As filed with the Securities and Exchange Commission on November 10, 1997
Registration No._______________
================================================================================
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------------
FORM SB-2
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
------------------------------
MEDICAL ACQUISITION CORP.
(Name of Small Business Issuer in its Charter)
<TABLE>
<S> <C> <C>
FLORIDA 6770 65-0784311
(State or Other Jurisdiction of (Primary Standard Industrial (I.R.S. Employer
Incorporation or Organization) Classification Code Number) Identification Number)
</TABLE>
------------------------------
201 S. BISCAYNE BLVD., SUITE 3000
MIAMI, FLORIDA 33131
TELEPHONE: 305) 373-9464
FACSIMILE: (305) 373-9443
(Address and Telephone Number of Principal Executive Offices and Principal Place
of Business)
JAY M. HAFT
CHIEF EXECUTIVE OFFICER
201 S. BISCAYNE BLVD., SUITE 3000
MIAMI, FLORIDA 33131
TELEPHONE: (305) 373-9464
FACSIMILE: (305) 373-9443
(Name, Address and Telephone Number of Agent for Service)
------------------------------
Copies to:
ANDREW HULSH, ESQ. DAVID N. FELDMAN, ESQ.
BAKER & MCKENZIE LAW OFFICES OF DAVID N. FELDMAN
701 BRICKELL AVENUE 36 WEST 44TH STREET
SUITE 1600 NEW YORK, NEW YORK 10036
MIAMI, FLORIDA 33131 TELEPHONE: (212) 869-7000
TELEPHONE: (305) 789-8985 FACSIMILE: (212) 997-4242
FACSIMILE: (305) 789-8953
------------------------------
Approximate date of proposed sale to the public: As soon as practicable after
this Registration Statement becomes effective.
------------------------------
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the Securities
Act registration 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(d) under the Securities Act, check the following box and list the Securities
Act registration statement number 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. [_]
------------------------------
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
==============================================================================================================
Title of Each Class of Amount to be Proposed Maximum Proposed Maximum Amount of
Securities to be Registered (2) Offering Price Per Unit Aggregate Offering Registration Fee
Registered Price(1)(2)
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, $0.01 1,341,667 $6.00 $8,050,002 $2,439
par value per share(1)
==============================================================================================================
<FN>
(1) Estimated solely for the purpose of calculating the registration fee in
accordance with Rule 457(o) under the Securities Act of 1933.
(2) Includes 175,000 shares of Common Stock which may be purchased by the
Underwriters pursuant to an over-allotment option.
</FN>
</TABLE>
------------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE
OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SUCH SECTION 8(A),
MAY DETERMINE.
================================================================================
<PAGE>
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
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.
SUBJECT TO COMPLETION, DATED NOVEMBER 10, 1997
PROSPECTUS
[LOGO] MEDICAL ACQUISITION CORP.
1,166,667 SHARES
Common Stock ($0.01 par value)
The 1,166,667 shares of common stock, par value $.01 per share ("Common Stock"),
offered hereby are being offered by Medical Acquisition Corp., a newly organized
Florida corporation ("Company"). The Company's objective is to effect a Business
Combination (as hereinafter defined) with an operating business in the
healthcare industry.
Prior to this offering, there has been no public market for the shares of Common
Stock and there can be no assurance that any such market will develop. For
information regarding the factors considered in determining the initial public
offering price of the Common Stock, see "Underwriting." The Company anticipates
that the Common Stock will be quoted on the Bulletin Board (as hereinafter
defined) under the symbol "MACC" upon completion of this offering.
Certain officers and directors of the Company and their respective affiliates
have advised the Underwriter that they intend to purchase approximately ____
shares of Common Stock, representing ___ percent (__%) of the total shares of
Common Stock offered hereby.
The Company anticipates that trading of the Common Stock will be conducted
through what is customarily known as the "pink sheets" and on the National
Association of Securities Dealers, Inc.'s Electronic Bulletin Board (the
"Bulletin Board"). Any market for the Common Stock which may result will likely
be less developed than if the Common Stock were traded on Nasdaq or on a
securities exchange. Subsequent to the closing of this offering, the Company
will prepare and file with the United States Securities and Exchange Commission
(the "Commission"), on Current Report Form 8-K, an audited balance sheet of the
Company reflecting receipt by the Company of the proceeds of this offering.
Eighty percent (80%) of the net proceeds of this offering may be held in a trust
account for a maximum period of 24 months following the consummation of this
offering. In the event of liquidation of the Company, investors may lose all or
a portion of their investment.
----------
THE SECURITIES OFFERED HEREBY INVOLVE A HIGH DEGREE OF RISK AND ARE NOT SUBJECT
TO THE PROTECTIONS OF THE RULES UNDER THE SECURITIES ACT OF 1933 RELATING TO
BLANK CHECK OFFERINGS. SEE "RISK FACTORS" ON PAGES 11 THROUGH 20.
----------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
================================================================================
UNDERWRITING
PRICE DISCOUNTS AND PROCEEDS TO
TO PUBLIC COMMISSIONS(1) COMPANY(2)(4)
- --------------------------------------------------------------------------------
Per Share.............. $6.00 $0.42 $5.58
- --------------------------------------------------------------------------------
Total(3)............... $7,000,002 $490,000 $6,510,002
- --------------------------------------------------------------------------------
(1) Does not include a non-accountable expense allowance of $120,000 which the
Company has agreed to pay to G-V Capital Corp., as placement agent (the
"Underwriter"). The Company has also agreed to sell to the Underwriter an
option (the "Underwriter's Warrants") to purchase 75,000 shares of Common
Stock at the initial public offering price, exercisable for a period of
five years commencing one year from the date of this Prospectus. The
Company has also agreed to indemnify the Underwriter against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended. See "Underwriting."
(2) Before deducting expenses payable by the Company estimated at $275,000,
including the non-accountable expense allowance. See "Use of Proceeds" and
"Underwriting."
(3) The Company has granted the Underwriter an option, exercisable within 30
days from the date of this Prospectus, to purchase up to 175,000
additional shares of Common Stock upon the same terms set forth above,
solely to cover over-allotments, if any. If such over-allotment option is
exercised in full, the total Price to Public, Underwriting Discounts and
Commissions and Proceeds to Company will be $8,050,002 $563,500 and
$7,486,502 respectively. See "Underwriting."
(4) There is no firm commitment on the part of the Underwriter to purchase any
or all of the Common Stock. Rather, the Underwriter has agreed to sell the
Common Stock through licensed dealers on a "best efforts" "all or none"
basis. Pending the closing of the sale of the 1,166,667 shares of Common
Stock, the proceeds of this offering will be deposited in escrow in a
non-interest bearing account at North Fork Bank until the closing of the
offering. Unless 1,166,667 shares of Common Stock are sold within a period
of 30 days from the date of this Prospectus or a 30 day extension period
thereafter, the offering will terminate and all funds theretofore received
from the sale of the Common Stock will be promptly returned to the
subscribers without deduction therefrom or interest thereon. Moreover,
during the period of escrow, subscribers will not be entitled to a return
of their subscriptions. See "Underwriting."
The shares of Common Stock are being offered by the Underwriter, subject to
prior sale, when, as and if delivered to and accepted by the Underwriter and
subject to the approval of certain legal matters by counsel and certain other
conditions. The Underwriter reserves the right to withdraw, cancel or modify
this offering and to reject any order in whole or in part. It is expected that
delivery of certificates representing the shares of Common Stock will be made
against payment therefor at the offices of the Underwriter in Hauppauge, New
York on or about ____________, 1997.
----------
G-V CAPITAL CORP.
----------
The date of this Prospectus is _________, 1997
<PAGE>
OFFERING NOT CONDUCTED IN ACCORDANCE WITH CERTAIN BLANK CHECK REGULATIONS
The Company's offering is not being conducted in accordance with Rule
419 ("Rule 419") promulgated by the Securities and Exchange Commission (the
"Commission"). According to the Commission, Rule 419 was designed to "strengthen
regulation of securities offerings by blank check companies which Congress has
found to have been common vehicles for fraud and manipulation in the penny stock
market." Pursuant to Rule 419, a "blank check" company is defined as (a) a
development stage company that has no specific business plan or has indicated
that its business plan is to engage in a merger or to effect a Business
Combination (as hereinafter defined) with an unidentified company or companies;
and (b) a company which issues a "penny stock," meaning any equity securities
that, among other things, (i) are not quoted in the Nasdaq system; or (ii) in
the case of a company which has been in continuous operation for less than three
years, has net tangible assets (i.e., total assets less intangible assets and
liabilities) of less than $5,000,000, as demonstrated by the Company's most
recent financial statements that have been audited and reported on by an
independent public accountant. The Company is not subject to Rule 419 as a
"blank check" Company because the Company's net tangible assets after this
offering will be greater than $5,000,000. Accordingly, investors in this
offering will not receive the substantive protections provided by Rule 419. See
"Risk Factors."
STATE BLUE SKY INFORMATION
The Company has made application to register, or an exemption from
registration will be obtained for, the sale of the shares of Common Stock
offered hereby in the States of Colorado, Florida, Illinois and New York.
Purchasers of shares of Common Stock either in this offering or in any
subsequent trading market which may develop must be residents of the States of
Colorado, Florida, Illinois and New York unless an applicable exemption is
available or a blue sky application has been filed and accepted in other states.
The Company will amend this Prospectus for the purpose of disclosing additional
states, if any, in which the shares of Common Stock will have been registered or
where an exemption from registration is available.
----------
CERTAIN PERSONS PARTICIPATING IN THE OFFERING MAY ENGAGE IN TRANSACTIONS THAT
STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE COMMON STOCK, INCLUDING
PURCHASES OF THE COMMON STOCK TO STABILIZE ITS MARKET PRICE, PURCHASES OF THE
COMMON STOCK TO COVER SOME OR ALL OF A SHORT POSITION IN THE COMMON STOCK
MAINTAINED BY THE UNDERWRITERS AND THE IMPOSITION OF PENALTY BIDS. FOR A
DESCRIPTION OF THESE ACTIVITIES, SEE "UNDERWRITING."
----------
ADDITIONAL INFORMATION
The Company intends to furnish to its stockholders annual reports
containing financial statements audited and reported on by its independent
public accounting firm and such other periodic reports as the Company may
determine to be appropriate or as may be required by law.
2
<PAGE>
PROSPECTUS SUMMARY
THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO, AND
SHOULD BE READ IN CONJUNCTION WITH, THE MORE DETAILED INFORMATION AND FINANCIAL
STATEMENTS (INCLUDING THE NOTES THERETO) APPEARING ELSEWHERE IN THIS PROSPECTUS.
EACH PROSPECTIVE INVESTOR IS URGED TO READ THIS PROSPECTUS IN ITS ENTIRETY.
UNLESS OTHERWISE INDICATED, THE INFORMATION IN THIS PROSPECTUS DOES NOT GIVE
EFFECT TO THE EXERCISE OF THE UNDERWRITER'S OVER ALLOTMENT OPTION, OR THE
EXERCISE OF THE WARRANTS ISSUED IN CONNECTION WITH THE COMPANY'S BRIDGE
FINANCING, HEREINAFTER DESCRIBED.
THE COMPANY
The Company is a newly organized Florida corporation, the objective of
which is to effect a merger, exchange of capital stock, stock or asset
acquisition or other similar type of transaction (a "Business Combination") with
an operating business (a "Target Business") in the healthcare industry. The
Company will seek to identify and effect a Business Combination with a Target
Business which provides quality healthcare-related products and/or services that
have proven or potential cost savings or other advantages in their relevant
markets.
Management of the Company ("Management") believes that certain current
key trends create favorable circumstances for the Company's Business Combination
with a Target Business in the healthcare industry, including the existence of
potentially attractive private market values of smaller healthcare enterprises
as a result of financial and operational demands resulting from the changing
dynamics of the healthcare industry, a strong desire of many private healthcare
companies to achieve liquidity through the public equity markets, the trend
towards consolidation in response to cost/pricing pressures, and the trend of
healthcare service companies expanding into national markets to broaden the
scope of their services and other factors. Accordingly, the Company believes
that, despite the recent recovery of public market valuations of many companies
within certain healthcare segments, there remain substantial niche opportunities
to effect attractive Business Combinations in certain segments of the industry,
and that, as a well-financed public entity possessing broad investment and
operational expertise in the healthcare industry, it is well positioned to
identify candidates to effect a Business Combination.
In selecting its officers, directors and advisors, the Company has
sought to create a management and advisory team that not only provides the
Company with depth of experience in healthcare industry mergers, acquisitions
and investments generally, but also provides the Company with operational,
investment and strategic experience in specific healthcare industry segments.
The Company believes that the skills and expertise of its officers,
directors, and advisors, their collective access to Business Combination
opportunities and ideas, their industry contacts and their proven management
abilities will enable the Company to successfully identify and effect a Business
Combination with a Target Business in the healthcare industry. These individuals
will play a key role in identifying and evaluating prospective candidates for a
Business Combination, selecting the Target Business, and structuring,
negotiating and consummating the Business Combination .
BOARD OF DIRECTORS
Each of the Company's executive officers, except for the Chairman of
the Board of Directors, all of whom are also members of the Company's Board of
Directors, were the founders of Healthcare Acquisition Corp. ("HCAC"). In March
1996, HCAC consummated an initial public offering in which it raised net
proceeds of approximately $9,000,000. Similar to the Company, HCAC was formed
with the purpose of using the proceeds to identify and effect a Business
Combination with an operating business in the healthcare industry. In March
1997, HCAC merged with Encore Orthopedics, Inc., a Texas corporation which
designs, manufactures, markets and sells products for the orthopedic implant
industry primarily in the United States, Europe and Asia. After the merger, the
surviving corporation's name was changed to Encore Medical Corporation
("Encore"). Encore's common stock is publicly traded on the
3
<PAGE>
Nasdaq National Market under the symbol "ENMC". On November 3, 1997, the closing
price per share of Encore's common stock was $4.63. There can be no assurance as
to the future performance of Encore or the prices at which its common stock will
trade.
Gene E. Burleson has been the Chairman of the Board of Directors of the
Company since its inception. Since January 1994, Mr. Burleson has served as
Chairman of the Board of Directors of GranCare, Inc., which has recently merged
into Paragon Health Network, Inc., a leading provider of comprehensive
post-acute healthcare services, primarily skilled nursing care, subacute and
medically complex care, long-term acute hospital care, inpatient/outpatient
therapy, hospital contract management, home health care and adult day care,
which is publicly traded on the New York Stock Exchange, Inc. ("NYSE"). From
December 1990 to February 1997, Mr. Burleson served as Chief Executive Officer
of GranCare, Inc.
Jay M. Haft has been the Vice-Chairman of the Board of Directors and
Chief Executive Officer of the Company since its inception. Mr. Haft, as an
attorney, strategic advisor and investor, has participated in the development
and financing of numerous emerging companies and negotiated, structured and
consummated all types of Business Combinations in the healthcare and other
industries. Mr. Haft was a founder of HCAC.
John H. Abeles, M.D. has been the President and a director of the
Company since its inception. Dr. Abeles is a healthcare industry investor and
consultant who, since 1980, has served as President and sole principal of
MedVest, Inc., a company which provides strategic, financial, and market-based
research and development advisory and consulting services, principally to
emerging companies in the healthcare industry. Dr. Abeles was also a founder of
HCAC.
Joel S. Kanter has served as Secretary, Treasurer and a director of the
Company since its inception. Mr. Kanter also serves as President of Walnut
Financial Services, Inc., a financial service and consulting firm, which is
publicly traded on the Nasdaq National Market, and Walnut Capital Corp., a
venture capital firm, and has, in those capacities and as an individual
investor, valued and negotiated substantial investments in the healthcare and
other industries. Mr. Kanter was also a founder of HCAC.
Linda Ann Hamilton has been a director of the Company since its
inception. Ms. Hamilton currently serves as President of HMS, Inc., a private
company located in Naples, Florida which provides managerial and administrative
services.
BOARD OF ADVISORS
Robert J. Becker, M.D. has been a member of the Board of Advisors to
the Company since its inception. Dr. Becker was the founder and served as the
Chief Executive Officer and President of HealthCare COMPARE Corp., a managed
care company which is publicly traded on the Nasdaq National Market. Healthcare
COMPARE Corp. has grown to become a major managed care organization, with one of
the largest integrated, independent Preferred Provider Organization network in
the United States. Dr. Becker is regarded as one of the pioneer entrepreneurs in
the managed care segment of the healthcare industry. Since retiring from the
active management of HealthCare COMPARE Corp., he has provided entrepreneurial
consulting services to both for profit and non-profit healthcare service
companies.
Nick Cindrich has been a member of the Board of Advisors to the Company
since its inception. Mr. Cindrich founded Encore, which designs, manufactures
and sells orthopedic implant products primarily in the United States, Europe and
Asia. He has over 25 years of experience in the medical device industry.
4
<PAGE>
Kenneth Davidson has been a member of the Board of Advisors to the
Company since its inception. Since November 1986, Mr. Davidson has served as
Chairman of the Board of Directors, Chief Executive Officer and President of
Maxxim Medical, Inc., a manufacturer of single-use specialty medical products
which is publicly traded on the NYSE.
Dr. Marvin J. Weinstein has been a member of the Board of Advisors to
the Company since its inception. Since 1981, Dr. Weinstein has been President of
Research Advisory Service, Inc., a biotechnology consulting company, that has
provided consulting services to several companies in the pharmaceutical
industry, including Yamanouchi Pharmaceuticals Corporation, Suntory Biomedical
Research, Inc. Xenora Ltd. and Martek Biosciences Inc. Prior to that time, Dr.
Weinstein was employed by Schering Plough Pharmaceutical Company for 25 years,
most recently as Senior Director and Vice President of Microbiology and
Recombinant DNA Research. Dr. Weinstein is the inventor on 30 patents and he has
organized and directed the group responsible for the discovery and development
of several antibiotics.
See "Management" for greater detail with respect to the biographical
information presented above.
A Business Combination may be effected using cash (to be derived from
the proceeds of this offering), equity, debt or a combination thereof. The
Company may ultimately effect a Business Combination with more than one
business; however, the Company's initial Business Combination must be with a
Target Business whose fair market value, as determined by an independent auditor
or investment banking firm, is equal to at least 80% of the net assets of the
Company at the time of the Business Combination. As of the date of this
Prospectus, the Company has no plans, arrangements or understandings with any
prospective candidates for a Business Combination and has not targeted any
business for investigation and evaluation. See "Special Characteristics of the
Company--Fair Market Value of Target Business."
To date, the Company's efforts have been limited to organizational
activities. The Company will not engage in any substantive commercial business
immediately following this offering and, until the consummation of a Business
Combination, the only material activities of the Company will be to evaluate and
select an appropriate Target Business and to structure, negotiate and consummate
the Business Combination. The implementation of the Company's business plan is
dependent, among other things, upon the successful consummation of this
offering. See "Proposed Business."
The Underwriter played no role in the formation and organization of the
Company. Jay M. Haft, John H. Abeles, M.D., and Joel S. Kanter assembled the
management team from their contacts in the healthcare industry.
SPECIAL CHARACTERISTICS OF THE COMPANY
The Company is a newly organized Florida corporation formed for the
purpose of effecting a Business Combination with a Target Business in the
healthcare industry. Although the Company is not a "blank check" company within
the meaning of Rule 419 promulgated under the Securities Act of 1933, as amended
(the "Securities Act"), the Company has incorporated selected investor
safeguards described below. Immediately after the consummation of a Business
Combination, these safeguards will no longer be applicable to the Company.
SUBSTANTIAL PORTION OF OFFERING PROCEEDS HELD IN TRUST
The net proceeds of this offering, after payment of underwriting
discounts, the Underwriter's non-accountable expense allowance and the estimated
expenses of this offering, are estimated to be $6,235,000 ($7,211,500 if the
Underwriter's over-allotment option is exercised in full). Eighty percent (80%)
of such amount, or $4,988,000 ($5,769,200 if the Underwriter's over-allotment is
exercised in full),
5
<PAGE>
which represents 71% of the gross proceeds of this offering, will be placed in a
trust account ("Trust Fund") and invested in United States government
securities. The initial trustee of the Trust Fund will be NationsBank, N.A. The
Trust Fund will not be released until the earlier of the consummation of a
Business Combination or the liquidation of the Company, which may not occur
until 18 months from the consummation of this offering, subject to an extension
of 6 months if a definitive agreement to consummate a Business Combination is
executed prior to such time. Therefore, unless and until a Business Combination
is consummated, the proceeds held in the Trust Fund will not be available for
use by the Company for any expenses related to this offering or expenses which
may be incurred by the Company related to the investigation and selection of a
Target Business and the negotiation of an agreement to effect a Business
Combination with a Target Business. Such expenses may be paid from the net
proceeds not held in the Trust Fund (approximately $1,247,000 or $1,442,300 if
the Underwriter's over-allotment option is exercised in full). See "Use of
Proceeds" and "Special Characteristics of the Company--Liquidation if No
Business Combination."
FAIR MARKET VALUE OF TARGET BUSINESS
The Company will not effect a Business Combination with a Target
Business unless the fair market value of such business, as determined by an
independent auditor or investment banking firm which is a member of the National
Association of Securities Dealers, Inc. ("NASD"), based upon standards generally
accepted by the financial community such as actual and potential sales, earnings
and cash flow and book value ("Fair Market Value"), is at least 80% of the net
assets of the Company at the time of such Business Combination. See "Proposed
Business--Selection of Target Business and Structuring a Business Combination."
STOCKHOLDER APPROVAL OF BUSINESS COMBINATION
The Company, after signing a definitive agreement to effect a Business
Combination with a Target Business, but prior to the consummation of any
Business Combination, will submit such transaction to the Company's stockholders
for their approval, even if the nature of the Business Combination would not
ordinarily require stockholder approval under applicable state law. All of the
Company's stockholders immediately prior to this offering ("Initial
Stockholders"), including all the officers and directors of the Company, have
agreed to vote the shares of Common Stock owned by them immediately prior to
this offering in accordance with the vote of the majority of all the other
shares of Common Stock ("Public Shares") voted on any Business Combination. The
holders of the Public Shares will be referred to herein as the "Public
Stockholders." The Initial Stockholders shall be deemed to be "Public
Stockholders" with respect to any Public Shares they acquire in this offering or
thereafter. The Company will proceed with the Business Combination only if the
holders of at least a majority of the outstanding shares of Common Stock vote in
favor of the Business Combination and less than 20% in interest of the Public
Stockholders exercise their conversion rights described below.
CONVERSION RIGHTS
At the time the Company seeks stockholder approval of any Business
Combination, the Company will offer each Public Stockholder the right to have
his shares of Common Stock converted to cash if such stockholder votes against
the Business Combination and the Business Combination is approved and
consummated. The per share conversion price will be equal to the amount in the
Trust Fund as of the record date for determination of stockholders entitled to
vote on such Business Combination (inclusive of any interest thereon), divided
by the number of Public Shares. A Public Stockholder may request conversion of
his shares at any time prior to the vote taken with respect to a proposed
Business Combination at a meeting held for that purpose, but such request will
not be granted unless such stockholder votes against the Business Combination
and the Business Combination is approved and consummated. It is anticipated that
the funds to be distributed to the Public Stockholders who have their shares of
Common Stock converted will be distributed promptly after the consummation of a
Business Combination. The Initial Stockholders will not have any conversion
rights with respect to the shares of
6
<PAGE>
Common Stock owned by them immediately prior to this offering. The Company will
not consummate any Business Combination if 20% or more in interest of the Public
Stockholders exercise their conversion rights.
LIQUIDATION IF NO BUSINESS COMBINATION
In the event that the Company does not consummate a Business
Combination within 18 months from the consummation of this offering, or 24
months from the consummation of this offering if the "Extension Criteria,"
described below, have been satisfied, the Company will be dissolved and will
distribute to all Public Stockholders in proportion to their respective equity
interests in the Company, an aggregate sum equal to the amount in the Trust
Fund, inclusive of any interest thereon, plus any remaining net assets of the
Company. If the Company were to expend all of the net proceeds of this offering,
other than the proceeds deposited in the Trust Fund prior to liquidation, and
without taking into account interest, if any, earned on the Trust Fund, the per
share liquidation price would be $4.28, $4.30 if the Underwriter's
over-allotment option is exercised in full or $1.72 and $1.70, respectively,
less than the per share offering price of $6.00. The proceeds deposited in the
Trust Fund could, however, become subject to the claims of creditors of the
Company which could have priority over the claims of the Company's stockholders.
Accordingly, there can be no assurance that the per share liquidation price will
not be less than $4.28. Notwithstanding the Company's commitment to liquidate if
it is unable to effect a Business Combination within 18 months from the
consummation of this offering, if the Company enters into a definitive agreement
to effect a Business Combination prior to the expiration of such 18-month
period, but is unable to consummate such Business Combination within such
18-month period ("Extension Criteria"), then the Company will have an additional
six months in which to consummate a Business Combination. If the Company is
unable to do so by the expiration of the 24-month period from the consummation
of this offering, it will then liquidate. Upon notice from the Company, the
trustee of the Trust Fund will commence liquidating the investments constituting
the Trust Fund and will turn over the proceeds to the transfer agent for the
Company's Common Stock for distribution to the Public Stockholders. The Company
anticipates that its instruction to the trustee would be given promptly after
the expiration of the applicable 18-month or 24-month period.
A Public Stockholder shall be entitled to receive funds from the Trust
Fund only in the event of a liquidation of the Company or in the event he seeks
to convert his shares into cash in connection with a Business Combination which
he voted against and which is actually consummated by the Company. In no other
circumstances shall a Public Stockholder have any right or interest of any kind
to or in the Trust Fund.
THE OFFERING
Common Stock offered........................ 1,166,667 shares
Common Stock Outstanding Prior to
the Offering (1) (2)........................ 1,000 shares
Common Stock to be Outstanding
After the Offering.......................... 1,167,667 shares
Proposed Bulletin Board Symbol.............. MACC
(1) Does not include (i) 92,500 shares of Common Stock which may be
purchased at a price of $6.00 per share upon the exercise of the Bridge
Warrants (as hereinafter defined); (ii) 75,000 shares of
7
<PAGE>
Common Stock which may be purchased at a price of $6.00 per share upon
exercise of the Underwriter's Warrants and (iii) 490,000 shares of
Common Stock which may be purchased at a price of $6.00 per share upon
the exercise of the Founders' Options (as hereinafter defined).
(2) Does not include 260,000 shares of Common Stock reserved for issuance
upon the exercise of stock options which may be granted under the
Company's 1997 Stock Option Plan. See "Management -- 1997 Stock Option
Plan."
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<PAGE>
USE OF PROCEEDS
The net proceeds of this offering are estimated to be approximately
$6,235,000 ($7,211,500 if the Underwriter's over-allotment option is exercised
in full). The Company intends to apply substantially all of the net proceeds of
this offering to effect a Business Combination with a Target Business, including
identifying and evaluating prospective candidates, selecting the Target Business
and structuring, negotiating and consummating the Business Combination. Eighty
percent (80%) of the net proceeds, or $4,988,000 ($5,769,200 if the
Underwriter's over-allotment option is exercised in full), which amount
represents 71% of the gross proceeds of this offering will be held in the Trust
Fund and invested in government securities. The Trust Fund will not be released
until the earlier of the consummation of a Business Combination or the
liquidation of the Company. The net proceeds not held in the Trust Fund,
approximately $1,247,000 ($1,442,300 if the Underwriter's over-allotment option
is exercised in full), will be used (i) to pay for business, legal and
accounting due diligence with respect to prospective Target Businesses; (ii) for
the general administrative expenses of the Company, including legal and
accounting fees and administrative support expenses in connection with the
Company's reporting obligations to the Commission; and (iii) to repay the
$185,000 (plus interest thereon) which was borrowed by the Company in the Bridge
Financing (as hereinafter defined). The funds obtained in the Bridge Financing
were used solely to pay certain organizational expenses and the costs of the
Bridge Financing and of this offering. See "The Company" and "Use of Proceeds."
RISK FACTORS
The securities offered hereby involve a high degree of risk and are not
subject to the protections of the rules under the Securities Act relating to
blank check offerings. See "Risk Factors."
9
<PAGE>
SUMMARY FINANCIAL INFORMATION
The summary financial information set forth below is derived from the
more detailed financial statements appearing elsewhere in this Prospectus. This
information should be read in conjunction with such financial statements,
including the notes thereto.
<TABLE>
<CAPTION>
October 22, 1997
BALANCE SHEET DATA: ACTUAL AS ADJUSTED(1)
------ --------------
<S> <C> <C>
Working capital $112,024 $6,227,194 (2)
Total assets $188,936 $6,271,478 (2)
Total liabilities $176,786 $ 38,783
Common Stock subject to possible conversion (3) $ 997,596
Stockholders' equity $ 12,150 $5,235,099
<FN>
----------------
(1) Gives effect to the sale of the shares of Common Stock offered hereby
and the application of the estimated net proceeds therefrom.
(2) Includes $4,988,000 being held in the Trust Fund which will be
available to the Company only upon the consummation of a Business
Combination within the time period described in this Prospectus. If a
Business Combination is not so consummated, the Company will be
dissolved and the proceeds held in the Trust Fund will be distributed
to the Public Stockholders. See "Special Characteristics of the Company
-- Offering Proceeds Held in Trust."
(3) In the event the Company consummates a Business Combination, the
conversion rights afforded to the Public Stockholders may result in the
conversion into cash of up to approximately 19.99% of the aggregate
number of Public Shares at a per share conversion price equal to the
amount in the Trust Fund as of the record date for determination of
stockholders entitled to vote on the Business Combination (inclusive of
any interest thereon) divided by the number of Public Shares.
</FN>
</TABLE>
10
<PAGE>
THE COMPANY
The Company was organized on July 25, 1997 as a Florida corporation.
The objective of the Company is to effect a Business Combination with a Target
Business in the healthcare industry. To date, the Company's efforts have been
limited to organizational activities and the consummation of a Bridge Financing
(as hereinafter defined). The implementation of the Company's business plan is
dependent upon the successful consummation of this offering. The Company's
office is located at 201 S. Biscayne Blvd., Suite 3000, Miami, Florida 33131,
and its telephone number is (305) 373-9464.
In October 1997, the Company issued an aggregate of 1,000 shares of
Common Stock for an aggregate purchase price of $6,000 and options under a
qualified option plan of the Company to purchase an aggregate of 490,000 shares
of Common Stock at an exercise price of $6.00 per share (the "Founders'
Options"). The Founders' Options are exercisable for a period of 10 years
commencing upon the consummation of this offering. In October and November 1997,
the Company consummated a bridge financing ("Bridge Financing") in order to pay
certain organizational expenses, the costs of the Bridge Financing and certain
costs of this offering. The investors in the Bridge Financing ("Bridge
Investors") loaned $185,000 to the Company and were issued debentures ("Bridge
Debentures") in that amount, bearing interest at the rate of 8% per annum and
payable at the consummation of this offering, and warrants (the "Bridge
Warrants") to purchase an aggregate of 92,500 shares of Common Stock at an
exercise price of $6.00 per share (the "Bridge Warrant Shares"). The Bridge
Warrants are exercisable for a period of five years commencing one (1) year from
the effective date of this Prospectus. The shares of Common Stock underlying the
Bridge Warrants are entitled to certain registration rights under the Securities
Act.
RISK FACTORS
THE SECURITIES OFFERED HEREBY INVOLVE A HIGH DEGREE OF RISK. EACH
PROSPECTIVE INVESTOR SHOULD CAREFULLY CONSIDER THE FOLLOWING RISK FACTORS PRIOR
TO MAKING AN INVESTMENT DECISION:
OFFERING NOT CONDUCTED IN ACCORDANCE WITH CERTAIN BLANK CHECK REGULATIONS
This offering is not being conducted in accordance with Rule 419
promulgated under the Securities Act, which was adopted to strengthen regulation
of securities offerings by "blank check" companies, which the United States
Congress has found to have been common vehicles for fraud and manipulation in
the penny stock market. Pursuant to Rule 419, a "blank check" company is defined
as (a) a development stage company that has no specific business plan or has
indicated that its business plan is to effect a Business Combination with an
unidentified company or companies; and (b) a company which issues a "penny
stock," meaning any equity securities that, among other things, (i) are not
quoted in the Nasdaq system; or (ii) in the case of a company which has been in
continuous operation for less than three years, has net tangible assets (i.e.,
total assets less intangible assets and liabilities) of less than $5,000,000, as
demonstrated by the company's most recent financial statements that have been
audited and reported on by an independent public accountant. The Company is not
subject to Rule 419 as a "blank check" company because the Company's net
tangible assets after the offering will be greater than $5,000,000. Accordingly,
investors in this offering will not receive the substantive protections provided
by Rule 419, although the Company has incorporated many of the investor
safeguards required by Rule 419. In the event that the Company becomes subject
to Rule 419 as a "blank check" company, whether as a result of a decrease in the
market price of the Common Stock or otherwise, the Company will be subject to
additional regulation. Under Rule 419, before a Business Combination can be
completed and before funds can be released from a trust fund, a blank check
company is required to update its registration statement with a post-effective
amendment and, after the effective date thereof, to furnish investors with a
prospectus (which forms a part of the post-effective amendment to its
registration statement) containing specified information, including a discussion
of the target business and audited financial statements of the proposed
candidate for the business combination. According to Rule 419, the investors
must have no less than 20 and no more than 45 days from the effective date of
the post-effective amendment to decide
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<PAGE>
whether to remain an investor or require the return of their investment funds.
Any investor not making such decision within such 45-day period is automatically
entitled to receive a return of his investment funds. Unless a sufficient number
of investors elect to remain investors, all of the deposited funds in the escrow
account must be returned to all investors and none of the securities will be
issued. Rule 419 further provides that if the blank check company does not
complete a business combination meeting the specified criteria within 18 months
(subject to a six month extension if a definitive agreement is signed prior to
the expiration of such 18-month period), all of the deposited funds must be
returned to investors. See "Special Characteristics of the Company."
RECENTLY ORGANIZED COMPANY; NO PRESENT SOURCE OF REVENUES
The Company was incorporated on July 25, 1997 and is in the development
stage. Neither the Company nor any of its officers, directors, promoters,
affiliates or associates has conducted any discussions, and there are no plans,
arrangements or understandings, with any prospective candidates for a Business
Combination or their representatives. To date, the Company's efforts have been
limited to organizational activities and the consummation of the Bridge
Financing. These activities have been funded from the Initial Stockholders'
initial capital contributions and the proceeds from the Bridge Financing. The
Company has a negative tangible net worth as of the date of this Prospectus. It
will not generate any revenues (other than interest income on the proceeds of
this offering) until, at the earliest, after the consummation of a Business
Combination. See "Management's Plan of Operation."
POSSIBLE LIQUIDATION OF THE COMPANY; PER SHARE LIQUIDATION PRICE LESS THAN
PUBLIC OFFERING PRICE
If the Company does not consummate a Business Combination within 18
months from the consummation of this offering, or 24 months from the
consummation of this offering if the Extension Criteria have been satisfied, the
Company will be dissolved and will distribute to all Public Stockholders in
proportion to their respective equity interests in the Company, an aggregate sum
equal to the amount in the Trust Fund, inclusive of any interest thereon, plus
any remaining net assets of the Company. It is likely that, in the event of any
such liquidation, the per share liquidation distribution will be less than the
initial per share public offering price as a consequence of the expenses of this
offering, the anticipated costs which will be incurred by the Company in seeking
a Business Combination, the general and administrative expenses of the Company
and legal and accounting fees and expenses in connection with the Company's
reporting obligations to the Commission and the repayment of the Bridge
Financing. If the Company were to expend all of the net proceeds of this
offering not held in the Trust Fund prior to liquidation, and without taking
into account interest, if any, earned on the Trust Fund, the per share
liquidation price would be $4.28, or $1.72 less than the per share offering
price of $6.00 ($4.30 or $1.70, respectively, if the Underwriter's
over-allotment option is exercised in full). The proceeds deposited in the Trust
Fund could, however, become subject to the claims of creditors of the Company
which may be required to be satisfied prior to the claims of the Company's
stockholders. Accordingly, there can be no assurance that the per share
liquidation price will not be less than $4.28, plus interest. The Initial
Stockholders have waived their respective rights to participate in any
liquidation distribution with respect to the shares of Common Stock owned by
them immediately prior to this offering.
A Public Stockholder shall be entitled to receive funds from the Trust
Fund only in the event of a liquidation or in the event he seeks to convert his
shares into cash in connection with a Business Combination which he voted
against and which is actually consummated by the Company. In no other
circumstances shall a Public Stockholder have any right or interest of any kind
to and in the Trust Fund. See "Special Characteristics of the Company."
UNASCERTAINABLE RISKS AND BROAD RANGE OF POTENTIAL TARGET BUSINESSES
Since the Company has not yet identified a prospective Target Business,
investors in this offering have no basis on which to evaluate the possible
merits or risks of the Target Business' operations. To the extent the Company
consummates a Business Combination with a financially unstable company, or a
12
<PAGE>
company in its early stage of growth, or without earnings, the Company will
become subject to all of the risks inherent in the operation of such a business.
Although management of the Company will endeavor to evaluate the risks inherent
in any particular Target Business, there can be no assurance that the Company
will properly ascertain all such risks. Subject to the limitations that a Target
Business be within the healthcare industry and have a Fair Market Value of at
least 80% of the net assets of the Company at the time of the Business
Combination, as determined by an independent auditor or investment banking firm,
management of the Company will have virtually unrestricted flexibility in
identifying and selecting a prospective candidate for the Business Combination.
Notwithstanding the foregoing, management has determined that it will effect a
Business Combination with a Target Business which, after the consummation of the
Business Combination, would satisfy the initial listing standards for inclusion
on the Nasdaq National Market or listing on either the NYSE or the American
Stock Exchange ("AMEX"). See "Proposed Business -- Selection of Target Business
and Structuring a Business Combination."
UNCERTAIN STRUCTURE OF BUSINESS COMBINATION; REDUCTION IN STOCKHOLDER EQUITY
INTEREST
The structure of a Business Combination with a Target Business, which
may take the form of a merger, exchange of capital stock or other equity, or a
stock or asset acquisition, presently cannot be determined since the Company has
not had any preliminary contacts, discussions or understandings with
representatives of any prospective Target Business regarding the possibility of
a Business Combination. The Company may use the funds held in the Trust Fund as
part of the consideration for the Business Combination or may issue additional
shares of Common Stock or shares of Preferred Stock, or incur debt, or any
combination thereof. In the event the Company issues capital stock, the current
percentage ownership interest of the stockholders may be significantly reduced.
See "Proposed Business -- Selection of Target Business and Structuring a
Business Combination."
"BEST EFFORTS OFFERING" "ALL OR NONE," ESCROW OF OFFERING PROCEEDS IN A
NON-INTEREST BEARING ACCOUNT PENDING FOR CONSUMMATION OF THE OFFERING
There is no firm commitment on the part of the Underwriter to purchase
any or all of the Common Stock offered hereby. Rather, the Underwriter has
agreed to sell the Common Stock through licensed dealers on a "1,166,667 shares
of Common Stock or none", "best efforts" basis. Accordingly, there can be no
assurance that any or all of the Common Stock being offered hereby will be sold.
Further, pending the closing of the sale of the 1,166,667 shares of Common
Stock, the proceeds of the offering will be deposited in escrow in a
non-interest bearing account at North Fork Bank collateralized by direct
obligations of the United States government or short-term U.S. treasury
collateralized instruments of North Fork Bank. Unless 1,166,667 shares of Common
Stock are sold within a period of thirty (30) days from the date of this
Prospectus or a thirty (30) day extension period thereafter (the "Offering
Period"), the offering will terminate and all funds theretofore received from
the sale of the Common Stock will be promptly returned to the subscribers
without deduction therefrom or interest thereon. Moreover, during the Offering
Period, subscribers will not be entitled to a return of their subscriptions.
Therefore, prospective investors in the Common Stock should consider that any
funds used by them to purchase shares of Common Stock in the offering could be
held in escrow and be unavailable for the entire duration of the Offering Period
and, in the event that 1,166,667 shares of Common Stock are not sold during the
Offering Period, such funds could be returned to them at the close of the
Offering Period without interest thereon.
DISCRETIONARY USE OF PROCEEDS; ABSENCE OF CURRENT SUBSTANTIVE DISCLOSURE
RELATING TO BUSINESS COMBINATIONS
The Company's management has broad discretion with respect to the
specific application of the net proceeds of this offering, although
substantially all of the net proceeds of this offering are intended to be
applied toward effecting a Business Combination with a Target Business in the
healthcare industry or to thereafter use by the Target Business for working
capital. As of the date of this Prospectus, the Company has not identified a
prospective Target Business and, accordingly, investors in this offering do
13
<PAGE>
not currently have any substantive information available for consideration of
any Business Combination. Notwithstanding the foregoing, in connection with
seeking stockholder approval of a Business Combination, the Company intends to
furnish its stockholders with proxy solicitation materials prepared in
accordance with the Securities Exchange Act of 1934, as amended ("Exchange Act")
which will include a description of the operations of the Target Business and
audited historical financial statements thereof. Such proxy solicitation
materials will be filed with, and be subject to the review of, the Commission.
See "Use of Proceeds."
LIMITED ABILITY TO EVALUATE MANAGEMENT OF TARGET BUSINESS
The Company's ability to successfully effect a Business Combination
will be dependent upon certain of its key personnel, although the future role of
such personnel in the Target Business cannot presently be ascertained. Although
it is possible that certain of the Company's key personnel will remain
associated in some capacities with the Target Business following a Business
Combination, such key personnel may not devote their full efforts to the affairs
of the Target Business. Moreover, there can be no assurance that the key
personnel will have sufficient experience or knowledge relating to the
operations of the particular Target Business. Furthermore, although the Company
intends to closely scrutinize the management of a prospective Target Business in
connection with evaluating the desirability of effecting a Business Combination,
there can be no assurance that the Company's assessment of management will prove
to be correct. In addition, there can be no assurance that the Company will be
able to retain the management of the Target Business or that such management
will have the necessary skills to manage a company intending to embark on a
program of business development. The Company may also seek to recruit additional
managers to supplement the incumbent management of the Target Business. There
can be no assurance that the Company will have the ability to recruit additional
managers with the skills necessary to enhance the management of the Target
Business. See "Proposed Business -- Selection of Target Business and Structuring
a Business Combination."
RISKS APPLICABLE TO HEALTHCARE INDUSTRY
Acquiring and operating companies in the healthcare industry entails
special considerations and risks. The Company, if it is successful in acquiring
a Target Business in the healthcare industry, will be subject to, and possibly
adversely affected by, one or more of the following:
HEALTHCARE REFORM
In recent years, an increasing number of legislative proposals have
been introduced or proposed in Congress and in some state legislatures that
would effect major changes in the healthcare system. Such changes may adversely
affect certain sectors of the healthcare industry. In addition, various cost
containment measures being adopted by government and private payment sources may
limit the scope and amount of reimbursable healthcare expenses and limit
increases and reimbursement rates for medical services. Significant decreases in
utilization and limits on reimbursement could have a material adverse effect on
certain segments of the healthcare industry.
GOVERNMENT REGULATION
In addition to the important role the government plays as a healthcare
industry payor, the healthcare industry is subject to extensive government
regulation. Compliance with such regulation can be expensive, and there can be
no assurance that if the Company is required to obtain regulatory approvals,
such regulatory approvals will be obtained in a timely manner, if at all. Denial
of approvals sought or delay in obtaining such approvals could have a material
adverse effect on the Company.
LIABILITY EXPOSURE
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<PAGE>
Inherent in the healthcare industry is the risk of liability claims
against providers of healthcare products and services. There can be no assurance
that a liability claim would not have a material adverse effect on the Company's
business or financial condition.
COMPETITION
The healthcare industry is highly competitive. Many companies in the
healthcare industry are substantially larger than the Company and have greater
financial and other resources than the Company. There can be no assurance that
the Company will compete successfully with such other companies.
DEPENDENCE UPON KEY PERSONNEL
The ability of the Company to consummate a Business Combination will be
largely dependent upon the efforts of the officers, directors and advisors of
the Company. The Company has not entered into employment agreements with any of
such personnel or obtained any "key person" life insurance on their lives and
does not currently intend to obtain such insurance. The loss of the services of
such key personnel could have a material adverse effect on the Company's ability
to successfully achieve its business objectives. None of the officers, directors
or advisors of the Company will be required to commit his full time to the
affairs of the Company. See "Management."
CONFLICTS OF INTEREST
None of the Company's officers, directors or advisors is required to
commit his full time to the affairs of the Company and each has business
activities outside of their respective positions with the Company. There is no
requirement for any of the officers, directors or advisors to devote a
substantial amount of time to the Company's business. Accordingly, such
personnel will have conflicts of interest in allocating management time among
various business activities. At present, none of the officers, directors or
advisors of the Company is involved in any other acquisition fund with
activities similar to those to be undertaken by the Company, but certain of the
officers and directors are, and in the future may become, affiliated with
entities which are engaged in business activities in the healthcare industry but
which are not acquisition funds. Such persons may have conflicts of interest in
determining to which entity a particular business opportunity should be
presented. The Company's officers and directors intend to offer all suitable
prospective Target Businesses to the Company before any other company until the
earlier of a Business Combination or the liquidation of the Company subject to
their fiduciary duties to other companies, if any. In general, officers and
directors of a corporation incorporated under the laws of the State of Florida
are required to present certain business opportunities to such corporation.
Accordingly, as a result of multiple business affiliations, certain of the
Company's officers and directors and advisors may have similar legal obligations
to present certain business opportunities to multiple entities. There can be no
assurance that any of the foregoing conflicts will be resolved in favor of the
Company. Furthermore, a portion of the net proceeds of this offering will be
used to repay the debentures issued in the Bridge Financing to the Bridge
Investors. Certain of the Bridge Investors are affiliated with, or are members
of the Company's management. See "Use of Proceeds," "Management -- Conflicts of
Interest," "Certain Transactions" and "Underwriting."
COMPETITION FOR BUSINESS COMBINATION OPPORTUNITIES; LIMITED RESOURCES
The Company expects to encounter intense competition from other
entities having a business objective similar to that of the Company, including
venture capital funds, leveraged buyout funds and operating businesses competing
for Business Combinations in the healthcare industry. Many of these entities are
well established and have extensive experience in connection with identifying
and effecting business combinations directly or through affiliates. Many of
these competitors possess greater technical, human and other resources than the
Company and the Company's financial resources will be relatively limited when
contrasted with those of many of these competitors. While the Company believes
that there are numerous potential Target Businesses that it could acquire with
the net proceeds of this offering, the
15
<PAGE>
Company's ability to compete in acquiring certain sizable Target Businesses may
be limited by its available financial resources (including its ability to obtain
additional financing). This inherent competitive limitation gives others an
advantage in pursuing a Business Combination with certain Target Businesses.
Further, the Company's obligation to seek stockholder approval of a Business
Combination is likely to delay the consummation of a transaction; and the
Company's obligation to convert into cash the shares of Common Stock held by
Public Stockholders in certain instances may reduce the resources available to
the Company for a Business Combination and the number of available acquisition
candidates. Either of these obligations may place the Company at a competitive
disadvantage in successfully negotiating a Business Combination. See "Proposed
Business -- Competition."
POSSIBLE NEED FOR ADDITIONAL FINANCING; STOCKHOLDER INABILITY TO VOTE ON
BUSINESS COMBINATION
Although the Company believes that the net proceeds of this offering
will be sufficient to allow it to consummate a Business Combination, inasmuch as
the Company has not yet identified any prospective Target Business, the Company
cannot ascertain the capital requirements for any particular transaction. In the
event that the net proceeds of this offering prove to be insufficient, either
because of the size of the Business Combination or the depletion of the
available net proceeds in search of a Target Business, or because the Company
becomes obligated to convert into cash a significant number of shares from
dissenting stockholders, the Company will be required to seek additional
financing. There can be no assurance that such financing would be available on
acceptable terms, if at all. To the extent that additional financing proves to
be unavailable when needed to consummate a particular Business Combination, the
Company would be compelled to restructure the transaction or abandon that
particular Business Combination and seek an alternative Target Business
candidate. If in the course of investigating and negotiating potential Business
Combinations, the Company depletes the funds outside the Trust Fund prior to
consummating a Business Combination, the stockholders of the Company, to the
extent that the Company is unable to continue its pursuit of a Business
Combination without additional financing, may never have the opportunity to vote
on a Business Combination, unless the Company can secure such financing. In
addition, in the event of the consummation of a Business Combination, the
Company may require additional financing to fund the operations or growth of the
Target Business. The failure by the Company to secure such additional financing
could have a material adverse effect on the continued development or growth of
the Target Business. None of the Company's officers, directors or stockholders
is required to provide any financing to the Company in connection with or after
a Business Combination. See "Proposed Business -- Selection of Target Business
and Structuring a Business Combination."
PROBABLE LACK OF BUSINESS DIVERSIFICATION
The Fair Market Value of the Target Business to be acquired in the
initial Business Combination will represent at least 80% of the net assets of
the Company at the time of Business Combination. Accordingly, the prospects for
the Company's success may be entirely dependent upon the future performance of
the first Target Business acquired and the Company may not have the resources to
diversify its operations or benefit from the possible spreading of risks or
offsetting of losses. See "Special Characteristics of the Company -- Fair Market
Value of Target Business."
RISKS OF LEVERAGE
The Company may incur indebtedness to consummate the Business
Combination or assume or refinance the indebtedness of the Target Business if
the Company's management deems it to be beneficial to the Company. There is no
legal limit on the amount of leverage that the Company may incur. Among the
possible adverse effects of any such leverage are: (i) if the Company's
operating revenues after the Business Combination were insufficient to pay debt
service, there would be a risk of default and foreclosure on the Company's
assets; (ii) if a loan agreement contains covenants that require the maintenance
of certain financial ratios or reserves, and any such covenant is breached
without a waiver or renegotiation of the terms of that covenant, then the lender
could have the right to accelerate the payment of the indebtedness even if the
Company has made all principal and interest payments when due; (iii) if
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<PAGE>
the interest rate on a loan fluctuated or the loan was payable on demand, the
Company would bear the risk of variations in the interest rate or demand for
payment; and (iv) if the terms of a loan did not provide for amortization prior
to maturity of the full amount borrowed and the "balloon" payment could not be
refinanced at maturity on acceptable terms, the Company might be required to
seek additional financing and, to the extent that additional financing were not
available on acceptable terms, to liquidate its assets. See "Proposed Business
- -- Selection of Target Business and Structuring a Business Combination."
AUTHORIZATION OF ADDITIONAL SECURITIES
The Company's Articles of Incorporation authorizes the issuance of
20,000,000 shares of Common Stock. Upon completion of this offering (assuming no
exercise of the Underwriter's over-allotment option), there will be 18,832,333
authorized but unissued shares of Common Stock available for issuance (after
appropriate reservation of shares for issuance upon exercise of the Founders'
Options, the Bridge Warrants and Underwriter's Warrants). The Company's Board of
Directors has the power to issue any or all of such shares without stockholder
approval, although the Company's Underwriting Agreement with the Underwriter
("Underwriting Agreement") prohibits the Company from issuing additional shares
of Common Stock prior to a Business Combination without prior written consent of
the Underwriter. Although the Company has no plans, understandings or
commitments as of the date of this Prospectus to issue any shares of Common
Stock other than as described in this Prospectus, the Company will, in all
likelihood, issue a substantial number of additional shares in connection with a
Business Combination. To the extent that additional shares of Common Stock are
issued, dilution to the interests of the Company's stockholders will occur. The
Company's Articles of Incorporation also authorizes the issuance of 5,000,000
shares of preferred stock ("Preferred Stock") with such designations, rights and
preferences as may be determined from time to time by the Board of Directors.
The Board of Directors is empowered, without stockholder approval, to issue
Preferred Stock with dividend, liquidation, conversion, voting or other rights
which could adversely affect the voting power or other rights of the holders of
the Company's Common Stock, although the Underwriting Agreement prohibits the
Company, prior to the Business Combination, from issuing a Preferred Stock which
participates in any manner in the proceeds of the Trust Fund, or which votes as
a class with the Common Stock on a Business Combination without prior written
consent of the Underwriter. In addition, the Preferred Stock and Common Stock
could be utilized, under certain circumstances, as a method of discouraging,
delaying or preventing a change in control of the Company. Although the Company
has no plans, understandings or commitments as of the date of this Prospectus to
issue any shares of Preferred Stock, there can be no assurance that the Company
will not do so in the future. See "Description of Securities."
POTENTIAL CONTROL BY MANAGEMENT
Upon consummation of this offering, the Initial Stockholders (including
all of the Company's' officers and directors) will collectively own ___% of the
then-issued and outstanding shares of Common Stock (assuming no exercise of the
Underwriter's over-allotment option and no purchases by the Initial Stockholders
of Common Stock in this offering), and the Initial Stockholders will have the
right to acquire an additional 490,000 shares and 92,500 shares of Common Stock
upon the exercise of the Founders' Options and the Bridge Warrants owned by
them, respectively, at an exercise price of $6.00 per share. It is unlikely that
there will be an annual meeting of stockholders to elect new directors prior to
the consummation of a Business Combination, in which case all of the current
directors will continue in office at least until the consummation of the
Business Combination. If there is an annual meeting, the Initial Stockholders
may have considerable influence regarding the outcome if they exercise the
Founders' Options. Accordingly, the Initial Stockholders may control the Company
at least until the consummation of a Business Combination. In addition, the
Initial Stockholders and their affiliates and/or relatives are not prohibited
from purchasing Common Stock in this offering and if they do, there can be no
assurance that the Initial Stockholders will not have considerable influence
upon the vote in connection with a Business Combination. Certain officers and
directors of the Company and their respective affiliates have advised the
Underwriter that they intend to purchase ____ shares of Common Stock,
representing ___ percent
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<PAGE>
(__%) of the total shares of Common Stock offered in this offering. See
"Management -- Directors and Executive Officers" and "Principal Stockholders."
STATE BLUE SKY REGISTRATION; RESTRICTED RESALES OF THE SECURITIES
The ability to register or qualify for sale the shares of Common Stock
of the Company for both initial sale and secondary trading will be limited
because a significant number of states have enacted regulations pursuant to
their securities or so-called "blue sky" laws restricting or, in many instances,
prohibiting, the sale of securities of "blind pool" issuers such as the Company
within that state. In addition, many states, while not specifically prohibiting
or restricting "blind pool" companies, would not register the securities to be
offered in this offering for sale in their states. Because of these regulations,
the Company has registered the securities being offered in this offering, or an
exemption from registration has been obtained (or is otherwise available), only
in the states of Colorado, Florida, Illinois and New York (the "Primary
Distribution States") and initial sales may only be made in such jurisdictions.
More specifically, the Company has registered the securities by filing in
Colorado, by coordination in Illinois, and by notification in Florida and New
York. In addition, such securities will be immediately eligible for resale in
the secondary market in each of the Primary Distribution States. Because of
regulations enacted to prohibit the sale of securities of "blind pool" companies
as well as the unavailability of exemptions provided to companies whose
securities are listed on an exchange or are eligible for inclusion in recognized
securities manuals such as Standard & Poor's Corporation Records, it is not
anticipated that a secondary trading market for the Company's securities will
develop in any of the other 47 states until after the consummation of a Business
Combination, if at all.
SHARES ELIGIBLE FOR FUTURE SALE
Upon the consummation of this offering, the Company will have 1,167,667
shares of Common Stock outstanding (1,342,667 shares if the Underwriter's
over-allotment option is exercised in full), of which 1,166,667 shares
(1,341,667 shares in the event of the exercise of the over-allotment option)
will be freely tradable without restriction or further registration under the
Securities Act, except for any shares purchased by an "affiliate" of the Company
(in general, a person who has a control relationship with the Company), which
will be subject to limitations of Rule 144 promulgated under the Securities Act.
All of the remaining 1,000 shares are deemed to be "restricted securities," as
the term is defined under Rule 144 promulgated under the Securities Act, in that
such shares were issued in private transactions not involving a public offering.
None of such restricted shares will be eligible for sale under Rule 144 prior to
October 1, 1998.
In general, under Rule 144 as currently in effect, subject to the
satisfaction of certain other conditions, a person, including an affiliate of
the Company (or persons whose shares are aggregated), who has owned restricted
shares of Common Stock beneficially for at least one year is entitled to sell,
in brokerage transactions, within any three-month period, a number of shares
equal to the greater of 1% of the total number of outstanding shares of the same
class or the average weekly trading volume during the four calendar weeks
preceding the sale. A person who has not been an affiliate of the Company for at
least two years is entitled to sell such shares under Rule 144 without regard to
any of the limitations described above.
Prior to this offering, there has been no market for the Common Stock
and no prediction can be made as to the effect, if any, that market sales of
restricted shares of Common stock or the availability of such shares for sale
will have on the market prices prevailing from time to time. Nevertheless, the
possibility that substantial amounts of Common Stock may be sold in the public
market may adversely affect prevailing market prices for the Common Stock and
could impair the Company's ability to raise capital through the sale of its
equity securities.
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<PAGE>
INVESTMENT COMPANY ACT CONSIDERATIONS
The regulatory scope of the Investment Company Act of 1940 ("Investment
Company Act"), which was enacted principally for the purpose of regulating
vehicles for pooled investments in securities, extends generally to companies
engaged primarily in the business of investing, reinvesting, owning, holding or
trading in securities. The Investment Company Act may, however, also be deemed
to be applicable to a company which does not intend to be characterized as an
investment company but which, nevertheless, engages in activities which may be
deemed to be within the definitional scope of certain provisions of the
Investment Company Act. The Company believes that its anticipated principal
activities, which will involve acquiring control of an operating company, will
not subject the Company to regulation under the Investment Company Act.
Nevertheless, there can be no assurance that the Company will not be deemed to
be an investment company under the Investment Company Act, particularly during
the period prior to a Business Combination. If the Company is deemed to be an
investment company, the Company may become subject to certain restrictions
relating to the Company's activities, including restrictions on the nature of
its investments and the issuance of securities. In addition, the Investment
Company Act imposes certain requirements on companies deemed to be within its
regulatory scope, including registration as an investment company, adoption of a
specific form of corporate structure and compliance with certain burdensome
reporting, recordkeeping, voting, proxy, disclosure and other rules and
regulations. In the event of characterization of the Company as an investment
company, the failure by the Company to satisfy regulatory requirements, whether
on a timely basis or at all, would, under certain circumstances, have a material
adverse effect on the Company.
DIVIDENDS UNLIKELY
The Company has not paid any dividends on its Common Stock to date and
does not intend to pay dividends prior to the consummation of a Business
Combination. The payment of dividends subsequent to any Business Combination
will be contingent upon the Company's revenues and earnings, if any, capital
requirements and general financial condition. The payment of any dividends
subsequent to a Business Combination will be within the discretion of the
Company's then-Board of Directors. It is the present intention of the Board of
Directors to retain all earnings, if any, for use in the Company's business
operations and, accordingly, the Board does not anticipate declaring any
dividends in the foreseeable future. See "Description of Securities --
Dividends."
BULLETIN BOARD; NO ASSURANCE OF PUBLIC MARKET; ARBITRARY DETERMINATION OF
OFFERING PRICE
The Company's securities will be traded in the over-the-counter market.
It is anticipated that they will be quoted on the Bulletin Board, an
NASD-sponsored and operated inter-dealer automated quotation system for equity
securities not included in the Nasdaq Small Cap Market or National Market, as
well as in the NQB Pink Sheets published by the National Quotation Bureau
Incorporated. The Bulletin Board has only recently been introduced as an
alternative to "pink sheet" trading of over-the-counter securities. There can be
no assurance that the Bulletin Board will be recognized by the brokerage
community as an acceptable trading medium. In the absence of such recognition,
the liquidity and stock price of the Company's securities in the secondary
market may be adversely affected, and there can be no assurance that a public
market for the Company's securities will develop or be sustained. In addition,
purchasers of the Company's securities may have more difficulty selling or
obtaining quotations of the price of the Company's securities than they would
have if the Company's securities were listed on Nasdaq or a national securities
exchange. Unless and until the Company's securities are listed on the Nasdaq or
a national securities exchange (of which no assurance can be given), the
liquidity of the Company's securities may be impaired, not only in the number of
shares which could be bought and sold, but also through delays in the timing of
transactions, reduction in securities analysts and the news media's coverage of
the Company, if any, and lower prices for the Company's securities than might
otherwise be obtained. There also can be no assurance that a stockholder who
desires to sell the Company's securities will be able to sell all or a portion
of the Company's securities being offered or at the desired times or prices.
Further, securities of issuers having relatively limited capitalization or
securities recently
19
<PAGE>
issued in an initial public offering are particularly susceptible to volatility
based on short term trading strategies of certain investors. The Underwriter has
informed the Company that it may make a market in the Company's securities, but
it is not obligated to do so, and any market making may be discontinued at any
time. The initial offering price of the shares of Common Stock has been
arbitrarily determined by negotiation between the Company and the Underwriter
and does not necessarily bear any relation to the Company's asset value, net
worth or other established criteria of value, and may not be indicative of the
prices of the shares of Common Stock that may prevail in the public market after
this offering. See "Description of Securities --State Blue Sky Information" and
"Underwriting."
RISKS OF LOW-PRICED STOCKS; PENNY STOCK REGULATIONS
Transactions in the Company's securities are presently not subject to
Rules 15g-1 through 15g-9 under the Exchange Act (the "Penny Stock Regulations")
because the Common Stock has a market price of more than $5.00 per share.
However, in the event that the market price of the Common Stock decreases to
less than $5.00 per share, unless the Company's securities are traded on Nasdaq,
transactions in the Company's securities will be subject to the Penny Stock
Regulations, except for (i) transactions in the Company's securities which are
not solicited or recommended by broker-dealers, (ii) sales to certain
institutional accredited investors, and (iii) certain private offerings of the
Company's securities. The Penny Stock Regulations require broker-dealers to make
a special suitability determination for the purchaser and to receive the
purchaser's written representations and agreement concerning the securities
transaction prior to concluding a sale. In addition, the Penny Stock Regulations
generally require broker-dealers to provide customers for whom they are
effecting transactions in a penny stock (as defined below), prior to concluding
a sale, with a standard risk disclosure document describing the customer's right
to disclosures of the (i) current bid and ask quotations, if any, (ii)
compensation of the broker-dealer and the salesperson in the transaction, and
(iii) monthly account statements showing the market value of such stock held in
the customer's account. Consequently, the Penny Stock Regulations may, if
applicable, in all transactions which are not exempt from their application,
affect the ability of broker-dealers to sell the Company, shares of Common Stock
and may affect the ability of purchasers in this offering to sell any of the
shares of Common Stock acquired pursuant to this Prospectus in the secondary
market and may reduce the likelihood that a bank or financial institution will
accept such securities as collateral. See "Bulletin Board; No Assurance of
Public Market; Arbitrary Determination of Offering Price."
The regulations of the Commission define a "penny stock" to be any
equity security that has a market price (as therein defined) less than $5.00 per
share or with an exercise price of less than $5.00 per share, subject to certain
exceptions. If Penny Stock Regulations become applicable to the Company's
securities as a result of a decrease in price of the Common Stock, they will
continue to be applicable unless and until the Common Stock is listed on the
Nasdaq Small Cap Market or any national securities exchange or until the Common
Stock has a market price of at least $5.00 per share.
OUTSTANDING WARRANTS
The Company has issued and outstanding warrants to purchase an
aggregate of ________ shares of Common Stock at a price of $6.00 per share. To
the extent shares of Common Stock are to be issued by the Company to effect a
Business Combination, the potential for the issuance of substantial numbers of
additional shares upon exercise of these warrants and options could increase the
cost to the Company of the Target Business (in terms of number of shares
required to be issued). See "Description of Securities -- Founders' Options and
Bridge Warrants."
20
<PAGE>
USE OF PROCEEDS
The net proceeds of this offering are estimated to be $6,235,000
($7,211,500 if the Underwriter's over-allotment is exercised in full). The
Company will use substantially all of the net proceeds of this offering to
effect a Business Combination with a Target Business, including identifying and
evaluating prospective candidates for a Business Combination, selecting the
Target Business, and structuring, negotiating and consummating the Business
Combination or to thereafter use by the Target Business for Working Capital. The
Company will not effect a Business Combination with a Target Business unless the
Fair Market Value of such business is at least 80% of the net assets of the
Company at the time of such Business Combination .
Eighty percent (80%) of the net proceeds, which amount represents 71%
of the gross proceeds of this offering, will be held in the Trust Fund and
invested in United States government securities by NationsBank, the initial
trustee. The Trust Fund will not be released until the earlier of the
consummation of a Business Combination or the liquidation of the Company.
Therefore, unless and until a Business Combination is consummated, the proceeds
held in the Trust Fund will not be available for use by the Company for any
expenses related to this offering or expenses which may be incurred by the
Company related to the investigation and selection of a Target Business and the
negotiation of an agreement to effect a Business Combination with the Target
Business. If a Business Combination is consummated, any amount in the Trust Fund
not paid as consideration to the sellers of the Target Business or for expenses
related to the Business Combination (which expenses may not exceed 15% of the
proceeds held in the Trust Fund) may be used for working capital or to finance
the operations of the Target Business, to effect other Business Combinations, or
for other corporate purposes, as determined by the then-Board of Directors of
the Company. If the stockholders reject a Business Combination, a separate
stockholder vote will be required to approve the use of more than 15% of the
proceeds held in the Trust Fund for expenses related to Business Combinations
before the Company consummates a Business Combination which would result in the
Company exceeding such 15% limitation. Proceeds held in the Trust Fund will not
be available for use by the Company for any expenses related to this offering.
The Company will disclose to stockholders as part of the proxy solicitation
materials sent to the Public Stockholders, the amount of expenses related to a
Business Combination that will be reimbursed or paid out of the proceeds held in
the Trust Fund. Management believes, however, that unless and until the Warrants
are exercised or additional financing is obtained, it is unlikely that the
Company would have sufficient proceeds remaining after its initial Business
Combination and the payment of expenses relating to such Business Combinations
to undertake additional Business Combinations. If a Business Combination is not
consummated, since all of the Initial Stockholders have waived their respective
rights to participate in the required liquidation distribution with respect to
any shares of Common Stock owned by them immediately prior to this offering
(other than with respect to the shares, if any, acquired by them in this
offering), all of the assets of the Company which may be distributed upon such
liquidation would be distributed only to the Public Stockholders.
Notwithstanding the foregoing waiver, the amount distributed to the Public
Stockholders will be no more than $4.28 per share ($4.30 per share if the
Underwriter's over-allotment option is exercised in full) (without taking into
account interest, if any, earned on the Trust Fund), which will be less than the
initial public offering price of $6.00 per share. The trustee of the Trust Fund
is authorized to invest the funds only in certain government securities and to
disburse the funds from the account upon receipt of instructions from the
Company; it has no other duties or obligations. See "Risk Factors -- Possible
Liquidation of the Company; Per Share Liquidation Price Less than Public
Offering Price."
The net proceeds of this offering not held in the Trust Fund,
approximately $1,247,000 ($1,442,300 if the Underwriter's over-allotment option
is exercised in full), will be used (i) to pay for business, legal and
accounting due diligence on prospective Target Businesses; (ii) for the general
and administrative expenses of the Company and legal and accounting fees and
expenses in connection with the Company's reporting obligations to the
Commission; and (iii) to repay the $185,000 (plus interest thereon) which was
borrowed by the Company in the Bridge Financing. The proceeds will not be used
to
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<PAGE>
make loans. The funds obtained by the Company in the Bridge Financing were used
solely to pay certain organizational expenses and the costs of the Bridge
Financing and of this offering. In addition, while the Company does not
presently anticipate engaging the services of professional firms or consultants
that specialize in Business Combinations on any formal basis, and the Company
has not engaged or entered into any discussions with respect to the engagement
of such firms, the Company may engage such firms in the future, in which event
the Company may use a portion of the proceeds not held in the Trust Fund to pay
a finder's fee or other compensation. The Company believes that, upon
consummation of this offering, it will have sufficient available funds to
operate for at least the next 24 months, assuming that a Business Combination is
not consummated during that time. The net proceeds of this offering not held in
the Trust Fund and not immediately required for the purposes set forth above
will be invested in general debt obligations of the United States Government or
other high-quality, short-term interest-bearing investments.
No compensation of any kind (including finders' and consulting fees)
will be paid to any Initial Stockholder of the Company, or any affiliate of any
Initial Stockholder, for services rendered to the Company prior to or in
connection with the consummation of the Business Combination; provided, however,
that such persons shall be entitled to receive, upon consummation of the
Business Combination, commissions for monies raised by them for the Company in
connection with the Business Combination (if permitted under applicable law), at
rates which are no less favorable to the Company than those which the Company
would pay to unaffiliated third parties. In addition, the Initial Stockholders
will receive reimbursement for any out-of-pocket expenses incurred in connection
with activities on behalf of the Company. Since the role of present management
after a Business Combination is uncertain, the Company has no ability to
determine what remuneration, if any, will be paid to such persons after a
Business Combination. See "Certain Transactions."
A Public Stockholder shall be entitled to receive funds from the Trust
Fund only in the event of a liquidation or if he seeks to convert his shares
into cash in connection with a Business Combination which he voted against and
which is actually consummated by the Company. In no other circumstances shall a
Public Stockholder have any right or interest of any kind to or in the Trust
Fund.
DILUTION
The difference between the public offering price per share of Common
Stock and the pro forma net tangible book value per share of Common Stock of the
Company after this offering constitutes the dilution to investors in this
offering. Net tangible book value per share is determined by dividing the net
tangible book value of the Company (total tangible assets less total
liabilities) by the number of outstanding shares of Common Stock. At October 22,
1997, the net tangible book value of the Company was $(25,786) or $(25.79) per
share of Common Stock. After giving effect to the sale of 1,166,667 shares of
Common Stock offered hereby (less underwriting discounts and estimated expenses
of this offering), the pro forma net tangible book value of the Company at
October 22, 1997 would have been $6,227,194 or $5.33 per share, representing an
immediate increase in net tangible book value of $31.12 per share to the Initial
Stockholders and an immediate dilution of $0.67 per share or 11.2% to the Public
Stockholders.
The following table illustrates the dilution to the Public Stockholders
on a per share basis:
<TABLE>
<S> <C> <C>
Public offering price $6.00
Net tangible book value before this offering $ (25.79)
Increase attributable to Public Stockholders $ 31.12
--------
Pro forma net tangible book value after this offering $5.33
-----
Dilution to Public Stockholders $0.67
</TABLE>
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<PAGE>
The following table sets forth, with respect to the Initial
Stockholders and the Public Stockholders, a comparison of the number and
percentage of their shares of Common Stock, the amount and percentage of
consideration paid and the average price per share paid to the Company for those
shares:
<TABLE>
<CAPTION>
SHARES PURCHASED TOTAL CONSIDERATION AVERAGE
----------------------------- ---------------------------- PRICE
NUMBER PERCENTAGE AMOUNT PERCENTAGE PER SHARE
--------- ---------- ---------- ---------- ---------
<S> <C> <C> <C> <C> <C>
Initial Stockholders 1,000 0.1% $6,000 0.1% $6.00
Public Stockholders 1,166,667 99.9% 7,000,002 99.9% $6.00
--------- ----- --------- -----
1,167,667 100% $7,006,002 100.0%
========= ===== ========== ======
</TABLE>
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<PAGE>
CAPITALIZATION
The following table sets forth the capitalization of the Company at
October 22, 1997 and as adjusted to give effect to the sale of the Common Stock
offered hereby and the application of the estimated net proceeds therefrom:
<TABLE>
<CAPTION>
ACTUAL AS ADJUSTED
------ -----------
<S> <C> <C>
Bridge Debentures Payable $137,810 $ 0
-------- ----------
Common stock, subject to possible conversion,
233,333 shares at conversion value 0 997,596
-------- ----------
Preferred stock, $.01 par value, 5,000,000 shares
authorized; none issued or outstanding
Common stock, $.01 par value, 20,000,000 shares
authorized; 1,000 shares issued and outstanding, actual;
934,334 shares issued and outstanding (excluding
233,333 shares subject to possible conversion), as adjusted; 10 9,343
Additional paid-in capital 13,240 5,243,313
Deficit accumulated during the development stage (1,100) (17,557)
-------- ----------
Total Stockholders' Equity 12,150 5,235,099
-------- ----------
Total capitalization $149,960 $6,232,695
======== ==========
</TABLE>
In the event the Company consummates a Business Combination, the
conversion rights afforded to the Public Stockholders may result in the
conversion into cash of up to approximately 19.99% of the aggregate number of
Public Shares at a per share conversion price equal to the amount in the Trust
Fund as of the record date for determination of stockholders entitled to vote on
the Business Combination (inclusive of any interest thereon) divided by the
number of Public Shares.
MANAGEMENT'S PLAN OF OPERATIONS
The Company, a development stage entity, is a newly organized Florida
corporation, the objective of which is to effect a Business Combination with a
Target Business in the healthcare industry. To date, the Company's efforts have
been limited to organizational activities.
In October and November 1997, the Company consummated its Bridge
Financing in order to pay certain organizational expenses, the costs of the
Bridge Financing and certain costs of this offering. Eleven Bridge Investors
loaned an aggregate of $185,000 to the Company and were issued Bridge Debentures
in that amount, bearing interest at the rate of 8% per annum and payable at the
consummation of this offering, and Bridge Warrants to purchase 92,500 shares of
Common Stock of the Company. The Company granted the Bridge Investors
"piggy-back" registration rights for the Bridge Warrant Shares after the
offering.
Substantially all of the Company's working capital needs subsequent to
this offering will be attributable to the identification, evaluation and
selection of a suitable Target Business and, thereafter, to structure, negotiate
and consummate a Business Combination with such Target Business. Such working
capital needs are expected to be satisfied from the net proceeds of this
offering not deposited in the Trust Fund. See the Financial Statements of the
Company included elsewhere in this Prospectus.
SPECIAL CHARACTERISTICS OF THE COMPANY
The Company is a newly organized corporation formed for the purpose of
effecting a Business Combination with a Target Business in the healthcare
industry. Although the Company is not a "blank
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<PAGE>
check" company within the meaning of Rule 419, the Company has incorporated
selected investor safeguards set forth below. Immediately after the consummation
of a Business Combination, these safeguards will no longer be applicable to the
Company.
SUBSTANTIAL PORTION OF OFFERING PROCEEDS HELD IN TRUST
The net proceeds of this offering are estimated to be $6,235,000
($7,211,500 if the Underwriter's over-allotment option is exercised in full).
Eighty percent (80%) of such amount, or $4,988,000 ($5,769,200 if the
Underwriter's over-allotment option is exercised in full), which represents 71%
of the gross proceeds of this offering, will be placed in the Trust Fund and
invested in United States government securities. The initial trustee of the
Trust Fund will be NationsBank N.A. The Trust Fund will not be released until
the earlier of the consummation of a Business Combination or the liquidation of
the Company, which may not occur until 18 months from the consummation of this
offering, subject to an extension of six months if a definite agreement to
consummate a Business Combination is executed prior to such time. Therefore,
unless and until a Business Combination is consummated, the proceeds held in the
Trust Fund will not be available for use by the Company for any expenses related
to this offering or expenses which may be incurred by the Company related to the
investigation and selection of a Target Business and the negotiation of an
agreement to effect a Business Combination with the Target Business. Such
expenses may be paid from the net proceeds not held in the Trust Fund
(approximately $1,247,000 or $1,442,300 if the Underwriter's over-allotment
option is exercised in full). See "Use of Proceeds."
FAIR MARKET VALUE OF TARGET BUSINESS
The Company will not effect a Business Combination with a Target
Business unless the Fair Market Value of such business is, as determined by an
independent auditor or investment banking firm which is a member of the NASD, at
least 80% of the net assets of the Company at the time of such Business
Combination. See "Proposed Business -- Selection of Target Business and
Structuring a Business Combination."
STOCKHOLDER APPROVAL OF BUSINESS COMBINATION
The Company, after signing a definitive agreement to effect a Business
Combination with a Target Business, but prior to the consummation of any
Business Combination, will submit such transaction to the Company's stockholders
for their approval, even if the nature of the Business Combination would not
ordinarily require stockholder approval under applicable state law. All of the
Initial Stockholders, including the officers and directors of the Company, have
agreed to vote the shares of Common Stock owned by them immediately prior to
this offering in accordance with the vote of the majority of the Public Shares
voted on any Business Combination. The Company will proceed with the Business
Combination only if the holders of at least a majority of the outstanding shares
of Common Stock vote in favor of the Business Combination and less than 20% in
interest of the Public Stockholders exercise their conversion rights described
below.
CONVERSION RIGHTS
At the time the Company seeks stockholder approval of any Business
Combination, the Company will offer each Public Stockholder the right to have
his shares of Common Stock converted to cash if such stockholder votes against
the Business Combination and the Business Combination is approved and
consummated. The per share conversion price will be equal to the amount in the
Trust Fund as of the record date for determination of stockholders entitled to
vote on such Business Combination (inclusive of any interest thereon), divided
by the number of Public Shares. A Public Stockholder may request conversion of
his shares at any time prior to the vote taken with respect to a proposed
Business Combination at a meeting held for that purpose, but such request will
not be granted unless such stockholder votes against the Business Combination
and the Business Combination is approved and consummated. It is anticipated that
the funds to be distributed to the Public Stockholders who have their
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<PAGE>
shares converted will be distributed promptly after consummation of a Business
Combination. The Initial Stockholders will not have any conversion rights with
respect to the shares of Common Stock owned by them immediately prior to this
offering. The Company will not consummate any Business Combination if 20% or
more in interest of the Public Stockholders exercise their conversion rights.
LIQUIDATION IF NO BUSINESS COMBINATION
In the event that the Company does not consummate a Business
Combination within 18 months from the consummation of this offering, or 24
months from the consummation of this offering if the "Extension Criteria,"
described below, have been satisfied, the Company will be dissolved and will
distribute to all Public Stockholders in proportion to their respective equity
interests in the Company, an aggregate sum equal to the amount in the Trust
Fund, inclusive of any interest thereon, plus any remaining net assets of the
Company. If the Company were to expend all of the proceeds of this offering,
other than the proceeds deposited in the Trust Fund prior to liquidation, and
without taking into account interest, if any, earned on the Trust Fund, the per
share liquidation price would be $4.28, $4.30 if the Underwriter's
over-allotment option is exercised in full, or $1.72 and $1.70, respectively,
less than the per share offering price of $6.00. The proceeds deposited in the
Trust Fund could, however, become subject to the claims of creditors of the
Company which could be prior to the claims of the Company's stockholders.
Accordingly, there can be no assurance that the per share liquidation price will
not be less than $4.28, plus interest. Notwithstanding the Company's commitment
to liquidate if it is unable to effect a Business Combination within 18 months
from the consummation of this offering, if the Company enters into a definitive
agreement to effectuate a Business Combination prior to the expiration of such
18-month period, but is unable to consummate such Business Combination within
such 18-month period ("Extension Criteria"), then the Company will have an
additional six months in which to consummate a Business Combination. If the
Company is unable to do so by the expiration of the 24-month period from the
consummation of this offering, it will then liquidate. Upon notice from the
Company, NationsBank N.A., the initial trustee of the Trust Fund, will commence
liquidating the investments constituting the Trust Fund and will turn over the
proceeds to the transfer agent for the Company's Common Stock for distribution
to the Public Stockholders. The Company anticipates that its instruction to the
trustee would be given promptly after the expiration of the applicable 18-month
or 24-month period.
A Public Stockholder shall be entitled to receive funds from the Trust
Fund only in the event of a liquidation of the Company or in the event he seeks
to convert his shares into cash in connection with a Business Combination which
he voted against and which is actually consummated by the Company. In no other
circumstances shall a Public Stockholder have any right or interest of any kind
to or in the Trust Fund.
26
<PAGE>
PROPOSED BUSINESS
INTRODUCTION
The Company's objective is to effect a Business Combination with a
Target Business in the healthcare industry. The Company intends to identify and
effect a Business Combination with a Target Business which provides quality
healthcare related products and/or services that have proven or potential cost
savings or other advantages in their relevant markets.
The Company was organized to provide a vehicle for a Business
Combination. The Company may ultimately effect a Business Combination with more
than one business and further diversify its business objectives. However, the
Company's initial Business Combination must be with a Target Business whose Fair
Market Value is at least 80% of the net assets of the Company at the time of the
Business Combination. See "Special Characteristics of the Company -- Fair Market
Value of Target Business." The Company has no plans, arrangements or
understandings with any prospective candidates for a Business Combination, and
has not targeted any business for investigation and evaluation.
The Company believes that, despite the recent recovery of public market
valuations of many companies within certain healthcare segments, there remain
substantial niche opportunities to effect attractive Business Combinations in
certain segments of the healthcare industry.
HEALTHCARE INDUSTRY TRENDS
The Company has identified the following trends that it believes can be
expected to continue to affect the healthcare industry over the long-term.
DEMOGRAPHIC SHIFT TO OLDER POPULATION
As a result of advances in medicine and other factors, the size of the
elderly population, the segment with the largest per capita usage of healthcare
services, is increasing rapidly. The high prevalence of chronic conditions among
the elderly, and the functional limitations that result, generate a large demand
for diagnostic, therapeutic, rehabilitative and supportive services.
CONTROLLING COSTS
The United States healthcare system is facing considerable pressure
from third-party payors, including insurers, federal and state governments, to
reduce healthcare costs. Some of the changes now occurring in the healthcare
industry have begun to cut the cost of care. These changes include: the shift
toward managed care providers, such as HMOs and PPOs; the transformation of the
healthcare delivery system; shortened hospital stays with increasing use of
alternate site settings, such as home healthcare, freestanding ambulatory
surgicenters and outpatient service facilities; a shortening of product life
cycles due to rapid technological changes, which may result in less pricing
flexibility and lower margins; and greater accountability for patient outcomes
by all providers and manufacturers.
TECHNOLOGICAL ADVANCES
Technology and innovation have significantly changed the scope,
practice and delivery of healthcare. Over the course of the last decade,
innovations in the medical device sector have led to the introduction of new
procedures such as angioplasty, arthroscopy, laparoscopic surgery, and
therapeutic laser treatments. Developments in pharmaceuticals and biotechnology
have resulted in effective treatments for acute and chronic diseases, such as
cardiovascular disease, neoplastic diseases and autoimmune diseases. New
diagnostic techniques, including ultrasound, computed tomography (CAT) scanning,
and positron emission tomography (PET) scanning, have become more sophisticated
and
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accurate, yielding valuable non-invasive diagnostic information about a wide
range of diseases and physiologic functions. Technological advances affect the
growth of the healthcare industry by creating greater opportunities for medical
intervention and by prolonging the lives of the consumers of medical products
and services.
INTERNATIONALIZATION OF MARKETS AND RESEARCH ACTIVITIES
Internationalization has enabled U.S. companies to penetrate lucrative
new markets for the marketing and distribution of healthcare products and
services, particularly in Western Europe and Japan, the largest foreign
healthcare markets. The healthcare industry has become increasingly
international as a result of growing worldwide demand for healthcare products
and services, heightened strategic awareness of the importance and potential of
international markets, and lower regulatory hurdles for product approval outside
the United States.
The Company's management perceives additional key trends it believes
create favorable circumstances presently for the Company's Business Combination
with a Target Business in the healthcare industry.
POTENTIALLY ATTRACTIVE PRIVATE MARKET VALUES
The rapidly changing dynamics of the healthcare industry place enormous
financial and operational demands on smaller healthcare enterprises, including
private companies, smaller public companies and divisions of larger, established
organizations. The Company believes that these market dynamics have created an
environment in which certain entities that are not achieving necessary
efficiencies may be available for purchase at attractive private market
valuations. The Company further believes its substantial industry knowledge, its
expert management team and its specialized structure as a financing vehicle make
it an attractive potential business partner for such an entity.
CONSOLIDATION
Trends in the healthcare industry, particularly the pressure to provide
products and services at lower costs, are forcing many companies to leverage
broader bases of operation against existing infrastructures. This phenomenon is
driving an era of consolidation across most sectors of the industry as companies
strive to find complementary products and services which provide their
organizations with operating synergies. The Company believes that its access to
financing and its management experience and capabilities provide an attractive
alternative to a smaller healthcare company seeking to achieve the critical mass
required to prosper in this competitive market environment.
INDUSTRY SEGMENTS OF INTEREST
In selecting its officers, directors and advisors, the Company has
sought to create a management and advisory team that not only provides the
Company with depth of experience in healthcare industry mergers, acquisitions
and investment generally, but also provides the Company with operational,
investment and strategic consultation experience in specific healthcare industry
segments. The Company believes that the breadth of its management and advisory
team's healthcare industry experience provides the Company with the expertise it
will require to critically assess virtually any healthcare industry business the
Company identifies as a potential Target Business.
In assembling its management and advisory team, the Company has
attempted to gather expertise in the following areas, which the Company believes
to be important to the selection of a Target Business and the negotiation and
consummation of a Business Combination.
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GENERAL EXPERTISE
THE COMPANY'S MANAGEMENT AND ADVISORY TEAM CONSISTS OF A GROUP WITH
COMPLEMENTARY SKILLS IN, AMONG OTHERS, THE FOLLOWING AREAS:
/bullet/ Corporate and Securities Analysis: Gene E. Burleson, Jay M. Haft
and Linda A. Hamilton
/bullet/ Mergers and Acquisitions: Gene E. Burleson, Jay M. Haft
and Joel S. Kanter
/bullet/ Venture Capital: Dr. John H. Abeles, Dr. Robert
J. Becker, Joel S. Kanter and
Linda A. Hamilton
/bullet/ Strategic Consulting: All Directors and Advisors
/bullet/ Corporate Management: Dr. Robert J. Becker, Gene E.
Burleson, Nick Cindrich and
Kenneth Davidson
PHARMACEUTICAL SEGMENT
THE COMPANY INTENDS TO RELY HEAVILY UPON THE EXPERTISE OF DR. JOHN H.
ABELES, DR. ROBERT J. BECKER, DR. MARVIN J. WEINSTEIN AND LINDA A. HAMILTON IN
IDENTIFYING AND ASSESSING POTENTIAL TARGET BUSINESSES WITHIN THE PHARMACEUTICAL
SEGMENT.
This segment consists of companies developing, manufacturing and/or
marketing pharmaceuticals (drugs), either as prescription or non-prescription
(over-the-counter or "OTC"), patented (branded), or off-patent (generic), and
companies developing, manufacturing and/or marketing the means to deliver drugs
in novel and useful formats (drug delivery systems). An area of particular, but
by no means exclusive, interest to the Company in the pharmaceutical segment is
the dermatological field. The Company anticipates that the prescription and OTC
segment of the skin care products industry will continue to grow over the next
decade due, among other factors, to an expanding elderly population, an
increased awareness of the effects of the sun and other environmental factors
upon the skin, and the desire of consumers to reduce the visible signs of aging.
DIAGNOSTICS SEGMENT
THE COMPANY ANTICIPATES THAT IN IDENTIFYING AND ASSESSING POTENTIAL
TARGET BUSINESSES WITHIN THIS SEGMENT, IT WILL RELY HEAVILY UPON THE EXPERTISE
OF DR. JOHN H. ABELES, DR. MARVIN J. WEINSTEIN, DR. KENNETH DAVIDSON AND JAY M.
HAFT, EACH OF WHOM HAVE RELEVANT INDUSTRY EXPERIENCE IN DIAGNOSTICS.
This segment consists of reagents, packaging and instrumentation for
the laboratory diagnosis of disease. Diagnostic systems and kits are sold to
hospitals, clinics, reference laboratories, doctors' offices and, in certain
instances, to the public consumers directly. The Company intends to concentrate
on Target Businesses within this segment having unique diagnostic systems
through which multiple tests can be run, rather than companies with
disease-specific tests. The Company also has an interest in the disposable
component of this segment.
MEDICAL DEVICES, EQUIPMENT, AND SUPPLIES SEGMENT
NICK CINDRICH, KENNETH DAVIDSON, LINDA A. HAMILTON AND JOEL S. KANTER
HAVE STRONG OPERATIONS EXPERIENCE IN THIS SEGMENT, AND JAY M. HAFT, JOEL S.
KANTER AND DR. JOHN H. ABELES HAVE ALL BEEN INVOLVED IN THIS SEGMENT IN
CONNECTION WITH FINANCING, CONSULTING AND STRATEGIC ACTIVITIES.
This segment consists of mechanical and electronic products for
diagnosis, monitoring and treatment. They range from disposable, single-use
inexpensive products to very expensive devices and equipment used only in the
most sophisticated hospitals. Some examples of products in this segment include
orthopedic implants, laser surgery tools, radiological imaging systems,
intravenous pumps, life signs monitors, sophisticated catheter and syringes,
ophthalmic implants, artificial heart valves, wound
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dressings, fiberoptic viewing instruments and cardiac pacemakers. In this
segment, the Company prefers companies offering disposable products, rather than
expensive capital goods.
MEDICAL SERVICES SEGMENT
DR. ROBERT J. BECKER AND GENE E. BURLESON HAVE THE MOST SIGNIFICANT
OPERATING EXPERIENCE IN THIS SEGMENT. IN ADDITION, JOEL S. KANTER AND, TO A
LESSER EXTENT, DR. JOHN H. ABELES AND JAY M. HAFT, HAVE EXPERIENCE IN INVESTING
IN, DIRECTING AND CONSULTING WITH, MEDICAL SERVICE COMPANIES.
This broad segment of the industry includes the provision of services
or the distribution of products to patients or other consumers. Included in this
category are companies that operate healthcare facilities such as hospitals,
outpatient centers, freestanding ambulatory surgicenters, rehabilitation
facilities, and nursing care facilities, and companies that provide managed care
plans and services (including HMOs and PPOs), home healthcare services, clinical
contract management services, medical professional staffing and support
services, and clinical laboratory and toxicology testing services.
BIOTECHNOLOGY SEGMENT
IN ANALYZING COMPANIES WITHIN THIS SEGMENT, THE COMPANY WILL RELY
PRINCIPALLY UPON THE EXPERTISE OF DR. JOHN H. ABELES, DR. ROBERT J. BECKER,
LINDA A. HAMILTON, AND DR. MARVIN J. WEINSTEIN.
This segment is composed of biotechnology companies that use genetic
engineering techniques, such as recombinant DNA technology and cell culture to
produce therapeutic and diagnostic products. Advances in molecular biology and
the screening of compounds have the potential to enhance materially the process
of discovering new, useful products and to accelerate the development processes.
Because the Company believes that opportunities to effect a Business Combination
with operating, cash flow generating companies in this segment are limited, it
does not intend to focus initially on companies within this segment. It is
possible, however, that the Company may consider biotech segment opportunities,
either as its initial Business Combination or, more likely, subsequent to the
Business Combination.
SELECTION OF TARGET BUSINESS AND STRUCTURING A BUSINESS COMBINATION
The activities of the Company will be overseen by its five-member Board
of Directors, three of whom are also executive officers. The Company also
expects to rely heavily upon the expertise of its Board of Advisors, the members
of which are not directors. The Company believes that the skills and expertise
of its officers, directors and advisors, their collective access to Business
Combination opportunities and ideas, their financial and healthcare industry
experience, and their proven management abilities will enable the Company to
successfully identify and effect a Business Combination in the healthcare
industry. See "Management."
The Company anticipates that candidates for a Business Combination will
be brought to its attention from its officers, directors and advisors and their
affiliates, as well as from various unaffiliated sources, including securities
broker-dealers, investment bankers, venture capitalists, commercial bankers and
other members of the financial community. Although they are not obligated to do
so, the Underwriter may introduce the Company to potential Target Businesses or
assist the Company in raising additional capital, as needs may arise in the
future. While the Company does not presently anticipate engaging the services of
the Underwriter or other professional firms or consultants that specialize in
Business Combinations on any formal basis, and the Company has not had any
discussions with respect to the engagement of any such firms, the Company may
engage such firms in the future, in which event the Company may pay a finder's
fee or other cash compensation. A finder's fee, if any, could also be payable in
securities of the Company. If the Company were to engage an outside consultant
or the services of a professional firm, the Company would consider the
experience, prior acquisition history and fees charged in deciding whom to
retain. The Company would interview consultants recommended by its officers,
directors and Initial Stockholders. In no event, however, will the Company pay a
finder's fee or
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commission to any Initial Stockholder or any affiliated entity for such service
or such recommendation. See "Management -- Conflicts of Interest."
Subject to the limitations that a Target Business be within the
healthcare industry and have a Fair Market Value of at least 80% of the net
assets of the Company at the time of Business Combination , as determined by an
independent auditors or investment banking firm, management of the Company will
have virtually unrestricted flexibility in identifying and selecting a
prospective candidate for a Business Combination. The Target Business may, among
other things, be either a single corporation, several corporations enjoying a
parent-subsidiary or "sister" company relationship, or a division of a large
corporation. In evaluating a prospective Target Business, management will
consider the following material factors:
/bullet/ financial condition and results of operations;
/bullet/ growth potential;
/bullet/ experience and skill of management and availability of additional
personnel;
/bullet/ capital requirements;
/bullet/ competitive position;
/bullet/ stage of development of products, processes or services;
/bullet/ degree of current or potential market acceptance of the products,
processes or services; and
/bullet/ proprietary features and degree of intellectual property or other
protection of the products, processes or services.
The foregoing criteria are not intended to be exhaustive; any
evaluation relating to the merits of a particular Target Business will be based
on the above factors as well as other considerations deemed relevant by
management. Notwithstanding the foregoing, management has determined that it
will effect a Business Combination with a Target Business which, after the
consummation of the Business Combination, would either (i) satisfy the initial
listing standards for inclusion on the Nasdaq National Market or listing on
either the NYSE or the AMEX, or (ii) in the opinion of management, be of equal
quality to a business which qualifies for inclusion on the Nasdaq National
Market or listing on NYSE or AMEX.
In connection with its evaluation of a prospective Target Business,
management will conduct an extensive due diligence review which will encompass,
among other things, meetings with incumbent management and inspection of
facilities, as well as review of financial and other information which will be
made available to the Company. The time and costs required to identify, evaluate
and select a Target Business (including conducting a due diligence review) and
to structure and consummate the Business Combination (including preparing
requisite documents for filing pursuant to applicable securities laws) cannot
presently be ascertained. Any costs incurred in connection with the
identification and evaluation of a prospective Target Business with which a
Business Combination is not ultimately consummated will result in a loss to the
Company and reduce the amount of capital available to otherwise consummate a
Business Combination.
The Company's structure provides an extremely flexible vehicle for
consummating the Business Combination with the Target Business. The Target
Business can be acquired using the cash held in the Trust Fund, authorized but
unissued Common or Preferred Stock, debt, or a combination thereof. If stock is
used, the amount in the Trust Fund not paid to the sellers of the Target
Business can be used to finance the operations of the Target Business or to
effect other Business Combinations. If cash is used, there are currently no
limitations relating to the Company's ability to borrow funds to increase the
amount of capital available to the Company to consummate the Business
Combination. Since certain of the officers and directors of the Company have
experience in operating businesses in the healthcare industry, they can decide
whether to retain management of the Target Business after the Business
Combination, hire additional or substitute managers, or manage the Target
Business themselves. Moreover, the Company believes that, as a publicly-traded
entity, it can offer the sellers and managers of the Target Business certain
attractive consideration and compensation alternatives which privately-held
buyers cannot offer.
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COMPETITION
In identifying, evaluating and selecting a Target Business, the Company
expects to encounter intense competition from other entities having a business
objective similar to that of the Company. Many of these entities are well
established and have extensive experience in connection with identifying and
effecting business combinations directly or through affiliates. Many of these
competitors possess greater technical, human and/or other resources than the
Company and the Company's financial resources will be relatively limited when
contrasted with those of many of these competitors. This inherent competitive
limitation may give others an advantage in pursuing the Business Combination
with certain Target Businesses. Further, the Company's obligation to seek
stockholder approval of a Business Combination may delay the consummation of a
transaction; and the Company's obligation in certain circumstances to convert
into cash shares of Common Stock held by Public Stockholders may reduce the
resources available to the Company for a Business Combination or for other
corporate purposes. Either of these obligations may place the Company at a
competitive disadvantage in successfully negotiating a Business Combination.
Management believes, however, that the Company's status as a public entity and
its potential access to the United States public equity markets may give the
Company a competitive advantage over similarly capitalized privately-held
entities having a similar business objective to that of the Company in acquiring
a Target Business with significant growth potential on favorable terms.
In the event that the Company succeeds in consummating a Business
Combination, the Company will become subject to competition from competitors of
the Target Business in the healthcare industry. The healthcare industry is
highly competitive. Many companies in the healthcare industry are substantially
larger than the Company and have greater financial and other resources than the
Company. There can be no assurance that, subsequent to a Business Combination,
the Company will have the resources or ability to compete effectively.
FACILITIES
After the effective date of this Prospectus through the consummation of
the Business Combination, the Company intends to lease a small amount of office
space from an unaffiliated third party and to obtain certain office and
secretarial services, as may be required by the Company from time to time. The
Company anticipates that the total monthly cost for the space and services will
not exceed $1,000 per month.
EMPLOYEES
As of the date of this Prospectus, the Company has no employees other
than its three executive officers and an administrative assistant who are not
required to devote their full time to the business of the Company.
PERIODIC REPORTING AND AUDITED FINANCIAL STATEMENTS
The Company intends to register its securities under the Exchange Act
and therefore will have certain reporting obligations, including the requirement
that it file annual and quarterly reports with the Commission. In accordance
with the requirements of the Exchange Act, the Company intends to furnish to its
stockholders Annual Reports containing financial statements audited and reported
on by its independent accountants.
The Company will not effect a Business Combination with a Target
Business if audited financial statements cannot be obtained for such Target
Business. Additionally, management will provide the Public Stockholders with
audited financial statements (prepared in accordance with generally accepted
accounting principles) of the prospective Target Business as part of the proxy
solicitation materials sent to the Public Stockholders to assist them in
assessing the Target Business. Management believes that the requirement of
having available audited financial statements for the Target Business will not
materially
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limit the pool of potential Target Businesses available for Business
Combination, although there can be no assurance in this regard.
MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
Each of the Company's executive officers except for the Chairman of the
Board, all of whom are also members of the Company's Board of Directors, were
the founders of Healthcare Acquisition Corp. ("HCAC"). In March 1996, HCAC
consummated an initial public offering in which it raised net proceeds of
approximately $9,000,000. Similar to the Company, HCAC was formed with the
purpose of using the proceeds to identify and effect a Business Combination with
an operating business in the healthcare industry. In March 1997, HCAC merged
with Encore Orthopedics, Inc., a Texas corporation which designs, manufactures,
markets and sells products for the orthopedic implant industry primarily in the
United States, Europe and Asia. After the merger, the surviving corporation's
name was changed to Encore Medical Corporation ("Encore"). Encore's common stock
is publicly traded on the Nasdaq National Market under the symbol "ENMC". On
November 3, 1997, the closing price per share of Encore's common stock was
$4.63. There can be no assurance as to the future performance of Encore or the
prices at which its common stock will trade.
The current directors and executive officers of the Company are as
follows:
NAME AGE POSITION
---- --- --------
Gene E. Burleson 55 Chairman of the Board
Jay M. Haft 61 Vice-Chairman of the Board and
Chief Executive Officer
John H. Abeles, M.D. 52 President and Director
Joel S. Kanter 40 Secretary, Treasurer and Director
Linda A. Hamilton 39 Director
GENE E. BURLESON has been the Chairman of the Board of Directors of the
Company since its inception. Since January 1994, Mr. Burleson has served as
Chairman of the Board of Directors of GranCare, Inc., which has recently merged
into Paragon Health Network, Inc. ("GranCare"), a leading provider of
comprehensive post-acute healthcare services, primarily skilled nursing care,
subacute and medically complex care, long-term acute hospital care,
inpatient/outpatient therapy, hospital contract management, home health care and
adult day care, which is publicly traded on the NYSE. From December 1990 to
February 1997, Mr. Burleson served as Chief Executive Officer of GranCare.
Before joining GranCare, Mr. Burleson served in progressively responsible
positions, most recently as President and Chief Operating Officer, within the
domestic and international operations of American Medical International, Inc.,
one of the leading hospital management companies in the United States which
provides a full range of inpatient and outpatient services. Mr. Burleson also
currently serves as a member of the board of directors of Walnut Financial
Services, Inc., a financial service and consulting firm which is traded on
Nasdaq National Market, and Deckers Outdoor Corporation, a manufacturer and
designer of innovative, function oriented footwear and apparel which is publicly
traded on the Nasdaq National Market.
JAY M. HAFT has been the Vice-Chairman of the Board of Directors and
Chief Executive Officer of the Company since its inception. Mr. Haft is a
strategic and financial consultant for growth stage companies. He is active in
international corporate finance, mergers and acquisitions, as well as in the
representation of emerging growth companies. He has actively participated in
strategic planning and fund raising for many high-tech companies, leading edge
medical technology companies and technical product, service and marketing
companies. Mr. Haft serves as Managing General Partner of Venture Capital
Associates, Ltd. and of Gen Am "1" Venture Fund, a domestic and an international
venture capital fund, respectively. Mr. Haft is also a director of numerous
public and private corporations, including Robotic
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Vision Systems, Inc., a three dimensional vision equipment company which is
publicly traded on the Nasdaq National Market, Noise Cancellation Technologies,
Inc., a noise and vibration attenuation equipment company which is publicly
traded on the Nasdaq National Market, Extech, Inc., a hotel management company
which is publicly traded on the Bulletin Board, Encore Medical Corporation, a
manufacturer of implant devices which is publicly traded on the Nasdaq National
Market, Viragen, Inc., a biologicals company which is publicly traded on the
Nasdaq National Market, PC Service Source, Inc., a computer parts replacement
company which is publicly traded on the Nasdaq National Market, DUSA
Pharmaceuticals, Inc., a photochemo-therapy company which is publicly traded on
the Nasdaq National Market, Oryx Technology Corporation, a material sciences
company which is publicly traded on the Nasdaq National Market, and Conserver
Corporation of America, a food preservation company which is publicly traded on
the Nasdaq Small Cap. He also serves as Chairman of the Board of Noise
Cancellation Technologies, Inc., and Extech, Inc. Mr. Haft is currently of
counsel to Parker Duryee Rosoff & Haft, in New York. He was previously a senior
corporate partner of such firm, from 1989 to 1994, and a member of the Florida
Commission for Government Accountability to the People, a National
Vice-President of the Miami Ballet and a director of the Concert Association of
Florida. Mr. Haft is a graduate of Yale College and Yale Law School.
JOHN H. ABELES, M.D. has been the President and a director of the
Company since its inception. Dr. Abeles is a healthcare industry investor and
consultant who, since 1980, has served as President and sole principal of
MedVest, Inc., a company which provides strategic, financial, and market-based
research and development advisory and consulting services principally to
emerging companies in the healthcare industry. From 1971 to 1975, Dr. Abeles was
an executive officer with several major pharmaceutical companies in the United
Kingdom and the United States, including Sterling Drugs, Inc., Pfizer, Inc., and
USV Pharmaceuticals Inc., in the pharmaceutical business. From 1975 to 1980, he
was an analyst with Kidder Peabody Inc. in its healthcare research department.
Dr. Abeles is currently a member of the board of directors of Oryx Technology
Corporation, a material sciences company which is publicly traded on the Nasdaq
Small Cap Market, DUSA Pharmaceuticals, Inc., a pharmaceutical company which is
publicly traded on the Nasdaq National Market, Pharmaprint, Inc., a botanical
pharmaceuticals company which is publicly traded on the Nasdaq National Market,
I-Flow Corporation, a manufacturer of home infusion pumps which is publicly
traded on the Nasdaq Small Cap Market, and Encore Medical Corporation, a
manufacturer of implant devices which is publicly traded on the Nasdaq National
Market. Dr. Abeles is also a director of the Neuroscience and Immunology
Division of the Higuchi BioSciences Institute at the University of Kansas. Dr.
Abeles earned an M.B., Ch.B from the University of Birmingham (England).
JOEL S. KANTER has been a director of the Company since its inception.
Mr. Kanter currently serves as President and director of Walnut Financial
Services, Inc., a financial service and consulting firm which is traded on the
Nasdaq National Market, and Walnut Capital Corp., a venture capital firm. Both
Walnut Financial Services, Inc. and Walnut Capital Corp. have provided financing
and consulting services to many companies in the healthcare industry. Mr. Kanter
is also currently a consultant to Universal Partners, L.P. which specializes in
the provision of bridge financing to small and medium sized corporations. Walnut
Financial Services, Inc. currently owns 50% of the general partner and 83% of
the limited partnership interest in Universal Partners L.P. Mr. Kanter serves as
President of Windy City, Inc. an investment management firm, and has served in
such capacity since 1986. From 1988 through February 1995, Mr. Kanter was a
consultant to Walnut Capital Corp. Mr. Kanter currently serves as a director of
GranCare, I-Flow Corporation, a manufacturer of home infusion pumps traded on
the Nasdaq Small Cap Market, Encore Medical Corporation, a manufacturer of
implant devices which is publicly traded on the Nasdaq National Market and
Greystone Medical Group, Inc., a development stage pharmaceutical company traded
on the Bulletin Board. Mr. Kanter earned a B.A. degree from Tulane University.
LINDA ANN HAMILTON has been a director of the Company since its
inception. Ms. Hamilton currently serves as President of HMS, Inc., a private
company located in Naples, Florida which provides managerial and administrative
services. From 1988 to 1995, she served as Assistant to the Chairman of the
Board/Chief Executive Officer and Corporate Secretary of Meadox Medicals, Inc.,
a privately held medical device manufacturer located in Oakland, New Jersey.
From 1976 to 1980, Ms. Hamilton was employed at Barnert Hospital in New Jersey
where she was involved in hospital administration functions
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related to patient care services. She developed and established a staffing
department responsible for the coordination of professional and non-professional
services and schedules. Ms. Hamilton is currently a member of the board of
directors of Genesis Orthopedics, Inc., a privately held manufacturer of
orthopedic trauma devices. Ms. Hamilton attended Ramato State College located in
New Jersey.
The Company has a Board of Advisors consisting of five individuals with
demonstrated expertise in the healthcare industry. The Company anticipates that
they will advise the Company concerning its Business Combination with a Target
Business and, possibly, the operations of the Target Business after the Business
Combination. The Company also anticipates that the Board of Advisors initially
will meet quarterly and that individual members will advise the Company more
frequently. The members of the Board of Advisors are employed by or affiliated
with organizations other than the Company and, therefore, may have other
commitments that may conflict or compete with their obligations, if any, to the
Company. The current members of the Board of Advisors and their respective
biographies are set forth below.
ROBERT J. BECKER, M.D. has been a member of the Board of Advisors to
the Company since its inception. Dr. Becker was the founder, and currently
serves as Chairman Emeritus of HealthCare COMPARE Corp., a managed care company
which is publicly traded on the Nasdaq National Market. Healthcare COMPARE Corp.
has grown to become a major managed care organization, with one of the largest
integrated, independent Preferred Provider Organization network in the United
States. Since 1982, Dr. Becker has served HealthCare COMPARE Corp. in several
capacities including, from 1982 to 1984, as its Chief Executive Officer and
President and, from 1984 to 1990, as its Chairman of the Board of Directors.
Since 1990, Dr. Becker has also served as President of Becker Consulting Corp.,
a company which provides consulting services to managed care companies. Dr.
Becker is also currently a member of the board of directors if IMPAC Medical
Systems, Inc., a private company which is in the oncology software business, and
American Psych Systems, Inc., a private behavioral health managed care company.
Dr. Becker earned his M.D. degree from the Medical College of Wisconsin.
NICK CINDRICH has been a member of the Board of Advisors to the Company
since its inception. Mr. Cindrich founded Encore Orthopedics, Inc., a Texas
corporation which designs, manufactures and sells orthopedic implant products
primarily in the United States, Europe and Asia. Since August 1994, he has
served as the Chief Executive Officer and Chairman of the Board of Directors of
Encore Orthopedics, Inc., which, as mentioned above, changed its name to Encore
Medical Corporation after merging with HCAC. From 1992 through 1994, Mr.
Cindrich was self-employed as a business consultant, while being restricted from
participation in the management of Encore Orthopedics, Inc. as a result of the
settlement of a lawsuit involving his previous employer. From 1984 to 1991, Mr.
Cindrich served as President of Intermedics Orthopedics, Inc., an orthopedic
device company. From 1980 to 1984, Mr. Cindrich was the Group Vice President --
Operations for DePuy, Inc., an orthopedic device company. From 1969 to 1980, Mr.
Cindrich held a series of positions, the last of which was Vice President of
Manufacturing, at Zimmer Inc., an orthopedic device company. Mr. Cindrich has
over 25 years of experience in the medical device industry.
KENNETH DAVIDSON has been a member of the Board of Advisors to the
Company since its inception. Since November 1986, Mr. Davidson has served as
Chairman of the Board of Directors, Chief Executive Officer and President of
Maxxim Medical, Inc. ("Maxxim"), a manufacturer of single-use specialty medical
products which is publicly traded on the NYSE. Mr. Davidson has served as a
director of Maxxim since 1982. Mr. Davidson is also a director of Henley
Healthcare, Inc., physical medicine and rehab, and of Encore Medical
Corporation, a manufacturer of implant devices which is publicly traded on the
Nasdaq National Market and Director of Operation of Rainbow, international
charity headquartered in Houston, Texas.
MARVIN J. WEINSTEIN, M.D. has been a member of the Board of Advisors to
the Company since its inception. Since 1981, Dr. Weinstein has been President of
Research Advisory Service, Inc., a biotechnology consulting company, that has
provided consulting services to several companies in the
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pharmaceutical industry including, Yamanouchi Pharmaceuticals Corporation,
Suntory Biomedical Research, Inc. Xenora Ltd. and Martek Biosciences Inc. Prior
to that time, Dr. Weinstein was employed by Schering Plough Pharmaceutical
Company for 25 years, where he attained the position of Senior Director and Vice
President of Microbiology and Recombinant DNA Research, was a research assistant
at the Squibb Institute from 1949 through 1956. Dr. Weinstein is the inventor on
30 patents and he has organized and directed the group responsible for the
discovery and development of several antibiotics. He serves as an adjunct
faculty member of The Rockefeller University, and as Research Fellow at the Drew
University Institute for Scientists Emeritii. Dr. Weinstein is currently a
member of the Board of Directors of New Brunswick Scientific Co., Inc., a
manufacturer of laboratory equipment traded on the Nasdaq National Market, and,
until recently he was a director at Epitope, Inc., a biotechnology company
traded on the American Stock Exchange. He was a member of one of the first
United States State Department Scientific Exchange Delegations to the former
Soviet Union. Dr. Weinstein earned a B.A. degree from Alfred University and M.S.
and Ph.D. degrees from New York University.
EXECUTIVE COMPENSATION
No executive officer has received any cash compensation from the
Company since its inception for services rendered. No compensation of any kind
(including finders and consulting fees) will be paid to any Initial Stockholder,
or any affiliate of any Initial Stockholder, for services rendered to the
Company prior to or in connection with the Business Combination; provided,
however, that such persons shall be entitled to receive, upon consummation of
the Business Combination, finder's fees for monies raised by them for the
Company in connection with the Business Combination, at rates which are no less
favorable to the Company than those which the Company would pay to unaffiliated
third parties. In addition, the Initial Stockholders will receive reimbursement
for any out-of-pocket expenses incurred in connection with activities on behalf
of the Company. There is no limit on the amount of such out-of-pocket expenses
and there will be no review of the reasonableness of such expenses by anyone
other than the Board of Directors, which includes persons who may seek
reimbursement. The amount of reimbursable expenses and any other expenses
incurred by the Company prior to a Business Combination cannot exceed the amount
of the net proceeds of this offering not held in the Trust Fund unless the
Company consummates a Business Combination. In the event that the Company does
not consummate a Business Combination, up to 15% of the proceeds of the Trust
Fund may be used to pay the expenses (reimbursable out-of-pocket or other)
related to the investigation and selection of a Target Business and the
negotiation of an agreement to effect a Business Combination with the Target
Business. See "Proposed Business--Selection of a Target Business and Structuring
a Business Combination."
1997 STOCK OPTION PLAN
The Option Plan became effective on October 1, 1997. As of the date of
this Prospectus, no options have been granted. The purpose of the Option Plan is
to attract and retain qualified personnel, to provide additional incentives to
employees, officers and consultants of the Company and to promote the success of
the Company's business. A reserve of 750,000 shares of the Company's Common
Stock has been established for issuance under the Option Plan. The Option Plan
is administered by a committee to be appointed by the Board of Directors (the
"Committee"). The Committee has complete discretion to determine which eligible
individuals are to receive option grants, the number of shares subject to each
such grant, the status of any granted option as either an incentive stock option
or a non-statutory option, the vesting schedule to be in effect for the option
grant and the maximum term for which any granted option is to remain
outstanding.
Each option granted under the Option Plan has a maximum term of ten
(10) years, subject to earlier termination following the optionee's cessation of
service with the Company. Options granted under the Option Plan may be exercised
only for fully vested shares. The exercise price of incentive stock options and
non-statutory stock options granted under the Option Plan must be at least equal
to the fair market value of the stock subject to the option on the date of grant
The Board of Directors or the
36
<PAGE>
Committee has the authority to determine the fair market value of the stock. The
purchase price is payable immediately upon the exercise of the option. Such
payment may be made in cash, in outstanding shares of Common Stock held by the
participant, through a promissory note payable in installments over a period of
years or any combination of the foregoing.
The Board of Directors may amend or modify the Option Plan at any time,
provided that no such amendment or modification may adversely affect the rights
and obligations of the participants with respect to their outstanding options or
vested shares without their consent. In addition, no amendment of the Option
Plan may, without the approval of the Company's shareholders: (i) materially
increase the benefits accruing to participants under the Option Plan; (ii)
materially increase the number of securities which may be issued under the plan;
(iii) materially modify the requirements as to eligibility for participation in
the Option Plan; or (iv) except as otherwise provided in the Option Plan,
substantially impair the rights or benefits of any participant pursuant to any
option previously granted without the consent of the participant. The Option
Plan will terminate on October 1, 2007, unless sooner terminated by the Board of
Directors.
CONFLICTS OF INTEREST
None of the Company's officers, directors or advisors is required to
commit his full time to the affairs of the Company and each has positions and
activities other than his position with the Company. There is no requirement for
any of the officers, directors or advisors to devote even a substantial amount
of time to the Company's business. Accordingly, such personnel will have
conflicts of interest in allocating management time among various business
activities. At present, none of the officers, directors or advisors of the
Company is involved in any other acquisition fund with activities similar to
those to be undertaken by the Company, but certain of the officers and directors
are, and in the future may become, affiliated with entities which are engaged in
business activities in the healthcare industry but which are not acquisition
funds. Such persons may have conflicts of interest in determining to which
entity a particular business opportunity should be presented. The Company's
officers and directors intend to offer all suitable prospective Target
Businesses to the Company before any other company until the earlier of a
Business Combination or the liquidation of the Company subject to their
fiduciary duties to other companies, if any. In general, officers and directors
of a corporation incorporated under the laws of the State of Florida are
required to present certain business opportunities to such corporation.
Accordingly, as a result of multiple business affiliations, certain of the
Company's officers and directors may have similar legal obligations to present
certain business opportunities to multiple entities. There can be no assurance
that any of the foregoing conflicts will be resolved in favor of the Company.
To minimize potential conflicts of interest, each Initial Stockholder,
officer, director or member of the Board of Advisors of the Company will abstain
from voting with respect to any proposed Business Combination if such person is
a director or officer of the Company, or a stockholder owning more than five
percent (5%) of the voting shares of the company which is a party to the
proposed Business Combination.
Furthermore, in connection with any stockholder vote relating to
approval of a Business Combination, all of the Initial Stockholders have agreed
to vote the shares of Common Stock owned by them on the date hereof in
accordance with the vote of the majority in interest of the Public Stockholders
and have agreed to waive their respective rights to participate in any
distribution with respect to such shares as a result of the Company's
liquidation prior to the consummation of a Business Combination.
PRINCIPAL STOCKHOLDERS
The following table sets forth certain information regarding beneficial
ownership of the Company's Common Stock, as of the date of this Prospectus, and
as adjusted to reflect the sale of the shares of Common Stock offered hereby
(assuming no exercise of the Underwriter's over-allotment option) by (i) each
stockholder known by the Company to be the beneficial owner of more than 5% of
the outstanding
37
<PAGE>
Common Stock, (ii) each director of the Company and (iii) all directors and
officers as a group. Except as otherwise indicated, the Company believes that
the beneficial owners of the Common Stock listed below, based on information
furnished by such owners, have sole investment and voting power with respect to
such shares, subject to community property laws where applicable.
<TABLE>
<CAPTION>
PERCENTAGE
BENEFICIALLY OWNED
------------------------
NUMBER BEFORE AFTER
PRINCIPAL STOCKHOLDERS OF SHARES OFFERING OFFERING
---------------------- --------- -------- --------
<S> <C> <C> <C>
Jay M. Haft and Clayre Haft (1)................................. 334 33.4% *
10 Edgewater Drive
Coral Gables, Florida 33133
John H. Abeles, M.D.(2)......................................... 333 33.3% *
c/o Medvest Inc.
2365 N.W. 41st Street
Boca Raton, Florida 33431
Joel S. Kanter (3).............................................. 333 33.3% *
c/o Windy City, Inc.
8000 Towers Crescent Drive
Suite 1070
Vienna, Virginia 22182
Gene E. Burleson................................................ -0- * *
c/o GranCare, Inc.
One Ravinia Drive
Suite 1500
Atlanta, Georgia 30346
Linda A. Hamilton............................................... -0- * *
c/o The Drax Group
281 Broad Avenue South
Naples, Florida 33940
All Officers and Directors as a group (five persons)............ 1,000 100% *
<FN>
- ----------
* Less than one percent (1%)
(1) Represents shares owned by husband and wife as joint tenants, with right of survivorship.
(2) Represents shares owned by Northlea Partners, Ltd. of which Dr. Abeles is a general partner.
(3) Represents shares owned by Windy City, Inc. of which Mr. Kanter is President.
</FN>
</TABLE>
Messrs. Haft, Abeles and Kanter may be deemed to be "promoters" of the
Company, as such term is defined under the Federal securities laws.
CERTAIN TRANSACTIONS
All transactions with affiliates of the Company, if any, will be on
terms believed by the Company to be no less favorable than are available from
unaffiliated third parties and will be approved by a majority of the members of
the Company's Board of Directors who do not have an interest in the transaction.
38
<PAGE>
DESCRIPTION OF SECURITIES
GENERAL
The Company is authorized to issue 20,000,000 shares of Common Stock,
par value $.01 per share, and 5,000,000 shares of Preferred Stock, par value
$.01 per share. As of the date of this Prospectus, before giving effect to this
offering, 1,000 shares of Common Stock are outstanding, held of record by 3
persons. No shares of Preferred Stock are currently outstanding.
COMMON STOCK
The holders of Common Stock are entitled to one vote for each share
held of record on all matters to be voted on by stockholders. There is no
cumulative voting with respect to the election of directors, with the result
that the holders of more than 50% of the shares voted can elect all of the
directors then being elected. The holders of Common Stock are entitled to
receive dividends when, as and if declared by the Board of Directors out of
funds legally available therefore. In the event of liquidation, dissolution or
winding up of the Company, the holders of Common Stock (except for the Initial
Stockholders who have agreed, with respect to any shares of Common Stock owned
by them on the date hereof, to waive their rights to share in any distribution
relating to a liquidation of the Company due to the failure of the Company to
consummate a Business Combination within 18 or 24 months, as the case may be,
from the consummation of this offering) are entitled to share ratably in all
assets remaining available for distribution to them after payment of liabilities
and after provision has been made for each class of stock, if any, having
preference over the Common Stock. Holders of shares of Common Stock, as such,
have no redemption, preemptive or other subscription rights, and except as
described under "Special Characteristics of the Company," there are no
conversion provisions applicable to the Common Stock. All of the outstanding
shares of Common Stock, when issued and paid for as set forth in this
Prospectus, will be, fully paid and nonassessable.
PREFERRED STOCK
The Company's Articles of Incorporation authorize the issuance of
5,000,000 shares of preferred stock ("Preferred Stock") with such designations,
rights and preferences as may be determined from time to time by the Board of
Directors. Accordingly, the Board of Directors is empowered, without stockholder
approval, to issue Preferred Stock with dividend, liquidation, conversion,
voting or other rights which could adversely affect the voting power or other
rights of the holders of the Company's Common stock, although the Underwriting
Agreement prohibits the Company, prior to a Business Combination, from issuing
Preferred Stock which participates in any manner in the proceeds of the Trust
Fund, or which votes as a class with the common stock on a Business Combination.
The Company may issue some or all of such shares in connection with a Business
Combination. In addition, the Preferred Stock could be utilized, under certain
circumstances, as a method of discouraging, delaying or preventing a change in
control of the Company. Although the Company does not currently intend to issue
any shares of Preferred Stock, there can be no assurance that the Company will
not do so in the future.
FOUNDERS' OPTIONS AND BRIDGE WARRANTS
Each Founders' Option and Bridge Warrant (collectively, the "Warrants")
entitles the registered holder to purchase one share of Common Stock for $6.00,
subject to adjustment under certain circumstances. The Founders' Options are
exercisable for a period of ten (10) years commencing upon the consummation of
this offering. The Bridge Warrants are exercisable for a period of five (5)
years commencing one (1) year from the consummation of this offering. The
Founders' Options are to be issued under the Option Plan prior to the
consummation of this offering.
39
<PAGE>
The exercise price and number of shares of Common Stock issuable on
exercise of the Warrants are subject to adjustment in certain circumstances,
including a stock dividend, recapitalization, reorganization, merger or
consolidation of the Company.
The Warrants may be exercised upon surrender of the Warrant certificate
on or prior to the expiration date at the offices of the Warrant Agent, with the
exercise form attached to the Warrant certificate completed and executed as
indicated, accompanied by full payment of the exercise price of the number of
Warrants being exercised. The holders of the Warrants do not have the rights or
privileges of holders of Common Stock prior to the exercise of the Warrants.
No Warrants will be exercisable unless at the time of exercise there is
a current prospectus covering the shares of Common Stock issuable upon exercise
of such Warrants under an effective registration statement filed with the
Commission and such shares have been qualified for sale or are exempt from
qualification under the securities laws of the state of residence of the holder
of such Warrants.
No fractional shares will be issued upon exercise of the Warrants.
However, if a holder of the Warrants exercises all Warrants then owned of record
by him, the Company will pay to such holder, in lieu of the issuance of any
fractional share which is otherwise issuable to such holder, an amount in cash
based on the market value of the Common stock on the last trading day prior to
the date of exercise.
DIVIDENDS
The Company has not paid any dividends on its Common Stock to date and
does not intend to pay dividends prior to the consummation of a Business
Combination. The payment of dividends after any such Business Combination will
be contingent upon the Company's revenues and earnings, if any, capital
requirements and its general financial condition. The payment of any dividends
subsequent to a Business Combination will be within the discretion of the
Company's then-Board of Directors. It is the present intention of the Board of
Directors to retain all earnings, if any, for use in the Company's business
operations and, accordingly, the Board does not anticipate declaring any
dividends in the foreseeable future.
TRANSFER AGENT
The transfer agent and registrar for the Common Stock is Corporate
Stock Transfer, Denver, Colorado.
SHARES ELIGIBLE FOR FUTURE SALE
Upon the consummation of this offering, the Company will have 1,167,667
shares of Common Stock outstanding (1,342,667 shares if the Underwriter's
over-allotment option is exercised in full), of which 1,166,667 shares
(1,341,667 shares in the event of the exercise of the over-allotment option)
will be freely tradable without restriction or further registration under the
Securities Act, except for any shares purchased by an "affiliate" of the Company
(in general, a person who has a control relationship with the Company), which
will be subject to limitations of Rule 144 promulgated under the Securities Act.
All of the remaining 1,000 shares are deemed to be "restricted securities," as
the term is defined under Rule 144 promulgated under the Securities Act, in that
such shares were issued in private transactions not involving a public offering.
None of such restricted shares will be eligible for sale under Rule 144 prior to
October 1, 1998.
In general, under Rule 144 as currently in effect, subject to the
satisfaction of certain other conditions, a person, including an affiliate of
the Company (or persons whose shares are aggregated), who has owned restricted
shares of Common Stock beneficially for at least one year is entitled to sell,
in brokerage transactions, within any three-month period, a number of shares
equal to the greater of 1% of
40
<PAGE>
the total number of outstanding shares of the same class or the average weekly
trading volume during the four calendar weeks preceding the sale. A person who
has not been an affiliate of the Company for at least two years is entitled to
sell such shares under Rule 144 without regard to any of the limitations
described above.
Prior to this offering, there has been no market for the Common Stock
and no prediction can be made as to the effect, if any, that market sales of
restricted shares of Common stock or the availability of such shares for sale
will have on the market prices prevailing from time to time. Nevertheless, the
possibility that substantial amounts of Common Stock may be sold in the public
market may adversely affect prevailing market prices for the Common Stock and
could impair the Company's ability to raise capital through the sale of its
equity securities.
REGISTRATION RIGHTS
The holders of the Bridge Warrants will be entitled to certain
piggyback rights with respect to the registration of the shares underlying the
Bridge Warrants under the Securities Act as discussed below. If, at any time
after the date of issuance of the Bridge Warrants, the Company proposes,
excluding this offering, to register any of its equity securities under the
Securities Act, either for its own account or for the account of other security
holders, the holders of the shares underlying the Bridge Warrants will be
entitled to notice of the registration and will entitled to include, at the
Company's sole expense (excluding underwriter discounts), all or any portion of
their Bridge Warrant Shares therein, subject to pro rata cut-back provisions in
the event that the managing underwriter in any underwritten offering determines
that the inclusion of the Bridge Warrant Shares and any other securities
entitled to piggyback registration rights would adversely affect the offering
being registered.
STATE BLUE SKY INFORMATION
The Company has made application to register, or an exemption from
registration will be obtained, for the sale of the shares of Common Stock
offered hereby in the States of Colorado, Florida, Illinois and New York.
Purchasers of the shares of Common Stock either in this offering or in any
subsequent trading market which may develop must be residents of the States of
Colorado, Florida, Illinois and New York unless an applicable exemption is
available or a blue sky application has been filed and accepted. The Company
will amend this Prospectus for the purpose of disclosing additional states, if
any, in which the shares of Common Stock will have been registered or where an
exemption from registration is available.
UNDERWRITING
The Underwriter has agreed, subject to the terms and conditions of the
Underwriting Agreement, to act as the exclusive agent for the Company to sell on
a "best efforts, all or none" basis, 1,166,667 shares of Common Stock offered
hereby and, solely to cover over-allotments, an additional 175,000 shares of
Common Stock upon the same terms and conditions. The Underwriter has made no
commitment to purchase any or all of the shares of Common Stock offered by this
Prospectus. It has agreed only to use its best efforts to find purchasers for
the shares of Common Stock within a period of thirty (30) days from the date of
this Prospectus, subject to extension for an additional period of thirty (30)
days from the date of this Prospectus upon mutual consent of the Company and the
Underwriter. The Underwriting Agreement provided that the obligations of the
Underwriter are subject to approval of certain legal matters by counsel and
various other conditions precedent.
All proceeds from subscriptions will be deposited promptly into a
non-interest bearing account with North Fork Bank, as escrow agent pursuant to
an escrow agreement between the Company, the Underwriter and such escrow agent.
Funds will be transmitted to the escrow agent for deposit in the escrow account
no later than noon of the business day following receipt. All checks must be
made payable to "North Fork Bank, as escrow agent for Medical Acquisition Corp."
In the event the 1,166,667 shares of Common Stock are not sold within the thirty
(30) day initial offering period and the thirty (30) day extension period
described above, funds will be refunded promptly to subscribers in full without
deduction therefrom or interest thereon. During the thirty (30) day
41
<PAGE>
offering period and any extension, no subscriber will be entitled to a refund of
any subscription, and no funds will be released from escrow until completion or
termination of the offering. There are none nor will there be any arrangements
between the Company and the Underwriter whereby shares of Common Stock will be
reserved for sales to persons associated or affiliated with management of the
Company or its affiliated persons, although such persons may purchase shares of
Common Stock in order to assure the completion of this offering.
The Underwriter will be paid a commission equal to seven percent (7%)
of the gross proceeds of the Offering of shares of Common Stock hereby. The
Underwriter, as agent for the Company, proposes to offer the shares of Common
Stock to the public at the initial offering price set forth on the cover page of
this Prospectus and to certain dealers at that price less a concession not in
excess of $____ per share. The Underwriter may allow, and such dealers may
reallow, a concession not in excess of $___ per share to certain other dealers.
The Company has agreed to indemnify the Underwriter against certain
liabilities, including liabilities under the Securities Act. The Company has
also agreed to pay to the Underwriter a non-accountable expense allowance equal
to $120,000. The Company also has agreed to pay all expenses in connection with
qualifying the shares of Common Stock offered hereby for sale under the laws of
such states as the Underwriter may designate, including fees and expenses of
counsel retained for such purposes by the Underwriter, [a one-time fee of
$5,000] payable to counsel for the Underwriter for the preparation of a
Secondary Market Trading Survey and the counsel fees, costs and disbursements in
connection with registering the offering with the NASD.
The Company has granted to the Underwriter an option, exercisable
during the 45-day period after the date of this Prospectus, to purchase from the
Company at the offering price, less commissions, up to an aggregate of 175,000
additional shares of Common Stock for the sole purpose of covering
over-allotments, if any.
In connection with this offering, the Company has agreed to sell to the
Underwriter, warrants (the "Underwriter's Warrants") for an aggregate of $100
consideration, representing the right to purchase up to an aggregate of 75,000
shares of Common Stock. The Underwriter's Warrants are exercisable initially at
$6.00 per share for a period of five years commencing one year from the date
hereof. The Underwriter's Warrants may not be transferred, sold, assigned or
hypothecated during the one-year period following the date of this Prospectus,
except to the Underwriter and members of the selected dealers and their officers
and partners. The Underwriter's Warrants grant to the holders thereof certain
"piggy-back" rights for a period of three years from the date of this Prospectus
with respect to the registration under the Securities Act of the Common Stock
issuable upon exercise of the Underwriter's Warrants.
Prior to this offering there has been to public market for any of the
Company's securities. Accordingly, the offering price of the shares of Common
Stock has been arbitrarily determined by negotiation between the Company and the
underwriters and does not necessarily bear any relation to establish valuation
criteria. Factors considered in determining such prices and terms, in addition
to prevailing market conditions, included an assessment of the prospects for the
industry in which the Company will compete, the Company's management and the
Company's capital structure.
Although they are not obligated to do so, the Underwriter may introduce
the Company to potential Target Businesses or assist the Company in raising
additional capital, as needs may arise in the future. The Company is not under
any contractual obligation with the Underwriter to engage it to provide any
services for the Company after the consummation of this offering but, if it
does, it may pay such Underwriter a finder's fee or other compensation.
In connection with this offering, the Underwriter and selling group
members (if any) and their respective affiliates may engage in transactions that
stabilize, maintain or otherwise affect the market
42
<PAGE>
price of the Common Stock. Such transactions may include stabilization
transactions effected in accordance with Rule 104 of Regulation M under the
Exchange Act, pursuant to which such persons may bid for or purchase Common
Stock for the purpose of stabilizing its market price. The Underwriter also may
create a short position for its own account by selling more Common Stock in
connection with this offering than it is committed to purchase from the Company,
and in such case may purchase Common Stock in the open market following
completion of this offering to cover all or a portion of such short position.
Any of the transactions described in this paragraph may result in the
maintenance of the price of the Common Stock at a level above that which might
otherwise prevail in the open market. None of the transactions described in this
paragraph are required, and, if they are undertaken, they may be discontinued at
any time.
LEGAL MATTERS
The legality of the securities offered hereby will be passed upon for
the Company by Baker & McKenzie, Miami, Florida. The Law Offices of David N.
Feldman, New York, New York, has acted as counsel for the Underwriter in
connection with this offering.
EXPERTS
The financial statements of Medical Acquisition Corp. as of October 22,
1997 and for the period from July 25, 1997 (inception) to October 22, 1997
included in this Prospectus have been audited by Richard A. Eisner & Company,
LLP, independent auditors, as set forth in their report appearing elsewhere
herein, and are included herein in reliance upon such report given upon the
authority of said firm as experts in accounting and auditing.
ADDITIONAL INFORMATION
The Company is subject to the informational requirements of the
Exchange Act and in accordance therewith files reports and other information
with the Commission. Reports, proxy statements and other information concerning
the Company can be inspected without charge at the Public Reference Room
maintained by the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549.
In addition, upon request such reports, proxy statements and other information
will be made available for inspection and copying at the Commission's public
reference facilities at 500 West Madison Street, suite 1400, Chicago, Illinois
60661 and at Seven World Trade Center, 13th Floor, New York, New York 10048.
Copies of such material can be obtained at prescribed rates upon request from
the Public Reference Section of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549. The Commission maintains a site on the World Wide Web
(HTTP://WWW.SEC.GOV.) that contains reports, registration statements, proxy and
information statements, and other information.
The Company has filed with the Commission in Washington, D.C., a
Registration Statement under the Securities Act with respect to the Common Stock
offered by this Prospectus. This Prospectus does not contain all of the
information set forth in the Registration Statement, certain parts of which are
omitted in accordance with the rules and regulation of the Commission. For
further information with respect to the Company and this offering, reference is
made to the Registration Statement, including the exhibits filed therewith,
copies of which may be obtained at prescribed rates from the Commission at the
public reference facilities maintained by the Commission. Descriptions contained
in this Prospectus as to the contents of any contract or other document filed as
an exhibit to the Registration Statement are not necessarily complete and each
such description is qualified by reference to such contract or document.
43
<PAGE>
MEDICAL ACQUISITION CORP.
(a corporation in the development stage)
<TABLE>
<CAPTION>
CONTENTS
PAGE
----
<S> <C>
FINANCIAL STATEMENTS
Independent auditors' report F-2
Balance sheet as of October 22, 1997 F-3
Statement of operations for the period from July 25, 1997 (inception) to October 22, 1997 F-4
Statement of stockholders' equity for the period from July 25, 1997 (inception) to October 22, 1997 F-5
Statement of cash flows for the period from July 25, 1997 (inception) to October 22, 1997 F-6
Notes to financial statements F-7
</TABLE>
F-1
<PAGE>
INDEPENDENT AUDITORS' REPORT
Medical Acquisition Corp.
Miami, Florida
We have audited the accompanying balance sheet of Medical Acquisition Corp. (a
corporation in the development stage) as of October 22, 1997 and the related
statements of operations, stockholders' equity and cash flows for the period
from July 25, 1997 (inception) to October 22, 1997. These financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Medical Acquisition Corp. as of
October 22, 1997 and the results of its operations and its cash flows for the
period from July 25, 1997 to October 22, 1997 in conformity with generally
accepted accounting principles.
Richard A. Eisner & Company, LLP
New York, New York
October 24, 1997
F-2
<PAGE>
<TABLE>
<CAPTION>
MEDICAL ACQUISITION CORP.
(a corporation in the development stage)
BALANCE SHEET
OCTOBER 22, 1997
<S> <C>
ASSETS
Current assets:
Cash $151,000
Deferred registration costs (Note 3) 25,168
Deferred financing costs net of amortization (Note 3) 7,267
Organization costs net of amortization 5,501
--------
$188,936
========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accrued interest on notes payable $ 193
Accrued expenses 38,783
--------
Total current liabilities 38,976
Bridge notes payable (Note 5) 137,810
--------
Total liabilities 176,786
--------
Stockholders' equity (Note 1):
Preferred stock, $.01 par value - shares authorized 5,000,000; none issued
(Note 6)
Common stock, $.01 par value - shares authorized 20,000,000; issued
and outstanding 1,000 shares 10
Additional paid-in capital 13,240
Deficit accumulated during the development stage (1,100)
--------
Total stockholders' equity 12,150
--------
$188,936
========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
F-3
<PAGE>
<TABLE>
<CAPTION>
MEDICAL ACQUISITION CORP.
(a corporation in the development stage)
STATEMENT OF OPERATIONS
PERIOD FROM JULY 25, 1997 (INCEPTION) TO OCTOBER 22, 1997
<S> <C>
EXPENSES:
Amortization of financing costs on notes payable and organization costs (Note 3) $ 847
Interest (Note 5) 253
--------
NET LOSS FOR THE PERIOD $ (1,100)
========
NET LOSS PER SHARE $ (1.10)
========
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 1,000
========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
F-4
<PAGE>
<TABLE>
<CAPTION>
MEDICAL ACQUISITION CORP.
(a corporation in the development stage)
STATEMENT OF STOCKHOLDERS' EQUITY
PERIOD FROM JULY 25, 1997 (INCEPTION) TO OCTOBER 22, 1997
COMMON STOCK DEFICIT
-------------------- ACCUMULATED
NUMBER ADDITIONAL DURING THE TOTAL
OF PAID-IN DEVELOPMENT STOCKHOLDERS'
SHARES AMOUNT CAPITAL STAGE EQUITY
------ ------ ---------- ----------- -------------
<S> <C> <C> <C> <C> <C>
Original issuance of common stock,
in October 1997, $6.00 per share 1,000 $10 $ 5,990 $ 6,000
Issuance of warrants in October 1997
(Note 5) 7,250 7,250
Net loss for the period $(1,100) (1,100)
----- --- -------- ------- --------
BALANCE OCTOBER 22, 1997 1,000 $10 $ 13,240 $(1,100) $ 12,150
===== === ======== ======= ========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
F-5
<PAGE>
<TABLE>
<CAPTION>
MEDICAL ACQUISITION CORP.
(a corporation in the development stage)
STATEMENT OF CASH FLOWS
PERIOD FROM JULY 25, 1997 (INCEPTION) TO OCTOBER 22, 1997
<S> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (1,100)
Adjustments to reconcile net loss to net cash provided by operating activities:
Amortization of deferred financing costs and debt discount 121
Amortization of organization costs 786
Increase in accrued interest on notes payable 193
-------
Net cash provided by operating activities -0-
-------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from bridge notes payable 145,000
Proceeds from sale of common stock to founding stockholders 6,000
--------
Net cash provided by financing activities 151,000
--------
NET INCREASE IN CASH AND BALANCE END OF PERIOD $151,000
========
SUPPLEMENTAL DISCLOSURE OF NON-CASH TRANSACTIONS:
Deferred registration, financing and organization costs of $38,783 are
included in accrued expenses at October 22, 1997
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
F-6
<PAGE>
MEDICAL ACQUISITION CORP.
(a corporation in the development stage)
NOTES TO FINANCIAL STATEMENTS
OCTOBER 22, 1997
NOTE 1 - ORGANIZATION
Medical Acquisition Corp. (the "Company") was incorporated in Florida on July
25, 1997 with the objective of acquiring or merging with an operating business
in the healthcare industry. The Company's founding directors and advisors
purchased 1,000 common shares, $.01 par value, in October 1997.
The Company's ability to commence operations is contingent upon obtaining
adequate financial resources through a proposed public offering ("Proposed
Offering") which is discussed in Note 4. The Company's management has broad
discretion with respect to the specific application of the net proceeds of this
offering, although substantially all of the net proceeds of this offering are
intended to be generally applied toward consummating a business combination with
an operating business engaged in the healthcare industry ("Business
Combination"). Furthermore, there is no assurance that the Company will be able
to successfully effect a Business Combination. Upon the closing of the Proposed
Offering, 80% of the net proceeds will be held in a trust account ("Trust Fund")
and invested in United States government securities until the earlier of (i) the
consummation of a Business Combination or (ii) liquidation of the Company. The
remaining net proceeds (20%) may be used to pay for business, legal and
accounting due diligence on prospective acquisitions, continuing general and
administrative expenses and to repay the bridge notes payable, including accrued
interest.
The Company, after signing a definitive agreement for the acquisition of a
target business, will submit such transaction for stockholder approval. All of
the Company's stockholders immediately prior to the Proposed Offering, including
all of the officers, directors and the advisors of the Company ("Initial
Stockholders"), have agreed to vote the shares of common stock owned by them as
of the effective date of the Proposed Offering in accordance with the vote of
the majority in interest of all other stockholders of the Company ("Public
Stockholders") with respect to any Business Combination.
With respect to the first Business Combination which is approved and
consummated, any Public Stockholder who votes against the Business Combination
may demand that the Company convert his shares into cash. The per share
conversion price will equal the amount in the Trust Fund as of the record date
of determination of stockholders entitled to vote on the Business Combination
divided by the number of shares held by Public Stockholders. The Company will
not consummate a Business Combination if 20% or more in interest of the Public
Stockholders exercise their conversion rights. Accordingly, Public Stockholders
holding approximately 19.99% of the aggregate number of shares owned by all
Public Stockholders may have their shares converted to cash in the event of a
Business Combination. Such Public Stockholders are entitled to receive their per
share interest in the Trust Fund computed without regard to shares held by
Initial Stockholders.
The Company's Certificate of Incorporation provides for mandatory liquidation of
the Company, without stockholder approval, in the event that the Company does
not consummate a Business Combination within 18 months from the date of the
consummation of the Proposed Offering, or 24 months from the consummation of the
Proposed Offering if certain extension criteria have been satisfied. In the
event of liquidation, it is likely that the per share value of the residual
assets remaining available for distribution (including Trust Fund assets) will
be less than the initial public offering price per share in the Proposed
Offering.
F-7
<PAGE>
MEDICAL ACQUISITION CORP.
(a corporation in the development stage)
NOTES TO FINANCIAL STATEMENTS
OCTOBER 22, 1997
NOTE 2 - SUMMARY OF ACCOUNTING POLICIES
[1] DEFERRED FINANCING COSTS:
Costs incurred in connection with the Company's initial bridge financing
are being amortized over the term of the notes.
[2] ORGANIZATION COSTS:
Costs incurred in connection with the organization of the Company are
being amortized over 24 months.
[3] NET LOSS PER SHARE:
Net loss per common share is computed on the basis of the weighted average
number of common shares outstanding during the period. Warrants to
purchase 72,500 shares of common stock (Note 5) have no effect on and are
excluded from the calculation.
[4] CASH EQUIVALENTS:
The Company considers all highly liquid debt instruments purchased with a
maturity of three months or less to be cash equivalents.
[5] 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 at
the date of the financial statements and the reported amounts of revenues
and expenses during the reporting period. Actual results could differ from
those estimates.
[6] STOCK-BASED COMPENSATION:
Statement of Financial Accounting Standards No. 123, "Accounting for
Stock-Based Compensation" ("SFAS No. 123") allows companies to either
expense the estimated fair value of stock options or to continue to follow
the intrinsic value method set forth in Accounting Principles Bulletin
Opinion No. 25, "Accounting for Stock Issued to Employees" ("APB No.
25,"), but disclose the pro forma effects on net income (loss) had the
fair value of the options been expensed. The Company has elected to apply
APB No. 25 in accounting for its stock option plan (see Note 7).
[7] RECENTLY ISSUED ACCOUNTING PRONOUNCEMENT:
In February 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 128 ("SFAS 128"),
"Earnings per Share". This new standard requires dual presentation of
basic and diluted earnings per share ("EPS") on the face of the statement
of income and requires reconciliation of the numerators and the
denominators of the basic and diluted EPS calculation. This statement will
be effective for the year ended December 31, 1997 and will require
retroactive restatement of previously reported per share data. The
adoption of SFAS 128 will have no effect on the Company's loss per share
of common stock.
F-8
<PAGE>
MEDICAL ACQUISITION CORP.
(a corporation in the development stage)
NOTES TO FINANCIAL STATEMENTS
OCTOBER 22, 1997
NOTE 3 - DEFERRED REGISTRATION AND FINANCING COSTS
As of October 22, 1997, the Company has incurred deferred registration costs of
$25,168, relating to expenses incurred in connection with the Proposed Offering,
and deferred financing costs of $7,328 related to the financing discussed in
Note 5. Upon consummation of the Proposed Offering, the deferred registration
costs will be charged to equity and the deferred financing costs will be charged
to operations. Should the Proposed Offering prove to be unsuccessful, the
deferred registration costs will also be charged to operations, along with
additional expenses to be incurred.
NOTE 4 - PROPOSED PUBLIC OFFERING
The Proposed Offering calls for the Company to offer for public sale 1,166,667
shares of common stock, $.01 par value at a proposed price of $6.00 per share.
The underwriter has agreed to sell the stock on an all or none "best efforts"
basis.
NOTE 5 - BRIDGE NOTES PAYABLE
In October 1997, the Company issued an aggregate of $145,000 (including $40,000
to two stockholders of the Company) of promissory notes to certain accredited
investors. These notes bear interest at the rate of 8% per annum, payable
semi-annually and are due on the earlier of October 1999 or the consummation of
the Company's initial public offering. In addition, the investors were issued
warrants to purchase 72,500 shares of common stock (valued at $7,250) which have
been accounted for as a debt discount increasing the effective interest rate to
10.5%. The warrants are exercisable at $6.00 per share for a period of five
years commencing one year after from the consummation of the proposed offering.
The Company has also received commitments from investors for an additional
$30,000. Upon receipt of such funds the Company will issue an additional $30,000
of promissory notes and warrants to purchase 15,000 shares of common stock.
NOTE 6 - PREFERRED STOCK
The Company is authorized to issue 5,000,000 shares of preferred stock with such
designations, voting and other rights and preferences as may be determined from
time to time by the Board of Directors.
NOTE 7 - STOCK OPTION PLAN
Effective October 1, 1997 the Company adopted its 1997 Stock Option Plan (the
"Plan") which provides for the grant of incentive stock options or nonqualified
stock options for up to 750,000 shares of common stock to employees and
consultants (including officers and directors) at an exercise price at least
equal to the fair market value of the stock on the date preceding the grant. The
vesting rights and term of the options (which may not exceed 10 years), will be
determined by a committee appointed by the Board of Directors for each grant. As
of October 22, 1997 no options have been granted under the Plan.
F-9
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 24. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Registrant's Bylaws limit, to the maximum extent permitted by
Florida law, the personal liability of directors and officers for monetary
damages for breach of their fiduciary duties as directors or officers. The
Bylaws provide further that the Company shall indemnify to the fullest extent
permitted by Florida law any person made a party to an action or proceeding by
reason of the fact that such person was director, officer, employee or agent of
the Company. The Bylaws also provide that directors and officers who are
entitled to indemnification shall be paid their expenses incurred in connection
with any action, suit, or proceeding in which such director or officer is made a
party by virtue of his or her being an officer or director of the Company to the
maximum extent permitted by Florida law.
Prior to the offering, the Company expects to enter into separate
indemnification agreements with its officers and directors containing provisions
which are in some respect broader than the specific indemnification provisions
contained in the Company's Bylaws. The indemnification agreements may require
the Company, among other things, to indemnify such directors and officers
against certain liabilities that may arise by reason of their status as
directors and officers (other than liabilities arising from willful misconduct
of a culpable nature), to advance their expenses incurred as a result of any
proceeding against them as to which they could be indemnified, and to obtain
directors' and officers' insurance, if available on reasonable terms. The
Company believes that these agreements are necessary to attract and retain
qualified persons as directors and officers.
Reference is made to the following documents filed as Exhibits to this
Registration Statement regarding relevant indemnification provisions described
above and elsewhere herein:
DOCUMENT EXHIBIT NUMBER
-------- --------------
Underwriting Agreement 1.1
Registrant's Articles of Incorporation, as amended to date 3.1
Registrant's Bylaws 3.2
ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the costs and expenses, other than
underwriting discounts and commissions and the Underwriter's non-accountable
expense allowance, payable in connection with the sale of the shares of Common
Stock being registered hereby. All amounts are estimates, except the
registration fee and the NASD filing fee.
ITEM AMOUNT
---- ------
SEC registration fee................................... $ 2,439
NASD filing fee........................................ 1,305
Blue Sky fees and expenses............................. 10,000
Printing and engraving expenses........................ 50,000
Road show expenses..................................... 10,000
Legal fees and expenses................................ 45,000
Auditors' fees and expenses............................ 15,000
Transfer Agent and Registrar fees...................... 5,000
Miscellaneous expenses................................. 16,256
--------
Total......................................... 155,000
========
II-1
<PAGE>
ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES
The following is a summary of the transactions by Registrant since the
Registrant's incorporation on July 25, 1997 involving sales of Registrant's
securities that were not registered under the Securities Act of 1933, as amended
(the "Securities Act").
On October 1, 1997, the founding shareholders of the Company received
1,000 shares of Common Stock for an aggregate consideration of $6,000 allocated
as follows:
NUMBER OF SHARES CONSIDERATION
---------------- -------------
Jay M. Haft and Clayre Haft (1) 334 shares $2,004.00
John H. Abeles, M.D.(2) 333 shares $1,998.00
Joel S. Kanter (3) 333 shares $1,998.00
- --------------
(1) Represents shares owned by husband and wife as joint tenants, with
right of survivorship.
(2) Represents shares owned by Northlea Partners, Ltd. of which Dr. Abeles
is a general partner.
(3) Represents shares owned by Windy City, Inc. of which Mr. Kanter is
President.
The issuance of these 1,000 shares were deemed exempt from registration under
the Securities Act in reliance on Section 4(2) thereof. In addition, the
recipients of the 1,000 shares of founders' Common Stock represented their
intentions to acquire the securities for investment only and not with a view to
or for sale in connection with any distribution thereof and appropriate legends
were affixed to the share certificates. The Company also issued options to
members of the Company's Board of Directors to purchase an aggregate of 490,000
shares of Common Stock at an exercise price of $6.00 per share (the "Founders'
Options"). The Founders' Options are exercisable for a period of 10 years
commencing upon the consummation of this offering. In October and November 1997,
the Company consummated the Bridge Financing in order to pay certain
organizational expenses, the costs of the Bridge Financing and certain costs of
this offering. The investors in the Bridge Financing ("Bridge Investors") loaned
$185,000 to the Company and were issued debentures in that amount, bearing
interest at the rate of 8% per annum and payable at the consummation of this
offering, and warrants to purchase an aggregate of 92,500 shares of Common Stock
at an exercise price of $6.00 per share (the "Bridge Warrants"). The Bridge
Warrants are exercisable for a period of five years commencing one year from the
date of the Prospectus. The shares of Common Stock underlying the Bridge
Warrants are entitled to certain registration rights under the Securities Act.
II-2
<PAGE>
ITEM 27. EXHIBITS
(a) Exhibits
1.1 Form of Underwriting Agreement *
3.1 Articles of Incorporation of Registrant, as amended to date *
3.2 Bylaws of Registrant *
4.1 Specimen Common Stock Certificate of Registrant *
4.2 Form of Bridge Debenture*
4.3 Form of Bridge Warrant Agreement*
4.4 Form of Underwriter's Warrant Agreement**
4.5 Form of Founder's Option Agreement**
4.6 Form of Trust Fund Agreement**
5.1 Opinion of Baker & McKenzie**
23.1 Consent of Richard A. Eisner & Company, LLP*
23.2 Consent of Baker & McKenzie (To be included in Exhibit 5.1)**
24.1 Powers of Attorney (included on signature page) *
27.1 Financial Data Schedule (for SEC use only)*
- ----------
* Filed herewith.
** To be filed by amendment.
(b) Financial Statement Schedules: None
ITEM 28. UNDERTAKINGS
The undersigned Registrant hereby undertakes:
(1) To provide to the underwriters at the closing specified in the
underwriting agreement certificates in such denominations and registered in such
names as required by the underwriters to permit prompt delivery to each
purchaser.
(2) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officer or controlling persons of
the registrant, pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that, in the opinion of the Commission, such
indemnification is against public policy as expressed in the Securities Act, and
is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered hereunder, 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.
(3) For determining any liability under the Securities Act, to 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 issuer under Rule 424(b) (1), or (4), or 497(h) under
the Securities Act as part of this registration statement as of the time the
Commission declared it effective.
(4) For determining any liability under the Securities Act, to treat
each post-effective amendment that contains a form of prospectus as a new
registration statement for the securities offered in the registration statement,
and that offering of the securities at that time as the initial bona fide
offering of those securities.
II-3
<PAGE>
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, as
amended, the Registrant certifies that it has reasonable grounds to believe that
it meets all of the requirements for filing on Form SB-2 and authorizes this
Registration Statement to be signed on its behalf by the undersigned, in the
City of Miami, State of Florida on November 10, 1997.
MEDICAL ACQUISITION CORP.
By: /s/ JAY M. HAFT
--------------------------
Jay M. Haft
Chief Executive Officer
POWER OF ATTORNEY
Each person whose signature appears below hereby authorizes Jay M. Haft
as his or her true and lawful attorney-in-fact and agent, with full power of
substitution and resubstitution for him or her and in his or her name, place and
stead, in any and all capacities to sign any and all amendments (including
post-effective amendments) to this Registration Statement, and any Registration
Statement filed pursuant to Rule 462(b) under the Securities Act of 1933, and to
file the same, with all exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission.
In accordance with the requirements of the Securities Act of 1933, as
amended, this Registration Statement has been signed by the following persons in
the capacities and on the dates stated.
<TABLE>
<S> <C> <C>
Chairman of the Board of Directors ___________, 1997
- ----------------------------
Gene E. Burleson
/s/ JAY M. HAFT Vice-Chairman of the Board and Chief November 10, 1997
- ---------------------------- Executive Officer (Principal Executive
Jay M. Haft Officer)
/s/ JOHN H. ABELES, M.D. President and Director (Principal Financial November 10, 1997
- ---------------------------- and Accounting Officer)
John H. Abeles, M.D.
/s/ JOEL S. KANTER Secretary, Treasurer and Director November 10, 1997
- ----------------------------
Joel S. Kanter
/s/ LINDA A. HAMILTON Director November 10, 1997
- ----------------------------
Linda A. Hamilton
</TABLE>
II-4
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT INDEX
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER EXHIBIT PAGES
- ------ ------- ------------
<S> <C> <C>
1.1 Form of Underwriting Agreement
3.1 Articles of Incorporation of Registrant, as amended to date
3.2 Bylaws of Registrant
4.1 Specimen Common Stock Certificate of Registrant
4.2 Form of Bridge Debenture
4.3 Form of Bridge Warrant Agreement
23.1 Consent of Richard A. Eisner & Company, LLP
24.1 Powers of Attorney (included on signature page)
27.1 Financial Data Schedule (for SEC use only)
</TABLE>
UNDERWRITING AGREEMENT
November , 1997
G-V Capital Corp.
150 Vanderbilt Motor Parkway
Suite 311
Hauppauge, N.Y. 11788
Dear Sirs:
Medical Acquisition Corp., a Florida corporation (the "Company"),
proposes, subject to the terms and conditions stated herein, to issue and sell,
1,166,667 shares of the common stock, $.01 par value (the "Common Stock"), of
the Company (the "Firm Shares"). In addition, solely for the purpose of covering
over-allotments, the Company proposes to grant to you the option to cause the
Company to issue and sell, at the offering price, less commissions and
non-accountable expense allowance, up to an aggregate of 175,000 shares of
Common Stock (the "Additional Shares") exercisable during the 45 day period
after the date of the Prospectus. The Firm Shares and the Additional Shares are
hereinafter collectively referred to as the "Shares". The Shares are more fully
described in the Registration Statement and Prospectus referred to below.
The Company has been advised by you that it proposes to offer the
shares of Common Stock to the public at the initial offering price set forth on
the cover page of the Prospectus and to certain dealers at that price less a
concession not in excess of $ per share. You may allow, and such dealers may
reallow, a concession not in excess of $ per share to certain other dealers.
The Company confirms as follows its agreement with you with respect to the sale
of the Shares by you as exclusive agent for the Company:
1. REGISTRATION STATEMENT AND PROSPECTUS: The Company has prepared and
filed with the Securities and Exchange Commission (the "Commission"), in
accordance with the Securities Act of 1933, as amended, and the rules and
regulations of the Commission promulgated thereunder (the "Rules and
Regulations", and together with said Act, the "Act"), a registration statement
on Form SB-2 (File No. ______________) and may have filed one or more amendments
thereto, including in such registration statement and in certain amendments
thereto a related preliminary prospectus for the registration under the Act of
the Shares. In addition, subject to the provisions of Section 4(e) hereof, the
Company has filed or will promptly file a further amendment to such registration
statement prior to the effectiveness of such registration statement, unless an
amendment is not required pursuant to Rule 430A of the Rules and Regulations. As
used in this Agreement, the term "Registration Statement" means such
registration statement, including the prospectus, financial statements and
schedules thereto, exhibits and other documents filed as part thereof, as
amended when, and in the form in which, it is declared effective by the
Commission, and, in the event any post-effective amendment thereto is filed
thereafter and on or before the Closing Date (as hereinafter defined), shall
also mean (from and after the date such post-effective amendment is effective
under the Act) such registration statement as so amended, provided that such
Registration Statement, at the time it becomes effective, may omit such
information as is permitted to be omitted from the Registration Statement when
it becomes effective pursuant to Rule 430A of the Rules and Regulations, which
information ("Rule 430A Information") shall be deemed to be included in such
Registration Statement when a final prospectus is filed with the Commission in
accordance with Rules 430A and 424(b)(1) or (4) of the Rules and Regulations;
the term "Preliminary Prospectus" means each prospectus included in the
Registration Statement, or any amendments thereto, before it becomes effective
under the Act, the form of prospectus omitting Rule 430A Information included in
the Registration Statement when it becomes effective, if applicable (the "Rule
430A Prospectus"), and any prospectus filed by the Company with your consent
pursuant to Rule 424(a) of the Regulations; the term "Prospectus" means the
final prospectus included as part of the Registration Statement, except that (i)
if any
<PAGE>
prospectus (including any preliminary prospectus) which differs from such
prospectus included in the Registration Statement is provided to you for use in
connection with the offering of the Shares (whether or not such differing
prospectus is required to be filed by the Company pursuant to Rule 424(b) under
the Act), the term "Prospectus" as used herein shall mean such differing
prospectus from and after the date on which it shall have been first used, and
(ii) in the event any supplement to or amendment of such prospectus is made
after the date on which the Registration Statement is declared effective and on
or prior to the Closing Date, the term "Prospectus" shall also mean (with
respect to any supplement, from and after the date such supplement is first used
or, with respect to any amendment, the date such amendment is effective under
the Act) such prospectus as so supplemented or amended; and the term "Effective
Date" means (i) if the Company and you have determined not to proceed pursuant
to Rule 430A under the Act, the date on which the Registration Statement becomes
effective, or (ii) if the Company and you have determined to proceed pursuant to
Rule 430A under the Act, the date of this Agreement.
2. AGREEMENTS TO SELL AND ISSUE: Subject to the terms and conditions
herein set forth, the Company agrees to appoint you as its exclusive agent to
sell on a "best efforts, all or none" basis at a purchase price of $6.00 per
Firm Share or, as applicable, solely for the purpose of covering over-allotments
made in connection with the offering of the Firm Shares, per Additional Share,
the number of Shares (to be adjusted by you so as to eliminate fractional
shares) determined by multiplying the aggregate number of Firm Shares or
Additional Shares to be sold by a fraction, the numerator of which is the
aggregate number of Firm Shares or Additional Shares to be sold by you and the
denominator of which is the aggregate number of Firm Shares or Additional Shares
to be sold hereunder.
Subject to the terms and conditions herein set forth the Company agrees
to appoint you as its exclusive agent to sell on a "best efforts, all or none"
basis, up to an aggregate of 175,000 Additional Shares at a purchase price of
$6.00 per Additional Share. Additional Shares may be sold solely for the purpose
of covering over-allotments made in connection with the offering of the Firm
Shares. Additional Shares may be sold at any time and from time to time on or
before the forty-fifth business day following the date of the Prospectus upon
written notice from you to the Company specifying the number of Additional
Shares to be sold.
You will offer the Shares for sale at the initial public offering price
set forth on the cover of the Prospectus. After the initial public offering, you
may from time to time increase or decrease the public offering price, in your
sole discretion, by reason of changes in general market conditions or otherwise.
The Company acknowledges that you agree to use your best efforts to
find purchasers for the Firm Shares and for the Additional Shares within a
period of 30 days from the date of this Prospectus, subject to the extension for
an additional period of 30 days on mutual consent of the Company (the "Offering
Period") and you and that you have made no commitment to purchase any or all of
the Firm Shares or Additional Shares.
3. DELIVERY AND PAYMENT: Delivery of and payment for the Firm Shares
shall be made at the offices of G-V Capital Corp. ("GV"), 150 Vanderbilt Motor
Parkway, Suite 311, Hauppauge, New York, 11788 (or such other place as shall be
mutually agreed upon) at such time and date, not later than the third full
business day following the end of the Offering Period, as you shall designate by
at least forty-eight hours prior notice to the Company (the "Closing Date").
All proceeds from subscriptions will be deposited promptly into a
non-interest bearing account with [North Fork Bank], as escrow agent pursuant to
an escrow agreement between the Company, the Underwriter and such escrow agent.
Funds will be transmitted to the escrow agent for deposit in the escrow account
no later than noon of the business day following receipt. All checks must be
payable to "North Fork Bank, as escrow agent for Medical Acquisition Corp." In
the event the 1,166,667 shares of Common Stock are not sold within the Offering
Period described above, funds will be refunded promptly to subscribers in full
without
2
<PAGE>
deduction therefrom or interest thereon. During the Offering Period, no
subscriber will be entitled to a refund of any subscription, and no funds will
be released from escrow until completion or termination of the offering. There
are none nor will there be any arrangements between the Company and the
Underwriter whereby shares of Common Stock will be reserved for sales to persons
associated or affiliated with management of the Company or its affiliated
persons, although such persons may purchase shares of Common Stock in order to
assure the completion of this offering.
Delivery of and payment for Additional Shares shall be made at said
offices of GV, or at such other place, and at such time(s) and date(s) (each an
"Optional Closing Date") as may be agreed upon in writing by you and the
Company; PROVIDED, HOWEVER, that in no event may an Optional Closing Date be (i)
earlier than the Closing Date or (ii) later than three business days after the
date on which the related notice to sell Additional Shares is given.
The Closing Date and the time and place of delivery of and payment for
the Shares may be varied by agreement between you and the Company. The Optional
Closing Date and the time and place of delivery of and payment for the
Additional Shares may be varied by agreement between you and the Company.
Delivery of certificates for the Shares (in definitive form, registered in such
names and in such denominations as you shall request at least two business days
prior to the Closing Date by written notice to the Company) shall be made to
each purchaser against payment of the purchase price therefor by certified or
official bank check or checks payable in New York Clearing House funds to the
order of the Company, as its interest may appear. For the purpose of expediting
the checking and packaging of certificates for the Shares, the Company agrees to
make such certificates available for inspection at the offices of GV at least 24
hours prior to the Closing Date and each Optional Closing Date, as the case may
be.
As its basic compensation, your commission shall be seven percent (7%)
of the aggregate offering price of the Shares sold, payable in cash, at the
Closing. In addition, the Company shall pay you a non-accountable expense
allowance equal to $120,000 and (ii) the Company shall, at the Closing, issue,
sell and deliver to you, for an aggregate of $100 consideration, a warrant
representing the right to purchase up to an aggregate of 75,000 shares of Common
Stock (the "Underwriters' Warrant") in substantially the form filed as an
exhibit to the Registration Statement. The shares of Common Stock issuable upon
exercise of the Underwriters' Warrant are hereinafter referred to collectively
as the "Underwriters' Warrant Shares". The Underwriters' Warrant will be
exercisable initially at $6.00 per share at any time and from time to time, in
whole or in part, during a four-year period commencing one year from the date of
the Prospectus. The Underwriter=s Warrants may not be transferred, sold,
assigned or hypothecated during the one-year period following the date of the
Prospectus, except to you and members of the selected dealers and their officers
and partners.
4. COVENANTS AND AGREEMENTS OF THE COMPANY: (A) The Company covenants
and agrees with you as follows:
(a) The Company will notify you promptly by telephone and (if requested by
you) will confirm such advice in writing, (1) when the Registration
Statement has become effective and when any post-effective amendment
thereto becomes effective, (2) if Rule 430A under the Act is used, or
the Prospectus is otherwise required to be filed with the Commission
pursuant to Rule 424(b) under the Act, when the Prospectus is filed
with the Commission pursuant to Rule 424(b) under the Act, (3) of any
request by the Commission for amendments or supplements to the
Registration Statement or the Prospectus or for additional information,
(4) of the issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement, preventing or suspending
the use of the Preliminary Prospectus, the Prospectus, the Registration
Statement or any amendment or supplement thereto, or refusing to permit
the effectiveness of the Registration Statement ("Stop Order"), or the
initiation of any proceedings for any of those purposes, (5) of the
happening of any event during the period mentioned in paragraph (f)
below which in the reasonable judgment of the Company makes any
statement made in the Registration Statement or the Prospectus untrue
or which requires the making
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of any changes in the Registration Statement or the Prospectus in order
to make the statements therein not misleading, and (6) of the receipt
of any comments from the Commission [or the Blue Sky] or securities
authorities of any jurisdiction regarding the Registration Statement,
any post-effective amendment thereto, the Preliminary Prospectus, the
Prospectus, or any amendment or supplement thereto. The Company will
use its best efforts to prevent the issuance of any Stop Order by the
Commission or any notification from the Blue Sky or securities
authorities of any jurisdiction suspending the qualification or
registration of the Shares for sale in such jurisdictions, and if at
any time the Commission shall issue any Stop Order, or if the Blue Sky
or securities authorities of any jurisdiction shall issue notification
suspending the qualification or registration of the Shares, the Company
will make every reasonable effort to obtain the withdrawal of such Stop
Order or notification at the earliest possible moment. The Company will
promptly advise you of its receipt of any notification with respect to
the suspension of the qualification or registration of the Shares for
offer or sale in any jurisdiction or the initiation or threatening of
any action or proceeding for such purpose.
(b) Prior to any public offering of the Shares, the Company will cooperate
with you and your counsel (or, at your discretion, our counsel) in
registering or qualifying the Shares for offer or sale under the Blue
Sky or securities laws, rules or regulations of such jurisdictions as
you may reasonably request; provided that in no event shall the Company
be obligated to register or qualify to do business as a foreign
corporation in any jurisdiction where it is not now so registered or
qualified or to take any action which would subject it to general
service of process, or to taxation as a foreign corporation doing
business, in any jurisdiction where it is not now so subject. The
Company will pay all fees and expenses relating to the registration or
qualification of the Shares under such Blue Sky or securities laws of
such jurisdictions as you may designate (including the legal fees,
expenses and disbursements of counsel to you, or, in your discretion,
counsel to the Company, for the registration or qualification of the
Shares in such jurisdictions as you shall determine). After
registration, qualification or exemption of the Shares for offer and
sale in such jurisdictions, and for as long as any offering pursuant to
this Agreement continues, the Company, at your reasonable request, will
file and make such statements or reports, and pay the fees applicable
thereto, at such times as are or may be required by the laws, rules or
regulations of such jurisdictions in order to maintain and continue in
full force and effect the registration, qualification or exemption for
offer or sale of the Shares in such jurisdictions. After the
termination of the offering contemplated hereby, and as long as any of
the Shares are outstanding, the Company will file and make, and pay all
fees applicable thereto, such statements and reports and renewals of
registration as are or may be required by the laws, rules or
regulations of such jurisdictions to maintain and continue in full
force and effect the registration, qualification or exemption for
secondary market transactions in the Shares, in the various
jurisdictions in which the Shares were originally registered, qualified
or exempted for offer or sale.
(c) The Company will furnish to you, without charge, four manually-signed
copies, and such reasonable number of conformed copies, of the
Registration Statement as originally filed on Form SB-2 and of any
amendments (including post-effective amendments thereto), including
financial statements and schedules, if any, and all consents,
certificates and exhibits (including those incorporated therein by
reference to the extent not previously furnished to you), heretofore or
hereafter made, signed by or on behalf of its officers whose signatures
are required thereon and a majority of its board of directors.
(d) The Company will use its best efforts to cause the Registration
Statement to become effective under the Act. Upon such effectiveness,
if the Company and you have determined not to proceed pursuant to Rule
430A under the Act, the Company will timely file a Prospectus pursuant
to, and in conformity with, Rule 424(b), if required, and if the
Company and you have determined to proceed pursuant to Rule 430A under
the Act, the Company will timely file a Prospectus pursuant to, and in
conformity with, Rules 424(b) and 430A under the Act.
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(e) The Company will give you and your counsel advance notice of its
intention to file any amendment to the Registration Statement or any
amendment or supplement to the Prospectus, whether before or after the
effective date of the Registration Statement, and will not file any
such amendment or supplement unless the Company shall have first
delivered copies of such amendment or supplement to you and your
counsel and you and your counsel shall have given your consent to the
filing of such amendment or supplement, which consent shall not be
unreasonably withheld. Any such amendment or supplement shall comply
with the Act.
(f) From and after the Effective Date, the Company will deliver to you,
without charge, as many copies of the Prospectus or any amendment or
supplement thereto as you may reasonably request. The Company consents
to the use of the Prospectus or any amendment or supplement thereto by
you and by all dealers to whom the Shares may be sold, both in
connection with the offering or sale of the Shares and for such period
of time thereafter as the Prospectus is required by law to be delivered
in connection therewith. If during such period of time any event shall
occur which in the judgment of you or your counsel should be set forth
in the Prospectus in order to make the statements therein, in light of
the circumstances under which they were made, not misleading, or if it
is necessary to supplement or amend the Prospectus to comply with law,
the Company will forthwith prepare and duly file with the Commission an
appropriate supplement or amendment thereto, and will deliver to each
of you, without charge, such number of copies thereof as you may
reasonably request.
(g) The Company will promptly pay all expenses in connection with (1) the
preparation, printing, filing, distribution and mailing (including,
without limitation, express delivery service) of the Registration
Statement, each preliminary prospectus, the Prospectus, and the
preliminary and final forms of Blue Sky memoranda (if any); (2) the
qualification, issuance and delivery of the Shares offered for sale
under the laws of such states as you may reasonably designate; (3) the
fees and expenses of legal counsel and independent accountants for the
Company relating to, among other things, opinions of counsel, audits,
review of unaudited financial statements and cold comfort review; (4)
the fees and expenses of a registrar or transfer agent for the Common
Stock; (5) the printing, filing, distribution and mailing (including,
without limitation, express delivery service) of this Agreement; (6)
furnishing such copies of the Registration Statement, the Prospectus
and any preliminary prospectus, and all amendments and supplements
thereto, as may be reasonably requested for use in connection with the
offering and sale of the Shares by you or by dealers to whom Shares may
be sold; (7) any fees and communication expenses with respect to
filings required to be made by you with the NASD Regulation, Inc. (the
"NASDR"); and (8) the quotation of the Shares on NASDR's Automated
Quotation System ("NASDAQ").
(h) On the Closing Date, the Company shall sell to you the Underwriters'
Warrant to purchase 75,000 Shares for an aggregate purchase price of
$100. The Underwriters Warrant shall be divided between you and your
designees in such manner as you shall direct by written instruction to
the Company at least two business days prior to the Closing Date.
(i) On or prior to the Closing Date, the Company shall obtain from each of
its officers and directors, his or her enforceable written agreement,
in form and substance satisfactory to your counsel, that for a period
of [twenty-four (24)] months after the Effective Date (or any longer
period required by NASDAQ or any jurisdiction in which the offer and
sale of the Shares is to be registered or qualified), he or she will
not offer for sale, sell, contract to sell, assign, pledge, transfer,
grant any option for the sale of, or otherwise dispose of, directly or
indirectly, any securities of the Company (including without limitation
any shares of Common Stock), owned by him or her as of the Closing
Date, whether upon exercise of warrants, stock options or otherwise,
without GV s prior written consent (the "Lock-up Letter").
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(j) The Company has reserved and shall continue to reserve and keep
available the maximum number of shares of its authorized but unissued
Common Stock and other securities for issuance upon exercise of the
Underwriters' Warrant.
(k) For a period of five years after the date of this Agreement, the
Company shall:
(1) retain Richard A. Eisner & Company, LLP, or a nationally
recognized firm of independent public accountants, as its
auditors, and at its own expense, shall cause such independent
certified public accountants to review the Company's financial
statements for each of the first three fiscal quarters of each
fiscal year prior to the announcement of quarterly financial
information and the filing of the Company's Form 10-QSB
quarterly reports;
(2) cause the Company's Board of Directors to meet not less
frequently than [quarterly], upon proper notice, and cause an
agenda and minutes of the preceding meeting to be distributed
to directors prior to each such meeting;
(3) distribute to its security holders, within 120 days after the
end of each fiscal year, an annual report (containing
certified financial statements of the Company) prepared in
accordance with those required under Rule 14a-3(b) of
Regulation 14A promulgated by the Commission under the
Securities Exchange Act of 1934, as amended; and
(4) appoint a transfer agent for the Common Stock reasonably
acceptable to you.
(l) For a period of five years after the date of this Agreement, the
Company shall furnish you, free of charge, with the following:
(1) within 90 days after the end of each fiscal year, financial
statements for the Company certified by the independent
certified public accountants referred to in Section 4(k)(1)
above, including a balance sheet, statement of operations,
statement of stockholders' equity and statement of cash flows,
for the Company, with supporting schedules, prepared in
accordance with generally accepted accounting principles, as
at the end of such fiscal year and for the twelve months then
ended, accompanied by a copy of the certificate or report
thereon of such independent certified public accountants;
(2) (x) for so long as the Company is a reporting company under
any of Sections 12(b), 12(g) or 15(d) of the Securities
Exchange Act of 1934, as amended, and the rules and
regulations of the Commission promulgated thereunder
(collectively, the "Exchange Act"), promptly after filing with
the Commission, copies of all reports and proxy soliciting
material which the Company is required to file under the
Exchange Act, or (y) at such times as the Company is not a
reporting company under the aforesaid provisions of the
Exchange Act, as soon as practicable after the end of each of
the first three fiscal quarters of each fiscal year, financial
statements of the Company, including a balance sheet,
statement of operations, statement of stockholders' equity and
statement of cash flows as at the end of, or for each such
fiscal quarter and the comparable period of the preceding
year, which statements need not be audited;
(3) as soon as practicable after they have first been distributed
to stockholders of the Company, copies of each annual and
interim financial or other report or communication sent by the
Company to its stockholders (except to the extent duplicative
of information furnished pursuant to any other clause of this
Section 4(n));
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(4) as soon as practicable following release or other
dissemination, copies of every press release and every
material news item and article in respect of the Company or
its affairs released or otherwise disseminated by the Company;
(5) promptly following receipt thereof, copies of the Company's
daily transfer sheets prepared by the Company's transfer agent
and a list of stockholders; and
(6) such additional documents and information with respect to the
Company and its affairs, if any, as you may from time to time
reasonably request.
(m) On or prior to the Effective Date, the Company will have accomplished
the quotation of the Shares on the NASD=s Electronic Bulletin Board,
subject only to notice of issuance and the registration of such
securities under the Exchange Act.
(n) The Company will make generally available to its security holders and
deliver to you as soon as it is practicable to do so (but in no event
later than the 45th day after the end of the twelve-month period
beginning at end of the fiscal quarter of the Company during which the
Registration Statement becomes effective, or, if the Registration
Statement becomes effective during the Company's last fiscal quarter,
the 90th day after the end of such twelve-month period), an earnings
statement of the Company (which need not be audited) covering a period
of at least twelve consecutive months commencing after the effective
date of the Registration Statement, which shall satisfy the
requirements of Section 11(a) of the Act.
(o) The Company will, promptly upon your request, prepare and file with the
Commission any amendments or supplements to the Registration Statement,
any Preliminary Prospectus or the Prospectus and take any other action,
which in the reasonable opinion of Law Offices of David N. Feldman,
counsel to you, may be reasonably necessary or advisable in connection
with the distribution of the Shares, and will cause the same to become
effective as promptly as possible.
(p) The Company will furnish to you as early as practicable prior to the
Closing Date and any Optional Closing Date, as the case may be, but no
less than two full business days prior thereto, a copy of the latest
available unaudited interim financial statements of the Company which
have been reviewed by the Company's independent certified public
accountants, as stated in their letters to be furnished pursuant to
Section 7(e) hereof.
(q) The Company will apply the net proceeds from the issuance and sale of
the Shares for the purposes and in the manner set forth under the
caption "Use of Proceeds" in the Prospectus, and will file on a timely
basis such reports with the Commission with respect to the sale of the
Shares and the application of the proceeds therefrom as may be required
pursuant to Rule 463 under the Act. The Company will operate its
business in such a manner and, pending application of the net proceeds
of the offering for the purposes and in the manner set forth under the
caption "Use of Proceeds" in the Prospectus, will invest such net
proceeds in certain types of securities so as not to become an
"investment company" as such term is defined under the Investment
Company Act of 1940, as amended (the "Investment Company Act"). You
acknowledge that a substantial portion of the proceeds shall be held in
a trust account pending a Business Combination (as defined in the
Prospectus).
(r) The Company has filed a registration statement on Form 8-A covering the
Shares pursuant to Section 12(b) of the Exchange Act and will use its
best efforts to cause said registration statement to become effective
on the Effective Date. The Company will comply with all registration,
filing and reporting requirements of the Exchange Act, which may from
time to time be applicable to the Company. The Company shall comply
with the provisions of all undertakings contained in the Registration
Statement.
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(s) For a period of ninety (90) days after the date hereof, the Company
will not, directly or indirectly, take any action designed, or which
will constitute or which is intended to cause or result in,
stabilization or manipulation of the market price of the Shares, or the
facilitation of the sale or resale of the Shares.
(t) The Company maintains a system of internal accounting controls
sufficient to provide reasonable assurance that (i) transactions are
executed in accordance with management's general or specific
authorizations; (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally
accepted accounting principles and to maintain asset accountability;
(iii) access to cash and cash equivalents is permitted only in
accordance with management's general or specific authorization; and
(iv) the recorded accountability for cash and cash equivalents is
compared with the existing cash and cash equivalents at reasonable
intervals and appropriate action is taken with respect to any
differences.
(u) There are no business relationships or related party transactions of
the nature required to be described in the Prospectus by Item 404 of
Regulation S-B of the Rules and Regulations involving the Company and
any person referred to in Items 401 or 404, except as described in the
Prospectus.
(v) The Company will not grant any person or entity registration rights
with respect to any of its securities, except such rights as are
subordinate to or pari passu with the registration rights contained in
the Underwriters' Warrant.
5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY: (A) The Company
represents and warrants to you that:
(a) When the Registration Statement becomes effective, and at all times
subsequent thereto to and including the Closing Date and each Optional
Closing Date, and during such longer period as the Prospectus may be
required to be delivered in connection with sales by you or any dealer,
and during such longer period until any post-effective amendment
thereto shall become effective, the Registration Statement (and any
post-effective amendment thereto) and the Prospectus (as amended or as
supplemented if the Company shall have filed with the Commission any
amendment or supplement to the Registration Statement or the
Prospectus) will contain all statements which are required to be stated
therein in accordance with the Act, will comply with the Act, and will
not contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary to make
the statements therein not misleading, and no event will have occurred
which should have been set forth in an amendment or supplement to the
Registration Statement or the Prospectus which has not then been set
forth in such an amendment or supplement; if a Rule 430A Prospectus is
included in the Registration Statement at the time it becomes
effective, the Prospectus filed pursuant to Rules 430A and 424(b) (1)
or (4) will contain all Rule 430A Information and all statements which
are required to be stated therein in accordance with the Act, will
comply with the Act, and will not contain any untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein not misleading; and
each Preliminary Prospectus, as of the date filed with the Commission,
did not include any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which
they were made, not misleading; except that no representation or
warranty is made in this Section 5(A)(a) with respect to statements or
omissions made in reliance upon and in conformity with written
information furnished to the Company as stated in Section 6(b) with
respect to you expressly for inclusion in any Preliminary Prospectus,
the Registration Statement, or the Prospectus, or any amendment or
supplement thereto.
(b) Neither the Commission nor the Blue Sky or securities authorities of
any jurisdiction has issued an order suspending the effectiveness of
the Registration Statement, preventing or suspending the use of any
Preliminary Prospectus, the Prospectus, the Registration Statement, or
any amendment or
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supplement thereto, refusing to permit the effectiveness of the
Registration Statement, or suspending the registration or qualification
of the Shares, nor has the Commission or any of such authorities
instituted or threatened to institute any proceedings with respect to
such an order.
(c) The Company is a corporation duly incorporated and validly existing in
good standing under the laws of Florida, its jurisdiction of
incorporation. The Company has full corporate power and authority and
has obtained all necessary consents, authorizations, approvals, orders,
licenses, certificates, declarations and permits of and from, and have
made all required filings with, all federal, state, local and other
governmental authorities and all courts and other tribunals, to own,
lease, license and use its properties and assets and to carry on its
business in the manner described in the Prospectus. All such consents,
authorizations, approvals, orders, licenses, certificates,
declarations, permits and filings are in full force and effect and the
Company is in all material respects complying therewith. The Company is
duly registered or qualified to do business as a foreign corporation
and is in good standing in each other jurisdiction in which their
ownership, leasing, licensing, or use of property and assets or the
conduct of its business requires such registration or qualification.
(d) The Company is authorized to issue 20,000,000 shares of Common Stock,
$.01 par value, and 5,000,000 shares of Preferred Stock. There are
1,000 shares of Common Stock currently outstanding and no shares of
Preferred Stock are currently outstanding. The Company does not have
any subsidiaries or own any capital stock or equity interest in any
other corporation, partnership, limited liability company or other
entity. Each outstanding share of Common Stock, including the
Additional Shares to be sold by the Company to you hereunder, are
validly authorized, and when such shares are issued and paid for as
described in the Prospectus, will be validly issued, fully paid, and
nonassessable, without any personal liability attaching to the
ownership thereof, and such shares have not been issued and is not
owned or held in violation of any preemptive rights of stockholders.
There is no commitment, plan or arrangement to issue, and no
outstanding option, warrant or other right calling for the issuance of,
any share of capital stock of the Company or any security or other
instrument which by its terms is convertible into, exercisable for, or
exchangeable for capital stock of the Company, except as disclosed in
the Prospectus. There is outstanding no security or other instrument
which by its terms is convertible into or exchangeable for capital
stock of the Company.
(e) The financial statements of the Company included in the Registration
Statement and the Prospectus fairly present the financial position, the
results of operations and the other information purported to be shown
therein at the respective dates and for the respective periods to which
they apply. Such financial statements have been prepared in accordance
with generally accepted accounting principles and are prepared in
accordance with the books and records of the Company. The accountants
whose reports on the audited financial statements are filed with the
Commission as a part of the Registration Statement are, and during the
periods covered by their report(s) included in the Registration
Statement and the Prospectus were, independent certified public
accountants with respect to the Company within the meaning of the Act.
No other financial statements are required by Form SB-2 or otherwise to
be included in the Registration Statement or the Prospectus. Except as
disclosed in the Prospectus, there has at no time been a material
adverse change in the condition (financial or otherwise), results of
operations, business, property, assets, liabilities or prospects of the
Company from the latest information set forth in the Registration
Statement or the Prospectus.
(f) There is no litigation, arbitration, claim, governmental or other
proceeding (formal or informal), or investigation pending, or to the
Company=s knowledge, threatened (or any basis therefor known to the
Company), with respect to or affecting the Company, its operations,
business, property or assets, except as disclosed in the Prospectus or
such as individually or in the aggregate do not now have and are not
expected to have a material adverse effect upon the operations,
businesses, property, assets or condition (financial or otherwise) of
the Company (a "Material Adverse Effect"). The Company is
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not in violation of, or in default with respect to, any law, rule,
regulation, order, judgment, or decree, except as disclosed in the
Prospectus or such as individually or in the aggregate do not now have
and are not expected to have a material adverse effect upon the
operations, businesses, property, assets, condition (financial or
otherwise) or prospects of the Company; nor is the Company required to
take any action in order to avoid any such violation or default.
(g) The Company has good and marketable title to all assets which the
Prospectus indicates are owned by it, free and clear of all liens,
security interests, pledges, charges, mortgages and other encumbrances
(except as may be required to be and are disclosed in the Prospectus).
The Company holds no properties under lease.
(h) Neither the Company nor any other party is now or is expected by the
Company to be in violation or breach of, or in default with respect to
complying with, any material provision of any indenture, mortgage, deed
of trust, debenture, note or other evidence of indebtedness, contract,
agreement, instrument, lease or license, or arrangement or
understanding which is material to the Company, and each such
indenture, mortgage, deed of trust, debenture, note or other evidence
of indebtedness, contract, agreement, instrument, lease or license is
in full force and is the legal, valid and binding obligation of the
Company, and to the knowledge of the Company, of the other contracting
party and is enforceable as to them in accordance with its terms. The
Company is not a party to or bound by any contract, agreement,
instrument, lease, license, arrangement or understanding, or subject to
any charter or other restriction, which has had or is expected in the
future to have a Material Adverse Effect. The Company is not in
violation or breach of, or in default with respect to, any term of its
Articles of Incorporation or By-laws, in each case as amended to the
date hereof.
(i) The Company does not own or have any licensed rights to, in or under
any patents, patent applications, trademarks, service marks, trademark
or service mark applications, trade names, service marks, copyrights,
technology, know-how or other intangible properties or assets (all of
the foregoing being herein called "Intangibles") that are material to
the business of the Company, except to the extent disclosed in the
Prospectus. There is no right under any Intangibles of the Company
necessary to the business of the Company as presently conducted or as
proposed to be conducted as indicated in the Prospectus, except as may
be disclosed in the Prospectus. The Company has not received notice of
infringement with respect to asserted Intangibles of others, except as
disclosed in the Prospectus. To the knowledge of the Company, there is
no infringement by others of Intangibles of the Company. To the
knowledge of the Company, there is no Intangible of others which has
had or may in the future have a materially adverse effect on the
condition (financial or otherwise), results of operations, businesses,
property, assets, liabilities or prospects of the Company.
(j) Neither the Company, any director or officer of the Company, or to the
best knowledge of the Company, any agent, employee, or other person
authorized to act on behalf of the Company have, directly or
indirectly: used any corporate funds of the Company for unlawful
contributions, gifts, entertainment or other unlawful expenses relating
to political activity; made any unlawful payment to foreign or domestic
government officials or employees or to foreign or domestic political
parties or campaigns from corporate funds of the Company; violated any
provision of the Foreign Corrupt Practices Act of 1977, as amended, as
relates to the business of the Company or its predecessor in interest;
or made any bribe, rebate, payoff, influence payment, kickback, or
other unlawful payment in connection with the business of the Company
or its predecessor in interest.
(k) Any contract, agreement, instrument, lease or license required to be
described in the Registration Statement or the Prospectus has been
properly described therein. Any contract, agreement, instrument, lease
or license required to be filed as an exhibit to the Registration
Statement has been filed with the Commission as an exhibit to or has
been incorporated as an exhibit by reference into the Registration
Statement.
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(l) The Company has all requisite corporate power and authority to execute,
deliver and perform under the terms and conditions of this Agreement
and the Underwriters' Warrant. All necessary corporate proceedings of
the Company have been duly taken to authorize the execution, delivery
and performance by the Company of this Agreement and the Underwriters'
Warrant. This Agreement has been duly authorized, executed and
delivered by the Company, is a legal, valid, and binding agreement of
the Company, and is enforceable as to the Company in accordance with
its terms. The Underwriters' Warrant has been duly authorized by the
Company and, when executed and delivered by the Company, assuming the
due execution and delivery thereof by the other parties thereto, will
be a legal, valid and binding agreement of the Company, enforceable
against the Company in accordance with its terms. No consent,
authorization, approval, order, license, certificate, declaration or
permit of or from, or filing with, any governmental or regulatory
authority, agent, board or other body is required for the issue and
sale of the Shares by the Company and the execution, delivery or
performance by the Company of this Agreement or the Underwriters'
Warrant (except filings with and orders of the Commission pursuant to
the Act which have been or will be made or obtained prior to the
Closing Date, and such filings, consents or permits as are required
under Blue Sky or securities laws in connection with the transactions
contemplated by this Agreement). No consent of any party to any
contract, agreement, instrument, lease, license, arrangement or
understanding to which the Company is a party, or to which any of their
properties or assets are subject, is required for the execution,
delivery or performance of this Agreement or the Underwriters' Warrant;
and the execution, delivery and performance of this Agreement and the
Underwriters' Warrant will not violate, result in a breach of, conflict
with, or (with or without the giving of notice or the passage of time
or both) entitle any party to terminate or call a default under any
such contract, agreement, instrument, lease, license, arrangement or
understanding, result in the creation or imposition of, any lien,
security interest, pledge, charge, or other encumbrance upon any of the
property or assets of the Company pursuant to the terms of any
indenture, mortgage, deed of trust, loan or credit agreement, lease or
other agreement or instrument to which the Company is a party or by
which the Company is bound or to which any of the property or assets of
the Company is subject or violate or result in a breach of any term of
the Certificate of Incorporation or By-laws of the Company, or violate,
result in a breach of, or conflict with any law, rule, regulation,
order, judgment or decree binding on the Company or to which its
operations, business, properties or assets are subject.
(m) Each purchaser of Shares will receive good title to the Shares
purchased by it and you will receive good title to the Underwriters'
Warrant purchased by you upon payment of the purchase price therefor in
accordance with the provisions of this Agreement, free and clear of all
liens, security interests, pledges, charges, encumbrances,
stockholders' agreements and voting trusts (collectively,
"Encumbrances").
(n) The Underwriters' Warrant Shares are validly authorized and reserved
for issuance and, when issued, paid for and delivered upon exercise of
the Underwriters' Warrant, in accordance with the provisions of the
Underwriters' Warrant will be validly issued, fully paid and
non-assessable and will not be issued in violation of any preemptive
rights of stockholders; and the holders of the Underwriters' Warrant
Shares will receive good title to them, free and clear of all
Encumbrances.
(o) The Shares and the Underwriters' Warrant conform to all statements
relating thereto contained in the Registration Statement and the
Prospectus.
(p) Since the respective dates as of which information is given in the
Registration Statement and the Prospectus, and except as otherwise may
be stated therein, (i) the Company has not entered into any transaction
or incurred any liability or obligation, contingent or otherwise, which
is material to the Company, except in the ordinary course of business,
(ii) there has not been any change in the outstanding capital stock of
the Company, or any issuance of options, warrants or rights to purchase
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the capital stock of the Company, or any material increase in the
long-term debt of the Company, or any material adverse change in the
business, condition (financial or otherwise) or results of operations
of the Company, (iii) no loss or damage (whether or not insured) to the
properties of the Company has been sustained which is material to the
Company, (iv) the Company has not paid or declared any dividend or
other distribution with respect to its capital stock, and (v) there has
not been any change, contingent or otherwise, in the direct or indirect
control of the Company nor, to the best knowledge of the Company, do
there exist any circumstances which would likely result in such a
change.
(q) The Company has not incurred, directly or indirectly, any liability for
a fee, commission or other compensation on account of the employment of
a broker or finder in connection with the offering of the Shares
contemplated by this Agreement, except as contemplated by this
Agreement or as disclosed in the Registration Statement.
(r) The Company is not, and does not intend to conduct its business in a
manner in which it would become, an "investment company" as defined in
Section 3(a) of the Investment Company Act.
(s) The Company has obtained, or prior to the Closing Date will obtain a
Lock-up Letter, from each of its officers and directors who owns shares
of Common Stock.
(t) No person or entity has the right to require registration of shares of
Common Stock or other securities of the Company because of the filing
or effectiveness of the Registration Statement other than as disclosed
in the Registration Statement.
(u) The Company has and will continue to (i) adequately insure its
properties against loss or damage by fire, (ii) maintain adequate
insurance against liability for negligence and (iii) maintain such
other insurance as is usually maintained by companies engaged in the
same or similar businesses, including without limitation, product
liability insurance.
(v) The Company has filed all federal, state and local tax returns required
to be filed (or have obtained extensions therefor) and have paid all
taxes shown on such returns and all assessments received by it to the
extent that payment has become due. The Company has made adequate
accruals for all taxes which may be owed by it but has not been paid.
6. INDEMNIFICATION AND CONTRIBUTION:
(a) The Company agrees to indemnify and hold harmless you, your
officers, directors, partners, employees, agents and counsel, and each person,
if any, who controls you within the meaning of Section 15 of the Act or Section
20(a) of the Exchange Act, against any and all loss, liability, claim, damage
and expense whatsoever (which shall include, for all purposes of this Section 6,
but not be limited to, attorneys' fees and any and all expense whatsoever
incurred in investigating, preparing, or defending against any litigation,
commenced or threatened, or any claim whatsoever and any and all amounts paid in
settlement of any claim or litigation) as and when incurred arising out of,
based upon, or in connection with (i) any untrue statement or alleged untrue
statement of a material fact contained in (1) any Preliminary Prospectus, the
Rule 430A Prospectus, the Registration Statement, or the Prospectus (as from
time to time amended and supplemented), or any amendment or supplement thereto,
or (2) any application or other document or communication (in this Section 6
collectively called an "application") executed by or on behalf of the Company or
based upon written information furnished by or on behalf of the Company filed in
any jurisdiction in order to qualify the Shares under the Blue Sky or securities
laws thereof (or the rules and regulations promulgated thereunder) or filed with
the Commission or any securities exchange or automated quotation system; or any
omission or alleged omission to state a material fact required to be stated
therein or necessary to make the statements therein not misleading, unless such
statement or omission was made in reliance upon and in conformity with written
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information furnished to the Company as stated in Section 6(b) by you for
inclusion in any Preliminary Prospectus, the Rule 430A Prospectus, the
Registration Statement, of the Prospectus, or any amendment or supplement
thereto, or in any application, as the case may be, or (ii) any breach of any
representation, warranty, covenant or agreement of the Company contained in this
Agreement. The foregoing agreement to indemnify shall be in addition to any
liability the Company may otherwise have, including liabilities arising under
this Agreement.
If any action is brought against you or any of your officers,
directors, partners, employees, agents or counsel, or any of your controlling
persons (each, an "indemnified party") in respect of which indemnity may be
sought against the Company pursuant to the foregoing paragraph, such indemnified
party or parties shall promptly notify the Company in writing of the institution
of such action (but the failure so to notify shall not relieve the Company from
any liability it may have pursuant to this Section 6(a)) and the Company shall
promptly assume the defense of such action, including the employment of counsel
(satisfactory to such indemnified party or parties) and payment of expenses.
Such indemnified party or parties shall have the right to employ its or their
own counsel in any such case, but the fees and expenses of such counsel shall be
at the expense of such indemnified party or parties, unless the employment of
such counsel shall have been authorized in writing by the Company in connection
with the defense of such action or the Company shall not have promptly employed
counsel satisfactory to such indemnified party or parties to have charge of the
defense of such action or such indemnified party or parties shall have
reasonably concluded that there may be one or more legal defenses available to
it or them or to other indemnified parties which are different from or
additional to those available to the Company, in any of which events such fees
and expenses shall be borne by the Company and the Company shall not have the
right to direct the defense of such action on behalf of the indemnified party or
parties. Anything in this paragraph to the contrary notwithstanding, the Company
shall not be liable for any settlement of any such claim or action effected
without its written consent. The Company agrees promptly to notify you of the
commencement of any litigation or proceedings against the Company or any of its
officers or directors in connection with the sale of the Shares, any Preliminary
Prospectus, the Rule 430A Prospectus, the Registration Statement, or the
Prospectus, or any amendment or supplement thereto, or any application.
(b) You agree to indemnify and hold harmless the Company, each director
of the Company, each officer of the Company who shall have signed the
Registration Statement, and each other person, if any, who controls the Company
within the meaning of Section 15 of the Act or Section 20(a) of the Exchange
Act, but only with respect to statements or omissions, if any, made in any
Preliminary Prospectus, the Rule 430A Prospectus, the Registration Statement, or
the Prospectus (as from time to time amended and supplemented), or any amendment
or supplement thereto, or in any application, in reliance upon and in conformity
with written information furnished to the Company by you expressly for inclusion
in any Preliminary Prospectus, the Rule 430A Prospectus, the Registration
Statement, or the Prospectus, or any amendment or supplement thereto, or in any
application, as the case may be. For all purposes of this Agreement, the public
offering price, the amounts of the selling concession and reallowance set forth
in the Prospectus and the information in the [third paragraph] under
"Underwriting" constitute the only information furnished in writing by or on
your behalf expressly for inclusion in any Preliminary Prospectus, the Rule 430A
Prospectus, the Registration Statement or the Prospectus (as from time to time
amended or supplemented), or any amendment or supplement thereto, or in any
application, as the case may be. If any action shall be brought against the
Company or any other person so indemnified based upon any Preliminary
Prospectus, the Rule 430A Prospectus, the Registration Statement, or the
Prospectus, or any amendment or supplement thereto, or any application, and in
respect of which indemnity may be sought against you pursuant to this Section
6(b), you shall have the rights and duties given to the Company, and the Company
and each other person so indemnified shall have the rights and duties given to
the indemnified parties, by the provisions of Section 6(a).
(c) To provide for just and equitable contribution, if (i) an
indemnified party makes a claim for indemnification pursuant to Section 6(a) or
6(b) (subject to the limitations thereof) but it is found in a final judicial
determination, not subject to further appeal, that such indemnification may not
be enforced in such
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case, even though this Agreement expressly provides for indemnification in such
case, or (ii) any indemnified or indemnifying party seeks contribution under the
Act, the Exchange Act, or otherwise, then the Company (including for this
purpose any contribution made by or on behalf of any director of the Company,
any officer of the Company who signed the Registration Statement, and any
controlling person of the Company), as one entity, and you, as a second entity,
shall contribute to the losses, liabilities, claims, damages and expenses
whatsoever to which any of them may be subject, so that you are responsible for
the proportion thereof equal to the percentage which the aggregate commission
set forth on the cover page of the Prospectus represents of the initial public
offering price of the Shares set forth on the cover page of the Prospectus and
the Company is responsible for the remaining portion, in proportion to the net
proceeds from the offering received by them; PROVIDED, HOWEVER, that if
applicable law does not permit such allocation, then other relevant equitable
considerations such as the relative fault of the Company and you in connection
with the facts which resulted in such losses, liabilities, claims, damages and
expenses shall also be considered. The relative fault, in the case of an untrue
statement, alleged untrue statement, omission, or alleged omission, shall be
determined by, among other things, whether such statement, alleged statement,
omission, or alleged omission relates to information supplied by the Company, or
you, and the parties' relative intent, knowledge, access to information, and
opportunity to correct or prevent such statement, alleged statement, omission or
alleged omission. The Company and you agree that it would be unjust and
inequitable if the respective obligations of the Company and you for
contribution were determined by PRO RATA or PER CAPITA allocation of the
aggregate losses, liabilities, claims, damages and expenses or by any other
method of allocation that does not reflect the equitable considerations referred
to in this Section 6(c). No person guilty of a fraudulent misrepresentation
(within the meaning of Section 11(f) of the Act) shall be entitled to
contribution from any person who is not guilty of such fraudulent
misrepresentation. For purposes of this Section 6(c), each person, if any, who
controls you within the meaning of Section 15 of the Act or Section 20(a) of the
Exchange Act, each officer of the Company who shall have signed the Registration
Statement and each director of the Company, shall have the same rights to
contribution as the Company, subject in each case to the provisions of this
Section 6(c). Anything in this Section 6(c) to the contrary notwithstanding, no
party shall be liable for contribution with respect to the settlement of any
claim or action effected without its written consent. This Section 6(c) is
intended to supersede any right to contribution under the Act, the Exchange Act,
or otherwise.
7. CONDITIONS OF YOUR OBLIGATIONS: Your obligations hereunder are
subject to the continuing accuracy of the representations and warranties of the
Company contained herein and in each certificate and document contemplated under
this Agreement to be delivered to you, as of the date hereof, as of the Closing
Date, and each Optional Closing Date, as the case may be, to the performance by
the Company of its obligations hereunder, and to the following additional
conditions:
(a) Notification that the Registration Statement has become effective shall
be received by you not later than 6:30 p.m., New York City time, on the
date of this Agreement or at such later date and time as shall be
consented to in writing by you. If the Company has elected to rely upon
Rule 430A of the Rules and Regulations, the price of the Shares and any
price-related information previously omitted from the effective
Registration Statement pursuant to such Rule 430A shall have been
transmitted to the Commission for filing pursuant to Rule 424(b) of the
Rules and Regulations within the prescribed time period, and prior to
the Closing Date the Company shall have provided evidence satisfactory
to you of such timely filing, or a post-effective amendment providing
such information shall have been promptly filed and declared effective
in accordance with the requirements of Rule 430A of the Rules and
Regulations.
(b) The Commission shall not have issued a Stop Order and no Blue Sky or
securities authority of any jurisdiction shall have issued an order
suspending the registration or qualification of the Shares, and no
proceedings for such purpose shall have been instituted or shall be
pending, or to the knowledge of the Company, be threatened or
contemplated by the Commission or the Blue Sky or securities
authorities of any such jurisdiction.
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(c) You shall have received an opinion, dated the Closing Date and
satisfactory in form and substance to your counsel from Baker &
McKenzie, counsel to the Company, to the effect that:
(1) The Company is a corporation duly incorporated and validly
existing in good standing under the laws of Florida, its
jurisdiction of incorporation, with full corporate power and
authority to own its property and conduct its business in the
manner described in the Prospectus. To the knowledge of such
counsel, the Company has obtained all necessary consents,
authorizations, approvals, orders, licenses, certificates,
declarations and permits of and from, and has made all
required filings with, all federal, state, local and other
governmental authorities and all courts and other tribunals,
to own, lease, license and use its properties and assets and
to carry on its business in the manner described in the
Prospectus..
(2) The authorized capital stock of the Company consists of
20,000,000 shares of Common Stock, $.01 par value, and
5,000,000 shares of Preferred Stock. There are 1,000 shares of
Common Stock currently outstanding and no shares of Preferred
Stock currently outstanding. Each outstanding share of Common
Stock and Preferred Stock is validly authorized, validly
issued, fully paid, and nonassessable, with no personal
liability attaching to the ownership thereof, has not been
issued and is not owned or held in violation of any preemptive
right of stockholders. To the knowledge of such counsel, there
is no commitment, plan or arrangement to issue, and no
outstanding option, warrant or other right calling for the
issuance of, any share of capital stock of the Company or any
security or other instrument which by its terms is convertible
into, exercisable for, or exchangeable for capital stock of
the Company, except as disclosed in the Prospectus. There is
outstanding no security or other instrument which by its terms
is convertible into or exchangeable for capital stock of the
Company except for the outstanding shares of Preferred Stock.
(3) To the knowledge of such counsel, there is no litigation,
arbitration, claim, governmental or other proceeding (formal
or informal), or investigation pending or threatened, with
respect to the Company or any of its operations, business,
property or assets, except as disclosed in the Prospectus or
such as individually or in the aggregate do not now have and
are not expected to have a material adverse effect on the
operations, business, property, assets or condition (financial
or otherwise) of the Company. The Company is not in violation
of, or in default with respect to, any law, rule or
regulation, or to the knowledge of such counsel, after
reasonable investigation, any order, judgment or decree,
except as disclosed in the Prospectus or such as individually
or in the aggregate do not now have and are not expected to
have a material adverse effect on the operations, businesses,
property, assets or condition (financial or otherwise) of the
Company; nor is the Company required to take any action in
order to avoid any such violation or default.
(4) Except as disclosed in the Prospectus, the Company is not now
in violation or breach of, or in default with respect to
complying with, any material provision of any indenture,
mortgage, deed of trust, debenture, note or other evidence of
indebtedness, contract, agreement, instrument, lease or
license, or arrangement or understanding which is material to
the Company, and each such indenture, mortgage, deed of trust,
debenture, note or other evidence of indebtedness, contract,
agreement, instrument, lease or license is in full and force
and is the legal, valid and binding obligation of the Company.
(5) The Company has all requisite corporate power and authority to
execute, deliver and perform this Agreement and the
Underwriters' Warrant. All necessary corporate proceedings of
the Company have been taken to authorize the execution,
delivery, and performance by the Company of this Agreement and
the Underwriters' Warrant. This Agreement and the
Underwriters' Warrant have been duly authorized, executed and
delivered by the Company,
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constitute legal, valid, and binding agreements of the
Company, and (subject to applicable bankruptcy, insolvency,
reorganization and other laws affecting the enforceability of
creditors' rights generally, and the application of equitable
principles affecting the enforceability of remedies in the
nature of specific enforcement, and except as the
enforceability of the indemnification and contribution
provisions of this Agreement and the Underwriters' Warrant may
be limited under applicable securities laws) is enforceable as
to the Company in accordance with its terms. The Underwriters'
Warrant has been duly authorized by the Company and, when
executed, issued and delivered by the Company and paid for by
you in accordance with the provisions of this Agreement, will
be a legal, valid and binding obligation of the Company,
enforceable against the Company in accordance with their
respective terms, except as may be limited by applicable
bankruptcy, insolvency, registration and other laws affecting
the enforceability of creditors' rights generally and the
application of equitable principles affecting the availability
of remedies in the nature of specific enforcement.
(6) The Company is not in violation or breach of, or in default
with respect to any term of its Certificate of Incorporation
or By-laws, in each case as amended to date.
(7) All legally required proceedings in connection with the
authorization, issue and sale of the Shares by the Company in
accordance with the provisions of this Agreement have been
taken, and no consent, authorization, approval, order,
license, certificate, declaration or permit of or from, or
filing with, any governmental or regulatory authority, agency,
board, bureau or other body is required for the execution,
delivery or performance by the Company of this Agreement and
the Underwriters' Warrant (except filings with and orders of
the Commission pursuant to the Act which have been made or
received and matters under Blue Sky or state securities laws,
rules or regulations, as to which such counsel need not
express an opinion).
(8) The Shares are validly authorized. Upon payment of the
purchase price thereunder in accordance with the provisions of
this Agreement, the Underwriters' Warrant will be duly
delivered. The Shares, when issued, paid for and delivered in
accordance with the provisions of this Agreement, will be
validly issued, fully paid and nonassessable, without any
personal liability attaching to the ownership thereof, and, to
the knowledge of such counsel, will not be issued in violation
of any preemptive rights of stockholders.
(9) The Underwriters' Warrant Shares are validly authorized and
have been duly and validly reserved for issuance, and when
issued, paid for and delivered upon exercise of the
Underwriters' Warrant in accordance with the provisions of the
Underwriters' Warrant will be validly authorized, validly
issued, fully paid, and nonassessable, with no personal
liability attaching to the ownership thereof, and, to the
knowledge of such counsel, will not have been issued in
violation of any preemptive rights of stockholders, and the
holders of the Underwriters' Warrant Shares will receive good
title to them, free and clear of all Encumbrances.
(10) The Shares and the Underwriters' Warrant Shares conform to all
statements relating thereto contained in the Registration
Statement and the Prospectus.
(11) To the knowledge of such counsel, any contract, agreement,
instrument, lease or license required to be described in the
Registration Statement or the Prospectus has been properly
described therein. To the knowledge of such counsel, any
contract, agreement, instrument, lease, or license required to
be filed as an exhibit to the Registration Statement has been
filed
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with the Commission as an exhibit to or has been incorporated
as an exhibit by reference into the Registration Statement.
(12) To the knowledge of such counsel, no person or entity has the
right to require registration of shares of Common Stock or
other securities of the Company because of the filing or
effectiveness of the Registration Statement who has not waived
such right.
(13) The Company is not an "investment company" by reason of its
assets and operations as defined in Section 3(a) of the
Investment Company Act.
(14) None of the shares of Common Stock issued by the Company prior
to the date hereof have been offered and sold by the Company
in violation of the Act or applicable Blue Sky or state
securities laws or rules or regulations. All shares of Common
Stock outstanding as of the date hereof have been duly
authorized and validly issued, and are fully paid and
non-assessable, with no personal liability attaching to the
ownership thereof, and, to the knowledge of such counsel, have
not been issued in violation of any preemptive rights of
stockholders.
(15) The statements in the Prospectus under the caption
"Description of Securities" have been reviewed by such counsel
and insofar as such statements refer to descriptions of
agreements, instruments or leases, summarize the status of
litigation or other proceedings, or the provisions of orders,
judgments or decrees, or constitute statements of law,
descriptions of statutes, rules or regulations, or conclusions
of law, such statements fairly present the information called
for and are accurate and complete in all material respects;
[provided that such counsel need not opine as to the
applicability of Rule 419 under the Act.]
(16) Except for liabilities and obligations incurred in the
ordinary course of business, to the knowledge of such counsel,
after due inquiry, there are no claims (absolute, accrued,
contingent or otherwise), except as disclosed in the
Prospectus or such as individually or in the aggregate do not
have and are not expected to have a material adverse effect
upon the operations, businesses, property, assets or condition
(financial or otherwise) of the Company.
(17) The Registration Statement has become effective under the Act,
and to the knowledge of such counsel, no Stop Order has been
issued and no proceedings for that purpose have been
instituted or threatened.
(18) The Registration Statement, any Rule 430A Prospectus, and the
Prospectus, and any amendment or supplement thereto (except
for the financial statements and the notes and schedules
related thereto, and other financial information and
statistical data contained therein or omitted therefrom, as to
which such counsel need express no opinion), comply as to form
in all material respects with the applicable requirements of
the Act.
(19) In addition, such counsel shall state that it has participated
in the preparation of the Registration Statement and the
Prospectus and any amendments or supplements thereto, and in
the course thereof participated in conferences with officers
and other representatives of the Company, representatives of
the independent certified public accountants for the Company
and your representatives at which the contents of the
Registration Statement and Prospectus and related matters were
discussed and, although such counsel is not passing upon and
does not assume any responsibility for the accuracy,
completeness or fairness of the statements contained in the
Registration Statement and Prospectus, or any amendment or
supplement thereto, on the basis of the foregoing, no facts
have come to the attention of such counsel which lead them to
believe that either the Registration Statement or any
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amendment thereto at the time such Registration Statement or
such amendment became effective or the Prospectus as of its
date or any amendment or supplement thereto as of its date
contained an untrue statement of a material fact or omitted to
state a material fact required to be stated therein or
necessary to make the statements therein not misleading (it
being understood that such counsel need express no comment
with respect to the financial statements, and the notes and
schedules related thereto, and other financial information and
statistical data included in the Registration Statement or
Prospectus).
(20) To the knowledge of such counsel, since the effective date of
the Registration Statement, no event has occurred which should
have been set forth in an amendment or supplement to the
Registration Statement or the Prospectus which has not been
set forth in such an amendment or supplement.
(21) In rendering such opinion, counsel for the Company may rely
(i) as to matters involving the application of laws other than
the laws of the United States, to the extent counsel for the
Company deems proper and to the extent specified in such
opinion, upon an opinion or opinions of local counsel (in form
and substance satisfactory to your counsel) acceptable to your
counsel, familiar with the applicable laws, in which case the
opinion of counsel for the Company shall state that the
opinion or opinions of such other counsel are satisfactory in
scope, form and substance to counsel for the Company and that
reliance thereon by counsel for the Company is reasonable;
(ii) as to matters of fact, to the extent they deem proper, on
certificates of responsible officers of the Company; and (iii)
to the extent they deem proper, upon written statements or
certificates of officers of departments of various
jurisdictions having custody of documents respecting the
corporate existence or good standing of the Company, provided
that copies of any such statements or certificates shall be
delivered to your counsel.
(d) You shall have received letters addressed to you and dated the date
hereof and the Closing Date from Richard A. Eisner & Company, LLP,
independent certified public accountants for the Company, addressed to
you, and in form and substance satisfactory to you, to the effect that:
(1) Such accountants are independent public accountants as
required by the Act and the rules and regulations of the
Commission thereunder and no information need be supplied with
respect to them in answer to Item 13 of Form SB-2.
(2) In their opinion, the financial statements and related notes
of the Company examined by them, at all dates and for all
periods referred to in their report therein, and included in
the Registration Statement and the Prospectus on their
authority as experts comply as to form in all material
respects with the applicable accounting requirements of the
Act and the Rules and Regulations of the Commission
promulgated thereunder.
(3) On the basis of limited procedures not constituting an audit,
including a reading of the latest available unaudited interim
financial statements of the Company and the financial data and
accounting records of the Company, inquiries of officials of
the Company and others responsible for financial and
accounting matters, a reading of the minute books of the
Company, including without limitation the minutes (if any) of
meetings or consents in lieu of meetings of the stockholders
and of the Board of Directors (and any committees thereof) of
the Company, and other specified procedures and inquiries
requested by you, if any, nothing has come to their attention
which causes them to believe that:
(i) except as disclosed in or contemplated by the
Registration Statement and the Prospectus, during the
period from the date of the last audited balance
sheet of the
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Company included in the Registration Statement and
Prospectus to a specified date not more than five (5)
days prior to the date of such letter, there were any
decreases, as compared with the corresponding period
of the preceding year, in net sales, cost of goods
sold, operating, selling, general and administrative
expenses, earnings from operations, the total or per
share amounts of net earnings, or the weighted
average number of shares outstanding;
(ii) except as disclosed in or contemplated by the
Registration Statement and the Prospectus, during the
period from the date of the last audited balance
sheet of the Company included in the Registration
Statement and Prospectus to a specified date not more
than five (5) days prior to the date of such letter,
there has been any change in the capital stock or
other securities of the Company or any payment or
declaration of any dividend or other distribution in
respect thereof or in exchange therefor, or any
increase in the long-term debt of the Company or any
decrease in the net current assets or net assets of
the Company as compared with the amounts shown on the
last audited balance sheet of the Company, included
in the Registration Statement and the Prospectus
(other than in the ordinary course of business); and
(iii) On the basis of their examinations referred to in
their report and consent included in the Registration
Statement and Prospectus and the indicated procedures
and inquiries referred to above, nothing has come to
their attention which, in their judgment, would cause
them to believe or indicate that the financial
statements and related notes and schedules of the
Company included in the Registration Statement and
Prospectus do not present fairly the financial
position and results of operations of the Company, as
at the dates and for the periods indicated, in
conformity with generally accepted accounting
principles applied on a consistent basis, and are not
in all material respects a fair presentation of the
information purported to be shown.
(4) In addition to their examination referred to in their report
included in the Registration Statement and the Prospectus and
the inquiries and limited procedures referred to in clause
(ii) of this Section 7(e), they have performed other
procedures, not constituting an audit, with respect to certain
numerical data, percentages, dollar amounts and other
financial information appearing in the Registration Statement
and the Prospectus, which are derived from the general
accounting records of the Company, and have compared certain
of such data and information with the accounting records of
the Company and found them to be in agreement.
(5) Such other matters as you may have reasonably requested.
(f) The representations and warranties of the Company in this Agreement
shall be true and correct with the same effect as if made on and as of
the Closing Date and the Company shall have complied with all
agreements and satisfied all conditions on its part to be performed or
satisfied at or prior to the Closing Date.
(g) The Registration Statement and the Prospectus and any amendments or
supplements thereto shall contain all statements which are required to
be stated therein in accordance with the Act and the Rules and
Regulations, and shall in all material respects conform to the
requirements thereof, and neither the Registration Statement nor the
Prospectus nor any amendment or supplement thereto shall contain any
untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements
therein not misleading.
19
<PAGE>
(h) There shall have been, since the respective dates as of which
information is given in the Registration Statement and the Prospectus,
no material adverse change in the business, property, condition
(financial or otherwise), results of operations, capital stock,
long-term or short-term debt or general affairs of the Company, except
changes which the Registration Statement and the Prospectus indicate
might occur after the effective date of the Registration Statement, and
the Company shall not have incurred any material liabilities or entered
into any agreements not in the ordinary course of business, except as
disclosed in the Registration Statement and the Prospectus.
(i) No action, suit or proceeding, at law or in equity, shall be pending or
threatened against the Company which would be required to be set forth
in the Registration Statement, and no proceedings shall be pending or
threatened against the Company before or by any commission, board or
administrative agency in the United States or elsewhere, wherein an
unfavorable decision, ruling or finding would have a Material Adverse
Effect.
(j) The Company shall have furnished to you or caused to be furnished to
you at the Closing Date, certificates of the President and chief
financial officer of the Company in form and substance satisfactory to
you, as to the accuracy of the representations and warranties of the
Company herein at and as of the Closing Date and as to the performance
by the Company of all its respective obligations hereunder to be
performed at or prior to the Closing Date and the Company shall have
furnished to you a certificate of the President and chief financial
officer of the Company satisfactory to you as to the matters set forth
in Sections 7(a) and (b) above.
(k) The NASD, upon review of the terms of the public offering of the
Shares, shall have indicated that it has no objections to the
compensation arrangements pertaining to the sale of the Shares and the
participation by you in the sale of the Shares.
(l) Prior to or on the Closing Date, the Company shall have executed and
delivered the Underwriters' Warrant to you.
(m) Prior to or on the Closing Date, the Company shall have delivered to
you executed copies of the Lock-up Letters.
(n) Subsequent to the date hereof, there shall not have occurred any
change, or any development involving a prospective change, in or
affecting particularly the business or financial affairs of the Company
which would materially and adversely affect the market for the Shares.
(o) Subsequent to the date hereof, no executive officer of the Company
listed as such in the Prospectus shall have died, become physically or
mentally disabled, resigned or have been removed or discharged.
(p) Upon the exercise, in whole or in part, by you of the option to sell
the Additional Shares, referred to in Section 2 hereof, your
obligations to sell the Additional Shares will be subject to the
continuing accuracy of the representations and warranties of the
Company contained herein and in each certificate and document
contemplated under this Agreement to be delivered to you, as of the
date hereof and as of each Optional Closing Date, to the performance by
the Company of its obligations hereunder, and the following additional
conditions:
(1) The Registration Statement shall remain effective at the
Optional Closing Date, and no Stop Order shall have been
issued by the Commission and no proceedings for that purpose
shall have been instituted or shall be pending, or to your
knowledge or the knowledge of the Company, shall be
contemplated by the Commission, and any reasonable request on
the part
20
<PAGE>
of the Commission for additional information shall have been
complied with to the satisfaction of Law Offices of David N.
Feldman, your counsel.
(2) You shall have received an opinion, dated the Optional Closing
Date and satisfactory in form and substance to counsel to you,
from Baker & McKenzie, counsel to the Company, which opinion
shall be substantially the same in scope and substance as the
opinion furnished to you on the Closing Date pursuant to
Section 7(c) hereof, except that such opinion, where
appropriate, shall cover the Additional Shares.
(3) You shall have received a letter in form and substance
satisfactory to you from Arthur Andersen LLP, independent
certified public accountants for the Company, dated the
Optional Closing Date and addressed to you confirming the
information in their letter referred to in Section 7(e) hereof
and stating that nothing has come to their attention during
the period from the ending date of their review referred to in
said letter to a date not more than five (5) days prior to the
Optional Closing Date, which would require any change in said
letter if it were required to be dated the Optional Closing
Date.
(4) You shall have received a certificate of the President and
chief financial officer of the Company, dated the Optional
Closing Date, in form and substance satisfactory to you,
substantially the same in scope and substance as the
certificate furnished to you on the Closing Date pursuant to
Section 7(j) hereof.
8. EFFECTIVE DATE OF AGREEMENT; TERMINATION.
(a) This Agreement shall become effective at 9:30 A.M., New York City
time, on the first full business day following the day on which the Registration
Statement becomes effective or at the time of the initial public offering by you
of the Shares, whichever is earlier. The time of the initial public offering
shall mean the time, after the Registration Statement becomes effective, of the
release by you for publication of the first newspaper advertisement which is
subsequently published relating to the Shares or the time, after the
Registration Statement becomes effective, when the Shares are first released by
you for offering by you or dealers by letter or telegram, whichever shall first
occur. You or the Company may prevent this Agreement from becoming effective
without liability of any party to any other party, except as noted below in this
Section 8, by giving the notice indicated in Section 8(c) before the time this
Agreement becomes effective.
(b) In addition to the right to terminate this Agreement pursuant to
Section 7 hereof by reason of the Company's failure, refusal or inability to
perform all obligations and satisfy all conditions on their part to be performed
or satisfied hereunder prior to the Closing Date or Optional Closing Date, as
the case may be, you shall have the right to terminate this Agreement at any
time prior to the Closing Date or any Optional Closing Date, as the case may be,
by giving notice to the Company, if the Company shall have sustained a material
loss or material adverse interference with its business or properties from fire,
flood, accident, hurricane, earthquake, theft, sabotage, or other calamity or
malicious act, whether or not covered by insurance, or from any labor dispute or
any court or governmental action, order or decree, of such a character as to
have a material adverse effect with the conduct of the business and operations
of the Company; or if there shall have been a general suspension of, or a
general limitation on prices for, trading in securities on the New York Stock
Exchange, the American Stock Exchange or in the over-the-counter market; or if a
banking moratorium has been declared by a state or federal authority; or if
there shall have been an outbreak of major hostilities between the United States
and any foreign power, or any other insurrection, armed conflict or national
calamity, which in your judgment makes it impracticable or inadvisable to
proceed with the offering, sale or delivery of the Firm Shares or the Additional
Shares, as the case may be.
(c) If you elect to prevent this Agreement from becoming effective as
provided in this Section 8, or to terminate this Agreement pursuant to Section 7
or this Section 8, you shall notify the Company promptly
21
<PAGE>
by telephone, telecopier, telex, or telegram, confirmed by letter. If, as so
provided in this Section 8, the Company elects to prevent this Agreement from
becoming effective, the Company shall notify you promptly by telephone,
telecopier, telex, or telegram, confirmed by letter.
(d) Anything in this Agreement to the contrary notwithstanding other
than Section 8(e), if this Agreement shall not become effective by reason of an
election pursuant to this Section 8 or if this Agreement shall terminate or
shall otherwise not be carried out within the time specified herein by reason of
any failure on the part of the Company to perform any covenant or agreement or
satisfy any condition of this Agreement by it to be performed or satisfied, the
sole liability of the Company to you, in addition to the obligations the Company
assumed pursuant to Section 4(g), will be to reimburse you for such
out-of-pocket expenses (including the fees and disbursements of their counsel)
as shall have been incurred by them in connection with this Agreement or the
proposed offer, sale, and delivery of the Shares, and upon demand the Company
agrees to pay promptly the full amount thereof to you.
(e) Notwithstanding any election hereunder or any termination of this
Agreement, and whether or not this Agreement is otherwise carried out, the
provisions of Sections 4(b), 4(g), 6, 10(b) and 10(c) shall not be in any way
affected by such election or termination or failure to carry out the terms of
this Agreement or any part hereof.
9. MISCELLANEOUS: (a) Notices required to be in writing shall be mailed
or delivered (i) to the Company at the Company's office at 201 S. Biscayne
Blvd., Suite 300, Miami, Florida 33131 with a copy to Andrew Hulsh, Esq., Baker
& McKenzie, 701 Brickell Avenue, Suite 1600, Miami, Florida 33131 or (ii) to
you, at the office of G-V Capital Corp., 150 Vanderbilt Motor Parkway, Suite 311
Hauppauge, New York 10022, Attention: Lawrence Kaplan with a copy to David N.
Feldman, Esq., Law Offices of David N. Feldman, 36 West 44th Street, Suite 1201,
New York, NY 10036, and shall be deemed given when received. Any notice not
required to be in writing, including but not limited to notices under Section
7(a) or 8 hereof, may be made by telex, telecopier or telephone and shall be
deemed given at the time the telex, or telecopied communication is received or
the telephone call is made, but if so made shall be subsequently confirmed in
writing.
(b) The representations, warranties, covenants and agreements of the
Company and the indemnity and contribution agreements, contained in Sections 4,
5 and 6 of this Agreement will remain in full force and effect, regardless of
any investigation made by or on behalf of you, the Company or any of its
officers or directors or any controlling persons of you or the Company and will
survive acceptance of and payment for any of the Shares and the termination of
this Agreement.
(c) This Agreement has been and is made solely for the benefit of you
and the Company and the controlling persons, directors and officers referred to
in Section 6 hereof and their respective successors and assigns, and no other
person shall acquire or have any right under or by virtue of this Agreement. The
term "successors and assigns" as used in this Agreement shall not include a
purchaser, as such purchaser, of Shares from you.
(d) This Agreement shall be governed by and construed in accordance
with the laws of the State of New York, applicable to contracts made and to be
performed entirely with such State, without regard to conflict of laws
provisions thereof.
Please confirm that the foregoing correctly sets forth the agreement
among the Company and you.
Very truly yours,
MEDICAL ACQUISITION CORP.
By:________________________________
Jay M. Haft, Chief Executive Officer
22
<PAGE>
Confirmed, as of the date first above mentioned.
G-V CAPITAL CORP.
By:___________________________
Lawrence Kaplan, President
EXHIBIT 3.1
ARTICLES OF INCORPORATION
OF
MEDICORP ACQUISITION CORP.
ARTICLE I
NAME
The name of this Corporation is Medicorp Acquisition Corp. (hereinafter
called the "Corporation"). The address of the principal office and the mailing
address of the Corporation is 201 S. Biscayne Avenue, Miami, Florida 33131.
ARTICLE II
NATURE OF BUSINESS
This Corporation is being formed for the following purposes:
A. To engage in any and all lawful business or activity permitted under
the laws of the United States and the State of Florida.
B. To generally have and exercise all powers, rights and privileges
necessary and incident to carrying out properly the objects herein mentioned.
C. To do anything and everything necessary, suitable, convenient or
proper for the accomplishment of any of the purposes or the attainment of any or
all of the objects hereinbefore enumerated or incidental to the purposes and
powers of this Corporation or which at any time appear conductive thereto or
expedient.
ARTICLE III
CAPITAL STOCK
The aggregate number of shares of all classes of capital stock which
this Corporation shall have authority to issue is 25,000,000, consisting of (i)
20,000,000 shares of common stock, par value $0.01 per share (the "Common
Stock"), and (ii) 5,000,000 shares of preferred stock, par value $0.01 per share
(the "Preferred Stock"). The designations and the preferences, limitations and
relative rights of the Preferred Stock and the Common Stock of the Corporation
are as follows:
A. PROVISIONS RELATING TO THE PREFERRED STOCK
1. The Preferred Stock may be issued from time to time in one
or more classes or series, the shares of each class or series to have such
designations and powers, preferences and rights, and qualifications, limitations
and restrictions thereof as are stated and expressed herein and in the
resolution or resolutions providing for the issue of such class or series
adopted by the Board of Directors (the "Board") as hereinafter prescribed.
2. Authority is hereby expressly granted to and vested in the
Board to authorize the issuance of the Preferred Stock from time to time in one
or more classes or series, to determine and take
<PAGE>
necessary proceedings fully to effect the issuance and redemption of any such
Preferred Stock, and, with respect to each class or series of the Preferred
Stock, to fix and state by the resolution or resolutions from time to time
adopted providing for the issuance thereof the following:
(a) whether or not the class or series is to have voting
rights, full or limited, or is to be without voting rights;
(b) the number of shares to constitute the class or series and
the designations thereof;
(c) the preferences and relative, participating, optional or
other special rights, if any, and the qualifications, limitations or
restrictions thereof, if any, with respect to any class or series;
(d) whether or not the shares of any class or series shall be
redeemable, and, if redeemable, the redemption price or prices, the time or
times at which and the terms and conditions upon which such shares shall be
redeemable and the manner of redemption;
(e) whether or not the shares of a class or series shall be
subject to the operation of retirement or sinking funds to be applied to the
purchase or redemption of such shares for retirement, and if such retirement or
sinking fund or funds be established, the annual amount thereof and the terms
and provisions relative to the operation thereof;
(f) the dividend rate, whether dividends are payable in cash,
stock of the Corporation, or other property, the conditions upon which and the
times when such dividends are payable, the preference to or the relation to the
payment of the dividends payable on any other class or classes or series of
stock, whether or not such dividend shall be cumulative or noncumulative, and,
if cumulative, the date or dates from which such dividends shall accumulate;
(g) the preferences, if any, and the amounts thereof which the
holders of any class or series thereof shall be entitled to receive upon the
voluntary or involuntary dissolution of, or upon any distribution of the assets
of, the Corporation;
(h) whether or not the shares of any class or series shall be
convertible into, or exchangeable for, the shares of any other class or classes
or of any other series of the same or any other class or classes of stock of the
Corporation and the conversion price or prices or ratio or ratios or the rate or
rates at which such conversion or exchange may be made, with such adjustments,
if any, as shall be stated and expressed or provided for in such resolution or
resolutions; and
(i) such other special rights and protective provisions with
respect to any class or series as the Board may deem advisable.
The shares of each class or series of the Preferred Stock may vary from
the shares of any other series thereof in any or all of the foregoing respects.
The Board may increase the number of shares of the Preferred Stock designated
for any existing class or series by a resolution adding to such class or series
authorized and unissued shares of the Preferred Stock not designated for any
other class or series. The Board may decrease the number of shares of the
Preferred Stock designated for any existing class or series by a resolution,
subtracting from such series unissued shares of the Preferred Stock designated
for such class or series, and the shares so subtracted shall become authorized,
unissued and undesignated shares of the Preferred Stock.
2
<PAGE>
B. PROVISIONS RELATING TO THE COMMON STOCK
1. Except as otherwise required by law or as may be provided
by the resolutions of the Board authorizing the issuance of any class or series
of Preferred Stock, as hereinabove provided, all rights to vote and all voting
power shall be vested exclusively in the holders of the Common Stock.
2. Subject to the rights of the holders of the Preferred
Stock, the holders of the Common Stock shall be entitled to receive when, as and
if declared by the Board, out of funds legally available therefor, dividends
payable in cash, stock or otherwise.
3. Upon any liquidation, dissolution or winding-up of the
Corporation, whether voluntary or involuntary, and after the holders of the
Preferred Stock shall have been paid in full the amounts to which they shall be
entitled (if any) or a sum sufficient for such payment in full shall have been
set aside, the remaining net assets of the Corporation shall be distributed pro
rata to the holders of the Common Stock in accordance with their respective
rights and interests to the exclusion of the holders of the Preferred Stock.
C. GENERAL PROVISIONS
1. Except as may be provided by the resolutions of the Board
authorizing the issuance of any class or series of Preferred Stock, as
hereinabove provided, cumulative voting by any shareholder is hereby expressly
denied.
2. No shareholder of the Corporation shall have, by reason of
its holding shares of any class or series of stock of the Corporation, any
preemptive or preferential rights to purchase or subscribe for any other shares
of any class or series of the Corporation now or hereafter to be authorized, and
any other equity securities, or any notes, debentures, warrants, bonds, or other
securities convertible into or carrying options or warrants to purchase shares
of any class, now or hereafter to be authorized, whether or not the issuance of
any such shares, or such notes, debentures, bonds or other securities would
adversely affect the dividend, voting or other rights of such shareholder.
ARTICLE IV
TERM OF EXISTENCE
This Corporation shall have perpetual existence unless sooner dissolved
in accordance with the laws of the State of Florida. The date on which corporate
existence shall begin is the date on which these Articles of Incorporation are
filed with the Secretary of State of the State of Florida.
ARTICLE V
INITIAL REGISTERED OFFICE AND AGENT
The street address of the initial registered office of the Corporation
is 701 Brickell Avenue, Suite 1600, Miami, Florida 33131-2827, and the name of
the initial registered agent of this Corporation at that address is Andrew
Hulsh.
3
<PAGE>
ARTICLE VI
NUMBER AND TERM OF DIRECTORS
The Corporation's Board shall consist of not less than three directors,
with the exact number to be fixed from time to time by resolution of the Board.
The number of directors may be decreased at any time and from time to time by a
majority of the directors then in office, but only to eliminate vacancies
existing by reason of the death, resignation, removal or expiration of the term
of one or more directors. No decrease in the number of directors shall have the
effect of shortening the term of any incumbent director. The names of the
initial directors of this Corporation are Jay Haft, John Abeles and Joel Kantor.
ARTICLE VII
INDEMNIFICATION
This Corporation shall indemnify any and all of its directors,
officers, employees or agents or former directors, officers, employees or agents
or any person or persons who may have served at its request as a director,
officer, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise in which it owns shares of capital stock or of which
it is a creditor, to the full extent permitted by law in existence now or
hereafter. Said indemnification shall include, but not be limited to, the
expenses, including the cost of any judgments, fines, settlements and counsel's
fees, actually and necessarily paid or incurred in connection with any action,
suit or proceedings, whether civil, criminal, administrative or investigative,
and any appeals thereof, to which any such person or his legal representative
may be made a party or may be threatened to be made a party, by reason of his
being or having been a director, officer, employee or agent as herein provided.
The foregoing right of indemnification shall not be exclusive of any other
rights to which any director, officer, employee or agent may be entitled as a
matter of law or which he may be lawfully granted.
ARTICLE VIII
AMENDMENTS TO ARTICLES OF INCORPORATION AND BYLAWS
This Corporation reserves the right to amend or repeal any provisions
contained in these Articles of Incorporation or any amendments hereto and any
right conferred upon the shareholders is subject to this reservation. Further,
the power to adopt, alter, amend or repeal the Bylaws shall be vested in the
Board of Directors of this Corporation.
ARTICLE IX
INCORPORATOR
The name and address of the person signing these Articles of
Incorporation is:
Michael H. Hoffman
701 Brickell Avenue, Suite 1600
Miami, Florida 33131-2827
4
<PAGE>
IN WITNESS WHEREOF, the undersigned incorporator has executed these Articles
of Incorporation on this 24th day of July, 1997.
/s/ MICHAEL HOFFMAN
--------------------------------
Michael H. Hoffman
5
<PAGE>
ACKNOWLEDGMENT OF REGISTERED AGENT
The undersigned, having been named as Registered Agent for Medicorp
Acquisition Corp., at the place designated in these Articles of Incorporation,
hereby agrees to act in such capacity and to comply with the provisions of law
in relation thereto.
/s/ ANDREW HULSH
---------------------------------
Andrew Hulsh
<PAGE>
ARTICLES OF AMENDMENT
TO
ARTICLES OF INCORPORATION
OF
MEDICORP ACQUISITION CORP.
Pursuant to the provisions of Section 607.1006 of the Florida Business
Corporation Act, the undersigned Florida profit corporation adopts the following
Articles of Amendment to its Articles of Incorporation:
1. The name of the corporation is MEDICORP ACQUISITION CORP. (the
"Corporation").
2. In order to change the name and address of the Corporation, Article
I of the Articles of Incorporation of the Corporation is hereby amended in its
entirety to read as follows:
ARTICLE I
NAME
The name of this corporation is Medical Acquisition Corp. (hereinafter
called the "Corporation"). The address of the principal office and the mailing
address of the Corporation is 201 S. Biscayne Blvd., Suite 3000, Miami, Florida
33131."
3. The amendment to the articles of incorporation effecting the name
and address change shall be effective as of 12:01 a.m., EST, on September 5,
1997.
4. The amendment was adopted by the sole incorporator of the
Corporation without shareholder action and shareholder action was not required.
IN WITNESS WHEREOF, the undersigned incorporator of the Corporation has
executed these Articles of Amendment this 4th day of September, 1997.
MEDICORP ACQUISITION CORP.
By: /s/ MICHAEL H. HOFFMAN
--------------------------------------
Michael H. Hoffman
Sole Incorporator
BYLAWS
OF
MEDICAL ACQUISITION CORP.
(A FLORIDA CORPORATION)
<PAGE>
<TABLE>
<CAPTION>
INDEX
PAGE NUMBER
<S> <C>
ARTICLE ONE - OFFICES
Section 1. Principal Office............................................................1
Section 2. Other Offices...............................................................1
ARTICLE TWO - MEETINGS OF SHAREHOLDERS
Section 1. Place ......................................................................1
Section 2. Time of Annual Meeting......................................................1
Section 3. Call of Special Meetings....................................................1
Section 4. Conduct of Meetings.........................................................1
Section 5. Notice and Waiver of Notice.................................................1
Section 6. Business for Annual and Special Meetings....................................2
Section 7. Shareholder Nominations of Director Candidates..............................2
Section 8. Quorum......................................................................3
Section 9. Voting Rights Per Share.....................................................3
Section 10. Voting of Shares............................................................3
Section 11. Proxies.....................................................................4
Section 12. Shareholder List............................................................4
Section 13. Action Without Meeting......................................................4
Section 14. Fixing Record Date..........................................................4
Section 15. Inspectors and Judges.......................................................5
Section 16. Voting for Directors........................................................5
ARTICLE THREE - DIRECTORS
Section 1. Number; Term; Election; Qualification.......................................5
Section 2. Resignation; Vacancies; Removal.............................................5
Section 3. Powers......................................................................5
Section 4. Place of Meetings...........................................................6
Section 5. Annual Meetings.............................................................6
Section 6. Regular Meetings............................................................6
Section 7. Special Meetings and Notice.................................................6
Section 8. Quorum and Required Vote....................................................6
Section 9. Action Without Meeting......................................................6
Section 10. Conference Telephone or Similar Communications Equipment Meetings...........6
Section 11. Committees..................................................................6
Section 12. Compensation of Directors...................................................7
ARTICLE FOUR - OFFICERS
Section 1. Positions...................................................................7
Section 2. Election of Specified Officers by Board of Directors........................7
Section 3. Election or Appointment of Other Officers...................................7
Section 4. Compensation................................................................7
Section 5. Term; Resignation; Removal; Vacancies.......................................7
Section 6. Chairman of the Board.......................................................8
Section 7. Vice-Chairman of the Board..................................................8
Section 8. Chief Executive Officer.....................................................8
Section 9. President...................................................................8
Section 10. Vice Presidents.............................................................8
Section 11. Chief Financial Officer.....................................................8
Section 12. Secretary...................................................................8
Section 13. Treasurer...................................................................9
Section 14. Other Officers; Employees and Agents........................................9
ARTICLE FIVE - CERTIFICATES FOR SHARES
Section 1. Issue of Certificates.......................................................9
Section 2. Legends for Preferences and Restrictions on Transfer........................9
Section 3. Facsimile Signatures........................................................9
Section 4. Lost Certificates..........................................................10
Section 5. Transfer of Shares.........................................................10
Section 6. Registered Shareholders....................................................10
Section 7. Redemption of Control Shares...............................................10
ARTICLE SIX - GENERAL PROVISIONS
Section 1. Dividends..................................................................10
Section 2. Reserves...................................................................10
Section 3. Checks.....................................................................10
Section 4. Fiscal Year................................................................10
Section 5. Seal.......................................................................10
Section 6. Gender.....................................................................10
ARTICLE SEVEN - AMENDMENT OF BYLAWS..............................................................11
</TABLE>
i
<PAGE>
BYLAWS
OF
MEDICAL ACQUISITION CORP.
ARTICLE ONE
OFFICES
Section 1. PRINCIPAL OFFICE. The principal office of Medical
Acquisition Corp., a Florida corporation (the "Corporation"), shall be located
at 201 S. Biscayne Blvd., Suite 3000, Miami, Florida 33131, unless otherwise
determined by the Board of Directors of the Corporation (the "Board of
Directors") in accordance with applicable law.
Section 2. OTHER OFFICES. The Corporation may also have offices at such
other places, either within or without the State of Florida, as the Board of
Directors may from time to time determine or as the business of the Corporation
may require.
ARTICLE TWO
MEETINGS OF SHAREHOLDERS
Section 1. PLACE. All annual meetings of shareholders shall be held at
such place, within or without the State of Florida, as may be designated by the
Board of Directors and stated in the notice of the meeting or in a duly executed
waiver of notice thereof. Special meetings of shareholders may be held at such
place, within or without the State of Florida, and at such time as shall be
stated in the notice of the meeting or in a duly executed waiver of notice
thereof.
Section 2. TIME OF ANNUAL MEETING. Annual meetings of shareholders
shall be held on such date and at such time fixed, from time to time, by the
Board of Directors, provided, that there shall be an annual meeting held every
calendar year at which the shareholders shall elect a board of directors and
transact such other business as may properly be brought before the meeting.
Section 3. CALL OF SPECIAL MEETINGS. Except as otherwise required by
law, special meetings of shareholders of the Corporation may be called only by
the Chairman of the Board, the Vice-Chairman of the Board, or the Chief
Executive Officer of the Corporation or by the Board of Directors pursuant to a
resolution approved by a majority of the entire Board of Directors. Only
business within the purpose or purposes described in the special meeting notice
required by Section 607.0705 of the Florida Business Corporation Act may be
conducted at a special shareholders' meeting.
Section 4. CONDUCT OF MEETINGS. The Chairman of the Board of Directors
(or in his absence, the Vice-Chairman of the Board, or in his absence, the Chief
Executive Officer, or in his absence, such other designee of the Chairman of the
Board of Directors) shall preside at the annual and special meetings of
shareholders and shall be given full discretion in establishing the rules and
procedures to be followed in conducting the meetings, except as otherwise
provided by law or in these Bylaws.
Section 5. NOTICE AND WAIVER OF NOTICE. Except as otherwise provided by
law, written or printed notice stating the place, date and time of the meeting
and, in the case of a special meeting, the purpose or purposes for which the
meeting is called, shall be delivered not less than ten (10) nor more than sixty
(60) days before the date of the meeting, either personally or by first-class
mail or other legally sufficient means, by or at the direction of the Chairman
of the Board, or the persons calling the meeting, to each shareholder of record
entitled to vote at such meeting. If the notice is mailed at least thirty (30)
days before the date of the meeting, it may be done by a class of United States
mail other than first class. If mailed, such notice shall be deemed to be
delivered when deposited in the United States mail addressed to the shareholder
at the address appearing on the stock transfer
<PAGE>
books of the Corporation, with postage thereon prepaid. If a meeting is
adjourned to another time and/or place, and if an announcement of the adjourned
time and/or place is made at the meeting, it shall not be necessary to give
notice of the adjourned meeting unless the Board of Directors, after
adjournment, fixes a new record date for the adjourned meeting. Whenever any
notice is required to be given to any shareholder, a waiver thereof in writing
signed by the person or persons entitled to such notice, whether signed before,
during or after the time of the meeting stated therein, and delivered to the
Corporation for inclusion in the minutes or filing with the corporate records,
shall constitute an effective waiver of such notice. Neither the business to be
transacted at, nor the purpose of, any regular or special meeting of the
shareholders need be specified in any written waiver of notice. Attendance of a
person at a meeting shall constitute a waiver of (a) lack of or defective notice
of such meeting, unless the person objects at the beginning of the meeting or
the transacting of any business at the meeting, or (b) lack of or defective
notice of a particular matter at a meeting that is not within the purpose or
purposes described in the meeting notice, unless the person objects to
considering such matter when it is presented.
Section 6. BUSINESS FOR ANNUAL AND SPECIAL MEETINGS. Business
transacted at any special meeting shall be confined to the purposes stated in
the notice thereof. At any annual meeting of shareholders, only such business
shall be conducted as shall have been properly brought before the meeting. To be
properly brought before an annual meeting, business must be either (a) specified
in the notice of meeting (or any supplement thereto) given by or at the
direction of the Board, (b) otherwise properly brought before the meeting by or
at the direction of the Board, or (c) otherwise properly brought before the
meeting by a shareholder. In addition to any other applicable requirements, for
business to be properly brought before an annual meeting by a shareholder, the
shareholder must have given timely notice thereof in writing to the Secretary of
the Corporation. To be timely, a shareholder's notice must be delivered to or
mailed and received at the principal executive offices of the Corporation, not
less than one hundred twenty (120) days nor more than one hundred eighty (180)
days prior to the first anniversary of the date of the Corporation's notice of
annual meeting provided with respect to the previous year's annual meeting;
provided, however, that if no annual meeting was held in the previous year or
the date of the annual meeting has been changed to be more than thirty (30)
calendar days earlier than or sixty (60) calendar days after such anniversary,
such notice by the shareholder to be timely must be so received not later than
the close of business on the tenth (10th) day following the date on which notice
of the date of the annual meeting is given to shareholders or made public,
whichever first occurs. Such shareholder's notice to the Secretary of the
Corporation shall set forth as to each matter the shareholder proposes to bring
before the annual meeting (i) a brief description of the business desired to be
brought before the annual meeting and the reasons for conducting such business
at the annual meeting, (ii) the name and record address of the shareholder
proposing such business, (iii) the class and number of shares of capital stock
of the Corporation which are beneficially owned by the shareholder, and (iv) any
material interest of the shareholder in such business. The Chairman of an annual
meeting shall, if the facts warrant, determine and declare to the meeting that
business was not properly brought before the meeting in accordance with the
requirements of this Section 6 and if he should so determine, he shall so
declare to the meeting and any such business not properly brought before the
meeting shall not be transacted. Notwithstanding any provision in these Bylaws
to the contrary, no business shall be conducted at the annual meeting except in
accordance with the procedures set forth in this Section; provided, however,
that nothing in this Section shall be deemed to preclude discussion by any
shareholder of any business properly brought before the annual meeting in
accordance with said procedure.
Section 7. NOMINATIONS OF DIRECTOR CANDIDATES. Only persons who are
nominated in accordance with the following procedures shall be eligible for
election as directors of the Corporation. Nominations of persons for election to
the Board of Directors at an annual or special meeting of shareholders may be
made by or at the direction of the Board of Directors by any nominating
committee or person appointed by the Board of Directors or by any shareholder of
the Corporation entitled to vote for the election of directors at the meeting
who complies with the notice procedures set forth in this Section 7, provided,
however, that nominations of persons for election to the Board of Directors at a
special meeting may be made only if the election of directors is one of the
purposes described in the special meeting notice required by Section 607.0705 of
the Florida Business Corporation Act. Nominations of persons for election at
annual meetings, other than nominations made by or at the direction of the
Board, shall be made pursuant to timely notice in writing to the Secretary of
the Corporation. To be timely, a shareholder's notice must be delivered to or
mailed and received at the principal executive offices of the Corporation, not
less than one hundred twenty (120) days nor more than one hundred eighty (180)
days prior to the first anniversary of the date of the Corporation's notice of
annual meeting provided with respect to the previous year's annual meeting;
provided, however, that if no annual meeting was held in the previous year or
the date of
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the annual meeting has been changed to be more than thirty (30) calendar days
earlier than or sixty (60) calendar days after such anniversary, such notice by
the shareholder to be timely must be so received not later than the close of
business on the tenth (10th) day following the date on which notice of the date
of the annual meeting is given to shareholders or made public, whichever first
occurs. Such shareholder's notice to the Secretary of the Corporation shall set
forth (a) as to each person whom the shareholder proposes to nominate for
election or re-election as a director, (i) the name, age, business address and
residence address of the proposed nominee, (ii) the principal occupation or
employment of the proposed nominee, (iii) the class and number of shares of
capital stock of the Corporation which are beneficially owned by the proposed
nominee, and (iv) any other information relating to the person that is required
to be disclosed in solicitations for proxies for election of directors pursuant
to Rule 14a under the Securities Exchange Act of 1934, as amended; and (b) as to
the shareholder giving the notice, (i) the name and record address of the
shareholder, and (ii) the class and number of shares of capital stock of the
Corporation which are beneficially owned by the shareholder. The Corporation may
require any proposed nominee to furnish such other information as may reasonably
be required by the Corporation to determine the eligibility of such proposed
nominee to serve as director of the Corporation. No person shall be eligible for
election as a director of the Corporation unless nominated in accordance with
the procedures set forth herein. The Chairman of the meeting shall, if the facts
warrant, determine and declare to the meeting that a nomination was not made in
accordance with the foregoing procedure, and if he should so determine, he shall
so declare to the meeting and the defective nomination shall be disregarded.
Section 8. QUORUM. Shares entitled to vote as a separate voting group
may take action on a matter at a meeting only if a quorum of those shares exists
with respect to that matter. Except as otherwise provided in the Articles of
Incorporation or applicable law, shares representing a majority of the votes
pertaining to outstanding shares which are entitled to be cast on the matter by
the voting group constitute a quorum of that voting group for action on that
matter. If less than a quorum of shares are represented at a meeting, the
holders of a majority of the shares so represented may adjourn the meeting from
time to time. After a quorum has been established at any shareholders' meeting,
the subsequent withdrawal of shareholders, so as to reduce the number of shares
entitled to vote at the meeting below the number required for a quorum, shall
not affect the validity of any action taken at the meeting or any adjournment
thereof. Once a share is represented for any purpose at a meeting, it is deemed
present for quorum purposes for the remainder of the meeting and for any
adjournment of that meeting unless a new record date is or must be set for that
adjourned meeting.
Section 9. VOTING RIGHTS PER SHARE. Each outstanding share, regardless
of class, shall be entitled to vote on each matter submitted to a vote at a
meeting of shareholders, except to the extent that the voting rights of the
shares of any class are limited or denied by or pursuant to the Articles of
Incorporation or the Florida Business Corporation Act.
Section 10. VOTING OF SHARES. A shareholder may vote at any meeting of
shareholders of the Corporation, either in person or by proxy. Shares standing
in the name of another corporation, domestic or foreign, may be voted by the
officer, agent or proxy designated by the bylaws of such corporate shareholder
or, in the absence of any applicable bylaw, by such person or persons as the
board of directors of the corporate shareholder may designate. In the absence of
any such designation, or, in case of conflicting designation by the corporate
shareholder, the chairman of the board, the president, any vice president, the
secretary and the treasurer of the corporate shareholder, in that order, shall
be presumed to be fully authorized to vote such shares. Shares held by an
administrator, executor, guardian, personal representative, or conservator may
be voted by such person, either in person or by proxy, without a transfer of
such shares into his name. Shares standing in the name of a trustee may be voted
by such person, either in person or by proxy, but no trustee shall be entitled
to vote shares held by such person without a transfer of such shares into his
name or the name of his nominee. Shares held by or under the control of a
receiver, a trustee in bankruptcy proceedings, or an assignee for the benefit of
creditors may be voted by such person without the transfer thereof into his
name. If shares stand of record in the names of two or more persons, whether
fiduciaries, members of a partnership, joint tenants, tenants in common, tenants
by the entirety or otherwise, or if two or more persons have the same fiduciary
relationship respecting the same shares, unless the Secretary of the Corporation
is given notice to the contrary and is furnished with a copy of the instrument
or order appointing them or creating the relationship wherein it is so provided,
then acts with respect to voting shall have the following effect: (a) if only
one votes, in person or by proxy, his act binds all; (b) if more than one vote,
in person or by proxy, the act of the majority so voting binds all; (c) if more
than one vote, in person or by proxy, but the vote is evenly split on any
particular matter, each faction is
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entitled to vote the share or shares in question proportionally; or (d) if the
instrument or order so filed shows that any such tenancy is held in unequal
interest, a majority or a vote evenly split for purposes hereof shall be a
majority or a vote evenly split in interest. The principles of this paragraph
shall apply, insofar as possible, to execution of proxies, waivers, consents, or
objections and for the purpose of ascertaining the presence of a quorum.
Section 11. PROXIES. Any shareholder of the Corporation, other person
entitled to vote on behalf of a shareholder pursuant to law, or attorney-in-fact
for such persons may vote the shareholder's shares in person or by proxy. Any
shareholder of the Corporation may appoint a proxy to vote or otherwise act for
such person by signing an appointment form, either personally or by his
attorney-in-fact. An executed telegram or cablegram appearing to have been
transmitted by such person, or a photographic, photostatic, or equivalent
reproduction of an appointment form, shall be deemed a sufficient appointment
form. An appointment of a proxy is effective when received by the Secretary of
the Corporation or such other officer or agent which is authorized to tabulate
votes, and shall be valid for up to 11 months, unless a longer period is
expressly provided in the appointment form. The death or incapacity of the
shareholder appointing a proxy does not affect the right of the Corporation to
accept the proxy's authority unless notice of the death or incapacity is
received by the Secretary of the Corporation or other officer or agent
authorized to tabulate votes before the proxy authority under the appointment is
exercised. An appointment of a proxy is revocable by the shareholder unless the
appointment form conspicuously states that it is irrevocable and the appointment
is coupled with an interest.
Section 12. SHAREHOLDER LIST. After fixing a record date for a meeting
of shareholders, the Corporation shall prepare an alphabetical list of the names
of all its shareholders who are entitled to notice of the meeting, arranged by
voting group with the address of, and the number and class and series, if any,
of shares held by each. The shareholders' list must be available for inspection
by any shareholder for a period of ten (10) days prior to the meeting or such
shorter time as exists between the record date and the meeting and continuing
through the meeting at the Corporation's principal office, at a place identified
in the meeting notice, in the city where the meeting will be held, or at the
office of the Corporation's transfer agent or registrar. Any shareholder of the
Corporation or such person's agent or attorney is entitled on written demand to
inspect the shareholders' list (subject to the requirements of law), during
regular business hours and at his expense, during the period it is available for
inspection. The Corporation shall make the shareholders' list available at the
meeting of shareholders, and any shareholder or agent or attorney of such
shareholder is entitled to inspect the list at any time during the meeting or
any adjournment. The shareholders' list is prima facie evidence of the identity
of shareholders entitled to examine the shareholders' list or to vote at a
meeting of shareholders.
Section 13. ACTION WITHOUT MEETING. Any action required or permitted by
law to be taken at a meeting of shareholders may be taken without a meeting or
notice if a consent, or consents, in writing, setting forth the action so taken,
shall be dated and signed by the holders of outstanding stock having not less
than the minimum number of votes that would be necessary to authorize or take
such action at a meeting at which all voting groups and shares entitled to vote
thereon were present and voted with respect to the subject matter thereof, and
such consent shall be delivered to the Corporation, within the period required
by Section 607.0704 of the Florida Business Corporation Act, by delivery to its
principal office in the State of Florida, its principal place of business, the
Secretary of the Corporation or another officer or agent of the Corporation
having custody of the book in which proceedings of meetings of shareholders are
recorded. Within ten (10) days after obtaining such authorization by written
consent, notice must be given to those shareholders who have not consented in
writing or who are not entitled to vote on the action, in accordance with the
requirements of Section 607.0704 of the Florida Business Corporation Act.
Section 14. FIXING RECORD DATE. For the purpose of determining
shareholders entitled to notice of or to vote at any meeting of shareholders or
any adjournment thereof, or entitled to receive payment of any dividend, or in
order to make a determination of shareholders for any other proper purposes, the
Board of Directors may fix in advance a date as the record date for any such
determination of shareholders, such date in any case to be not more than seventy
(70) days, and, in case of a meeting of shareholders, not less than ten (10)
days, before the meeting or action requiring such determination of shareholders.
If no record date is fixed for the determination of shareholders entitled to
notice of or to vote at a meeting of shareholders or the determination of
shareholders entitled to receive payment of a dividend, the date before the day
on which the first notice of the meeting is mailed or the date on which the
resolutions of the Board of Directors declaring such dividend is adopted, as the
case may
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be, shall be the record date for such determination of shareholders. When a
determination of shareholders entitled to vote at any meeting of shareholders
has been made as provided in this Section, such determination shall apply to any
adjournment thereof, except where the Board of Directors fixes a new record date
for the adjourned meeting.
Section 15. INSPECTORS AND JUDGES. The Board of Directors in advance of
any meeting may, but need not, appoint one or more inspectors of election or
judges of the vote, as the case may be, to act at the meeting or any adjournment
thereof. If any inspector or inspectors, or judge or judges, are not appointed,
the person presiding at the meeting may, but need not, appoint one or more
inspectors or judges. In case any person who may be appointed as an inspector or
judge fails to appear or act, the vacancy may be filled by the Board of
Directors in advance of the meeting, or at the meeting by the person presiding
thereat. The inspectors or judges, if any, shall determine the number of shares
of stock outstanding and the voting power of each, the shares of stock
represented at the meeting, the existence of a quorum, the validity and effect
of proxies, and shall receive votes, ballots and consents, hear and determine
all challenges and questions arising in connection with the right to vote, count
and tabulate votes, ballots and consents, determine the result, and do such acts
as are proper to conduct the election or vote with fairness to all shareholders.
On request of the person presiding at the meeting, the inspector or inspectors
or judge or judges, if any, shall make a report in writing of any challenge,
question or matter determined by him or them, and execute a certificate of any
fact found by him or them.
Section 16. VOTING FOR DIRECTORS. Unless otherwise provided in the
Articles of Incorporation, directors shall be elected by a plurality of the
votes cast by the shares entitled to vote in the election at a meeting at which
a quorum is present.
ARTICLE THREE
DIRECTORS
Section 1. NUMBER; TERM; ELECTION; QUALIFICATION. The number of
directors of the Corporation shall be fixed from time to time, within the limits
specified by the Articles of Incorporation, by resolution of the Board of
Directors. The directors of the Corporation shall hold their director positions
until their successors are elected and qualified. Directors shall be elected in
the manner and hold office for the term as prescribed in the Articles of
Incorporation. Directors must be natural persons who are 18 years of age or
older but need not be residents of the State of Florida, shareholders of the
Corporation or citizens of the United States.
Section 2. RESIGNATION; VACANCIES; REMOVAL. A director may resign at
any time by giving written notice to the Board of Directors or the Chairman of
the Board. Such resignation shall take effect at the date of receipt of such
notice or at any later time specified therein; and, unless otherwise specified
therein, the acceptance of such resignation shall not be necessary to make it
effective. In the event the notice of resignation specifies a later effective
date, the Board of Directors may fill the pending vacancy (subject to the
provisions of this Section) before the effective date if they provide that the
successor does not take office until the effective date. Whenever any vacancy on
the Corporation's Board of Directors shall occur due to death, resignation,
retirement, disqualification, removal, increase in the number of directors, or
otherwise, only a majority of directors in office, although less than a quorum
of the entire Board of Directors, may fill the vacancy or vacancies for the
balance of the unexpired term or terms, at which time a successor or successors
shall be duly elected by the shareholders of the Corporation and qualified.
Shareholders of the Corporation shall not, and shall have no power to, fill any
vacancy on the Board of Directors. Shareholders of the Corporation may remove a
director from office prior to the expiration of his or her term, with or without
cause by an affirmative vote of at least a majority of the combined voting power
of the outstanding shares of capital stock of the Corporation entitled to vote
for the election of directors, voting together as a single class.
Section 3. POWERS. The business and affairs of the Corporation shall be
managed by the Board of Directors, which may exercise all such powers of the
Corporation and do all such lawful acts and things as are not by statute or by
the Articles of Incorporation or by these Bylaws directed or required to be
exercised and done by the shareholders.
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Section 4. PLACE OF MEETINGS. Meetings of the Board of Directors,
regular or special, may be held either within or without the State of Florida.
Section 5. ANNUAL MEETINGS. Unless scheduled for another time by the
Board of Directors, the first meeting of each newly elected Board of Directors
shall be held, without call or notice, immediately following each annual meeting
of shareholders.
Section 6. REGULAR MEETINGS. Regular meetings of the Board of Directors
may also be held without notice at such time and at such place as shall from
time to time be determined by the Board of Directors.
Section 7. SPECIAL MEETINGS AND NOTICE. Special meetings of the Board
of Directors may be called by the President or Chairman of the Board and shall
be called by the Secretary on the written request of any two directors. At least
forty-eight (48) hours' prior written notice of the date, time and place of
special meetings of the Board of Directors shall be given to each director.
Except as required by law, neither the business to be transacted at, nor the
purpose of, any regular or special meeting of the Board of Directors need be
specified in the notice or waiver of notice of such meeting. Notices to
directors shall be in writing and delivered to the directors at their addresses
appearing on the books of the Corporation by personal delivery, mail or other
legally sufficient means. Subject to the provisions of the preceding sentence,
notice to directors may also be given by telegram, teletype or other form of
electronic communication. Notice by mail shall be deemed to be given at the time
when the same shall be received. Whenever any notice is required to be given to
any director, a waiver thereof in writing signed by the person or persons
entitled to such notice, whether before, during or after the meeting, shall
constitute an effective waiver of such notice. Attendance of a director at a
meeting shall constitute a waiver of notice of such meeting and a waiver of any
and all objections to the place of the meeting, the time of the meeting and the
manner in which it has been called or convened, except when a director states,
at the beginning of the meeting or promptly upon arrival at the meeting, any
objection to the transaction of business because the meeting is not lawfully
called or convened.
Section 8. QUORUM AND REQUIRED VOTE. A majority of the prescribed
number of directors determined as provided in the Articles of Incorporation
shall constitute a quorum for the transaction of business and the act of the
majority of the directors present at a meeting at which a quorum is present
shall be the act of the Board of Directors, unless a greater number is required
by the Articles of Incorporation. Whenever, for any reason, a vacancy occurs in
the Board of Directors, a quorum shall consist of a majority of the remaining
directors until the vacancy has been filled. If a quorum shall not be present at
any meeting of the Board of Directors, a majority of the directors present
thereat may adjourn the meeting to another time and place, without notice other
than announcement at the time of adjournment. At such adjourned meeting at which
a quorum shall be present, any business may be transacted that might have been
transacted at the meeting as originally notified and called.
Section 9. ACTION WITHOUT MEETING. Any action required or permitted to
be taken at a meeting of the Board of Directors or committee thereof may be
taken without a meeting if a consent in writing, setting forth the action taken,
is signed by all of the members of the Board of Directors or the committee, as
the case may be, and such consent shall have the same force and effect as a
unanimous vote at a meeting. Action taken under this Section 9 is effective when
the last director signs the consent, unless the consent specifies a different
effective date. A consent signed under this Section 9 shall have the effect of a
meeting vote and may be described as such in any document.
Section 10. CONFERENCE TELEPHONE OR SIMILAR COMMUNICATIONS EQUIPMENT
MEETINGS. Directors and committee members may participate in and hold a meeting
by means of conference telephone or similar communications equipment by means of
which all persons participating in the meeting can hear each other.
Participation in such a meeting shall constitute presence in person at the
meeting, except where a person participates in the meeting for the express
purpose of objecting to the transaction of any business on the ground the
meeting is not lawfully called or convened.
Section 11. COMMITTEES. The Board of Directors, by resolution adopted
by a majority of the whole Board of Directors, may designate from among its
members an executive committee and one or more other committees, each of which,
to the extent provided in such resolution, shall have and may exercise all of
the authority of the Board of Directors in the business and affairs of the
Corporation except where the action of the full
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Board of Directors is required by applicable law. Each committee must have two
or more members who serve at the pleasure of the Board of Directors. The Board
of Directors, by resolution adopted in accordance with this Article Three, may
designate one or more directors as alternate members of any committee, who may
act in the place and stead of any absent member or members at any meeting of
such committee. Vacancies in the membership of a committee may be filled only by
the Board of Directors at a regular or special meeting of the Board of
Directors. The executive committee shall keep regular minutes of its proceedings
and report the same to the Board of Directors when required. The designation of
any such committee and the delegation thereto of authority shall not operate to
relieve the Board of Directors, or any member thereof, of any responsibility
imposed upon it or such member by law.
Section 12. COMPENSATION OF DIRECTORS. The directors may be paid their
expenses, if any, of attendance at each meeting of the Board of Directors and
may be paid a fixed sum for attendance at each meeting of the Board of Directors
or a stated salary as director. No such payment shall preclude any director from
serving the Corporation in any other capacity and receiving compensation
therefor. Similarly, members of special or standing committees may be allowed
compensation for attendance at committee meetings or a stated salary as a
committee member and payment of expenses for attending committee meetings.
Directors may receive such other compensation as may be approved by the Board of
Directors.
ARTICLE FOUR
OFFICERS
Section 1. POSITIONS. The officers of the Corporation shall consist of
a Chairman of the Board, a Vice-Chairman of the Board, a Chief Executive
Officer, a President, one or more Vice Presidents (any one or more of whom may
be given the additional designation of rank of Executive Vice President or
Senior Vice President), a Secretary, a Chief Financial Officer, and a Treasurer.
Any two or more offices may be held by the same person. Officers other than the
Chairman of the Board and the Vice-Chairman of the Board need not be members of
the Board of Directors. The Chairman of the Board and the Vice-Chairman of the
Board must be members of the Board of Directors.
Section 2. ELECTION OF SPECIFIED OFFICERS BY BOARD OF DIRECTORS. The
Board of Directors at its first meeting after each annual meeting of
shareholders shall elect a Chairman of the Board, a Vice-Chairman of the Board,
a Chief Executive Officer, a President, one or more Vice Presidents (including
any Senior or Executive Vice Presidents), a Secretary, and a Treasurer.
Section 3. ELECTION OR APPOINTMENT OF OTHER OFFICERS. Such other
officers and assistant officers and agents as may be deemed necessary may be
elected or appointed by the Board of Directors, or, unless otherwise specified
herein, appointed by the Chairman of the Board. The Board of Directors shall be
advised of appointments by the Chairman of the Board at or before the next
scheduled Board of Directors meeting.
Section 4. COMPENSATION. The salaries, bonuses and other compensation
of the Chairman of the Board and all officers of the Corporation to be elected
by the Board of Directors pursuant to Section 2 of this Article Four shall be
fixed from time to time by the Board of Directors or pursuant to its direction.
The salaries of all other elected or appointed officers of the Corporation shall
be fixed from time to time by the Chairman of the Board or pursuant to his
direction.
Section 5. TERM; RESIGNATION; REMOVAL; VACANCIES. The officers of the
Corporation shall hold office until their successors are elected and qualified.
Any officer or agent elected or appointed by the Board of Directors or the
Chairman of the Board may be removed, with or without cause, by the Board of
Directors, but such removal shall be without prejudice to the contract rights,
if any, of the person so removed. Any officer or agent appointed by the Chairman
of the Board pursuant to Section 3 of this Article Four may also be removed from
such office or position by the Board of Directors or the Chairman of the Board,
with or without cause. Any vacancy occurring in any office of the Corporation by
death, resignation, removal or otherwise shall be filled by the Board of
Directors, or, in the case of an officer appointed by the Chairman of the Board,
by the Chairman of the Board or the Board of Directors. Any officer of the
Corporation may resign from his respective office or position by
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delivering notice to the Corporation, and such resignation shall be effective
without acceptance. Such resignation shall be effective when delivered unless
the notice specifies a later effective date. If a resignation is made effective
at a later date and the Corporation accepts the future effective date, the Board
of Directors may fill the pending vacancy before the effective date if the Board
provides that the successor does not take office until such effective date.
Section 6. CHAIRMAN OF THE BOARD. The Chairman of the Board shall
preside at all meetings of the shareholders and the Board of Directors. The
Chairman of the Board shall also serve as the chairman of any executive
committee.
Section 7. VICE-CHAIRMAN OF THE BOARD. The Vice-Chairman of the Board
shall serve as vice-chairman of all meetings of the shareholders and the Board
of Directors. The Vice-Chairman of the Board shall have all the powers of the
Chairman of the Board in the absence of the Chairman of the Board or in the
event the Board of Directors shall not have designated a Chairman of the Board.
The Vice-Chairman of the Board shall also serve as Vice-Chairman of any
executive committee.
Section 8. CHIEF EXECUTIVE OFFICER. Subject to the control of the Board
of Directors, the Chief Executive Officer, in conjunction with the President,
shall have general and active management of the business of the Corporation,
shall see that all orders and resolutions of the Board of Directors are carried
into effect and shall have such powers and perform such duties as may be
prescribed by the Board of Directors. In the absence of the Chairman of the
Board and the Vice-Chairman of the Board or in the event the Board of Directors
shall not have designated a Chairman of the Board or a Vice-Chairman of the
Board, the Chief Executive Officer shall preside at meetings of the shareholders
and the Board of Directors.
Section 9. PRESIDENT. Subject to the control of the Board of Directors,
the President, in conjunction with the Chief Executive Officer, shall have
general and active management of the business of the Corporation and shall have
such powers and perform such duties as may be prescribed by the Board of
Directors. In the absence of the Chairman of the Board, the Vice-Chairman of the
Board, and the Chief Executive Officer or in the event the Board of Directors
shall not have designated a Chairman of the Board, Vice-Chairman of the Board,
and a Chief Executive Officer shall not have been elected, the President shall
preside at meetings of the shareholders and the Board of Directors.
Section 10. VICE PRESIDENTS. The Vice Presidents, in the order of their
seniority, unless otherwise determined by the Board of Directors, shall, in the
absence or disability of the President and the Chief Executive Officer, perform
the duties and exercise the powers of the President. They shall perform such
other duties and have such other powers as the Board of Directors, the Chairman
of the Board, the Vice-Chairman of the Board or the Chief Executive Officer
shall prescribe or as the President may from time to time delegate. Executive
Vice Presidents shall be senior to Senior Vice Presidents, and Senior Vice
Presidents shall be senior to all other Vice Presidents.
Section 11. CHIEF FINANCIAL OFFICER. The Chief Financial Officer shall
be responsible for maintaining the financial integrity of the Corporation, shall
prepare the financial plans for the Corporation and shall monitor the financial
performance of the Corporation and its subsidiaries, as well as performing such
other duties as may be presecribed by the Board of Directors, the Chairman of
the Board, the Vice-Chairman of the Board, the Chief Executive Officer or the
President.
Section 12. SECRETARY. The Secretary shall attend all meetings of the
shareholders and all meetings of the Board of Directors and record all the
proceedings of the meetings of the shareholders and of the Board of Directors in
a book to be kept for that purpose and shall perform like duties for the
standing committees when required. The Secretary shall give, or cause to be
given, notice of all meetings of the shareholders and special meetings of the
Board of Directors and shall keep in safe custody the seal of the Corporation
and, when authorized by the Board of Directors, affix the same to any instrument
requiring it. The Secretary shall perform such other duties as may be prescribed
by the Board of Directors, the Chairman of the Board, the Vice-Chairman of the
Board, the Chief Executive Officer or the President.
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Section 13. TREASURER. The Treasurer shall have the custody of
corporate funds and securities and shall keep full and accurate accounts of
receipts and disbursements in books belonging to the Corporation and shall
deposit all moneys and other valuable effects in the name and to the credit of
the Corporation in such depositories as may be designated by the Board of
Directors. The Treasurer shall disburse the funds of the Corporation as may be
ordered by the Board of Directors, taking proper vouchers for such
disbursements, and shall render to the Chairman of the Board and the Board of
Directors at its regular meetings or when the Board of Directors so requires an
account of all his transactions as Treasurer and of the financial condition of
the Corporation. The Treasurer shall perform such other duties as may be
prescribed by the Board of Directors, the Chairman of the Board, the
Vice-Chairman of the Board, the Chief Executive Officer or the President.
Section 14. OTHER OFFICERS; EMPLOYEES AND AGENTS. Each and every other
officer, employee and agent of the Corporation shall possess, and may exercise,
such power and authority, and shall perform such duties, as may from time to
time be assigned to such person by the Board of Directors, the officer so
appointing such person or such officer or officers who may from time to time be
designated by the Board of Directors to exercise such supervisory authority.
ARTICLE FIVE
CERTIFICATES FOR SHARES
Section 1. ISSUE OF CERTIFICATES. The shares of the Corporation shall
be represented by certificates, provided that the Board of Directors of the
Corporation may provide by resolution or resolutions that some or all of any or
all classes or series of its stock shall be uncertificated shares. Any such
resolution shall not apply to shares represented by a certificate until such
certificate is surrendered to the Corporation. Notwithstanding the adoption of
such a resolution by the Board of Directors, every holder of stock represented
by certificates (and upon request every holder of uncertificated shares) shall
be entitled to have a certificate signed by or in the name of the Corporation by
the Chairman of the Board or the Vice-Chairman of the Board, or the Chief
Executive Officer, President or Vice President, and by the Treasurer or an
Assistant Treasurer, or the Secretary or an Assistant Secretary of the
Corporation, representing the number of shares registered in certificate form.
Section 2. LEGENDS FOR PREFERENCES AND RESTRICTIONS ON TRANSFER. The
designations, relative rights, preferences and limitations applicable to each
class of shares and the variations in rights, preferences and limitations
determined for each series within a class (and the authority of the Board of
Directors to determine variations for future series) shall be summarized on the
front or back of each certificate. Alternatively, each certificate may state
conspicuously on its front or back that the Corporation will furnish the
shareholder a full statement of this information on request and without charge.
Every certificate representing shares that are restricted as to the sale,
disposition, or transfer of such shares shall also indicate that such shares are
restricted as to transfer, and there shall be set forth or fairly summarized
upon the certificate, or the certificate shall indicate that the Corporation
will furnish to any shareholder upon request and without charge, a full
statement of such restrictions. If the Corporation issues any shares that are
not registered under the Securities Act of 1933, as amended, or not registered
or qualified under the applicable state securities laws, the transfer of any
such shares shall be restricted substantially in accordance with the following
legend:
"THESE SHARES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933 OR UNDER ANY APPLICABLE STATE LAW. THEY MAY NOT BE
OFFERED FOR SALE, SOLD, TRANSFERRED OR PLEDGED WITHOUT (1)
REGISTRATION UNDER THE SECURITIES ACT OF 1933 AND ANY APPLICABLE
STATE LAW, OR (2) AT HOLDER'S EXPENSE, AN OPINION (SATISFACTORY
TO THE CORPORATION) OF COUNSEL (SATISFACTORY TO THE CORPORATION)
THAT REGISTRATION IS NOT REQUIRED."
Section 3. FACSIMILE SIGNATURES. Any and all signatures on the
certificate may be a facsimile signature. In case any officer, transfer agent or
registrar who has signed or whose facsimile signature has been placed upon such
certificate shall have ceased to be such officer, transfer agent or registrar
before such certificate
9
<PAGE>
is issued, it may be issued by the Corporation with the same effect as if he
were such officer, transfer agent or registrar at the date of issue.
Section 4. LOST CERTIFICATES. The Board of Directors may direct a new
certificate or certificates to be issued in place of any certificate or
certificates theretofore issued by the Corporation alleged to have been lost or
destroyed, upon the making of an affidavit of that fact by the person claiming
the certificate of stock to be lost or destroyed. When authorizing such issue of
a new certificate or certificates, the Corporation 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 to give the Corporation a
bond in such sum as it may direct as indemnity against any claim that may be
made against the Corporation with respect to the certificate alleged to have
been lost or destroyed.
Section 5. TRANSFER OF SHARES. Upon surrender to the Corporation or the
transfer agent of the Corporation of a certificate for shares duly endorsed or
accompanied by proper evidence of succession, assignment or authority to
transfer, it shall be the duty of the Corporation to issue a new certificate to
the person entitled thereto, cancel the old certificate and record the
transaction upon its books.
Section 6. REGISTERED SHAREHOLDERS. The Corporation shall be entitled
to recognize the exclusive rights of a person registered on its books as the
owner of shares to receive dividends, and to vote as such owner, and shall not
be bound to recognize any equitable or other claim to or interest in such share
or shares on the part of any other person, whether or not it shall have express
or other notice thereof, except as otherwise provided by the laws of the State
of Florida.
Section 7. REDEMPTION OF CONTROL SHARES. As provided by the Florida
Business Corporation Act, if a person acquiring control shares of the
Corporation does not file an acquiring person statement with the Corporation,
the Corporation may, at the discretion of the Board of Directors, redeem the
control shares at the fair value thereof at any time during the 60-day period
after the last acquisition of such control shares. If a person acquiring control
shares of the Corporation files an acquiring person statement with the
Corporation, the control shares may, at the discretion of the Board of
Directors, be redeemed by the Corporation at the fair value thereof, only if
such shares are not accorded full voting rights by the shareholders as provided
by law.
ARTICLE SIX
GENERAL PROVISIONS
Section 1. DIVIDENDS. The Board of Directors may from time to time
declare, and the Corporation may pay, dividends on its outstanding shares in
cash, property, stock (including its own shares) or otherwise pursuant to law
and subject to the provisions of the Articles of Incorporation.
Section 2. RESERVES. The Board of Directors may by resolution create a
reserve or reserves out of earned surplus for any proper purpose or purposes,
and may abolish any such reserve in the same manner.
Section 3. CHECKS. All checks or demands for money and notes of the
Corporation shall be signed by such officer or officers or such other person or
persons as the Board of Directors may from time to time designate.
Section 4. FISCAL YEAR. The fiscal year of the Corporation shall end on
December 31st of each year, unless otherwise fixed by resolution of the Board of
Directors.
Section 5. SEAL. The corporate seal shall have inscribed thereon the
name and state of incorporation of the Corporation. The seal may be used by
causing it or a facsimile thereof to be impressed or affixed or in any other
manner reproduced.
Section 6. GENDER. All words used in these Bylaws in the masculine
gender shall extend to and shall include the feminine and neuter genders.
10
<PAGE>
ARTICLE SEVEN
AMENDMENT OF BYLAWS
Except as otherwise set forth herein, these Bylaws may be altered,
amended or repealed or new Bylaws may be adopted at any meeting of the Board of
Directors at which a quorum is present, by the affirmative vote of a majority of
the directors present at such meeting.
CERTIFICATE NO.
-----------
For ____________________________________________________ Shares
Issued to _____________________________________________________
_______________________________________________________________
Dated __________________________________________________ 19 ___
From whom transferred
_______________________________________________________________
Dated __________________________________________________ 19 ___
NO. ORIGINAL NO. OF ORIGINAL NO. OF SHARES
CERTIFICATE SHARES TRANSFERRED
_______________________________________________________________
Received Certificate No. ______________________________________
for ____________________________________________________ Shares
on _____________________________________________________ 19 ___
_______________________________________________________________
_______________________________________________________________
NO. ORGANIZED UNDER THE LAWS OF SHARES
THE STATE OF FLORIDA
MEDICAL ACQUISITION CORP.
20,000,000 SHARES COMMON STOCK $0.01 PAR VALUE
THIS CERTIFIES THAT ____________________________________________________________
IS HEREBY ISSUED ________________________________________________ FULLY PAID AND
AND NON-ASSESSABLE SHARES OF THE CAPITAL STOCK OF THE ABOVE NAMED CORPORATION
TRANSFERABLE ONLY ON THE BOOKS OF THE CORPORATION BY THE HOLDER HEREOF IN PERSON
OR BY DULY AUTHORIZED ATTORNEY UPON SURRENDER OF THIS CERTIFICATE PROPERLY
ENDORSED.
IN WITNESS WHEREOF, THE SAID CORPORATION HAS CAUSED THIS CERTIFICATE TO BE
SIGNED BY ITS DULY AUTHORIZED OFFICERS AND ITS CORPORATE SEAL TO BE HEREUNTO
AFFIXED THIS ___________________ DAY OF _______________________ A.D. 19_________
______________________________________ _______________________________________
SECRETARY PRESIDENT
<PAGE>
FOR VALUE RECEIVED, __________________ HEREBY SELL, ASSIGN AND TRANSFER
UNTO ___________________________________________________________________________
_________________________________________________________________________ SHARES
REPRESENTED BY THE WITHIN CERTIFICATE, AND DO HEREBY IRREVOCABLY CONSTITUTE AND
APPOINT ______________________________________________________________ ATTORNEY
TO TRANSFER THE SAID SHARES ON THE BOOKS OF THE WITHIN NAMED CORPORATION WITH
FULL POWER OF SUBSTITUTION IN THE PREMISES.
DATED _______________________ 19 ___
IN PRESENCE OF _______________________
_________________________
NOTICE. THE SIGNATURE OF THIS ASSIGNMENT
MUST CORRESPOND WITH THE NAME AS WRITTEN UPON THE
FACE OF THE CERTIFICATE, IN EVERY PARTICULAR, WITHOUT
ALTERATION OR ENLARGEMENT OR ANY CHANGE WHATEVER.
THE SECURITIES REPRESENTED BY THIS DEBENTURE HAVE NOT BEEN REGISTERED UNDER THE
UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR ANY STATE
SECURITIES LAWS, AND MAY NOT BE OFFERED OR SOLD, TRANSFERRED, PLEDGED,
HYPOTHECATED OR OTHERWISE DISPOSED OF EXCEPT (I) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE ACT, (II) TO THE EXTENT APPLICABLE, RULE 144
UNDER THE ACT (OR ANY SIMILAR RULE UNDER THE ACT RELATING TO THE DISTRIBUTION OF
SECURITIES) OR (III) IF AN EXEMPTION FROM REGISTRATION UNDER THE ACT IS
AVAILABLE. THE SECURITIES EVIDENCED BY THIS DEBENTURE ARE ALSO SUBJECT TO THE
REGISTRATION RIGHTS SET FORTH IN THAT CERTAIN SUBSCRIPTION AGREEMENT DATED AS OF
__________________, 1997 BY AND BETWEEN THE HOLDER HEREOF AND THE COMPANY, A
COPY OF WHICH IS ON FILE AT THE COMPANY'S PRINCIPAL EXECUTIVE OFFICE (THE
"SUBSCRIPTION AGREEMENT").
No. 1 $5,000
__________, 1997
MEDICAL ACQUISITION CORP.
8% DEBENTURE
THIS DEBENTURE is one of a duly authorized issue of Debentures
(as hereinafter defined) of Medical Acquisition Corp., a corporation duly
organized and existing under the laws of the State of Florida (the "Company"),
designated as its 8% Debentures in an aggregate original principal amount of at
least One Hundred Thousand Dollars ($100,000) and not exceeding One Hundred
Fifty Thousand Dollars ($150,000) (the "Debentures").
FOR VALUE RECEIVED, the Company promises to pay to
______________________, the registered holder hereof (the "Holder"), the
principal sum of Five Thousand Dollars ($5,000) on the date (the "Maturity
Date") which is the earlier of (i) two years from the date hereof, 1999 or (ii)
the consummation of an initial public offering of the Company's securities, and
to pay interest on the principal sum outstanding from time to time in arrears at
the rate of 8% per annum, compounded annually and payable on a semi-annual basis
commencing six months after the date hereof computed on the basis of the actual
number of days elapsed in a 365-day year. Any accrued and unpaid interest shall
be payable in full on the Maturity Date. Accrual of interest shall commence on
the date hereof until payment in full of the principal sum has been made or duly
provided for. All accrued and unpaid interest shall bear interest at the same
rate from and after the due date of the interest payment until so paid. The
interest so payable, less any amounts required by law to be deducted or
withheld, will be paid on the Maturity Date to the person in whose name the
Debenture is registered on the records of the Company regarding registration and
transfers of the Debentures (the "Debenture Register"); PROVIDED, HOWEVER, that
the Company's obligation to a transferee of this Debenture arises only if such
transfer, sale or other disposition is made in accordance with the terms and
conditions of the Subscription Agreement executed by the original Holder in
connection with the purchase of the Debentures (the "Subscription Agreement").
The principal of, and interest on, the Debentures is payable in such coin or
currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts, at the address last appearing on
the Debenture Register of the Company, as designated in writing by the Holder
from time to time.
This Debenture is subject to the following additional
provisions:
1. The Debentures are issuable in denominations of Five
Thousand Dollars ($5,000) and integral multiples thereof. This Debenture is
exchangeable for an equal aggregate principal amount of
<PAGE>
Debentures of different authorized denominations, as requested by the Holder. No
service charge will be made for such registration or transfer or exchange.
2. The Company shall be entitled to withhold from all payments
of interest on this Debenture any amounts required to be withheld under the
applicable provisions of the United States income tax laws or any other
applicable laws at the time of such payments.
3. This Debenture has been issued subject to certain
investment representations of the original Holder hereof (set forth in Section 6
of the Subscription Agreement) and may be offered, sold, transferred or
exchanged only in compliance with the Securities Act of 1933, as amended. Prior
to due presentment for transfer of this Debenture, the Company and any agent of
the Company may treat the person in whose name this Debenture is duly registered
on the Debenture Register as the owner hereof for the purpose of receiving
payment as herein provided and for all other purposes, whether or not this
Debenture be overdue, and neither the Company nor any such agent shall be
affected by notice to the contrary.
4. Any of the following shall constitute an "Event of
Default":
(a) The Company shall fail to make any payment (whether
principal, interest or otherwise) on the Debentures
as and when the same shall be due and payable and
such default shall continue for five (5) business
days after the due date thereof;
(b) Any of the representations or warranties made by the
Company herein, in the Subscription Agreement, or in
any certificate or financial or other written
statements heretofore or hereafter furnished by or on
behalf of the Company in connection with the
execution and delivery of the Debentures or the
Subscription Agreement shall be false or misleading
in any material respect as of the date made;
(c) The Company shall fail to perform or observe, in any
material respect, any other material covenant, term,
provision, condition, agreement or obligation of the
Company under the Debentures or the Subscription
Agreement and such failure shall continue uncured for
a period of five (5) business days after the first
date on which such failure arises (it being
understood that in the case of defaults which can not
reasonably be cured within a 5-day period no grace
period shall be necessary as a precondition to the
failure to perform such covenant constituting an
Event of Default);
(d) The Company shall (i) make an assignment for the
benefit of its creditors or commence proceedings for
its dissolution; or (ii) apply for or consent to the
appointment of a trustee, liquidator, custodian or
receiver thereof, or for a substantial part of its
property or business;
(e) A trustee, liquidator, custodian or receiver shall be
appointed for the Company or for a substantial part
of its property or business without its consent and
shall not be discharged within sixty (60) days after
such appointment;
(f) Bankruptcy, reorganization, insolvency or liquidation
proceedings or other proceedings for relief under any
bankruptcy law or any law for the relief of debtors
shall be instituted by or against the Company and, if
instituted against the Company, shall not be
dismissed within sixty (60) days after such
institution or the Company shall by any action or
answer approve, consent to, or acquiesce in
2
<PAGE>
any such proceeding or admit the material
allegations, or default in answering a petition filed
in any such proceeding;
(g) The Company shall default on the payment of any debts
in excess of $100,000 beyond any applicable grace
period;
(h) Any judgments, levies or attachments shall be
rendered against the Company or any of its assets or
properties in an aggregate amount in excess of
$100,000 and such judgments, levies or attachments
shall not be dismissed, stayed, bonded or discharged
within thirty (30) days of the date of entry thereof;
or
(i) The Company shall be a party to any merger or
consolidation or shall dispose of all or
substantially all of its assets in one or more
transactions or shall redeem more than a DE MINIMIS
amount of its outstanding shares of capital stock,
other than (i) a merger or share exchange effected
solely for the purpose of reincorporating the Company
or (ii) a merger or share exchange in which the
Company is the surviving corporation and the
stockholders of the Company immediately prior to such
merger or share exchange own more than fifty percent
(50%) of the outstanding voting stock of the Company
following the merger or share exchange.
Upon the occurrence of any Event of Default or at any time thereafter, and in
each and every such case, unless such Event of Default shall have been waived in
writing by the Holder (which waiver shall not be deemed to be a waiver of any
subsequent Event of Default) at the option of the Holder in the Holder's sole
discretion, the Holder may, upon written notice to the Company, accelerate the
maturity hereof, whereupon all principal and interest hereunder shall be
immediately due and payable without presentment, demand, protest or notice of
any kind all of which are hereby expressly waived, anything herein or in any
note or other instruments contained to the contrary notwithstanding, and the
Holder may immediately, and without expiration of any period of grace, enforce
any and all of the Holder's rights or remedies afforded by law.
5. The Company, should an Event of Default occur, expressly
waives demand and presentment for payment, notice of nonpayment, protest, notice
of protest, notice of dishonor, notice of acceleration or intent to accelerate,
bringing of suit and diligence in taking any action to collect amounts called
for hereunder and shall be directly and primarily liable for the payment of all
sums owing and to be owing hereon, regardless of and without any notice,
diligence, act or omission as or with respect to the collection of any amount
called for hereunder.
6. No provision of this Debenture shall alter or impair the
obligation of the Company, which is absolute and unconditional, to pay the
principal of, and interest on, this Debenture at the time, place, and rate, and
in the coin or currency, herein prescribed. This Debenture and all other
Debentures now or hereafter issued of similar terms are direct obligations of
the Company. This Debenture ranks equally with all other Debentures now or
hereafter issued under the terms set forth herein.
7. Any notice to be given or to be served upon any party in
connection with the Debentures must be in writing and will be deemed to have
been given and received upon confirmed receipt, if sent by facsimile, or two (2)
days after it has been submitted for delivery by Federal Express or an
equivalent carrier, charges prepaid and addressed to the following addresses
with a confirmation of delivery:
If to the Company, to:
Medical Acquisition Corp.
201 S. Biscayne Blvd., Suite 3000
3
<PAGE>
Miami, Florida 33131
Attn.: Jay M. Haft
Telephone: (305) 373-9464
Facsimile: (305) 373-9443
With copy to:
Andrew Hulsh, Esq.
Baker & McKenzie
Barnett Tower, Suite 1600
701 Brickell Avenue
Miami, Florida 33131-2827
Telephone: (305) 789-8900
Facsimile: (305) 789-8953
If to the Holder, to:
____________________________
____________________________
____________________________
____________________________
With a copy to:
____________________________
____________________________
____________________________
____________________________
Any party may, at any time by giving notice to the other party, designate any
other address in substitution of an address established pursuant to the
foregoing to which such notice will be given.
8. Except as otherwise expressly provided herein, this
Debenture shall be governed as to validity, interpretation, construction, effect
and in all other respects by the internal laws of the State of Florida. The
Company (i) agrees that any legal suit, action or proceeding arising out of or
relating to this Debenture Agreement shall be instituted exclusively in the
federal or state courts located in the County of Dade of the State of Florida,
(ii) waives any objection to the venue of any such suit, action or proceeding
and the right to assert that such forum is not a convenient forum, and (iii)
irrevocably consents to the jurisdiction of the federal or state courts located
in the Coutny of Dade of the State of Florida in any such suit, action or
proceeding.
[SIGNATURE PAGE FOLLOWS]
4
<PAGE>
IN WITNESS WHEREOF, the Company has caused this instrument to
be duly executed by an officer thereunto duly authorized.
Dated:______________, 1997 MEDICAL ACQUISITION CORP.
By: ______________________________
Name:
Title:
5
THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR UNDER THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE OFFERED OR
SOLD IN CONTRAVENTION OF THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE
STATE LAWS OR THE RESTRICTIONS CONTAINED IN THIS WARRANT.
WARRANT TO SUBSCRIBE FOR AND PURCHASE
2,500 SHARES OF COMMON STOCK
MEDICAL ACQUISITION CORP.
THIS WARRANT CERTIFIES THAT, for value received, _________________, or
its registered assigns, is entitled to subscribe for and purchase from Medical
Acquisition Corp., a Florida corporation (the "Company"), during the period
commencing one (1) year from the effective date of the registration statement to
be filed by the Company in connection with an initial public offering of the
Company's securities ("Effective Date") and expiring on the six-year anniversary
of the Effective Date (the "Expiration Date"), two thousand five hundred (2,500)
fully paid and non-assessable shares of the Common Stock, par value $.01 per
share (the "Common Stock"), of the Company.
. METHOD OF EXERCISE; PAYMENT; PRICE; ISSUANCE OF NEW WARRANT; TRANSFER
AND EXCHANGE. This Warrant (the "Warrant") may be exercised by the holder
hereof, during the period set forth above, in whole or in part (but not as to a
fractional shares of Common Stock), by the surrender of this Warrant, together
with the exercise form attached hereto as EXHIBIT A (the "Exercise Form") duly
completed and signed, at the principal office of the Company, and by payment to
the Company by certified or cashier's check of the Warrant Price. For the
purposes of this Warrant, the term "Warrant Price" shall mean $6.00 per share of
Common Stock, or such other price as shall result from the adjustments specified
in Section 2 hereof. In lieu of exercising this Warrant by delivery of certified
or cashier's check, the holder hereof may make a valid Warrant exercise by
electing to receive shares of Common Stock equal to the value of this Warrant
(or the portion thereof being canceled) by surrendering this Warrant at the
principal office of the Company together with the Exercise Form (a "Net
Exercise"), in which event the Company shall transfer to the holder hereof a
number of shares of Common Stock computed using the following formula:
X = Y (A-B)
-------
A
Where X = the number of shares of Common Stock to be
issued to the holder hereof. A Net Exercise
can only be achieved where X is a positive
number.
Y = the number of shares of Common Stock
purchasable by the holder hereof under this
Warrant the rights to which are surrendered
pursuant to the Net Exercise.
A = the fair market value of one share of
Common Stock (as determined by the average
bid and ask price, or closing price, as
appropriate, per share of Common Stock as
quoted on Nasdaq, any other national
exchange upon which the Company's Common
Stock is quoted, the Automated Quotation
System of the National Quotations Bureau,
Incorporated or an equivalent, generally
accepted, reporting service, or if the
shares of Common Stock are not publicly
traded, a price determined in good faith by
the Board of Directors of the Company).
B = the Warrant Price (as adjusted to the date
of such calculation).
The Company agrees that the shares so purchased shall be deemed to be issued to
the holder hereof as the record owner of such shares as of the close of business
on the date on which this Warrant shall have
<PAGE>
been surrendered and payment for such shares as aforesaid shall have been made
or a Net Exercise shall have occurred. In the event of any exercise of this
Warrant, certificates for the shares of Common Stock so purchased shall be
delivered to the holder hereof within a reasonable time after this Warrant shall
have been so exercised. Unless this Warrant has expired, a new warrant
representing the right to purchase the number of shares of Common Stock, if any,
with respect to which this Warrant shall not then have been exercised, shall
also be issued to the holder hereof at such time.
The Warrant shall be transferable only on the books of the Company
maintained at its principal office upon delivery thereof by the holder or by its
duly authorized attorney or representative, or accompanied by proper evidence of
succession, assignment or authority to transfer, together with the form of the
assignment, attached hereto as EXHIBIT B (the "Assignment Form") duly completed
and signed.
1. STOCK FULLY PAID; RESERVATION OF SHARES. The Company covenants and
agrees that all shares of Common Stock shall, upon issuance pursuant to the
exercise of this Warrant and payment, as the case may be, of the Warrant Price
be fully paid and non-assessable and free from all liens and encumbrances with
respect to the issuance thereof. The Company further covenants and agrees that
during the period within which this Warrant may be exercised, the Company shall
at all times have authorized and reserved, for the purpose of the issuance upon
exercise of this Warrant, at least the maximum number of shares of Common Stock
as are issuable upon the exercise of this Warrant.
2. ADJUSTMENT OF WARRANT PRICE AND NUMBER OF SHARES OF COMMON STOCK.
The number and kind of securities purchasable upon the exercise of this Warrant
and the Warrant Price shall be subject to adjustment from time to time as
follows:
(a) If the Company shall (i) subdivide its outstanding shares
of Common Stock, (ii) combine its outstanding shares of Common Stock into a
smaller number of shares, (iii) issue a stock dividend, or (iv) issue by
reclassification of its shares of Common Stock any shares or other securities of
the Company, then, in each such event, the number of shares of Common Stock
purchasable upon exercise of this Warrant immediately prior thereto, shall be
adjusted so that the holder of this Warrant shall be entitled to receive the
kind and number of shares of Common Stock or other securities of the Company
which it would have owned or have been entitled to receive after the occurrence
of any of the events described above, had such Warrant been exercised
immediately prior to the occurrence of such event (or any record date with
respect thereto). Such adjustment shall be made whenever any of the events
listed above shall occur. An adjustment made pursuant to this paragraph (a)
shall become effective immediately after the effective date of the event
retroactive to the record date, if any, for such event.
(b) If the Company sells its shares of Common Stock for less
than $6.00 per share in an initial public offering or if the effective exercise,
exchange or conversion price in derivative securities offered in such offering
is less than $6.00 per share, whether paid for in cash or in kind, the Warrant
Price shall be appropriately decreased to an amount equal to the price at which
the shares of Common Stock were issued in such initial public offering. An
adjustment made pursuant to this paragraph (b) shall become effective
immediately after the effective date of the Company's initial public offering.
(c) No adjustment in the number of shares of Common Stock
purchasable under this Warrant shall be required unless the adjustment would
require an increase or decrease of at least one percent in the number of shares
of Common Stock purchasable upon the exercise of this Warrant. Any adjustments
which by reason of this paragraph (c) are not required to be made shall be
carried forward and taken into account in any subsequent adjustment. All
calculations under this Section 2 shall be made to the nearest one hundredth of
a share or to the nearest cent, as the case may be.
(d) Unless otherwise provided, whenever the number of shares
of Common Stock purchasable upon the exercise of this Warrant is adjusted, the
Warrant Price per share of Common Stock payable upon exercise of each Warrant
shall be adjusted by multiplying such Warrant Price immediately
2
<PAGE>
prior to such adjustment by a fraction, the numerator of which shall be the
number of shares of Common Stock purchasable upon the exercise of each Warrant
immediately prior to such adjustment, and the denominator of which shall be the
number of shares of Common Stock purchasable immediately after such adjustment.
(e) Whenever the number of shares of Common Stock purchasable
upon the exercise of this Warrant or the Warrant Price of such shares of Common
Stock is adjusted, the Company shall promptly mail by first class mail, postage
prepaid, to the holder of this Warrant notice of such adjustment or adjustments,
together with a certificate setting forth the number of shares of Common Stock
purchasable upon the exercise of this Warrant and the Warrant Price of the
shares of Common Stock after the adjustment, a brief statement of the facts
requiring such an adjustment, and the computation by which such adjustment was
made.
(f) For the purpose of this Section 2, the term "shares of
Common Stock" means the Common Stock of the Company of the class authorized at
the date of this Warrant and stock of any other class into which such presently
authorized shares of Common Stock may be changed and any other shares of stock
of the Company which do not have priority in the payment of dividends or upon
liquidation over any other class of stock. In the event that at any time, as a
result of an adjustment made pursuant to this Section 2, the holders of this
Warrant become entitled to purchase any shares of Common Stock or other
securities of the Company other than shares of Common Stock, thereafter the
number of such other shares or other securities so purchasable upon exercise of
this Warrant and the Warrant Price of such shares or other securities shall be
subject to adjustment from time to time in a manner and on terms as nearly
equivalent as practicable to the provisions with respect to the shares contained
in this Section 2 and the provisions of this Section 2 and all other applicable
sections of this Warrant shall apply on like terms to any such other shares or
securities.
(g) Except as provided in paragraphs (a) through (f), no
adjustment for any dividends, or any distribution or sale of securities, shall
be made during the term of this Warrant or upon the exercise of this Warrant.
(h) In case of any capital reorganization, or any
reclassification of the shares of Common Stock (other than a reclassification
outlined by paragraph (a)(iii) above) of the Company, or in case of the
consolidation or merger of the Company with or into any other corporation or the
sale, lease, conveyance or other disposition of all or substantially all of the
properties and assets of the Company to any other corporation, the Company or
such successor or purchasing corporation, as the case may be, shall execute with
the holder of this Warrant an agreement to the effect that this Warrant shall,
after such capital reorganization, reclassification, consolidation, merger or
sale, lease, conveyance or other disposition, be exercisable into the kind and
amount of shares of stock or other securities or property (including cash) to
which the holder of the number of shares of Common Stock deliverable
(immediately prior to the happening of such capital reorganization,
reclassification, consolidation, merger, sale, lease, conveyance or other
disposition) upon exercise of a Warrant would have been entitled upon the
happening of such event. The Company shall mail by first class mail, postage
prepaid, to the holder of this Warrant a notice of any event requiring such
agreement at least 30 days prior to the effective date of such event. Such
agreement shall provide for all appropriate adjustments, which shall be as
nearly equivalent as may be practicable to the adjustments provided for in this
Section 2. The provisions of this paragraph (h) shall also apply to successive
reorganizations, reclassifications, consolidations, mergers, sales, leases,
conveyances and other dispositions.
(i) Irrespective of any adjustments in the Warrant Price or
the number or kind of shares or other securities purchasable upon the exercise
of this Warrant, the Warrant theretofore or thereafter issued may continue to
express the same price and number and kind of shares of Common Stock as are
stated in this Warrant.
3
<PAGE>
(j) The Company shall not be required to issue fractional
shares of Common Stock on the exercise of Warrants. If any fraction of a share
would, except for the provisions of this Section 2, be issuable on the exercise
of this Warrant (or specified portion thereof), the Company shall pay an amount
in cash equal to the current market price per share of Common Stock, multiplied
by such fraction. For the purpose of this Section 2, the current or closing
market price per share of Common Stock at any date shall be deemed to be the
average of the daily closing prices for the 45 consecutive trading days,
commencing 60 days before the date of computation. The closing price for each
day shall be (i) if the shares of Common Stock are listed or admitted to trading
on a principal national securities exchange or the National Market System of
NASDAQ, the last reported sales price on the principal national securities
exchange on which the shares of Common stock are listed or admitted to trading
or on the National Market System of NASDAQ, (ii) if the shares of Common Stock
are not listed or admitted to trading on any such exchange, the average of the
highest bid and lowest asked prices, as reported on the Automated Quotation
System of the National Quotations Bureau, Incorporated or an equivalent,
generally accepted reporting service, or (iii) if the shares of Common Stock are
not publicly traded, a price determined in good faith by the Board of Directors
of the Company.
3. REGISTRATION RIGHTS. The shares of Common Stock underlying this
Warrant shall be entitled to certain registration rights upon the terms, and
subject to the conditions, of the Registration Rights Agreement of even date
herewith between the Holder of this Warrant and the Company.
4. NO SHAREHOLDER RIGHTS. This Warrant shall not entitle the holder
hereof to any voting rights or other rights as a shareholder of the Company.
5. GENDER AND NUMBER. As used herein, the use of any of the masculine,
feminine, or neuter gender and the use of singular or plural numbers shall
include any of all of the other, wherever and whenever appropriate in the
context.
6. NOTICES. Except as otherwise provided herein, any notice pursuant to
this Warrant by the Company or any Holder of the Warrant shall be in writing and
shall be deemed to have been duly given when personally delivered or five days
after such notice is mailed by certified mail, return receipt requested, postage
prepaid (a) if to the Company, to Medical Acquisition Corp., 201 S. Biscayne
Blvd., Miami, Florida 33131, Suite 3000, Attention: Jay M. Haft, and (b) if to
the Holder of this Warrant, to such person at his address listed on the
Company's books and records, or to such other address as it may be changed from
time to time on the books of the Company by written notice. Each party hereto
may from time to time change the address to which notices to it are to be
delivered or mailed hereunder by notice in writing to the other party.
7. BENEFITS. Nothing in the Warrant shall be construed to give to any
person or corporation other than the Company and the holder of this Warrant any
legal or equitable right, remedy, or claim hereunder; but this Warrant shall be
for the sole and exclusive benefit of the Company and the holder of this
Warrant.
8. INVESTMENT. The Holder hereof covenants and agrees that this Warrant
has been taken for investment and for its own account and not with a view
towards resale or distribution within the meaning of the Securities Act of 1933,
as amended (the "Securities Act"). Furthermore, such Holder acknowledges that
the certificate(s) representing the shares of Common Stock issuable upon
exercise of this Warrant will bear an appropriate legend to this effect and that
such shares will be "restricted securities", as defined under Rule 144
promulgated under the Securities Act. The Holder of this Warrant, by acceptance
hereof, agrees to give written notice to the Company before exercising or
transferring this Warrant or any part hereof or transferring any Common Stock
issuable or issued upon the exercise hereof, of such Holder's intention to do
so, describing briefly the manner of any proposed transfer of this Warrant or
such Holder's intention as to the disposition to be made of shares of Common
Stock issued upon the exercise hereof. Promptly upon receiving such written
notice, the Company shall present copies thereof to its counsel. If in the
opinion of such counsel the proposed transfer, or exercise and disposition
4
<PAGE>
of this Warrant or any part hereof, or disposition of shares of Common Stock may
be effected without registration or qualification (under any Federal or State
law) of this Warrant or the shares of Common Stock issuable or issued on the
exercise hereof, the Company, as promptly as practicable, shall notify such
Holder of such opinion, whereupon such Holder shall be entitled to transfer this
Warrant or any part hereof, or to exercise this Warrant or any part hereof in
accordance with its terms and/or dispose of the shares received upon such
exercise or to dispose of shares of Common Stock received upon the previous
exercise of this Warrant, all in accordance with the terms of the notice
delivered by such Holder to the Company, provided that an appropriate legend may
be endorsed on this Warrant or the certificates for such shares respecting
restrictions upon transfer thereof necessary or advisable in the opinion of
counsel to the Company to prevent further transfers which would be in violation
of Section 5 of the Securities Act.
9. EXCHANGE. This Warrant is exchangeable, upon the surrender hereof by
the Holder hereof at the principal office of the Company, for new Warrants of
like tenor representing in the aggregate the right to subscribe for and purchase
the number of shares which may be subscribed for and purchased hereunder, each
of such new Warrants to represent the right to subscribe for and purchase such
number of shares as shall be designated by said Holder hereof at the time of
such surrender.
10. GOVERNING LAW. Except as otherwise expressly provided herein, this
Warrant shall be governed as to validity, interpretation, construction, effect
and in all other respects by the internal laws of the State of Florida. The
Company (i) agrees that any legal suit, action or proceeding arising out of or
relating to this Warrant Agreement shall be instituted exclusively in the
federal or state courts located in the County of Dade of the State of Florida,
(ii) waives any objection to the venue of any such suit, action or proceeding
and the right to assert that such forum is not a convenient forum, and (iii)
irrevocably consents to the jurisdiction of the federal or state courts located
in the Coutny of Dade of the State of Florida in any such suit, action or
proceeding.
DATED as of__________, 1997
MEDICAL ACQUISITION CORP.
By: __________________________
Name:
Title:
5
<PAGE>
EXHIBIT A
EXERCISE FORM
(To be Executed by the Registered Holder
to Exercise the Rights to Purchase
Common Shares Evidenced by the Warrant)
MEDICAL ACQUISITION CORP.
201 S. Biscayne Blvd., Suite 3000
Miami, Florida 33131
Attn: Jay M. Haft
The undersigned hereby irrevocably subscribes for _________ shares of
your Common Stock pursuant to and in accordance with the terms and conditions of
that certain Warrant dated _________ ____, 1997, and herewith makes payment of
$__________ therefor (by certified or cashier's check or through a Net Exercise
as defined in the Warrant), and requests that a certificate for such shares be
issued in the name of the undersigned and be delivered to the undersigned at the
address stated below. The undersigned further requests that if the number of
shares subscribed for herein shall not be all of the shares purchasable
hereunder, that a new Warrant of like tenor for the balance of the shares
purchasable hereunder be delivered to the undersigned.
Name: ____________________________________
Signed: __________________________________
Address: _________________________________
Dated: _____________________________
<PAGE>
EXHIBIT B
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned ___________________________________
hereby sells, assigns and transfers unto ______________________________________,
_______________ of the ____________ Warrants represented by the within Warrant,
together with all rights, title and interest therein, and does hereby
irrevocably constitute and appoint the Company, attorney, to transfer said
Warrant on the books of such Company with full power of substitution in the
premises.
Dated: _________________________________
Name of Existing Warrant Holder: _______________________________________________
Social Security or Federal ID Number: __________________________________________
Address: _______________________________________________________________________
Signature: _____________________________________________________________________
Name of New Warrant Holder: ____________________________________________________
Social Security or Federal ID Number: __________________________________________
Address: _______________________________________________________________________
Signature: _____________________________________________________________________
CONSENT OF INDEPENDENT AUDITORS
We hereby consent to the use in this Registration Statement of our report dated
October 24, 1997, relating to the financial statements of Medical Acquisition
Corp. and to the reference to our firm under the caption "Experts" in the
Prospectus.
/s/ RICHARD A. EISNER & COMPANY, LLP
- ------------------------------------
Richard A. Eisner & Company, LLP
New York, New York
November 4, 1997
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JUL-25-1997
<PERIOD-END> OCT-22-1997
<CASH> 151,000
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 151,000
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 188,936
<CURRENT-LIABILITIES> 38,976
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 12,140
<TOTAL-LIABILITY-AND-EQUITY> 188,936
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 847
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 253
<INCOME-PRETAX> (1,100)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,100)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,100)
<EPS-PRIMARY> (1.10)
<EPS-DILUTED> (1.10)
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