As filed with the Securities and Exchange Commission on ________, 1997.
Registration No._______
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
Form SB-2
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
ATLANTIS AQUAFARM, INC.
(Name of Small Business Issuer in Its Charter)
New York 11-32-36296
(State or Jurisdiction (Primary Standard Industrial (I.R.S. Employer
of Incorporation or Classification Code Number) Identification NO.)
Organization)
175 27th Street, Brooklyn,
New York 11032,
(718) 361-1200
(Address and Telephone Number Principal Executive Offices)
Patrick D. Trimble
39 Bushwick Street, Melville,
New York 11747,
(516) 351-5987
(Name, Address and Telephone Number of agent for service)
Copies to:
GRAEME A. CHAMBERS, Esq. STEPHEN E. ROUNDS,
Chambers Davidson, LLP Esq. 4675 E. 18th Avenue
30 Rockefeller Plaza, Suite 1922 Denver, Colorado 80220
New York, NY 10112
(212) 332 - 7220
Approximate date of commencement of proposed sale to the public: As soon
as practicable after the effective date of this Registration Statement.
If any of the securities being registered on this form are to be offered on a
delayed or continuous basis pursuant to rule 415 under the Securities Act of
1933, 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 ecurities Act registration statement number of the earlier effective
registration statement for the same offering.___
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement numbe of the earlier effective registration statement for
the same offering. ___
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box.___
<PAGE>
CALCULATION OF REGISTRATION FEE
Title of Each Class of Proposed Maximum Amount of
Securities to be Registered Aggregate Offering Registration
Price (1) Fee (1)
Units, each consisting of one share of Common $ 1,800,000
Stock, no par value, and one Class A Warrant
Common Stock, no par value, and Class B Warrants(2) $___________ __________
Common Stock, no par value 3) $___________ __________
TOTAL $_________
(1) Estimated solely for purposes of calculating the registration fee
pursuant to Rule 457.
(2) Issuable upon exercise of the Class A Warrants contained in the Units.
(3) Issuable upon exercise of the Class B Warrants contained in, and
underlying the Class A Warrants contained in the Units.
Pursuant to Rule 416, there are also being registered such additional
shares and warrants as may become issuable pursuant to anti-dilution
provisions of the Warrants.
The registrant hereby amends this registration statement on such date or
dates as may be necessary to delay its effective date until the registrant
shall file a further amendment which specifically states that this
registration statement shall thereafter become effective in accordance with
Section 8(a) of the Securities Act of 1933, or until the registration
statement shall become effective on such date as the Commission, acting
pursuant to said Section 8(a), may determine.
EXPLANATORY NOTE
This Registration Statement covers the registration of 300,000 Units,
("Units"), each Unit consisting of:
(a) one share of Common Stock, no par value per share (the "Common
Stock"), of Atlantis Aquafarm, Inc. a New York corporation (the
"Company"); and
(b) one Class A Warrant (the "Class A Warrant"), which entitles the
holder to purchase one share of the Common Stock and one Class B
Warrant (the "Class B Warrant"), which entitles the holder to
purchase one share of the Common Stock, for sale by the Company in
an underwritten public offering.
for an aggregate of 300,000 shares of the Common Stock, 300,000 Class A
Warrants and 300,000 Class B Warrants.
<PAGE>
PROSPECTUS SUBJECT TO COMPLETION DATED _________, 1997
ATLANTIS AQUAFARM, INC.
MINIMUM OFFERING OF 190,000 UNITS ($1,140,000)
AND
MAXIMUM OFFERING OF 300,000 UNITS ($1,800,000)
Each Unit consisting of One Share of Common Stock
and One Class A Warrant
Atlantis Aquafarm, Inc. a New York corporation (the "Company") hereby
offers through Boe & Company, Inc. (the "Underwriter"), a minimum of 190,000 and
a maximum of 300,000 Units, at an offering price of $6.00 per Unit (the
"Offering"). Each Unit consists of one share of Common Stock, no par value and
one Class A Warrant. The components of the Units will be separately transferable
immediately. Each Class A Warrant entitles the holder to purchase, at an
exercise price of $7.50 (subject to adjustment), one share of Common Stock and
one Class B Warrant. Each Class B Warrant entitles the holder to purchase, at an
exercise price of $6.50 (subject to adjustment), one share of Common Stock. The
Class A Warrants are exercisable at any time through the first anniversary of
the date on which the Company has accepted subscriptions for the minimum number
of Units offered hereby (the "Initial Closing"). The Class B Warrants are
exercisable at any time through the second anniversary of the Initial Closing.
The Class A Warrants and the Class B Warrants are collectively referred to
herein as the "Warrants." See "Description of Capital Stock." The Units
constituting the Minimum Offering is being offered on a "best efforts, all or
none" basis and the remaining Units are being offered on a "best efforts" basis.
The minimum subscription is One Hundred (100) Units except that the Underwriter
and the Company reserve the right, in their sole discretion, to accept
investments of less than the minimum investment.
THESE SECURITIES INVOLVE A HIGH DEGREE OF RISK AND IMMEDIATE AND SUBSTANTIAL
DILUTION. SEE "RISK FACTOR" BEGINNING ON PAGE 9 AND "DILUTION."
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 PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
================================================================================
Price to Public Underwriting Proceeds to
Discounts and Company (2)
Commissions (1)
- --------------------------------------------------------------------------------
Per Unit $ 6.00 $ 0.60 $ 5.40
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Total Minimum $ 1,140,000 $ 114,000 $ 1,026,000
Total Maximum $ 1,800,000 $ 180,000 $ 1,620,000
================================================================================
(1) Does not include additional underwriting compensation to be paid by the
Company to the Underwriter in the form of a non-accountable expense
allowance ("Non-Accountable Expense Allowance") equal to 3% of the
aggregate public offering price of the Units, $5,000 of which has been
advance to the Underwriter.
(2) Before deducting offering expenses payable by the Company estimated to be $
75,000, including, among other expenses, printing, mailing and marketing
expenses and legal and accounting fees.
Boe & Company, Inc.
INFORMAION 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 BE 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.
4
<PAGE>
The date of this Prospectus is _____________, 1997.
All proceeds of the offering will be held in escrow by
_____________________ (the "Escrow Agent") until the sale of a minimum of
190,000 Units equal to at least $ 1,140,000 (the "Initial Closing") or the
earlier termination of the Offering. The Offering will terminate on the date
(the "Offering Termination Date") which shall be the earlier of (i) nine months
after the effective date of this Prospectus and (ii) the date on which the
Maximum Offering shall have been sold, unless such period is extended at the
sole discretion of the Company for an additional period of not more than ninety
(90) days. If the Initial Closing has not occurred by the Offering Termination
Date, the proceeds held in escrow will be returned by the Company to the
investors (with interest provided that the investor furnishes appropriate tax
reporting information to the Company) and without any deduction therefrom. At
such time as the Initial Closing shall occur, the proceeds held in escrow will
be disbursed to the Company and the escrow will be closed. Thereafter, the
Company may continue to sell Units up to the Maximum Offering for the remaining
term of the Offering. Proceeds from such sales will be immediately available to
the Company.
Prior to the Offering, there has been no market for the Company's
securities and there can be no assurance that such a market will develop. The
initial public offering price of the Units, and the exercise prices and other
terms of the Warrants, have been determined by the Company, and are not
necessarily related to the Company's assets, book value, financial condition or
any other recognized criteria of value.
THE OFFERING HAS BEEN REGISTERED UNDER THE SECURITIES LAWS OF A LIMITED NUMBER
OF STATES, AND THE SHARES OFFERED HEREBY MAY BE SOLD ONLY IN THOSE STATES. SUCH
REGISTRATIONS, HOWEVER, DO NOT CONSTITUTE AN ENDORSEMENT OR APPROVAL BY ANY
PARTICULAR STATE SECURITIES COMMISSION OF ANY SECURITIES OFFERED OR THE TERMS OF
THE OFFERING.
ALTHOUGH IT HAS NO LEGAL OBLIGATION TO DO SO, THE UNDERWRITER MAY
FROM TIME TO TIME ACT AS A MARKET-MAKER AND OTHERWISE EFFECT TRANSACTIONS IN
TH COMPANY?S SECURITIES. THE UNDERWRITER, IF IT PARTICIPATES IN THE MARKET,
MAY BE A DOMINATING INFLUENCE IN ANY MARKET THAT MIGHT DEVELOP FOR ANY OF
THE COMPANY?S SECURITIES. SUCH ACTIVITIES, IF COMMENCED, MAY BE DISCONTINUED
AT ANY TIME OR FROM TIME TO TIME. THEREFORE, THERE IS NO ASSURANCE THAT THE
UNDERWRITER WILL OR WILL NOT BE A DOMINATING INFLUENCE. THE PRICES AND
LIQUIDITY OF THE SECURITIES OFFERED HEREUNDER MAY BE AFFECTED BY THE DEGREE,
IF ANY, OF THE UNDERWRITER'S PARTICIPATION IN THE MARKET. SEE "RISK FACTORS"
AND "UNDERWRITING."
Upon completion of the Minimum Offering, the Company will become subject to the
information and reporting requirements of the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), and, in accordance therewith, will file
reports, proxy and information statements and other information with the
Securities and Exchange Commission (the "Commission"). The Company intends to
furnish its stockholders with annual reports containing audited financial
statements and such other periodic reports as the Company deems appropriate or
as may be required by law. Additionally, such reports and information may be
inspected and copied at prescribed rates at the public reference facilities
maintained by the Commission at Judiciary Plaza, 450 Fifth Street, N. W.,
Washington, D. C. 20549 and at the following regional Offices of the Commission:
7 World Trade Center, New York, New York10048, and 500 West Madison Street,
Chicago, Illinois 60661. The Company's fiscal year ends on March 31 of each
year.
ATLANTIS AQUAFARM TM and the related fish logo are trademarks of Atlantis
Aquafarm, Inc.
5
<PAGE>
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by, and should be read
in conjunction with, the more detailed information, including the financial
statements and notes thereto (the "Financial Statements"), appearing elsewhere
in this Prospectus. Each prospective investor is urged to read this Prospectus
in its entirety.
The Company
Atlantis Aquafarm, Inc. ("Atlantis" or the "Company") is a development
stage company recently formed for the primary purpose of farming European Sea
Bass and other types of fish in a controlled environment on a large scale for
the North Eastern U.S. market. The Company believes that concerns about
environmental pollution and diet, the corresponding increase in popularity of
farm-raised fish, and the lack of available fresh product, particularly salt
water species such as European Sea Bass and other species not indigenous to U.S.
waters, will provide Atlantis with a market for its product.
Initially the Company plans to market European Sea Bass through direct
relationships with several of the larger wholesale seafood distributors in the
New York metropolitan area. It is anticipated the fish will be sold primarily
live on a cash-and-carry basis to the ethnic oriental market. Preliminary market
research appears to indicate that the entire start-up production level can be
absorbed by this limited part of a much larger market.
Independent sources have recently reported fish consumption within the New
York metropolitan area to be in excess of 3,000,000 lbs per week1. Often, wild
fish served as "fresh" in a New York restaurant have been harvested more than a
week previously2. The disparity between the Company's intended product, which
will be available within hours of being selected live at the Company's
facilities, and the competition, is even wider when one considers that, compared
to the Company's European Sea Bass, a salt water fish much coveted for its taste
and texture, the most similar locally available fish is Sea Bass. Since most
locally available Sea Bass is caught in the Southern United States, shipped on
ice, it cannot compete with the Company's product in terms of freshness and
therefore taste. Moreover, by use of patented grow-out tanks which duplicate the
fishes' natural environment by forcing them to swim against a current, Atlantis
expects to avoid the blander taste and texture sometimes associated with farm
raised fish.
- ----------
1 Nation's Largest Seafood Market Under Scrutiny (NPR), 10-17-95.
2 "Today's Fish: Straight From the Farm" by Mark Bittman C New York
Times, September 18, 1996.
6
<PAGE>
Critically, Atlantis can break even by marketing only 10,000 lbs of
European Sea Bass per week (240 Metric Tons per annum) at a sale price of
$2.50/lb. Potential market outlets have indicated a willingness to pay
significantly more for the Company's product. If these market indications are
accurate the Company could achieve profitability without full production.
However, the Company anticipates achieving a production level of 10,000 lbs. per
week within 16 months.
Accordingly, although Atlantis expects to be offering a premium product in
terms of freshness and taste, it would not need to seek premium prices which may
limit its market. Indeed, Atlantis should be able to undercut its competitors'
prices by a substantial margin should the need arise.
When its core business is established and production levels can be safely
increased, the Company plans to diversify the fish species it produces. The
Company also plans to target the substantial market of "white table cloth"
restaurants with fish that are fresher, less expensive and more environmentally
secure than those available through traditional channels.
Ultimately, the Company plans to open similar operations outside other
major cities, particularly in the Northern United States where the climate and
geographic location militate against more traditional sources of "fresh" fish.
Prospective investors should recognize, however, that existing seafood
companies or others may establish competing operations in the Company's proposed
market in the future, thereby reducing market share and sales revenues.
Furthermore, delays and production problems could mean that break-even levels of
production are not met within the anticipated time frame or at all or that
production costs and therefore the projected sales price of the Company's
product may exceed those presently anticipated by the Company. See "Risk
Factors." Moreover, additional financing may be required for the Company to
achieve its long term goals involving product diversification, additional
centers of operations and increased markets. Such additional financing may not
be available.
The Company has no operating history. However, to some extent, the Company
has modeled itself on successful aquafarms growing similar species in other
geographic regions. Additionally, the Company has conducted extensive marketing
research in the New York metropolitan area and believes that a viable market
exists for its product, particularly since current information shows that the
Company's product can be offered for sale substantially fresher than, and at a
price substantially less than prevailing market rates for, similar fish, if and
when available.
The Company is a New York corporation which was organized on December 17,
1993. The Company's principal executive office is presently located at 175 27th
Street, Brooklyn, New York 11232.
7
<PAGE>
The Offering
Securities Offered.................. Between 190,000 Units (the "Minimum
Offering") and 300,000 Units (the
"Maximum Offering"), each Unit
consisting of one share of Common
Stock and one Class A Warrant.
Each Class A Warrant entitles the
holder to purchase for $7.50 one
share of Common Stock and one
Class B Warrant, through the first
anniversary of the Initial Closing,
and each Class B Warrant entitles
the holder to purchase for $6.50
one share of Common Stock, from
exercise of the Class A Warrant
through the second anniversary of
the Initial Closing. The exercise
prices of the Warrants are subject
to adjustment in certain
circumstances. See "Description of
Capital Stock-Warrants."
Offering Price...................... $6.00 Per Unit.
Initial Closing..................... The Initial Closing of the Offering
will occur upon the sale of the
Minimum Offering.
Securities Outstanding Prior to the
Offering
Common Stock ................. 535,400 Shares
Class D Warrants ............. 25,000
Securities Outstanding After the
Offering
Common Stock ................. 725,400 Shares (Minimum) 835,400
(Maximum)
Class A Warrants ............. 190,000 (Minimum) 300,000 (Maximum)
Class B Warrants ............. 190,000 (Minimum) 300,000 (Maximum)
Class C Warrants ............. 19,000 (Minimum) 30,000 (Maximum)
Class D Warrants ............. 25,000
Dividend Policy..................... The Company does not anticipate
paying dividends on its Common
Stock in the foreseeable future.
See "Dividend Policy."
Use of Proceeds..................... The net proceeds of the Offering
will be used for:
(i) Purchase of Equipment and
Livestock
(ii) Real Property; and
(iii) Working Capital.
See "Use of Proceeds."
8
<PAGE>
Risk Factors........................ The Company is a development stage
company which has transacted no
business since it was formed in
December 1993. An investment in
the securities offered hereby is
speculative in nature and involves
a high degree of risk. Prior to
making any investment decision,
prospective investors should read
and carefully review the "Risk
Factors" section of this Prospectus.
INVESTOR SUITABILITY
Only residents of the States of New York, New Jersey, Florida, Colorado,
Nevada, Oregon, Utah, and Washington may purchase the Units offered hereby. Each
subscriber will be required to execute a Subscription Agreement which, among
other things, requires the subscriber to certify his or her State of residence.
A subscriber who is a resident of a State other than a State in which the Units
have been qualified for sale may request that the Company register the Units in
the State in which such subscriber resides. However, the Company is under no
obligation to do so, and may refuse any such request.
9
<PAGE>
RISK FACTORS
The Units being registered hereby involve a high degree of risk and
therefore should be considered extremely speculative. THESE UNITS SHOULD NOT BE
PURCHASED BY ANYONE WHO CANNOT AFFORD THE POSSIBLE LOSS OF THEIR ENTIRE
INVESTMENT. Prospective investors should read the entire Prospectus and
carefully consider among the other factors and financial data described herein,
the following risk factors related to the business of the Company:
Risk Relating to the Company
Development Stage Company; No Operating History. Although the Company was
incorporated on December 17, 1993, it has no operating history or revenues. To
date it has engaged only in certain preliminary activities relating to the
establishment of its proposed business and the preparation of this Prospectus.
The Company is still in the developmental stage and, has not acquired any
operating assets, entered into any arrangements for equipment, livestock or
facilities, or hired or trained any personnel, necessary to commence production.
The Company's plans for the financing and development of its proposed business
are based solely upon the experience and judgement of its current management and
upon certain available market information. Although several wholesale and retail
seafood consumers have indicated interest in acquiring a substantial part of the
Company's projected output and the Company therefore anticipates receiving
revenues as soon as the first batch of fish is available for market
(approximately 9 to 12 months), there can be no assurance that such wholesale
and retail outlets will materialize, that revenues will be received within 9 to
12 months, if at all, that the Company will be successful or that the Company
will ever operate profitably. Even if the revenue assumptions underlying its
plans prove to be correct, there can be no assurance that the Company will not
incur substantial losses. As a start-up company, the Company will be subject to
the substantial and numerous risks, expenses and difficulties associated with
the creation of a new business, such as the risks involved in the hiring and
training of employees, leasing of facilities and capital equipment,
establishment of financial and operating systems, compliance with federal, state
and local regulations, cost and availability of livestock, feed and chemicals,
marketing of the Company's product, actions taken by potential competitors
(particularly with respect to pricing) and general economic conditions. See
"Plan of Operation," and "Financial Statements".
Losses to Date; Negative Shareholders' Equity. During the period December
17, 1993 (inception), through June 30, 1997, the Company had no operating
revenues and incurred a loss of $10,317. As of June 30,1997, the Company had a
shareholders' equity of $43,223. The rate of loss is expected to increase as the
Company's activities increase until the Company is able to generate sales levels
sufficient to offset the significant costs of starting operations, such as the
acquisition of equipment and facilities and the cost of ongoing operations.
Although the Company does not at this point anticipate the need to raise
additional financing in the form of equity or debt, certain circumstances may
arise, for example the acquisition of suitable real estate for its facilities,
which may cause the Company's future and continued existence to be dependent
upon its ability to raise such additional financing. There can be no assurances
that the Company will be able to raise such additional capital or that the
Company will ever be profitable. See "Business & Financial Statements."
10
<PAGE>
Reliance Upon Officers, Directors and Key Employees. The Company is highly
dependent, at present, upon the personal efforts and abilities of its president
Patrick D. Trimble. Mr. Trimble will be devoting his full-time to the Company's
activities. It is anticipated that Mr. Trimble will be assisted by a qualified
and experienced manager from an established correspondent European Sea Bass farm
in France, although such individual is not currently under contract to the
Company. The future success of the Company is therefore, in part, dependent upon
the efforts of Mr. Trimble and his ability to attract other qualified management
personnel, either of which could have a materially adverse impact on the
business of the Company. Mr. Trimble has entered into a three year employment
agreement with the Company. The Company will apply for key person life insurance
in the amount of $500,000, payable in the event of Patrick Trimble's untimely
death, and appropriate disability insurance. See "Management".
Competition. The Company is unaware of any other growers of farm raised
European Sea Bass in the New York metropolitan area or elsewhere in the United
States. However, there are numerous other companies, both public and private,
which are currently engaged in, or which may engage in the near future, in the
seafood industry. Although such businesses are not currently the same as that
proposed by the Company, they do involve the sale of seafood to the same market
as that targeted by the Company and must therefore be considered competitive to
the business of the Company. This is particularly true of those companies which
distribute Sea Bass caught in the southern United States, and farmed fresh water
hybrid Striped Bass, in the New York metropolitan market. Furthermore, such
other companies may have substantially greater resources, financial and
otherwise, than the Company with which to expand their established operations to
more closely align their product with that of the Company.
Additional Financing Requirements. Based on the Company's operating plan,
the Company believes that the net proceeds of the Offering, together with
revenues from continuing operations (if any), will be sufficient to satisfy its
capital requirements and finance its operations for a minimum of 12 months.
However, there can be no assurance that events affecting the Company's
operations will not result in the Company depleting its funds before that time.
The Company may need to raise substantial additional funds to continue to fund
operating expenses or its business strategy. There can be no assurance that
additional financing will be available, or, if available, that such financing
will be on terms favorable to the Company. Failure to obtain such additional
financing under such circumstances would have a material adverse effect on the
Company.
Preferred Stock; Possible Anti-Takeover Effects. The Company's Certificate
of Incorporation, as amended, authorizes the Board of Directors to issue up to
1,000,000 shares of preferred stock, par value $ .01 per share. The preferred
stock may be issued in one or more series, the terms of which may be determined
at the time of issuance by the Board of Directors, without further action by
stockholders, and may include, among other things, voting rights (including the
right to vote as a series on particular matters), preferences as to dividends
and liquidation, conversion and redemption rights, and sinking fund provisions.
11
<PAGE>
No preferred stock is currently outstanding, and the Company has no present
plans for the issuance of any preferred stock. However, the issuance of any such
preferred stock could materially adversely affect the rights of holders of
Common Stock and, therefore, could reduce the value of the Common Stock. In
addition, specific rights granted to future holders of preferred stock could be
used to restrict the Company's ability to merge with, or sell its assets to, a
third party. The ability of the Board of Directors to issue preferred stock
could discourage, delay, or prevent a takeover of the Company, thereby
preserving control of the Company by the current stockholders. See "Description
of Capital Stock."
No Dividends Anticipated. The Company has never paid any dividends on its
Common Stock and does not anticipate the payment of dividends in the foreseeable
future. The Company currently intends to reinvest earnings, if any, in the
development and expansion of its business. See "Dividend Policy," "Dilution" and
"Description of Capital Stock.'
Control of the Company. Upon consummation of the Offering, the Company's
directors, officers and existing stockholders will beneficially own, in the
aggregate, approximately 535,400 shares of the outstanding Common Stock,
representing approximately 64%, if the Maximum Offering is sold, and 73%, if the
Minimum Offering is sold, of the issued and outstanding Common Stock.
Accordingly, these stockholders will be in a position to control the management
policies of the Company in general, and can determine the outcome of any
corporate transaction or other matter submitted to the Company's stockholders
for approval including the election of directors, mergers, acquisitions,
consolidations or the sale of all or substantially all of the Company's assets.
See "Principal Stockholders" and "Description of Capital Stock." Such
concentration of ownership could limit the price that certain investors might be
willing to pay in the future for shares of Common Stock, and could have the
effect of making it more difficult for a third party to acquire, or of
discouraging a third party from attempting to acquire, control of the Company.
Risks Relating to the Offering
Extended Offering Period. Until subscriptions for the Minimum Offering
have been received no Units will be issued. Accordingly, during the period from
the effective date of this Prospectus until the earlier of the date of the
Minimum Offering is sold or the Offering Termination Date (which is nine-twelve
months after the commencement of the Offering), funds submitted to the Company
will be held in escrow by the Company. As a result, subscribers may not have the
availability of the funds used to purchase the Units for an extended period of
time with no corresponding certainty that they will ultimately receive Units
unless the Minimum Offering is achieved.
12
<PAGE>
Immediate Substantial Dilution. The current stockholders of the Company
acquired beneficial ownership of their shares of Common Stock at prices
substantially below the offering price. Accordingly, purchasers of the Units
will incur an immediate and substantial dilution of approximately $4.74 per
share, 79 %, assuming the Minimum Offering is sold ($4.20 per share, 70%
assuming the Maximum Offering is sold), in that the net tangible book value of
the Company's Common Stock after the Offering will be approximately $1.26 per
share (assuming the Minimum Offering) as compared with an assumed effective
initial public offering price of $6.00 per share of Common Stock (assuming for
this purpose only that no value is being attributed to the Warrants included in
the Units). Net tangible book value is the amount of the Company's total assets
minus intangible assets and liabilities. See "Dilution". As a result, investors
purchasing Units hereunder will bear most of the risk of loss while management
of the Company will remain in the hands of the current stockholders. See
"Control of the Company".
Determination of the Initial Public Offering Price and Terms. There is no
public trading market for the Company's Common Stock, and the initial public
offering price of the Units and the terms of the Warrants included therein have
been arbitrarily determined by the Company and are not necessarily related to
the Company's asset value, net worth, earnings potential, or other established
criteria of value and should not be considered to be an indication of the actual
value of the Company. Each prospective investor should make an independent
evaluation of the fairness of such price.
No Prior Market; Possible Volatility of Unit Price. There has been no
prior market for the Company's Units, Common Stock or Warrants and there can be
no assurance that a public market for the Units, Common Stock or the Warrants
will develop or be sustained after the Offering. In the absence of such a
market, purchasers of the Units, Common Stock and the Warrants may experience
substantial difficulty in selling their securities, and therefore must be able
to afford the loss of entire investment. In addition, the trading price of the
Company's Units, Common Stock and Warrants could be highly volatile, as is
frequently the case with the securities of small capitalization companies.
Furthermore, factors such as variations in quarterly operating results, changes
in the Company's target market including the introduction of new competitors,
announcements of new government regulations and standards, general economic
conditions and other factors can subject the stock of companies such as the
Company to price and volume fluctuations that are often unrelated to operating
performance.
Possible Market Illiquidity. The company anticipates that trading of the
Units, Common Stock, and the Warrants will probably be conducted in the OTC
Bulletin Board Service3, or if unavailable, the over-the-counter market in what
is commonly referred to as the "pink sheets." As a result, an investor would
likely find it more difficult to dispose of, or to obtain accurate quotations as
to the value of the Company's securities. While no assurance can be given in
this regard, the Company anticipates obtaining a listing on the OTC Bulletin
Board Service. See "Description of Capital Stock."
- ----------
3 The Company intends to apply for the symbol ATAF. If this is not
available a suitable alternative will be sought.
13
<PAGE>
Shares Eligible for Future Sale. The sale, or availability for sale, of a
substantial number of shares of Common Stock in the public market subsequent to
the offering pursuant to Rule 144 under the Securities Act ("Rule 144"), or
otherwise, could materially adversely affect the market price of the Common
Stock and could impair the Company's ability to raise additional capital through
the sale of its equity securities or debt financing. The availability of Rule
144 to the holders of restricted securities of the Company would be conditioned
on, among other factors, the availability of certain public information
concerning the Company. All of the 535,400 shares of Common Stock currently
outstanding and 380,000 shares of Common Stock underlying the Warrants are
"restricted securities" as that term is defined in Rule 144 which may, under
certain circumstances, be sold without registration under the Securities Act.
All existing stockholders of the Company, including all of the executive
officers and directors of the Company, have agreed, however, not to publicly
sell or otherwise dispose of any securities of the Company for a period of 12
months from the effective date of this Prospectus. In addition, such
stockholders, including the executive officers and directors of the Company,
have agreed not to privately sell or otherwise dispose of any securities of the
Company during such period unless the proposed transferee agrees to be bound by
such restrictions on transfer.
Legal Restrictions on Sales of Shares Underlying the Warrants. The
Warrants issued in this Offering are not exercisable unless, at the time of
exercise the Company has a current prospectus covering the shares of Common
Stock issuable upon the exercise of the Warrants and such shares have been
registered or qualified, or are deemed to be exempt, under the securities laws
of the state of residence of the exercising holder of the Warrants. In addition,
in the event any Warrant holders attempt to exercise any Warrants at any time
after nine months from the date of this Prospectus, the Company will be required
to file a post-effective amendment and deliver a current prospectus before the
Warrants may be exercised.
The Warrants are separately transferable immediately upon issuance.
Purchasers may buy Warrants in the after-market or may move to a jurisdiction in
which the shares underlying the Warrants are not so registered or qualified
during the period that the Warrants are exercisable. In this event, the Company
would be unable to issue shares to those persons desiring to exercise their
Warrants unless and until the shares and Warrants could be qualified for sale in
jurisdictions in which such purchasers reside, or an exemption from such
qualification exists in such jurisdiction and Warrant holders would have to
attempt to sell the Warrants in a jurisdiction where such sale is permissible or
allow them to expire unexercised. There can be no assurance that the shares
underlying the Warrants, or the Warrants, will ever be qualified for sale in any
jurisdictions other than those jurisdictions where the shares underlying the
Warrants will not be registered or qualified for sale pursuant to this Offering
The Company will endeavor to take such reasonable steps as may be necessary to
register or qualify shares underlying the warrants. See "Description of the
Capital Stock -- Warrants."
Potential Market for Securities. At the time of listing, the Company
intends to apply for a symbol to be listed on the OTC Bulletin Board Service.
The proposed symbol is ATAF. No assurance can be given that the symbol will be
available at the time of application. However, if such is unavailable, the
Company will apply for a similar symbol.
14
<PAGE>
Use of Proceeds to Benefit Insiders. Approximately $190,000 of the net
proceeds of the Offering will be used to pay annual salaries for current
executive officers of the Company, all of whom are stockholders of the Company.
See "Use of Proceeds," "Management," "Certain Transactions" and Financial
Statements and Notes thereto.
Disclosures Relating to Low Priced Stocks; Possible Restrictions on
Resales of Low Priced Stocks and Broker Dealer Sales; Possible Adverse Effect of
Penny Stock Rules on Liquidity for the Company's Securities. While the Company
does not anticipate this, the Company's securities may become subject to Rule
15g-9 under the Securities Exchange Act of 1934 (the "Exchange Act"), which
imposes additional sales practice requirements on broker-dealers which sell
"penny stock" securities to persons other than established customers and
accredited investors (generally, certain institutions and individuals with net
worth in excess of $1,000,000 or annual incomes exceeding $200,000 or $300,000
together with their spouses). For transactions covered by this Rule, a
broker-dealer must make a special suitability determination for the purchaser
and have received the purchaser's written consent to the transaction prior to
sale. Consequently, such Rule may affect the ability of broker-dealers to sell
the Company's securities and may affect the ability of purchasers in the
Offering to sell any of the securities acquired hereby in the secondary market.
The Commission has adopted regulations which generally define a penny
stock to be any non-Nasdaq equity security that has a market price (as therein
defined) of less than $5.00 per share or an exercise price of less than $5.00
per share, subject to certain exceptions. For any transaction by broker-dealers
involving a penny stock, unless exempt, the rules require delivery, prior to a
transaction in a penny stock, of a risk disclosure document relating to the
penny stock market. Disclosure is also required to be made about compensation
payable to both the broker-dealer and the registered representative and current
quotations for the securities. Finally, monthly statements are required to be
sent disclosing recent price information for the penny stock held in the account
and information on the limited market in penny stocks.
The foregoing required penny stock restrictions will not apply to the
Company's securities if such securities are listed on Nasdaq and have certain
price and volume information provided on a current and continuing basis, or meet
certain minimum net tangible assets or average revenue criteria. There can be no
assurance that the Company's securities will qualify for exemption from these
restrictions. In any event, even if the Company's securities were exempt from
such restrictions, it would remain subject to Section 15(b) (6) of the Exchange
Act, which gives the Commission the authority to prohibit any person who is
engaged in unlawful conduct while participating in a distribution of penny stock
from associating with a broker-dealer or participating in a distribution of
penny stock, if the Commission finds that such a restriction would be in the
public interest. If the Company's securities are, or become, subject to the
rules on penny stocks, the market liquidity for the Company's securities could
be severely adversely affected.
15
<PAGE>
Underwriter's Influence on the Market. Although it has no legal obligation
to do so, the Underwriter may from time act as a market maker and otherwise
effect transactions in the Company's securities. To the extent the Underwriter
acts as a market-maker in the Common Stock or Warrants it may be a dominating
influence in that market. The price and liquidity of such securities may be
affected by the degree, if any, of the Underwriter's participation in the market
inasmuch as a significant amount of such securities may be sold to customers of
the Underwriter. Such customers subsequently may engage in transactions for the
sale or purchase of such securities through or with the Underwriter. In the
event that market-making activities are commenced, the Underwriter may
discontinue such activities at any time or from time to time. See
"Underwriting."
Conflicts of Interest. CHAMBERS DAVIDSON, LLP acts as outside counsel to
the Company. Graeme A. Chambers is a principal in CHAMBERS DAVIDSON, LLP and a
stockholder and warrant holder in the Company. Accordingly, a potential conflict
of interest exists. All subscribers shall be deemed to have waived such
potential conflict of interest by their purchase of Units. see "Management",
"Principal Stockholders" and "Certain Transactions".
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
Certain statements contained or incorporated by reference in this
prospectus, including without limitation, statements containing the words
"believes," "anticipates," "expects" and words of similar import, constitute
"forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1996 (the "Reform Act"). Such forward-looking
statements involve known and unknown risks, uncertainties and other factors
which may cause the actual results, performance or achievements of the Company,
or industry results, to be materially different from any future results,
performance or achievements expressed or implied by such forward- looking
statements. Certain of these factors are identified and/or discussed in detail
elsewhere in this prospectus, particularly under the caption "Risk Factors".
Other factors may not have been addressed at all. Additional such factors can
change constantly to reflect market conditions, environmental conditions,
regulatory changes, consumer availability and production problems etc. Given
these uncertainties, prospective investors are cautioned not to place undue
reliance on such forward-looking statements. The Company disclaims any
obligation to update any such factors or to publicly announce the result of any
revision to any of the forward-looking statements contained herein to reflect
future events or developments.
16
<PAGE>
USE OF PROCEEDS
The net proceeds from the sale of the Offering (after payment of offering
expenses) are expected to range from $951,000 at the Minimum Offering to
$1,545,000 at the Maximum Offering. After release from escrow (for proceeds on
the sale of Units up to the Minimum Offering), the proceeds will be invested by
the Company in short-term interest bearing securities, money market funds or
United States government securities, pending the uses described below.
The principal purposes for which the net proceeds of the Offering are
expected to be applied are:
Approximate Approximate
Amount of Amount of
Proceeds Proceeds
(Minimum) (Maximum)
----------- -----------
Advertising/ Promotion $4,000.00 $6,000.00
Audit/ Accounting $10,000.00 $10,000.00
Food $40,000.00 $60,000.00
Insurance $30,000.00 $40,000.00
Livestock $42,000.00 $66,000.00
Legal $35,000.00 $45,000.00
Shop & Office Equipment $25,000.00 $40,000.00
Rent/Mortgage $240,000.00 $360,000.00
Renovation/Construction of Facilities $15,000.00 $40,000.00
Salaries * $190,000.00 $210,000.00
Tanks/Pumps/filters & Related Equipment $220,000.00 $550,000.00
Working Capital $100,000.00 $118,000.00
----------- -----------
TOTAL $951,000,000.00 $1,545,000.00
=============== =============
* Patrick Trimble $50,000; Eric Popkoff $30,000; Govind Srivastava $30,000;
Farm Manager $35,000; Labor $20,000; Marine Biologist $25,000 (Additional;
Labor $20,000 at Maximum Offering).
17
<PAGE>
The Company has not determined the exact amounts it plans to expend on
each of the above uses or the timing of such expenditures. The foregoing
represents the Company's best estimate of the allocation of the net proceeds of
the Offering during the next 12 months. This estimate is based on certain
assumptions, including that construction of the necessary equipment and
facilities can be completed within 3 months, that operations will commence in
the fourth month, and that accordingly the first sales will begin to offset
expenditures by the twelfth month. However, future events, including the
problems, delays, expenses, difficulties and complications frequently
encountered by companies in an early stage of development, changes in economic,
regulatory or competitive conditions or the Company's planned business and the
success or lack thereof of the Company's sales and marketing efforts during the
12 month period following completion of the Offering or thereafter may create
unforseen expenditures and/or make shifts in the allocation of funds and
curtailment of certain planned expenditures necessary or desirable. Any such
shifts will be at the discretion of the Company and accordingly, potential
investors should view the foregoing projection of expenditures as an estimate
only.
To the extent the net proceeds of this offering are not utilized
immediately, they will be invested in United State government or governmental
agency securities or short-term insured certificates of deposit.
18
<PAGE>
PLAN OF OPERATION
The following discussion should be read in conjunction with the financial
statements and notes thereto included elsewhere in this Prospectus.
Although, the Company was organized on December 17, 1993, it has no
operating history and is in the developmental stage. The Company believes that
the net proceeds of the sale of the Minimum Offering will be sufficient for the
Company to provide the necessary facilities, to commence production of livestock
and to continue the operation of the Company's business for a minimum of twelve
months following the Offering, by which time it is anticipated that revenues
from sales will be available to supplement such proceeds. However, there can be
no assurance that such sales will be realized in the time frame expected and/or
that the net proceeds of the Offering will be sufficient to permit the Company
to operate during such 12-month period. Furthermore, although the Company
anticipates that the net proceeds from the Offering together with revenues
expected to be derived from sales should be sufficient to fund its capital needs
for a minimum of 12 months following the completion of the Offering, the Company
may be required to seek additional financing during such period in the event of
delays, lack of market acceptance, cost overruns, or unanticipated expenses
associated with a company in an early stage of development. In addition, the
Company may need further financing following such 12 month period in order to
continue development. There can be no assurance that the Company will be able to
obtain such financing or that such financing, if available, will be on
acceptable terms. In the event such necessary financing is not obtained, the
Company will be materially adversely affected.
DIVIDEND POLICY
The Company currently does not intend to pay any dividends in the
foreseeable future and intends to retain any future earnings to finance the
growth and development of its businesses. Payment of any future dividends will
depend upon the future earnings, financial condition, any contractual
restrictions (including restrictions under any loan obtained by the Company),
restrictions imposed by applicable law, capital requirements of the Company and
other factors which the Board of Directors may consider appropriate.
19
<PAGE>
DILUTION
The difference between the public offering price per share of Common Stock
and the net tangible book value per share of Common Stock after this offering
constitutes the dilution to investors in this offering. The net tangible book
value of the Company at June 30, 1997 was negative approximately a negative
($32,541) or ($0.061) per share of Common Stock. Net tangible book value per
share represents the amount of total tangible assets less total liabilities,
divided by the number of shares of issued and outstanding Common Stock. At June
30 , 1997, the Company had intangible assets and deferred stock offered costs
with a net book value of $63,056. Net tangible book value per share dilution
represents the difference between the amount per share paid by purchasers of
Units in the Offering and the pro forma net tangible book value per share after
the Offering. Purchasers of the Units will incur an immediate and substantial
dilution of approximately $4.74 per share, 79%, assuming the Minimum Offering is
sold ($4.20 per share, 70%, assuming the Maximum Offering is sold), in that the
net tangible book value of the Company's Common Stock after the Offering will be
approximately $1.26 per share (assuming the Minimum Offering) and $1.80 per
share (assuming the Maximum Offering) as compared with an assumed effective
initial public offering price of $6.00 per share of Common Stock (assuming for
this purpose only that no value is being attributed to the Warrants included in
the Units). The following table illustrates the foregoing information with
respect to dilution to new investors on a per share basis:
Minimum Maximum
------- -------
Initial public offering price $ 6.00 $ 6.00
per unit
Net tangible book value ($ 0.061) ($ 0.061)
at June 30, 1997
Increase per share attributable 1.199 1.739
----- -----
to new investors
Pro forma net tangible book value
per share after the Offering 1.26 1.80
---- ----
Dilution per share to new investors $ 4.74 $ 4.20
====== ======
20
<PAGE>
The following table summarizes, on a pro forma basis as of June 30, 1997,
the difference between the number of shares purchased from the Company, the
relative investment in the Company and the average price per share paid by
existing stockholders and new stockholders giving pro forma effect to the sale,
by the Company, of the shares of Common Stock offered hereby at $6.00 per share,
to new investors in the Offering:
<TABLE>
<CAPTION>
Minimum Offering:
Shares Purchased Total Consideration Average Price
---------------- ------------------- -------------
Number Percent Amount Percent Per Share
------ ------- ------ ------- ---------
<S> <C> <C> <C> <C> <C>
Existing stockholders 535,400 74% $ 53,540 4.50% $ .10
New investors 190,000 26% $1,140,000 95.50% $ 6.00
--------------------------------------------------------------
Total 725,400 100% $1,193,540 100.0%
======= === ========== =====
Maximum Offering:
Shares Purchased Total Consideration Average Price
---------------- ------------------- -------------
Number Percent Amount Percent Per Share
------ ------- ------ ------- ---------
Existing stockholders 535,400 64% $ 53,540 2.90% $ .10
New investors 300,000 36% $1,800,000 97.10% $ 6.00
--------------------------------------------------------------
Total 835,400 100% $1,853,540 100.0%
======= === ========== =====
</TABLE>
21
<PAGE>
CAPITALIZATION
The following table sets forth the capitalization of the Company: (i) at
June 30, 1997, and (ii) as adjusted to reflect the issuance and sale by the
Company of the minimum 190,000 Units offered hereby (at an assumed initial
public offering price of $6.00 per Unit and after deduction of estimated
offering expenses payable by the Company).
June 30, 1997
-------------
As Adjusted
Actual (Minimum)
------ ---------
Stockholders' equity (1):
Preferred Stock, $.01 par value, 1,000,000
shares authorized, zero shares issued & $ 0 $ 0
outstanding
Common stock, $.001 par value, 5,000,000 shares
authorized, 535,400 shares issued and outstand-
ing as of June 30, 1997; 725,400 shares issued
and outstanding as 535 725 adjusted (minimum) 535 725
Additional paid in capital 53,005 998,815
Deficit accumulated during the development stage (10,317) (10,317)
------- -------
Total stockholders' equity 43,223 989,223
Total capitalization $43,223 $989,223
======= ========
(1) Excludes 380,000 shares of common stock reserved for issuance on exercise
of 190,000 Class A Warrants and 190,000 Class B Warrants. Also excludes
8,225 common shares issuable pursuant to outstanding stock options, and
any stock issuable from C & D Warrants.
SELECTED FINANCIAL AND OPERATING DATA
The following selected consolidated financial and operating data should be
read in conjunction with the Financial Statements included elsewhere in this
Prospectus. The Statement of Operations Data as set forth below for, and as of
the end of the period from inception (October 17, 1993) through June 30,1997 and
22
<PAGE>
the Balance Sheet Data as of November 30, 1996 and June 30, 1997, are derived
from the financial statements of the Company, which financial statements have
been audited by Ronald R. Chadwick P.C., independent certified public
accountants. The selected financial and operating data for the seven months
ended June 30, 1997, are not necessarily indicative of the results to be
expected for the full year.
<TABLE>
<CAPTION>
December 17, 1993
Year Ended November 30 7 Months Ended (inception) to
----------------------
1995 1996 June 30, 1997 June 30, 1997
---- ---- ------------- -------------
<S> <C> <C> <C> <C>
Statement of
Operation Data:
Revenues $ - $ - $ - $ -
Operating Expenses $ 4,338 $ 2,868 $ 1,306 $ 10,317
-------- -------- -------- --------
Net income (loss) $ (4,338) $ (2,868) $ (1,306) $(10,317)
-------- -------- -------- --------
Net income (loss)
per share $ - $ - $ (.13) $ (8.18)
Weighted average number
of common shares
outstanding - - 10,198 1,262
Balance Sheet Data:
Seven Months Ended
November 30, 1996 June 30, 1997
----------------- -------------
Working capital (deficiency) $(12,206) $(32,541)
Total assets 22,136 76,125
Stockholders' equity (deficit) ( 2,538) 43,223
</TABLE>
23
<PAGE>
THE COMPANY
General
Atlantis Aquafarm, Inc. was incorporated in the State of New York, on
December 17, 1993. The Company's principal executive office is presently located
at 175 27th Street, Brooklyn, New York 11232. Atlantis is a company whose core
business will be to raise and market live salt water fish in climatically
controlled and environmentally and ecologically sound facilities for consumption
in local markets. Ultimately, the goal of Atlantis is to become a fully
integrated corporation producing a wide range of fresh farm-raised seafood
products, and providing management consulting services targeted at the fish
farming industry. Toward that end, Atlantis may seek to develop and/or acquire
corporations, partnership interests, or other business entities which will
increase the net worth of Atlantis.
Initially, Atlantis will be an environmentally controlled, recycled
saltwater fish farm, capable of producing 240 metric tons (528,000 lbs) per year
of live food fish, for the local wholesale and ethnic oriental markets. Atlantis
will process the product through all growth cycles from hatchery to harvest, at
which time it will be distributed fresh from the tank into the large local New
York metropolitan market.
The Product
Atlantis will initially produce the species EUROPEAN SEA BASS
(Discentrachas LaBrax). Although Atlantis Aquafarm expects to be the first
producer of European Sea Bass in the US, this species is farmed extensively in
Europe. The factors considered in the choice of this species include both
economic and biological criteria.
It is important from an economic point of view that the fish reaches
market size within the period of high growth rates, and this species will
achieve that aim, coming to market within the first year of life. The rapid
growth rate of Sea Bass make it very suitable for culture.
Any farm raised species must have been thoroughly studied before any
commercial venture, for their feed conversion rate, their ability to reproduce
in captivity and their toleration to high-stocking density and poor water
quality. Not every species of fin fish are able to be farm raised. The species
European Sea Bass proves to be biologically suitable for this intensive form of
aquaculture. The species is tolerant of handling when grading and moving and is
resistant to most diseases. In Europe this species has been studied and
successfully acquacultually produced for fifteen years. This knowledge is very
useful in securing control over all stages of the life cycles and hereby making
it possible for mass production from eggs to fingerling through grow out.
Mostly importantly, the market demands for the species in terms of price
and volume must be consistently high in order to maximize profitability. The
species European Sea Bass is not common to this region of the world. This
species is native to and harvested in the Mediterranean and aquaculturally
produced throughout Europe. In Europe, where its demand and market price is
24
<PAGE>
high, the fish is considered is available, in view of the existing large
European and Asian markets. Aquafarms in Europe are enjoying great success with
this species, both in production and in marketing. In general, the Atlantis
Aquafarm facility can guarantee better quality and freshness and consistent
year-round supply than the currently available sources. On the average, seafood
is eight days old by the time it reaches the wholesale level. Atlantis' product
will be alive and swimming a few hours before shipment from its facility.
Presently, there is no one in North America growing European Sea Bass. The
Company's objective is to be the first aquafarm in the New York Metropolitan
area in order to take advantage of the well established, developed market.
It should be noted that most U.S. aquafarms use a static tank system to
grow their fish in still water, thereby contributing to the complaint that
farm-raised fish have less taste and texture than do their wild brethren. In
contrast, Atlantis will employ patented "circulating flow" tanks to keep the
fish in motion, thereby simulating the natural environment of the fish it
produces. The Company anticipates that the combination of the high quality grain
diet and the continuous exercise can most closely replicate the taste and
texture of fish harvested in their natural environment.
Location
It is anticipated that Atlantis will be located at a fully enclosed site
in Queens, New York, or comparable site in the New York metropolitan area, just
minutes from a large market which consumes in excess of 3,000,000 lbs of fish
per week.
In its survey of available facilities, the Company has targeted Economic
Development Zones because of their cost effectiveness and the financial
incentives offered by State and federal governmental agencies and utility
companies. Currently, the Company is negotiating to acquire a 50,000 square foot
building in St. Albans. St. Albans is a New York City economic development zone
which should result in a variety of financial benefits to the Company. While
this acquisition is not certain, management believes that if this site is not
available, a comparable site can be acquired.
Most importantly, this site is close to three major New York metropolitan
airports, and has easy access to all the major expressways. This location, at
the core of a densely populated regional center, minimizes loss of product
freshness between harvesting and consumption, as well as significantly reducing
any shipping costs. It should also eliminate much of the cost and uncertainty of
identifying potential customers in a large geographic market. In fact, it is
anticipated that most consumers will pick up the product themselves, thereby
avoiding much of the overhead involved in maintaining a distribution system.
Furthermore, this location permits the Company to avail itself of low-cost
labor and local experts in the industry. Kingsborough College of Brooklyn has
one of the finest programs for training individuals wishing to enter the seafood
industry, and SUNY at Stony Brook University has a highly-respected Marine
Biology Department. The Company anticipates that the unique design and location
of its facility will attract the attention of graduates and professors of
Kingsborough and Stony Brook University, some of whom have already expressed
interest in the project. The Company's general employment needs can be easily
and economically fulfilled by the large pool of potential unskilled laborers
available in an economic development zone.
25
<PAGE>
Finally, the Company believes that as the first aquaculture farm within
the boundaries of New York City, the uniqueness of its facility will engender
media interest and publicity. This publicity will help to instill confidence in
farm-raised fish products and help to facilitate the Company's future growth.
Recently, local media has devoted significant coverage to the problems of
sea-caught fish, focusing on the problems with tainted fish from polluted waters
and the lack of the guaranteed freshness in the local markets. The Company can
utilize this type of news coverage to boost interest in our product and create
name recognition for Atlantis Aquafarm products. These factors, coupled with the
use of the latest technology, will enable the Company to provide a fresh, high
quality product to the available market on a year-round basis.
Market; Product Demand
"With the demand for seafood far outpacing the production capacity
of oceans and streams, aquaculture - or fish farming - is one of the
world's fastest growing food industries. Globally, sales have
reached $33.5 billion, according to the Food and Agriculture
Organization of the United States. Fully 20 percent of the seafood
eaten by people in 1994, the latest figures available, came from
farms - 20.5 million tons worth, up from 7.4 million tons just a
decade earlier."4
As this quote indicates, today's seafood does not all come from the sea.
With environmental concerns growing, depleted wild stocks and increasing public
health consciousness, the trend towards farm raised seafood is expected to
continue. According to the National Marine Fisheries Service, annual sales of
farmed fish doubled in the decade after 1984, from 355 million pounds to 665
million pounds in 1994. Despite this growth, farmed fish still represent only a
small portion of the amount of fish sold domestically5. The Company anticipates
a continued, significant increase in demand and intends to be at the forefront
of the movement, focusing on the health concerns of the public with respect to
diet and off-shore pollution.
For the diet conscious, farm raised seafood is a made to order "designer"
product. Farmers can adjust the fat content of the diet to make the fish extra
fatty, which is how sushi chefs prefer it, or they can reduce the fat to make it
extra lean, which is how the makers of smoked fish like it. They can feed it
more omega-3 fatty acids (which has been associated with reduced risk of
coronary heart disease) to improve its nutritional profile. They can augment the
feed with pigments, without which its flesh would be pale, to give it the color
consumers expect. And they can adjust the feed content to give it a distinctive
but rather mild flavor.
- ----------
4 "Cultivating the World's Demand for Seafood" by Jan Christensein -- New
York Times Business Day, March 1, 1997.
5 "Today's Fish: Straight From the Farm" by Mark Bittman -- New York Times,
September 18, 1996.
26
<PAGE>
Equally importantly, it has been reported that farmed fish are safer fish.
There is no question that the image of fish and shellfish suffered when the
public began making the connection between polluted water and polluted fish. A
few years ago, Consumer Reports found that nearly half the fish it bought in
supermarkets and fish stores was contaminated with bacteria from human or animal
feces, and some had elevated levels of PCBs and mercury6. The magazine also
noted that a surprising amount of fish was mislabeled. Farmed fish, however,
grow in a carefully monitored environment. As such, Atlantis should be able to
control contaminants and eliminate external toxins. As a result, consumers can
stop worrying about such unpleasant side effects as hepatitis and mercury
poisoning when they eat farmed fish.
From an economic perspective, farm raised seafood is an inexpensive form
of protein. However, it is the consistent quality, flavor and supply of farmed
fish that make it especially attractive to businesses that serve a lot of
seafood. The Red Lobster restaurant chain is the biggest buyer of farmed seafood
in the country, but other chains and, increasingly, "white tablecloth"
restaurants rely on it, too.
"Farmed fish is the way to go. They arrive here a day after
they're harvested, and I can get exactly the quantity I
want."7
It may be anticipated that in supermarkets, labels such as "farm-raised"
will be come more common as the industry grows and the FDA tightens seafood
regulations.
Marketing
The best thing about farm raised seafood is the swift harvesting,
processing and shipping routine that makes farm raised fish so valuable to chefs
and retailers. With the increase of the Earth's population, the amount of farm
raised seafood is going to have double production to meet demands.
Atlantis will initially market its products in the Metro New
York/Tri-State area. The Company has surveyed the Fulton Fish Market and local
ethnic seafood markets in the New York City area. When Fulton can obtain Sea
Bass they sell it whole on ice to white-tablecloth restaurants for $6.00-8.00
per lb. The oriental market requires this fish live for sushi bars and ethnic
restaurants in Chinatown and Flushing. The Company conducted meetings with
prospective buyers from the New York City area. As a result, several well
established wholesalers have expressed their intent to purchase weekly
quantities of European Sea Bass which would, in aggregate, almost completely
absorb the Company's entire projected yearly production.
- ----------
6 down on the fish farm" by Norman Boucher C SELF magazine, August 1996
7 Ed Brown, executive chief of the Sea Grill, Rockefeller Center, New
York-- New York Times, September 18, 1996.
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One of those companies, J & C Seafood, with whom the Company has reached
tentative agreement is the second one of the largest fish distributors in the
New York metropolitan area. With the supply for fresh Sea Bass in New York City
so unpredictable, J & C Seafood was enthusiastic about the prospect of
purchasing 4,500-5,000 lbs per week, the quantity which the Company projects if
needs to market in order to break even. See "Exhibits".
If, of all the wholesale and retail outlets who have expressed a desire to
purchase the Company's product, only J & C Seafood fulfills its stated intention
which management believes highly improbable, the Company would still have gross
sales of at least $936,000 per year. However, the Company continues to pursue
other viable customers.
The Company is confident that the entire planned output of its initial New
York operations will be easily consumed through distribution to wholesale
seafood operations. In addition, the Company feels that there is also a vast
secondary market among white-tablecloth restaurants and other retail outlets.
In view of the New York metropolitan area's gross annual fish consumption
which exceeds 150 million pounds, Atlantis at annual production capacity of
528,000 lbs is initially seeking only a 0.352% market share. Given its
competitive advantage in terms of freshness and price the Company expects to
achieve this without difficulty. However, it must be re-iterated that there is
no guarantee that the wholesalers who have previously indicated a willingness to
buy the Company's product will remain interested or that the Company will be
able to find alternative outlets for its product.
Risk Management
Failure in the aquaculture industry is usually a result of poor planning
and ineffectual technology. Accordingly, the Company has tried to anticipate all
possible risks involved in this high-technology project and to address the same
with proper planning and the right choice of technology. In this regard, the
Company believes that Mr. Trimble's past experience in the Aquaculture industry,
the projected involvement of an experienced farm manager from an existing
European Sea Bass Farm in France and the consulting availability of staff at the
Marine Biology Department of Kingsborough Community College, brings to this
project the vital experience needed to insure a successful venture.
Product Protection
Since the Company's facilities are environmentally controlled, the only
way infection could occur is when the eggs are brought in from another hatchery.
All the eggs purchased will come from certified disease-free hatcheries. As a
further precaution, each egg shipment will be immediately dipped into an
antiseptic solution for 15 minutes and thoroughly inspected for abnormal shape
and size. The Company will be receiving an average of 2 -3 million eggs per
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year. After the eggs hatch, they are kept in a dark room for the first 10 days.
This eliminates swim bladder disease and drastically cuts down on stress during
hatching. Additionally, ozone will be mixed with the water supply. Ozone kills
all bacteria, fungus, and molds on contact. Ozone is a water clarifier used to
keep the water clear and sterile.
Initially, the Company expects to have two Marine Fish Biologists on
staff. One of these experts is expected to be retained from the Company's
correspondent aquafarm in France, Siam Inc. This individual will be in charge of
the daily operations of the hatchery, nursery and grow-out of the Sea Bass. With
the help of a full-time Marine Biologist on staff, the Company expects that if a
problem arises, it will be quickly dealt with. The biologist will have the
ability to consult with the established experts in European Sea Bass at Siam
Inc. It is intended that Atlantis will be affiliated with the Marine Biology
Department of Kingsborough Community College in Sheepshead Bay, Brooklyn.
Certain professors in the fisheries program are marine consultants for the
Company and are readily available for advice and consultation.
Power/Equipment Failure
The Company's electric power will be supplied by Consolidated Edison.
However, in case of a power failure, the Company intends to implement a 55
kilowatt back-up generator from Katolight, with an automatic transfer switch.
The generator will automatically turn on to keep the pumps and filters running.
The entire water system, water quality, PH, salt and oxygen count, plus the
water and air temperature will be monitored by a computer with printout and
phone mode to call management in case of an emergency. The managers will have
beepers to keep in touch with the Farm and each other at all times, watching
over all aspects of the operation.
The Company will also install a back-up aeration system, in case the
system breaks down or needs repairs. Each tank has two pumps in case the other
pump fails. Replacement parts will be kept on-site in case of breakdown. The
Company will be installing three separate air conditioning units. If one
malfunctions, the other two will keep the building properly cooled at the
optimum temperature of 70 degrees. The air conditioning, ice machine, and ozone
equipment, plus all other equipment will be maintained with service contracts.
Atlantis water supply is provided by New York City Water from the
Catskills-Delaware System. The Company is purchasing four 4,200-gallon
cylindrical vertical storage tanks from Terracon Corporation. These tanks will
be used to mix the salt and other compounds, and to remove the chlorine from the
water prior to adding the water to the grow-out pods. They will thus act as a
water reservoir and provide a back-up water supply on premises.
The ozone/oxygen system the Company is using to insure an optimum supply
of ozone and oxygen is utilized daily in thousands of hospitals.
The advanced feed system has proven effective in the poultry, dairy and
swine production.
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Catastrophic Loss
Atlantis will be protected by a complete general business insurance policy
with an insurance umbrella of $5,000,000.
Competition
At this time the Company is not aware of any other U.S. producers of
European Sea Bass. It is currently imported from Europe on ice and cannot
therefore compete in terms of price or freshness. Nor are there currently any
facilities local to the Metro New York/Tri State area producing any type of salt
water fish. The most similar locally available fish is Sea Bass. This fish is
caught in the Southern United States and shipped. It therefore cannot be sold
live to the Company's target market area and cannot compete in terms of
freshness. At full capacity, the Company will be initially seeking approximately
a 0.352% market share at a projected market price of $4.50/lb. Thus, in terms of
freshness and price, Atlantis' product will be extremely competitive.
Nevertheless, it should be recognized that direct and indirect competitors could
begin operations in the Company's market area, and competitors not located in
the Company's market area could provide a supply of European Sea Bass and other
fish to the Company's customers and potential customers, thereby reducing sales
revenue, earnings and market share.
Non-Payment
It is expected that much of the product will be collected on a cash and
carry basis. However management of the Company has checked the two potential
principal consumers identified above and is satisfied with their reputation in
the industry.
Security/Vandalism
The site chosen for Atlantis will be protected by twenty-four hour
security.
Product Liability
The Company intends to obtain $1,000,000 product liability insurance.
The Future
Production can be increased at the initial site to meet future market
demands. The space the Company intends to occupy will allow the addition of a
small number of tanks, increasing the production. Production can also be
increased by 25% by increasing the amount of un-recirculated water introduced
into the system. New aquaculture systems and new sites can be implemented at any
time the Company deems it necessary and profitable.
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Due to the uniqueness of the selected water system, Atlantis could grow
numerous varieties of marine fish to meet changing market demands. Tanks could
be integrated with Sea Bream, or utilized to grow Oriental Sea Bass (Lates
Calcarifer Bloch) specifically for the Oriental market. The Company could
purchase eggs from Japanese fish farms and grow them out the same way as
European Sea Bass. Additional revenues could be generated in the future through
the sale of other farm-raised seafood products, such as Catfish, Trout, Salmon,
etc., raised from other aquafarms under the Atlantis name and logo. Atlantis
aspires to capture the seafood market with high quality, competitively priced,
name brand associated products in much the same way as "Purdue" captured the
retail chicken market.
Once operational the Company plans to explore the possibilities of
separating the solid waste from the liquid waste by using a settling tank. This
fish waste has a high concentration of nitrogen, and is therefore an excellent
natural plant fertilizer. Once it is separated and dried, it could be bagged and
sold to fertilizer companies, thus providing a secondary income.
The possibility also exists for a hydroponic herb garden within the
existing space the Company intends to occupy. This garden will be suspended from
the ceiling in PVC piping. The waste-water from the tanks will run through this
system providing the plants with a rich source of necessary nutrients. The
bacteria at the base of the herb's root will break down the nitrates in the
water providing an inexpensive means of water filtration. The combination of the
aquafarm and the hydroponic farm means optimum use of space and resources, thus
providing a supplementary income to Atlantis.
Atlantis, being the first of its kind in the New York City area, would be
the centerpiece of an aquafarm network in and around the greater metropolitan
area. The Company's vision of the future is to see grow-out farms close to all
major markets, serviced by a central hatchery location. Once this facility is
established and selling European Sea Bass, the Company has the capability of
expanding (as the market demands) in its present location and increasing and
diversifying the amount of product grown. The success of this facility will be
achieved by utilizing the latest technology to provide a constant year-round
supply of fresh, tasty, grain-fed, food fish for the North American market at a
fixed cost. Product growth will be environmentally controlled and under
continuous monitoring 24-hours a day guaranteeing a high-quality, healthy
product free of chemicals and heavy metals.
Human Resources
As of the date of this Prospectus, apart from its officers, the Company
has no employees. During the 12-month period following completion of the
Offering, the Company intends to hire one or two marine biologists and an
experienced farm manager to ensure product quality, sufficiency and protection.
The Company will also hire between one and three laborers at minimum wage.
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MANAGEMENT
Directors, Executive Officers and Key Personnel of the Company
The Company's directors, executive officers and key personnel are as
follows:
Name Age Position with the Company
---- --- -------------------------
Patrick D. Trimble(1) 39 President, Director
Govind Srivastava 42 Treasurer, Director
Eric Popkoff 42 Vice-President - Corporate Development,
Graeme Chambers 41 Director Secretary, Director
James Dimino 47 Director
(1) May be considered a founder of the Company as that term is defined
under the Securities Act.
Mr. Trimble was educated at the City University of New York and has
degrees in Marine Technology and Commercial Fisheries Science and is the
recipient of numerous honors and awards. He has been involved in various
aspects of the Seafood industry for ten years. Mr. Trimble is a governmental
appointee to serve as a member of Northeast Regional Aquaculture Center which
administers the USDA grant program for the aquaculture industry. Before
starting Atlantis Aquafarms, Mr. Trimble was a vice-president at a local fish
farm. Mr. Trimble lives with his family in Melville, New York.
Mr. Srivastava is a qualified public accountant with multi-level
experience in the seafood industry during the past eleven years. He has worked
on fisheries policies with EEC-ACP officials and foreign governmental
ministries. On a practical level he has formulated and implemented strategies
related to productivity, product selection/mix and cost reduction with a major
seafood company with tuna canning operations and a fish processing plant
involving both fresh and frozen products. On an international level, Mr.
Srivastava has negotiated trade agreements and has been involved in numerous
trade fairs including the Boston Seafood Show. As part of his general management
and accounting functions Mr. Srivastava has been responsible for human
resources, working capital management, auditing and preparation of financial
statements.
Mr. Popkoff has been the President and Chief Executive Officer of
Undiscovered Equities Research Corp., Brooklyn, New York, an information
services company since December 1994. Mr. Popkoff who has an MBA in Management
and an MBA in International Business from Baruch College previously taught
accounting and business practices. He sits on the board of directors for several
corporations including Summa Metals, Inc, Nevada which is currently in
registration with the SEC.
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Mr. Chambers has been an attorney for eighteen years, practicing in both
Europe and the U.S.. He is a senior partner with the New York based law firm of
CHAMBERS DAVIDSON, LLP, legal counsel for the Company. Mr. Chambers specializes
in general corporate and real estate law, representing a wide arrange of "blue
chip" clients including banks, insurance companies, foreign governments and
venture capital groups. He has been involved in numerous public and private
offerings. He currently sits on the board of directors for several other
corporations and not-for-profit organizations.
Mr. Dimino has 27 years of multi-level experience in the seafood
industry. He is Chief Executive Officer of James Dimino Wholesale Seafood,
Inc., J & C Seafood, Inc. and J & C International Import and Export Inc. He
is a member of the National Fisheries Institute.
Executive Compensation; Employment Agreements
The Company has only recently been organized and, prior to September 1,
1997, will not pay or accrue any executive compensation. The Company has
entered into three-year employment agreements with certain of its key
management personnel. Patrick Trimble, Govind Srivastava and Eric A.
Popkoff. Mr. Trimble will be devoting 100% of his time to over-seeing
operations. Mr. Srivastava will spend approximately 25% of his time on
marketing the Company's product and overseeing its day to day financial
affairs. Mr. Popkoff will devote approximately 25% of his time to pursuing
corporate development opportunities and on public relations. See "Certain
Transactions".
Director Compensation
Directors who are not salaried employees or officers of the Company will
receive $250 for each Board and committee meeting attended. CHAMBERS DAVIDSON,
LLP will be compensated at their customary hourly rate for Mr. Chambers' time.
In addition all Directors may be reimbursed for certain expenses in connection
with attendance at Board and committee meetings. Other than with respect to
reimbursement of expenses, Directors who are salaried employees or officers of
the Company will not receive additional compensation for service as a Director.
Limitation of Liability and Indemnification Matters
The Company has included in its Certificate of Incorporation provisions to
indemnify its directors and officers to the extent permitted by New York law.
The Company's Certificate of Incorporation also includes provisions to eliminate
the personal liability of its directors and officers to the Company and its
stockholders to the fullest extent permitted by New York law. Under current law,
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such exculpation would extend to an officer's or director's breaches of
fiduciary duty, except for (i) breaches of such person's duty of loyalty, (ii)
those instances where such person is found not to have acted in good faith and
(iii) those instances where such person received an improper personal benefit as
the result of such breach.
The Company's bylaws provide that the Company shall indemnify officers and
directors, with regard to any action or proceeding to the fullest extent
permitted under New York law.
At present, there is no pending litigation or proceeding involving any
director, officer, employee or agent of the Company where indemnification will
be required or permitted. The Company is not aware of any threatened litigation
or proceeding which may result in a claim for such indemnification.
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CERTAIN TRANSACTIONS
In October 15, 1996 the Company sold 535,400 shares of common stock to 4
officers and directors for $6,590 in cash and $42,575 in services rendered.
In November 1996 the Company issued promissory notes with options to
acquire an aggregate of 2,500 shares of common stock in the Company for $7,500
to two individuals who are relatives of the president of the Company. In
November 1996 the Company raised further capital by issuing two further
promissory notes with options to acquire an aggregate of 3,333 shares common
stock in the Company to 2 individuals for $5,000 each. One of these persons
James Dimino is an officer and director of the Company. All of these notes
accrue interest at 10% and are to be repaid from the proceeds of the Company
underwriting. The holders have an option to purchase restricted common stock at
$0.50 a share. These options expire 90 days following the completion of the
Minimum Offering.
On October 15, 1996 the Company also issued to Graeme Chambers, its a
partner in its general counsel law firm and an officer and director of the
Company, 25,000 of the Company's Class D warrants in return for services
rendered to the Company during its inception. Each Class D Warrant entitles the
holder to acquire one share of common stock in the Company at a purchase price
of $6.00 per share. The class D Warrants have pre-emptive registration rights.
The Company has placed its initial public offering into registration with
the SEC on form SB-2.
The Company has signed 3-year employment agreements with Patrick
Trimble, the president, Govind Srivastava, the Treasurer and Eric Popkoff,
Vice President - Corporate Development. Mr. Trimble will receive a salary of
$50,000.00 for year one, $60,000.00 for year two and $70,000.00 for year
three of the agreement. Mr. Trimble will spend substantially all of his time
on the Company's business. Each of Mr. Srivastava and Mr. Popkoff will
receive a salary of $30,000.00 for year one, $40,000.00 for year two and
$50,000.00 for year three of their agreements. Each of Mr. Srivastava and Mr.
Popkoff will spend approximately 25% of his working time on the Company's
business. In addition, Mr. Trimble will receive a production bonus of 5% of
excess gross revenues above 265,000 pounds.
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PRINCIPAL STOCKHOLDERS
The following table sets forth, as of the date of this Prospectus, certain
information as to the stock ownership of (i) each of the Company's directors,
(ii) each of the Company's executive officers, (iii) the executive officers and
directors as a group and (iv) all persons known by the Company to be the
beneficial owner of more than five percent of the outstanding Common Stock of
the Company prior to this Offering and giving pro forma effect to the sale of
the shares of Common Stock offered hereby.
The Company believes that the persons and entities named in the table have
sole voting and investment power with respect to all shares of Common Stock
shown as beneficially owned by them, subject to community property laws, where
applicable.
Shares Percentage
Beneficially Prior to Percentage After
Name and Address of Minimum Maximum
Beneficial Owner Owned Offering Offering Offering
- ---------------- ----- -------- -------- --------
Patrick D. Trimble
President 368,250 68.78% 50.76% 44.08%
Govind Srivastava
Treasurer, Director 56,250 10.50% 7.75% 6.73%
Eric Popkoff
Vice-President Corporate
Development, Director 75,000 14.02% 10.34% 8.97%
Graeme A. Chambers
Secretary, Director 22,500(1) 4.20% 3.10% 2.69%
James Dimino
Director 13,400 2.50% 1.85% 1.60%
(1) Does not include 25,000 shares underlying issued Class D warrants.
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DESCRIPTION OF CAPITAL STOCK
General
The Company's authorized capital stock consists of Five Million shares of
Common Stock, no par value per share, and One Million shares of Preferred Stock,
$.001 par value per share. Immediately prior to the Offering, there were
outstanding 535,400 shares of Common Stock (held by 5 persons) and no shares of
Preferred Stock.
Units
Each Unit consists of one share of Common Stock and one Class A Warrant.
Each Class A Warrant entitles the holder thereof to purchase one share of Common
Stock and one Class B Warrant, and each Class B Warrant entitles the holder
thereof to purchase one share of Common Stock. The Class A Warrants, the Class B
Warrants and Common Stock included in the Units are immediately exercisable and
transferable separately.
Common Stock
Holders of Common Stock are entitled to one vote for each share held of
record on all matters to be voted on by stockholders and are entitled to receive
such dividends from funds legally available therefor, when, as and if declared
by the Board of Directors. Upon the liquidation, dissolution or winding up of
the affairs of the Company, the holders of Common Stock are entitled to share
ratably in all of the assets for the Company available for distribution after
payment of all liabilities and liquidation preferences of the Preferred Stock,
if any. Holders of the Common Stock do not have preemptive, subscription or
conversion rights, There are no redemption or sinking fund provisions for the
benefit of the holders of the Common Stock in the Company's Certificate of
Incorporation. All outstanding shares of the Common Stock offered hereby will
be, when issued and delivered, validly issued, fully paid and nonassessable.
Warrants
Class A Warrants. The holder of each Class A Warrant is entitled, upon
payment of the exercise price of $7.50, to purchase on share of Common Stock and
one Class B Warrant. The Class A Warrants are exercisable at any time commencing
on the date of the Initial Closing through the close of business on the first
anniversary of the Initial Closing, provided that at such time as a current
prospectus relating to the Common Stock and the Class B Warrants is in effect
and the Common Stock and the Class B Warrants are qualified for sale or exempt
from qualification under applicable state securities laws. The Class A Warrants
are immediately transferable separately from the Common Stock.
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Class B Warrants. The holder of each Class B Warrant is entitled to
purchase one share of Common Stock at an exercise price of $6.50. The Class B
Warrants are exercisable at any time commencing after exercise of the Class A
Warrants, through the close of business on the second anniversary of the Initial
Closing, provided that at such time a current prospectus relating to the Common
Stock is then in effect and the Common Stock is qualified for sale or exempt
from qualification under the applicable state securities laws. The Class B
Warrants underlying the Class A Warrants and will be transferred separately from
the Common Stock received upon exercise of the Class A Warrants.
Class C Warrants. Class C Warrants entitle the Underwriter to purchase
Common Stock at One Hundred Twenty Percent (120%) of the public underwriting
price for a period of five (5) years after the effective date, subject to a one
year holding period. At the request of the majority of the holders of all of the
Class C Warrants the Company will agree to register the Class C Warrants, and
the Common Stock underlying them, for a single time and at its sole expense, in
order to make them free trading.
Class D Warrants. Class D Warrants entitle the Holder for a period of five
(5) years after the effective date, subject to a one year holding period, to
purchase Common Stock at One Hundred Percent (100%) of the public underwriting
price. Holders of Class D Warrants have piggy-back rights to register the Class
D Warrants, and the Common Stock underlying them in conjunction with any
registration of the Class C Warrants.
General. The Warrants may be exercised upon surrender of the
certificate(s) therefor on or prior to the expiration of the exercise date (as
explained above) at the offices of the Company's warrant agent (the "Warrant
Agent") with the "subscription form" on the reverse side of the certificate(s)
completed and executed as indicated, accompanied by payment (in the form of
certified or cashier's check payable to the order of the Company) of the full
exercise price for the number of Warrants being exercised. Unless exercised
during the relevant exercise period described above, the Warrants will expire
automatically.
The Warrants contain provisions that protect the holders thereof against
dilution by adjustment of the exercise price per share and the number of shares
issuable upon exercise thereof upon the occurrence of certain events, including
issuances of the Common Stock (or securities convertible, exchangeable or
exercisable into the Common Stock) at less that the market value, stock
dividends, stock splits, mergers sale of substantially all of the Company's
assets, and for other extraordinary events, provided, however, that no such
adjustment shall be made upon, among other things, (i) the issuance or exercise
of options or other securities under employee benefit plans up to certain
maximum amounts or (ii) the sale or exercise of outstanding options or warrants
or the Warrants offered hereby.
The Company is not required to issue fractional shares of the Common
Stock, and in lieu thereof will make a cash payment based upon the current
market value of such fractional shares. The holder of the Warrants will not
possess any rights as a stockholder of the Company unless he or she exercises
the Warrants.
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The Company may reduce the exercise prices of the Warrants or extend the
warrant expiration date upon notice to all Warrant holders.
Preferred Stock
The Preferred Stock may be issued in series, and shares of each series
will have such rights and preferences as are fixed by the Board of Directors in
the resolutions authorizing the issuance of that particular series. In
designating any series of Preferred Stock, the Board of Directors may, without
further action by the holders of Common Stock, fix the number of shares
constituting that series and fix the dividend rights, dividend rate, conversion
rights, voting rights (which may be greater or lesser that the voting rights of
the Common Stock), rights and terms of redemption (including any sinking fund
provisions) and the liquidation preferences of the series of Preferred Stock. It
is to be expected that the holders of any series of Preferred Stock, when and if
issued, will have priority claims to dividends and to any distributions upon
liquidation of the Company and that they may have other preferences over the
holders of the Commons Stock.
The Board of Directors may issue series of Preferred Stock without action
of the stockholders of the Company. The issuance of Preferred Stock may
adversely affect the rights of the holders of Common Stock. In addition, the
issuance of Preferred Stock may be used as an anti-takeover device without
further action on the part of the shareholders. Furthermore, the issuance of
Preferred Stock may dilute the voting power of holders of the Common Stock (such
as by issuing Preferred stock with super-voting rights) and may render more
difficult the removal of current management, even if such removal may be in the
stockholders' best interests. The Company has no current plans to plans to issue
any Preferred Stock.
The Company's Transfer Agent
America Securities Transfer will serve as the Company's Transfer Agent for
the Common Stock, Class A Warrants and Class B Warrants.
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SHARES ELIGIBLE FOR FUTURE SALE
Upon consummation of the Offering, the Company will have outstanding
725,400 (assuming the Minimum Offering) and 835,400 (assuming the Maximum
Offering) shares of the Common Stock. All of the shares of the Common Stock
offered hereby will be freely tradable without restriction or further
registration under the Securities Act except for any shares purchased by any
person who is or thereby becomes an affiliate of the Company, which shares will
be subject to the resale limitations contained in Rule 144 promulgated under the
Securities Act.
Holders of the Class A Warrants included in the Units offered hereby will
be entitled to purchase an aggregate of 190,000 (at the Minimum Offering) and
300,000 (at the Maximum Offering) shares of Common Stock upon exercise of the
Class A Warrants at any time during the one-year period following the date of
this Prospectus and holders of the Class B Warrants issuable upon exercise of
the Class A Warrants will be entitled to purchase an aggregate of 190,000 (at
the Minimum Offering) and 300,000 (at the Maximum Offering) additional shares of
Common Stock upon exercise of the Class B Warrants at any time during the
two-year period following the date of this Prospectus, in each case, provided
that the Company satisfies certain securities registration requirements with
respect to the securities underlying the Warrants. Any and all shares of Common
Stock purchased upon exercise of the Warrants will be freely tradable, except
for any shares purchased by any person who is or thereby becomes an affiliate of
the Company, provided such registration requirements are met. All existing
stockholders of the Company, including all of the executive officers and
directors of the Company, have agreed, however, not to publicly sell or
otherwise dispose of any securities of the Company for a period of 12 months
from the effective date of this Prospectus. In addition, such stockholders,
including the executive officers and directors of the Company, have agreed not
to privately sell or otherwise dispose of any securities of the Company during
such period unless the proposed transferee agrees to be bound by such
restrictions on transfer.
In general under Rule 144, as currently in effect, a person (or persons
whose shares are aggregated), including a person who may be deemed to be an
affiliate of the Company as that terms is defined under the Securities Act, is
entitled to sell, within any three month period, that number of shares which
such person has beneficially owned for at least two years which does not exceed
the greater of (i) one percent of the number of the then outstanding shares of
Common Stock or (ii) the average weekly trading volume in the Common Stock
during the four calendar weeks preceding such sale. Sales under Rule 144 are
also subject to certain requirements as to the manner of sale, notice and the
availability of current public information about the Company. Furthermore, a
person who is not deemed to have been an affiliate of the Company during the
ninety days preceding a sale by such person and who has beneficially owned such
shares for at least three years in entitled to sell such shares without regard
to the volume, manner of sale or notice requirements. Upon completion of the
Offering all of the 535,400 shares of the Common Stock outstanding on the date
of this Prospectus will be held by affiliates of the Company.
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Under Rule 701 of the Securities Act, persons who purchase shares upon the
exercise of options granted prior to the effective date of the Offering are
entitled to sell such shares 90 days after the effective date of the Offering
and in reliance on Rule 144 without having to comply with the holding period
requirements of Rule 144 and, in the case of nonaffiliates, without having to
comply with the public information, volume limitation, or notice provisions of
Rule 144.
Prior to the Offering, there has been no public market for the Company's
securities, Following the Offering, the Company cannot predict the effect, if
any, that market sales of the Common Stock, or the availability of such shares
for sale, will have on the market price prevailing from time to time.
Nevertheless, sales by the existing stockholders of substantial amounts of
Common Stock in the public market could adversely affect prevailing market
prices for the Company's securities. In addition, the availability for sale of
substantial amounts of Common Stock acquired through the exercise of the Class A
Warrants and Class B Warrants or other options could adversely affect prevailing
market prices for the Common Stock.
The Commission has recently proposed shortening the basic 144 holding
period from two years to one year; no assurance can be given as to when or
whether such change will occur.
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UNDERWRITING
General
Subject to the terms and conditions set forth in the Underwriting
Agreement by and between the Company and the Underwriter ("Underwriting
Agreement"), the Underwriter has agreed to sell on a "best efforts, all or
nothing", basis, a minimum of 190,000 Units and on a "best efforts" basis a
maximum of 300,000 Units.
The Underwriter has advised the Company that it proposes to offer the
Units to the public at the price of $6.00/Unit. The Units are offered by the
Underwriter subject to approval of certain legal matters by counsel to the
Underwriter and certain other conditions typical of such agreements specified in
Underwriting Agreement.
Subject to completion of the Minimum Offering, the Underwriter will
receive a sales commission equal to ten percent (10%) of the gross price paid by
purchasers of the Units. The Company has also agreed to pay the Underwriter a
Non-Accountable Expense Allowance equal to 3% of the aggregate sales price paid
by investors for the Units ($5,000 of which was previously advanced to the
Underwriter). Any amounts previously paid shall be credited against any amount
due.
There is no public trading market for the Company's Common Stock, and
there can be no assurance that a public market for the Units, Common Stock or
the Warrants will develop in the near future as a result of the Offering. The
initial public offering price of the Units and the terms of the Warrants
included therein have been determined by the Company and are not necessarily
related to the Company's asset value, net worth, earnings potential, or other
established criteria of value and should not be considered to be an indication
of the actual value of the Company. In making its determination, the Company
considered, among other things, the Company's lack of operating history, its
limited financial resources, its growth and profit potential, the amount of
dilution to investors in the Offering and the risk of investing in the Company.
Trading of the Units, Common Stock, and the Warrants will probably be conducted
in the "OTC Bulletin Board Service", or if unavailable, the over-the-counter
market in the so-called "pink sheets." As a result, an investor would likely
find it more difficult to dispose of or to obtain accurate quotations as to the
value of the Company's securities. While no assurance can be given, the Company
anticipates obtaining a listing on the OTC Bulletin Board Service. The Company
intends to apply for listing on The Nasdaq SmallCap Market when, and if, the
Company meets applicable listing requirements. The principal requirements for
listing on The Nasdaq SmallCap Market are $4,000,000 of total assets, $2,000,000
of total stockholders' equity, a minimum bid price of $3.00 per share and a
minimum of two market makers. To date, the Company has not contacted any
potential market makers for the Company's Common Stock. Following the completion
of the sale of the Minimum, the company intends to begin contacting potential
market makers in this regard. However, there can be no assurance that the
Company will be able to interest brokers or dealers in acting as market makers
for the Company's Common Stock. No assurance can be given as to when or whether
the Company's Common Stock will qualify for listing on The Nasdaq Small Cap
Market.
42
<PAGE>
The Underwriter has required that all officers and directors agree to a
lock-up of their securities for a period of not less than twelve (12) months in
order for the Underwriter to engage in the Offering as well as in order to
maintain a more orderly trading market. Such shares will have a legend placed on
the certificates to express the lock-up.
The Underwriter's Purchase Option
As part of the consideration to the Underwriter for its services in
connection with the public offering described herein, the Company has agreed to
issue and sell to the Underwriter, for $0.0001, Underwriter's (Class C) Warrants
to purchase such number of shares of Common Stock as shall equal 10% of the
number of shares of Common Stock being underwritten for account of the Company.
The Underwriter's (Class C) Warrants may not be transferred for one year
following the date of this Prospectus except to officers and partners of the
Underwriter. The Underwriter's Warrants shall be exercisable at any time during
a period of four (4) years commencing one year after the date of this Prospectus
(the "Warrant Exercise Term") at a price equaling 120% of the public offering
price of the Units.
During the Warrant Exercise Term, the holders of the Underwriter's
Warrants are given at nominal cost the opportunity to profit from a rise in the
market price of the Securities. To the extent that the Underwriter's Warrants
are exercised, dilution of the interests of the stockholders will occur. The
Company may find it more difficult to raise additional equity capital if it
should be needed for the business of the Company while the Underwriter's
Warrants are outstanding. At any time when the holders thereof might be expected
to exercise such Underwriter's Warrants, the Company would probably be able to
obtain additional equity capital on terms more favorable than those provided by
the Underwriter's Warrants. Any profit realized on the sale of securities
issuable upon the exercise of the Underwriter's Warrants may be deemed
additional underwriter compensation.
Registration Rights
In connection with the underwriting of the Company's public offering, the
Company has granted to the Underwriter certain "piggy back" and "demand"
registration rights. Pursuant to the terms of the Underwriting Agreement, the
Company agrees that, for a period of seven (7) years from the effective date of
the public offering of the Units, if the Company intends to file a Registration
Statement or Statements for the public sale of securities for cash (other than a
Form S-8, Form S-4 or comparable Registration Statement), it will notify all of
the holders of the Underwriter's Warrants and/or underlying securities and if so
requested it will include therein material to permit a public offering of the
securities underlying the Underwriter's Warrants at the expense of the Company
(excluding fees and expenses of the holder's counsel and any underwriting or
selling commissions). In addition, for a period of five (5) years from such
effective date, upon the written demand of holder(s) representing a majority of
the Underwriter's Warrants, the Company agrees, on one occasion, to promptly
register the underlying securities at the expense of the Company (excluding fees
and expenses of the holder's counsel and any underwriting or selling
commissions).
43
<PAGE>
Finder's Fees
No finder has been associated with the Company's public offering as
described herein; nor does the Company have any obligation to pay a finder's fee
to anyone in connection with any pending transaction involving the Company.
Indemnification
The Company has agreed to indemnify the Underwriter and others against
certain liabilities, including liabilities under the Securities Act. Insofar as
indemnification for liabilities arising under the Securities Act may be provided
to officers, directors or persons controlling the Company, the Company has been
informed that, in the opinion of the Commission, such indemnification is against
public policy and is therefore unenforceable. The Underwriter has agreed to
indemnify the Company, its directors, and each person who controls it within the
meaning of Section 15 of the Securities Act with respect to any statement in, or
omission from, the Registration Statement, the Prospectus or any amendment or
supplement thereto if such statement or omission was made in reliance upon
information furnished in writing to the Company by the Underwriter specifically
for or in connection with the preparation of the Registration Statement, the
Prospectus, or any such amendment or supplement thereto.
The forgoing summaries of certain terms and conditions of the Underwriting
Agreement state all the material elements of such documents. Copies of the
foregoing documents have been filed with the Commission as exhibits to the
Registration Statement of which this is hereby made to each such exhibit for a
detailed description of the provisions thereof which have been summarized above.
See "Available Information."
LEGAL MATTERS
Certain legal matters in connection with the issuance of the securities
offered hereby will be passed upon by Chambers Davidson, LLP, New York, New
York. Graeme A. Chambers, a partner in the firm owns 22,500 shares of the Common
Stock of the Company and 25,000 Class D Warrants. Chambers Davidson, LLP has
rendered legal services to the Company in connection with this Offering. See
"Management," "Principal Stockholders," and "Certain Transactions."
EXPERTS
The Financial Statements of the Company for the period from inception to
June 30, 1997, included herein and elsewhere in the Registration Statement, of
which this Prospectus forms a part, have been audited by Ronald R. Chadwick,
P.C., Aurora, Colorado, independent auditor, as set forth in his Report thereon
appearing elsewhere in the Registration Statement, and are included in reliance
upon such report given upon the authority of such firm as experts in accounting
and auditing.
44
<PAGE>
ADDITIONAL INFORMATION
The Company has filed with the Commission, a Registration Statement on
Form SB-2 (together with all amendments, schedules and exhibits thereto, the
"Registration Statement") under the Securities Act with respect to the Common
Stock offered hereby. This Prospectus, which constitutes a part of the
Registration Statement, does not contain all of the information set forth in the
Registration Statement, certain parts of which are omitted in accordance with
the rules and regulations of the Commission. For further information with
respect to the Company and the Common Stock offered hereby, reference is made to
the Registration Statement. Statements made in the Prospectus as to the contents
of any contract, agreement or other document are not necessarily complete; with
respect to each such contract, agreement or other document filed as an exhibit
to the Registration Statement, reference is made to such exhibit for a more
complete description of the matter involved, and each such statement shall be
deemed qualified in its entirety by such reference. The Registration Statement
and the exhibits thereto may be inspected, without charge, at the public
reference facilities maintained by the Commission at Room 1024, Judiciary Plaza,
450 Fifth Street, N.W., Washington, D.C. 20549, and at the Commission's regional
offices at Northwestern Atrium Center, 500 West Madison Street, Room 1400,
Chicago, IL 60661, and 7 World Trade Center, Suite 1300, New York, NY 10048.
Copies of such material can also be obtained from the Public Reference Section
of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, at
prescribed rates.
If the Company's Units becomes qualified, and is accepted for listing on
the Nasdaq SmallCap Market, copies of such reports and other information filed
with the Commission would also be filed with, and would be available for
inspection at the offices of, the National Association of Securities Dealers,
Inc., 1735 K Street, Washington, D.C. 20006.
In the event that the Units are not qualified, or accepted, for listing on
the Nasdaq SmallCap Market, it is possible that brokers or dealers may desire to
trade Units in the "OTC Bulletin Board Service". Under the rules of the
Commission, however, such trading would only be permitted if such brokers or
dealers have current public information about the Company as required by Rule
15c2-11, promulgated under the Exchange Act. In order to assist brokers or
dealers in complying with this requirement, the Company may provide to such
brokers or dealers copies of the Prospectus and/or the information about the
Company.
45
<PAGE>
Index to Financial Statements
Report of independent certified public accountants...........................F-1
Financial Statements:
Balance sheets.........................................................F-2
Statements of operations...............................................F-3
Statement of shareholders' equity......................................F-4
Statements of cash flows...............................................F-6
Notes to financial statements..........................................F-8
46
<PAGE>
ATLANTIS AQUAFARM , INC.
(A Development Stage Company)
FINANCIAL STATEMENTS
November 30, 1996
& June 30, 1997
<PAGE>
ATLANTIS AQUAFARM, INC.
(A Development Stage Company)
Financial Statements
TABLE OF CONTENTS
Page
INDEPENDENT AUDITOR'S REPORT ON
THE FINANCIAL STATEMENTS........................... F-1
FINANCIAL STATEMENTS
Balance sheet.....................................F-2
Statement of F-3
Statement of stockholders' .......................F-4
Statement of cash flows...........................F-6
Notes to financial statements.....................F-8
<PAGE>
INDEPENDENT AUDITOR'S REPORT
Board of Directors
Atlantis Aquafarm, Inc.
Melville, New York
I have audited the accompanying balance sheets of Atlantis Aquafarm, Inc. as of
November 30, 1996 and June 30, 1997 and the related statements of operations,
stockholders' equity and cash flows for the years ended November 30, 1995 and
November 30, 1996, and for the seven months ended June 30, 1997. These financial
statements are the responsibility of the Company's management. My responsibility
is to express an opinion on these financial statements based on my audit.
I conducted my audit in accordance with generally accepted auditing standards.
Those standards require that I plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit 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.
I believe that my audit provides a reasonable basis for my opinion.
In my opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of Atlantis Aquafarm, Inc. as of
November 30, 1996 and June 30, 1997 and the results of its operations and its
cash flows for the periods ended November 30, 1995, November 30, 1996 and June
30, 1997 in conformity with generally accepted accounting principles.
Aurora, Colorado
September 16, 1997 RONALD R. CHADWICK, P.C.
<PAGE>
ATLANTIS AQUAFARM, INC.
(A Development Stage Company)
BALANCE SHEET
November 30, June 30,
1996 1997
----------- ---------
ASSETS
Current assets
Cash $ 2,468 $ 361
Funds receivable - notes 10,000 -
------- -------
Total current assets 12,468 361
Deferred offering costs (Note 1) 9,600 75,716
Organization costs (net of accumulated
amortization of $102 and $122) 68 48
------- -------
Total Assets $22,136 $76,125
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable $ 9,180 $13,849
Related party notes payable (Note 2) 2,500 7,265
Other notes payable 10,000 8,794
Taxes payable 2,994 2,994
------- -------
Total current liabilities 24,674 32,902
------- -------
Total Liabilities 24,674 32,902
------- -------
Stockholders' equity (Note 5)
Preferred stock: $.01 par value,
1,000,000 shares authorized,
0 shares issued & outstanding - -
Common stock: $.001 par value,
5,000,000 shares authorized,
535,400 shares issued & outstanding - 535
Additional paid in capital 6,473 53,005
Deficit accumulated during
the development stage ( 9,011) ( 10,317)
------- -------
Stockholders' Equity (Deficit) ( 2,538) 43,223
------- -------
Total Liabilities And Stockholders' Equity $22,136 $76,125
======= =======
The accompanying notes are an integral part of the financial statements.
F-2
<PAGE>
ATLANTIS AQUAFARM, INC.
(A Development Stage Company)
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
Seven Months Dec. 17, 1993
Year Ended Year Ended Ended (inception) to
November 30, November 30, June 30, June 30,
1995 1996 1997 1997
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Sales $ - $ - $ - $ -
Operating expenses 4,338 2,868 1,306 10,317
------------- ------------- ------------- -------------
Income (loss) from operations ( 4,338) ( 2,868) ( 1,306) ( 10,317)
------------- ------------- ------------- -------------
Income (loss) before provision
for income taxes and
extraordinary items ( 4,338) ( 2,868) ( 1,306) ( 10,317)
Provision for income tax (Note 3) - - - -
------------- ------------- ------------- -------------
Net income (loss) $( 4,338) $( 2,868) $( 1,306) $( 10,317)
============= ============= ============= =============
Net income (loss) per share $( -) $( -) $( .13) $( 8.18)
============= ============= ============= =============
Weighted average number of
common shares outstanding - - 10,198 1,262
============= ============= ============= =============
*Less than $0.01 (one cent) per share
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-3
<PAGE>
ATLANTIS AQUAFARM, INC.
(A Development Stage Company)
STATEMENT OF STOCKHOLDERS' EQUITY
For the Period December 17, 1993 (inception)
to June 30, 1997
<TABLE>
<CAPTION>
COMMON STOCK Total
Paid in (Accumulated Stockholders'
Shares Amount Capital Deficit ) Equity (Deficit)
------ ------ --------- ------------ ----------------
<S> <C> <C> <C> <C> <C>
Balances at
Dec. 17, 1993 - $ - $ - $ - $ -
Paid in capital - - 820 - 820
Net gain (loss)
for the year ended
Nov. 30, 1994 - - - ( 1,805) ( 1,805)
------ ------ -------- ----------- ----------
Balances at
Nov. 30, 1994 - $ - $ 820 $( 1,805) $( 985)
Paid in capital - - 3,520 - 3,520
Net gain (loss)
for the year ended
Nov. 30, 1995 - - - ( 4,338) ( 4,338)
------ ------ -------- ----------- -----------
Balances at
Nov. 30, 1995 - $ - 4,340 $( 6,143) $( 1,803)
Paid in capital - - 2,133 - 2,133
Net gain (loss)
for the year ended
Nov. 30, 1996 - - - ( 2,868) ( 2,868)
------ ------ -------- ----------- -----------
Balances at
Nov. 30, 1996 - $ - $ 6,473 $( 9,011) $( 2,538)
</TABLE>
-Continued On Following Page-
The accompanying notes are an integral part of the financial statements.
F-4
<PAGE>
ATLANTIS AQUAFARM, INC.
(A Development Stage Company)
STATEMENT OF STOCKHOLDERS' EQUITY
For the Period December 17, 1993 (inception)
to June 30, 1997
-Continued From Previous Page-
<TABLE>
<CAPTION>
COMMON STOCK Total
Paid in (Accumulated Stockholders'
Shares Amount Capital Deficit ) Equity (Deficit)
------ ------ --------- ------------ ----------------
<S> <C> <C> <C> <C> <C>
Paid in capital - - 895 - 895
Conversion of paid in
capital to note payable,
June 30, 1997 - - (2,500) - (2,500)
Common stock issued
($.10 per share) on
June 27, 1997 for $4,868
in prior paid in capital,
$1,340 of converted
note payable, and
$47,332 in services 535,400 535 48,137 - 48,672
Net gain (loss)
for the period ended
June 30, 1997 - - - ( 1,306) (1,306)
------- -------- ------- ----------- -------------
Balances at
June 30, 1997 535,400 $ 535 $53,005 $( 10,317) $ 43,223
======= ======== ======= =========== =============
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-5
<PAGE>
ATLANTIS AQUAFARM, INC.
(A Development Stage Company)
STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
Seven Months Dec. 17, 1993
Year Ended Year Ended Ended (inception) to
November 30, November 30, June 30, June 30,
1995 1996 1997 1997
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Cash Flows From Operating Activities:
Net income (loss) $( 4,338) $( 2,868) $( 1,306) $( 10,317)
Adjustments to reconcile net
income (loss) to net cash
provided by (used for)
operating activities:
(Increase) in deferred
offering costs ( 800) ( 8,800) ( 18,784 ( 28,384)
Increase in amortization 34 34 20 122
(Increase) in organization costs - - - ( 170)
Increase in accounts payable 537 8,422 4,803 13,983
Increase in taxes payable 1,047 1,047 - 2,994
------------- ------------ ------------- -------------
Net cash provided by (used
for) operating activities ( 3,520) ( 2,165) ( 15,267) ( 21,772)
------------- ------------ ------------- -------------
</TABLE>
-Continued On Following Page-
The accompanying notes are an integral part of the financial statements.
F-6
<PAGE>
ATLANTIS AQUAFARM, INC.
(A Development Stage Company)
STATEMENT OF CASH FLOWS
-Continued From Previous Page-
<TABLE>
<CAPTION>
Seven Months Dec. 17, 1993
Year Ended Year Ended Ended (inception) to
November 30, November 30, June 30, June 30,
1995 1996 1997 1997
------------ ------------ ------------ -------------
<S> <C> <C> <C> <C>
Cash Flows From Financing Activities:
Increase in notes payable - 2,500 $ 12,265 17,265
Increase in paid in capital 3,520 2,133 $ 895 4,868
----------- ---------- ------------ ---------
Net cash provided by (used for)
financing activities 3,520 4,633 13,160 22,133
----------- ---------- ------------ ---------
Net Increase (Decrease) In Cash - 2,468 ( 2,107) 361
Cash At The Beginning Of The Period - - 2,468 -
----------- ---------- ------------ ---------
Cash At The End Of The Period $ - $ 2,468 $ 361 $ 361
=========== ========== ============ =========
</TABLE>
Schedule Of Non-Cash Investing And Financing Activities:
During the year ended November 30, 1996, the Company issued $10,000 in
notes payable for which no cash was received until the following year.
During the seven months ended June 30, 1997 the Company:
1) converted $134 in interest payable to notes payable,
2) converted $2,500, classed as paid in capital in prior years, into a
note payable,
3) issued 535,400 shares of common stock at $.10 per share for $47,332
in services, $4,868 in prior capital contributions, and $1,340 in the
partial conversion of a note payable to capital.
Supplemental Disclosure
Cash paid from inception (December 17, 1993) to June 30, 1997 for
interest and income taxes: None.
The accompanying notes are an integral part of the financial statements.
F-7
<PAGE>
ATLANTIS AQUAFARM, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
NOTE 1. ORGANIZATION, OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES:
Atlantis Aquafarm, Inc. ("Atlantis", the "Company"), was incorporated in the
state of New York on December 17, 1993. The Company was formed to engage in the
business of commercial farming, production and marketing of restaurant quality
European bass fish. Management plans call for the raising and packing of
European sea bass in large commercial quantities for sale to the wholesale
marketplace. The Company has not commenced planned principle operations and is a
development stage company.
Income tax
Deferred taxes are provided on a liability method whereby deferred tax assets
are recognized for deductible temporary differences and operating loss
carryforwards and deferred tax liabilities are recognized for taxable temporary
differences. Temporary differences are the differences between the reported
amounts of assets and liabilities and their tax bases. Deferred tax assets are
reduced by a valuation allowance when, in the opinion of management, it is more
likely than not that some portion or all of the deferred tax assets will not be
realized. Deferred tax assets and liabilities are adjusted for the effects of
changes in tax laws and rates on the date of enactment.
Cash and cash equivalents
The Company considers all highly liquid investments with an original maturity of
three months or less as cash equivalents.
Accounting year
The Company employs a fiscal year which ends November 30.
Use of estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenue and expenses during the reporting period.
Actual results could differ from those estimates.
F-8
<PAGE>
ATLANTIS AQUAFARM, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS - Continued
NOTE 1. ORGANIZATION, OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES (Continued):
Net income (loss) per share
The net income (loss) per share is computed by dividing the net income (loss) by
the weighted average number of shares of common outstanding. Warrants, stock
options, and common stock issuable upon conversion of the Company's preferred
stock are not included in the computation if the effect of such inclusion would
be anti-dilutive and would increase the earnings or decrease loss per share.
Stock offering costs
Expenditures incident to the public stock offering which consist primarily of
legal, accounting, commissions and printing expenses are capitalized as incurred
and will be charged against the proceeds of the public offering if said offering
is successful, and charged off as an expense if the offering is not successful.
Organization costs
Organization costs are costs associated with the formation of the Company. These
costs are capitalized and amortized over a 5 year period on a straight line
basis.
NOTE 2. RELATED PARTY TRANSACTIONS
Two relatives of an officer have loaned the Company $7,265 on two, one year
notes, at 10% interest (Note 4). The same parties have options to purchase the
Company's common shares (Note 5).
On June 27, 1997 the Company issued 535,400 shares to officers, directors and
others for $.10 per share.
F-9
<PAGE>
ATLANTIS AQUAFARM, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS - Continued
NOTE 3. INCOME TAXES
Deferred income taxes arise from the temporary differences between financial
statement and income tax recognition of net operating losses. These loss
carryovers are limited under the Internal Revenue Code should a significant
change in ownership occur.
At June 30, 1997 the Company had approximately $9,986 of unused federal net
operating loss carryforwards, which begin to expire in the year 2009.
A deferred tax asset, arising from the net operating loss carryover, of
approximately $1,498 has been offset by a 100% valuation allowance.
NOTE 4. NOTES PAYABLE
At November 30, 1996 and June 30, 1997 the Company had the following notes
payable outstanding:
Balances at Balances at
November 30, June 30,
1997 1997
----------- -----------
Related party notes payable,
unsecured, interest at 10% per annum,
maturing September 1, 1997 $ 2,500 $ 7,265
Two notes payable, unsecured,
interest at 10% per annum,
each note maturing September 1, 1997 10,000 8,794
-------- --------
Total $ 12,500 $ 16,059
======== ========
The schedule of maturities by fiscal year for all notes outstanding is as
follows:
November 30, 1997 $ 16,059
========
F-10
<PAGE>
ATLANTIS AQUAFARM, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS - Continued
NOTE 5. STOCKHOLDERS' EQUITY
Common stock
The Company as of November 30, 1996 and June 30, 1997 had 5,000,000 shares of
authorized common stock, $.001 par value, with 0 shares issued and outstanding
at November 30, 1996 and 535,400 shares issued and outstanding at June 30, 1997.
On June 27, 1997 the Company issued 535,400 shares for $.10 per share to
officers, directors and others.
Preferred stock
The Company has 1,000,000 shares of authorized preferred stock, par value $.01,
issuable from time to time in different series with rights and privileges to be
determined by the Board of Directors. No specific series of preferred stock have
yet been established.
Stock options
Two relatives of an officer have options to purchase a number of the Company's
common shares equal to $14,530 divided by the issue price of such stock in
connection with any initial private or public offering of the Company's common
stock, at an exercise price of $.50 per share, for a period commencing on the
completion of the minimum funding requirement of such offering and ending 90
days thereafter. If no offering is completed within 12 months from September 1,
1996, the options shall expire.
The Company has granted two other stock options, giving the holder of one an
option to purchase a number of the Company's common shares equal to $10,000
divided by the issue price of such stock in connection with any initial private
or public offering of the Company's common stock, at an exercise price of $.50
per share, for a period commencing on the completion of the minimum funding
requirement of such offering and ending 90 days thereafter, and the holder of
the other an option to purchase a number of the Company's common shares equal to
$25,000 divided by the issue price of such stock in connection with any initial
private or public offering of the Company's common stock, at an exercise price
of $.50 per share, for a period commencing on the completion of the minimum
funding requirement of such offering and ending 90 days thereafter. If no
offering is completed within 12 months from September 1, 1996, the options shall
expire.
F-11
<PAGE>
ATLANTIS AQUAFARM, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS - Continued
NOTE 6. PROPOSED PUBLIC OFFERING
The Company plans to raise capital through a public stock offering. The offering
calls for the sale to the public of a minimum of 190,000 units and a maximum of
300,000 units on a best efforts basis, at a price of $6.00 per unit. Each unit
consists of 1 share of common stock and 2 warrants.
F-12
<PAGE>
No dealer, salesman or other person has been authorized to give any
information or to make any representations in connection with this Offering
other than those contained in this Prospectus, and, if given or made, such
information or representations must not be relied upon as having been authorized
by the Company. This Prospectus does not constitute an offer to sell, or a
solicitation of an offer to buy, any securities offered hereby by anyone in any
authorized or in which the person making such offer or solicitation is not
qualified to do so or to anyone to whom it is unlawful to make such offer or
solicitation. Neither the delivery of this Prospectus nor any sale made
hereunder shall, under any circumstances, create any implication that the
information contained herein is correct as of any time subsequent to the date of
this Prospectus.
---------------------
TABLE OF CONTENTS
Page
Prospectus Summary . . . . . . . . . . . . . . . . . . . 5
The Offering . . . . . . . . . . . . . . . . . . . . . . 7
Investment Suitability . . . . . . . . . . . . . . . . . 8
Risk Factors . . . . . . . . . . . . . . . . . . . . . . 9
Special Note Regarding
Forward-looking Statements . . . . . . . . . . . . . 15
Use of Proceeds . . . . . . . . . . . . . . . . . . . . 16
Plan of Operation . . . . . . . . . . . . . . . . . . . 18
Dividend Policy . . . . . . . . . . . . . . . . . . . . 18
Dilution . . . . . . . . . . . . . . . . . . . . . . . 19
Capitalization . . . . . . . . . . . . . . . . . . . . 21
Selected Financial and Operating Data . . . . . . . . . 22
The Company . . . . . . . . . . . . . . . . . . . . . . 23
Management . . . . . . . . . . . . . . . . . . . . . . .31
Certain Transactions . . . . . . . . . . . . . . . . . .34
Principal Stockhold. . . . . . . . . . . . . . . . . .. 35
Description of Capital Stock . . . . . . . . . . . . . .36
Share Eligible For Future Sale . . . . . . . . . . . . .39
Underwriting . . . . . . . . . . . . . . . . . . . . . .41
Legal Matters . . . . . . . . . . . . . . . . . . . . . 43
Experts . . . . . . . . . . . . . . . . . . . . . . . . 43
Additional Information . . . . . . . . . . . . . . . . .44
--------------------
Until _______, 1997 (25 days from the date of this Prospectus), all dealers
effecting transactions in the Common Stock, 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 when acting as underwriter and
with respect to their unsold allotments or subscriptions.
ATLANTIS AQUAFARM, INC.
Minimum Offering of 190,000 Units and
Maximum Offering of 300,000 Units
Each Unit Consisting of One Share of
Common Stock and One Class A Warrant
_________________
PROSPECTUS
_________________
Boe & Company, Inc.
<PAGE>
PART II
ITEM 24. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Company's Certificate of Incorporation and By-Laws contain provisions
exculpating the Company's directors from liability to the Company's shareholders
for certain actions taken or omitted by them and indemnifying the Company's
officers and directors against judgments, fines, amount paid in settlement and
reasonable attorneys' fees incurred in the defense of certain actions and
proceedings to the extent permitted under New York law, including any actions
and proceedings related to the sale of the Securities offered hereby.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors or officers pursuant to the foregoing, or
otherwise, the Company has been informed that in the opinion of Securities and
Exchange Commission, such indemnification is against public policy as expressed
in the Securities Act and is, therefore, unenforceable.
ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
Expenses of the Company in connection with the issuance and distribution
of the Securities being registered, other than underwriting discounts and
commissions, are estimated as follows:
Registration Fee ......................................$_____
Nasdaq Fee ............................................._____
NASD, Inc. Fee ........................................._____
Attorneys' Fees and Expenses ..........................35,000
Accountants' Fees Expenses .............................6,000
Printing and Engraving .................................6,000
Blue Sky Expenses .....................................10,000
Transfer and Warrant Agent's Fees and Expenses ...........500
Underwriter's Expense Allowance ........................5,000
Escrow Fees...............................................500
Miscellaneous ..........................................=====
Total .......................................$75,000
ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES
During the three years preceding the filing of this Registration
Statement, the Company sold the following securities in transactions that were
not registered under the Securities Act (the numbers of securities issued are
adjusted to give effect to the Pre-Offering Transactions (as defined in the
Prospectuses included in this Registration Statement)):
(1) In October, 1996 the Company sold 535,66400 shares of common stock to
4 officers and directors for $6,590 in cash and $42,575 in services rendered.
II-1
<PAGE>
(2) In November, 1996 the Company issued promissory notes with options to
acquire an aggregate of 2,500 shares of common stock in the Company for $7,500
to two individuals who are relatives of the president of the Company.
(3) In November, 1996, the Company raised further capital by issuing two
further promissory notes with options to acquire an aggregate of 3,333 shares
common stock in the Company to 2 individuals for $5,000 each. One of these
persons James Dimino is an officer and director of the Company. All of these
notes accrue interest at 10% and are to be repaid from the proceeds of the
Company underwriting. The holders have an option to purchase restricted common
stock at $0.50 a share. These options expire 90 days following the completion of
the Minimum Offering.
(4) On October 15, 1996 the Company also issued to Graeme Chambers, a
partner in its general counsel law firm and an officer and director of the
Company, 25,000 of the Company's Class D warrants in return for services
rendered to the Company during its inception. Each Class D Warrant entitles the
holder to acquire one share of common stock in the Company at a purchase price
of $6.00 per share. The class D Warrants have pre-emptive registration rights.
ITEM 27. EXHIBITS
Exhibit No.
1. - Underwriting Agreement
3.1.1 - Certificate of Incorporation of the
Company
3.1.2 - Certificate of Amendment of the
Certificate of Incorporation of the
Company dated 2.14.95
3.1.3 - Certificate of Amendment of the
Certificate of Incorporation of the
Company dated 3.12.97
3.2 - By-laws of the Company
4.1 - Proposed form of Warrant Agreement
between the Company and the
Underwriter*
4.2 - Proposed form of Warrant Agreement between the
Company and Graeme A. Chambers*
4.3 - 10% Promissory Note and Stock Option
in the principal amount of $2,000
issued to Daniel Trimble
4.4 - 10% Promissory Note and Stock Option
in the principal amount of $3,794
issued to James Dimino
4.5 - 10% Promissory Note and Stock Option
in the principal amount of $4,765
issued to June Trimble
4.6 - 10% Promissory Note and Stock Option
in the principal amount of $5,000
issued to Bennett Helfgott
4.7 - Subscription Agreement from Patrick Trimble
4.8 - Subscription Agreement from Eric
Popkoff
4.9 - Subscription Agreement from Govind
Srivistava
4.10 - Subscription Agreement from Graeme
Chambers
4.11 - Subscription Agreement from James
Dimino
5. - Opinion of Chambers Davidson LLP re: legality*
10.1 - Employment Agreement between the Company and
Patrick Trimble
II-2
<PAGE>
10.2 - Employment Agreement between the Company
and Eric Popkoff
10.3 - Employment Agreement between the
Company and Govind Srivistava
23.1 - Consent of Chambers Davidson
(included in Exhibit 5 )
23.2 - Consent of Ronald R. Chadwick, P.C.,
CPA
24 - Power of Attorney (see p. II-5)
- -------------------------
* to be filed by amendment
ITEM 28. UNDERTAKINGS
The Company hereby undertakes:
(a) That it will:
(1) 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;
(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, 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 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.
(b) That it will provide to the Representative at the closing specified in
the Underwriting Agreement certificates in such denominations and registered in
such names as required by the Representative to permit prompt delivery to each
purchases.
(c) In the event that a claim for indemnification against liabilities
under the Securities Act (other than the payment by the Company 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.
(d) That it will:
II-3
<PAGE>
(1) For determining any liability under the Securities Act, treat
the information omitted from the form of prospectus filed as part of this
Registration Statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the Company under 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.
(2) For determining any liability under the Securities Act, treat
each post-effective amendment that contains a form of prospectus as a new
registration statement for the Securities offered in the registration statement,
and that offering of the Securities at the time as the initial bona fide
offering of those Securities.
II-4
<PAGE>
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, the
Company certifies that it has reasonable grounds to believe that it meets all
the requirements for filing on Form SB-2 and has authorized this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of New York, State of New York, on July 5, 1995.
ATLANTIS AQUAFARM, INC.
By: /s/Patrick D. Trimble
--------------------------
Patrick D. Trimble
President, Director
Known all men by these presents, that each person whose signature appears
below constitutes and appoints Patrick D. Trimble and Eric Popkoff (with full
powers to each of them to act alone) as his true and lawful attorney-in-fact and
agent, with full power and substitution, for him and in his name, place and
stead, in any and all capacities to sign any or all amendments or post-effective
amendments to this Registration Statement, and to file the same, with all
exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, to sign any and all applications,
registration statements, notices or other documents necessary or advisable to
comply with the applicable state securities laws, and to file the same, together
with all other documents in connection therewith, with the appropriate state
securities authorities, granting unto said attorneys-in-fact appropriate state
securities authorities, granting unto said attorneys-in-fact and agents or any
of the, or their or his substitute or substitutes, full power and authority to
do and perform each and every act and thing requisition and necessary to be done
in and about the premises, as fully to all intents and purposes as he might or
could do in person, thereby ratifying and confirming all that said
attorney-in-fact and agents or any of them, or their or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
In accordance with 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 stated.
Signature Title Date
/s/Patrick D. Trimble President, Director
- ----------------------
Patrick D. Trimble
/s/Govind Srivastava Treasurer, Director
- ----------------------
Govind Srivastava
/s/Eric Popkoff Vice-President -
- ---------------------- Corporate Development,
Eric Popkoff Director
/s/Graeme Chambers Secretary, Director
- ----------------------
Graeme Chambers
/s/James Dimino Director
- ----------------------
James Dimino
II-5
Underwriting Agreement
Mr. Patrick Trimble
Atlantis Aquafarm, Inc.
175 27th Street
Brooklyn, NY 11032
Dear Mr. Trimble:
This Underwriting Agreement is between Boe & Company, Inc., 13791 East
Rice Place, Suite 142, Aurora, Colorado 80015 (the "Underwriter") and Atlantis
Aquafarm, Inc., 175 27th Street, Brooklyn, New York, (the "Company").
1. Registration Statement. We will agree on a timetable for the filing of
a Registration Statement on Form SB-2, amendments, blue sky filings, and all
other steps necessary to make the proposed public Offering effective on a date
acceptable to the Underwriter. The Company will carefully prepare with the
Underwriter, a Registration Statement with exhibits covering the Units proposed
to be offered. The Registration Statement will be filed with the Securities and
Exchange Commission ("SEC"). The Company shall seek counsel qualified and
experienced in the preparation of filings under the Securities Act to prepare
the Registration Statement. All financial statements contained in the
Registration Statement, as amended from time to time, will be in the form and
content satisfactory to the Underwriter and to the Underwriter's counsel, and
will have been prepared and reported on by independent certified public
accountants.
The proposed Registration Statements will be submitted to the Underwriter
as soon as possible and at least 15 days before the Company proposes to file
such Registration Statement with the SEC. The content of all comment letters
shall be supplied to the Underwriter upon request. All Amendments to the
Registration Statement shall be available for review by the Underwriter prior to
the time they are filed with the SEC.
2. Public Offering. The Company proposes to offer through the Underwriter
and/or underwriting group selected by the Underwriter up to 220,000 Units,
consisting of One Share of Common Stock, no par value ("Share") and One Class A
Warrant ("Class A Warrant"), which entitles the holder to purchase one share of
Common Stock, and One Class B Warrant ("Class B Warrant"), which entitles the
holder to purchase one share of Common Stock. The Underwriter shall not have an
over-allotment option. The Underwriter reserves the right to re-price the issue
in the light of conditions existing at the time the Offering becomes effective.
The Underwriter contemplates underwriting the Offering on a best efforts basis.
3. Underwriter's Counsel. Underwriter's counsel, if any, shall make all
required filings with the National Association of Securities Dealers, Inc. All
corporate proceedings undertaken by the Company and other legal matters which
relate to the public Offering shall be satisfactory in all material respects to
counsel for the Underwriter, if any.
<PAGE>
4. Warrants and Options. Warrants and options issued and to be issued by
the Company within a specified time period shall be acceptable to the
Underwriter.
5. Future Sales. It is understood that during the period of the proposed
Offering and for one year from the date of the definitive Prospectus, the
Company will not sell any equity or long term debt securities without the
Underwriter's prior written consent which shall not be unreasonably withheld.
Prior to the effective date of the Registration Statement, the Company will
cause each of its officers and directors and shareholders who own over 5% of the
Company's shares outstanding prior to the effective date of the Registration
Statement to enter into an undertaking such that he will not sell any shares
owned directly or indirectly by him to the public for 12 months from the date of
the definitive Prospectus used in the Offering without the Underwriter's prior
written consent.
6. Reciprocal Indemnification. It is understood that the proposed
Underwriting Agreement will provide for reciprocal indemnification between the
Company and the Underwriter as to certain liabilities, including liabilities
under the Securities Act of 1933, as amended.
7. Information Available. It is understood and agreed between the Company
and the Underwriter that all documents and other information relating to the
Company's affairs will be made available upon request to the Underwriter and
it's counsel, if any. Included therein are all Articles of Incorporation and
Amendments, By-Laws and Amendments, Minutes of the Company's Incorporators,
Director's and Shareholders Meetings, all financial statements and correct
copies of any material contracts, leases, and agreements, to which the Company
is a party. The Company will provide the Underwriter upon request, with
unaudited monthly financial data concerning the Company from now until
termination of the Offering.
8. Properties, Capital Structure, Dilution, Employee Benefit Plans. The
properties owned or held under option by the Company, the capital structure of
the Company immediately proceeding the public Offering, the contemplated
dilution to the public investor, and the Company's business plan shall be
acceptable to the Underwriter. It is contemplated that the Common Stock held by
the public upon completion of the maximum amount of the public offering will
represent at least 39% of the outstanding shares. Shares underlying options and
warrants, other than warrants held by the Underwriter, shall be deemed
outstanding for this purpose. Any employee incentive plan, of whatever nature,
presently contemplated, shall be fully disclosed to the Underwriter and subject
to the approval of the Underwriter.
9. Blue-Sky Laws. It is understood and agreed between the Company and the
Underwriter that it shall be the obligation of the Company to qualify, at its
sole expense, such states as may be reasonably designated between the Company
and the Underwriter. The officers, directors and promoters of the Company will
comply with applicable Blue-Sky requirements, including those pertaining to the
escrow of shares, providing such escrow shall in no event extend beyond a period
of two years.
2.
<PAGE>
10. Issue, Sale and Delivery of Units. The Company hereby employs the
Underwriter, as its exclusive agent to sell for the Company's account the Units,
on a cash basis only, at the price of $6.00 per Unit. The Underwriter hereby
agrees to use its best efforts on an "all-or-none" basis, as agent for the
Company, to sell the first 150,000 Units subject to the terms, provisions, and
conditions set forth in this Agreement and agrees to use its "best efforts" as
agent for the Company, to sell the remaining 70,000 Units offered to the public.
It is understood between the parties hereto that there is no firm commitment by
the Underwriter to purchase any or all of the Units, and the Underwriter agrees
that it will exert its best efforts to sell the Units covered by the
Registration Statement in accordance with all of the provisions of the Act.
The Underwriter shall have the right to associate with other dealers as it
may determine. The Underwriter shall have the right to grant to such persons
such concessions out of the commissions to be received by the Underwriter as the
Underwriter may determine.
11. Underwriter Expense Allowance. It is understood that the Company shall
reimburse the Underwriter for its expenses in the amount of three percent (3%)
of which a non-refundable payment of $5,000.00 has been paid.
12. Warrants. Upon termination of the Offering, the Company will sell to
the Underwriter a maximum of 22,000 Common Stock Purchase Warrants, for a
purchase price of $220.00, which entitles the Underwriter to purchase one share
of the Company's Common Stock for each ten shares of the Company's Common Stock
which have been sold in the Offering. The Warrants shall be non-exercisable for
a period of twelve (12) months following the date of the definitive Prospectus,
unless the Company merges, the Warrants may be exercised immediately prior to
such action. The Warrants shall contain anti-dilution provisions acceptable to
the Underwriter. The Warrants will be exercisable for a period of five (5)
years, such period to commence twelve (12) months after the date of the
definitive Prospectus used in this Offering and if the Warrants are not
exercised during this term, they shall by their terms automatically expire. The
exercise price of the Warrants shall be 120% of the per share Offering price.
The shares underlying said Warrant will be fully registered in the initial
Registration Statement to which this offering is a part of The Warrants will not
be transferred to anyone for a period of twelve months after the date of the
definitive Prospectus, except that they may be assigned in whole or in part to
or among the officers of the Underwriter, to participating dealers, and their
officers and partners with whom the Underwriter associates in the offering, by
operation of law as a result of the death of any transferee to whom the warrants
may be transferred, and to any successor to the business of the Underwriter.
13. Right of First Refusal. Subject to compliance by the Underwriter with
the terms of the Underwriting Agreement, the Company and the Underwriter
understand and agree that for a period of three (3) years from the date of the
definitive Prospectus the Underwriter shall have a preferential right to
purchase for its account or to sell for the account of the Company any equity or
debt securities with respect to which the Company may seek a public offering or
private offering for cash.
3.
<PAGE>
Specifically excluded from the Underwriter's right of first refusal are public
or private offerings of the Company's shares in exchange for properties, assets
or stock of other individuals or corporations. The Company will consult the
Underwriter with regard to any such covered offering for cash prior to
consulting any other prospective underwriter and will offer the Underwriter the
opportunity to purchase or sell any such securities on terms not less favorable
to the Company than it can secure elsewhere. The Underwriter shall have thirty
(30) days in which to accept such offer. The Company shall not be required to
consult the Underwriter concerning any borrowing from banks and institutional
lenders or concerning financing under any equipment leasing or similar
arrangements.
14. Expenses. The Company agrees that it is to pay (1) All fees and
expenses of any counsel whom it may employ to represent it separately in
connection with or on account of the Offering; (2) All fees and costs, including
legal and accounting fees, incurred in connection with preparation of the
Registration Statement and all amendments thereto; (3) All costs of issuing and
delivering the subject Units; (4) All costs of printing and delivering to the
Underwriter such number of copies of the Prospectus the Underwriter may
reasonably require; (5) Except as set forth herein, all fees and costs,
including legal and accounting fees, incurred in connection with registration or
qualification of all or any part of the securities offered by the Prospectus, or
attempted registration or qualification of the same, for sale in various states,
together with all mailings, telephone, travel, clerical and other office costs
incurred or to be incurred by the Company in connection with the Offering which
is subject to this Agreement. The Underwriter agrees that it is to pay (1) All
fees and expense of any legal counsel whom it may employ to represent it
separately in connection with or on account of the Offering; (2) All fees and
expenses incurred in qualifying your organization as a Broker/Dealer with the
Securities and Exchange Commission and the securities departments or commissions
of the various states in which the Offering is made and such registration is
required; (3) All advertising, mailing, telephone, travel, clerical and other
office costs incurred or to be incurred by the Underwriter or by Underwriter's
sales personnel in connection with the Offering which is subject to this
Agreement.
15. Representation of the Company. The Company represents to the
Underwriter that no person has acted as a finder or investment advisor in
connection with the transactions contemplated herein and will indemnify the
Underwriter with respect to any claim for finder's fee in connection herewith.
The Company represents and warrants that no officer, director shareholder of the
Company is a member of the NASD, an employee or associated member of the NASD.
The Company represents that it has separately disclosed to the Underwriter all
potential conflicts of interest involving officers, directors, principals,
shareholders, and/or employees.
16. 1934 Act, Quarterly Reports to Shareholders, Quotation on NASDAQ,
Listing in Moody's, Transfer Agent. The Company agrees that for at least five
years after its Units are registered under Securities Exchange Act of 1934, the
Company will issue to its shareholders within 45 days after the end of the
Company's first three fiscal quarters, quarterly reports containing unaudited
financial information. The Company, upon request of the Underwriter, will
promptly upon becoming eligible apply for quotation on the NASD Automatic
Quotation System.
4.
<PAGE>
The Company will as soon as possible after the completion of the Offering apply
for a listing in Standard and Poor's Corporate Record and maintain such listing
on a current basis, The Company shall obtain a CUSIP number for its certificates
and shall engage a transfer agent.
17. Binding Agreement. This Agreement shall be binding upon and inure
solely to the benefit of the parties hereto and their representatives,
successors, assigns, and no other person shall acquire or have any right under
or by virtue of this Agreement. No purchaser of the Units shall be construed as
a successor or assignee by reason merely of such purchase. If any event occurs
during the term of this Agreement changing or modifying the facts as set forth
in any such representation or warranty, the party to whom such representation or
warranty shall be made, will immediately advised thereof by the other party.
Notices provided for herein may be given by mail, postage prepaid or
personal delivery. If to the Company, to Atlantis Aquafarm Inc., 175 27th
Street, Brooklyn, New York 11032. Notices to the Underwriter shall be addressed
to Boe & Company, Inc., 13791 E. Rice Pl., #142, Aurora, Colorado 80015.
The undersigned represents that this Agreement has been duly authorized by
the Company and that he has authority from the Board of Directors to sign the
Agreement.
If the foregoing correctly sets forth our understanding, please indicate
your acceptance thereof in the spaces provided below for that purpose and return
to us a signed counterpart hereof, whereupon this letter and your acceptance
shall constitute a binding agreement between us.
Dated this 22 day of October,1997.
Very Truly Yours,
BY AUTHORITY OF THE BOARD OF DIRECTORS
Atlantis Aquafarm, Inc.
By:/s/Patrick Trimble
-------------------
Patrick Trimble, President
Boe & Company, Inc.
By:/s/Jeffrey Boe
-------------------
Jeffrey Boe, President
5.
STATEMENT OF
SOLE INCORPORATOR
OF
ATLANTIS AQUAFARM, INC.
The Certificate of Incorporation of this corporation having been filed in
the office of the Secretary of State, the undersigned, being the sole
incorporator named in said certificate, does hereby state that the following
actions were taken on this day for the purpose of organizing this corporation:
1. The following persons were elected as directors to hold office until the
first annual meeting of the stockholders or until their respective
successors are elected and qualified:
Patrick Trimble
Graeme Chambers
2. By-laws for the regulation of the affairs of the corporation were adopted
by the undersigned incorporator and were ordered and inserted in the minute
book immediately following the copy of the Certificate of Incorporation and
before this instrument.
3. The Board of Directors was authorized, in its discretion, to issue the
shares of the capital stock of this corporation to the full amount or
number of shares authorized by the Certificate of Incorporation, in such
amounts and for such considerations as from time to time shall be
determined by the Board of Directors and as may be permitted by law.
Dated: December 17, 1993
/s/ Norma Rodriguez
Norma Rodriguez, Sole Incorporator
<PAGE>
N. Y. S. DEPARTMENT OF STATE 162 WASHINGTON AVENUE
DIVISION OF CORPORATIONS AND STATE RECORDS ALBANY, NY 12231
FILING RECEIPT
CORPORATION NAME: ATLANTIS AQUAFARM, INC.
DOCUMENT TYPE: INCORPORATION (DOM. BUSINESS) COUNTY: KING
SERVICE COMPANY: NATIONAL CORPORATED RESEARCH LTD.
FILED: 12/17/1993 DURATION: PERPETUAL CASH#: 931217000017 FILM#: 931217000017
ADDRESS FOR PROCESS
THE CORPORATION
773 SUNRISE HIGHWAY
LYNBROOK, NY 11563
REGISTERED AGENT
STOCK: 200 NPV
FILER FEES 170.00 PAYMENTS 170.00
- ----- ---- --------
CHAMBERS & DAVIDSON FILING: 125.00 CASH: 0.00
773 SUNRISE HIGHWAY TAX: 10.00 CHECK: 0.00
LYNBROOK, NY 11563 CERT: 0.00 BILLED: 170.00
COPIES: 10.00
HANDLING: 25.00
REFUND: 0.00
<PAGE>
Certificate of Incorporation
Of
Atlantis Aquafarm, Inc.
Under Section 402 of the business Corporation Law
of the State of New York
Filed: Dec 17 827am '93
Filed By:
Chambers & Davidson
773 Sunrise Highway
Lynbrook, NY 11563
<PAGE>
Certificate of Incorporation
Of
Atlantis Aquafarm, Inc.
Under Section 402 of the business Corporation Law
of the State of New York
The undersigned, being of the age of eighteen years or over, for the
purpose of forming a corporation pursuant to Section 402 of the Business
Corporation Law of the State of New York does hereby certify:
First: The name of the Corporation (hereinafter referred to as the
"Corporation") shall be Atlantis Aquafarm, Inc.
Second: The purpose for which the corporation is formed is to engage in any
lawful act or activity for which a corporation may be organized under the
Business Corporation Law, provided that the Corporation is not formed to engage
in any act or activity which requires the consent or approval of any state
official, department, board, agency or other body, without such consent or
approval first being obtained.
Third: The office of the Corporation shall be located in the County of
Kings, State of New York.
Fourth: The aggregate number of shares which the Corporation shall have
authority to issue is two hundred (200) shares, each with no par value.
Fifth: The Secretary of State is designated as the agent of the Corporation
upon whom process against the Corporation may be served. The post office address
to which the Secretary of State shall mail a copy of any process against the
Corporation served upon him is: 773 Sunrise Highway,
Lynbrook, New York 11563.
<PAGE>
Sixth: No director of the corporation shall be personally liable to the
Corporation or its shareholders for damages for any breach of duty in such
capacity, provided that nothing contained in this Article shall eliminate or
limit the liability of any director if a judgement or other final adjudication
adverse to him establishes that his acts or omissions were in bad faith or
involved intentional misconduct or a knowing violation of law to which he was
not legally entitled or that his acts violated Section 719 of the New York
Business Corporation Law.
Seventh: The Corporation shall indemnify any and all directors and officers
to the fullest extent permitted bye the New York Business Corporation Law.
In Witness Whereof, the undersigned has signed this Certificate and does
hereby affirm the statements contained therein as true under the penalty of
perjury this 16th day of December, 1993
/s/ Norma Rodriguez
Norma Rodriguez, Sole Incorporator
National Corporate Research, Ltd.
225 West 34th Street
New York, N.Y. 10122-0032
<PAGE>
State of New York ss:
Department of State
I hereby certify that I have compared the annexed copy with the original
document filed by the Department of State and that the same is a correct
transcript of said original.
Witness my hand and seal of the Department of State on DEC 17 1993
Secretary of State
CERTIFICATE OF AMENDMENT
OF THE
CERTIFICATE OF INCORPORATION
OF
ATLANTIS AQUAFARM, INC.
(UNDER SECTION 805 OF THE BUSINESS CORPORATION LAW)
The undersigned, being the President and Secretary of Atlantis Aquafarm,
Inc., hereby certify that:
FIRST: The name under which it was formed is Atlantis Aquafarm,
Inc.
SECOND: The certificate of incorporation of the corporation was
filed with the Department of State on December, 17, 1993.
<PAGE>
THIRD: Article FOURTH of the certificate of incorporation of the
corporation dealing with authorized shares and the par value thereof, is hereby
amended to (a) increase and re-designate the aggregate number of shares which
the corporation shall have the authority to issue from two hundred (200) shares,
all of which are common shares without par value, to 25,000,000 shares,
consisting of 24,000,000 shares, each with a par value of one cent ($.01) and
1,000,000 shares to be re-designated as preferred shares, each with a par value
of one cent ($.01). None of the two hundred (200) common shares without par
value currently authorized have been issued.
To effect the foregoing Article FOURTH of the certificate of incorporation
is hereby amended to read in full as follows:
"FOURTH: The aggregate number of shares which the corporation shall
have the authority to issue is 25,000,000 shares consisting of 24,000,000
shares, each with a par value of one cent ($.01) and 1,000,000 preferred
shares, each with a par value of one cent ($.01)."
FOURTH: The foregoing amendment of the certificate of incorporation was
authorized by the unanimous vote of the board of directors of the
corporation, there being no shareholders of record.
IN WITNESS WHEREOF, we have signed this certificate on the day of February,
1995 and affirm the statements contained therein as true under penalties of
perjury.
/s/Patrick Trimble
-----------------------------
Patrick Trimble, President
/s/Graeme A. Chambers
----------------------------------
Graeme A. Chambers, Secretary
N. Y. S. DEPARTMENT OF STATE
DIVISION OF CORPORATIONS AND STATE RECORDS ALBANY, NY 12231
FILING RECEIPT
CORPORATION NAME: ATLANTIS AQUAFARM, INC.
DOCUMENT TYPE: INCORPORATION (DOMESTIC BUSINESS) COUNTY: KING
SERVICE COMPANY: NATIONAL CORPORATE RESEARCH LTD.
FILED: 12/17/1993 DURATION: ********* CASH#: 97031000653 FILM#: 970317000628
ADDRESS FOR PROCESS
THE CORPORATION
C/O CHAMBERS DAVIDSON LLP 242 OLD COUNTRY ROAD
MINEOLA, NY 11501
REGISTERED AGENT
STOCK: 6000000 PV
FILER FEES 95.00 PAYMENTS 95.00
- ----- ---- --------
CHAMBERS DAVIDSON, LLP FILING: 60.00 CASH: 0.00
717 FIFTH AVENUE TAX: 0.00 CHECK: 0.00
NEW YORK, NY 10022 CERT: 0.00 BILLED: 95.00
COPIES: 10.00
HANDLING: 25.00
REFUND: 0.00
<PAGE>
State of New York ss:
Department of State
I hereby certify that the annexed copy has been compared with the original
document in the custody of the Secretary of State and that the same is a true
copy of the said original.
Witness my hand and seal of the Department of State on Mar 19 1997
Special Deputy Secretary of State
<PAGE>
CERTIFICATE OF AMENDMENT
OF THE CERTIFICATE OF INCORPORATION OF
ATLANTIS AQUAFARM, INC.
(UNDER SECTION 805 OF THE BUSINESS CORPORATION LAW)
The undersigned, being the Incorporator, Secretary and the Vice President
of Atlantis Aquafarm, Inc., hereby certify that:
FIRST: The name of the corporation is Atlantis Aquafarm, Inc.
SECOND: The certificate of incorporation of the corporation was filed by
the Department of State on December 17, 1993.
THIRD: Article FOURTH of the certificate of incorporation of the
corporation dealing with authorized shares and the par value thereof, is hereby
amended to increase and re-designate the aggregate number of shares which the
corporation shall have the authority to issue. Before the amendment the
corporation is authorized to issue Twenty Five Million (25,000,000) shares, all
of which are common shares each with a par value of One Cent ($.01) per share.
None of these Twenty Five Million (25,000,000) shares have been issued by the
corporation.
<PAGE>
Article FOURTH of the certificate of incorporation of the corporation
dealing with authorized shares and the par value thereof, is hereby amended to
increase and re-designate the aggregate number of common shares of Twenty Five
Million (25,000,000) each with a par value of One Cent ($.01) per share. The
aggregate number of shares which the corporation shall have the authority to
issue after the amendment is Six Million (6,000,000) shares, consisting of (i)
Five Million (5,000,000) common shares with no par value; and (ii) One Million
(1,000,000) preferred shares each with a par value of One Cent ($.01) per share
with rights and privileges to be determined by the board of directors of the
corporation.
To effect the foregoing, Article FOURTH of the certificate of
incorporation is hereby amended to read in full as follows:
"FOURTH: The aggregate number of shares which the corporation shall
have the authority to issue is Six Million (6,000,000) shares
consisting of (i) Five Million (5,000,000) common shares, each with
no par value; and (ii) One Million (1,000,000) preferred shares,
each with a par value of One Cent ($.01) per share."
The rate of the change for common shares is: 1 : 4. The rate of the change
for preferred shares is: 1 : 5
FOURTH: Article FIFTH of the certificate of incorporation of the
corporation dealing with the post office address to which the Secretary of State
shall mail a copy of any process against the corporation served upon him is
hereby changed to: Atlantis Aquafarm, Inc. c/o Chambers Davidson LLP, 242 Old
Country Road, Mineola, New York, 11501.
To effect the foregoing, Article FIFTH of the certificate of incorporation
is hereby
2
<PAGE>
amended to read in full as follows:
"The Secretary of State is designated as the agent of the
Corporation upon whom process against the Corporation may be served.
The post office address to which the Secretary of State shall mail a
copy of any process against the Corporation served upon him is:
Atlantis Aquafarm, Inc.
c/o Chambers Davidson LLP
242 Old Country Road
Mineola, New York, 11501."
FIFTH: The foregoing amendment and change of the certificate of
incorporation does not change any stated capital.
SIXTH: The foregoing amendment and change of the certificate of
incorporation of the corporation was duly adopted by unanimous vote of the board
of directors of the corporation, there being no shareholders of record and no
subscribers for shares whose subscriptions have been accepted.
IN WITNESS WHEREOF, we have signed this certificate on the 12th day of
March, 1997, and affirm the statements contained therein as true under penalties
of perjury.
/s/Graeme A. Chambers
-----------------------------
Graeme A. Chambers, Secretary
/s/Graeme A. Chambers
----------------------------------
Graeme A. Chambers, Vice President
<PAGE>
CERTIFICATE OF AMENDMENT
OF THE CERTIFICATE OF INCORPORATION OF
ATLANTIS AQUAFARM, INC.
UNDER SECTION 805 OF THE BUSINESS CORPORATION LAW
FILED MAR 17 1997
FILED BY:
CHAMBERS DAVIDSON, LLP
717 FIFTH AVENUE
NEW YORK, NEW YORK 10022
BY- LAWS
of
ATLANTIS AQUAFARM, INC.
ARTICLE I - OFFICES
The principal office of ATLANTIS AQUAFARM, INC. (the "Corporation") shall be:
39 Bushwick Street
Melville, NY 11747
The corporation may also have offices at such other places within or
without the State of New York as the board may from time to time determine or
the business of the corporation may require.
ARTICLE II - SHAREHOLDERS
I PLACE OF MEETINGS.
Meetings of shareholders shall be held at the principal office of the
Corporation or at such place within or without the State of New York as the
board shall authorize,
2. ANNUAL MEETING.
The annual meeting of the shareholders shall be held on the 30 day of June
at 10:00 A.M. in each year if not a legal holiday, and, if a legal holiday, then
on the next business day following at the same hour, when the shareholders shall
elect a board and transact such other business as may properly come before the
meeting.
3 . SPECIAL MEETINGS.
Special meetings of the shareholders may be called by the board or by the
president and shall be called by the president or the secretary at the request
in writing of a majority of the board or at the request in writing by
shareholders owning a majority in amount of the shares issued and outstanding.
Such request shall state the purpose or purposes of the proposed meeting.
Business transacted at a special meeting shall be confined to the purposes
stated in the notice.
<PAGE>
4. FIXING RECORD DATE.
For the purpose of determining the shareholders entitled to notice of or to
vote at any meeting of shareholders or any adjournment thereof, or to express
consent to or dissent from any proposal without a meeting, or for the purpose of
determining shareholders entitled to receive payment of any dividend or the
allotment of any rights, or for the purpose of any other action, the board shall
fix, in advance, a date as the record date for any such determination of
shareholders. Such date shall not be more than fifty nor less than ten days
before the date of such meeting, nor more than fifty days prior to any other
action. If no record date is fixed it shall be determined in accordance with the
provisions of law.
5. NOTICE OF MEETINGS OF SHAREHOLDERS.
Written notice of each meeting of shareholders shall state the purpose or
purposes for which the meeting is called, the place, date and hour of the
meeting and unless it is the annual meeting, shall indicate that it is being
issued by or at the direction of the person or persons calling the meeting.
Notice shall be given either personally or by mail to each shareholder entitled
to vote at such meeting, not less than ten nor more than fifty days before the
date of the meeting. If action is proposed to be taken that might entitle
shareholders to payment for their shares, the notice shall include a statement
of that purpose and to that effect. If mailed, the notice is given when
deposited in the United States mail, with postage thereon prepaid, directed to
the shareholder at his address as it appears on the record of shareholders, or,
if s/he shall have filed with the secretary a written request that notices to
him/her be mailed to some other address, then directed to him/her at such other
address.
6. WAIVERS.
Notice of meeting need not be given to any shareholder who signs a waiver
of notice, in person or by proxy, whether before or after the meeting. The
attendance of any shareholder at a meeting, in person or by proxy, without
protesting prior to the conclusion of the meeting the lack of notice of such
meeting, shall constitute a waiver of notice by him/her.
7. QUORUM OF SHAREHOLDERS.
Unless the certificate of incorporation provides otherwise, the holders of
a majority of the shares entitled to vote thereat shall constitute a quorum at a
meeting of shareholders for the transaction of any business, provided that when
a specified item of business is required to be voted on by a class or classes,
the holders of a majority of the shares of such class or classes shall
constitute a quorum for the transaction of such specified item of business.
When a quorum is once present to organize a meeting, it is not broken by
the subsequent
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<PAGE>
withdrawal of any shareholders. The shareholders present may adjourn the
meeting despite the absence of a quorum.
8. PROXIES
Every shareholder entitled to vote at a meeting of shareholders or to
express consent or dissent without a meeting may authorize another person or
persons to act for him by proxy. Every proxy must be signed by the shareholder
or his attorney-in-fact. No proxy shall be valid after expiration of eleven
months from the date thereof unless otherwise provided in the proxy. Every proxy
shall be revocable at the pleasure of the shareholder executing it, except as
otherwise provided by law.
9. QUALIFICATION OF VOTERS.
Every shareholder of record shall be entitled at every meeting of
shareholders to one vote for every share standing in his name on the record of
shareholders, unless otherwise provided in the certificate of incorporation.
10. VOTE OF SHAREHOLDERS.
Except as otherwise required by statute or by the certificate of
incorporation;
(a) directors shall be elected by a plurality of the votes cast at a
meeting of shareholders by the holders of shares entitled to vote at the
election;
(b) all other corporate action shall be authorized by a majority of the
votes cast.
11 1. WRITTEN CONSENT OF SHAREHOLDERS.
Any action that may be taken by vote may be taken without a meeting on
written consent. setting forth the action so taken, signed by the holders of all
the outstanding shares entitled to vote thereon or signed by such lesser number
of holders as may be provided for in the certificate of incorporation.
ARTICLE III - DIRECTORS
1 . BOARD OF DIRECTORS.
Subject to any provision in the certificate of incorporation the business
of die Corporation shall be managed by its board of directors each of whom shall
be at least 18 years of age and be shareholders.
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<PAGE>
2. NUMBER OF DIRECTORS.
The number of directors shall be at least three. When all of the shares are
owned by less than three shareholders the number of directors may be less than
three but not less than the number of shareholders.
3. ELECTION AND TERM OF DIRECTORS.
At each annual meeting of shareholders, the shareholders shall elect
directors to hold office until the next annual meeting. Each director shall hold
office until the expiration of the term for which he is elected and until his
successor has been ejected and qualified, or until his prior resignation or
removal.
4. NEWLY CREATED DIRECTORSHIPS AND VACANCIES.
Newly created directorships resulting from an increase in the number of
directors and vacancies occurring in the board for any reason except the removal
of directors without cause may be filled by a vote of a majority of the
directors then in office, although less than a quorum exists, unless otherwise
provided in the certificate of incorporation. Vacancies occurring by reason of
the removal of directors without cause shall be filled by vote of the
shareholders unless otherwise provided in the certificate of incorporation. A
director elected to fill a vacancy caused by resignation, death or removal shall
be elected to hold office for the unexpired term of his predecessor.
5. REMOVAL OF DIRECTORS.
Any or all of the directors may be removed for cause by vote of the
shareholders or by action of the board. Directors may be removed without cause
only by vote of the shareholders.
6. RESIGNATION.
A director may resign at any time by giving written notice to the board,
the president or the secretary of the Corporation. Unless otherwise specified in
the notice, the resignation shall take effect upon receipt thereof by the board
or such officer, and the acceptance of the resignation shall not be necessary to
make it effective.
7. QUORUM OF DIRECTORS.
Unless otherwise provided in the certificate of incorporation. a majority
of the entire board shall constitute a quorum for die transaction of business or
of any specified item of business.
-4-
<PAGE>
8. ACTION OF THE BOARD.
Unless otherwise required by law, the vote of a majority of the directors
present at the time of the vote, if a quorum is present at such time, shall be
the act of the board. Each director present shall have one vote regardless of
the number of shares, if any, which he may hold.
9. ELECTION AND TERM OF DIRECTORS.
At each annual meeting of shareholders, the shareholders shall elect
directors to hold office until the next annual meeting. Each director shall hold
office until the expiration of the term for which he is elected and until his
successor has been elected and qualified, or until his prior resignation or
removal.
10. NEWLY CREATED DIRECTORSHIPS AND VACANCIES.
Newly created directorships resulting from an increase in the number of
directors and vacancies occurring in the board for any reason except the removal
of directors without cause may be filled by a vote of a majority of the
directors then in office, although less than a quorum exists, unless otherwise
provided in the certificate of incorporation. Vacancies occurring by reason of
the removal of directors without cause shall be filled by vote of the
shareholders unless otherwise provided in the certificate of incorporation. A
director elected to fill a vacancy caused by resignation, death or removal shall
be elected to hold office for the unexpired term of his predecessor.
11. PLACE AND TIME OF BOARD MEETINGS.
The board may hold its meetings at the office of the Corporation or at such
other places, either within or without the State of New York, as it may from
time to time determine.
12. REGULAR ANNUAL MEETING.
A regular annual meeting of die board shall be held immediately following
the annual meeting of shareholders at the place of such annual meeting of
shareholders.
13. NOTICE OF MEETINGS OF THE BOARD, ADJOURNMENT.
(a) Regular meetings of the board may be held without notice at such time
and place as it shall from time to time determine. Special meetings of die board
shall be held upon notice to the directors and may be called by the president
upon three days notice to each director either personally or by mail or by wire;
special meetings shall be called by the president or by the secretary in a like
manner on written request of two directors. Notice of a meeting need not be
given to any director who submits a waiver of notice whether
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<PAGE>
before or after the meeting or who attends the meeting without protesting prior
thereto or at its commencement, the lack of notice to him;
(b) A majority of the directors present, whether or not a quorum is
present, may adjourn any meeting to another time and place. Notice of the
adjournment shall be given all directors who were absent at the time of the
adjournment and, unless such time and place are announced at the meeting, to the
other directors.
14. CHAIRMAN.
At all meetings of the board the president, or in his absence, a chair man
chosen by the board shall preside.
15. EXECUTIVE AND OTHER COMMITTEES.
The board, by resolution adopted by a majority of the entire board, may
designate from among its members an executive committee and other committees,
each consisting of three or more directors. Each such committee shall serve at
the pleasure of the board.
16. COMPENSATION.
No compensation shall be paid to directors, as such, for their services,
but by resolution of the board a fixed sum and expenses for actual attendance,
at each regular or special meeting of the board may be authorized. Nothing
herein contained shall be construed to preclude any director from serving the
Corporation in any other capacity and receiving compensation therefor.
ARTICLE IV OFFICERS
I . OFFICES, ELECTION, TERM.
(a) Unless otherwise provided for in the certificate of incorporation, the
board may elect or appoint a president, one or more vice-presidents, a secretary
and a treasurer, and such other officers as it may determine, who shall have
such duties, powers and functions as hereinafter provided.
(b) All officers shall be elected or appointed to hold office until the
meeting of the board following the annual meeting of shareholders.
(c) Each officer shall hold office for the term for which he is elected or
appointed and until his successor has been elected or appointed and qualified.
-6-
<PAGE>
2. REMOVAL, RESIGNATION, SALARY, ETC.
(a) Any officer ejected or appointed by the board may be removed by the
board with or without cause.
(b) In the event of the death, resignation or removal of an officer, the
board in its discretion may elect or appoint a successor to fill the unexpired
term.
(c) Any two or more offices may be held by the same person, except the
offices of president and secretary. When all of the issued and outstanding stock
of the Corporation is owned by one person, such person may hold all or any
combination of offices.
(d) The salaries of all officers shall be fixed by the board.
(e) The directors may require any officer to give security for the faithful
performance of his duties.
3 . PRESIDENT.
The president shall be the chief executive officer of the Corporation; he
shall preside at all meetings of the shareholders and of the board; he shall
have the management of the business of the Corporation and shall see that all
orders and resolutions of the board are carried into effect.
4. VICE-PRESIDENTS.
During the absence or disability of the president, the vice-president, or
if there are more than one, the executive vice-president, shall have all the
powers and functions of the president. Each vice-president shall perform such
other duties as the board shall prescribe.
5. SECRETARY.
The secretary shall:
(a) attend all meetings of the board and of the shareholders;
(b) record all votes and minutes of all proceedings in a book to be kept
for that purpose;
(c) give or cause to be given notice of all meetings of shareholders and
of special meetings of the board;
(d) keep in safe custody the seal of the Corporation and affix it to any
instrument when authorized by the board;
-7-
<PAGE>
(e) when required, prepare or cause to be prepared and available at each
meeting of shareholders a certified list in alphabetical order of the names of
shareholders entitled to vote thereat, indicating the number of shares of each
respective class held by each;
(f) keep all the documents and records of the Corporation as required by
law or otherwise in a proper and safe manner.
(g) perform such other duties as may be prescribed by the board.
6. ASSISTANT-SECRETARIES.
During the absence or disability of the secretary, the assistant-secretary,
or if there are more than one, the one so designated by the secretary or by the
board, shall have all the powers and functions of the secretary.
7. TREASURER.
The treasurer shall:
(a) have the custody of the corporate funds and securities;
(b) keep full and accurate accounts of receipts and disbursements in the
corporate books;
(c) deposit all money and other valuables in the name and to the credit of
the Corporation in such depositories as may be designated by the board;
(d) disburse the funds of the Corporation as may be ordered or authorized
by the board and preserve proper vouchers for such disbursements;
(e) render to the president and board at the regular meetings of the board,
or whenever they require it, an account of all his transactions as treasurer and
of the financial condition of the Corporation;
(f) render a fall financial report at the annual meeting of the
shareholders if so requested;
(g) be furnished by all corporate officers and agents at his request, with
such reports and statements as he may require as to all financial transactions
of the Corporation;
(h) perform such other duties as are given to him by these by-laws or as
from time to time are assigned to him by the board or the president.
-8-
<PAGE>
8. ASSISTANT- TREASURER.
During the absence or disability of the treasurer, the assistant-treasurer,
or if there are more than one, the one so designated by the secretary or by the
board, shall have all the powers and functions of the treasurer.
9. SURETIES AND BONDS.
In case the board shall so require, any officer or agent of the Corporation
shall execute to the Corporation a bond in such sum and with such surety or
sureties as the board may direct, conditioned upon the faithful performance of
his duties to the Corporation and including responsibility for negligence and
for the accounting for all property, funds or securities of the Corporation
which may come into his hands.
ARTICLE V - CERTIFICATES FOR SHARES
1 . CERTIFICATES.
The shares of the Corporation shall be represented by certificates. They
shall be numbered and entered in the books of the Corporation as they are
issued. They shall exhibit the holders name and the number of shares and shall
he signed by the president or a vice-president and the treasurer or the
secretary and shall bear the corporate seal.
2. LOST OR DESTROYED CERTIFICATES.
The board 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 or destroyed, upon the making of an affidavit of that
fact by the person claiming the certificate to be lost or destroyed. When
authorizing such issue of a new certificate or certificates, the board may, in
its discretion and as a condition precedent to the issuance thereof, require the
owner of such lost 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 in such sum and with such surety or sureties 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 or
destroyed.
3. TRANSFERS OF SHARES.
(a) 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
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<PAGE>
certificate to the person entitled thereto, and cancel the old certificate.
Every such transfer shall be entered on the transfer book of the Corporation
which shall be kept at its principal office. No transfer shall be made within
ten days next preceding the annual meeting of shareholders.
(b) The Corporation shall be entitled to treat the holder of record of any
share as the holder in fact thereof and, accordingly, shall not he bound to
recognize any equitable or other claim to or interest in such share on the part
of any other person whether or not it shall have express or other notice
thereof, except as expressly provided by the laws of New York.
4. CLOSING TRANSFER BOOKS.
The board shall have the power to close the share transfer books of the
Corporation for a period of not more than ten days during the thirty day period
immediately preceding (1) any shareholders meeting, or (2) any date upon which
shareholders shall be called upon to or have a right to take action without a
meeting, or (3) any date fixed for the payment of a dividend or any other form
of distribution, and only those shareholders of record at the time the transfer
books are closed, shall be recognized as such for the purpose of (1) receiving
notice of or voting at such meeting, or (2) allowing them to take appropriate
action, or (3) entitling them to receive any dividend or other form of
distribution.
ARTICLE VI - DIVIDENDS
Subject to the provisions of the certificate of incorporation and to
applicable law, dividends on the outstanding shares of the Corporation may be
declared in such amounts and at such time or times as the board may determine.
Before payment of any dividend, there may be set aside out of the net profits of
the Corporation available for dividends such sum or sums as the board from time
to time in its absolute discretion deems proper as a reserve fund to meet
contingencies, or for equalizing dividends, or for repairing or maintaining any
property of the Corporation, or for such other purpose as the board shall think
conducive to the interests of the Corporation and the board may modify or
abolish any such reserve.
ARTICLE VII - CORPORATE SEAL
The seal of the Corporation shall be circular in form and bear the name of
the Corporation, the year of its organization and the words "Corporate Seal, New
York". The seal may be used by causing it to be impressed directly on the
instrument or writing to be sealed, or upon adhesive substance affixed thereto.
The seal on the certificates for shares or on any corporate obligation for the
payment of money may be a facsimile, engraved or printed.
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<PAGE>
ARTICLE VIII - EXECUTION OF INSTRUMENTS
All corporate instruments and documents shall be signed or countersigned,
executed, verified or acknowledged by such officer or officers or other person
or persons as the board may from time to time designate.
ARTICLE IX - FISCAL YEAR
The fiscal year shall begin on the 1" day of December in each year.
ARTICLE X - REFERENCES TO CERTIFICATE OF INCORPORATION
Reference to the certificate of incorporation in these by-laws shall
include all amendments thereto or changes thereof unless specifically excepted.
ARTICLE XI - BY-LAW CHANGES
1 . AMENDMENT, REPEAL, ADOPTION, ELECTION OF DIRECTORS.
(a) Except as otherwise provided in the certificate of incorporation the
bylaws may be amended, repealed or adopted by vote of the holders of the shares
at the time entitled to vote in the election of any directors. By-laws may also
be amended, repealed or adopted by the board but any by-law adopted by the board
may be amended by the shareholders entitled to vote thereon as hereinabove
provided.
(b) If any by-law regulating an impending election of directors is adopted,
amended or repealed by the board, there shall be set forth in the notice of the
next meeting of shareholders for the election of directors the by- law so
adopted, amended or repealed, together with a concise statement of the changes
made.
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THE SECURITIES WHICH ARE REPRESENTED BY THIS INSTRUMENT, AND ANY SHARES OF
COMMON STOCK ISSUABLE UPON EXERCISE OF THE OPTION CONTAINED HEREIN, HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER ANY STATE
SECURITIES LAWS. SUCH SECURITIES HAVE BEEN OR WILL BE ACQUIRED FOR INVESTMENT
PURPOSES ONLY AND NOT A VIEW TO DISTRIBUTION OR RESALE, MAY NOT BE SOLD,
TRANSFERRED, MADE SUBJECT TO A SECURITY INTEREST, PLEDGED, HYPOTHECATED OR
OTHERWISE DISPOSED OF UNLESS AND UNTIL REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, AND UNDER ALL APPLICABLE STATE SECURITIES LAWS, OR AN OPINION
OF COUNSEL FOR THE COMPANY IS RECEIVED TO THE EFFECT THAT REGISTRATION IS NOT
REQUIRED UNDER SUCH ACT OR LAWS.
10% PROMISSORY NOTE AND STOCK OPTION
$ 2500 New York, New York
September, 1996
FOR VALUE RECEIVED, the undersigned ATLANTIS AQUAFARM, INC., a New York
corporation (the "Company") hereby promises to pay to Daniel Trimble ("Holder")
the principal amount of US$2500 as hereinafter provided, together with interest
(computed on the basis of a 360-day year of twelve thirty-day months) on the
unpaid principal amount hereof at the rate of 10% per annum from the date hereof
to maturity, except as set forth below.
The principal of this Note shall be due and payable on the last day of the 12th
month after the date of this Note. At the option of the Company, the unpaid
principal amount of this Note may be prepaid, in whole or in part, from time to
time, without penalty or premium . Upon any prepayment of this Note, the Company
shall, at the time of prepayment pay all interest accrued, to the date of
prepayment. All payments of principal and interest shall be made at the office
of the Company at 39 Bushwick Street, Melville, NY 11747 or such other place as
the Company may have designated by written notice to the holder as its then
principal office.
Additionally, the Holder of this Note shall have the option to acquire certain
common stock in connection with any proposed private or public offering of such
stock. Holder shall be entitled to acquire an amount of common stock equal to
twice the original principal amount of this Note divided by [the issue price] of
such stock at an exercise price of $ .50 per share. Such option may only be
exercised by written notice (the "Exercise Notice") from Holder delivered to the
Company at any time after the date hereof but prior to the ninetieth (90th) day
after the completion of the minimum requirements of the initial offering (the
"Minimum Underwriting"), if any, of the Company's common stock. The Exercise
Notice must be accompanied by a certified or bank check for the aggregate
purchase price of all shares being acquired and by a Stock Purchase Agreement in
form and substance satisfactory to the Company.
<PAGE>
Time will be of the essence in connection with all facets of the option.
Notwithstanding the foregoing, unless the Minimum Underwriting is accomplished
within 365 days of the date hereof, the option contained herein shall terminate.
All notices desired or required to be given pursuant to this Agreement shall be
in writing (for the purposes of this paragraph a telegram, telecopy or telex
shall be a writing) sent by certified or registered mail if mailed, return
receipt requested, or shall be delivered personally with receipt acknowledged in
writing, to the appropriate parties at their addresses set forth above, with a
copy of each notice to:
If to the Company to: ATLANTIS AQUAFARM, INC.
39 Bushwick Street
Attention: Patrick Trimble
Telecopy: (516) 351-5987
If to Holder to: 48 Woodbury Road
Haupparge, New York
/s/Daniel Trimble
- -----------------
Any notice so sent by registered or certified mail shall be deemed given three
(3) days after the date of mailing. All other notices shall be deemed given when
actually received by the party to whom the same is directed or that party's
agent. A notice may be given either by a party or by such party's attorney and
the parties hereby designate their respective attorneys as their agents to send
or receive such notices.
This Note may not be amended and no term, covenant, agreement or condition of
this Note may be waived except by a writing signed on behalf of each party and
any such amendment or waiver shall be effective only to the extent set forth in
that writing.
Except as may otherwise be provided herein, this Note shall be governed by, and
interpreted and construed in accordance with, the law of the State of New York
without regard to any such law that would require the application of the laws of
any other jurisdiction. In no case shall the interest on this Note exceed the
maximum amount which may be charged or collected under applicable law, and any
such excess interest paid shall be refunded to the undersigned or applied to the
principal owing hereunder.
ATLANTIS AQUAFARM, INC.
By: /s/Patrick Trimble
----------------------
Patrick Trimble, President
2
THE SECURITIES WHICH ARE REPRESENTED BY THIS INSTRUMENT, AND ANY SHARES OF
COMMON STOCK ISSUABLE UPON EXERCISE OF THE OPTION CONTAINED HEREIN, HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER ANY STATE
SECURITIES LAWS. SUCH SECURITIES HAVE BEEN OR WILL BE ACQUIRED FOR INVESTMENT
PURPOSES ONLY AND NOT A VIEW TO DISTRIBUTION OR RESALE, MAY NOT BE SOLD,
TRANSFERRED, MADE SUBJECT TO A SECURITY INTEREST, PLEDGED, HYPOTHECATED OR
OTHERWISE DISPOSED OF UNLESS AND UNTIL REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, AND UNDER ALL APPLICABLE STATE SECURITIES LAWS, OR AN OPINION
OF COUNSEL FOR THE COMPANY IS RECEIVED TO THE EFFECT THAT REGISTRATION IS NOT
REQUIRED UNDER SUCH ACT OR LAWS.
10% PROMISSORY NOTE AND STOCK OPTION
$ 3794 New York, New York
September, 1996
FOR VALUE RECEIVED, the undersigned ATLANTIS AQUAFARM, INC., a New York
corporation (the "Company") hereby promises to pay to James Dimino ("Holder")
the principal amount of US$3794 as hereinafter provided, together with interest
(computed on the basis of a 360-day year of twelve thirty-day months) on the
unpaid principal amount hereof at the rate of 10% per annum from the date hereof
to maturity, except as set forth below.
The principal of this Note shall be due and payable on the last day of the 12th
month after the date of this Note. At the option of the Company, the unpaid
principal amount of this Note may be prepaid, in whole or in part, from time to
time, without penalty or premium . Upon any prepayment of this Note, the Company
shall, at the time of prepayment pay all interest accrued, to the date of
prepayment. All payments of principal and interest shall be made at the office
of the Company at 39 Bushwick Street, Melville, NY 11747 or such other place as
the Company may have designated by written notice to the holder as its then
principal office.
Additionally, the Holder of this Note shall have the option to acquire certain
common stock in connection with any proposed private or public offering of such
stock. Holder shall be entitled to acquire an amount of common stock equal to
twice the original principal amount of this Note divided by [the issue price] of
such stock at an exercise price of $ .50 per share. Such option may only be
exercised by written notice (the "Exercise Notice") from Holder delivered to the
Company at any time after the date hereof but prior to the ninetieth (90th) day
after the completion of the minimum requirements of the initial offering (the
"Minimum Underwriting"), if any, of the Company's common stock. The Exercise
Notice must be accompanied by a certified or bank check for the aggregate
purchase price of all shares being acquired and by a Stock Purchase Agreement in
form and substance satisfactory to the Company.
<PAGE>
Time will be of the essence in connection with all facets of the option.
Notwithstanding the foregoing, unless the Minimum Underwriting is accomplished
within 365 days of the date hereof, the option contained herein shall terminate.
All notices desired or required to be given pursuant to this Agreement shall be
in writing (for the purposes of this paragraph a telegram, telecopy or telex
shall be a writing) sent by certified or registered mail if mailed, return
receipt requested, or shall be delivered personally with receipt acknowledged in
writing, to the appropriate parties at their addresses set forth above, with a
copy of each notice to:
If to the Company to: ATLANTIS AQUAFARM, INC.
39 Bushwick Street
Attention: Patrick Trimble
Telecopy: (516) 351-5987
If to Holder to: 175 27th Street
Brooklyn, New York
Any notice so sent by registered or certified mail shall be deemed given three
(3) days after the date of mailing. All other notices shall be deemed given when
actually received by the party to whom the same is directed or that party's
agent. A notice may be given either by a party or by such party's attorney and
the parties hereby designate their respective attorneys as their agents to send
or receive such notices.
This Note may not be amended and no term, covenant, agreement or condition of
this Note may be waived except by a writing signed on behalf of each party and
any such amendment or waiver shall be effective only to the extent set forth in
that writing.
Except as may otherwise be provided herein, this Note shall be governed by, and
interpreted and construed in accordance with, the law of the State of New York
without regard to any such law that would require the application of the laws of
any other jurisdiction. In no case shall the interest on this Note exceed the
maximum amount which may be charged or collected under applicable law, and any
such excess interest paid shall be refunded to the undersigned or applied to the
principal owing hereunder.
ATLANTIS AQUAFARM, INC.
By: /s/Graeme Chambers
----------------------
Graeme Chambers, Secretary
By: /s/James Dimino
-------------------
James Dimino, Director
2
THE SECURITIES WHICH ARE REPRESENTED BY THIS INSTRUMENT, AND ANY SHARES OF
COMMON STOCK ISSUABLE UPON EXERCISE OF THE OPTION CONTAINED HEREIN, HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER ANY STATE
SECURITIES LAWS. SUCH SECURITIES HAVE BEEN OR WILL BE ACQUIRED FOR INVESTMENT
PURPOSES ONLY AND NOT A VIEW TO DISTRIBUTION OR RESALE, MAY NOT BE SOLD,
TRANSFERRED, MADE SUBJECT TO A SECURITY INTEREST, PLEDGED, HYPOTHECATED OR
OTHERWISE DISPOSED OF UNLESS AND UNTIL REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, AND UNDER ALL APPLICABLE STATE SECURITIES LAWS, OR AN OPINION
OF COUNSEL FOR THE COMPANY IS RECEIVED TO THE EFFECT THAT REGISTRATION IS NOT
REQUIRED UNDER SUCH ACT OR LAWS.
10% PROMISSORY NOTE AND STOCK OPTION
$ 4765 New York, New York
September, 1996
FOR VALUE RECEIVED, the undersigned ATLANTIS AQUAFARM, INC., a New York
corporation (the "Company") hereby promises to pay to June Trimble ("Holder")
the principal amount of US$4765 as hereinafter provided, together with interest
(computed on the basis of a 360-day year of twelve thirty-day months) on the
unpaid principal amount hereof at the rate of 10% per annum from the date hereof
to maturity, except as set forth below.
The principal of this Note shall be due and payable on the last day of the 12th
month after the date of this Note. At the option of the Company, the unpaid
principal amount of this Note may be prepaid, in whole or in part, from time to
time, without penalty or premium . Upon any prepayment of this Note, the Company
shall, at the time of prepayment pay all interest accrued, to the date of
prepayment. All payments of principal and interest shall be made at the office
of the Company at 39 Bushwick Street, Melville, NY 11747 or such other place as
the Company may have designated by written notice to the holder as its then
principal office.
Additionally, the Holder of this Note shall have the option to acquire certain
common stock in connection with any proposed private or public offering of such
stock. Holder shall be entitled to acquire an amount of common stock equal to
twice the original principal amount of this Note divided by [the issue price] of
such stock at an exercise price of $ .50 per share. Such option may only be
exercised by written notice (the "Exercise Notice") from Holder delivered to the
Company at any time after the date hereof but prior to the ninetieth (90th) day
after the completion of the minimum requirements of the initial offering (the
"Minimum Underwriting"), if any, of the Company's common stock. The Exercise
Notice must be accompanied by a certified or bank check for the aggregate
purchase price of all shares being acquired and by a Stock Purchase Agreement in
form and substance satisfactory to the Company.
<PAGE>
Time will be of the essence in connection with all facets of the option.
Notwithstanding the foregoing, unless the Minimum Underwriting is accomplished
within 365 days of the date hereof, the option contained herein shall terminate.
All notices desired or required to be given pursuant to this Agreement shall be
in writing (for the purposes of this paragraph a telegram, telecopy or telex
shall be a writing) sent by certified or registered mail if mailed, return
receipt requested, or shall be delivered personally with receipt acknowledged in
writing, to the appropriate parties at their addresses set forth above, with a
copy of each notice to:
If to the Company to: ATLANTIS AQUAFARM, INC.
39 Bushwick Street
Attention: Patrick Trimble
Telecopy: (516) 351-5987
If to Holder to: 8513 Acorn Circle
Moriches, New York
/s/June Trimble
- ---------------
Any notice so sent by registered or certified mail shall be deemed given three
(3) days after the date of mailing. All other notices shall be deemed given when
actually received by the party to whom the same is directed or that party's
agent. A notice may be given either by a party or by such party's attorney and
the parties hereby designate their respective attorneys as their agents to send
or receive such notices.
This Note may not be amended and no term, covenant, agreement or condition of
this Note may be waived except by a writing signed on behalf of each party and
any such amendment or waiver shall be effective only to the extent set forth in
that writing.
Except as may otherwise be provided herein, this Note shall be governed by, and
interpreted and construed in accordance with, the law of the State of New York
without regard to any such law that would require the application of the laws of
any other jurisdiction. In no case shall the interest on this Note exceed the
maximum amount which may be charged or collected under applicable law, and any
such excess interest paid shall be refunded to the undersigned or applied to the
principal owing hereunder.
ATLANTIS AQUAFARM, INC.
By: /s/Patrick Trimble
----------------------
Patrick Trimble, President
2
THE SECURITIES WHICH ARE REPRESENTED BY THIS INSTRUMENT, AND ANY SHARES OF
COMMON STOCK ISSUABLE UPON EXERCISE OF THE OPTION CONTAINED HEREIN, HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER ANY STATE
SECURITIES LAWS. SUCH SECURITIES HAVE BEEN OR WILL BE ACQUIRED FOR INVESTMENT
PURPOSES ONLY AND NOT A VIEW TO DISTRIBUTION OR RESALE, MAY NOT BE SOLD,
TRANSFERRED, MADE SUBJECT TO A SECURITY INTEREST, PLEDGED, HYPOTHECATED OR
OTHERWISE DISPOSED OF UNLESS AND UNTIL REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, AND UNDER ALL APPLICABLE STATE SECURITIES LAWS, OR AN OPINION
OF COUNSEL FOR THE COMPANY IS RECEIVED TO THE EFFECT THAT REGISTRATION IS NOT
REQUIRED UNDER SUCH ACT OR LAWS.
10% PROMISSORY NOTE AND STOCK OPTION
$ 5,000 New York, New York
September, 1996
FOR VALUE RECEIVED, the undersigned ATLANTIS AQUAFARM, INC., a New York
corporation (the "Company") hereby promises to pay to Bennett Helfgott
("Holder") the principal amount of US$5,000 as hereinafter provided, together
with interest (computed on the basis of a 360-day year of twelve thirty-day
months) on the unpaid principal amount hereof at the rate of 10% per annum from
the date hereof to maturity, except as set forth below.
The principal of this Note shall be due and payable on the last day of the 12th
month after the date of this Note. At the option of the Company, the unpaid
principal amount of this Note may be prepaid, in whole or in part, from time to
time, without penalty or premium . Upon any prepayment of this Note, the Company
shall, at the time of prepayment pay all interest accrued, to the date of
prepayment. All payments of principal and interest shall be made at the office
of the Company at 39 Bushwick Street, Melville, NY 11747 or such other place as
the Company may have designated by written notice to the holder as its then
principal office.
Additionally, the Holder of this Note shall have the option to acquire certain
common stock in connection with any proposed private or public offering of such
stock. Holder shall be entitled to acquire an amount of common stock equal to
five times the original principal amount of this Note divided by [the issue
price] of such stock at an exercise price of $ .50 per share. Such option may
only be exercised by written notice (the "Exercise Notice") from Holder
delivered to the Company at any time after the date hereof but prior to the
ninetieth (90th) day after the completion of the minimum requirements of the
initial offering (the "Minimum Underwriting"), if any, of the Company's common
stock. The Exercise Notice must be accompanied by a certified or bank check for
the aggregate purchase price of all shares being acquired and by a Stock
Purchase Agreement in form and substance satisfactory to the Company.
<PAGE>
Time will be of the essence in connection with all facets of the option.
Notwithstanding the foregoing, unless the Minimum Underwriting is accomplished
within 365 days of the date hereof, the option contained herein shall terminate.
All notices desired or required to be given pursuant to this Agreement shall be
in writing (for the purposes of this paragraph a telegram, telecopy or telex
shall be a writing) sent by certified or registered mail if mailed, return
receipt requested, or shall be delivered personally with receipt acknowledged in
writing, to the appropriate parties at their addresses set forth above, with a
copy of each notice to:
If to the Company to: ATLANTIS AQUAFARM, INC.
39 Bushwick Street
Attention: Patrick Trimble
Telecopy: (516) 351-5987
If to Holder to: 175 27th Street
Brooklyn, New York
Any notice so sent by registered or certified mail shall be deemed given three
(3) days after the date of mailing. All other notices shall be deemed given when
actually received by the party to whom the same is directed or that party's
agent. A notice may be given either by a party or by such party's attorney and
the parties hereby designate their respective attorneys as their agents to send
or receive such notices.
This Note may not be amended and no term, covenant, agreement or condition of
this Note may be waived except by a writing signed on behalf of each party and
any such amendment or waiver shall be effective only to the extent set forth in
that writing.
Except as may otherwise be provided herein, this Note shall be governed by, and
interpreted and construed in accordance with, the law of the State of New York
without regard to any such law that would require the application of the laws of
any other jurisdiction. In no case shall the interest on this Note exceed the
maximum amount which may be charged or collected under applicable law, and any
such excess interest paid shall be refunded to the undersigned or applied to the
principal owing hereunder.
ATLANTIS AQUAFARM, INC.
By: /s/Graeme Chambers
----------------------
Graeme Chambers, Secretary
By: /s/Bennett Helfgott
-----------------------
Bennett Helfgott
2
SUBSCRIPTION AGREEMENT
ATLANTIS AQUAFARM
THIS SUBSCRIPTION AGREEMENT IS INTENDED ONLY FOR THE USE OF OFFICERS
AND DIRECTORS OF THE COMPANY AND MAY NOT BE USED FOR ANY OTHER
POTENTIAL INVESTOR.
IN MAKING AN INVESTMENT DECISION INVESTORS MUST RELY ON THEIR OWN EXAMINATION OF
THE ISSUER AND THE TERMS OF THE OFFERING, INCLUDING THE MERITS AND RISKS
INVOLVED. THESE SECURITIES HAVE NOT BEEN RECOMMENDED BY ANY FEDERAL OR STATE
SECURITIES COMMISSION OR REGULATORY AUTHORITY. FURTHERMORE, THE FOREGOING
AUTHORITIES HAVE NOT CONFIRMED THE ACCURACY OR DETERMINED THE ADEQUACY OF THIS
DOCUMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND
MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, AND THE APPLICABLE STATE SECURITIES LAWS, PURSUANT TO
REGISTRATION OR EXEMPTIONS THEREFROM. INVESTORS SHOULD BE AWARE THAT THEY WILL
BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE
PERIOD OF TIME.
DATED AS OF JUNE 27, 1997
<PAGE>
SUBSCRIPTION AGREEMENT
Subscription Agreement, dated as of June 27, 1997, between ATLANTIS
AQUAFARM INC., a New York corporation (the "Company"), and Patrick D. Trimble, a
New York resident ("Subscriber").
WHEREAS, the Subscriber desires to subscribe for, and the Company desires
to make available for purchase Three Hundred Sixty Eight Thousand Two Hundred
and Fifty (368,250) shares of the Company's Common Stock, par value $.001 per
share (the "Shares"), on the terms and conditions set forth below.
NOW, THEREFORE, in consideration of the mutual covenants and obligations
set forth in this Agreement, the parties hereto agree as follows:
1. Subscription for the Shares. Subject to all of the terms and conditions
of this Agreement, and in reliance upon the representations and warranties
contained herein, the Subscriber hereby subscribes for and agrees to purchase
the Shares for his own account, and the Company agrees to sell to the Subscriber
the Shares at $.10/share for a total purchase price of Thirty Six Thousand Eight
Hundred Twenty Five Dollars ($36,825).
2. Subscriber's Representations, Warranties and Covenants.
(a) Accredited Status. The Subscriber qualifies as an "accredited
investor" as defined in Rule 501(a) of Regulation D promulgated by the
Securities and Exchange Commission under the Securities Act of 1933, as amended
(the "1933 Act"), by reason of his status as an officer and/or director of the
Company.
(b) Investment Intention and Restrictions on Disposition. The
Subscriber represents and warrants that the Subscriber is acquiring the Shares
being purchased by him hereunder solely for the Subscriber's own account for
investment and not with a view to, or in connection with, any resale or other
distribution thereof in any transaction or series of transactions that would be
in violation of the securities laws of the United States or any state thereof.
The Subscriber agrees that he will not, directly or indirectly, offer, transfer,
sell, pledge, hypothecate or otherwise dispose of any of the Shares (or solicit
any offers to buy, purchase or otherwise acquire or take a pledge of any of the
Shares) or any interest therein, or any rights relating thereto, except in
compliance with (i) the Securities Act of 1933, as amended, and the rules and
regulations thereunder (the "Act"), (ii) all applicable state securities or
"blue sky" laws. The Subscriber further understands, acknowledges and agrees
that none of the Shares or any economic or voting rights relating thereto may be
transferred, sold, pledged, hypothecated or otherwise disposed of unless such
2
<PAGE>
disposition is pursuant to an effective registration statement under the Act and
is in compliance with applicable state securities laws or is exempt from such
registration and/or compliance. Any attempt by the Subscriber, directly or
indirectly, to offer, transfer, sell, pledge, hypothecate or otherwise dispose
of any the Shares or any economic or voting rights relating thereto without
complying with the provisions of this Agreement and the Stockholder Agreement
shall be void and of no effect.
(c) Restrictions on Transfer. The Subscriber acknowledges receipt of
advice from the Company that (i) the Shares being purchased by him hereunder
have not been registered under the Act or qualified under any state securities
or "blue sky" laws, (ii) the Shares must be held indefinitely and such
Subscriber must continue to bear the economic risk of the investment in the
Shares unless the Shares are subsequently registered under the Act or an
exemption from such registration is available, (iii) there may not be any public
market for the Shares in the foreseeable future, (iv) when and if the Shares may
be disposed of without registration in reliance upon Rule 144, such disposition
can be made only in limited amounts and in accordance with the terms and
conditions of such Rule, (v) if the exemption afforded by Rule 144 is not
available, public sale without registration will require the availability of an
exemption under the Act, (vi) a restrictive legend in the form set forth in
Section 7 shall be placed on the certificates representing the Shares, and (vii)
a notation shall be made in the appropriate records of the Company indicating
that the Shares are subject to restrictions on transfer and, if the Company
should in the future engage the services of a stock transfer agent appropriate
stop-transfer instructions will be issued to such transfer agent with respect to
the Shares.
(d) Access to Information. The Subscriber represents and warrants
that (i) he is familiar with the business and financial condition, properties,
operation and prospects of the Company and that he has been granted the
opportunity to ask questions of, and receive answers from, representatives of
the Company concerning the terms and conditions of the purchase of the Shares
hereunder and to obtain any additional information that he deems necessary or
appropriate to evaluate an investment in the Company, including the Registration
Statement, and all such questions have been answered to the full satisfaction of
Subscriber, (ii) Subscriber, his attorney, accountant or other financial advisor
has had access to all material books and records of the Company and all material
contracts and documents relating to the Company, its business and the purchase
of the Shares contemplated hereby, (iii) no oral representations have been made
or oral information furnished to Subscriber or his adviser(s) in connection with
the offering of the Shares which were in any way inconsistent with the books and
records and material contracts and documents of the Company made available to
Subscriber or his adviser(s) for review, (iv) his knowledge and experience in
financial and business matters is such that he is capable of evaluating the
merits and risk of the investment in the Shares, and (v) he is at least 21 years
of age and is a resident of the State of New York.
(e) Ability to Bear Risk. The Subscriber represents and warrants that
(i) the financial situation of the Subscriber is such that he can afford to bear
the economic risk of holding the Shares purchased by him hereunder for an
indefinite period, (ii) he can afford to suffer the complete loss of his
investment in the Shares, (iii), Subscriber has adequate means of providing for
his and his dependents' current needs and possible personal contingencies, (iv)
has no need for liquidity in this investment, and (v) can afford a complete loss
of such investment.
3
<PAGE>
(f) Current Information. All information which Subscriber has
provided to the Company concerning his investor status and financial position,
including the information contained in the attached Investor Questionnaire, is
correct and complete as of the date set forth at the end hereof, and if there
should be any adverse change in such information prior to his subscription being
accepted by the Company, Subscriber shall immediately provide the Company with
such information.
3. Representations and Warranties of the Company. The Company represents
and warrants to the Subscriber that: (i) the execution and delivery of this
Subscription Agreement, the performance of the Company's obligations hereunder
and the consummation by it of the transactions contemplated hereby have been
duly and validly authorized by all requisite corporate action on the part of the
Company, and (ii) the Shares, when issued and delivered in accordance with the
terms hereof, will be validly issued, fully paid and nonassessable, and free and
clear of any liens or encumbrances other than those created pursuant to this
Agreement or otherwise in connection with the transactions contemplated hereby
and thereby.
4. State Securities Laws. Notwithstanding anything in this Agreement to
the contrary, the Company shall not have any obligation to sell the Shares to
the Subscriber if the Subscriber is a resident of a jurisdiction in which the
sale of the Shares to the Subscriber would constitute a violation of the
securities laws of such jurisdiction.
5. Tax Matters.
(a) Individual Risk. The Subscriber represents and warrants that he
understands the tax consequences of the transactions contemplated by this
Agreement, including his purchase of Shares, and any disposition of the Shares,
and acknowledges that he will be solely responsible for any and all tax
liabilities payable by him in connection with the ownership of the Shares
including the purchase, ownership and disposition of any of the Shares. The
Subscriber acknowledges that the Company has made no representation or warranty
as to the tax consequences of any of the transactions contemplated by this
Agreement and the Company shall have no liability or obligation to the
Subscriber with respect to any liability or obligations the Subscriber may incur
as a result of such transactions.
(b) Withholding. The Company shall have the right to withhold or
require the Subscriber to remit to the Company an amount sufficient to satisfy
federal, state and local withholding tax requirements incurred upon the
purchase, ownership or disposition of any share of Shares, and the Company may
defer any issuance of stock or payment of cash from any source whatsoever to the
Subscriber until such requirements are satisfied.
6. Stock Certificate Legends. The certificates representing the Shares
being purchased by the Subscriber hereunder shall bear the following legend:
4
<PAGE>
"THE SHARES EVIDENCED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"), AND MAY NOT BE OFFERED, SOLD, ASSIGNED, PLEDGED,
HYPOTHECATED OR OTHERWISE DISPOSED OF UNLESS AND UNTIL REGISTERED UNDER THE ACT
AND ANY APPLICABLE STATE SECURITIES LAWS OR UNLESS IT IS ESTABLISHED TO THE
SATISFACTION OF COUNSEL FOR THE ISSUER THAT SUCH OFFER, SALE, ASSIGNMENT,
PLEDGE, HYPOTHECATION, TRANSFER OR OTHER DISPOSITION IS EXEMPT FROM REGISTRATION
UNDER, OR IS OTHERWISE IN COMPLIANCE WITH, THE ACT AND ALL OTHER APPLICABLE
SECURITIES LAWS.
7. Indemnification. Subscriber hereby indemnifies and holds harmless the
Company, its directors and officers and its affiliates from and against all
damages, losses, costs, and expenses (including reasonable attorneys' fees)
which they may incur by reason of the failure of Subscriber to fulfill any of
the terms or conditions of this Agreement or by reason of any breach of the
representations and warranties made by Subscriber herein or in any document
provided by the undersigned to the Company.
8. Miscellaneous.
(a) Notices. All notices and other communications required or
permitted to be given under this Agreement shall be in writing and shall be
deemed to have been given if delivered personally or by telecopy or sent by
certified mail, return receipt requested, postage prepaid, or by Federal Express
or other similar courier service to the parties to this Agreement at the
following addresses or to such other address as the party to this Agreement
whose address it is shall specify by notice to the other: if to the Purchaser,
to the Purchaser at the address set forth under the Purchaser's name on the
Signature Page; and if to the Company, to it at 175 27th Street, Brooklyn, New
York 11732, Attention: Secretary, with a copy to Chambers Davidson LLP, 717
Fifth Avenue, New York, NY 10022, Attention: Graeme A. Chambers.
(b) Binding Effect; Benefits. This Agreement shall be binding upon
and inure to the benefit of the parties to this Agreement and their respective
heirs, successors and assigns. Nothing in this Agreement, express or implied, is
intended or shall be construed to give any person other than the parties to this
Agreement and their respective heirs or successors or permitted assigns any
legal or equitable right, remedy or claim under, or in respect of, any agreement
or any provision contained herein.
5
<PAGE>
(c) Waiver; Amendment. No action taken pursuant to this Agreement,
including, without limitation, any investigation by or on behalf of either
party, shall be deemed to constitute a waiver by the party taking such action,
of compliance by the other party with any representations, warranties, covenants
or agreements contained herein. The waiver by either party hereto of a breach of
any provision of this Agreement shall not operate or be construed as a waiver of
any preceding or succeeding breach and no failure by either party to exercise
any right or privilege hereunder shall be deemed a waiver of such party's rights
or privileges hereunder, or shall be deemed a waiver of such party's rights to
exercise the same at any subsequent time or times hereunder. Neither this
Agreement nor any terms or provision hereof may be amended, modified, waived or
supplemented orally, but only by a written instrument executed by the Company
and the Subscriber.
(d) Assignability. Neither this Agreement nor any right, remedy,
obligation or liability arising hereunder or by reason hereof shall be
assignable by the Company without the prior written consent of the Subscriber,
or by the Subscriber without the prior written consent of the Company.
(e) Applicable Law. This Agreement shall be governed by and
construed in accordance with the law of the State of New York, regardless of the
law that might be applied under principles of conflicts of law.
(f) Section and Other Headings. The section and other headings
contained in this Agreement are for reference purposes only and shall not affect
the meaning or interpretation of this Agreement.
(g) Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original and all of which
together shall be deemed to be one and the same instrument.
(h) Pronouns. Any use of masculine pronouns herein shall be deemed
to include the feminine and neuter cases, as applicable.
(i) Entire Agreement. This Agreement shall constitute the entire
agreement of the parties hereto with respect to the subject hereof and shall
supersede all prior agreements or understandings, whether written or oral.
(j) Severability. In case any provision of this Agreement shall be
invalid or
6
<PAGE>
unenforceable in any jurisdiction, the validity and enforceability of
the remaining provisions shall not in any way be affected thereby.
IN WITNESS WHEREOF, the Company and the Subscriber have executed this
Agreement as of the date first set forth above.
ATLANTIS AQUAFARM, INC.
By: /s/Eric Popkoff
Name: Eric Popkoff
Title: Vice President
"SUBSCRIBER"
/s/Patrick D. Trimble
Subscriber hereby ------------------------------------
Subscribes for 368,250 Patrick D. Trimble
Shares Address: 39 Bushwick Street
Melville, New York 11747
7
SUBSCRIPTION AGREEMENT
ATLANTIS AQUAFARM
THIS SUBSCRIPTION AGREEMENT IS INTENDED ONLY FOR THE USE OF OFFICERS AND
DIRECTORS OF THE COMPANY AND MAY NOT BE USED FOR ANY OTHER POTENTIAL INVESTOR.
IN MAKING AN INVESTMENT DECISION INVESTORS MUST RELY ON THEIR OWN EXAMINATION OF
THE ISSUER AND THE TERMS OF THE OFFERING, INCLUDING THE MERITS AND RISKS
INVOLVED. THESE SECURITIES HAVE NOT BEEN RECOMMENDED BY ANY FEDERAL OR STATE
SECURITIES COMMISSION OR REGULATORY AUTHORITY. FURTHERMORE, THE FOREGOING
AUTHORITIES HAVE NOT CONFIRMED THE ACCURACY OR DETERMINED THE ADEQUACY OF THIS
DOCUMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND
MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, AND THE APPLICABLE STATE SECURITIES LAWS, PURSUANT TO
REGISTRATION OR EXEMPTIONS THEREFROM. INVESTORS SHOULD BE AWARE THAT THEY WILL
BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE
PERIOD OF TIME.
DATED AS OF JUNE 27, 1997
<PAGE>
SUBSCRIPTION AGREEMENT
Subscription Agreement, dated as of June 27, 1997, between ATLANTIS
AQUAFARM INC., a New York corporation (the "Company"), and Eric Popkoff, a New
York resident ("Subscriber").
WHEREAS, the Subscriber desires to subscribe for, and the Company desires
to make available for purchase Seventy Five Thousand (75,000) shares of the
Company's Common Stock, par value $.001 per share (the "Shares"), on the terms
and conditions set forth below.
NOW, THEREFORE, in consideration of the mutual covenants and obligations
set forth in this Agreement, the parties hereto agree as follows:
1. Subscription for the Shares. Subject to all of the terms and conditions
of this Agreement, and in reliance upon the representations and warranties
contained herein, the Subscriber hereby subscribes for and agrees to purchase
the Shares for his own account, and the Company agrees to sell to the Subscriber
the Shares at $.10/share for a total purchase price of Seven Thousand Five
Hundred Dollars ($7,500).
2. Subscriber's Representations, Warranties and Covenants.
(a) Accredited Status. The Subscriber qualifies as an "accredited
investor" as defined in Rule 501(a) of Regulation D promulgated by the
Securities and Exchange Commission under the Securities Act of 1933, as amended
(the "1933 Act"), by reason of his status as an officer and/or director of the
Company.
2
<PAGE>
(b) Investment Intention and Restrictions on Disposition. The
Subscriber represents and warrants that the Subscriber is acquiring the Shares
being purchased by him hereunder solely for the Subscriber's own account for
investment and not with a view to, or in connection with, any resale or other
distribution thereof in any transaction or series of transactions that would be
in violation of the securities laws of the United States or any state thereof.
The Subscriber agrees that he will not, directly or indirectly, offer, transfer,
sell, pledge, hypothecate or otherwise dispose of any of the Shares (or solicit
any offers to buy, purchase or otherwise acquire or take a pledge of any of the
Shares) or any interest therein, or any rights relating thereto, except in
compliance with (i) the Securities Act of 1933, as amended, and the rules and
regulations thereunder (the "Act"), (ii) all applicable state securities or
"blue sky" laws. The Subscriber further understands, acknowledges and agrees
that none of the Shares or any economic or voting rights relating thereto may be
transferred, sold, pledged, hypothecated or otherwise disposed of unless such
disposition is pursuant to an effective registration statement under the Act and
is in compliance with applicable state securities laws or is exempt from such
registration and/or compliance. Any attempt by the Subscriber, directly or
indirectly, to offer, transfer, sell, pledge, hypothecate or otherwise dispose
of any the Shares or any economic or voting rights relating thereto without
complying with the provisions of this Agreement and the Stockholder Agreement
shall be void and of no effect.
(c) Restrictions on Transfer. The Subscriber acknowledges receipt of
advice from the Company that (i) the Shares being purchased by him hereunder
have not been registered under the Act or qualified under any state securities
or "blue sky" laws, (ii) the Shares must be held indefinitely and such
Subscriber must continue to bear the economic risk of the investment in the
Shares unless the Shares are subsequently registered under the Act or an
exemption from such registration is available, (iii) there may not be any public
market for the Shares in the foreseeable future, (iv) when and if the Shares may
be disposed of without registration in reliance upon Rule 144, such disposition
can be made only in limited amounts and in accordance with the terms and
conditions of such Rule, (v) if the exemption afforded by Rule 144 is not
available, public sale without registration will require the availability of an
exemption under the Act, (vi) a restrictive legend in the form set forth in
Section 7 shall be placed on the certificates representing the Shares, and (vii)
a notation shall be made in the appropriate records of the Company indicating
that the Shares are subject to restrictions on transfer and, if the Company
should in the future engage the services of a stock transfer agent appropriate
stop-transfer instructions will be issued to such transfer agent with respect to
the Shares.
(d) Access to Information. The Subscriber represents and warrants
that (i) he is familiar with the business and financial condition, properties,
operation and prospects of the Company and that he has been granted the
opportunity to ask questions of, and receive answers from, representatives of
the Company concerning the terms and conditions of the purchase of the Shares
hereunder and to obtain any additional information that he deems necessary or
appropriate to evaluate an investment in the Company, including the Registration
Statement, and all such questions have been answered to the full satisfaction of
Subscriber, (ii) Subscriber, his attorney, accountant or other financial advisor
has had access to all material books and records of the Company and all material
contracts and documents relating to the Company, its business and the purchase
of the Shares contemplated hereby, (iii) no oral representations have been made
or oral information furnished to Subscriber or his adviser(s) in connection with
the offering of the Shares which were in any way inconsistent with the books and
records and material contracts and documents of the Company made available to
Subscriber or his adviser(s) for review, (iv) his knowledge and experience in
financial and business matters is such that he is capable of evaluating the
merits and risk of the investment in the Shares, and (v) he is at least 21 years
of age and is a resident of the State of New York.
3
<PAGE>
(e) Ability to Bear Risk. The Subscriber represents and warrants
that (i) the financial situation of the Subscriber is such that he can afford to
bear the economic risk of holding the Shares purchased by him hereunder for an
indefinite period, (ii) he can afford to suffer the complete loss of his
investment in the Shares, (iii), Subscriber has adequate means of providing for
his and his dependents' current needs and possible personal contingencies, (iv)
has no need for liquidity in this investment, and (v) can afford a complete loss
of such investment.
(f) Current Information. All information which Subscriber has
provided to the Company concerning his investor status and financial position,
including the information contained in the attached Investor Questionnaire, is
correct and complete as of the date set forth at the end hereof, and if there
should be any adverse change in such information prior to his subscription being
accepted by the Company, Subscriber shall immediately provide the Company with
such information.
3. Representations and Warranties of the Company. The Company represents
and warrants to the Subscriber that: (i) the execution and delivery of this
Subscription Agreement, the performance of the Company's obligations hereunder
and the consummation by it of the transactions contemplated hereby have been
duly and validly authorized by all requisite corporate action on the part of the
Company, and (ii) the Shares, when issued and delivered in accordance with the
terms hereof, will be validly issued, fully paid and nonassessable, and free and
clear of any liens or encumbrances other than those created pursuant to this
Agreement or otherwise in connection with the transactions contemplated hereby
and thereby.
4. State Securities Laws. Notwithstanding anything in this Agreement to the
contrary, the Company shall not have any obligation to sell the Shares to the
Subscriber if the Subscriber is a resident of a jurisdiction in which the sale
of the Shares to the Subscriber would constitute a violation of the securities
laws of such jurisdiction.
5. Tax Matters.
(a) Individual Risk. The Subscriber represents and warrants that he
understands the tax consequences of the transactions contemplated by this
Agreement, including his purchase of Shares, and any disposition of the Shares,
and acknowledges that he will be solely responsible for any and all tax
liabilities payable by him in connection with the ownership of the Shares
including the purchase, ownership and disposition of any of the Shares. The
Subscriber acknowledges that the Company has made no representation or warranty
as to the tax consequences of any of the transactions contemplated by this
Agreement and the Company shall have no liability or obligation to the
Subscriber with respect to any liability or obligations the Subscriber may incur
as a result of such transactions.
(b) Withholding. The Company shall have the right to withhold or
require the Subscriber to remit to the Company an amount sufficient to satisfy
federal, state and local withholding tax requirements incurred upon the
purchase, ownership or disposition of any share of Shares, and the Company may
defer any issuance of stock or payment of cash from any source whatsoever to the
Subscriber until such requirements are satisfied.
6. Stock Certificate Legends. The certificates representing the Shares
being purchased by the Subscriber hereunder shall bear the following legend:
4
<PAGE>
"THE SHARES EVIDENCED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"), AND MAY NOT BE OFFERED, SOLD, ASSIGNED, PLEDGED,
HYPOTHECATED OR OTHERWISE DISPOSED OF UNLESS AND UNTIL REGISTERED UNDER THE ACT
AND ANY APPLICABLE STATE SECURITIES LAWS OR UNLESS IT IS ESTABLISHED TO THE
SATISFACTION OF COUNSEL FOR THE ISSUER THAT SUCH OFFER, SALE, ASSIGNMENT,
PLEDGE, HYPOTHECATION, TRANSFER OR OTHER DISPOSITION IS EXEMPT FROM REGISTRATION
UNDER, OR IS OTHERWISE IN COMPLIANCE WITH, THE ACT AND ALL OTHER APPLICABLE
SECURITIES LAWS.
7. Indemnification. Subscriber hereby indemnifies and holds harmless the
Company, its directors and officers and its affiliates from and against all
damages, losses, costs, and expenses (including reasonable attorneys' fees)
which they may incur by reason of the failure of Subscriber to fulfill any of
the terms or conditions of this Agreement or by reason of any breach of the
representations and warranties made by Subscriber herein or in any document
provided by the undersigned to the Company.
8. Miscellaneous.
(a) Notices. All notices and other communications required or
permitted to be given under this Agreement shall be in writing and shall be
deemed to have been given if delivered personally or by telecopy or sent by
certified mail, return receipt requested, postage prepaid, or by Federal Express
or other similar courier service to the parties to this Agreement at the
following addresses or to such other address as the party to this Agreement
whose address it is shall specify by notice to the other: if to the Purchaser,
to the Purchaser at the address set forth under the Purchaser's name on the
Signature Page; and if to the Company, to it at 175 27th Street, Brooklyn, New
York 11732, Attention: Secretary, with a copy to Chambers Davidson LLP, 717
Fifth Avenue, New York, NY 10022, Attention:
Graeme A. Chambers.
(b) Binding Effect; Benefits. This Agreement shall be binding upon
and inure to the benefit of the parties to this Agreement and their respective
heirs, successors and assigns. Nothing in this Agreement, express or implied, is
intended or shall be construed to give any person other than the parties to this
Agreement and their respective heirs or successors or permitted assigns any
legal or equitable right, remedy or claim under, or in respect of, any agreement
or any provision contained herein.
5
<PAGE>
(c) Waiver; Amendment. No action taken pursuant to this Agreement,
including, without limitation, any investigation by or on behalf of either
party, shall be deemed to constitute a waiver by the party taking such action,
of compliance by the other party with any representations, warranties, covenants
or agreements contained herein. The waiver by either party hereto of a breach of
any provision of this Agreement shall not operate or be construed as a waiver of
any preceding or succeeding breach and no failure by either party to exercise
any right or privilege hereunder shall be deemed a waiver of such party's rights
or privileges hereunder, or shall be deemed a waiver of such party's rights to
exercise the same at any subsequent time or times hereunder. Neither this
Agreement nor any terms or provision hereof may be amended, modified, waived or
supplemented orally, but only by a written instrument executed by the Company
and the Subscriber.
(d) Assignability. Neither this Agreement nor any right, remedy,
obligation or liability arising hereunder or by reason hereof shall be
assignable by the Company without the prior written consent of the Subscriber,
or by the Subscriber without the prior written consent of the Company.
(e) Applicable Law. This Agreement shall be governed by and
construed in accordance with the law of the State of New York, regardless of the
law that might be applied under principles of conflicts of law.
(f) Section and Other Headings. The section and other headings
contained in this Agreement are for reference purposes only and shall not affect
the meaning or interpretation of this Agreement.
(g) Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original and all of which
together shall be deemed to be one and the same instrument.
(h) Pronouns. Any use of masculine pronouns herein shall be deemed
to include the feminine and neuter cases, as applicable.
(i) Entire Agreement. This Agreement shall constitute the entire
agreement of the parties hereto with respect to the subject hereof and shall
supersede all prior agreements or understandings, whether written or oral.
(j) Severability. In case any provision of this Agreement
shall be invalid or
6
<PAGE>
unenforceable in any jurisdiction, the validity and enforceability of the
remaining provisions shall not in any way be affected thereby.
IN WITNESS WHEREOF, the Company and the Subscriber have executed this
Agreement as of the date first set forth above.
ATLANTIS AQUAFARM, INC.
By: /s/Patrick Trimble
Name: Patrick D. Trimble
Title: President
"SUBSCRIBER"
Subscriber hereby /s/Eric Popkoff
Subscribes for 75,000 Eric Popkoff
Shares Address: 1750 East 23rd Street
Brooklyn, NY 11229
7
SUBSCRIPTION AGREEMENT
ATLANTIS AQUAFARM
THIS SUBSCRIPTION AGREEMENT IS INTENDED ONLY FOR THE USE OF OFFICERS AND
DIRECTORS OF THE COMPANY AND MAY NOT BE USED FOR ANY OTHER POTENTIAL INVESTOR.
IN MAKING AN INVESTMENT DECISION INVESTORS MUST RELY ON THEIR OWN EXAMINATION OF
THE ISSUER AND THE TERMS OF THE OFFERING, INCLUDING THE MERITS AND RISKS
INVOLVED. THESE SECURITIES HAVE NOT BEEN RECOMMENDED BY ANY FEDERAL OR STATE
SECURITIES COMMISSION OR REGULATORY AUTHORITY. FURTHERMORE, THE FOREGOING
AUTHORITIES HAVE NOT CONFIRMED THE ACCURACY OR DETERMINED THE ADEQUACY OF THIS
DOCUMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND
MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, AND THE APPLICABLE STATE SECURITIES LAWS, PURSUANT TO
REGISTRATION OR EXEMPTIONS THEREFROM. INVESTORS SHOULD BE AWARE THAT THEY WILL
BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE
PERIOD OF TIME.
DATED AS OF JUNE 27, 1997
<PAGE>
SUBSCRIPTION AGREEMENT
Subscription Agreement, dated as of June 27, 1997, between ATLANTIS
AQUAFARM INC., a New York corporation (the "Company"), and Govind Srivastava, a
New York resident ("Subscriber").
WHEREAS, the Subscriber desires to subscribe for, and the Company desires
to make available for purchase Fifty Six Thousand Two Hundred Fifty (56,250)
shares of the Company's Common Stock, par value $.001 per share (the "Shares"),
on the terms and conditions set forth below.
NOW, THEREFORE, in consideration of the mutual covenants and obligations
set forth in this Agreement, the parties hereto agree as follows:
1. Subscription for the Shares. Subject to all of the terms and conditions
of this Agreement, and in reliance upon the representations and warranties
contained herein, the Subscriber hereby subscribes for and agrees to purchase
the Shares for his own account, and the Company agrees to sell to the Subscriber
the Shares at $.10/share for a total purchase price of Five Thousand Six Hundred
and Twenty Five Dollars ($5,625).
2. Subscriber's Representations, Warranties and Covenants.
(a) Accredited Status. The Subscriber qualifies as an "accredited
investor" as defined in Rule 501(a) of Regulation D promulgated by the
Securities and Exchange Commission under the Securities Act of 1933, as amended
(the "1933 Act"), by reason of his status as an officer and/or director of the
Company.
2
<PAGE>
(b) Investment Intention and Restrictions on Disposition. The
Subscriber represents and warrants that the Subscriber is acquiring the Shares
being purchased by him hereunder solely for the Subscriber's own account for
investment and not with a view to, or in connection with, any resale or other
distribution thereof in any transaction or series of transactions that would be
in violation of the securities laws of the United States or any state thereof.
The Subscriber agrees that he will not, directly or indirectly, offer, transfer,
sell, pledge, hypothecate or otherwise dispose of any of the Shares (or solicit
any offers to buy, purchase or otherwise acquire or take a pledge of any of the
Shares) or any interest therein, or any rights relating thereto, except in
compliance with (i) the Securities Act of 1933, as amended, and the rules and
regulations thereunder (the "Act"), (ii) all applicable state securities or
"blue sky" laws. The Subscriber further understands, acknowledges and agrees
that none of the Shares or any economic or voting rights relating thereto may be
transferred, sold, pledged, hypothecated or otherwise disposed of unless such
disposition is pursuant to an effective registration statement under the Act and
is in compliance with applicable state securities laws or is exempt from such
registration and/or compliance. Any attempt by the Subscriber, directly or
indirectly, to offer, transfer, sell, pledge, hypothecate or otherwise dispose
of any the Shares or any economic or voting rights relating thereto without
complying with the provisions of this Agreement and the Stockholder Agreement
shall be void and of no effect.
(c) Restrictions on Transfer. The Subscriber acknowledges receipt of
advice from the Company that (i) the Shares being purchased by him hereunder
have not been registered under the Act or qualified under any state securities
or "blue sky" laws, (ii) the Shares must be held indefinitely and such
Subscriber must continue to bear the economic risk of the investment in the
Shares unless the Shares are subsequently registered under the Act or an
exemption from such registration is available, (iii) there may not be any public
market for the Shares in the foreseeable future, (iv) when and if the Shares may
be disposed of without registration in reliance upon Rule 144, such disposition
can be made only in limited amounts and in accordance with the terms and
conditions of such Rule, (v) if the exemption afforded by Rule 144 is not
available, public sale without registration will require the availability of an
exemption under the Act, (vi) a restrictive legend in the form set forth in
Section 7 shall be placed on the certificates representing the Shares, and (vii)
a notation shall be made in the appropriate records of the Company indicating
that the Shares are subject to restrictions on transfer and, if the Company
should in the future engage the services of a stock transfer agent appropriate
stop-transfer instructions will be issued to such transfer agent with respect to
the Shares.
(d) Access to Information. The Subscriber represents and warrants
that (i) he is familiar with the business and financial condition, properties,
operation and prospects of the Company and that he has been granted the
opportunity to ask questions of, and receive answers from, representatives of
the Company concerning the terms and conditions of the purchase of the Shares
hereunder and to obtain any additional information that he deems necessary or
appropriate to evaluate an investment in the Company, including the Registration
Statement, and all such questions have been answered to the full satisfaction of
Subscriber, (ii) Subscriber, his attorney, accountant or other financial advisor
has had access to all material books and records of the Company and all material
contracts and documents relating to the Company, its business and the purchase
of the Shares contemplated hereby, (iii) no oral representations have been made
or oral information furnished to Subscriber or his adviser(s) in connection with
the offering of the Shares which were in any way inconsistent with the books and
records and material contracts and documents of the Company made available to
Subscriber or his adviser(s) for review, (iv) his knowledge and experience in
financial and business matters is such that he is capable of evaluating the
merits and risk of the investment in the Shares, and (v) he is at least 21 years
of age and is a resident of the State of New York.
3
<PAGE>
(e) Ability to Bear Risk. The Subscriber represents and warrants
that (i) the financial situation of the Subscriber is such that he can afford to
bear the economic risk of holding the Shares purchased by him hereunder for an
indefinite period, (ii) he can afford to suffer the complete loss of his
investment in the Shares, (iii), Subscriber has adequate means of providing for
his and his dependents' current needs and possible personal contingencies, (iv)
has no need for liquidity in this investment, and (v) can afford a complete loss
of such investment.
(f) Current Information. All information which Subscriber has
provided to the Company concerning his investor status and financial position,
including the information contained in the attached Investor Questionnaire, is
correct and complete as of the date set forth at the end hereof, and if there
should be any adverse change in such information prior to his subscription being
accepted by the Company, Subscriber shall immediately provide the Company with
such information.
3. Representations and Warranties of the Company. The Company represents
and warrants to the Subscriber that: (i) the execution and delivery of this
Subscription Agreement, the performance of the Company's obligations hereunder
and the consummation by it of the transactions contemplated hereby have been
duly and validly authorized by all requisite corporate action on the part of the
Company, and (ii) the Shares, when issued and delivered in accordance with the
terms hereof, will be validly issued, fully paid and nonassessable, and free and
clear of any liens or encumbrances other than those created pursuant to this
Agreement or otherwise in connection with the transactions contemplated hereby
and thereby.
4. State Securities Laws. Notwithstanding anything in this Agreement to the
contrary, the Company shall not have any obligation to sell the Shares to the
Subscriber if the Subscriber is a resident of a jurisdiction in which the sale
of the Shares to the Subscriber would constitute a violation of the securities
laws of such jurisdiction.
5. Tax Matters.
(a) Individual Risk. The Subscriber represents and warrants that he
understands the tax consequences of the transactions contemplated by this
Agreement, including his purchase of Shares, and any disposition of the Shares,
and acknowledges that he will be solely responsible for any and all tax
liabilities payable by him in connection with the ownership of the Shares
including the purchase, ownership and disposition of any of the Shares. The
Subscriber acknowledges that the Company has made no representation or warranty
as to the tax consequences of any of the transactions contemplated by this
Agreement and the Company shall have no liability or obligation to the
Subscriber with respect to any liability or obligations the Subscriber may incur
as a result of such transactions.
(b) Withholding. The Company shall have the right to withhold or
require the Subscriber to remit to the Company an amount sufficient to satisfy
federal, state and local withholding tax requirements incurred upon the
purchase, ownership or disposition of any share of Shares, and the Company may
defer any issuance of stock or payment of cash from any source whatsoever to the
Subscriber until such requirements are satisfied.
4
<PAGE>
6. Stock Certificate Legends. The certificates representing the Shares
being purchased by the Subscriber hereunder shall bear the following legend:
"THE SHARES EVIDENCED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"), AND MAY NOT BE OFFERED, SOLD, ASSIGNED, PLEDGED,
HYPOTHECATED OR OTHERWISE DISPOSED OF UNLESS AND UNTIL REGISTERED UNDER THE ACT
AND ANY APPLICABLE STATE SECURITIES LAWS OR UNLESS IT IS ESTABLISHED TO THE
SATISFACTION OF COUNSEL FOR THE ISSUER THAT SUCH OFFER, SALE, ASSIGNMENT,
PLEDGE, HYPOTHECATION, TRANSFER OR OTHER DISPOSITION IS EXEMPT FROM REGISTRATION
UNDER, OR IS OTHERWISE IN COMPLIANCE WITH, THE ACT AND ALL OTHER APPLICABLE
SECURITIES LAWS.
7. Indemnification. Subscriber hereby indemnifies and holds harmless the
Company, its directors and officers and its affiliates from and against all
damages, losses, costs, and expenses (including reasonable attorneys' fees)
which they may incur by reason of the failure of Subscriber to fulfill any of
the terms or conditions of this Agreement or by reason of any breach of the
representations and warranties made by Subscriber herein or in any document
provided by the undersigned to the Company.
8. Miscellaneous.
(a) Notices. All notices and other communications required or
permitted to be given under this Agreement shall be in writing and shall be
deemed to have been given if delivered personally or by telecopy or sent by
certified mail, return receipt requested, postage prepaid, or by Federal Express
or other similar courier service to the parties to this Agreement at the
following addresses or to such other address as the party to this Agreement
whose address it is shall specify by notice to the other: if to the Purchaser,
to the Purchaser at the address set forth under the Purchaser's name on the
Signature Page; and if to the Company, to it at 175 27th Street, Brooklyn, New
York 11232, Attention: Secretary, with a copy to Chambers Davidson LLP, 717
Fifth Avenue, New York, NY 10022, Attention:
Graeme A. Chambers.
(b) Binding Effect; Benefits. This Agreement shall be binding upon
and inure to the benefit of the parties to this Agreement and their respective
heirs, successors and assigns. Nothing in this Agreement, express or implied, is
intended or shall be construed to give any person other than the parties to this
Agreement and their respective heirs or successors or permitted assigns any
legal or equitable right, remedy or claim under, or in respect of, any agreement
or any provision contained herein.
5
<PAGE>
(c) Waiver; Amendment. No action taken pursuant to this Agreement,
including, without limitation, any investigation by or on behalf of either
party, shall be deemed to constitute a waiver by the party taking such action,
of compliance by the other party with any representations, warranties, covenants
or agreements contained herein. The waiver by either party hereto of a breach of
any provision of this Agreement shall not operate or be construed as a waiver of
any preceding or succeeding breach and no failure by either party to exercise
any right or privilege hereunder shall be deemed a waiver of such party's rights
or privileges hereunder, or shall be deemed a waiver of such party's rights to
exercise the same at any subsequent time or times hereunder. Neither this
Agreement nor any terms or provision hereof may be amended, modified, waived or
supplemented orally, but only by a written instrument executed by the Company
and the Subscriber.
(d) Assignability. Neither this Agreement nor any right, remedy,
obligation or liability arising hereunder or by reason hereof shall be
assignable by the Company without the prior written consent of the Subscriber,
or by the Subscriber without the prior written consent of the Company.
(e) Applicable Law. This Agreement shall be governed by and
construed in accordance with the law of the State of New York, regardless of the
law that might be applied under principles of conflicts of law.
(f) Section and Other Headings. The section and other headings
contained in this Agreement are for reference purposes only and shall not affect
the meaning or interpretation of this Agreement.
(g) Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original and all of which
together shall be deemed to be one and the same instrument.
(h) Pronouns. Any use of masculine pronouns herein shall be deemed
to include the feminine and neuter cases, as applicable.
(i) Entire Agreement. This Agreement shall constitute the entire
agreement of the parties hereto with respect to the subject hereof and shall
supersede all prior agreements or understandings, whether written or oral.
(j) Severability. In case any provision of this Agreement shall be
6
<PAGE>
invalid or unenforceable in any jurisdiction, the validity and enforceability of
the remaining provisions shall not in any way be affected thereby.
IN WITNESS WHEREOF, the Company and the Subscriber have executed this
Agreement as of the date first set forth above.
ATLANTIS AQUAFARM, INC.
By: /s/Patrick D. Trimble
Name: Patrick D. Trimble
Title: President
"SUBSCRIBER"
/s/Govind Srivastava
Subscriber hereby Govind Srivastava
Subscribes for 56,250
Shares Address: 310 Birchwood Park Drive
Jericho, NY 11753
7
SUBSCRIPTION AGREEMENT
ATLANTIS AQUAFARM
THIS SUBSCRIPTION AGREEMENT IS INTENDED ONLY FOR THE USE OF OFFICERS AND
DIRECTORS OF THE COMPANY AND MAY NOT BE USED FOR ANY OTHER POTENTIAL INVESTOR.
IN MAKING AN INVESTMENT DECISION INVESTORS MUST RELY ON THEIR OWN EXAMINATION OF
THE ISSUER AND THE TERMS OF THE OFFERING, INCLUDING THE MERITS AND RISKS
INVOLVED. THESE SECURITIES HAVE NOT BEEN RECOMMENDED BY ANY FEDERAL OR STATE
SECURITIES COMMISSION OR REGULATORY AUTHORITY. FURTHERMORE, THE FOREGOING
AUTHORITIES HAVE NOT CONFIRMED THE ACCURACY OR DETERMINED THE ADEQUACY OF THIS
DOCUMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND
MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, AND THE APPLICABLE STATE SECURITIES LAWS, PURSUANT TO
REGISTRATION OR EXEMPTIONS THEREFROM. INVESTORS SHOULD BE AWARE THAT THEY WILL
BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE
PERIOD OF TIME.
DATED AS OF JUNE 27, 1997
<PAGE>
SUBSCRIPTION AGREEMENT
Subscription Agreement, dated as of June 27, 1997, between ATLANTIS
AQUAFARM INC., a New York corporation (the "Company"), and Graeme A.
Chambers, a New York resident ("Subscriber").
WHEREAS, the Subscriber desires to subscribe for, and the Company desires
to make available for purchase Twenty Two Thousand Five Hundred (22,500) shares
of the Company's Common Stock, par value $.001 per share (the "Shares"), on the
terms and conditions set forth below.
NOW, THEREFORE, in consideration of the mutual covenants and obligations
set forth in this Agreement, the parties hereto agree as follows:
1. Subscription for the Shares. Subject to all of the terms and conditions
of this Agreement, and in reliance upon the representations and warranties
contained herein, the Subscriber hereby subscribes for and agrees to purchase
the Shares for his own account, and the Company agrees to sell to the Subscriber
the Shares at $.10/share for a total purchase price of Two Thousand Two Hundred
Fifty Dollars ($2,250).
2. Subscriber's Representations, Warranties and Covenants.
(a) Accredited Status. The Subscriber qualifies as an "accredited
investor" as defined in Rule 501(a) of Regulation D promulgated by the
Securities and Exchange Commission under the Securities Act of 1933, as amended
(the "1933 Act"), by reason of his status as an officer and/or director of the
Company.
2
<PAGE>
(b) Investment Intention and Restrictions on Disposition. The
Subscriber represents and warrants that the Subscriber is acquiring the Shares
being purchased by him hereunder solely for the Subscriber's own account for
investment and not with a view to, or in connection with, any resale or other
distribution thereof in any transaction or series of transactions that would be
in violation of the securities laws of the United States or any state thereof.
The Subscriber agrees that he will not, directly or indirectly, offer, transfer,
sell, pledge, hypothecate or otherwise dispose of any of the Shares (or solicit
any offers to buy, purchase or otherwise acquire or take a pledge of any of the
Shares) or any interest therein, or any rights relating thereto, except in
compliance with (i) the Securities Act of 1933, as amended, and the rules and
regulations thereunder (the "Act"), (ii) all applicable state securities or
"blue sky" laws. The Subscriber further understands, acknowledges and agrees
that none of the Shares or any economic or voting rights relating thereto may be
transferred, sold, pledged, hypothecated or otherwise disposed of unless such
disposition is pursuant to an effective registration statement under the Act and
is in compliance with applicable state securities laws or is exempt from such
registration and/or compliance. Any attempt by the Subscriber, directly or
indirectly, to offer, transfer, sell, pledge, hypothecate or otherwise dispose
of any the Shares or any economic or voting rights relating thereto without
complying with the provisions of this Agreement and the Stockholder Agreement
shall be void and of no effect.
(c) Restrictions on Transfer. The Subscriber acknowledges receipt of
advice from the Company that (i) the Shares being purchased by him hereunder
have not been registered under the Act or qualified under any state securities
or "blue sky" laws, (ii) the Shares must be held indefinitely and such
Subscriber must continue to bear the economic risk of the investment in the
Shares unless the Shares are subsequently registered under the Act or an
exemption from such registration is available, (iii) there may not be any public
market for the Shares in the foreseeable future, (iv) when and if the Shares may
be disposed of without registration in reliance upon Rule 144, such disposition
can be made only in limited amounts and in accordance with the terms and
conditions of such Rule, (v) if the exemption afforded by Rule 144 is not
available, public sale without registration will require the availability of an
exemption under the Act, (vi) a restrictive legend in the form set forth in
Section 7 shall be placed on the certificates representing the Shares, and (vii)
a notation shall be made in the appropriate records of the Company indicating
that the Shares are subject to restrictions on transfer and, if the Company
should in the future engage the services of a stock transfer agent appropriate
stop-transfer instructions will be issued to such transfer agent with respect to
the Shares.
(d) Access to Information. The Subscriber represents and warrants
that (i) he is familiar with the business and financial condition, properties,
operation and prospects of the Company and that he has been granted the
opportunity to ask questions of, and receive answers from, representatives of
the Company concerning the terms and conditions of the purchase of the Shares
hereunder and to obtain any additional information that he deems necessary or
appropriate to evaluate an investment in the Company, including the Registration
Statement, and all such questions have been answered to the full satisfaction of
Subscriber, (ii) Subscriber, his attorney, accountant or other financial advisor
has had access to all material books and records of the Company and all material
contracts and documents relating to the Company, its business and the purchase
of the Shares contemplated hereby, (iii) no oral representations have been made
or oral information furnished to Subscriber or his adviser(s) in connection with
the offering of the Shares which were in any way inconsistent with the books and
records and material contracts and documents of the Company made available to
Subscriber or his adviser(s) for review, (iv) his knowledge and experience in
financial and business matters is such that he is capable of evaluating the
merits and risk of the investment in the Shares, and (v) he is at least 21 years
of age and is a resident of the State of New York.
3
<PAGE>
(e) Ability to Bear Risk. The Subscriber represents and warrants
that (i) the financial situation of the Subscriber is such that he can afford to
bear the economic risk of holding the Shares purchased by him hereunder for an
indefinite period, (ii) he can afford to suffer the complete loss of his
investment in the Shares, (iii), Subscriber has adequate means of providing for
his and his dependents' current needs and possible personal contingencies, (iv)
has no need for liquidity in this investment, and (v) can afford a complete loss
of such investment.
(f) Current Information. All information which Subscriber has
provided to the Company concerning his investor status and financial position,
including the information contained in the attached Investor Questionnaire, is
correct and complete as of the date set forth at the end hereof, and if there
should be any adverse change in such information prior to his subscription being
accepted by the Company, Subscriber shall immediately provide the Company with
such information.
3. Representations and Warranties of the Company. The Company represents
and warrants to the Subscriber that: (i) the execution and delivery of this
Subscription Agreement, the performance of the Company's obligations hereunder
and the consummation by it of the transactions contemplated hereby have been
duly and validly authorized by all requisite corporate action on the part of the
Company, and (ii) the Shares, when issued and delivered in accordance with the
terms hereof, will be validly issued, fully paid and nonassessable, and free and
clear of any liens or encumbrances other than those created pursuant to this
Agreement or otherwise in connection with the transactions contemplated hereby
and thereby.
4. State Securities Laws. Notwithstanding anything in this Agreement to the
contrary, the Company shall not have any obligation to sell the Shares to the
Subscriber if the Subscriber is a resident of a jurisdiction in which the sale
of the Shares to the Subscriber would constitute a violation of the securities
laws of such jurisdiction.
5. Tax Matters.
(a) Individual Risk. The Subscriber represents and warrants that he
understands the tax consequences of the transactions contemplated by this
Agreement, including his purchase of Shares, and any disposition of the Shares,
and acknowledges that he will be solely responsible for any and all tax
liabilities payable by him in connection with the ownership of the Shares
including the purchase, ownership and disposition of any of the Shares. The
Subscriber acknowledges that the Company has made no representation or warranty
as to the tax consequences of any of the transactions contemplated by this
Agreement and the Company shall have no liability or obligation to the
Subscriber with respect to any liability or obligations the Subscriber may incur
as a result of such transactions.
(b) Withholding. The Company shall have the right to withhold or
require the Subscriber to remit to the Company an amount sufficient to satisfy
federal, state and local withholding tax requirements incurred upon the
purchase, ownership or disposition of any share of Shares, and the Company may
defer any issuance of stock or payment of cash from any source whatsoever to the
Subscriber until such requirements are satisfied.
4
<PAGE>
6. Stock Certificate Legends. The certificates representing the Shares
being purchased by the Subscriber hereunder shall bear the following legend:
"THE SHARES EVIDENCED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"), AND MAY NOT BE OFFERED, SOLD, ASSIGNED, PLEDGED,
HYPOTHECATED OR OTHERWISE DISPOSED OF UNLESS AND UNTIL REGISTERED UNDER THE ACT
AND ANY APPLICABLE STATE SECURITIES LAWS OR UNLESS IT IS ESTABLISHED TO THE
SATISFACTION OF COUNSEL FOR THE ISSUER THAT SUCH OFFER, SALE, ASSIGNMENT,
PLEDGE, HYPOTHECATION, TRANSFER OR OTHER DISPOSITION IS EXEMPT FROM REGISTRATION
UNDER, OR IS OTHERWISE IN COMPLIANCE WITH, THE ACT AND ALL OTHER APPLICABLE
SECURITIES LAWS.
7. Indemnification. Subscriber hereby indemnifies and holds harmless the
Company, its directors and officers and its affiliates from and against all
damages, losses, costs, and expenses (including reasonable attorneys' fees)
which they may incur by reason of the failure of Subscriber to fulfill any of
the terms or conditions of this Agreement or by reason of any breach of the
representations and warranties made by Subscriber herein or in any document
provided by the undersigned to the Company.
8. Miscellaneous.
(a) Notices. All notices and other communications required or
permitted to be given under this Agreement shall be in writing and shall be
deemed to have been given if delivered personally or by telecopy or sent by
certified mail, return receipt requested, postage prepaid, or by Federal Express
or other similar courier service to the parties to this Agreement at the
following addresses or to such other address as the party to this Agreement
whose address it is shall specify by notice to the other: if to the Purchaser,
to the Purchaser at the address set forth under the Purchaser's name on the
Signature Page; and if to the Company, to it at 175 27th Street, Brooklyn, New
York 11732, Attention: Secretary.
(b) Binding Effect; Benefits. This Agreement shall be binding upon
and inure to the benefit of the parties to this Agreement and their respective
heirs, successors and assigns. Nothing in this Agreement, express or implied, is
intended or shall be construed to give any person other than the parties to this
Agreement and their respective heirs or successors or permitted assigns any
legal or equitable right, remedy or claim under, or in respect of, any agreement
or any provision contained herein.
5
<PAGE>
(c) Waiver; Amendment. No action taken pursuant to this Agreement,
including, without limitation, any investigation by or on behalf of either
party, shall be deemed to constitute a waiver by the party taking such action,
of compliance by the other party with any representations, warranties, covenants
or agreements contained herein. The waiver by either party hereto of a breach of
any provision of this Agreement shall not operate or be construed as a waiver of
any preceding or succeeding breach and no failure by either party to exercise
any right or privilege hereunder shall be deemed a waiver of such party's rights
or privileges hereunder, or shall be deemed a waiver of such party's rights to
exercise the same at any subsequent time or times hereunder. Neither this
Agreement nor any terms or provision hereof may be amended, modified, waived or
supplemented orally, but only by a written instrument executed by the Company
and the Subscriber.
(d) Assignability. Neither this Agreement nor any right, remedy,
obligation or liability arising hereunder or by reason hereof shall be
assignable by the Company without the prior written consent of the Subscriber,
or by the Subscriber without the prior written consent of the Company.
(e) Applicable Law. This Agreement shall be governed by and
construed in accordance with the law of the State of New York, regardless of the
law that might be applied under principles of conflicts of law.
(f) Section and Other Headings. The section and other headings
contained in this Agreement are for reference purposes only and shall not affect
the meaning or interpretation of this Agreement.
(g) Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original and all of which
together shall be deemed to be one and the same instrument.
(h) Pronouns. Any use of masculine pronouns herein shall be deemed
to include the feminine and neuter cases, as applicable.
(i) Entire Agreement. This Agreement shall constitute the entire
agreement of the parties hereto with respect to the subject hereof and shall
supersede all prior agreements or understandings, whether written or oral.
(j) Severability. In case any provision of this Agreement shall be
6
<PAGE>
invalid orunenforceable in any jurisdiction, the validity and enforceability of
the remaining provisions shall not in any way be affected thereby.
IN WITNESS WHEREOF, the Company and the Subscriber have executed this
Agreement as of the date first set forth above.
ATLANTIS AQUAFARM, INC.
By: /s/Patrick D. Trimble
Name: Patrick D. Trimble
Title: President
"SUBSCRIBER"
Subscriber hereby /s/Graeme A. Chambers
Subscribes for 22,500 Graeme A. Chambers
Shares Address: 84 Wood Lane
Woodmere, NY 11598
7
SUBSCRIPTION AGREEMENT
ATLANTIS AQUAFARM
THIS SUBSCRIPTION AGREEMENT IS INTENDED ONLY FOR THE USE OF OFFICERS AND
DIRECTORS OF THE COMPANY AND MAY NOT BE USED FOR ANY OTHER POTENTIAL INVESTOR.
IN MAKING AN INVESTMENT DECISION INVESTORS MUST RELY ON THEIR OWN EXAMINATION OF
THE ISSUER AND THE TERMS OF THE OFFERING, INCLUDING THE MERITS AND RISKS
INVOLVED. THESE SECURITIES HAVE NOT BEEN RECOMMENDED BY ANY FEDERAL OR STATE
SECURITIES COMMISSION OR REGULATORY AUTHORITY. FURTHERMORE, THE FOREGOING
AUTHORITIES HAVE NOT CONFIRMED THE ACCURACY OR DETERMINED THE ADEQUACY OF THIS
DOCUMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND
MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, AND THE APPLICABLE STATE SECURITIES LAWS, PURSUANT TO
REGISTRATION OR EXEMPTIONS THEREFROM. INVESTORS SHOULD BE AWARE THAT THEY WILL
BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE
PERIOD OF TIME.
DATED AS OF JUNE 27, 1997
<PAGE>
SUBSCRIPTION AGREEMENT
Subscription Agreement, dated as of June 27, 1997, between ATLANTIS
AQUAFARM INC., a New York corporation (the "Company"), and James Dimino, a New
York resident ("Subscriber").
WHEREAS, the Subscriber desires to subscribe for, and the Company desires
to make available for purchase Thirteen Thousand Four Hundred (13,400) shares of
the Company's Common Stock, par value $.001 per share (the "Shares"), on the
terms and conditions set forth below.
NOW, THEREFORE, in consideration of the mutual covenants and obligations
set forth in this Agreement, the parties hereto agree as follows:
1. Subscription for the Shares. Subject to all of the terms and conditions
of this Agreement, and in reliance upon the representations and warranties
contained herein, the Subscriber hereby subscribes for and agrees to purchase
the Shares for his own account, and the Company agrees to sell to the Subscriber
the Shares at $.10/share for a total purchase price of One Thousand Three
Hundred Forty Dollars ($1,340).
2. Subscriber's Representations, Warranties and Covenants.
(a) Accredited Status. The Subscriber qualifies as an "accredited
investor" as defined in Rule 501(a) of Regulation D promulgated by the
Securities and Exchange Commission under the Securities Act of 1933, as amended
(the "1933 Act"), by reason of his status as an officer and/or director of the
Company.
2
<PAGE>
(b) Investment Intention and Restrictions on Disposition. The
Subscriber represents and warrants that the Subscriber is acquiring the Shares
being purchased by him hereunder solely for the Subscriber's own account for
investment and not with a view to, or in connection with, any resale or other
distribution thereof in any transaction or series of transactions that would be
in violation of the securities laws of the United States or any state thereof.
The Subscriber agrees that he will not, directly or indirectly, offer, transfer,
sell, pledge, hypothecate or otherwise dispose of any of the Shares (or solicit
any offers to buy, purchase or otherwise acquire or take a pledge of any of the
Shares) or any interest therein, or any rights relating thereto, except in
compliance with (i) the Securities Act of 1933, as amended, and the rules and
regulations thereunder (the "Act"), (ii) all applicable state securities or
"blue sky" laws. The Subscriber further understands, acknowledges and agrees
that none of the Shares or any economic or voting rights relating thereto may be
transferred, sold, pledged, hypothecated or otherwise disposed of unless such
disposition is pursuant to an effective registration statement under the Act and
is in compliance with applicable state securities laws or is exempt from such
registration and/or compliance. Any attempt by the Subscriber, directly or
indirectly, to offer, transfer, sell, pledge, hypothecate or otherwise dispose
of any the Shares or any economic or voting rights relating thereto without
complying with the provisions of this Agreement and the Stockholder Agreement
shall be void and of no effect.
(c) Restrictions on Transfer. The Subscriber acknowledges receipt of
advice from the Company that (i) the Shares being purchased by him hereunder
have not been registered under the Act or qualified under any state securities
or "blue sky" laws, (ii) the Shares must be held indefinitely and such
Subscriber must continue to bear the economic risk of the investment in the
Shares unless the Shares are subsequently registered under the Act or an
exemption from such registration is available, (iii) there may not be any public
market for the Shares in the foreseeable future, (iv) when and if the Shares may
be disposed of without registration in reliance upon Rule 144, such disposition
can be made only in limited amounts and in accordance with the terms and
conditions of such Rule, (v) if the exemption afforded by Rule 144 is not
available, public sale without registration will require the availability of an
exemption under the Act, (vi) a restrictive legend in the form set forth in
Section 7 shall be placed on the certificates representing the Shares, and (vii)
a notation shall be made in the appropriate records of the Company indicating
that the Shares are subject to restrictions on transfer and, if the Company
should in the future engage the services of a stock transfer agent appropriate
stop-transfer instructions will be issued to such transfer agent with respect to
the Shares.
(d) Access to Information. The Subscriber represents and warrants
that (i) he is familiar with the business and financial condition, properties,
operation and prospects of the Company and that he has been granted the
opportunity to ask questions of, and receive answers from, representatives of
the Company concerning the terms and conditions of the purchase of the Shares
hereunder and to obtain any additional information that he deems necessary or
appropriate to evaluate an investment in the Company, including the Registration
Statement, and all such questions have been answered to the full satisfaction of
Subscriber, (ii) Subscriber, his attorney, accountant or other financial advisor
has had access to all material books and records of the Company and all material
contracts and documents relating to the Company, its business and the purchase
of the Shares contemplated hereby, (iii) no oral representations have been made
or oral information furnished to Subscriber or his adviser(s) in connection with
the offering of the Shares which were in any way inconsistent with the books and
records and material contracts and documents of the Company made available to
Subscriber or his adviser(s) for review, (iv) his knowledge and experience in
financial and business matters is such that he is capable of evaluating the
merits and risk of the investment in the Shares, and (v) he is at least 21 years
of age and is a resident of the State of New York.
3
<PAGE>
(e) Ability to Bear Risk. The Subscriber represents and warrants
that (i) the financial situation of the Subscriber is such that he can afford to
bear the economic risk of holding the Shares purchased by him hereunder for an
indefinite period, (ii) he can afford to suffer the complete loss of his
investment in the Shares, (iii), Subscriber has adequate means of providing for
his and his dependents' current needs and possible personal contingencies, (iv)
has no need for liquidity in this investment, and (v) can afford a complete loss
of such investment.
(f) Current Information. All information which Subscriber has
provided to the Company concerning his investor status and financial position,
including the information contained in the attached Investor Questionnaire, is
correct and complete as of the date set forth at the end hereof, and if there
should be any adverse change in such information prior to his subscription being
accepted by the Company, Subscriber shall immediately provide the Company with
such information.
3. Representations and Warranties of the Company. The Company represents
and warrants to the Subscriber that: (i) the execution and delivery of this
Subscription Agreement, the performance of the Company's obligations hereunder
and the consummation by it of the transactions contemplated hereby have been
duly and validly authorized by all requisite corporate action on the part of the
Company, and (ii) the Shares, when issued and delivered in accordance with the
terms hereof, will be validly issued, fully paid and nonassessable, and free and
clear of any liens or encumbrances other than those created pursuant to this
Agreement or otherwise in connection with the transactions contemplated hereby
and thereby.
4. State Securities Laws. Notwithstanding anything in this Agreement to the
contrary, the Company shall not have any obligation to sell the Shares to the
Subscriber if the Subscriber is a resident of a jurisdiction in which the sale
of the Shares to the Subscriber would constitute a violation of the securities
laws of such jurisdiction.
5. Tax Matters.
(a) Individual Risk. The Subscriber represents and warrants that he
understands the tax consequences of the transactions contemplated by this
Agreement, including his purchase of Shares, and any disposition of the Shares,
and acknowledges that he will be solely responsible for any and all tax
liabilities payable by him in connection with the ownership of the Shares
including the purchase, ownership and disposition of any of the Shares. The
Subscriber acknowledges that the Company has made no representation or warranty
as to the tax consequences of any of the transactions contemplated by this
Agreement and the Company shall have no liability or obligation to the
Subscriber with respect to any liability or obligations the Subscriber may incur
as a result of such transactions.
(b) Withholding. The Company shall have the right to withhold or
require the Subscriber to remit to the Company an amount sufficient to satisfy
federal, state and local withholding tax requirements incurred upon the
purchase, ownership or disposition of any share of Shares, and the Company may
defer any issuance of stock or payment of cash from any source whatsoever to the
Subscriber until such requirements are satisfied.
4
<PAGE>
6. Stock Certificate Legends. The certificates representing the Shares
being purchased by the Subscriber hereunder shall bear the following legend:
"THE SHARES EVIDENCED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"), AND MAY NOT BE OFFERED, SOLD, ASSIGNED, PLEDGED,
HYPOTHECATED OR OTHERWISE DISPOSED OF UNLESS AND UNTIL REGISTERED UNDER THE ACT
AND ANY APPLICABLE STATE SECURITIES LAWS OR UNLESS IT IS ESTABLISHED TO THE
SATISFACTION OF COUNSEL FOR THE ISSUER THAT SUCH OFFER, SALE, ASSIGNMENT,
PLEDGE, HYPOTHECATION, TRANSFER OR OTHER DISPOSITION IS EXEMPT FROM REGISTRATION
UNDER, OR IS OTHERWISE IN COMPLIANCE WITH, THE ACT AND ALL OTHER APPLICABLE
SECURITIES LAWS.
7. Indemnification. Subscriber hereby indemnifies and holds harmless the
Company, its directors and officers and its affiliates from and against all
damages, losses, costs, and expenses (including reasonable attorneys' fees)
which they may incur by reason of the failure of Subscriber to fulfill any of
the terms or conditions of this Agreement or by reason of any breach of the
representations and warranties made by Subscriber herein or in any document
provided by the undersigned to the Company.
8. Miscellaneous.
(a) Notices. All notices and other communications required or
permitted to be given under this Agreement shall be in writing and shall be
deemed to have been given if delivered personally or by telecopy or sent by
certified mail, return receipt requested, postage prepaid, or by Federal Express
or other similar courier service to the parties to this Agreement at the
following addresses or to such other address as the party to this Agreement
whose address it is shall specify by notice to the other: if to the Purchaser,
to the Purchaser at the address set forth under the Purchaser's name on the
Signature Page; and if to the Company, to it at 175 27th Street, Brooklyn, New
York 11732, Attention: Secretary, with a copy to Chambers Davidson LLP, 717
Fifth Avenue, New York, NY 10022, Attention:
Graeme A. Chambers.
(b) Binding Effect; Benefits. This Agreement shall be binding upon
and inure to the benefit of the parties to this Agreement and their respective
heirs, successors and assigns. Nothing in this Agreement, express or implied, is
intended or shall be construed to give any person other than the parties to this
Agreement and their respective heirs or successors or permitted assigns any
legal or equitable right, remedy or claim under, or in respect of, any agreement
or any provision contained herein.
5
<PAGE>
(c) Waiver; Amendment. No action taken pursuant to this Agreement,
including, without limitation, any investigation by or on behalf of either
party, shall be deemed to constitute a waiver by the party taking such action,
of compliance by the other party with any representations, warranties, covenants
or agreements contained herein. The waiver by either party hereto of a breach of
any provision of this Agreement shall not operate or be construed as a waiver of
any preceding or succeeding breach and no failure by either party to exercise
any right or privilege hereunder shall be deemed a waiver of such party's rights
or privileges hereunder, or shall be deemed a waiver of such party's rights to
exercise the same at any subsequent time or times hereunder. Neither this
Agreement nor any terms or provision hereof may be amended, modified, waived or
supplemented orally, but only by a written instrument executed by the Company
and the Subscriber.
(d) Assignability. Neither this Agreement nor any right, remedy,
obligation or liability arising hereunder or by reason hereof shall be
assignable by the Company without the prior written consent of the Subscriber,
or by the Subscriber without the prior written consent of the Company.
(e) Applicable Law. This Agreement shall be governed by and
construed in accordance with the law of the State of New York, regardless of the
law that might be applied under principles of conflicts of law.
(f) Section and Other Headings. The section and other headings
contained in this Agreement are for reference purposes only and shall not affect
the meaning or interpretation of this Agreement.
(g) Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original and all of which
together shall be deemed to be one and the same instrument.
(h) Pronouns. Any use of masculine pronouns herein shall be deemed
to include the feminine and neuter cases, as applicable.
(i) Entire Agreement. This Agreement shall constitute the entire
agreement of the parties hereto with respect to the subject hereof and shall
supersede all prior agreements or understandings, whether written or oral.
(j) Severability. In case any provision of this Agreement
shall be invalid or
6
<PAGE>
unenforceable in any jurisdiction, the validity and enforceability of the
remaining provisions shall not in any way be affected thereby.
IN WITNESS WHEREOF, the Company and the Subscriber have executed this
Agreement as of the date first set forth above.
"SUBSCRIBER"
By:/s/James Dimino
Name: James Dimino
Title: Director
Address: 175 27th Street
Brooklyn, NY 11232
ATLANTIS AQUAFARM, INC.
Subscriber hereby By: /s/Graeme A. Chambers
Subscribes for 13,400
Shares Name: Graeme A. Chambers
Title: Secretary
7
Atlantis Aquafarm, Inc.
175 27th Street,
Brooklyn, NY 11032
Gentlemen:
We refer to the Registration Statement on Form SB-2 (Commission File No.
___-NY) and all amendments thereto (the "Registration Statement") filed by
Atlantis Aquafarm, Inc., a New York corporation (the "Company"), with the
Securities and Exchange Commission (the Commission) under the Securities Act of
1933, as amended (the "Securities Act"), relating to the issue and sale in a
public offering of 300,000 Units (the "Units"), each consisting of one share
(the "Unit Shares") of Common Stock, $.001 par value (the "Common Stock"), and
one Class A Warrant (the "Class A Warrants") to purchase one share of Common
Stock and one Class B Warrant (the "Class B Warrants" and together with the
Class A Warrants, the "Warrants"), which number of Units includes 600,000 shares
of Common Stock issuable upon exercise of the Warrants (the "Warrant Shares").
Terms not defined herein shall have the meanings ascribed to them in the
Registration Statement.
As the basis for the opinion hereinafter expressed, we have examined
originals or copies, certified or otherwise identified to our satisfaction, of
such documents, corporate records, certificates of public officials and other
instruments as we have considered necessary or advisable for the purpose of this
opinion. We have relied as to factual matters on certificates or other documents
furnished by the Company or its officers and directors and by governmental
authorities and upon such other documents and data as we have deemed
appropriate. We have assumed the genuineness of all signatures, the authenticity
of all documents submitted to us as originals and the conformity with the
originals of all documents submitted to us as copies. We have not independently
verified such information and assumptions.
We are members of the bar of the State of New York and do not herein
express any opinion as to any law other than the laws of the State of New York.
Subject to the foregoing and based on such examination, we are of the
opinion that (i) the Unit Shares have been duly authorized and, assuming the due
execution and delivery of the certificates for the Unit Shares against payment
therefore, will be validly issued, validly paid and nonassessable; (ii) the
Units and the Warrants have been duly authorized and assuming due execution and
delivery thereof, will be validly issued; and (iii) the Warrant Shares have been
duly authorized and, upon delivery and payment therefor in accordance with the
terms of the Warrants, will be validly issued, fully paid and nonassessable.
We consent to the filling of this opinion as an exhibit to the Registration
Statement and to the reference made to our firm which appears in the Prospectus
constituting a part thereof under the caption "LEGAL MATTERS". In giving such
consent, we do not thereby admit that we come within the category of persons
whose consent is required under Section 7 of the Securities Act or the rules and
regulations of the Commission thereunder.
Very Truly Yours,
Chambers Davidson, L.L.P.
EMPLOYMENT AGREEMENT
between
ATLANTIS AQUAFARM, INC.
and
PATRICK TRIMBLE
<PAGE>
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT, dated as of May 1, 1997, between ATLANTIS AQUAFARM,
INC. a Delaware corporation (the "Company") and PATRICK D. TRIMBLE (the
"Executive"). The parties hereto agree as follows:
1. Employment.
(a) Agreement to Employ. Upon the terms and subject to the
conditions of this Agreement, the Company shall hereby employ the Executive and
the Executive hereby agrees to be employed by the Company.
(b) Term of Employment. Subject to Section 5, the Company shall
employ the Executive pursuant to the terms hereof for the period commencing on
September 1, 1997 (the "Commencement Date") and ending on the third anniversary
of the Commencement Date (the "Third Anniversary"), provided that the
Executive's employment with the Company shall be deemed to be automatically
renewed upon the same terms and conditions for additional one-year periods
thereafter unless either party hereto shall have given the other party written
notice that such party does not intend to renew the Agreement no later than two
(2) months prior to the date on which the term would otherwise expire. The
period during which the Executive is employed pursuant to this Agreement,
including any renewal thereof in accordance with this Section l(b), shall be
referred to as the "Employment Period."
2. Position and Duties.
During the Employment Period, the Executive shall serve as Chairman
of the Board of Directors of the Company (the "Board") and Chief Executive
Officer of the Company and the Executive shall have the duties, responsibilities
and obligations customarily assigned to individuals serving in the position or
positions in which the Executive serves hereunder. The Executive shall devote
such time as reasonably necessary to perform the services required of him
hereunder, and shall use his best efforts, judgement, skill and energy to
perform such services in a manner consonant with the duties of his position and
to improve and advance the business and interests of the Company. Nothing
contained in this Agreement shall prohibit the Executive from owning, directly
or indirectly, any shares of capital stock or any equity or ownership interest
in any corporation, partnership joint venture, proprietorship or other business
organization which, in any case, is engaged in the ownership or operation of
television or radio stations or any activities related thereto, it being
understood that the Executive's employment with the Company does not constitute
an exclusive relationship. During the Employment Period, the Executive shall
report to the Company's Board of Directors.
<PAGE>
3. Compensation.
(a) Salary. From the Commencement Date until the first anniversary
of the Commencement Date (the "First Anniversary"), the Company shall pay the
Executive a base salary of $50,000. The Executive's annual base salary shall be
$60,000 for the period between the First Anniversary and the second anniversary
of the Commencement Date (the "Second Anniversary") and shall be $70,000 for the
period between the Second Anniversary and the Third Anniversary. The Company
shall pay the Executive such base salary in equal bi-monthly installments or in
such other installments as the parties may agree. Thereafter, the Company shall
pay the Executive an annual base salary to be negotiated with the Board of
Directors but in any event not to be less than the prior year's salary plus 10%.
(b) Production Bonus. In addition to the salary set forth in
paragraph (a), in each year when the Company shall have sold in excess of
265,000 lbs. of product, Executive shall receive a bonus equal to 5% of the net
proceeds of such excess production.
4. Benefits and Vacation.
(a) Medical Benefits. During the Employment Period, the Executive
shall be eligible to participate in any health insurance plans
sponsored or maintained by the Company for the benefit of its
senior executive corporate officers to the extent that the
Executive is eligible to participate in any such plans under the
generally applicable provisions thereof. The Company may, in its
discretion, amend or terminate any such plans in accordance with
the terms thereof.
(b) Vacation. During the Employment Period, the Executive shall be
entitled to four weeks of paid vacation annually. The Executive
shall be furnished with an office at and shall conduct his duties
at the Company's headquarters in New York.
(c) Key-man Life and Disability Insurance. The Company shall maintain
a policy of Key-Man life insurance in the amount of $1,000,000
and a policy of disability insurance in sufficient amount to hire
a replacement for the Executive during any period of
indisposition. The Executive will cooperate in obtaining such
insurance.
5. Termination of Employment. If the Executive's employment with the
Company terminates earlier than upon the expiration of the Employment Period
specified in Section 1(b), determined without regard to this Section 5, the
Executive shall be entitled to receive the following payments under the
following circumstances:
2
<PAGE>
(a) Termination for Cause or a Resignation Other than for Good
Reason. If the Executive's employment terminates under this Section 5 due to a
Termination for Cause or a Resignation Other than for Good Reason, the Executive
shall receive his Earned Salary and any other benefits under any benefit plan of
the Company to which he is entitled pursuant to the terms of such plan.
(b) Termination Without Cause or Resignation for Good Reason. If the
Executive's employment terminates under this Section 5 due to a Termination
Without Cause or a Resignation for Good Reason, the Executive shall receive both
his Earned Salary and the full salary that would otherwise be payable under
Section 3 through the remaining term of the Employment Period, determined
without regard to this Section 5 and any other benefits under any benefit plan
of the Company to which he is entitled pursuant to the terms of such plan.
(c) Definitions. For purposes of this Section, capitalized terms
have the following meanings:
"Cause" means a termination of Executive's employment by the Company
or any of its subsidiaries due to (i) the continued failure (other than any such
failure resulting from incapacity due to reasonably documented physical or
mental illness) by Executive substantially to perform his duties,
responsibilities or obligations as an officer, director or employee of the
Company or any of its subsidiaries after having been given written notice of
such failure to perform and after having failed to improve such performance, in
the judgement of the Board (determined without the Executive's participation)
within the time period (which shall not be less than 30 days) specified in such
notice or (ii) the engaging by Executive in serious misconduct which is material
to the performance by Executive of his duties and obligations for the Company or
any of its subsidiaries, including, without limitation, gross negligence,
dishonesty, willful malfeasance, gross misconduct, the disclosure of material
secret or confidential information of the Company or such subsidiary or
conviction of a felony or the entry of a plea of nolo contendere to a felony.
"Earned Salary" means the base salary earned, but unpaid, for
services rendered to the Company on or prior to the date of disability,
resignation or termination of the Executive's employment, as the case may be.
Earned Salary shall be paid in a single lump sum as soon as practicable, but in
no event more than 30 days following such date.
"Resignation for Good Reason" means a resignation by the
Executive as a result of any of the following:
(a) a material breach by the Company of its obligations under this
Agreement with respect to the base salary, benefits and vacation to which the
Executive is entitled under Sections 3 and 4 hereof: or
3
<PAGE>
(b) the taking of any action by the Company that would substantially
diminish the aggregate value of the benefits provided to the Executive under the
benefit plans of the Company that may be in effect at such time in which he was
participating, other than any such reduction which is (i) required by law, (ii)
implemented in connection with a general concessionary arrangement affecting all
employees or affecting the group of senior corporate executive employees and
station general managers of (iii) generally applicable to all similarly situated
beneficiaries of such plans; or
(c) the material reduction by the Company of the Executive's duties
and positions under this Agreement.
"Resignation Other than for Good Reason" shall be any resignation
other than a Resignation with Good Reason.
"Termination for Cause" shall be any termination of the Executive's
employment by the Company for Cause.
"Termination Without Cause" shall be any termination of the
Executive's employment by the Company other than a Termination for Cause.
6. Full Discharge of Company Obligations. The amounts payable to the
Executive pursuant to Section 5 following termination of his employment shall be
in full and complete discharge of the Executive's rights under this Agreement
and any other claims he may have in respect of his employment by the Company or
any of its subsidiaries. Such amounts payable shall constitute liquidated
damages with respect to any and all such rights and claims and, upon the
Executive's receipt of such amounts, the Company shall be released and
discharged from any and all liability to the Executive in connection with this
Agreement or otherwise in connection with the Executive's employment with the
Company. Notwithstanding the foregoing, nothing herein contained shall affect
(i) Executive's rights as a stockholder in the Company and (ii) Executive's
entitlement to, and rights under, any stock options which may have been granted
to him in connection with his employment or otherwise.
7. Miscellaneous.
(a) Binding Effect. This Agreement shall be binding on the Company
and any person or entity which succeeds to the interest of the Company
(regardless of whether such succession occurs by operation of law, by reason of
the sale of all or a portion of the Company's stock or assets or a merger,
consolidation or reorganization involving the Company). This Agreement shall
also inure to the benefit of the Executive's heirs, executors, administrators
and legal representatives.
(b) Assignment. Except as provided under Section 7(a) above, neither
this Agreement nor any of the rights or obligations hereunder shall be assigned
or delegated by either party hereto without the prior written consent of the
other party.
4
<PAGE>
(c) Entire Agreement. This Agreement supersedes any and all prior
agreements between the parties hereto, and constitutes the entire agreement
between the parties hereto with respect to the matters referred to herein, and
no other agreement, oral or otherwise, shall be binding between the parties
unless it is in writing and signed by the party against whom enforcement is
sought. There are no promises, representations, inducements or statements
between the parties other than those that are expressly contained herein. The
Executive acknowledges that he is entering into this Agreement of his own free
will and accord, and with no duress, that he has read this Agreement and that he
understands it and its legal consequences. No parol or other evidence may be
admitted to alter, modify or construe this Agreement, which may be changed only
by a writing signed by the parties hereto.
(d) Severability; Reformation. If one or more of the provisions of
this Agreement shall become invalid, illegal or unenforceable in any respect,
the validity, legality and enforceability of the remaining provisions contained
herein shall not be affected thereby.
(e) Waiver. Waiver by any party hereto of any breach or default by
any other party of any of the terms of this Agreement shall not operate as a
waiver of any other breach or default, whether similar to or different from the
breach or default waived. No waiver of any provision of this Agreement shall be
implied from any course of dealing between the parties hereto or from any
failure by either party hereto to assert its or his rights hereunder on any
occasion or series of occasions.
(f) Notices. Any notice required or desired to be delivered under
this Agreement shall be in writing and shall be delivered personally, by courier
service, by registered mail, return receipt requested, or by telecopy and shall
be effective upon dispatch to the party to whom such notice shall be directed,
and shall be addressed as follows (or to such other address as the party
entitled to notice shall hereafter designate in accordance with the terms
hereof):
If to the Company:
ATLANTIS AQUAFARM, INC.
175 27th Street,
Brooklyn, New York 11232
Attention: Secretary
Telecopy #:
with a copy to:
CHAMBERS DAVIDSON LLP
717 Fifth Avenue, 15th Floor
New York, NY 10022
Attention: Graeme A. Chambers, Esq.
Fax #: (212) 822-7444
5
<PAGE>
If to the Executive:
Patrick Trimble
39 Bushwick Street
Melville, NY 11747
(g) Amendments. This Agreement may not be altered, modified or
amended except by a written instrument signed by each of the parties hereto.
(h) Headings. Headings to sections in this Agreement are for
the convenience of the parties only and are not intended to be part of or to
affect the meaning or interpretation hereof.
(i) Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed an original but both of which
together shall constitute one and the same instrument.
(j) Withholding. Any payments provided for herein shall be
reduced by any amounts required to be withheld by the Company from time to time
under applicable Federal, state or local income or employment tax laws or
similar statutes or other provisions of law then in effect.
(k) Governing Law. This Agreement shall be governed by the
laws of the State of New York, without reference to principles of conflicts or
choice of law under which the law of any other jurisdiction would apply.
IN WITNESS WHEREOF, the Company has caused this Agreement to
be executed by its duly authorized officers and the Executive has hereunto set
his hand as of the day and year first above written.
ATLANTIS AQUAFARM, INC.
By:/s/Patrick Trimble
Title: President
By:/s/Eric Popkoff
Title: Vice President
WITNESS:
/s/Graeme A. Chambers
WITNESS: EXECUTIVE:
/s/Graeme A. Chambers /s/Patrick Trimble
Patrick Trimble
6
Draft 4/14/97
EMPLOYMENT AGREEMENT
between
ATLANTIS AQUAFARM, INC.
and
ERIC POPKOFF
<PAGE>
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT, dated as of May 1, 1997, between ATLANTIS AQUAFARM,
INC. a Delaware corporation (the "Company") and ERIC POPKOFF (the "Executive").
The parties hereto agree as follows:
1. Employment.
(a) Agreement to Employ. Upon the terms and subject to the
conditions of this Agreement, the Company shall hereby employ the Executive and
the Executive hereby agrees to be employed by the Company.
(b) Term of Employment. Subject to Section 5, the Company shall
employ the Executive pursuant to the terms hereof for the period commencing on
September 1, 1997 (the "Commencement Date") and ending on the third anniversary
of the Commencement Date (the "Third Anniversary"), provided that the
Executive's employment with the Company shall be deemed to be automatically
renewed upon the same terms and conditions for additional one-year periods
thereafter unless either party hereto shall have given the other party written
notice that such party does not intend to renew the Agreement no later than two
(2) months prior to the date on which the term would otherwise expire. The
period during which the Executive is employed pursuant to this Agreement,
including any renewal thereof in accordance with this Section l(b), shall be
referred to as the "Employment Period."
2. Position and Duties.
During the Employment Period, the Executive shall serve on the Board
of Directors of the Company (the "Board") and shall have the following duties,
responsibilities and obligations:
(i) investor public relations/communications;
(ii) SEC compliance;
(iii) additional financing; and
(iv) merger & acquisition strategies.
<PAGE>
The Executive shall devote such time as reasonably necessary to
perform the services required of him hereunder being not less than ten (10)
hours per week, and shall use his best efforts, judgement, skill and energy to
perform such services in a manner consonant with the duties of his position and
to improve and advance the business and interests of the Company. Nothing
contained in this Agreement shall prohibit the Executive from owning, directly
or indirectly, any shares of capital stock or any equity or ownership interest
in any corporation, partnership joint venture, proprietorship or other business
organization except one which is engaged in competition with the Company it
being understood that the Executive's employment with the Company does not
otherwise constitute an exclusive relationship. During the Employment Period,
the Executive shall report to the Company's Board of Directors.
3. Compensation. From the Commencement Date until the first anniversary of
the Commencement Date (the "First Anniversary"), the Company shall pay the
Executive a base salary of $30,000. The Executive's annual base salary shall be
$40,000 for the period between the First Anniversary and the second anniversary
of the Commencement Date (the "Second Anniversary") and shall be $50,000 for the
period between the Second Anniversary and the Third Anniversary. The Company
shall pay the Executive such base salary in equal bi-monthly installments or in
such other installments as the parties may agree. Thereafter, the Company shall
pay the Executive an annual base salary to be negotiated with the Board of
Directors but in any event not to be less than the prior year's salary plus 10%.
4. Benefits and Vacation. During the Employment Period, the Executive shall
be eligible to participate in any health, disability and life insurance plans
sponsored or maintained by the Company for the benefit of its senior executive
corporate officers to the extent that the Executive is eligible to participate
in any such plans under the generally applicable provisions thereof. The Company
may, in its discretion, amend or terminate any such plans in accordance with the
terms thereof. During the Employment Period, the Executive shall be entitled to
two weeks of paid vacation annually. The Executive shall be furnished with an
office at and shall conduct his duties primarily at the Company's headquarters
in New York.
5. Termination of Employment. If the Executive's employment with the
Company terminates earlier than upon the expiration of the Employment Period
specified in Section 1(b), determined without regard to this Section 5, the
Executive shall be entitled to receive the following payments under the
following circumstances:
(a) Termination for Cause or a Resignation Other than for Good
Reason. If the Executive's employment terminates under this Section 5 due to a
Termination for Cause or a Resignation Other than for Good Reason, the Executive
shall receive his Earned Salary and any other benefits under any benefit plan of
the Company to which he is entitled pursuant to the terms of such plan.
(b) Termination Without Cause or Resignation for Good Reason. If the
Executive's employment terminates under this Section 5 due to a Termination
Without Cause or a Resignation for Good Reason, the Executive shall receive both
his Earned Salary and the full salary that would otherwise be payable under
Section 3 through the remaining term of the Employment Period, determined
without regard to this Section 5 and any other benefits under any benefit plan
of the Company to which he is entitled pursuant to the terms of such plan.
2
<PAGE>
(c) Definitions. For purposes of this Section, capitalized terms
have the following meanings:
"Cause" means a termination of Executive's employment by the Company
due to (i) the continued failure (other than any such failure resulting from
incapacity due to reasonably documented physical or mental illness) by Executive
substantially to perform his duties, responsibilities or obligations as an
officer, director or employee of the Company after having been given written
notice of such failure to perform and after having failed to improve such
performance, in the judgement of the Board (determined without the Executive's
participation) within the time period (which shall not be less than 30 days)
specified in such notice or (ii) the engaging by Executive in serious misconduct
which is material to the performance by Executive of his duties and obligations
for the Company, including, without limitation, gross negligence, dishonesty,
willful malfeasance, gross misconduct, the disclosure of material secret or
confidential information of the Company or any subsidiary or conviction of a
felony or the entry of a plea of nolo contendere to a felony.
"Earned Salary" means the base salary earned, but unpaid, for
services rendered to the Company on or prior to the date of disability,
resignation or termination of the Executive's employment, as the case may be.
Earned Salary shall be paid in a single lump sum as soon as practicable, but in
no event more than 30 days following such date.
"Resignation for Good Reason" means a resignation by the
Executive as a result of any of the following:
(a) a material breach by the Company of its obligations under this
Agreement with respect to the base salary, benefits and vacation to which the
Executive is entitled under Sections 3 and 4 hereof: or
(b) the taking of any action by the Company that would substantially
diminish the aggregate value of any benefits which may by provided to the
Executive under the benefit plans of the Company that may be in effect at such
time in which he was participating, other than any such reduction which is (i)
required by law, or (ii) implemented in connection with a general concessionary
arrangement affecting all employees or affecting the group of senior corporate
executive employees, or (iii) generally applicable to all similarly situated
beneficiaries of such plans; or
(c) the material reduction by the Company of the Executive's duties
and positions under this Agreement.
"Resignation Other than for Good Reason" shall be any resignation
other than a Resignation with Good Reason.
"Termination for Cause" shall be any termination of the
Executive's employment by the Company for Cause.
3
<PAGE>
"Termination Without Cause" shall be any termination of the
Executive's employment by the Company other than a Termination for Cause.
6. Full Discharge of Company Obligations. The amounts payable to the
Executive pursuant to Section 5 following termination of his employment shall be
in full and complete discharge of the Executive's rights under this Agreement
and any other claims he may have in respect of his employment by the Company or
any of its subsidiaries. Such amounts payable shall constitute liquidated
damages with respect to any and all such rights and claims and, upon the
Executive's receipt of such amounts, the Company shall be released and
discharged from any and all liability to the Executive in connection with this
Agreement or otherwise in connection with the Executive's employment with the
Company. Notwithstanding the foregoing, nothing herein contained shall affect
(i) Executive's rights as a stockholder in the Company and (ii) Executive's
entitlement to, and rights under, any stock options which may have been granted
to him in connection with his employment or otherwise.
7. Miscellaneous.
(a) Binding Effect. This Agreement shall be binding on the Company
and any person or entity which succeeds to the interest of the Company
(regardless of whether such succession occurs by operation of law, by reason of
the sale of all or a portion of the Company's stock or assets or a merger,
consolidation or reorganization involving the Company). This Agreement shall
also inure to the benefit of the Executive's heirs, executors, administrators
and legal representatives.
(b) Assignment. Except as provided under Section 7(a) above, neither
this Agreement nor any of the rights or obligations hereunder shall be assigned
or delegated by either party hereto without the prior written consent of the
other party.
(c) Entire Agreement. This Agreement supersedes any and all prior
agreements between the parties hereto, and constitutes the entire agreement
between the parties hereto with respect to the matters referred to herein, and
no other agreement, oral or otherwise, shall be binding between the parties
unless it is in writing and signed by the party against whom enforcement is
sought. There are no promises, representations, inducements or statements
between the parties other than those that are expressly contained herein. The
Executive acknowledges that he is entering into this Agreement of his own free
will and accord, and with no duress, that he has read this Agreement and that he
understands it and its legal consequences. No parol or other evidence may be
admitted to alter, modify or construe this Agreement, which may be changed only
by a writing signed by the parties hereto.
(d) Severability; Reformation. If one or more of the provisions of
this Agreement shall become invalid, illegal or unenforceable in any respect,
the validity, legality and enforceability of the remaining provisions contained
herein shall not be affected thereby.
4
<PAGE>
(e) Waiver. Waiver by any party hereto of any breach or default by
any other party of any of the terms of this Agreement shall not operate as a
waiver of any other breach or default, whether similar to or different from the
breach or default waived. No waiver of any provision of this Agreement shall be
implied from any course of dealing between the parties hereto or from any
failure by either party hereto to assert its or his rights hereunder on any
occasion or series of occasions.
(f) Notices. Any notice required or desired to be delivered under
this Agreement shall be in writing and shall be delivered personally, by courier
service, by registered mail, return receipt requested, or by telecopy and shall
be effective upon dispatch to the party to whom such notice shall be directed,
and shall be addressed as follows (or to such other address as the party
entitled to notice shall hereafter designate in accordance with the terms
hereof):
If to the Company:
ATLANTIS AQUAFARM, INC.
175 27th Street,
Brooklyn, NY 11232
Attention: Secretary
Telecopy #:
with a copy to:
CHAMBERS DAVIDSON LLP
717 Fifth Avenue, 15th Floor
New York, NY 10022
Attention: Graeme A. Chambers, Esq.
Fax #: (212) 822-7444
If to the Executive:
Eric Popkoff
1750 East 23rd Street
Brooklyn, NY 11229
(g) Amendments. This Agreement may not be altered, modified or
amended except by a written instrument signed by each of the parties hereto.
(h) Headings. Headings to sections in this Agreement are for
the convenience of the parties only and are not intended to be part of or to
affect the meaning or interpretation hereof.
5
<PAGE>
(i) Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed an original but both of which
together shall constitute one and the same instrument.
(j) Withholding. Any payments provided for herein shall be
reduced by any amounts required to be withheld by the Company from time to time
under applicable Federal, state or local income or employment tax laws or
similar statutes or other provisions of law then in effect.
(k) Governing Law. This Agreement shall be governed by the
laws of the State of New York, without reference to principles of conflicts or
choice of law under which the law of any other jurisdiction would apply.
IN WITNESS WHEREOF, the Company has caused this Agreement to
be executed by its duly authorized officers and the Executive has hereunto set
his hand as of the day and year first above written.
ATLANTIS AQUAFARM, INC.
By:/s/Patrick Trimble
Title: President
WITNESS:
/s/Graeme A. Chambers
WITNESS: EXECUTIVE:
/s/Graeme A. Chambers By:/s/Eric Popkoff
ERIC POPKOFF
6
EMPLOYMENT AGREEMENT
between
ATLANTIS AQUAFARM, INC.
and
GOVIND SRIVISTAVA
<PAGE>
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT, dated as of May 1, 1997, between ATLANTIS AQUAFARM,
INC. a New York corporation (the "Company") and GOVIND SRIVISTAVA (the
"Executive"). The parties hereto agree as follows:
1. Employment.
(a) Agreement to Employ. Upon the terms and subject to the
conditions of this Agreement, the Company shall hereby employ the Executive and
the Executive hereby agrees to be employed by the Company.
(b) Term of Employment. Subject to Section 5, the Company shall
employ the Executive pursuant to the terms hereof for the period commencing on
September 1, 1997 (the "Commencement Date") and ending on the third anniversary
of the Commencement Date (the "Third Anniversary"), provided that the
Executive's employment with the Company shall be deemed to be automatically
renewed upon the same terms and conditions for additional one-year periods
thereafter unless either party hereto shall have given the other party written
notice that such party does not intend to renew the Agreement no later than two
(2) months prior to the date on which the term would otherwise expire. The
period during which the Executive is employed pursuant to this Agreement,
including any renewal thereof in accordance with this Section l(b), shall be
referred to as the "Employment Period."
2. Position and Duties.
During the Employment Period, the Executive shall serve on the Board
of Directors of the Company (the "Board") and shall have the following duties,
responsibilities and obligations:
(i) marketing and sales;
(ii) controller.
<PAGE>
The Executive shall devote such time as reasonably necessary to
perform the services required of him hereunder (which shall in no event be less
than 15 hours per week), and shall use his best efforts, judgement, skill and
energy to perform such services in a manner consonant with the duties of his
position and to improve and advance the business and interests of the Company.
Nothing contained in this Agreement shall prohibit the Executive from owning,
directly or indirectly, any shares of capital stock or any equity or ownership
interest in any corporation, partnership joint venture, proprietorship or other
business organization except one which is engaged in competition with the
Company it being understood that the Executive's employment with the Company
does not otherwise constitute an exclusive relationship. During the Employment
Period, the Executive shall report to the Company's Board of Directors.
3. Compensation. From the Commencement Date until the first anniversary of
the Commencement Date (the "First Anniversary"), the Company shall pay the
Executive a base salary of $30,000. The Executive's annual base salary shall be
$40,000 for the period between the First Anniversary and the second anniversary
of the Commencement Date (the "Second Anniversary") and shall be $50,000 for the
period between the Second Anniversary and the Third Anniversary. The Company
shall pay the Executive such base salary in equal bi-monthly installments or in
such other installments as the parties may agree.
4. Benefits and Vacation. During the Employment Period, the Executive shall
be eligible to participate in any health, disability and life insurance plans
sponsored or maintained by the Company for the benefit of its senior executive
corporate officers to the extent that the Executive is eligible to participate
in any such plans under the generally applicable provisions thereof. The Company
may, in its discretion, amend or terminate any such plans in accordance with the
terms thereof. During the Employment Period, the Executive shall be entitled to
two weeks of paid vacation annually. The Executive shall be furnished with an
office at and shall conduct his duties primarily at the Company's headquarters
in New York.
5. Termination of Employment. If the Executive's employment with the
Company terminates earlier than upon the expiration of the Employment Period
specified in Section 1(b), determined without regard to this Section 5, the
Executive shall be entitled to receive the following payments under the
following circumstances:
(a) Termination for Cause or a Resignation Other than for Good
Reason. If the Executive's employment terminates under this Section 5 due to a
Termination for Cause or a Resignation Other than for Good Reason, the Executive
shall receive his Earned Salary and any other benefits under any benefit plan of
the Company to which he is entitled pursuant to the terms of such plan.
(b) Termination Without Cause or Resignation for Good Reason. If the
Executive's employment terminates under this Section 5 due to a Termination
Without Cause or a Resignation for Good Reason, the Executive shall receive both
his Earned Salary and the full salary that would otherwise be payable under
Section 3 through the remaining term of the Employment Period, determined
without regard to this Section 5 and any other benefits under any benefit plan
of the Company to which he is entitled pursuant to the terms of such plan.
(c) Definitions. For purposes of this Section, capitalized terms
have the following meanings:
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"Cause" means a termination of Executive's employment by the Company
due to (i) the continued failure (other than any such failure resulting from
incapacity due to reasonably documented physical or mental illness) by Executive
substantially to perform his duties, responsibilities or obligations as an
officer, director or employee of the Company after having been given written
notice of such failure to perform and after having failed to improve such
performance, in the judgement of the Board (determined without the Executive's
participation) within the time period (which shall not be less than 30 days)
specified in such notice or (ii) the engaging by Executive in serious misconduct
which is material to the performance by Executive of his duties and obligations
for the Company, including, without limitation, gross negligence, dishonesty,
willful malfeasance, gross misconduct, the disclosure of material secret or
confidential information of the Company or any subsidiary or conviction of a
felony or the entry of a plea of nolo contendere to a felony.
"Earned Salary" means the base salary earned, but unpaid, for
services rendered to the Company on or prior to the date of disability,
resignation or termination of the Executive's employment, as the case may be.
Earned Salary shall be paid in a single lump sum as soon as practicable, but in
no event more than 30 days following such date.
"Resignation for Good Reason" means a resignation by the
Executive as a result of any of the following:
(a) a material breach by the Company of its obligations under this
Agreement with respect to the base salary, benefits and vacation to which the
Executive is entitled under Sections 3 and 4 hereof: or
(b) the taking of any action by the Company that would substantially
diminish the aggregate value of any benefits which may be provided to the
Executive under the benefit plans of the Company that may be in effect at such
time in which he was participating, other than any such reduction which is (i)
required by law, or (ii) implemented in connection with a general concessionary
arrangement affecting all employees or affecting the group of senior corporate
executive employees, or (iii) generally applicable to all similarly situated
beneficiaries of such plans; or
(c) the material reduction by the Company of the Executive's duties
and positions under this Agreement.
"Resignation Other than for Good Reason" shall be any resignation
other than a Resignation with Good Reason.
"Termination for Cause" shall be any termination of the
Executive's employment by the Company for Cause.
"Termination Without Cause" shall be any termination of the
Executive's employment by the Company other than a Termination for Cause.
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5. Full Discharge of Company Obligations. The amounts payable to the
Executive pursuant to Section 5 following termination of his employment shall be
in full and complete discharge of the Executive's rights under this Agreement
and any other claims he may have in respect of his employment by the Company or
any of its subsidiaries. Such amounts payable shall constitute liquidated
damages with respect to any and all such rights and claims and, upon the
Executive's receipt of such amounts, the Company shall be released and
discharged from any and all liability to the Executive in connection with this
Agreement or otherwise in connection with the Executive's employment with the
Company. Notwithstanding the foregoing, nothing herein contained shall affect
(i) Executive's rights as a stockholder in the Company and (ii) Executive's
entitlement to, and rights under, any stock options which may have been granted
to him in connection with his employment or otherwise.
6. Miscellaneous.
(a) Binding Effect. This Agreement shall be binding on the Company
and any person or entity which succeeds to the interest of the Company
(regardless of whether such succession occurs by operation of law, by reason of
the sale of all or a portion of the Company's stock or assets or a merger,
consolidation or reorganization involving the Company). This Agreement shall
also inure to the benefit of the Executive's heirs, executors, administrators
and legal representatives.
(b) Assignment. Except as provided under Section 7(a) above, neither
this Agreement nor any of the rights or obligations hereunder shall be assigned
or delegated by either party hereto without the prior written consent of the
other party.
(c) Entire Agreement. This Agreement supersedes any and all prior
agreements between the parties hereto, and constitutes the entire agreement
between the parties hereto with respect to the matters referred to herein, and
no other agreement, oral or otherwise, shall be binding between the parties
unless it is in writing and signed by the party against whom enforcement is
sought. There are no promises, representations, inducements or statements
between the parties other than those that are expressly contained herein. The
Executive acknowledges that he is entering into this Agreement of his own free
will and accord, and with no duress, that he has read this Agreement and that he
understands it and its legal consequences. No parol or other evidence may be
admitted to alter, modify or construe this Agreement, which may be changed only
by a writing signed by the parties hereto.
(d) Severability; Reformation. If one or more of the provisions of
this Agreement shall become invalid, illegal or unenforceable in any respect,
the validity, legality and enforceability of the remaining provisions contained
herein shall not be affected thereby.
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(e) Waiver. Waiver by any party hereto of any breach or default by
any other party of any of the terms of this Agreement shall not operate as a
waiver of any other breach or default, whether similar to or different from the
breach or default waived. No waiver of any provision of this Agreement shall be
implied from any course of dealing between the parties hereto or from any
failure by either party hereto to assert its or his rights hereunder on any
occasion or series of occasions.
(f) Notices. Any notice required or desired to be delivered under
this Agreement shall be in writing and shall be delivered personally, by courier
service, by registered mail, return receipt requested, or by telecopy and shall
be effective upon dispatch to the party to whom such notice shall be directed,
and shall be addressed as follows (or to such other address as the party
entitled to notice shall hereafter designate in accordance with the terms
hereof):
If to the Company:
ATLANTIS AQUAFARM, INC.
175 27th Street
Brooklyn, NY 11232
Attention: Secretary
Telecopy #: 718-449-2217
with a copy to:
CHAMBERS DAVIDSON LLP
717 Fifth Avenue, 15th Floor
New York, NY 10022
Attention: Graeme A. Chambers, Esq.
Fax #: (212) 822-7444
If to the Executive:
GOVIND SRIVISTAVA
310 Birchwood Bark Drive
Jericho, NY 11753
(g) Amendments. This Agreement may not be altered, modified or
amended except by a written instrument signed by each of the parties hereto.
(h) Headings. Headings to sections in this Agreement are for
the convenience of the parties only and are not intended to be part of or to
affect the meaning or interpretation hereof.
(i) Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed an original but both of which
together shall constitute one and the same instrument.
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(j) Withholding. Any payments provided for herein shall be
reduced by any amounts required to be withheld by the Company from time to time
under applicable Federal, state or local income or employment tax laws or
similar statutes or other provisions of law then in effect.
(k) Governing Law. This Agreement shall be governed by the
laws of the State of New York, without reference to principles of conflicts or
choice of law under which the law of any other jurisdiction would apply.
IN WITNESS WHEREOF, the Company has caused this Agreement to
be executed by its duly authorized officers and the Executive has hereunto set
his hand as of the day and year first above written.
ATLANTIS AQUAFARM, INC.
By:/s/Patrick Trimble
Title: President
WITNESS:
- ------------------------------
WITNESS: EXECUTIVE:
- ------------------------------ By: /s/GOVIND SRIVISTAVA
GOVIND SRIVISTAVA
Atlantis Aquafarm, Inc.
175 27th Street,
Brooklyn, NY 11032
Gentlemen:
We refer to the Registration Statement on Form SB-2 (Commission File No.
___-NY) and all amendments thereto (the "Registration Statement") filed by
Atlantis Aquafarm, Inc., a New York corporation (the "Company"), with the
Securities and Exchange Commission (the Commission) under the Securities Act of
1933, as amended (the "Securities Act"), relating to the issue and sale in a
public offering of 300,000 Units (the "Units"), each consisting of one share
(the "Unit Shares") of Common Stock, $.001 par value (the "Common Stock"), and
one Class A Warrant (the "Class A Warrants") to purchase one share of Common
Stock and one Class B Warrant (the "Class B Warrants" and together with the
Class A Warrants, the "Warrants"), which number of Units includes 600,000 shares
of Common Stock issuable upon exercise of the Warrants (the "Warrant Shares").
Terms not defined herein shall have the meanings ascribed to them in the
Registration Statement.
As the basis for the opinion hereinafter expressed, we have examined
originals or copies, certified or otherwise identified to our satisfaction, of
such documents, corporate records, certificates of public officials and other
instruments as we have considered necessary or advisable for the purpose of this
opinion. We have relied as to factual matters on certificates or other documents
furnished by the Company or its officers and directors and by governmental
authorities and upon such other documents and data as we have deemed
appropriate. We have assumed the genuineness of all signatures, the authenticity
of all documents submitted to us as originals and the conformity with the
originals of all documents submitted to us as copies. We have not independently
verified such information and assumptions.
We are members of the bar of the State of New York and do not herein
express any opinion as to any law other than the laws of the State of New York.
Subject to the foregoing and based on such examination, we are of the
opinion that (i) the Unit Shares have been duly authorized and, assuming the due
execution and delivery of the certificates for the Unit Shares against payment
therefore, will be validly issued, validly paid and nonassessable; (ii) the
Units and the Warrants have been duly authorized and assuming due execution and
delivery thereof, will be validly issued; and (iii) the Warrant Shares have been
duly authorized and, upon delivery and payment therefor in accordance with the
terms of the Warrants, will be validly issued, fully paid and nonassessable.
We consent to the filling of this opinion as an exhibit to the Registration
Statement and to the reference made to our firm which appears in the Prospectus
constituting a part thereof under the caption "LEGAL MATTERS". In giving such
consent, we do not thereby admit that we come within the category of persons
whose consent is required under Section 7 of the Securities Act or the rules and
regulations of the Commission thereunder.
Very Truly Yours,
Chambers Davidson, L.L.P.
RONALD R. CHADWICK, P.C.
CERTIFIED PUBLIC ACCOUNTANT
3025 S. PARKER ROAD
SUITE 109
AURORA, COLORADO 80014
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TELEPHONE: (303) 306-1967
TELECOPIER: (303) 306-1944
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANT
I hereby consent to the use in the Prospectus, constituting part of this
Registration Statement on Form SB-2, of my report dated May 15, 1997 relating to
the financial statements of Atlantis Aquafarm, Inc. which appear in such
Prospectus. I also consent to the reference to my firm under the heading
"Experts" in such Prospectus.
Aurora, Colorado /s/Ronald R. Chadwick, P.C.
June 17, 1997 RONALD R. CHADWICK, P.C.
