material information on the
plan of distribution.
(2) For determining liability under the Securities Act of 1933, treat each
post-effective amendment as a new registration statement of the securities
offered, and the offering of the securities at that time to be the initial bona
fide offering.
(3) File a post-effective amendment to remove from registration any of the
securities that remain unsold at the end of the offering.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 (the "Act") may be permitted to directors, officers and
controlling persons of the Registrant pursuant to the foregoing provisions, or
otherwise, the Registrant has advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities
(other than the payment of the Registrant of expenses incurred or paid by a
director, officer, or controlling person of the Registrant in the successful
defense of any action, suit or proceeding) is asserted by such director, officer
or controlling person in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as
expressed in the Securities Act and will be governed by the final adjudication
of such issue.
For determining any liability under the Securities Act, the Registrant
will treat the information omitted from the form of prospectus filed as part of
this Registration Statement in reliance upon Rule 430A and contained in the form
of prospectus filed by the Registrant
II-4
<PAGE>
pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act as part of
this Registration Statement as of the time the Commission declared it effective.
For determining any liability under the Securities Act, the Registrant
will treat each post-effective amendment that contains a form of prospectus as a
new registration statement for the securities offered in the registration
statement, and that offering of the securities at that time as the initial bona
fide offering of those securities.
II-5
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant has duly caused this registration statement to be signed on its
behalf by the undersigned, thereunto duly authorized in the City of Huntington
Station, State of New York on the 30th day of September, 1997.
By: /s/ Nicholas J. Seccafico
---------------------------------------
Nicholas J. Seccafico, President
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated:
Signatures Titles Date
- ---------- ------ ----
President, Chief Financial
/s/ Nicholas J. Seccafico and Accounting Officer
- ------------------------- and a Director of the
Nicholas J. Seccafico Company September 30, 1997
/s/ Lindo Garuffi
- ------------------------- Secretary and a Director
Lindo Garuffi of the Company September 30, 1997
II-6
<PAGE>
EXHIBIT 3.1
CERTIFICATE OF INCORPORATION
OF
SAXON ACQUISITION CORP.
_______________
FIRST: The name of this corporation shall be:
SAXON ACQUISITION CORP.
SECOND: Its registered office in the State of Delaware is to be located at:
15 East North Street, in the City of Dover, County of Kent and its registered
agent at such address is: XL CORPORATE SERVICES, INC.
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 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 total number of shares of stock which this corporation is
authorized to issue is:
20,000,000 shares of Common Stock with a Par Value of $.001.
FIFTH: The name and address of the incorporator is as follows:
Robert Aratingi
Blumberg Excelsior Corporate Services, Inc.
62 White Street
New York, NY 10013
SIXTH: The Directors shall have power to make and to alter or amend the
By-Laws; to fix the amount to be reserved as working capital, and to authorize
and cause to be executed, mortgages and liens without limit as to the amount,
upon the property and franchise of this corporation.
With the consent in writing, and pursuant to a majority vote of the holders of
the capital stock issued and outstanding, the Directors shall have authority to
dispose, in any manner, of the whole property of this corporation.
<PAGE>
The By-Laws shall determine whether and to what extent the account and books of
this corporation, or any of them, shall be open to the inspection of the
stockholders; 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.
The stockholders and directors shall have power to hold their meetings and keep
the books, documents and papers of the corporation outside of the State of
Delaware, at such places as may be, from time to time, designated by the By-Laws
or by resolution of the stockholders or directors, except as otherwise required
by the laws of Delaware.
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 referenced 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.
SEVENTH: No director of this Corporation shall be liable to the Corporation or
its stockholders for monetary damages for breach of fiduciary duty as a
director, except for liability (I) for any breach of the director'sduty of
loyalty to the Corporation or its stockholders, (ii) for acts or omissions not
in good faith or which involve intentional misconduct or a knowing violation of
law, (iii) under Section 174 of the General Corporation Law, or (iv) for any
transaction from which the director derived an improper personal benefit.
IN WITNESS WHEREOF, I have hereunto set my hand and seal this 9th day of
July, A.D., 1997.
XL CORPORATE SERVICES, INC.
_____________________________
Robert Aratingi
Incorporator
<PAGE>
EXHIBIT 3.2
SAXON ACQUISITION CORP.
BY-LAWS
ARTICLE I
OFFICES
-------
Section 1. The registered office shall be at such place within the State
of Delaware as the board of directors may, from time to time, determine.
Section 2. The corporation may also have offices at such other places both
within and without the State of Delaware as the board of directors may from time
to time determine or the business of the corporation may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
------------------------
Section 1. All meetings of the stockholders for the election of directors
shall be held in the State of New York at such place as may be fixed, from time
to time by the board of directors, or at such other place either within or
without the State of New York as shall be designated from time to time by the
board of directors and stated in the notice of the meeting. Meetings of
stockholders for any other purpose may be held at such time and place, within or
without the State of New York as shall be stated in the notice of the meeting or
in a duly executed waiver of notice thereof.
Section 2. Annual meetings of stockholders shall be held on the fifteenth
day of the fifth month following the end of each fiscal year or as soon
thereafter as practicable, as shall be designated from time to time by the board
of directors and stated in the notice of the meeting, at which they shall elect
by a plurality vote a board of directors, and transact such other business as
may properly be brought before the meeting.
Section 3. Written notice of the annual meeting stating place, date and
hour of the meeting shall be given to each stockholder entitled to vote at such
meeting not less than ten nor more than sixty days before the date of the
meeting.
Section 4. The officer who has charge of the stock ledger of the
corporation shall prepare and make, at least ten days before every meeting of
stockholders, a complete list of the stockholders entitled to vote at the
meeting, arranged in alphabetical order, and showing the address of each
stockholder and the number of shares registered in the name of each stockholder.
Such list shall be open to the examination of any stockholder, for any purpose
germane to the meeting, during ordinary business hours, for a period of at least
ten days prior to the meeting, either at a place within the city where the
meeting is to be
1
<PAGE>
held, which place shall be specified in the notice of the meeting, or, if not so
specified, at the place where the meeting is to be held. The list shall also be
produced and kept at the time and place of the meeting during the whole time
thereof, and may be inspected by any stockholder who is present.
Section 5. Special meetings of the stockholders, for any purpose or
purposes, unless otherwise prescribed by statute or by the certificate of
incorporation, may be called by the chairman or president and shall be called by
the president or secretary at the request in writing of a majority of the board
of directors, or at the request in writing of stockholders owning a majority in
amount of the entire capital stock of the corporation issued and outstanding and
entitled to vote. Such request shall state the purpose or purposes of the
proposed meeting.
Section 6. Written notice of a special meeting stating the place, date and
hour of the meeting and the purpose or purposes for which the meeting is called,
shall be given not less than ten nor more than sixty days before the date of the
meeting, to each stockholder entitled to vote at such meeting.
Section 7. Business transacted at any special meeting of stockholders
shall be limited to the purposes stated in the notice.
Section 8. The holders of a majority of the stock issued and outstanding
and entitled to vote thereat, present in person or represented by proxy, shall
constitute a quorum at all meetings of the stockholders for the transaction of
business except as otherwise provided by statute or by the certificate of
incorporation. If, however, such quorum shall not be present or represented at
any meeting of the stockholders, the stockholders entitled to vote thereat,
present in person or represented by proxy, shall have power to adjourn the
meeting from time to time, without notice other than announcement at the
meeting, until a quorum shall be present or represented. At such adjourned
meeting, at which a quorum shall be present or represented, any business may be
transacted which might have been transacted at the meeting as originally
notified. If the adjournment is for more than thirty days, or if after the
adjournment a new record date is fixed for the adjourned meeting, a notice of
the adjourned meeting shall be given to each stockholder of record entitled to
vote at the meeting.
Section 9. When a quorum is present at any meeting, the vote of the
holders of a majority of the stock having voting power present in person or
represented by proxy shall decide any question brought before such meeting,
unless the question is one upon which by express provision of the statutes, of
the certificate of incorporation or other provisions of the by-laws, a different
vote is required in which case such express provision shall govern and control
the decision of such question.
Section 10. Unless otherwise provided in the certificate of incorporation
each stockholder shall at every meeting of the stockholders be entitled to one
vote in person or
2
<PAGE>
by proxy for each share of the capital stock having voting power held by such
stockholder, but no proxy shall be voted on after three years from its date,
unless the proxy provides for a longer period.
Section 11. Unless otherwise provided in the certificate of incorporation,
any action required to be taken at any annual or special meeting of such
stockholders, may be taken without a meeting, without prior notice and without a
vote, if a consent in writing, setting forth the action so taken, shall be
signed by the holders of outstanding stock having not less than the minimum
number of votes that would be necessary to authorize or take such action at a
meeting at which all shares entitled to vote thereon were present and voted.
Prompt notice of the taking of the corporate action without a meeting by less
than unanimous written consent shall be given to those stockholders who have not
consented in writing.
Section 12. At each meeting of the stockholders, the chairman of the board
or, in his absence or inability to act, any person chosen by the majority of
those stockholders present in person or represented by proxy shall act as
chairman of the meeting. The secretary or, in his absence or inability to act,
any person appointed by the chairman of the meeting shall act as secretary of
the meeting and keep the minutes thereof.
Section 13. The board may, in advance of any meeting of stockholders,
appoint one or more inspectors to act at such meeting or any adjournment
thereof. If the inspectors shall not be so appointed or if any of them shall
fail to appear or act, the chairman of the meeting shall appoint inspectors.
Each inspector, before entering upon the discharge of his duties, shall take and
sign an oath faithfully to execute the duties of inspector at such meeting with
strict impartiality and according to the best of his ability. The inspectors
shall determine the number of shares outstanding and the voting power of each,
the number of shares represented at the meeting, the existence of a quorum, the
validity and effect of proxies, and shall receive votes, ballots or consents,
hear and determine all challenges and questions arising in connection with the
right to vote, count and tabulate all votes, ballots or consents, determine the
result, and do such acts as are proper to conduct the election or vote with
fairness to all stockholders. On request of the chairman of the meeting or any
stockholder entitled to vote thereat, the inspectors shall make a report in
writing of any challenge, question or matter determined by them and shall
execute a certificate of any fact found by them. No director or candidate for
the office of director shall act as an inspector of an election of directors.
Inspectors need not be stockholders.
ARTICLE III
DIRECTORS
---------
Section 1. The number of directors which shall constitute the whole board
shall be not less than one nor more than seven. The first board shall consist
of one director.
3
<PAGE>
Thereafter, within the limits above specified, the number of directors shall be
determined by resolution of the board of directors or by the stockholders at the
annual meeting of the stockholders, except as provided in Section 2 of this
Article, and each director elected shall hold office until his successor is
elected and qualified. Directors need not be stockholders.
Section 2. Vacancies and newly created directorships resulting from any
increase in the authorized number of directors may be filled by a majority of
the directors then in office, though less than a quorum, or by a sole remaining
director, and the directors so chosen shall hold office until the next annual
election and until their successors are duly elected and shall qualify, unless
sooner displaced. If there are no directors in office, then an election of
directors may be held in the manner provided by statute. If, at the time of
filling any vacancy or any newly created directorship, the directors then in
office shall constitute less than a majority of the whole board (as constituted
immediately prior to any such increase), the Court of Chancery may, upon
application of any stockholder or stockholders holding at least ten percent of
the total number of the shares at the time outstanding having the right to vote
for such directors, summarily order an election to be held to fill any such
vacancies or newly created directorships, or to replace the directors chosen by
the directors then in office.
Section 3. The business of the corporation shall be managed by its board
of directors which may exercise all such powers of the corporation and do all
such lawful acts and things as are not by statute or by the certificate of
incorporation or by these by-laws directed or required to be exercised or done
by the stockholders.
MEETINGS OF THE BOARD OF DIRECTORS
----------------------------------
Section 4. The board of directors of the corporation may hold meetings,
both regular and special, either within or without the State of Delaware.
Section 5. The first meeting of each newly elected board of directors
shall be held immediately following the annual meeting of stockholders at the
place of such annual meeting of stockholders and no notice of such meeting shall
be necessary to the newly elected directors in order legally to constitute the
meeting, provided a quorum shall be present. In the event such meeting is not
held immediately following the annual meeting of stockholders at the place of
such annual meeting of stockholders, the meeting may be held at such time and
place as shall be specified in a notice given as hereinafter provided for
special meetings of the board of directors, or as shall be specified in a
written waiver signed by all of the directors.
Section 6. Regular meetings of the board of directors may be held without
notice at such time and at such place as shall from time to time be determined
by the board.
4
<PAGE>
Section 7. Special meetings of the board may be called by the president on
one day's notice to each director, either personally or by mail or by telegram;
special meetings shall be called by the president or secretary in like manner
and on like notice on the written request of two directors (one director in the
event that there be a single director in office).
Section 8. At all meetings of the board a majority of the directors shall
constitute a quorum for the transaction of business and the act of a majority of
the directors present at any meeting at which there is a quorum shall be the act
of the board of directors, except as may be otherwise specifically provided by
statute or by the certificate of incorporation. If a quorum shall not be present
at any meeting of the board of directors the directors present thereat may
adjourn the meeting from time to time, without notice other than announcement at
the meeting, until a quorum shall be present.
Section 9. Unless otherwise restricted by the certificate of incorporation
or these by-laws, any action required or permitted to be taken at any meeting of
the board of directors or of any committee thereof may be taken without a
meeting, if all members of the board or committee, as the case may be, consent
thereto in writing, and the writing or writings are filed with the minutes of
proceedings of the board or committee.
Section 10. Unless otherwise restricted by the certificate of
incorporation or these by-laws, members of the board of directors, or any
committee designated by the board of directors, may participate in a meeting of
the board of directors, or any committee, by means of conference telephone or
similar communications equipment by means of which all persons participating in
the meeting can hear each other, and such participation in a meeting shall
constitute presence in person at the meeting.
Section 11. No contract or other transaction between this corporation and
any other corporation shall be impaired, affected or invalidated, nor shall any
director be liable in any way by reason of the fact that any one or more of the
directors of this corporation is or are interested in, or is a director or
officer, or are directors of such other corporation, provided that such facts
are disclosed or made known to the board of directors.
Any director, personally and individually, may be a party to or may be
interested in any contract or transaction of this corporation, and no director
shall be liable in any way by reason of such interest, provided that the fact of
such interest be disclosed or made known to the board of directors, and provided
that the board of directors shall authorize, approve or ratify such contract or
transaction by the vote (not counting the vote of any such director) of a
majority of a quorum, notwithstanding the presence of any such director at the
meeting at which such action is taken. Such director or directors may be
counted in determining the presence of a quorum at such meeting. This Section
shall not be construed to impair or invalidate or in any way affect any contract
or other transaction which would otherwise be valid under the law (common,
statutory or otherwise) applicable thereto.
5
<PAGE>
COMMITTEES OF DIRECTORS
-----------------------
Section 12. The board of directors may, by resolution passed by a majority
of the whole board, designate one or more committees, each committee to consist
of one or more of the directors of the corporation. The board may designate one
or more directors as alternate members of any committee, who may replace any
absent or disqualified member at any meeting of the committee. In the absence
or disqualification of a member of a committee, the member or members thereof
present at any meeting and not disqualified from voting, whether or not he or
they constitute a quorum, may unanimously appoint another member of the board of
directors to act at a meeting in the place of any such absent or disqualified
member. Any such committee, to the extent provided in the resolution of the
board of directors, shall have and may exercise all the powers and authority of
the board of directors in the management of the business and affairs of the
corporation, and may authorize the seal of the corporation to be affixed to all
papers which may require it; but no such committee shall have the power or
authority in reference to amending the certificate of incorporation, adopting an
agreement of merger or consolidation, recommending to the stockholders the sale,
lease or exchange of all or substantially all of the corporation's property and
assets, recommending to the stockholders a dissolution of the corporation or a
revocation of a dissolution, or amending the by-laws of the corporation; and,
unless the resolution or the certificate of incorporation expressly so provide,
no such committee shall have the power or authority to declare a dividend or to
authorize the issuance of stock. Such committee or committees shall have such
name or names as may be determined from time to time by resolution adopted by
the board of directors. Each committee shall keep regular minutes of its
meetings and report the same to the board of directors when required.
COMPENSATION OF DIRECTORS
-------------------------
Section 13. Unless otherwise restricted by the certificate of
incorporation or these by-laws, the board of directors shall have the authority
to fix the compensation of directors. The directors may be paid their expenses,
if any, of attendance at each meeting of the board of directors and may be paid
a fixed sum for attendance at each meeting of the board of directors or a stated
salary as director. No such payment shall preclude any director from serving
the corporation in any other capacity and receiving compensation therefor.
Members of special or standing committees may be allowed like compensation for
attending committee meetings.
REMOVAL OF DIRECTORS
--------------------
Section 14. Unless otherwise restricted by the certificate of
incorporation or by-laws, any director or the entire board of directors may be
removed, with or without cause, by the holders of a majority of shares entitled
to vote at an election of directors.
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ARTICLE IV
NOTICES
-------
Section 1. Whenever, under the provisions of the statutes or of the
certificate of incorporation or of these by-laws, notice is required to be given
to any director or stockholder, it shall not be construed to mean personal
notice, but such notice may be given in writing, by mail, addressed to such
director or stockholder, at his address as it appears on the records of the
corporation, with postage thereon prepaid, and such notice shall be deemed to be
given at the time when the same shall be deposited in the United States mail.
Notice to directors may also be given by telegram.
Section 2. Whenever any notice is required to be given under the
provisions of the statutes or of the certificate of incorporation or of these
by-laws, a waiver thereof in writing, signed by the person or persons entitled
to said notice, whether before or after the time stated therein, shall be deemed
equivalent thereto.
ARTICLE V
OFFICERS
--------
Section 1. The officers of the corporation shall be chosen by the
board of directors and shall be a president, a secretary and a treasurer. The
board of directors may also choose a chairman, one or more vice-presidents, and
one or more assistant secretaries and assistant treasurers. Any number of
offices may be held by the same person, unless the certificate of incorporation
or these by-laws otherwise provide.
Section 2. The board of directors at its first meeting after each
annual meeting of stockholders shall choose a president, one or more vice-
presidents, a secretary and a treasurer.
Section 3. The board of directors may appoint such other officers and
agents as it shall deem necessary who shall hold their offices for such terms
and shall exercise such powers and perform such duties as shall be determined
from time to time by the board.
Section 4. The salaries of all officers and
agents of the corporation shall be fixed by the board of directors.
Section 5. The officers of the corporation shall hold office until
their successors are chosen and qualify. Any officer elected or appointed by
the board of directors may be removed at any time by the affirmative vote of a
majority of the board of directors. Any vacancy occurring in any office of the
corporation shall be filled by the board of directors.
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THE CHAIRMAN OF THE BOARD AND THE PRESIDENT
-------------------------------------------
Section 6. The chairman of the board, if any, shall be the chief
executive officer of the Corporation and shall have general and active
management of the business of the Corporation and general and active supervision
and direction over the other officers, agents and employees and shall see that
their duties are properly performed. He shall, if present, preside at each
meeting of the stockholders and of the board and shall be an ex officio member
of all committees of the board. He shall perform all duties incident to the
office of chairman of the board and chief executive officer and such other
duties as may from time to time be assigned to him by the board.
The president shall be the chief operating officer (and if
there is no chairman of the board, then also the chief executive officer) of the
Corporation and shall have general and active supervision and direction over the
business operations and affairs of the Corporation and over its several
officers, agents and employees, subject, however, to the direction of the
chairman of the board and the control of the board of directors. At the request
of chairman of the board, or in the case of his absence or inability to act, the
president shall perform the duties of the chairman of the board and when so
acting, shall have all the powers of, and be subject to all the restrictions
upon, the chairman of the board. In general, the president shall have such other
powers and shall perform such other duties as usually pertaining to office of
president or as from time to time may be assigned to him by the board, the
chairman of the board or these by-laws.
Section 7. The chairman or president shall execute bonds, mortgages
and other contracts requiring a seal, under the seal of the corporation, except
where required or permitted by law to be otherwise signed and executed and
except where the signing and execution thereof shall be expressly delegated by
the board of directors to some other officer or agent of the corporation.
THE VICE PRESIDENTS
-------------------
Section 8. In the absence of the president or in the event of his
inability or refusal to act, the vice president (or in the event there be more
than one vice president, the vice presidents in the order designated by the
directors, or in the absence of any designation, then in the order of their
election) shall perform the duties of the president, and when so acting, shall
have all the powers of and be subject to all the restrictions upon the
president. The vice presidents shall perform such other duties and have such
other powers as the board of directors may from time to time prescribe.
THE SECRETARY AND ASSISTANT SECRETARIES
---------------------------------------
Section 9. The secretary shall attend all meetings of the board of
directors and all meetings of the stockholders and record all the proceedings of
the meetings of the corporation and of the board of directors in a book to be
kept for that purpose and shall
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perform like duties for the standing committees when required. He shall give,
or cause to be given, notice of all meetings of the stockholders and special
meetings of the board of directors, and shall perform such other duties as may
be prescribed by the board of directors or president, under whose supervision he
shall be. He shall have custody of the corporate seal of the corporation and
he, or an assistant secretary, shall have the authority to affix the same to any
instrument requiring it and when so affixed, it may be attested by his signature
or by the signature of such assistant secretary. The board of directors may
give general authority to any other officer to affix the seal of the corporation
and to attest the affixing by his signature.
Section 10. The assistant secretary, or if there be more than one,
the assistant secretaries in the order determined by the board of directors (or
if there be no such determination, then in the order of their election), shall,
in the absence of the secretary or in the event of his inability or refusal to
act, perform the duties and exercise the powers of the secretary and shall
perform such other duties and have such other powers as the board of directors
may from time to time prescribe.
THE TREASURER AND ASSISTANT TREASURERS
--------------------------------------
Section 11. The treasurer shall have the custody of the corporate
funds and securities and shall keep full and accurate accounts of receipts and
disbursements in books belonging to the corporation and shall deposit all moneys
and other valuable effects in the name and to the credit of the corporation in
such depositories as may be designated by the board of directors.
Section 12. He shall disburse the funds of the corporation as may be
ordered by the board of directors, taking proper vouchers for such
disbursements, and shall render to the president and the board of directors, at
its regular meetings, or when the board of directors so requires, an account of
all his transactions as treasurer and of the financial condition of the
corporation.
Section 13. If required by the board of directors, he shall give the
corporation a bond (which shall be renewed every six years) in such sum and with
such surety or sureties as shall be satisfactory to the board of directors for
the faithful performance of the duties of his office and for the restoration to
the corporation, in case of his death, resignation, retirement or removal from
office, of all books, papers, vouchers, money and other property of whatever
kind in his possession or under his control belonging to the corporation.
Section 14. The assistant treasurer, or if there shall be more than
one, the assistant treasurers in the order determined by the board of directors
(or if there be no such determination, then in the order of their election),
shall, in the absence of the treasurer or in the event of his inability or
refusal to act, perform the duties and exercise
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the powers of the treasurer and shall perform such other duties and have such
other powers as the board of directors may from time to time prescribe.
ARTICLE VI
CERTIFICATES OF STOCK
---------------------
Section 1. Every holder of stock in the corporation shall be entitled
to have a certificate, signed by, or in the name of the corporation by, the
chairman or vice-chairman of the board of directors or the president or a vice-
president and the treasurer or an assistant treasurer, or the secretary or an
assistant secretary of the corporation, certifying the number of shares owned by
him in the corporation.
If the corporation shall be authorized to issue more than
one class of stock or more than one series of any class, the powers,
designations, preferences and relative, participating, optional or other special
rights of each class of stock or series thereof and the qualification,
limitations or restrictions of such preferences and/or rights shall be set forth
in full or summarized on the face or back of the certificate which the
corporation shall issue to represent such class or series of stock, provided
that, except as otherwise provided in section 202 of the General Corporation Law
of Delaware, in lieu of the foregoing requirements, there may be set forth on
the face or back of the certificate which the corporation shall issue to
represent such class or series of stock, a statement that the corporation will
furnish without charge to each stockholder who so requests the powers,
designations, preferences and relative, participating, optional or other special
rights of each class of stock or series thereof and the qualifications,
limitations or restrictions of such preferences and/or rights.
Section 2. Any of or all the signatures on the certificate may be
facsimile. In case any officer, transfer agent or registrar who has signed or
whose facsimile signature has been placed upon a certificate shall have ceased
to be such officer, transfer agent or registrar before such certificate is
issued, it may be issued by the corporation with the same effect as if he were
such officer, transfer agent or registrar at the date of issue.
LOST CERTIFICATES
-----------------
Section 3. The board of directors may direct a new certificate or
certificates to be issued in place of any certificate or certificates
theretofore issued by the corporation alleged to have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the person claiming
the certificate of stock to be lost, stolen or destroyed. When authorizing such
issue of a new certificate or certificates, the board of directors may, in its
sole discretion and as a condition precedent to the issuance thereof, require
the owner of such lost, stolen or destroyed certificate or certificates, or his
legal representative, to advertise the same in such manner as it shall require
and/or give, the corporation a bond
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in such sum as it may direct as indemnity against any claim that may be made
against the corporation with respect to the certificate alleged to have been
lost, stolen or destroyed.
TRANSFER OF STOCK
-----------------
Section 4. Upon surrender to the corporation or the transfer agent of
the corporation of a certificate for shares duly endorsed or accompanied by
proper evidence of succession, assignment or authority to transfer, it shall be
the duty of the corporation to issue a new certificate to the person entitled
thereto, cancel the old certificate and record the transaction upon its books.
FIXING RECORD DATE
------------------
Section 5. In order that the corporation may determine the
stockholders entitled to notice of or to vote at any meeting of stockholders or
any adjournment thereof, or to express consent to corporate action in writing
without a meeting, or entitled to receive payment of any dividend or other
distribution or allotment of any rights, or entitled to exercise any rights in
respect of any change, conversion or exchange of stock or for the purpose of any
other lawful action, the board of directors may fix, in advance, a record date,
which shall not be more than sixty nor less than ten days before the date of
such meeting, nor more than sixty days prior to any other action. A
determination of stockholders of record entitled to notice of or to vote at a
meeting of stockholders shall apply to any adjournment of the meeting; provided,
however, that the board of directors may fix a new record date for the adjourned
meeting.
REGISTERED STOCKHOLDERS
-----------------------
Section 6. The corporation shall be entitled to recognize the
exclusive right of a person registered on its books as the owner of shares to
receive dividends, and to vote as such owner, and to hold liable for calls and
assessments a person registered on its books as the owner of shares, and shall
not be bound to recognize any equitable or other claim to or interest in such
share or shares on the part of any other person, whether or not it shall have
express or other notice thereof, except as otherwise provided by the laws of
Delaware.
ARTICLE VII
GENERAL PROVISIONS
------------------
DIVIDENDS
---------
Section 1. Dividends upon the capital stock of the corporation,
subject to the provisions of the certificate of incorporation, if any, may be
declared by the board of directors at any regular or special meeting, pursuant
to law. Dividends may be paid in
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cash, in property, or in shares of the capital stock, subject to the provisions
of the certificate of incorporation.
Section 2. Before payment of any dividend, there may be set aside out
of any funds of the corporation available for dividends such sum or sums as the
directors from time to time, in their absolute discretion, think proper as a
reserve or reserves to meet contingencies, or for equalizing dividends, or for
repairing or maintaining any property of the corporation, or for such other
purposes as the directors shall think conducive to the interest of the
corporation, and the directors may modify or abolish any such reserve in the
manner in which it was created.
ANNUAL STATEMENT
----------------
Section 3. The board of directors shall present at each annual
meeting, and at any special meeting of the stockholders when called for by vote
of the stockholders, a full and clear statement of the business and condition of
the corporation.
CHECKS
------
Section 4. All checks or demands for money and notes of the
corporation shall be signed by such officer or officers or such other person or
persons as the board of directors may from time to time designate.
FISCAL YEAR
-----------
Section 5. The fiscal year of the corporation shall be determined by
resolution of the board of directors.
SEAL
----
Section 6. The corporate seal shall have inscribed thereon the name
of the corporation, the year of its organization and the words "Corporate Seal,
Delaware." The seal may be used by causing it or a facsimile thereof to be
impressed or affixed or reproduced or otherwise.
ARTICLE VIII
AMENDMENTS
----------
Section 1. These by-laws may be altered, amended or repealed or new
by-laws may be adopted by the stockholders or by the board of directors, at any
meeting of the stockholders or of the board of directors if notice of such
alteration, amendment, repeal or adoption of new by-laws be contained in the
notice of such special meeting. The by-laws may also be amended by the
stockholders pursuant to Section 11 of Article II without prior
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notice of alteration, amendment, repeal or adoption of new by-laws. The power
to adopt, amend or repeal by-laws by the board of directors shall not divest or
limit the power of the stockholders to adopt, amend or repeal by-laws.
ARTICLE IX
INDEMNIFICATION
The officers and directors of the corporation shall be entitled to
indemnification to the maximum extent permitted by Delaware law.
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EXHIBIT 10.4
SAXON ACQUISITION CORP.
1997 INCENTIVE AND NON-STATUTORY STOCK OPTION PLAN
1. Purpose of Plan and Effective Date.
-----------------------------------
(a) The purpose of this 1997 Incentive and Non-Statutory Stock Option Plan
(hereinafter called the "Plan") is to further the success of Saxon Acquisition
Corp., a Delaware corporation, (hereinafter called the "Company" or "Employer
Corporation"), and any subsidiaries by making available Common Stock of the
Company for purchase by eligible directors, officers, consultants and key
employees of the Company and any subsidiaries and thus to provide an additional
incentive to such personnel to continue to serve the Company and any
subsidiaries and to give them a greater interest as stockholders in the success
of the Company. It is intended that this Plan be considered an "Employee
Benefit Plan" within the meaning of Regulation 405 of the Securities Act of
1933, as amended (the "1934 Act").
(b) The Company intends this Plan to enable the Company to issue, pursuant
hereto, incentive stock options as such term is defined in Section 422 of the
Internal Revenue Code of 1986, as amended from time to time (the "Code"). The
Company also intends this Plan to enable it to issue similar options which will
not, however, be qualified as incentive stock options (also known as "Non-
Statutory" stock options).
(c) The Plan shall become effective on the date of approval by the Board of
Directors of the Company, which date is September 15, 1997; provided, however,
that the Plan shall be subject to approval and ratification by stockholders of
the Company holding a majority of its voting stock, voting in person or by
proxy, at a meeting of stockholders to be held within twelve months from
September 15, 1997.
2. Definitions.
------------
As used in this Plan, the following terms have the following respective
meanings:
"Board" means the Board of Directors of the Company.
"Common Stock" means common stock, $.01 par value of the Company.
"Disability" means permanent total disability as defined in the Code.
"Fair Market Value of the Option Stock" means fair market value of the
Option Stock determined as of the date of grant of the option, in accordance
with Section 422(c)(7) of the Code and the Regulations applicable thereto. In
this regard, unless the Code states otherwise, "Fair Market Value" shall mean,
with respect to Shares of Common Stock underlying the Option Stock (the
"Shares") (I) the closing price per Share of the Shares on the principal
exchange on which the Shares are then trading, if any, on such date, or, if the
Shares were not traded on such date, then on the next preceding trading day
during which a sale occurred; or (ii) if the Shares are not traded on an
exchange but are quoted
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on NASDAQ or a successor quotation system, the last sales price or if the last
sales price is not available, the mean between the closing representative bid
and asked prices for the Shares on such date as reported by NASDAQ or such
successor quotation system; or (iii) if the Shares are not publicly traded on an
exchange and not quoted on NASDAQ or a successor quotation system, the mean
between the closing bid and asked prices for the Shares on such date as
determined in good faith by the Board or Committee thereof; or (iv) if the
Shares are not publicly traded, the fair market value established by the Board
or Committee thereof acting in good faith."
"Grant" means the action of the Board or the appropriate committee at the
time of grant of an option.
"Incentive Stock Option" means any incentive stock option as defined in
Section 422(b) of the Code granted to an individual for any reason connected
with his employment by the Employer Corporation at the time of the granting of a
given option under the Plan.
"Incentive Stock Option Under this Plan" means any Incentive Stock Option
granted pursuant to this Plan.
"Modification" means any change in the terms of an option which would
constitute a "modification" as defined in Section 424(h)(3) of the Code,
including, without limitation, such a modification to an option as effected by a
change in the Plan and any other change in the Plan which would increase the
number of shares reserved for options under the Plan, materially change the
administration of the Plan (except as permitted in paragraphs 4(c) hereof) or
that would otherwise materially increase the benefits accruing to, or available
for, participants in the Plan; provided, however, that registration of Option
shares under the Securities Act of 1933, as amended, shall not be deemed a
Modification.
"Non-Statutory Stock Option" means any option granted under this Plan other
than an Incentive Stock Option under this Plan.
"Option Stock" means stock subject to an option granted under this Plan.
"Options" means any Incentive Stock Option or Non-Statutory Stock Option,
unless otherwise indicated or required by context.
"Subsidiary" means any corporation which is a "subsidiary corporation" as
defined in Section 424(f) of the Code, and the regulations thereto.
"10% Stockholder" means a person who owns stock possessing more than 10% of
the total combined voting power of all classes of stock of Company or of any
parent or subsidiary of the Company after giving effect to the attribution of
stock ownership provisions of Section 424(d) of the Code.
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<PAGE>
References in these definitions to provisions of the Code shall, when
appropriate to effectuate the purposed of this Plan, be deemed to be references
to such provisions of the Code and regulations promulgated thereunder as the
same may be from time to time amended or to successor provisions to such
provisions. Terms defined elsewhere in this Plan shall have the meanings set
forth in such respective definitions. The term "Subsidiary" or "Subsidiaries"
shall be deemed to include any parent corporation (if any) as defined in Section
425(e) of the Code.
3. Stock Subject to Plan.
----------------------
Subject to the provisions of paragraph 12 hereof, there shall be reserved
for issuance or transfer upon the exercise of Options to be granted from time to
time Under the Plan an aggregate of 1,000,000 shares of Common Stock, which
shares may be in whole or in part, as the Board of Directors of the Company
shall from time to time determine, authorized and unissued shares of Common
Stock or issued shares of Stock which shall have been reacquired by the Company.
If any Option granted under the Plan shall expire or terminate for any reason
without having been exercised in full, the unpurchased shares subject thereto
shall again be available for the purposes of the Plan.
4. Administration.
---------------
(a) The Board of Directors of the Company (the "Board") shall administer
the Plan. Members of the Board shall be entitled to receive Incentive Stock
Options Under this Plan if they are employees of the Company and/or its
subsidiaries, subject to the provisions of paragraph 5 hereof. Members of the
Board who are not such employees shall be eligible to receive Non-Statutory
Stock Options, subject to paragraphs 5 and 18 hereof.
(b) The Board shall have plenary authority in its discretion, but subject
to the express provisions of the Plan: to determine the purchase price of the
Common Stock covered by each Option, the persons to whom, and the time or times
when, Options shall be granted, and the number of shares to be subject to each
Option; to determine the time or times during which Options may or must be
exercised and the conditions for exercise; to determine the time or times and
conditions under which Option rights will vest and terminate; to interpret the
Plan; to prescribe, amend, and rescind rules and regulations relating to it; to
determine the terms and provisions (and amendments thereof) of the respective
Option agreements (which need not be identical), including such terms and
provisions (and amendments thereof) as shall be required in the judgment of the
Board to conform to any change in any law or regulation applicable thereto; and
to make all other determinations deemed necessary or advisable for the
administration of the Plan. The Board's determination on the foregoing matters
shall be conclusive and binding on the Company and on all Optionees and their
legal representatives, except that any act constituting a modification of a plan
or of an Option must receive stockholder approval in accordance with paragraph
14 herein.
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<PAGE>
(c) To the extent permitted by the By-Laws of the Company, the Board, by
resolution, may delegate administration of the Plan to a committee composed of
not less than three (3) members of the Board. If administration is delegated to
a committee, the committee shall have the powers to administer the Plan
theretofore possessed by the Board. The committee's powers shall be subject,
however, to such resolutions as may from time to time be adopted by the Board in
exercise of the Board's final power to determine questions of policy and
expediency which arise in connection with the Plan. The Board at any time by
resolution may abolish the committee, revest the administration of the Plan in
the Board or grant options during the existence of the Committee.
5. Eligibility.
------------
Incentive Stock Options Under this Plan may be granted under this Plan only
to officers (who are employees) and to other key employees of (a) the Company
and (b) subsidiary corporations (hereinafter called "subsidiaries") of the
Company. A director of the Company or any subsidiaries may receive an Incentive
Stock Option under this Plan if such person is otherwise an employee of the
Company and/or any subsidiaries. An employee, director or officer of the
Company (or any subsidiaries), may receive a Non-Statutory Stock Option. In
addition, consultants and advisors who the Board determines is providing bona
fide services to the Company or any subsidiaries, whether or not otherwise
compensated, may receive a Non-Statutory Stock Option so long as the Plan would
continue to qualify as an Employee Benefit Plan under the 1934 Act. In
determining the persons to whom Options shall be granted and the number of
shares to be covered by each Option, the Board may take into account the nature
of the services rendered by, and the responsibilities borne by, such respective
persons, their present and potential contributions to the Company's success and
such other factors as the Board in its discretion shall deem relevant. Subject
to the provisions of paragraph 7 hereof, Options may be granted to persons who
hold or have held options under previous plans, and a person who has been
granted an Option under the Plan may be granted an additional Option or Options
under the Plan or under any future option plan if the Board shall so determine.
6. Option Prices.
--------------
The purchase price of the Common Stock under each Option shall be determined
by the Board. The purchase price may not be less than the fair market value of
the Common Stock at the time of granting, except that in the case of a 10%
Stockholder who receives an Incentive Stock Option, the purchase price may not
be less than 110% of such fair market value. In no event shall the purchase
price be less than par value of the Common Stock.
7. Certain Limitations on Granting and Exercise of Options.
--------------------------------------------------------
Any other provisions of this Plan to the contrary notwithstanding, the
granting and exercise of Options hereunder shall be subject to the following
limitations (which shall be in addition to the limitations, provisions and
conditions contained elsewhere in this Plan):
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<PAGE>
(a) The aggregate fair market value (determined at the time the option is
granted) of the Optioned Stock for which Incentive Stock Options are exercisable
for the first time by any employee during any calendar year (under all such
Plans of the individual's Employer Corporation and its parent and subsidiary
corporation) shall not exceed $100,000.
(b) Options may be granted as soon as practicable after the date of the
adoption of the Plan by the Board and instruments evidencing such grant(s) may
similarly be so issued, but in each case, such Options and such instruments
shall be subject to the approval and ratification of the Plan by the
stockholders of the Company as in paragraph 1 provided, and notwithstanding
anything in the Plan that may be deemed to be to the contrary, no Option may be
exercised unless and until such approval and ratification is obtained. In the
event such approval and ratification shall not be obtained, the Plan and all
Options that may have been granted pursuant thereto shall be null and void. The
shares of Common Stock underlying an Incentive Stock Option may be sold in a
disqualifying disposition under Section 421(b) of the Code.
(c) The exercise of any Option will be contingent upon receipt from the
Option holder of a representation that, at the time of such exercise, it is his
then present intention to acquire the shares being purchased for investment and
not with a view to the resale or distribution of any part thereof, unless, in
the opinion of counsel for the Company, such investment representation is not
required or unless such shares shall have been registered under the Securities
Act of 1933, as amended. The legend indicated below shall be placed on the
certificate or certificates for the shares to be delivered the Option holder
(unless such shares shall have been registered under the Securities Act of 1933,
as amended), reading as follows:
"No sale, offer to sell or transfer of the securities represented by the
certificate shall be made unless a registration statement under the Federal
Securities Act of 1933, as amended, with respect to such securities is then in
effect or an exemption from the registration requirement of such Act is then in
fact applicable to such transfer."
Similarly and in conformity to the above the Option holder understands that
necessary stop transfer orders shall be placed upon the subject certificates in
accordance with the Securities Act of 1933, as amended.
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<PAGE>
8. Duration of Options.
--------------------
The term of Options granted under the Plan shall be as fixed by the Board
at the time of grant; provided, however, that (a) in the case of persons other
than 10% Stockholders, the term of an Option shall not exceed 10 years from the
date of grant, and (b) in the case of 10% Stockholders, the term of an Option
shall not exceed 5 years from the date of grant. The terms of Incentive Stock
Options may, however, be foreshortened as provided in paragraph 11 hereof. No
Option may be exercised after expiration of such Option's term.
9. Exercise of Options.
--------------------
(a) An Option granted under the Plan shall be exercisable at such time or
times, whether or not in installments, as the Board shall prescribe at the time
the Option is granted. An Option which has become exercisable may be exercised
in accordance with its terms as to any or all full shares purchasable under the
provisions of the Option, but not at any time as to less than 100 shares unless
the remaining shares which have become so purchasable are less than 100 shares.
The purchase price of the shares shall be paid as provided herein and in
paragraph 13 hereof, upon the exercise of the Option.
(b) Except as provided in paragraph 11, an Incentive Stock Option may not
be exercised at any time unless the holder thereof is then an employee of the
Company or any subsidiaries and shall have been continuously employed by the
Company or any subsidiaries since the date of grant (As used in this Plan, the
terms "employ" and "employment" shall be deemed to refer to employment as an
employee in any such capacity, and "termination of employment" shall be deemed
to mean termination of employment as an employee in all of such capacities and
continuation of employment as an employee in none of such capacities.)
(c) An exercisable option, or any exercisable portion thereof, may be
exercised solely by delivery to the Chief Accounting Officer of the Company or
his office of all of the following prior to the time when such option or such
portion becomes unexercisable under the Plan:
(I) Notice in writing signed by the optionee or other person then
entitled to exercise such option or portion, stating that such option or portion
is exercised, such notice complying with all applicable rules established by the
Board or Committee thereof.
(ii) (A) Full payment (in cash or by check) for the shares with
respect to which such option or portion is hereby exercised.
(B) With the consent by resolution of the Board or Committee
thereof, which consent may contain additional restrictions to implement the
provisions contained herein, shares of any class of the Company's stock owned by
the optionee duly endorsed for transfer to the Company with a fair market value
(as determinable under paragraph 2) on the date of delivery equal to the
aggregate option price of the Shares with
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respect to which such option or portion is thereby exercised (which shares shall
be owned by the optionee for more than six months at the time they are
delivered);
(C) With the consent of the Board or Committee thereof, any
other form of cashless exercise permitted under paragraph 9(d) hereof; or
(D) Any combination of the consideration provided in the
foregoing subsections (A), (B) and (C);
(iii) Such representations and documents as the Board or Committee
thereof, in its absolute discretion, deems necessary or advisable to effect
compliance with all applicable provisions of the Securities Act of 1933, as
amended, and any other federal or state securities laws or regulations. The
Board or Committee thereof may, in its absolute discretion, also take whatever
additional actions it deems appropriate to effect such compliance including,
without limitation, placing legends on share certificates and issuing stop-
transfer orders to transfer agents and registrars; and
(iv) In the event that the option or portion thereof shall be
exercised by any person or persons other than the optionee, appropriate proof of
the right of such person or persons to exercise the option or portion thereof.
(d) The Board or a Committee thereof, in its sole discretion, may establish
procedures whereby an optionee, to the extent permitted by and subject to the
requirements of Rule 16B-3 under the Securities Exchange Act of 1934 (the
"Act"), Regulation T issued by the Board of Governors of the Federal Reserve
System pursuant to the Act, federal income tax laws, and other federal, state
and local tax and securities laws, can exercise an option or a portion thereof
without making a direct payment of the option price to the Company. If the
Company so elects to establish a cashless exercise program, the Company shall
determine, in its sole discretion and from time to time, such administrative
procedures and policies as it deems appropriate provided such procedures and
policies are consistent with those of any other cashless exercise program
established pursuant to any other plan established by the Company. Such
procedures and policies shall be binding on any optionee wishing to utilize the
cashless exercise program."
10. Nontransferability of Options.
------------------------------
No Option granted under this Plan shall be transferable other than in the
case of individuals by will or the laws of descent and distribution and an
option granted to an individual may be exercised during the lifetime of the
holder thereof, only by the holder.
11. Termination of Employment.
--------------------------
Except in the case of Optionee's death as provided below, in the event of
termination of employment of a person to whom an Incentive Stock Option has been
granted under the Plan, notwithstanding the reason for termination (such as
termination for cause, without cause, voluntary on the part of the optionee, or
by reason of death or
7
<PAGE>
disability), any Incentive Stock Option held by him under the Plan, to the
extent not theretofore exercised, shall immediately upon termination of
employment terminate. Incentive Stock Options granted under the Plan shall not
be affected by any change of employment so long as the holder continues in the
employ of the Company or any subsidiaries. Nothing in the Plan or in any Option
granted pursuant to the Plan shall confer on any individual any right to
continue in the employ of the Company or any subsidiaries or affiliates or
interfere in any way with the right of the Company or any subsidiaries or
affiliates to terminate his employment or occupancy of any corporate office at
any time.
In the event of the death of an Optionee to whom an Incentive Stock Option
has been granted under the Plan while he is in the employ of the Company or a
subsidiary, such Incentive Stock Option may be exercised (to the extent of the
number of shares covered by the Incentive Stock Option which were purchasable by
the Optionee at the date of his death) by the estate of the Optionee, or by a
person who acquired the right to exercise such Incentive Stock Option by bequest
or inheritance or by reason of the death of the Optionee, at any time within a
period of six months after his death, but in no event after the day in which the
Incentive Stock Option would otherwise terminate under paragraph 8.
In the event of termination of employment of a person to whom an Incentive
Stock Option has been granted under the Plan by reason of the disability of such
person, the optionee may exercise his Incentive Stock Option at any time within
one year after such termination of employment but in no event after the day in
which the Incentive Stock Option would otherwise terminate, to the extent of the
number of shares covered by his Incentive Stock Option which were purchasable by
him at the date of the termination of employment.
In the case of Non-Statutory Stock Options, the disability or death of
optionee shall not terminate the options granted to an officer, director or
employee so long as such officer, director or employee was continuously
performing services for the Company up to the date of his disability or death,
as the case may be. In the case of Non-Statutory Options, the Board of
Directors shall determine other applicable termination provisions of these
Options, if any, in accordance with paragraph 4.
12. Adjustment upon Changes in Capitalization.
------------------------------------------
Subject to compliance with the requirements for qualification of the Plan
and of the Options issued or to be issued thereunder as "Incentive Stock
Options" under applicable provisions of federal laws and regulations, the
aggregate number and class of shares as to which Options may be granted under
the Plan, the number and class of shares covered by each outstanding Option and
the price per share thereof (but not the total price), and each such Option,
shall all be proportionately adjusted for any increase or decrease in the number
of issued shares of Common Stock of the Company resulting from a split-up or
consolidation of shares or any like capital adjustment, or the payment of any
stock
8
<PAGE>
dividends, or any other increase or decrease in the number of issued shares of
Common Stock of the Company without receipt of consideration by the Company.
Subject to any required action by the stockholders, if the Company shall be
the surviving corporation in any merger or consolidation, any Option granted
hereunder shall be adjusted so as to pertain and apply to the securities to
which the holder of the number of shares of Common Stock of the Company subject
to the Option would have been entitled.
Upon (I) the dissolution or liquidation of the Company, (ii) a merger or
consolidation of the Company with one or more corporations as a result of which
the Company is not the surviving corporation, or (iii) a sale or other
disposition of all or substantially all of the assets of the Company, any Option
granted hereunder at the discretion of the Board of Directors by Resolution
shall terminate, but the Option holder shall have the right, prior to any such
event, to exercise his Option in whole or in part, but in no event after the day
in which the Option would otherwise terminate under paragraph 8.
Notwithstanding anything contained herein to the contrary, if the Company is
merged into a corporation which will be substantially (i.e. 70% or more) owned
after the merger by the same shareholders of the Company, then any Option
granted hereunder shall be adjusted so as to pertain and apply to the securities
to which the holder of the number of shares of Common Stock of the Company
subject to the Option would have been entitled.
Adjustments under this Paragraph 12 shall be made by the Board, whose
determination as to what adjustment shall be made, and the extent thereof, shall
be final, binding and conclusive.
13. Payment of Purchase Price, Federal Income Tax or Other Withholding Amount.
--------------------------------------------------------------------------
(a) The shares to be purchased upon exercise of any Option shall be paid
for in accordance with the provisions of paragraph 9. In respect to Non-
Statutory Stock Options or any Incentive Stock Options which fail to qualify as
such for any reason, any required federal income tax or other withholding amount
shall be paid (in full) by the Option Holder to the Company. The Company shall
not be required to deliver or transfer certificates for such shares until all
such payments have been made, and until the Company has had an opportunity (at
its sole option) to obtain verification from the Option Holder that all federal
income tax or other withholding amounts have been properly calculated and paid.
(b) The Board of Directors is authorized, in its sole discretion, to
establish a program, if any, in which option holders may deliver shares of the
Company or have the Company withhold shares otherwise issuable upon exercise of
an option in order to satisfy federal and state withholding tax liability with
respect to the grant of an option, its exercise or any payment or transfer under
such option.
9
<PAGE>
14. Termination and Amendment.
--------------------------
(a) Unless the Plan shall theretofore have been terminated as hereinafter
provided, it shall terminate on, and no Options shall be granted thereunder
after September 15, 2007 (i.e., 10 years from the adoption of this Plan). The
Plan may be terminated earlier by the stockholders of the Company or by the
Board.
(b) Modifications or other amendments to the Plan may be made by the
stockholders of the Company. The Plan may also be amended by the Board;
provided, however, that no amendment which shall constitute a Modification shall
be effective unless approved by the stockholders of the Company within 12 months
before or after the adoption of the Modification.
(c) No termination, Modification, or amendment of the Plan, may, without
the consent of the optionee to whom any Option shall theretofore have been
granted, adversely affect the rights of such optionee under such Option; nor
shall any such Modification or amendment be deemed to effect a Modification,
extension or renewal of any such Option previously granted except pursuant to an
express written agreement to such effect, executed by the Company and the
optionee.
15. Time of Granting Options.
-------------------------
Nothing contained in the Plan shall constitute the granting of any Option
hereunder. The granting of an Option pursuant to the Plan shall take place only
upon approval by the Board (or its delegate under paragraph 4 hereunder) of a
resolution granting an Option under this Plan. Notice of the determination
shall be given to each person to whom an Option is so granted within a
reasonable time after the date of such grant. After the granting of an Option
under this Plan, a written Option agreement shall be duly executed by or on
behalf of the Company.
16. Form and Terms of Option Agreement.
-----------------------------------
Option agreements evidencing Options granted pursuant to the Plan shall
be in such form and shall contain such terms not inconsistent with the Plan as
the Board may approve. Option agreements may contain such restrictions upon the
exercise of Options and upon the transfer of Common Stock acquired upon exercise
of Options (and such provisions for the enforcement of such restrictions) as the
Board may consider necessary to insure compliance with the Securities Act of
1933, as amended, and/or with state "Blue Sky" laws.
17. Partial Invalidity.
-------------------
The invalidity or unenforceability of any particular provision of this
Plan shall not affect the other provisions of this Plan nor affect the validity
or enforceability of the other provisions of Options granted under this Plan,
and this Plan and the Options granted
10
<PAGE>
hereunder shall be construed in all respects as if such invalid or unenforceable
provision were omitted.
18. Special Provisions with Respect to Incentive Stock Options under this Plan
--------------------------------------------------------------------------
and Non-Statutory Stock Options.
--------------------------------
Paragraph 5 provides for the persons eligible to receive Options granted
under this Plan. The Board in granting any Option shall indicate whether it
intends the Option to be an Incentive Stock Option Under this Plan or a Non-
Statutory Stock Option and shall cause the Option agreement with respect thereto
to indicate such intention. Should a person hold both one or more Incentive
Stock Options Under this Plan and one or more Non-Statutory Stock Options, all
of such Options shall be exercisable in accordance with their respective terms
and limitations, and nothing in this Plan shall be construed as causing the
exercise of any such Option to preclude the exercise of any such other Option in
accordance with its terms.
19. Miscellaneous
-------------
Shares of Common Stock of the Company which are subject to Option but
which have not yet been purchased or paid for shall have no subscription rights
and no Option holder shall be deemed to be a stockholder of the Corporation for
any purpose.
Plan Adopted by the Board of Directors on September 15, 1997 and by the
stockholders on _____________.
11
<PAGE>
EXHIBIT 23
CONSENT OF INDEPENDENT AUDITOR
We consent to the inclusion in this Registration Statement on Form S-1 of our
report dated June 27, 1997 of the financial statement of Dupont Securities
Group, Inc. and of our report dated August 15, 1997 of the financial statements
of Saxon Acquisition Corp. We also consent to the references to our firm under
the caption "Experts."
Baron & Baron
New York, New York
September 30, 1997
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> OTHER
<FISCAL-YEAR-END> MAY-31-1998
<PERIOD-START> JUL-09-1997
<PERIOD-END> JUL-18-1997
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 9991
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 9991
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 9991
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 4911
<OTHER-SE> 5000
<TOTAL-LIABILITY-AND-EQUITY> 9991
<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> 0
<EPS-DILUTED> 0
<FN>
The above information reflects the inception balance sheet of Saxon
Acquisition Corp. operations have not commenced as of this date.
</FN>
</TABLE>
